John, Denison, executive vice president of operations of Power Plus Inc. (PPI), is feeling stressed out. The producer of

[answerhappygod]

John, Denison, executive vice president of operations of PowerPlus Inc. (PPI), is feeling stressed out. The producer of powertools for the do-it-yourself market is experiencing higherfulfillment costs as retailers change their buying patterns. Theyall seem to want smaller, more frequent shipments to a largernumber of locations. And, the retailers’ service expectations areon the rise. They are demanding advanced shipping notification,RFID tags on all products, and improved inventory visibility. Goneare the days when the retailers bought power tools by the truckloadfor delivery to a few regionally dispersed DCs. Instead, they areasking for smaller shipments to multiple DCs and direct delivery tostores. Some retailers are also inquiring about PPI’s ability todeliver orders for in dividual customers direct to their homes.This drop-shipping strategy is completely new to PPI and Denisonworries that it could create major bottlenecks at the company’scentralized DC that sits next to the factory in Louisville,Kentucky. And, all of these new requirements are accompanied byshorter order cycle time goals. Denison feels that he is stuckbetween a rock and a hard place as the major home improvement chainstores (Home Depot, Lowe’s, and True Value) account for more than80 percent of PPI’s sales. Although compliance is proving to bevery expensive, PPI cannot afford to deny the requests. Doing sowould have an unwelcome effect on revenues. After consulting withhis fulfillment team, Denison has come to the conclusion that hehas three reasonable options to address the emerging marketplacerequirements: Option 1 – Upgrade the existing PPI DC in Kentucky tohandle multiple order types and smaller shipments. Deploy warehouseautomation to improve order fulfillment speed and efficiency.Option 2 – Expand the PPI fulfillment network. Add regional DCs inNevada and New Jersey to the existing Kentucky DC. Modifyoperational processes and flows so that orders for DCs, stores, andindividual consumers can be fulfilled. Option 3 – Outsourcefulfillment to a capable third-party logistics company so that PPIcan focus its efforts on quality production, accurate demandplanning, and lean inventory management. Denison’s next step is tofully evaluate the three options and choose a path forward beforehis upcoming meeting with Emily Leen, the owner of PPI. Leen willask tough questions and Denison must be confident in hisrecommendation.
1. Compare and contrast the three options from the perspectiveof customer service. Which do you believe will provide the bestlevel of service? Why (Benefits and challenges)?
2. Compare and contrast the three options from the perspectiveof cost. Which one do you believe will provide the most economicalsolution for PPI? (Benefits and challenges)?
3. What types of functional and cost trade-offs will Denisonneed to analyze?
4. Which distribution option do feel gives PPI the bestopportunity for future success? Why?