Michigan Liquor Control Commission - Case Study Example

? Michigan Liquor Control Commission Michigan Liquor Control Commission Several alternatives can be adopted by the Michigan Liquordistribution; they can opt for decreasing the number of their store houses and retail stores after conducting proper investigation. They can even decrease the transportation cost by directly supplying the goods to the retail outlets thus decreasing the number of state based stores. But downsizing may experience confrontation from the end of the labor unions as several workers will end up losing their jobs. The commission can even look at privatization as an option thus resulting in the decrease of the involvement of the state in the liquor industry. There are fewer chances that the state would take this option due to the heavy revenue earned from this sector. The money earned in revenue from liquor distribution and from the taxes applied on them is used for other welfare programs operated by the state. The state can invest in instituting proper information systems in order to identify issues in logistics and in order to meet customer demand in a better way. This implementation can be supported with increased supply of information between the retailers and the suppliers and thus will lead to better management of inventory and will lead to heavy reduction in cost. The state can even conduct bargaining with the suppliers as well as the retailers and distillers. Distillers store the supplied liquor and transfer it at higher prices to the sate stores and then the stores sell it at a much higher price. Thus the state can invest in MIS system to reduce the quantity of inventory managed by the distillers and negotiate with the state stores to charge lower markup in order to increase sales and can decrease the number of licenses it is issuing to retailers. 2. The best option available to the state for distilled liquor distribution is investment in proper management information system. A proper MIS system will increase the efficiency of distribution. This system will even decrease the quantity of liquor that is stored by distillers. A proper supply chain backed by management information system will report to the state about the needs of the consumers. Thus the amount of liquor supplied will be in compliance with consumer needs and extra storage cost will decline. The distillers will not have to store unpurified liquor for a longer period of time, thus they will charge lower storage cost. Decrease in storage cost will result in decline in the amount at which state stores obtain distilled liquor and thus they will sell it at lower prices to the retailers and the end customers will be able to obtain it at a much lower price. The problem with this issue is the implementation of change which may not be preferred by those who are inexperienced and do not have the proper training to work with the new change. Another cost will be the high cost of implementing a MIS system. The state cannot privatize the distribution of liquor as it will result in loss of heavy revenue. During the period of 1992 and 1993, the state earned total revenue of over $515 million through distribution of liquor (Bowersox, 1996, p.458). Secondly, privatization will result in reduction in cost of operations as private ownership will aim at gaining higher profits and thus they may close several second tier stores which will result in loss of jobs and this will not be liked by the unions such as the UAW and they might take up strike as an option, thus resulting in complete stoppage of the operations. 3. Several considerations might be of great amount of importance and are needed to be taken into consideration while making any changes. Previously the state had adopted prohibition policy in order to restrict the activity of bootlegging but still bootlegging continued to operate in the region of Michigan. The state realized that prohibition was not a good idea and they took the industry under their own control and ended up earning heavy amount of revenue and the heavy revenue it earned due to its participation continues to be the reason due to which the state has not taken up privatization as an option. Another important consideration is that druggist became a heavy political influence when control was implemented in the industry, but now they have lost their power, still there are various small sized retailers who enjoy benefits as the state has implemented single policy for all retailers. Another important point that needs to be taken into account is that even if the industry is privatized, lower prices cannot be ensured as private ownership results in profit seeking behavior and thus prices might continue to be high. But if competition between private owners takes place, they might compete on the basis of prices in order to remain in operation. Another important point of consideration might be the high paying jobs that the unskilled labor force will lose due to privatization. 4. The issue of whether social conflict exists or not if the state finances education through revenue earned from distribution of liquor depends on individual’s opinion. Education is important for the society; it enables the members of a society to earn a living for them and to think in a positive manner thus resulting in decrease in crime rate and maintenance of the society’s smooth operations. If the government does not finance education through revenue earned from distribution of liquor, the state may have to charge members of the society for education and several individuals may be not able to afford this important aspect of human development. 5. While creating a commission report, all the concerns and the objectives stated by Joseph will need to be considered and made part of the report and method to address concerns and achieve objectives need to be added to the report. Identification of the issues and alternative solutions will need to be taken into consideration and which option will best solve the state’s issue will be needed to be addressed in the report. References Bowersox, D. J., & Closs, D. (1996). Logistical management. London: McGraw-Hill. Read More