Plaza, the Logistics Park of Zaragoza Case Study Help
Introduction
PLAZA, a new logistics park in the boundaries of Zaragoza (Spain) is considered to be the largest logistics park in Europe. The logistics park Plaza was developed as a joint venture between public and private entities with the aim of creating a state-of-the-art logistics hub in a strategic location in Spain. The park offered a range of benefits, including a prime location near major transportation routes, high-quality infrastructure, and access to skilled labor.
Despite these advantages, the park was struggling to attract and retain tenants, and its occupancy rates remained low. The case describes the challenges faced by the park's management team in attracting tenants and growing occupancy rates, including competition from other logistics hubs in the region and the global economic downturn. The case also explores the potential opportunities for growth and development of the logistics park, including the possibility of attracting new types of tenants and expanding into new markets.
Problem Statement
The main concern of the company is how could it attract and retain tenants for a new logistics park in Zaragoza, Spain. Despite being strategically located near major transportation routes and offering state-of-the-art infrastructure, the park was struggling to fill its available space. Ultimately, the problem statement is how to develop a successful marketing strategy and value proposition for the logistics park that will appeal to potential tenants and drive long-term growth and profitability.
Situational Analysis
Option 1: Set up a DC in Zaragoza, Spain
Setting up a DC in Zaragoza will have lower inventory holding costs due to lower property and labor costs in Spain, a shorter distance from the port of Barcelona to Zaragoza compared to the distance from the port of Rotterdam to a distribution center in the same area. While logistics costs could be higher due to the longer shipping distance from Asia to Spain, higher fixed charges at the port of Barcelona compared to the port of Rotterdam, and higher transportation costs from the port to the DC in Zaragoza.
Option 2: Use an existing DC in Rotterdam, the Netherlands
Using an existing DC in Rotterdam could have lower logistics costs due to the shorter shipping distance from Asia to Europe, lower fixed charges at the port of Rotterdam compared to the port of Barcelona, and lower transportation costs from the port to the DC in Rotterdam. Whereas inventory holding costs could be higher due to higher property and labor costs in the Netherlands, and long distances from the DC to customers in Spain.
Relevant Cost for the Customers
In terms of the total relevant costs of options individually for a Plaza park customer, we need to consider the following cost factors:
Shipping cost from the Asian port to the European port is estimated to be €145 per TEU for shipping to Rotterdam instead of Barcelona. Cost of transport of a container from the port to a Europe warehouse, which includes entrance charges ranging from €750 to €850, with an average of €800 per truckload. Inventory holding costs at the warehouse are estimated to be 15% for Zaragoza and 20% for Rotterdam.
The calculated total relevant cost for the customers for the option of setting up a DC in Zaragoza has turned out to be 406905 while for the option of using an existing DC in Rotterdam, the total relevant cost is calculated to be 622080. Based on the relevant cost analysis, the option of setting up a DC in Zaragoza appears to be more financially viable compared to the option of using an existing DC in Rotterdam. This is because the relevant costs associated with Option one are lower than those associated with Option two.
Customer’s Conclusions
The customer's conclusions would change if the demand was more/less uncertain, the service level increased, the number of units per container changed, or the product cost increased/decreased. These factors would affect the transportation and inventory holding costs and, hence, the total relevant costs for each option. For example, if the demand were more uncertain, the customer might need to hold more safety stock, which would increase the inventory holding costs................
Plaza, the Logistics Park of Zaragoza Case Study Help
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