Bloomex Company (Canada) Logistics Optimization

Bloomex: Optimizing Logistics and Supply Chain

Bloomex is one of the top companies in Canada that deals with arrangements that involve gifts and flowers (Ovchinnikov et al., 2011). It proposes its services through the modern global way of trading known as online shopping. Its customers have to access the online website and purchase orders which Bloomex then delivers within 24 hours heedless of where the client is located in Canada or not. Efficient delivery has added to the success of Bloomex to attain a higher competitive edge than its competitors. Further to fast delivery of products, the online website offers 24/7 client support through emails, live chat, and toll-free numbers hence ascertain customer satisfaction. Because of its good reputation in Canada, the company seeks to add another transhipment facility in Miami. Bloomex wants to increase its current supply and pinpoint a shipping center where the additional supply will be housed. These changes will help the company to meet the rising demand for its services and products.

Summary of the Case Study

Bloomex.CA Logistics Optimization case study highlights the company's current shipment areas that serve as warehouses and production facilities (Ovchinnikov et al., 2011). These areas are Calvary, Winnipeg, Vancouver, Ottawa, Montrail, and Halifax. The study also highlights locations where Bloomex gets its flowers. The company gets its supplies from local growers in South East Asia, South America, Florida, and Ontario. Global wholesalers in Holland are the major suppliers of Bloomex. Its current transhipments facilities are Vancouver and Toronto.
Dimitri Lokhonia, the company's logistics expert, wants to open another transhipment facility in Miami. A transhipment facility receives supplies which are then taken to other facilities. He seeks to analyze whether it will be profitable for the company to open a facility in Miami. Lokhonia wants to know the best shipment plan when transhipment facilities are opened. The company also seeks to determine whether the company will gain if the supply of items is increased and which location will be the best to receive those supplies.

Problem definition

Bloomex has three problems to solve based on the changes Lokhonia wants to incorporate. Firstly, how to distribute its products proportionally from transhipment areas to the production or warehouse facilities based on demand. Secondly, to know the gains that additional supply will bring to the company. Lastly, to establish the shipping facility that will accommodate the additional quantity.

Model Formula

Two tables (model 1.1 and model 1.2) were constructed based on exhibit 1 in the case study to answer the problems above (Ovchinnikov et al., 2011). The models take into account the number of boxes demanded per production facility and also factors in the supplies received from the wholesalers and local growers. The values allocated per transhipment area did not exceed its inventory availability. Each facility received the ordered boxes but only Winnipeg lacked two boxes which explain the need for additional supplies. The shipment costs are expressed in Canadian dollars per box. To get the transportation cost, unit cost to ship the bag to its respective facility was multiplied by the number of bags required in that facility. In the resource allocation sheet, zero indicates that the transhipment area has not been assigned the additional supply meaning there is no extra cost of supply.

Model Validation

The first sheet shows the number of bags assigned per transhipment area. This sheet helps to solve the distribution problem arising when Miami is added as a transhipment area. It also indicates the number of bags required as additional supply which is derived from differentiating the demanded amount per each facility with the inventory available. The distribution data helps to determine the transportation costs needed to ship the bags from the transhipment areas to each facility and hence the total shipping cost (Shapiro, 2001). With the total transportation cost, Bloomex can understand the savings or gains by adding Miami as a transhipment area.

Interpretation of Results

The analysis of the first production table shows that the total numbers of boxes demanded are 1182 while the inventory at hand is 1180 across all transhipment facilities. The company, therefore, requires two more boxes to be supplied to meet the demand in Winnipeg facility. Those two boxes are best housed in Miami area as it is much cheaper as shown in the resource allocation sheet.
Zero values in the production distribution table show that the facility has not ordered any boxes or the transhipment area is not supplying to that facility. Zero values in the transportation cost table indicate that there was no cost involved in the shipment of boxes to that facility (Shapiro, 2001). The total shipping cost, when Miami is included as a transhipment area, is 5855 with additional supplies of 5875. This cost shows that the company will save more than 17220 Canadian dollars which means it should go ahead with its plan of having Miami as a transhipment area since it will bring enormous gains to the company.

Conclusion

Bloomex was not sure whether having a transhipment facility in Miami was the right move. It also wanted to evaluate where additional supplies would be shipped to, and gains that would arise from these moves. The models used have factored each demand from the production facilities, the inventory in those transhipment areas, and transportation cost per box to those facilities. After factoring those values, the models have come up with a new product distribution plan with Miami as another transhipment area. The models show the gains the company will have indicating why it is the right move to take and also shows the allocation of additional supplies to the transhipment areas.

References

Shapiro, J. (2001). Modeling the supply chain. Pacific Grove, CA: Brooks/Cole-Thomson Learning.
Ovchnnikov, A., Samuel E. Bodily, and Tyler, J. (2011). Bloomex.CA Logistics Optimization. University of Virginia Darden School Foundation, Charlottesville, VA.

APPENDIX

Model 1.1 Product Distributions and Transportation Cost

Model 1.2 Resource Allocation of the additional supplies.