Problem
The Distribution Director at Company X, a subsidiary of an international pharmaceutical corporation, found themselves under strong pressure from the company’s board, which had decided that it was necessary to reduce the number of regional warehouses maintained by the company across the country. Warehouse C was the first designated for liquidation (the contract with this warehouse was soon to expire).
Distribution practice
The distribution system for Company X’s products was largely based on cooperation with public warehouses. Company X used the services of 37 regional warehouses, of which 33 were rented and four were owned by the parent company.
In no case did Company X lease the entire warehouse space. The lease agreement was negotiated every 12 months.
In all cases, a uniform system of one-time fees applied for every 100 pounds of goods delivered to the warehouse. Additional payments resulting from damage to goods or telephone bill charges were settled separately.
For every 100 pounds of weight over the limit set for a given month, a small penalty fee was charged.
The article comes from the magazine “Logistyka” 2002/4.