Reference no: EM132856034

1) Distribution Network Design

Aldi has become one of the most successful grocery retailers in Europe and Germany. They were able to offer lower prices than other retailers at a (presumably) good level of quality, which gave them a competitive advantage.

a) Please explain how their assortment planning, purchasing policies and distribution network contributed to this competitive advantage and their success in the past (i.e., 10-20 years ago).

b) In recent years, Aldi has changed its assortment, e.g., they are now selling products from well-known brands, they are selling organic products and have, overall, a larger assortment of products. Please explain the impact this change has on the distribution network and distribution processes of Aldi. Which problems does Aldi now face compared to their "old" model (discussed in a))?

c) Although it has not happened so far, many experts believe that - in future - the share of online grocery shopping will increase and fewer people will shop at traditional supermarkets. In the UK, a "pure-play" online retailer has been quite successful ("Ocado"). Please describe the distribution network of a "pure" online grocery retailer who offers only home delivery. When is it profitable to distribute groceries online only? What are the cost advantages and disadvantages in comparison to traditional retailers like Aldi or REWE?

d) In Germany, REWE is expanding its online grocery business. As one of the largest grocery retailers REWE now operates its traditional stores and also has a (growing) online channel with home delivery. Please explain the design of the distribution network in their "hybrid" model. What are their distribution advantages and disadvantages compared to traditional retailers (without online delivery) and pure-play online retailers?

2) Multi-Stage Network Design

A leading German manufacturer of paint wants do redesign its supply chain. Currently, it has three factories that can manufacture all of its products. One in the south of Germany, one in the north, and one in the east. The company has six warehouses in Germany. These warehouses receive the products from the factories and distribute them to the customers in 20 different sales regions in Germany. The manager of the company wants to keep its three factories, but does not know if the number of (six) warehouses is correct and whether they are in the right locations. Assume that you are an external consultant to the company who will carry out an extensive project to determine the right number of warehouses and their locations.

a) Please provide a step-by-step approach on how you would try to solve this problem. Explain which data you would need from the company, and how you would proceed in obtaining a recommendation.

b) To solve the company's problem, you want to use two interrelated models: the continuous location model and the warehouse location model. The manager has never heard of these two models. Explain the two models and how you would use them in your analysis. Develop a graphic to illustrate appropriately, how the two models are interrelated (i.e. which model you use first, which data of one model is used for the other, etc). You do not need to provide an explicit mathematical formulation of either one of the models; it is sufficient to explain the objective function and constraints verbally).

3) Transportation Management - Strategic Fit

a) Explain how your company's supply chain strategy and the mode of transportation depend on each other and draw a figure that supports your arguments.

b) Explain why different companies may choose a different transportation mode mix although they transport the same product.