Polaroid Corporation: European Distribution system|
Logistics Management system|
Prof. S. Venkatramanaiah|
Group 2 |
AludaiyaarasuAsvin VMohan M S Prabu PRajasekar VijayaraghavanSrinivasan DK.M.Venkatraj|
Polaroid Corporation, headquartered in Cambridge, Massachusetts, was a company marketed a wide variety of instant photographic products for consumers and industries. After the deregulation of US motor industry consolidation of the warehouses in US took place, which resulted in an improved service level and reduced costs. Overwhelmed by the consolidation results, the management wanted to consolidate the subsidiaries’ warehouses in the Europe to a direct distribution. There were around Twelve European subsidiaries each where headed by general manager. Of that France, Germany, Italy and United Kingdom together have accounted 70 – 80% of the sales.
The Polaroid had three primary production areas in Vale of Leven, Scotland, Enschede, Netherlands and one in Cambridge itself. The site at Enschede also served as a central distribution site and export center known as International Distribution center (IDSC) that served all the international subsidiaries. Each European subsidiary had their own warehouse to cater as a buffer and for customizing the orders, special packaging and rush orders. As the measures for the economic integration of the European Community also made the direct distribution as an impetus option which could be used to save the transportation cost by 25%.
But there was a resistance by the general managers of the European subsidiaries because of various problems like layoff, Buffer reduction, depriving the responsibility and above all, they felt that IDSC management team didn’t had the management skill. They were also skeptic about the outcome after implementation. Tom carrol, Director of International Distribution and customer service had different options before him. Like total handover to a third party or implement the direct centralized distribution. For Direct distribution, in the first place, he was contemplating in picking the first subsidiary to be centralized among the different options of Austria, UK, Italy and Germany Case Analysis:
For effective implementation of Centralized warehouse system in Europe for reducing the operational cost in spite of mounting opposition from the General Managers of European subsidiaries Options:
Following are the different distribution system present to serve the European subsidiaries from Enschede, 1. To upgrade present IDSC warehouse to handle direct distribution to all the European Subsidiaries 2. To have a central ware house in Enschede and two satellite regional warehouse in southern France and a facility in Denmark 3. To allow a third party logistic provider to handle the direct distribution and warehousing in addition to the transportation service Reasons for opposition to plan:
Following are the different concern raised by the General Managers of All the European Subsidiaries, 1. Doubt on the capability of the ISDC in Encshede to handle the requirements of all the European subsidiaries 2. Concern on lose of flexibility to respond to changes in the market which the subsidiaries considered the reason for their success 3. There is no financial benefit seen in reducing the inventory level as the subsidiaries are not charged for the inventory they hold 4. Doubt on whether the cost savings quoted could be achieved 5. Loss of warehouse was seen as substantial loss in their power 6. Subsidiaries considered the quality of Enschede as weak 7. Will lose a buffer between central distribution system and the customers 8. ISDC blamed for inbound transportation delays
9. Country specific objections like,
a. Idiosyncrasies of trucking industry in Italy would make it difficult to do business differently b. Belgium and Netherland...