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Master Thesis 30Hp Fall 08 Fall 08 Master thesis 30hp Case study to locate the future Customer Distribution Centre and create a material management to handle e- commerce Authors: Chan William 890907 Stahrberg Christoffer 891214 Supervisor: Stokkedal Roger Examiner: Forslund Helena Semester: Spring 2014 Course code: 4FE05E Fall 08 Fall 08 FOREWORD Great thanks to BILTEMA and IKEA who made this thesis possible. Special thanks to Jönsson CIO of BILTEMA, Hansson CIO of Retlog and Andersson Process Developer of IKEA CDC, for their valuable experience and knowledge. Further the authors want to extend our gratitude to all other respondents that have made the empirical basis of this paper through interviews and observations. It is a privilege to test theoretical knowledge on a multinational company and try to support the establishment of a new business area with the help of a best in practice business. Without the openness and cooperativeness, this project would not have had the broad empirical basis. The authors also want to extend thanks to; the opponents, our supervisor Roger Stokkedal and the examiner Helena Forslund. The help, support and valuable reflections have contributed with different aspects and as additional motivation to finish the report. Växjö, Sweden 2014-05-28 ___________________ ___________________ Chan William Stahrberg Christoffer Fall 08 Fall 08 ABSTRACT Course: Master thesis in Business administration and economics, major of logistic, 4FE05E, VT14 Authors: Chan William & Stahrberg Christoffer Supervisor: Stokkedal Roger Examiner: Forslund Helena Title: Case study to locate the future Customer Distribution Centre and create a material management to handle e-commerce Background: Before BILTEMA’s decision-making in investing in e-commerce, many questions have to be answered such as market demand, expansion and other decisions, appropriate for the company’s existing operations and strategies. The importance of selecting warehouse location has the theoretical goal of profit and to support the overall business strategy of the firm. Some of the most suitable warehouse locations in Sweden are Halmstad, Linköping, Jönköping and Örebro. Besides warehouse localisation, material management is an important part to consider regarding the establishment of e-commerce and a new Customer Distribution Centre (CDC). The material management can be planned and outlined in different ways depending on the nature of the company. Purpose: The purpose is to find a suitable location in Sweden to establish a Customer Distribution Centre, for BILTEMA. The second purpose is to create a plan for the material management inside the future Customer Distribution Centre, for BILTEMA. Method: The thesis is bases on a qualitative and quantitative case study through semi- structured interviews, direct observations and benchmarking. Interviews with BILTEMA’s different management levels were made in the company’s headquarter. The authors also visited different department stores in order to gain an overall view of the company’s major sales channel and knowledge of the product range. Empirical data has been gathered from the chosen regions’ municipalities and government statistics in order to find a suitable warehouse location. A benchmarking at IKEA CDC in Torsvik was executed and the further gathered information regarding BILTEMA’s product range has supported the authors to create a suitable material management for the company’s future CDC. Conclusion: The authors deemed the expansion and the secured supply strategy equally important for BILTEMA’s future e-commerce orientation. A point system was developed in order to create a basis for decision-making and as such the conducted points indicate Örebro as the most suitable CDC location for BILTEMA, regarding opportunity for expansion, accessibility, as well as being located closest to the centre of gravity of all Nordic countries’ inhabitants. Furthermore our suggestion for BILTEMA’s material management plan consists of receiving, storage, order-picking and packaging. BILTEMA should not invest in an automated system and should mainly perform manual material handling, due to current insufficient demand for e-commerce orders in general. Fall 08 Fall 08 LIST OF CONTENTS 1. INTRODUCTION ........................................................................................................................ 10 1.1 COMPANY PRESENTATION .......................................................................................................10 1.2 BACKGROUND ..................................................................................................................................13 1.3 PROBLEM DISCUSSION ................................................................................................................16 1.4 RESEARCH QUESTIONS ...............................................................................................................19 1.5 PURPOSE ...............................................................................................................................................19 1.6 THESIS DISPOSITION .....................................................................................................................21 2. METHODOLOGY ...................................................................................................................... 22 2.1 SCIENTIFIC VIEW ............................................................................................................................22 2.2 SCIENTIFIC APPROACH ...............................................................................................................22 2.3 RESEARCH STRATEGY ................................................................................................................23 2.4 RESEARCH DESIGN ........................................................................................................................24 2.4.1 BENCHMARKING .........................................................................................................................24 2.5 RESEARCH ETHICAL CONSIDERATIONS ..........................................................................28 2.6 DATA COLLECTION .......................................................................................................................29 2.7 SELECTION OF RESPONDENTS ...............................................................................................31 2.8 ANALYTICAL METHOD ...............................................................................................................32 2.9 QUALITY CRITERION ....................................................................................................................35 3. WHERE SHOULD BILTEMA PLACE THEIR FUTURE CDC IN SWEDEN IN ORDER TO IMPLEMENT THE COMPANY’S E-COMMERCE?................................... 38 3.1 THEORETICAL FRAMEWORK ..................................................................................................38 3.1.1 QUALITATIVE FACTORS ............................................................................................................. 39 3.1.1.1 LABOUR AVAILABILITY ................................................................................................................................... 39 3.1.1.2 ACCESSIBILITY ........................................................................................................................................................ 39 3.1.1.3 CLOSE TO SUPPLIER............................................................................................................................................. 40 3.1.1.4 CLOSE TO CUSTOMER ........................................................................................................................................ 40 3.1.1.5 OPPORTUNITY FOR EXPANSION ................................................................................................................. 41 3.1.1.6 CLOSE TO OTHER INDUSTRIES AND COMPETITORS .................................................................... 41 3.1.1.7 ECONOMIES OF SCALE ....................................................................................................................................... 42 3.1.1.8 FACILITY RELATED COSTS ............................................................................................................................. 42 3.1.1.9 ENVIRONMENTAL IMPACTS .......................................................................................................................... 42 3.1.2 QUANTITATIVE FACTOR (CENTRE OF GRAVITY METHOD) ..............................44 3.1.2.1 CENTRE OF GRAVITY – ONE TERMINAL, SEVERAL CUSTOMERS ................ 44 3.2 EMPIRICAL FINDINGS ..................................................................................................................46 3.2.1 QUALITATIVE IMPACTS ............................................................................................................. 46 3.2.1.1 LABOUR AVAILABILITY ................................................................................................................................... 46 3.2.1.2 ACCESSIBILITY ........................................................................................................................................................ 51 3.2.1.3 CLOSE TO SUPPLIER............................................................................................................................................. 56 3.2.1.4 CLOSE TO CUSTOMER .......................................................................................................................................
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