| dc.description.abstract | With highly competitive market environment, multinational corporations (MNCs) are expanding through business extension and resource consolidation. In recent years, logistics industry is also gradually moving towards the trend of mergers and acquisitions. The case company (Company C) of this study is a professional third-party logistics (3PL) provider, which had been acquired by a MNC under this wave. Since the acquisition, with the existing customer amplification and introduction of new businesses, existing storage facilities are insufficient to meet the increasing demand. Company C has to rent small warehouses nearby in order to accommodate the overflows from the two major distribution centers (DC). However, short-term leasing and scattered warehousing render increasing logistics cost. Moreover, with the expiration of the leasing contract of the current DC by the end of 2014, the manager has to decide whether to renew the contract with a 14.5% rental increment.
Facility planning, an important strategic decision for logistics companies, typically involves considerations of many cost factors (e.g., labor, transportation). Once the decision is finalized, it would affect the company’s operating costs and its competitiveness for years to come. Facility planning and assessment, therefore, are very important for 3PL management. In this study, a growing 3PL company has to provide not only the professional logistics integration services to the customers, but also to consider the ever-expanding facilities requirements from growing business. We propose a facility planning model considering various logistics costs in order to assess possible alternatives. Through a net present value (NPV) analysis and a multi-scenario approach, we identify the most appropriate facility plan under various business growth rates, and provide conclusions and recommendations to the management for their consideration in logistics facilities planning decision.
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