ELEMENTS OF LOGISTICS MANAGEMENT

BOARD EXAM CASE STUDY PROJECT (2002, 2003)

TYBMS B
GROUP MEMBERS NAME Macklin Dias Tiffany DLima Mark Dsilva Zenia Rodrigues Sumona Shetty Poonam Singh Sneha Varghese ROLL NUMBER 3508 3509 3510 3541 3547 3548 3549

Elements of Logistics Management

CASE STUDY 2002

ABCL LTD. A. FACTS:
ABCL Ltd. is a leading fast food processing company. Operating centre at Thane. Procurement centres Nashik, Pune, Aurangabad (Procurement of Veg & Non-Veg raw materials is done locally as well as from Nashik, Pune, & Aurangabad). Distribution centres 25 centres including Nashik, Pune, & Aurangabad.
D D D D

D D D D D D

NASHIK D D D

THANE

PUNE

D D AUBAD D D D D D D

10 years of experience in the fast food business. Tie-up with foreign firm operating in the same field. Good market in Mumbai, Pune & surrounding cities. Products are sold under the brand name Nasta. Popular with collegians & office-goers. Modern kitchen in New Mumbai. Raw materials are transported from procurement centres using hire trucks. Packaging is good & attractive.

Board Case Study (2002, 2003)

Quality & taste are the main reasons for popularity. 3 different packs Party, Family & Individual.

B. PROBLEM AREAS:
Shortages, damages & decomposition during transportation: 10%15% Inconsistency in transit time. Reliability of raw material transporters is low. Packaging is not long lasting. Taste & flavour is lost if not refrigerated for 8hrs at a time. Logistics information network is not good. Procurement centres do not communicate with each other. Lack of co-ordination leads to problems of stock, spoilage, theft, wastage of raw material & finished goods. Transportation & storage are the main culprits for losses. Entry of multi-nationals increases competition & pressure. Holidays, festivals, & college seasons puts pressure on demand & supply; results in losses & mismanagement.

C. SOLUTIONS:
ANSWER 1: Proper transportation policy to ensure minimum transportation loss & reduction in the packaging costs. Transportation of raw materials is the main problem. Reasons & suggestions to resolve them: Long distance transportation. Solution:

Elements of Logistics Management

Instead of procuring raw materials from far off places like Nashik, Pune, & Aurangabad, maximum raw materials can be sourced from local vendors & suppliers near Thane. A relationship can be established with local suppliers & try to negotiate the prices (the reason for sourcing from far-off places could be lower prices). Transporters are not reliable. Solution: Switch to more capable/reliable transporters Avoid outsourcing & arrange for its own transport fleet Shortages, damages, decomposition of goods during transit. Solution: Instead of spending on making packaging more attractive, channelize the funds in packaging the goods in airtight containers & padding Shortages & decomposition can be tackled using the P system instead of the Q system Shortages can be met by maintaining buffer stocks Introduction of racks in trucks for storage of items such as eggs during transportation will prevent damages & such losses

Inconsistency in transit time, which causes problems in forecasting stocks, & excess lead times. Solution: Transporters can be given a fixed period of time to deliver the goods Transporters can be charged fines for delays

ANSWER 2: Demand forecasting techniques.

Board Case Study (2002, 2003)

The company should conduct proper demand forecasting, in order to predict the times of high demand. This would enable the company to plan efficiently in order to increase the supply during periods of high demand such as holidays, festivals, etc. In order to deal with the inventory shortage problems, the company should introduce an efficient communication system, & make use of LIS, MIS, EDI, etc. The distribution centres must co-ordinate with each other, in order to curb problems such as spoilage, stocks, pilferage, wastage, etc. The company can make use of JIT II. The vendor can manage the quantities of goods required by the company. This would solve inventory problems. If the demand forecasting system is efficient, the high cost of refrigeration due to preservation of inventory at warehouses can be avoided. For this, every distribution centres demand has to be forecasted properly.

ANSWER 3: Suggestions for improved Purchase & Distribution policy. During transit, the goods can be kept in a temperature controlled environment, so as to increase the shelf life. Distribution centres must communicate with each other in order to improve distribution efficiency. Introduce unit packaging at major centres. Suppliers located at far-off places can use their own means of transport along with a surcharge. This would be cheaper that conducting transportation on their own.

Elements of Logistics Management

The distribution centres must provide feedback to the major centres & the operating centre at Thane.

ANSWER 4: Yes, it is advisable for the company to have their own dedicated transport fleet. This would enable the company to control the transit time. The company could then ensure that their trucks are equipped with cold storage facilities. The product, Nasta, loses its taste & flavour, if not refrigerated for 8 hrs. Hence, if the transit time is reduced, & refrigeration is provided, the product will be preserved, thus reducing losses. The company can decide the number of rounds of transport accordingly. Trucks can be used to carry goods to & from the procurement centres. However, vans can be used for shorter distances. Specific needs can be better fulfilled, if the company has its own fleet.

Board Case Study (2002, 2003)

CASE STUDY 2003

M/S MODERN GARMENTS A. FACTS:
Manufacturers of garments for ladies & gents. Advanced technology. Supply chain - purchase of raw material, stitching, packaging & final supply. Logistic function - key competitive element in market. Control of inbound, outbound logistics - affects inventories, reduces losses from transit delays, improves response time & service reliability. Leader in the readymade shirt market segment. Joint venture with French company - to expand to trousers & t-shirts market. Old manufacturing unit at Thane. New manufacturing unit at Pune. Warehousing, raw material management, information networking includes insignificant cost. Post liberalization - mature market, better expectations, improved technology & design.

