Reference no: EM132237938

Logistics & Supply Chain Management Assignment -

Case Study - Patties Foods distribution network project Australia

Patties Foods (Patties) is a publicly listed company on the Australian stock exchanges that has its roots in a family business, developed with a passion for quality and customer satisfaction.

Patties is the largest manufacturer of pastry pies in Australia and is based in Bairnsdale, a town in regional Victoria approximately four hours' drive from Melbourne. Its brand portfolio includes Four 'N Twenty, Herbert Adams, Nanna's, Patties, Wedgewood and Snowy River. The company has expanded the business to include frozen fruits in the Creative Gourmet and the Chefs Pride ranges. Patties products are available through retail, private label and food services distribution channels.

The Factory operates seven days a week, producing approximately 400 pallets of product a day. The Factory has a small staging warehouse that holds 500 pallets. From here the product is distributed to three separate picking warehouses, located in metropolitan Melbourne; these are operated by three storage and distribution service companies. Each picking warehouse provides a national service for either the retail, private label or food service channels.

Off-peak production volume is approximately 1700 pallets a week; however, in peak seasons this can increase by almost 50 per cent, leading to the need for overflow external warehousing near the factory in Bairnsdale.

A new group manager logistics (GML) has joined Patties with an initial task to develop a solution for this problem. The GML has assessed the situation and validates senior management's belief that Patties needs to redesign its distribution network. To facilitate this, a plan has been developed to reduce the number of LSP-managed warehouse in Melbourne from three to one and build a 10,000-pallet freezer warehouse on the Bairnsdale manufacturing site.

The design of the new freezer has a 5700-sqm area (including staging and docks) and seven levels of racking. The building is north-facing, with stock entering the site from the factory via the south-western corner of the building. It is to be planned and operated using a commercial-off-the-shelf(COTS) warehouse management system (WMS), which replenishes the new picking warehouse in Melbourne, coordinated by the newly created role of inventory controller.

For operational purposes, it has been agreed that 85 per cent utilisation should be considered a full warehouse. It is also part of the planning criteria that vehicles need to be loaded or unloaded within 60-minutes windows in order to accommodate the safe operating procedures for freezer warehouses.

The total upgrade to the business over the course of three year is expected to require an investment of $22 million by the company. This will increase the production capability, with additional pie manufacturing lines and the development of a gluten-free manufacturing area, in addition to the new-on-site freezer warehouse and distribution network.

Questions -

1. Identify the current logistical challenges faced by Patties Foods. Discuss the following area:

a. Location.

b. Operation hours.

c. Vehicles loading/unloading.

d. Managing staff's expectation.

e. Managing stakeholders' interests.

f. Contracting for raw and packaging materials safety stock holding.

g. Construct freezer warehouse at the Bairnsdale.

h. Commercial-off-the-shelf (COTS) warehouse management system (WMS).

i. The role of inventory controller.

2. Discuss the target level of utilisation in the new warehouse. What should that level be in your view? Explain the rationale behind your decision.

3. Given that the operation has seven-high racking within a freezer environment, what technological solutions might Patties consider to aid facility management?

4. Explain the cost savings you anticipate with your design to double the size of the warehouse. In what areas do you expect a cost increase?

Note - Description: Question 1 answer is 1-3 lines. Q2-Q3 answer is 3-4 lines. Q4 answer is 5-6 lines. Doesn't need to write long answerers, get the point.