Now that we have completed the economic analysis, we should now consider the opportunities and/or risks of both plans. We should also consider the plans’ possible impact on revenue.
Information that can be shared if inquired by the interview:
Advantages of 1 center
Economies of scale: less complicated management system Having all the employees work together helps to build company culture. Lower inventory levels are needed. With one big center, deviations in demand across the country can cancel each other out. With 5 centers, each center must carry higher levels of inventory to account for deviations in demand within their own region.
Advantages of 5 centers
Reduced inventory risk. If there is only one center, the company’s inventory can be completely destroyed by events such as fires or floods. Inventory is closer to the client. This results in shorter processing times and increased flexibility. (Clients can make smaller orders or order special product combinations.) This leads to better relationships with clients and increases client loyalty. Centers can learn from each other and copy the best practices developed at other centers.
Since this is a candidate-led case, the candidate should drive the case from start to finish.
This case focuses on Ooze’s distribution strategy.
Sooner or later, most consumer goods companies will face similar problems.
Financial aspects mostly influence the decision.
Nevertheless, the interviewee should not forget the risks and/or opportunities (which are often very hard to financially quantify) that are associated with each plan.