PRMM MOTORS



Introduction3

Discussion4

Is an additional warehouse in the United States needed?4

What type of shipping method should be used, and why?5

What are cycle stock and safety stock? Should it have either?5

Cycle stock5

Safety stock6

What type of inventory management techniques could the company use?6

Conclusion7

References8

PRMM MOTORS

Introduction

PRMM is a popular engine manufacturing name in Europe from many years. The company mainly focuses on communicating the assets of internal combustion that mainly includes engines and its component ranges from the engine blocks to gaskets. The company has installed its manufacturing facility in India from the past ten years and has settled its warehouse in Wolfsburg Germany. The company is following the practice of manufacturing the products and then shipping the stock to its warehouse for distribution in Europe. PRMM Motors has developed a 'Go Global' strategy for the year 2013 and wants to explore the US racing car market and is planning to manufacture the racing car engines and its components due to the increasing popularity of racing cars in US. Leaders in Car manufacturing had already explore the market segment and are producing the premium quality product in order to satisfy the customer needs. For the concern PRMM asked SPI for the advice to develop an advisory plan for the firm that answer their all the possible concerns regarding their facility expansion, warehouse, distribution centres and the shipping time and procedure required. The advisory develops a detailed plan for PRMM Motors that answer all of their relevant concerns that are thoroughly discuss in the paper in the form of questions asked by the PRMM Motors. PRMM provides the necessary data for efficient solution that includes the size of the market they are planning to capture. What is their production capacity and what capacity expansion they have planned? Average production and shipping time they have experienced? There annual sales in units? Order cycle time? And last but not the least the statistical data of the market research of car racing market segment of US.

Discussion

After the detailed analysis of the case of PRMM Motors, the SPI suggested the following solutions.

Is an additional warehouse in the United States needed?

The first and the major concern of PRMM Motors was about their warehousing. Since they planned to enter a new corner they must have conduct a market research on the segment and have already planned their financial and production capacity needs and resources accordingly. In order to mark a decision for an additional warehouse in US the firm is required to conduct some more analysis. SPI advice to find out the total set up cost of warehousing in US, distribution time, Order time and Cycle time, average shipping time for replenishing the stock in US and then compare it to the results if the activity will be headed from the Wolfsburg warehouse. The company also guided them with the option of outsourcing. The main factor to consider for an additional warehouse is to keenly observe the product order cycle. If the company can entertain the product availability within the order cycle ...