integrated l & scm case study

8/3/2019 Integrated l & Scm Case Study

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Presented by: (PUMBA,

PUNE)

Rahul S. Thorat -0346

Subin Geo Mathews-0359

Romi Rawal -0165


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CASE

Akash Ispat Engineering Company Limited

10 years Old Engineering Establishment

Medium Sized Company

Sales Turnover of Rs. 700 Cr.


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JIT has been implemented

Led to conflicts between the purchase,

production and the traffic department

Inventory carrying costs reduced by 45%

Transportation costs increased by 25%


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Problems Faced :

Customer complaints due to failure to deliver

Increase in transportation costs by 25% due to

higher frequency of delivery and no full loadtransportation

Need for more speedier mode of transportation

which increases transportation costs

Overtime


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(Contd.)

Increase in competition

Demand decreasing due to economic slump

Non availability of the materials in time


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KEY CONCEPT

Third Party Logistics(3PL):

Businesses that provide one or many of the followinglogistics services:

Transportation Management

Public/Contract Warehousing

Distribution Management

Freight Consolidation


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Types of 3PL providers:

y Transportation based-Services extend beyond transportation to offer acomprehensive set of logistics offerings.

y Warehouse/distribution based-

Many have former warehouse and/or distributionexperience.

y Forwarder based-

Very independent middlemen with forwarder roles.Non-asset owners that provide a wide range oflogistics services.


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y Financial based-

Provide freight payment and auditing, cost

accounting and control, and tools for

monitoring, booking, tracking, tracing, and

managing inventory.

y Information based-

Significant growth and development in this

category of Internet-based, business-to-business, electronic markets for

transportation and logistics services.


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Advantages of 3PL:

Save time

No investment in

Buying trucks

Training

Development

Helps in expanding to new markets

Narrow your focus Reach more customers effectively

Increase profitability


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Disadvantages of 3PL:

o Loss of control

o Impact on in-house workforce

o More distance from clients i.e. a loss of personal

touch


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Difference between 3PL and a

Transportation provider:

Transportation provider gets product from

point A to point B

Just one function of logistics

3PL provider assists in multiple functions


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Solution I :

A-B-C PARETO ANALYSIS

CLASS - A CLASS - B CLASS - C

VOLUME LOW(15 20%) MEDIUM(30-40%) VERY HIGH(50-60%)

COSTHIGH

(70-80%)

MODERATE

(15-20%)

LOW

(5-10%)

FREQUENCY OF

SHIPMENT

DAILY DAILY 2-4 Times / Year

LOT SIZELOW MEDIUM LARGE

SIZE OF SAFETY

STOCK

SMALL MODERATE LARGE

SOLUTION


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E.g.HP Company, Greeley Division

CLASS - A CLASS - B CLASS - C

VOLUME 3 % 3 % 94 %

COST 88 % 4 % 8 %

FREQUENCY OF

SHIPMENTDAILY DAILY 2-4 /YEAR


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Solution II:

THIRD PARTY LOGISTICS (3PL)

A. Transactional Outsourcing (Short Term):

Based on transactionsNo long term contracts

No bonding between the 3PL and the

outsourcing company.


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B. Strategic Outsourcing (Long Term) :

Based on long-term relationships with

successful outcomes

3PL companies become partners in

supply chain management

Establish transactional transparency


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Vendor Managed Inventory (VMI) :

VMI is essentially an integrated approach

whereby the inventory at the downstream is

monitored and managed by the upstream (e.g.vendor/supplier).

Solution III:

STRATEGIC PARTNERING WITH VENDOR

THROUGH VMI


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Upstream demand visibility is improved to

reduce the impact of demand fluctuations

As a part of logistical customer service

strategy

Point-to-point information on real demand


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Advantages of VMI :

Lower inventory investments.

Better scheduling and planning

Lower Inventory Stock outs

Closer customer ties and preferred

status


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REFERENCES Logistics and Supply Chain Management

- Martin Christopher

Just In Time Manufacturing

- M G Korgaonker

Quad E- Awan University Research Journal of Engg.

Science & Technology, Volume 1 No. 1, January-June 2000

http://sreevidya.wordpress.com/2007/10/31/3pl-its-

advantages/


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integrated l & scm case study

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