POLAROID CORPORATION: EUROPEAN DISTRIBUTION SYSTEM
Polaroid planned to centralize inventories and distribution in Europe because it would save substantial costs and improve service quality. However, it lacked support from many European managers who objected to the plan due to following reasons: The central warehouse in Enschede, Netherlands: its capacity and service quality may not meet requirements from subsidiaries. In the past, some subsidiaires experienced poor services from this warehouse. Subsidiaries would lose flexibility to respond to local market changes. The financial benefits from the move (e.g. costs savings) were uncertain and unreliable. EU managers got used to having their own warehouses to control inventory outflows. Diminution in EU managers’ power and responsibilities.
Warehouse staff layoff problems: union activities and expensive severance pay. Large customers want local warehouses to meet their rush orders/needs. In addition, Polaroid was considering which option below is the best to implement the plan: Implement the plan for all subisidiaries at once; or
Implement the plan for one subsidiary first, then expand to others; or Outsource both warehousing and distribition to independant third parties. In either plan, Polaroid needs to gain support from European managers, improve capacity & quality at the central warehouse, and ensure the successful implementation of the centralization.
Recommendations and Analysis:
Do not implement the plan at once for all subsidiaries.
The plan still lacked support and trust from EU managers. Furthermore, the current capacity and service quality at the central warehouse failed to meet new requirements. It needed time to grow and improve. Choose UK to run the plan first.
First, UK manager gave strong support to the plan and was willing to join the program. Second, UK was a major market hence huge costs could be saved and if successful, it would set an example that persuade other...
Please join StudyMode to read the full document