| | | | | | | | | | | | | |Lintas Freight & Logistics LLC | |[Chapter 1] | Introduction | 1. INTRODUCTION As part of curriculum of the Post Graduate Diploma in Management course at Bhavans Royal Institute of Management, students are required to do a project in any reputed organization. For this reason, I did my summer project work in Lintas Freight & Logistics LLC, Dubai. The project work was titled ‘Benchmarking the Effectiveness of Logistics Management” in Dubai and to suggest ways and means to improve the management strategic decisions. . 1 OBJECTIVE OF THE STUDY The objectives of the Project are: PRIMARY OBJECTIVES • To compare the effectiveness of logistics management at Lintas Freight and Logistics and to bench mark the organization with respect to the industry. • To have a thorough understanding of how logistics and freight industries work. • To identify the drivers behind Logistics and Freight. SECONDARY OBJECTIVE • To know about Logistics Industries • To understand the value of each organization • To know whether the customers are satisfied with the existing range of service pattern. 1. 2 METHODOLOGY OF THE STUDY
The data used
The study is done only on industries dealing with Freight and Logistics in Dubai area. Limitations are mentioned in the following book in Chapter 5, 5. 8. a Introduction to Logistics Management Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers’ requirements. A professional working in the field of logistics management is called a logistician.
Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one’s business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. . Origin and Definition of Logistics: The term « logistics » originates from the ancient Greek « ????? » (« logos »— »ratio, word, calculation, reason, speech, oration »). Logistics is considered to have originated in the military’s need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and distribution of supplies.
The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities. ”Another dictionary definition is: « The time related positioning of resources. » As such, logistics is commonly seen as a branch of engineering which creates « people systems » rather than « machine systems »…. c. Prospects of Growth in the Industry In years gone by, the traditional warehousing and logistics facility was located by railroad tracks, a water port, and/or freeways, usually in the least desirable parts of cities or large towns.
This stereotype then faded as gigantic, state-of-the-art facilities began to sprout in more rural areas on the outskirts of transportation and population hubs. The World started beginning to see such facilities showing up in even less « traditional » areas. Modern warehouses now are being located in carefully manicured industrial parks that are sprouting as fast as the corn and wheat once did in these open spaces-often in out-of-the-way places. Why the emphasis on such locations for logistics companies? Much of it is due to the great flux that the logistics industry has been undergoing in the first three years of the 21st century.
Most of these changes are being driven by a growing trend in the manufacturing and retail sectors to form partnerships with companies to which they can outsource non-core logistics competencies-3PL providers. In turn, 3PL providers are continually looking to provide innovative supply chain solutions to customers by focusing on value-added capabilities, differentiating themselves from the competition. They focus on key objectives, such as implementing information technologies, instituting effective management processes, integrating services and technologies globally, nd delivering comprehensive solutions that create value for 3PL users and their supply chains. This need to partner with customers and become more integrated into their supply chain processes has created the ancillary need to locate close to these customers. That isn’t to say the need for easy access to transportation hubs and different modes of transportation won’t continue to be important. But the above shift in business strategy, along with the advances in technology and enhanced communication, has opened the door for logistics facilities to operate effortlessly in a myriad of locations.
Profit warnings, share price pressures, mergers, reorganizations, relocations, disposals, painful layoffs and great geopolitical uncertainties can sweep away even the most comprehensive logistics strategies – and that’s despite outstanding management over many years. These are exceptionally difficult times and it has never been more important to connect logistics and freight planning to executive board thinking than now. It’s easy to lose sight of the bigger picture in the rush to cut infrastructure cost and conserve cash.
Hopefully organization succeed in protecting the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale and momentum? To be a logistics winner in the coming years organizations need to use the downturn to reshape for growth, propelled by an unshakeable conviction that the mission is still important, that more prosperous times lie ahead, and that in some way the company infrastructure is helping to build a better kind of world. Own passion for running the race matters most of all in a downturn, when people are insecure, see only savage cost savings, and loyalty is tested.
The corporation’s future will be dominated by six factors, or faces of a cube, spelling F U T U R E. Logistics is inevitable in the future and essentially the management policy also has a significant role in the future of world. Generally the study is being featured with all aspects of management in Logistics and Freight areas. (Logistics include Transportation, Warehousing, Network Design, Crossdocking, and Value Adding) d. General Import / Export Market a. ) Market Analysis UAE sea freight exports rose in volume and value during recent years.
