Question
BLM is a manufacturing company. They have 5 suppliers. Currently, each supplier delivers material to the BLM manufacturing facility directly. On average, BLM pays $500
BLM is a manufacturing company. They have 5 suppliers. Currently, each supplier delivers material to the BLM manufacturing facility directly. On average, BLM pays $500 for transportation cost for each shipment they receive. (i.e. 5 deliveries per week costs $2,500 per week). Table below shows the number of shipments by each supplier. These shipments are usually in small quantities (less than truck load LTL). The new logistics manager of BLM proposed a new method that might save total costs for BLM: consolidating incoming shipments. The plan is to consolidate 10 less than truck load shipments to one truck load at a public warehouse (rented facility) and ship the truck load to the BLM manufacturing facility. In this method, BML would spend $150 for each LTL shipment from the supplier to the warehouse, $2000 for a truck load shipment from the warehouse to the manufacturing facility, and $2000 weekly rental cost for the warehouse (including labor). Assume that you are the logistics manager at BLM. Analyze the current and proposed methods. Write a memorandum to the top management discussing the method that should be selected. Describe the advantages and potential problems of each method. less than 500 words
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