ASSIGNMENT 1
Note: This is an Assignment. You may use illustrations
and diagrams to enhance explanations. Assignment must be in your hand writing.
It must not be duplicated from other students.
UNIT -I & II
CASE STUDY
Gateway: A Direct Sales manufacturer
Gateway
is a manufacturer of PCs that sells directly to customers who place orders at
Gateway retail stores, through the telephone, or via the Internet. The company
was founded in 1985 and started as a direct sales manufacturer with no retail
footprint. In 1996, Gateway was one of the first PC manufacturer’s to start
selling PC’s online. Over the years Gateway expanded its operations worldwide
with sales and manufacturing presence in Europe
and Asia Pacific. In 1999, the company had three plants in the United States , a plant in Ireland , and one in Malaysia
In
the late 1990s’ Gateway introduced an aggressive strategy of opening Gateway
retail stores, increasing their selling, general, and administrative (SG &
A) expenses from 12.5 percent of sales in 1997 to 15.1 percent of sales in
1999. As of January 2002, Gateway had about 280 retail stores in the United States
Initially,
investors rewarded Gateway for this strategy and raised the stock price to over
$80 per share in late 1999. By November 2002, however, Gateway shares had
dropped to below $4 and Gateway had lost a significant amount of money.
In
2001, Gateway decided to close all overseas operations to focus on its business
in the United States Ireland and Malaysia United States
Gateway
has also shut its production facility in Salt
Lake City United
States
Q1. Why did Gateway have multiple
production facilities in the United
States
Q2. What factors did Gateway
consider when deciding which plants to close?
Q3. Why does Gateway not carry any
finished-product inventory at its retail stores?
Q4. Should a firm with an investment
in retail stores carry any finished-goods inventory? What are the
characteristics of products that are most suitable to be carried in
finished-goods inventory? What characterizes products that are best
manufactured to order?
Q5. Is the Dell model of selling
directly without retail stores always less expensive than a supply chain with
retail stores?
Q6. What are the supply chain
implications of Gateway’s decision to offer fewer configurations?
ASSIGNMENT 2
Note: This is an Assignment. You may use illustrations
and diagrams to enhance explanations. Assignment must be in your hand writing.
It must not be duplicated from other students.
UNIT -
CASE STUDY
Integrated L&SCM
It is 9:30 a.m. the rays of the early sun are filtering in through the
sheer glass that comprises the northeast wall of Akash Ispat Engineering
Company Limited’s boardroom. AIECL is a 10-year-old medium-sized company having
a sales turnover of about Rs 700 crore. The presence of just 6 people has made
the room seem larger than it is. Azim Ahmad, a man in his late his late 50s
started his career as an technical trainee who joined the company since its
incorporation. At present, he is the chief production manager who always loves
his machines and never wants them to be idle. Harbhajan Singh, having a long
experience of a public sector steel company is always afraid of sales loss due
to stock-out situations. K. Mathur (ED), highly successful, dynamic and
proactive, always looks like a dangerous man. Arun Lal,a traditional traffic
manager, always offers his justification in quantitative and comparative terms.
Kashi Nath, Purchasing Manager, quite a young man possesses a management background
from top 5 institutes of India
Past performance of
the company has been quite impressive but, since the last two quarters,
problems arte cropping. Customers are making complaints regarding failure to
meet delivery commitments. Transportation costs are increasing. Competition is
increasing and demand is decreasing due to an economic slump.
Hence, the meeting is called by the CEO to review the performance in
general and inventory and transportation costs in particular along with
customer complaints.
K.Mathur: Look at the transportation cost. It has increased by 25 per cent. if
continued, it will eat us. We must realize that today, transportation has
tremendous cost-cutting, potential.
Arun Lal: I know that transportation cost has increased by 25 per cent in the
last 6 months but it is mainly due to MR. Nath’s policy of JIT inventory
system. He never wants to keep inventory. That is why I am not in position to
ensure a full-load to transporter at the same time. Quite frequently, I have to
opt for more speedier modes of transportation, even air freight, to ensure
timely delivery. I am helpless.
Kashi Nath: (interrupts) Mr. Lal. as we are saving a lot by means of this system.
I prefer air freights to make sure of getting what I need on time.
Azim Ahmad: (supports Mr. Lal and comments) and when I need something, I need it
immediately. This JIT is a risky and expensive proposition. We are very late in
getting production materials. Unnecessarily, I have to opt for overtime and
make use of air freight to meet delivery dates.
