Running Head: Advanced Business Logistics 1

Advanced Business Logistics

Name:

College:
 Advanced Business Logistics 2

BathKing Industries was imposed on a number of logistics service and cost constraints.

BKI was expected by the stores to process the orders for each of the stores separately and make

delivery arrangements so as to deliver within five working days. The outcomes of this new

processing arrangement include an increase in order processing costs and freight costs. This is

because the stores expect the deliveries to be made to the respective stores directly and with a

lead time of five days. BKI would be expected to process smaller quantity orders for each of the

stores and the pallet quantity orders from the regional DCs. The company will incur more cost in

contracting truckload service to deliver the goods to the stores.

Establishing a series of company owned Regional DCs would be beneficial to the

company. This is because the company will be able to cut costs incurred in the value chain. The

DCs to be established would be located on high demand area in various regions that the company

suppliers. This kind of move will help the company have some direct control on the activities in

the supply chain. With this move the company will lower contracting costs previously incurred

in its distribution arrangement. The company will have the products delivered from the main

company facility to those regional DCs in bulk, and then re-packaging will be done. This will

enable the stores to receive the products as they want them in smaller batches. The move of

establishing company owned regional DCs will help the company achieve delivery of the

products in due time. Thus, ensuring that there are no delays and reduced cost of delivery.

If BKI moves forward with the RDC plan, the facility ownership I recommend is a

franchise. A franchise system can be defined as a system in which a business owner or franchisee

pays royalties and fees to a parent company referred to as a franchiser in return of being

identified using the parent’s company trademark, sell its products or services, and use its

business format and system [ CITATION Czi05 \l 1033 ] . This is because franchising agreements will
 Advanced Business Logistics 3

tend to be longer and the franchisor offers a broad package of rights and resources such as

equipment, managerial systems, initial trainings, and technical knowhow. This move is

advantageous in the sense that it is a low cost method of initiating the RDC centers for BKI

Company, the franchisee chosen understands the current market of operation very well, and it

allows the company to expand to different markets simultaneously at a low cost of operation.

With this move the BKI will not incur a high initial cost of investment thus it will not cut into its

profit margins. The franchisee will have to stick to the quality and operations of BKI for them to

run smoothly.

A process map is a sequence of activities that a product goes through before it is shipped

to the required destination [ CITATION Dyc08 \l 1033 ]. According to Rutner’s proposal, the

company would build a facility RDC network in high demand areas that would supply the orders

to the stores.

BKI Facility-bulk RDC facilities- to handle Stores- receive smaller

shipments to the RDC for case picking, pallet case quantities for
all the chain stores cross docking, individual stores.
and some value-added
services. And maintain
low inventory levels.
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References

Czinkota, R., Ronkainen, A., & Moffett, M. (2005). International Business (7 ed.). South

Western: Thomson.

Dyck, B., & Neubert, M. (2008). Management: Current practices and new directions. New

York: Cengage Learning.