VW Warehousing

1. Warehousing Strategy

2. Agenda
Introduction
Background
Challenges
Analysis
Conclusion

3. Introduction
Volkswagen's "Strategy 2016"
Canadian Warehousing Strategy
Key Issues
Advantages & Disadvantages
Factor-Rating Method
Recommendations

4. Background
One of the world’s largest car manufacturing companies
Nine brands sold and distributed in 153 countries
A new record is set
Deliveries increased in Canada
Aggressive five year growth plan
10% year over year growth in annual sales volume
Resource: Bortolussi, A. 2012

6. Challenges
An aggressive growth plan
Where to store the additional inventory to support the
growth
24 hour service level agreement
95% internal service level requirement

7. Analysis - Options
Expand existing
warehouse
Build or lease new
warehouse
Outsource to a 3rd party

8. Advantages/Disadvantages
Advantages Disavantages
Expand/Exis0ng/
Warehouse
Cost/less
Time/to/implement/is/
dependent
High/management/control/
May/affect/warehouse/
performance/
New/Warehouse
May/improve/customer/
service
Cost/more/than/op0on/1
Time/to/implement/is/long
High/management/control/
Terms/of/lease/is/long
Leads/to/higher/levels/of/
inventory
Outsource Implementa0on/is/fast
Cost/more
10Gyear/contract

9. Time and Cost of Options
Expand Existing
Warehouse
Lease a New
Warehouse
Outsource
Cost $80 per Sq. Ft. $120 per Sq. Ft. $120 per Sq. Ft.
Time 6-8 months 2 years Immediately
Terms 10-years 20-years 10-year Conteact
Management
Control
High High Low
Resource: Bortolussi, A. 2012

10. Factor-Rating Method
/ /
Scores/(out/of/10) Weighted/Scores
Key/Success/
Factors
Weight
Expand-
Exis/ng-
Warehouse
New-
Warehouse
Outsource
Exis/ng-
Warehouse
New-
Warehouse
Outsource
Can/Reduce/
Maintain/
Opera0ng/Costs
0.2 5 2 8 1 0.4 1.6
Can/Successfully/
Support/Growth/
Plan
0.3 7 8 7 2.1 2.4 2.1
Streamlines/
Process
0.1 8 7 5 0.8 0.7 0.5
Improves/
Customer/
Service/Levels
0.3 5 7 7 1.5 2.1 2.1
Can/Gain/Access/
to/Technology/
Not/in/Company
0.1 5 5 8 0.5 0.5 0.8
TOTAL 1 30 27 36 5.9 6.1 7.1

11. Conclusion
Advantages and disadvantages indicate moving the
location of the facility to a new area and larger
warehouse
Factor-Rating indicates that outsourcing would be the
most viable option for this rapid growth plan
Inconclusive results indicate that Executives would
need to provide their input in order to make the best
decision
At this time, we recommend additional feedback from
key individuals

12. Thank You