Michigan Liquor Control Commission - Research Paper Example

Shipment consolidation- small orders are integrated so that big loads can be carried in one carriage. Implementing shipment consolidation decreases the freight rates due to negotiation and bargaining power because of economies of scale. Freight rates are also dependent on the warehouse. The shipment consolidation and a consolidated warehouse decrease emergency deliveries. Value added services- the firm should implement an electronic scanning system and to replace error-prone paper-based information collection system; hence saving time in the supply chain.

Any increase in the cost of packaging the goods can be offset by a reduction in transit costs. Inventory carrying costs- The inventory carrying costs will reduce because the number of inventories stored at a central warehouse will be fewer than that stored at the regional warehouse. Moreover, consolidation enables the just in time system to be feasible; hence reducing inventories and cutting costs. Effect of third party/ private warehouse facilities on warehousing costs handling costs, storage costs and fixed facility costs- the third party provider will cause the overall costs of fixed facilities, handling and storage costs to reduce due to economies of scale.

The coordination work among the warehouse owners also reduces the administrative costs that include fixed costs. By consolidating multiple client freight, the transportation costs are also reduced. Decentralization- the firm should have a decentralized DPR where the products reach the customers fast through their supply chain. A centralized system requires more time before the products are accessible, and may lead to the groceries getting spoilt or rotten. Decentralized- decentralized customer relationship collaboration enables the firm get feedback faster and easier from their customers.

A centralized system may not be easily accessible for the customers. Decentralized- a decentralized LCS enables the