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DEP is efficient with order collection and production, but builds unnecessary delays in warehousing and shipment/distribution because of an attempt to gain economies of scale. There are sometimes delays in production, because various chemicals may be out of stock under DEP’s current supplier arrangements, as well their raw materials policy.
The risk of recommendation 2 is loss of economies of scale, communication difficulties with 3PL providers (loss of control), and a loss of job security for DEP warehouse and trucking stuff.
The costs of this option may prove to be excessive. The risk of recommendation 3, which is independent of 1 & 2, is that the finished goods inventory costs may be excessive. This may also be risky if orders change.
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