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PRMM Motors: Logistics

PRMM Motors has been a popular engine company in Europe for several years, and it manufactures engines and components that range from engine blocks to gaskets. Its manufacturing plant has been in India for the past 10 years and ships the stock to its warehouse in Wolfsburg, Germany. Recently, the company has decided that it wants to reach the U.S. market because of increasing popularity of racing. It has approached SPI and explained the situation, and the company is looking for advice on the following:

Should it keep 1 warehouse in Germany or build an additional warehouse in the United States?

What type of shipping method should be used, and why?
What are cycle stock and safety stock? Should it have either?
What type of inventory management techniques could the company use?

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Solution Preview

Since the company wants to reach the US market, the company should also open a warehouse in the USA. The new warehouse in the USA will enable PRMM Motors to receive its shipments directly from India. This will save shipping costs. In addition, if the stocks are in the US warehouse deliveries can be made relatively quickly. Having a warehouse in the US will make PRMM Motors more responsive to customer demand in the United States. The Germany warehouse will continue to service the European market. PRMM Motors should have two warehouses, one in Germany and one in the United States.

The type of shipping method that PRMM Motors should use is containerized multi-modal shipping. The goods should be shipped in multi-modal ...

Solution Summary

The answer to this problem explains shipping and warehousing. The references related to the answer are also included.