It will also reduce the safety stock levels at DC which will take care of huge inventory issues they are currently facing. But in the process of shifting localisation process from manufacturing to DC, few prerequisites are to be considered. Developing the capabilities of DC to support localisation activities. Developing or installing new facilities at DC to support localisation activities. Developing new packaging techniques to ship the product from US to Europe and using the same package for final product. Developing Skilled man power to support localisation and Quality checks as well. Standardising the activities of DC’s to include localisation SOP. Developing local suppliers for procurement of materials required for localisation. Considering the potential benefits, that this change can bring to the company, I think it is worth in investing the above points mentioned rather than developing a sophisticated forecasting technique or using air freight or investing in a new factory in Europe.
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- Spring '14
- Standard Deviation, risk pooling