Norsk is a Danish producer who produces dairy products with five subsidiaries in

Question

Norsk is a Danish producer who produces dairy products with five subsidiaries in EU countries and has a large network of distributors in North America. The company currently decides to redesign the distribution network in Scandinavia where 140 warehouses have turned into pure stocking points, while administrative activities have been concentrated in 14 new regional logistics centers and quantitative forecasting data has been centralized in corporate headquarters. List and classify decisions faced by Norsk management in a redesign logistics system.

Explanation / Answer

Two of the most important factors will be:

Any logistics decision making involves the above two parameters. Higher service levels requires a relatively distributed decision making, higher logistics costs while centralization and lowering service levels may save costs. Hence, a trade off is a challenge.

Product category also decides logistics decision making. A product category like dairy will require freshness of products, faster movement, and high service levels. Any stock outs means the demand is lost or it will go to a rival product.

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