Manufacturing Business Case study

Part oneThanks to strong demand for their premium water bottles, EB has outgrown their current facility inWinnipeg, MB. For ten years they have operated out of their single location that housed their offices,manufacturing facility, and their warehouse. The facility is 200,000 square feet and has 75,000 squarefeet dedicated to manufacturing, 75,000 square feet to warehousing, and 50,000 square feet to officespace. The facility is leased from a commercial real estate corporation and the current lease expires intwelve months. EB’s warehouse is setup to accommodate standard pallets (48 x 40) in ten rows of steelracking with ten foot wide aisles between the racks. The racks do extend four pallet positions high. EBpurchased these racks second hand from a local supplier when they were establishing the warehouse. Allof the product is palletized coming from manufacturing and EB owns three forklifts and two manualpump trucks. One of the forklifts is used as a spare in case one of the other forklifts isn’t working. All ofthe forklifts are less than two years old and aside from routine maintenance, they haven’t had majorbreakdown issues yet. EB operates a two 8-hour shifts per day for both production and warehousingbetween 7:00 am and 3:00 pm for the first shift and 2:30 pm and 10:30 pm Monday to Friday.Manufacturing has requested additional room for a new set of production machines to increase capacityhowever this would require taking almost all of the space allocated for the warehousing operation. EB hasadvised their commercial landlord that they are considering expansion and taking on a new warehousethat would allow for manufacturing to expand. The commercial landlord provided two potential optionsfor buildings that are within one kilometer of their current facility. The first option is a 100,000 squarefoot warehouse that could be leased and privately operated by EB. The second is an option to use a publicwarehousing that is operated by a separate tenant of the commercial landlord. In this space, the publicwarehousers has indicated they have up to 100,000 square feet that they could dedicate to EB and wouldcharge them a flat rate for the storage area each month and then separately for the amount of producthandling that is required.You have been asked to prepare a preliminary report that will detail the advantages anddisadvantages of expanding their warehousing operation to either a new privately operated warehouse orinto the public alternative. Also, management is interested in any way that they could optimize theexisting storage area possibly to provide more room for manufacturing.Specifically, you have been asked to:1. Describe the advantages and disadvantages of the two new warehousing options.2. Discuss potential materials handling strategies for reducing the amount of space that the existingwarehouse operation occupies within EB’s building.Business Case Assignment Part two:As a medium sized company, EB has relied on its internal office staff to manage many functions beyondthe job that they were initially hired for. One area that they have not yet hired a dedicated individual for ispurchasing and the responsibility for purchasing products and services is done by the individual closestinvolved in the activity. For example, the Director of Operations is responsible for purchasing rawmaterials and you as the Director of Logistics is responsible for purchasing the transportation-relatedservices. Since their inception ten years ago, EB has used the same TL provider. In the short time that youhave been with EB you have witnesses some issues around missing pickup appointments, incorrectlycompleting documentation, and invoices that are not correctly billed. You suspect that there are carriersthat may be able to provide better service that what you have been experiencing and in the last seniormanagement meeting, you suggested that EB should investigate other carriers that may provide betterservice. The CEO of EB welcomed the idea and encouraged you to proceed with looking at new carriersbut underlined the importance of not spending any additional money if possible over the rates they arepaying today. The CEO explained that whatever decision is made regarding the warehouse expansion, itwill need capital to pay for and all departments should seek ways to reduce cost or at least not increase itover the short term.At the same management meeting, purchasing in general was discussed deeper and you alsoshared your concern that the organization doesn’t have an ethical purchasing policy. You provided arough estimate that within the office there are probably ten people that routinely purchase goods andservices. This ranges from large spends on raw materials, to smaller but still significant spends on thingslike transportation, office equipment, software, and vehicle leases for example. It is common that mostsuppliers visit the company around holidays and provide small gifts to the employees that they interactwith and it is normal to hear of employees attending dinners and sporting events with suppliers. You offerto provide a basic framework of an ethical purchasing policy that could be adopted for the entire companyand the CEO welcomed your idea.Following the meeting, the CEO has asked you to prepare a preliminary report that will detail the methodthat you will use in qualifying a potential new supplier of truckload service and consider a series of areasthat an eventual ethical purchasing policy would need to include.Specifically, you have been asked to:1. Detail the factors that you would use in comparing truckload companies against each other anddevelop a proposed weight or ranking of the factors according to what you consider to be their level ofimportance in selecting a new carrier.2. Consider and discuss the potential areas that a new ethical purchasing policy needs to address. Theseinclude: a) the rationale for why EB should have a corporate ethical policy, b) who the policy shouldbe protecting, and c) what ethical criteria should guide decisions on ethical conduct. The CEO is notrequesting you develop the actual policy at this time, rather consider the specific areas and discusseach in detail.

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