UAE’s largest exporting state, Dubai, led these increases with substantial increases in volume and value of exports. All states showed an increase in export value and many states having an increase in export volume. Abudhabi, Rasalkhaimah, and other states showed small decreases in export volume compared to Dubai. Total freight import values increased 16. 3% in 2006/07. China remains largest import market. Exports to other largest sea freight export markets showed substantial growth, namely Africa (25. 8%), India (28. 4%) and other Asian Markets (28. 4%).
Over the last 6 years, import volumes and value to China and India have consistently grown, while imports from Japan increased following three consecutive years of decline. Most of this increase can be attributed to a large increase in sea freight imports from China, which rose 86,629,230 tonnes or 218. 5%. Other substantial increases in import volume were seen from Taiwan (23. 7%), India (22. 2%), Italy (14. 9%), New Zealand (14. 9%) and Mexico (70. 4%), while noteworthy decreases in export volume were seen to Netherlands (-14. 0%) and USA (-25. 2%). 006/07 saw a mixed result for Chinese and other Asian sea freight exports. Increasing import value was led by Base Metals (principally Copper Cathodes and Lead), despite recording a small decrease in import volume in the group. Mineral Products (mainly Liquid Gas and Iron products) and Prepared Foodstuffs (mainly packed FMCG products) were the other major commodity groups showing an increase in value, also backed by increasing commodity prices for these groups. Prepared Foodstuffs have shown a continual increase in import value over the last 6 years. The 2006/07 increase in Mineral
Products and Base Metal Products imports follows 3 years of import value decline in these products. (Base metals used mainly for Automobiles, Batteries etc. ) The most substantial decrease in export volume was seen in Vegetable Products (grains and other plant products), with an associated drop in export value. Transport Equipment also saw a large drop in export value and volume. A decrease in export value continues 3 consecutive years of decreases in export value in these groups. The most constant export is for dates to neighbouring nations. Dates are of very less demand in Western regions of the globe. . ) Perishable Items- Animal Products: Meat, Dairy & Seafood UAE import products in the Animal Products category include meat, seafood and dairy. Chicken and lamb meat imports are UAE’s largest sea freight imports in this category. Both Chicken (110%) and Lamb (22. 6%) saw increases in sea freight import value during 2006/07, with smaller increases in total volume, reflecting the increased price for these commodities during the period. Lamb imports by air also rose in 2006/07, but imports by air account for only 3. 7% of the total chicken and lamb exports.
Over the last 5 years, sea freight lamb imports have been quite consistent and at a high level. The dramatic growth in chicken imports during 2006/07 comes on top of steady growth since 2000/01. The other single largest Animal product commodity is Tuna, with 2006/07 sea freight imports totaling $65,134,998 and 5,178 tonnes. This is well below the 2002/03 peak of $201,066,102, with decreases in export value seen during the previous years. In addition to the sea freight imports, Tuna is also imported by airfreight. Similar decreases were seen in both sea and airfreight imports.
Frozen Prawns, increased in volume and value (7. 0%) during 2006/07. Grated Cheese (including Cheddar) remains an important dairy import by sea with yearly exports fluctuating between $36 and $49 million over the last 6 years. Cheese curd exports increased substantially during 2006/07. Imports are mainly from Denmark, Switzerland. Grain: Wheat, Rice is UAE’s single largest volume import commodity. Import volume and value dropped across most major commodities in the grain category. Actually had an increase in import volume for Rice and Wheat for the year 2006-07. pic] |[Chapter 2] | |Industry Profile | 2. Logistics Industry 2. 1 LOGISTICS (UAE – Middle East) Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers.
Logistics involve the integration of information, transportation, inventory, warehousing, material-handling and packaging. In terms of value, global logistics industry has been estimated to be more than USD 235 billion and make up significant part of the GDP with regard to India. The Middle East is currently India’s top export destination for a burgeoning consumer electronics sector. Exports reached $175 million in 2005-06, an increase of 96 percent over the previous year, according to the Electronics and Computer Software Export Promotion Council (ESC).
The growing trade reciprocity with China, 63 percent of respondents to a recent China supplier survey, Middle East Export / Import Opportunities, cited the Middle East as the next « hot » import market for Chinese-manufactured goods. UAE is now in a stage of transition from an import substitution closed economy model to an outward oriented trade regime. The importance of logistics as an enabler of trade and economic growth is worth mentioning. Massive improvement in infrastructure for transportation leads to present and future development in trade, resulting in the economic growth of the nation.
