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Case 1
M/s Britecolor Paints
Ltd. (BPL) is a manufacturer of decorative paints for households commercial premises
and industrial application.
(a) M/s.
BPL had embarked on a policy of satisfying every possible customer
in respect of shades, delivery and durability. Thus it went ahead and created
twenty-five depots, one almost in every major city. The manufacturing base
however, was maintained at Pune. The factory received information in connection
with stocks from depots J once in a week and there was no inter-communication
between depots. Since they were in a competitive market, price was
predetermined, i.e. the manufacturer had no liberty to price the product as per
one’s own choice.
(b) In their effort to satisfy the customer,
M/s BPL manufactured every possible shade by combining various primary shades
and would await the prospective customer to carry out the purchase. It ensured
that these shades were available at each and every depot even at the cost of
transportation incurred in sending goods in less than full truckload lots. This
certainly provided a very high service level and customers who could get
the shade as per their desire, were fully satisfied.
(c) While on one hand M/s
BPL had a population of very satisfied customers, they had almost 50% of
their total domestic sales lying as finish Goods inventory at various depots,
on the other hand.
(d) Industrial paints,
though not very customised, the respective industrial customer was quite
satisfied. Consequently, the inventory of finished goods was very low in this
segment. But at the same time, realisation was also lower due to stiff
competition from other industrial paint manufacturers than the domestic
segment.
(e) Nevertheless, the
economic runs of industrial paints were always assured due to high off-take by
the industrial customers.
(f) The objective of
the manufacturer was to increase the realization taking into account, economic
runs, inventory, seasonality and individual choices of domestic / industrial
customer.
Qeustions
If you are appointed as
the logistics consultant, then advise M/s BPL in respect of
(a) How to achieve
economy in transportation, by maintaining almost same service level?
(b) Demand Forecasting
technique to take care of seasonality, reduction in inventory.
(c) Information technology to substitute
maintenance of high inventory without affecting customer service level.
(d) Connectivity
between factory and depots (networking Diagram)
Case
2
ABCL Ltd. is leading/
Fast Food Processing Company operating from Thane. It is involved in the fast
food business since last 10 years and has tie up with a foreign firm operating
in the same field. It handles both Vegetable as well Non—Vegetable products for
which it arranges the vegetables and chickens from the local vegetable vendors
and poultry farms as well as from far off places like Nasik, Pune and
Aurangabad. It has very good market in Mumbai, Pune and surrounding cities. The
products are sold in the brand name of ‘Nasta’ which is very popular brand
amongst the young collegians and office goers. it has its ‘7,- most modern
kitchen at New •Mumbai to cater the needs for fresh Nasta. Vegetables and
chicken items are transported from the procurement centres of Nasik ,
Pune, Aurangabad Aurangabad
Questions
In case you are
appointed as logistic consultant to solve the problems, you are required to put
forward your suggestions for:
(a) Proper
transportation policy to ensure minimum transportation loss of vegetables and
poultry products and reduction in the packaging costs.
(b) Demand Forecasting
techniques to take care of the seasonality, reduction in inventory and shortage
and other related problems.
(c) Suggestion for
improved Purchase and Distribution policy.
(d) Is it advisable to
have company owned dedicated transport fleet?
Case 3
Mumbai four mills, provide high-quality
bakery flours to commercial bakers as well as to the consumer market. The
commercial buyers have consistent demand and brand-loyalty, whereas consumers
have minimal brand-loyalty but also generally prefer known names over store
brands. Demand is seasonal for the flours with the annual break occurring just
before Diwali and slacking off dramatically during January and February. To
offset these both, Mumbai Flour Mills and its major supermarket chain-accounts
carry out special deals and sales promotions.
The Production planning Dept. of the company
located at Akola , Maharashtra, has the
responsibility for controlling the inventory levels at the plant warehouse at Nagpur as well as three distribution centres located at Nasik in Maharashtra, Bhopal Nagpur Nagpur
Recently the company has experienced two major stock out for its consumer-size 5 Kg. sacks of refined quality white flour. One of these was due to problems in milling operations, the other occurred when marketing initiated a “buy one, get one free” coupon promotion. Since these events, the planning has become overly cautious and errs on the side having excess inventories at the distribution centres. Additional, two other events have affected Distribution Centre’ throughput:
(1) implementation of direct factory supply
for replenishing the five largest super market chains, and (2) a price increase
making Mumbai Flour more expensivethan its national brand competitors such a
Pillsbury or ATA Maida.
