B I S C O R P.

C A S E

*Serves about 2,000 retail stores including Home Depot, Wal-Mart As well as BIS-owned stores. *Single-tier network, all products are shipped from plant to 17 Warehouses. *Family venture (1964), now owned by 12 shareholders. *Sells 4,000 SKUs *CEO is concerned that supply chain is NOT efficient **Inbound truck utilization, **Inventory turns & **Service levels are TOO LOW *Production & distribution strategies 20 yrs. Back model? *Shareholders in search for outside help in modifying logistic Network & supply chain strategy. Re-engineering the production, inventory, & logistics functions. *Identified 3 important issues that need to be addressed: **What is the best network configuration that the BIS corp. should Use? Single-tier network, low truck utilization, hence high transport cost. Proposed two-tier distribution network, with a primary & secondary Warehouses. Whse.1 to receive products from the plants & transfer Inventory to Whse.2 who in turn will serve the retail outlets. **Given the new network configuration, where should the company

Position inventory? How much? With 4,000 SKUs? **Which plant should produce which product? *CEO insist that delivery time should be no more than one day for most Of the retail outlets (service level). *Product growth varies from product family. *CEO & Company shareholders oppose building a new manufacturing Plant because of the cost and risks involved.

NETWORK PLANNING - the process by which the firm structures and manages the supply chain in order to: *find the right balance between inventory, transportation, and manufacturing cost. *match supply and demand under uncertainty by positioning and managing inventory effectively *utilize resources effectively by sourcing products from the most appropriate manufacturing facility.

STEPS IN NEWWORK PLANNING: *Network design decisions on the number, locations, and size of manufacturing plants and warehouses, the assignment of retail outlets to warehouses. *Inventory position identifying stocking points as well as selecting facilities that will produce to stock and thus keep inventory, and facilities that will produce to order and hence keep no inventory. *Resource allocation to determine whether production and packaging of different products is done at the right facility. What should be the plants sourcing strategies? How much capacity should each plant have to meet seasonal demand?