While around Dh. 200, billion of investments have been made during last 5 years to augment port facilities in the country (UAE), equally massive investments have also been made in road networks. The logistics/shipping/freight sector has received keen attention from both investors and government. On the positive point of view, new opportunities are opening up for the sector. Trade volumes both overseas and inland are growing very fast. The pace of growth in the specialized sectors like Liquid Natural Gas (LNG), Containers, Goods, Electronic Equipments etc. re comparatively much higher. Integrated logistics and multimode transportation are opening up new business for logistics/ shipping companies. [pic] 2. 2 Logistics Management and Logistics Management Software Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements. A professional working in the field of logistics management is called a logistician.
Software is used for automating logistics activities which helps the supply chain industry in automating the work flow as well as management of the system. Very few generalized software are only available in the new market in the said topology. This is because there is no common rule to generalize the system as well as work flow even though the practice is more or less the same. Most of the commercial companies do use one or the other custom solution. There are various software that are being used within the departments of logistics. The software’s that are used in these departments are,
Conventional Department: CVT software / CTMS software Container Trucking: CTMS software a. Business Logistics Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one’s business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and it is the science of process having its presence in all sectors of the industry.
The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption. The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities.
Logisticians combine the professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project. b Production Logistics The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time.
The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics can be applied in existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency. Production logistics is getting more and more important with the decreasing batch sizes.
Even a single customer demand can be fulfilled in an efficient way. Track and tracing, which is an essential part of production logistics – due to product safety and product reliability issues – is also gaining importance especially in the automotive and the medical industry. [pic] |[Chapter 3] | |Company Profile |
When it comes to supply chain management, the answer is: “Leadership, Innovation and Quality Solutions” What Lintas Freight and Logistics does: • Freight Movement • Cargo/ Freight Management Solutions • Full Truckload & Solution Providers • Contract Packaging & Other Services • Warehouse Operations (Outsourced) and Management • Logistics 3PL 3. Lintas Freight & Logistics LLC Overall View: 3. 1 Vision and Mission Lintas Freight and Logistics: Best People. Best Processes. Best Value. a. Vision To become a leading freight, transportation, clearing and logistics company in the Middle East.
To be the recognized industry leader, through total commitment to customer service, by maintaining our uncompromising integrity, in the support and development of our People, Communications and Systems in sustained growth and profitability. b. Mission To set the standard for excellence in global logistics through total commitment to quality in people and customer service, with superior financial results. To solve reliable transportation and logistics services to the needs of the business community. Reliable services eans on-time delivery, undamaged goods, and correct documentation in case of deviations. To perform continuous business improvement in order to meet and exceed customer expectation, To create sustainable business growth in order to enhance the prosperity of employee and benefit shareholders. Decisions can impact the success of the company as much as the performance of the supply chain. No matter what industry or region of the world other organization do business in, the supply chain is an integral part to the success as same as the products, the services, and the people.
In 2002, Lintas Freight and Logistics Services, LLC was formed to build on the global distribution experience to help other companies lower distribution costs while improving customer service and brand loyalty. Lintas Freight and Logistics is a technology-based company providing customized solutions that transform distribution to a source of competitive advantage. Main motive is to provide integrated solutions from managing transportation, inventory, and distribution centers to sophisticated forecasting, information management, and network consulting services.
Today, Lintas Logistics serves more than 35 client companies, globally, in an array of different market sectors. The organization mission is to provide best value, integrated freight and logistics solutions to clients in time-sensitive, service-critical businesses. Organization tries to leverage and continuously improve the capabilities. Our clients trust us and depend on our Best People and Best Processes to help them succeed. 3. 2 Lintas Freight and Logistics Service Today, Lintas employ many professionals in their branch offices and in fields (Ports), dedicated to helping freight, transportation, clearing, forwarding and logistics needs.
Young, energetic, professional, and passionate: their humble beginnings, satisfying customer needs has been the driving force behind every Lintas Freight & Logistics employee. Lintas provide these services around globally and main focus to UAE and Indian markets Lintas Freight and Logistics, focus on main areas they are: a. Customer service to a higher level. b. Partnering to seeking the right answers. c. Finding solutions that optimize cost and service. d. And always asking, how can we serve you better? e. Analyzing every opportunity, every challenge to provide a custom solution that works best for customer.
When Customers go with Lintas, they quickly realize they’ve made the right decision. The relationships the organization develops with the clients are built on trust and mutual respect, with open, honest communication. When they ask . . . “what can we do for you? ”. Organization is not just making conversation. Organization really wants to find more ways to serve customers better and focus on resources. [pic] 3. 3 Continuous Improvement in the Organization Lintas Logistics employees and other contracting people and other exceptional people are the cornerstone of organizations service, they are experts in their fields.
