distribution game Essay

Submitted By krishnapalla
Words: 703
Pages: 3

East Coast Oil Company (ECOC) is a privately owned company specializing in the creating of fragrance oils, essential oils, massage oils, natural herbal extracts and flavor compounds for use in fragrances, household goods, air and personal care. Established in 1968, the company has emerged as one the industry's leading, dynamic and influential companies.
With an offering of over 500 varieties of high quality fragrance oils we also offer select designer fragrance oils. Our oils are used for candle making, soap making, bath and body lotions, incense oil burners, sachets, and massage oils, amongst many other products .We stock nearly 60 essential oils which are only 100% pure and are specially imported from all over the world to service our wide customer base.
Currently our headquarters is based out of Roanoke, Virginia, USA. ECOC has a global support network with representatives and agents in various regions across, Europe, Asia, Russia, North & South America, the Middle East and Africa. With increasing sales revenue overseas our sales force cover more than 70 countries worldwide, and our oils are well placed in the market with stocking distributors to meet the local demands of our customers. ECOC believes in investing in their employees and valued worldwide partners (agents and distributors) by periodically visiting worldwide sites and provide training and supplemental marketing material.
As East Cost Oil Company continues to grow, the company strives to offer high quality oils and outstanding customer care to its network of consumers.

1. Transportation costs: Transportation costs were reduced by choosing the carriers that offers the minimum costs by scheduling the shipments in advance and ordering at least breakeven quantity to take advantage of the quantity based pricing offered by carriers. We have also minimized usage of the Air cargo and premium carriers APL-CON and CHR logistics and used them only in scenarios where we had a late shipment or sudden increase in demand. There is one time Carrier relationship management setup fee of $2000.We have saved this cost by using limited number of carriers repeatedly over the periods of 52 weeks.
2. Inventory: There is a 28% Inventory holding cost per SKU unit per year for DC and 3PL inventory and 20% holding cost for in-transit inventory. By keeping low closing inventory we have reduced the inventory holding costs. We have reduced the hidden damage by not choosing the transportation carrier that have history of damage and avoiding 3PL storage to limit the damage in moving the stock from DC to 3PL facility.
3. Storage & handling Cost (Warehouse and 3PL) and holding cost: By improving the forecast the closing inventory levels were reduced and thus reducing the warehouse storage costs ($0.04 unit/week) and holding costs. In cases where we have maintained more safety stock to meet the unanticipated demand and special orders, we have ensured that the closing stock doesn’t…