LUSH - Business Consulting Project

Project Details

Project Client: LUSH
Project Description: Expansion Feasibility Study
Students: Aida Esmaili and Chelsey Bogaczewicz
Term: Spring 2014
BCIT Program: International Business Management

This project involved the student team preparing a feasibility study for LUSH Cosmetics of servicing the US market using a warehousing and distribution facility in the US and providing recommendations based on findings.

The purpose of the project was to provide recommendations to LUSH based on the feasibility of servicing all United States retail locations with sundry stock in a more time efficient, cost efficient and sustainable way. Currently, LUSH believes there is potential for improving these metrics for their distribution to the US stores. Based on available space (80-100 pallets), and whether LUSH should operate using one, two, or no distribution centres.

The opportunities addressed in this project include: decreasing transit time for stores located in the US by delivering goods in no more than 3 days, improving service levels, reclaiming warehousing space in Vancouver and Toronto facilities, and potential savings on freight costs through route optimization of US supplier.

The student team analyzed three possible distribution scenarios which includes; one central distribution center, two distribution centers located on each US coast, and keeping operations in Canada as they are presently. After conducting a cost-benefit analysis and researching the advantages and disadvantages of each scenario, the team recommended using one central location to serve LUSH’s US retail locations.

The team conducted an in-depth analysis to discover which state(s) best suit LUSH’s supply chain needs. After researching industry reports regarding US distribution site selection, logistics “hot spots” in the US and contacting industry professionals with knowledge of handling distribution in the US, the team recommended Missouri as the best fit location for distributing from one central location.

The student team contacted various 3PL providers in the United States that matched LUSH’s criteria provided by the client. The criteria included cost effectiveness, low transit times, green initiatives, and future capabilities for expansion. The student team recommended Smart Warehousing (a 3PL company location in Kansas City, MO) for LUSH to use as their US distribution partner.

If LUSH decides to implement the recommendation made by the student team, the benefits to be gained include; lowering transit times of delivering to US retail locations from 5 days to 3 days, warehouse cost savings of $5,156 per year, and reclaiming space in their Canadian warehouses which are currently running out of space.