Performance Measurement & Process Outsourcing

You are to analyse the customer and product data provided in order to develop a more cost effective logistics service strategy for both customers and products. The service strategy needs to have as its goals both performance improvement and reduction in working capital.

The suggested approach is to undertake a Pareto analysis for the customer and product data in order to categorise both customers and products in terms of their contribution to profit. You are to identify the top four percent of customer/product transactions that deliver 64% of total profit, and develop appropriate logistics strategies for these key categories and other, less profitable accounts and products. Furthermore, you are to develop appropriate strategies for managing customer and product service levels based on analysis of ‘net sales value of customer account vs cost- to-serve' and ‘volume (by SKU) and profit contribution (by SKU)', respectively. Having undertaken the forgoing analysis, you are to incorporate your strategies into a plan to improve logistics performance and reduce working capital. For the purposes of this assessment, you can assume the data is taken from the retail industry and that all products are of equal importance to customers.

The total submission should comprise 2500 words. APA referencing guidelines are to be followed

Objective 1 [Word limit: 1500 words]
Using quantitative methods and analysis, review and evaluate
- Pareto analysis to develop customer profitability strategy where 4% customer contribute 64% of profit.
- Analysis of strategy on net sales value vs cost to serve.
- Analysis of product sales: Demand vs profit Contribution, SKU.

Objective 2 [Word limit: 1500 words]

Formulate a plan to improve logistics performance and reduce working capital. Formulate plan based on evaluation of Objective 1 analyses and strategies. Link strategies to performance improvements and reductions in working capital.