B. PROBLEM AREAS:
Several competitors who have access to latest technology. Controlling inbound-outbound logistics- costly. All competitors have equally good products. Product defects due to stitching, cutting, transportation are being inspected more. A lot of money is spent on distribution. Garment variety leads to more raw materials in stock.

Elements of Logistics Management

Traditional information system has become inadequate ( 500 outlets, 50 transporters ) Lead time variability- buffer stocks with distributers. Transit time fluctuations- truck breakdowns, improper documentation, & unfair vehicle overcharge. Fleet management- bigger budget. Only garments with good on-delivery quality are accepted. Prime concern for value addition to product- logistics distribution, customer service & satisfaction. Due to variations order fulfilment is important.

C. SOLUTIONS:
ANSWER 1: Alternatives in transportation of Inbound & Outbound materials. Transit time delays should be avoided & damages during transportation should be reduced. Documentation should be taken care of. The trucks should be maintained in good condition, in order to avoid breakdown of trucks, this in turn will reduce transit time. The company could opt for their own fleet of transport for outbound material. This will ensure: o o o o On-time delivery of material Maintenance of trucks in good condition Documentation is done properly Elimination of unfair charging of vehicles, as the companies will have their own vehicles

It is important for the company to take care of outbound & inbound logistics as it will reduce losses due to transit delays. If response time reduces & service reliability increases, customer satisfaction will increase.

Board Case Study (2002, 2003)

The company should opt for piggy-back transport in order to deliver the goods to 500 retail outlets in minimum time.

ANSWER 2: Ways to reduce the cost of Inbound & Outbound Logistic Functions. The company should opt for jointly approved transporters with the suppliers. Discussions should be held with suppliers so that the transporters are accepted by both. If inbound transporters are jointly decided, reliable & responsible transporters will be selected, which will result in reduction of costs. Outbound transportation can be resolved by the company opting for their own transportation fleet.

ANSWER 3: Major problems in performing Inbound & Outbound Logistic Functions. Inbound logistics functions: Keeping inventory. Losses due to transit delays. Improve response time so as to improve service reliability. Outbound logistics functions: Distribution Product defects due to stitching, cutting, transportation. Lead time variability buffer stocks with distributors. Transit time fluctuations. Order fulfilment.

Elements of Logistics Management

ANSWER 4: It is advisable for the company to maintain its own transport system. The company is currently facing a lot of problems in the current outsourcing of its transport function, such as: o Product damages o Lead time variability o Transit time fluctuations due to truck breakdowns, improper documentation, etc o Unfair vehicle overcharge The company can avoid the above problems if it is in control of its transport function, instead of outsourcing it to unreliable outside parties.

The following are the advantages of the company managing its own transport: o Accessibility: The vehicles would be available whenever required, even at short notice. o Special requirements: The vehicles could incorporate special storage facilities that could required for specific products. o More control: The problems of improper documentation & overcharge would not occur. Also, if effective fleet management is carried out, even breakdowns could be avoided. o Reliability: The company would be in control of the vehicle schedules as well as the drivers being hired. So, a stable transit time can be estimated, thus eliminating the problem of buffer stocks with vendors to deal with time variations.

Though it would initially be an expensive affair, it would benefit the company in the long run.

Board Case Study (2002, 2003)

Railway services can be used to transport goods for longer distances e.g. from state to state, & trucks or vans can be used for movement of goods for shorter distances e.g. within the state. This can help bring down the overall transport cost. Let one outlet per state act as a buffer stockist for all the outlets on the vicinity. This can help avoid unnecessary long-distance transportation, & can further reduce the overall transport cost.

ANSWER 5: Since liberalization, the market has become more focused & consumer oriented, as the customer expectations have increased. Hence, products can last in the market only if they are of good quality. So, the quality of goods has to be maintained throughout the logistics functions. Care must be taken to maintain a standard quality of products. Defects, damages, etc must be avoided as much as possible. Customers like to have a lot of choices and options. The company already has a good variety of designs as well as state-of-the-art technology. It could maintain a lot of variety in terms of material, designs, colour, etc. Also, these choices have to be available across the 500 retail outlets that the company possesses. The company could research the different preferences of material, design, colour, etc. of customers across the country, & stock only the preferred varieties should be made available in that particular area. This could reduce the stock of goods lying idle with retailers. The packaging should be attractive & should protect the clothes from dust, humidity, etc. as well. The presentation of goods at the outlets must be acceptable, so that customers are aware of what is available. Customers require trial of the garments to check the size. So, the company can have a standard set of sizes throughout their product lines to avoid any grievances due to faulty sizes later. Also, instead of opening up the packages at the outlet, one plain garment per design

Elements of Logistics Management

& size could be kept at hand in all the outlets. This will avoid possible damage to the clothes during trial. Customers must be given an exchange facility in case the goods that they purchased have any company defects that might have been overlooked before purchase, viz. stitching defects, spoilage, tears, etc. Also, customers should be allowed just one chance to exchange the goods in case they find that they are not satisfied with the colour, design or size of their purchases.