- Published: Wednesday, 11 May 2016 08:43
- Written by Rodney
Describe the nature of CPDW problem
Determination and implementation of appropriate performance metric that would translate into financial success and indicate real financial situation of the company were the main problems for the CPDW. It is essential for a logistic service provider to appropriately determine performance metric because of associated functional complexity (Coyle, Langley, Gibson, & Novack, 2012). Current space utilization based performance metric was giving wrong picture of the overall performance and financial condition of the company. The logistics facility was completely filled with pallet-loads of glass from local glass manufacturer. The utilization of the storage space went beyond original estimates of 99, 500 square feet to 110, 000 square feet. The increased space utilization was supposed to yield increased profitability but the company could not realize expected profit. The reason for the problem is obvious. Because of the low ceiling height of the facility, the distribution and warehouse facility is not appropriate for storage services. Therefore, the warehouse is likely to result maximum yield if it can be used for mix logistic services including repacking, order fulfillment, and reverse logistics. The pallet-loads of glass were using the space as storage house. Instead of piling up because of low height of ceiling, they were crowding the floor space inefficiently and leaving no spaces for other services or even moving the pallets. The financial performance of the company was reflecting the inefficient use of the space. CPDW is failing to reach break-even point.