An automotive company distributes service parts through a global warehouse network. To increase customer fill rates without decreasing return on assets (ROA), which of the following actions should the company take?

The goal is to increase customer fill rates without decreasing Return on Assets (ROA). ROA is calculated as Net Income / Total Assets. To maintain or improve ROA, any increase in assets (like inventory) must be avoided. Cross-docking is a logistics strategy where inbound shipments are sorted and directly loaded onto outbound trucks without being stored in the warehouse. This practice significantly reduces or eliminates inventory holding, which lowers total assets. By speeding up the flow of goods, it also improves product availability and delivery times, thereby increasing customer fill rates.

A. Increase the average order cycle time: This would worsen customer service and likely decrease fill rates, directly contradicting the primary objective.
B. Increase the number of rented warehouses: This would increase operating expenses and inventory assets, negatively impacting both net income and total assets, thus decreasing ROA.
D. Implement vendor-managed inventory (VMI): While VMI can reduce a company's inventory assets and improve fill rates, cross-docking is a more direct operational change to the warehouse network itself.

1. APICS CSCP Learning System (2022). Module 2: Supply Chain Planning and Execution, Section A: Demand Management and Planning, Topic 2: Distribution Network Design. The text explains how cross-docking facilities reduce inventory holding costs and transit times.

2. Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2020). Supply Chain Logistics Management (5th ed.). McGraw-Hill. In Chapter 11, "Distribution Operations," cross-docking is presented as a key strategy for high-velocity operations that minimizes inventory and associated asset investment.

3. Stalk, G., Evans, P., & Shulman, L. E. (1992). Competing on capabilities: The new rules of corporate strategy. Harvard Business Review, 70(2), 57-69. This foundational article discusses how logistics capabilities like cross-docking (popularized by Walmart) create competitive advantage by improving asset turnover.