Of 1500 pallets in the
Hyderabad Distribution Centre the Mumbai Flour Mills shows only 396 pallets for
open orders. This has led the company to use outside overflow storage, where there
are another 480 pallets. Flour is easily damaged, hence, Mumhai Flour Mills
prefers to minimise handling. Over stocking
at Distribution centres alone cost Rs. 1.85/- per pallet for outside storage to which must be added Rs. 4.25 per pallet extra handling and Rs. 225 per truckload for transportation.
at Distribution centres alone cost Rs. 1.85/- per pallet for outside storage to which must be added Rs. 4.25 per pallet extra handling and Rs. 225 per truckload for transportation.
Similar scenarios are being played out at the
other DCs as well. Mr. Mohan, the distribution manager is contemplating various
approaches to solving the inventory problem. It is clear that the product must
be in place at the time a consumer is making a decision to buy the product, but
the company cannot
tolerate the overstocking situation and the stress that it is putting on facilities and cash flow. Mr. Mohan’s first thought is “a better information system” which will provide timely and accurate information throughout the organisation.
tolerate the overstocking situation and the stress that it is putting on facilities and cash flow. Mr. Mohan’s first thought is “a better information system” which will provide timely and accurate information throughout the organisation.
On the basis of above case answer the following:
Questions:-
(1)
Evaluate the alternative solution that could be considered by Mr. Mohan.
(2)
What additional solution do you propose?
(3)
Examine the transportation system and its drawbacks?
Case 4
M/s Modern Garments is
the manufacturers of Ladies and Gents garments like shirts, tops and undergarments
etc. The technology is advanced and there are several players with access to
such latest technologies. The supply chains for M/s Modern Garments includes
significant purchases of raw material, stitching, packaging and supply to
customers. The logistics functions are the key competitive elements in the
market, M/s Modern Garments is considering to take over the control of its
inbound and out bound logistics function which affect the inventories, reduce
the losses due to transit delays and improve the response timeand service
reliability. However the cost implications of such changes have to be looked
into.
The M/s Modem Garments has been a leader in the readymade shirts market in India for a number of years. After liberalization they entered into a joint venture with a French Company to expand their business in the field of Trousers and T-shirts. However new joint venture company M/s Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-art garment manufacturing plant at Pune in Maharashtra to compete with other market players. The company has planned to undertake the distribution of garments made and packed in its plants at New-Mumbai and Kalyan so as to retain the control over design, quality and service channel of the products.
After liberalization,
the market has grown more matured and expectations of the customers towards the
features of the product have increased and also the technology and design has
improved considerably. Now in the market only garments with good delivery
quality are acceptable. All the competitors have equally good quality product
in the market. Presently the area of logistics distribution, customer service
and satisfaction are the area of prime concern in order to have extra value
addition to the product. The product defects due to stitching, cutting and
transportation are now under increasing scrutiny.
From the cost control point of view, the
amount of money held up in distribution pipeline is significant. The large
variety of garments now means more raw materials to be held in stocks.
Presently the incoming supplies are arranged by the vendor firms, they may be
persuaded to opt for jointly approved transporters. Due to product variations,
the order fulfillment and its processing is of considerable importance. The
traditional information system has become inadequate. There are over 500 retail
outlets through which the finished products are
distributed with the help of more than 50 transporters. Lead- time
variability is creating problem of buffer stocks• with distributors. The transit
time fluctuations are due to the breakdown of trucks, improper documentation
and unfair practice of over charging of the vehicles etc. Such variability has
to be reduced. Major portion of logistics cost was allocated in fleet
management; where as warehousing, raw material management and information
networking have insignificant costs.
Questions
(i)
Examine the possibility of alternatives in transportation of the inbound and
outbound materials?
(ii) How to reduce the cost of inbound and outbound logistics functions?
(iii) What could be the major problem in exploiting the inbound and outbound logistic functions?
(iv) Is it advisable to have dedicated transport system to operate packaged materials mainly for the company?
(v) What arrangements have to be made to ensure the service quality for customers?
Case 5
M/s Ador Electrodes
Limited (AEL) was incorporated in the year 1981 and is the second largest player
in the welding industry in India
‘The company has four
state-of-an-art manufacturing plants accredited with ISO certification &
backed by strong technical support from their foreign collaborators. The
company is also having a well established all India
The biggest drawback in
the present system is that the inventory at all warehouses is carried by the
company, blocking the huge amount of company’s working capital. The level of
average inventory they maintain is equal to their 6 months sales requirements.
Over & above, in many places where the sales are low, the stocks remain unsold
for longer periods. Moreover, because of improper maintenance of these
warehouses the stocks also get damaged I spoiled or stolen. The
warehouses are managed by the employees of the company having no ‘basic
qualifications & experience in inventory and warehouse management.
The management of the
company took a serious note of the situation and now wishes to take immediate
steps to overcome the current logistical problems to face the competitive
scenario.
