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Warehousing Strategy
AgendaIntroduction
Background
Challenges
Analysis
Conclusion
Introduction
Volkswagen's "Strategy 2016"
Canadian Warehousing Strategy
Key Issues
Advantages & Disadvantages
Factor-Rating Method
Recommendations
Background
One of the world’s largest car manufacturing companies
Nine brands sold and distributed in 153 countries
A new record is set
Deliveries increased in Canada
Aggressive five year growth plan
10% year over year growth in annual sales volume
Resource: Bortolussi, A. 2012
Challenges
An aggressive growth plan
Where to store the additional inventory to support the growth
24 hour service level agreement
95% internal service level requirement
Analysis - Options
Expand existing warehouse
Build or lease new warehouse
Outsource to a 3rd party
Advantages/DisadvantagesAdvantages Disavantages
Expand Exis0ng Warehouse
Cost less Time to implement is dependent
High management control May affect warehouse performance
New Warehouse
May improve customer service
Cost more than op0on 1
Time to implement is long
High management control Terms of lease is long
Leads to higher levels of inventory
Outsource Implementa0on is fastCost more
10-‐year contract
Time and Cost of OptionsExpand Existing
WarehouseLease a New Warehouse Outsource
Cost $80 per Sq. Ft. $120 per Sq. Ft. $120 per Sq. Ft.
Time 6-8 months 2 years Immediately
Terms 10-years 20-years 10-year Conteact
Management Control High High Low
Resource: Bortolussi, A. 2012
Factor-Rating Method
Scores (out of 10) Weighted Scores
Key Success Factors
WeightExpand Exis/ng
Warehouse
New Warehouse Outsource Exis/ng
WarehouseNew
Warehouse Outsource
Can Reduce/Maintain
Opera0ng Costs0.2 5 2 8 1 0.4 1.6
Can Successfully Support Growth
Plan0.3 7 8 7 2.1 2.4 2.1
Streamlines Process
0.1 8 7 5 0.8 0.7 0.5
Improves Customer
Service Levels0.3 5 7 7 1.5 2.1 2.1
Can Gain Access to Technology Not in Company
0.1 5 5 8 0.5 0.5 0.8
TOTAL 1 30 27 36 5.9 6.1 7.1
ConclusionAdvantages and disadvantages indicate moving the location of the facility to a new area and larger warehouse
Factor-Rating indicates that outsourcing would be the most viable option for this rapid growth plan
Inconclusive results indicate that Executives would need to provide their input in order to make the best decision
At this time, we recommend additional feedback from key individuals
Thank You
