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Scm 210 – Intro to Logistics / Supply Chain

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Supply Chain Management: CEO Decision on West Coast Expansion
Yunior A. Espinal
Colorado Tech University
SCM 210 – Intro to Logistics / Supply Chain
May 1, 2015

Supply Chain Management: CEO Decision on West Coast Expansion
Section I: Introduction The main pro for having multiple distribution centers and shipping locations across the U.S. is to have the ability to meet customer demand at all major locations. Other pros include lowering the transportation and freight costs to diverse customer locations. Reducing the travel area when establishing multiple distribution centers and shipping locations lower transportation costs. The expectation is that multiple distribution centers will help to lower the time frame for customer servicing by meeting current customer demand. Effectively, linking demand with inventory (Fortna, n.d.). Intuitively, cons include the cost of land, buildings, labor, and equipment, for the development of multiple distribution centers and shipping locations. The rate of domestic sales for each region should increase faster than the rate of cost of operations for each regional distribution center. The benefit of having more than one international distribution center is to manage more effectively the distribution of international sales. Cons include the higher cost of labor (Blackerby, 2003). Cost of labor is reflective of the underlying exchange rate of the euro/USD or 1 euro = $1.50. The cons of an international shipping location instead shipping from the U.S. manufacturing warehouse are the increase in labor cost.
Section II: Decision-Making The ability to maximize profits and minimize costs is imperative to the decision-making process. The West Coast customers are currently satisfied with paying the local freight cost of shipping. Therefore, the benefit of establishing a West Coast distribution center or combination manufacturing and

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