Questions:
1. What are the
company’s present logistical problems?
2. Give your
recommendations for improving the company’s logistical performance?
Case
6
1967 M/s. Vijay
Enterprise ventured into trading of electronic consumer durable targeting the
large potential market in the
year 1970, the company managed to get the exclusive
dealership of a leading electronic manufacturing company in India to market their products in the Western Indiá . Later on, the company with a view to create their own brand
in the market established a plant in Maharashtra
& started their own manufacturing activities. With a manufacturing capacity
under their belt, the company increased their turnover tremendously in the next
20 years with the help of all India
After the liberalisation of the Indian economy in 1991, the entire business scenario- particularly in consumer durable industry - has undergone a drastic change. The company started experiencing the pressure of competition from local as well as international players. It was observed that during the last 5 years sales growth has come down and the company is losing its market share slowly& steadily.
The external agency that conducted a study for the Company came out with their following observations.
1. At all levels in the company employee orientation is towards production rather than marketing
2 The cost of product distribution is the highest compared to the Industry standards
3. The warehouse space was urderutilized — the utilization factor varies between 95 % during the peak season and drop to 40% during the slack season.
After the liberalisation of the Indian economy in 1991, the entire business scenario- particularly in consumer durable industry - has undergone a drastic change. The company started experiencing the pressure of competition from local as well as international players. It was observed that during the last 5 years sales growth has come down and the company is losing its market share slowly& steadily.
The external agency that conducted a study for the Company came out with their following observations.
1. At all levels in the company employee orientation is towards production rather than marketing
2 The cost of product distribution is the highest compared to the Industry standards
3. The warehouse space was urderutilized — the utilization factor varies between 95 % during the peak season and drop to 40% during the slack season.
4. There is duplication
of many logistics
operations. Every department has their own policies I practices and
objectives.
5. In more than 20 per
cent of the trips made to mother warehouses / C& F agents, the
products are despatched in less than full truckloads, resulting in high
transportation costs.
6. Only 65 % of shipments were delivered on time, as a result of slow information flow and inadequate connectivity across the system causing longer order processing time.
6. Only 65 % of shipments were delivered on time, as a result of slow information flow and inadequate connectivity across the system causing longer order processing time.
7. Transit damages were
ranging between 2 to 5 % due to improper logistical packaging and inadequate
material handling equipment.
6. The finished goods
inventory is above the best managed company in the industry
Questions:
1.
Identify the main logistical problems of the Company
2. To offer better
customer service level and reduce the operating cost, how will you go about
redesigning the distribution network?
Case 7
M/s. Decorative Laminates Corporation (DLC)
is a supplier of decorative sheets for
wooden furniture makers in domestic as well as commercial markets. In
spite of competition n this field their sales volumes shown growth during last
2 to 3 years. The last year was recorded 15% more sales compared to previous
year. Even though the sales volume are increasing• the profit margin is getting reduced day
by day due to future competition.
In one of the monthly
management review meetings it was observed that the main cause for depleting profitability
is the increasing procurement costs. . The report presented by the new Purchase
Manger revealed that in order to obtain quantity discounts from the suppliers
the company was purchasing inputs & other maintenance items much more than
their actual requirements. This has not only created a problem of holding huge
inventories but necessitated hiring of additional warehouse space to
accommodate these high inventories. It has also been observed that most of the
purchasing tasks like inventory control are
still performed manually.
The computers are used only for maintaining purchasing
records and printing purchase
orders.
Questions
1. What is the main problem in this case? What
are your suggestions to the company on inventory management?
2. What type of
logistical cost approach you would suggest to the company?
Case 8
M/s. Compu-Tech is on the reputed Indian
companies producing various types of
computer printers. Their production plant is situated at Noida in
northern India
The company introduced LS popular line of Desk Jet printers first time in India in 2005.
Immediately on the launch of this products
The
solo more than one lacs units during that year. But the problems came with the boom in sales.
Already, the company was running into serious inventory snags, particularly
with service to its customers situated In southern region. The printers were
generally shipped to all the distribution centers & onward to the customers by road only. Unfortunately,
that resulted in long lead times, making It tough to meet the shorter delivery
time offered by the local sellers mainly from Southern
India .
The Company also found itself running short
of production capacity to meet the quantity requirements of certain large
institutional & industrial customers. To add to it, quite often the company
was running out of stock for certain fast moving models and at the same time
facing problems of excess inventory of other models. Working out product wise
demand from each market was also proving difficult for their manufacturing
plant.
Questions
1. What are the main
problems in the logistical network of M/s. Compu-Tech?
2. What solutions would
you propose o overcome these problems?
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