Harbhajan Singh: Whatever the problem, we must have an effective pipeline. When I am
not getting things in time, how I can meet the sales target? We are losing our
image and will soon lose sales. Competition is mounting. Our competitors are
now offering ready delivery.
K. Mathur: (Interrupts and says) No more argument and excuses. I want action
towards cutting costs.
Kashi Nath : (Defending himself) The lead-time problem can be sorted-out by a
trade-off between sales and production forecasts. I need information earlier.
Harbhajan Singh: Customers insist on promised prompt delivery and I am helpless.
Azim Ahmad: since a long time back, I have been insisting on the merger of
purchasing and traffic in order to get closer to production.
K. Mathur: (Quite frustrated)
If we want to survive, we have to cut transportation as well as inventory
costs.
D. Sahu: I appreciate the
great job of Kashi Nath because our inventory – carrying cost is down by about
45 per cent. But, I do agree that transportation cost has increased
considerably.
K.Mathur: (Concludes the meeting with his remarks) I partly agree with
Azim’s idea. But in my opinion, we must have an integrated system for all types
of inventory and traffic management.
Mathur further asked Kashi Nath to submit a
blueprint within a fortnight to him along with a plan of action.
Questions
Q.1
Discuss the basic problem domain of the firm along with the situations
responsible for the development of the problem.
Q.2 What should Kashi Nath do?
Q.3 Should Kashi Nath suggest a L&SC manager? If yes, how can an
integrated system be developed to minimize total logistical costs?
ASSIGNMENT 3
Note: This is an Assignment. You may use illustrations
and diagrams to enhance explanations. Assignment must be in your hand writing.
It must not be duplicated from other students.
UNIT -
CASE STUDY
Warehouse Efficiency
Personal
Care Limited (PCL) is a large and premier FMCG company in India
The
company has four of its own mother warehouse situated in the four zones of north,
south, east and west that receive products from almost all the plants on a
regular and consignment basis in containers by road. These warehouses are
responsible for taking care of stocks, order placement for next arrivals,
loading and unloading, protective storage, stock recording, apart from order
processing and trans-shipment of goods to C&F agents of respective zone
whose numbers come around 150 per warehouse.
After
receiving goods from various plants, these warehousing are first entered into
the computer for inventory recording purposes. Suitable storage location spaces
are then assigned after taking into consideration the quality to be stored, the
physical dimension, characteristics of items, frequently of flow, and
availability of the space, which is quite variable and flexible. For storage of
goods, flexible racking system is used so that the size of a rack’s space can
be changed as per the size on the product’s package. Furthermore, racking is
back-to-back in pallet blocks which are 5 storied and in one block, there are
about 400 back-to-back rocks.
In
certain areas, for selected heavy weight and bulky items, 50 selectors drive
forklift trucks and in the remaining areas, as many as 350 selectors pick the
goods manually and use hand trolley. Selectors are normally less educated and
highly experienced, who have well-defined areas of selection.
With
the existing system, there have been a lot of practical problems, such as under
utilization of space, traffic congestion in aisles between the racks as one
selector blocks another’s progress while he is picking items from a location,
wrong assortment, difficult to track goods, difficult to fill one single order
as it contains a variety of items, etc. furthermore, a trucker is required to
collect items from different places of the warehouse to make up the order.
Frequently, they have to wait for full load. Then, the driver had to collect
challan and other required papers. Normally, this whole process took seven to
ten days, subject to ready availability of the goods in the stock. In the case
of stock-out items, it may goes anywhere in between 15 to 30 days. That is why,
replenishment cycle time of nearby C&F agents’ is about 15 days and for
others, it comes around 3 weeks. Due to a gradual increase in the quantum of
competition and increasing customer expectations, along with increasing
awareness about the overwhelming contribution of L&SCM in cost reduction
and service improvement, the top management of PCL have appointed highly
qualified and experienced professionals at all four warehouses with the
following objectives:
·
to
improve the efficiency of the warehouses;
·
to
reduce the replenishment cycle time by 25 per cent;
·
to
reduce the total logistical costs by 10 per cent; and
·
to have
transparency in dispatch of premium products.
Mr.
A. K. Sinha, who joined the north zone ware house as chief warehouse manager,
has had a very successful career of 25 years. He wants to redefine the whole
warehouse operating system.
Questions
1. How should Mr. Sinha approach this problem?
2. Develop a strategy to overcome the problem and
fulfill the redefined objectives of the firm.
3. What changes would be recommended for the
implementation of the new strategy?
4. Suggest measures for evaluation of performance
of the warehouses.
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