Energetic, always looking for ways to drive cost out of the supply chain and all the while working to improve the service. Initially from the beginning, organization has hired only the best and brightest. The most committed. Every member of the team is empowered to create and implement client-centered solutions. Deploying the management team regionally means decision-making and is kept local, on-the-scene. The team structure means good ideas can come from anywhere within the company. a. Customers need solutions now. Lintas Freight and Logistics get them on that moment. With world-class technology as the backbone of the solutions and service.
Integrating systems and providing real-time information to help reduce cost by moving the products of customers to market as efficiently as possible. Organizations “Can Do” culture is rooted in customer service, flexibility and innovation. It’s been that way since the Lintas Freight and Logistics organization was launched over 5 years ago. Organization has got a rich tradition of redefining service for the supply chain management, freight management and logistics industry. This commitment to quality customer service led Lintas Freight and Logistics to become the third-party logistics provider to be certified by UAE as best system standards.
Today, the Quality Management System not only serves as the foundation of the on-going Continuous Improvement in day-to-day procedures, it also serves as the cornerstone of the Lintas Freight and Logistics. The process driven approach to problem-solving helps the organization exceed customers’ expectations, as the organization helps tackle service and cost issues within their supply chains. 3. 4 Organization Functions: a. Freight Forwarding Departments typically arrange cargo movements to an international destination.
This department has the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. A freight forwarder organizes the safe efficient movement of goods on behalf of an exporter, importer or another company or person, sometimes including dealing with packing and storage. Taking into account the type of goods and the customer’s delivery requirements, freight forwarder array, the best means of transport, using the services of shipping lines, airlines or road and rail freight (Not applicable to UAE) operators.
Functions: i. Researching and planning the most appropriate route for a shipment. Taking account of the perishable or hazardous nature of the goods, cost transit time and security. ii. Arranging appropriate packing. Taking account of climate, climate, terrain, weight, nature of goods and cost, delivery or warehousing of goods at their final destination. iii. Obtaining, checking and preparing documentation to meet customs and insurance requirements, packing specifications and compliance with overseas countries regulations and fiscal regimes. iv.
Offering consolidation services by air, sea, and road. o Ensuring cost effective and secure solutions to small shippers with sufficient cargo to utilize their own dedicated units. o Liaising with third parties to move goods by road, air or sea in accordance with customer requirements. o Arranging insurance and assisting the client in the event of a claim o Arranging payment of freight and other charges or collection of payment on behalf of the client o Transmitting data by internet and satellite systems, enabling real time tracking and tracing of goods Arranging charters for large volumes out of gauge or project movements by air and sea o Acting as broker in customs negotiations worldwide to guide the freight efficiently through complex procedures o Arranging courier and specialist hand carry services o Maintaining visibility and control through all phases of the journey, including the production of management reports and statistical and unit cost analysis o Acting as consultant in customs o Maintaining current knowledge of relevant legislation, political situations and other factors that could affect the movement of freight At more senior level, the role may also involve managing staff and overseeing activities within a department or specializing in a particular area, such as sea freight or air freight. b. Logistics Field: Bulk Operations The main function in this department includes identifying the customers and collecting information about the amount of material to be exported, the product, place of exports. The department also undertakes cargo booking, provides information on the rates, the schedules, the arrival, departure time, name of the ship, transshipment details and does the follow up.
Functions i. Identifying the customers by the marketing person of this department ii. Convincing the shipper of the services that company provides to be better than the other shipping service providers. iii. Enquire about the place or commonly referred to as the destination port to which the shipper would like to export the cargo iv. Enquire about the type and quantity of the cargo, that he would like to export v. The type of container and the number of containers that the shipper would like to take vi. Analyzing the rate the shipper expects from his cargo movement vii.
Working out the tariff for the shipper, which include the terminal handling charges, liftoff and lift on, plugging and monitoring changes if the container is a reefer type and any special charges such as seasonal surcharges, port surcharges, CAF (Currency Adjustment Factor), BAF (Bunker Adjustment Factor) viii. Informing the shipper the rate and negotiating with him ix. Scheduling the arrival and department time of the vessel x. Listing out the transshipment details and do the follow up c. Clearing and Forwarding (C & F) The main function of C department is to undertake the customs formalities on behalf of the exporters or importers.
The documentation process and clearing activities are done by this department. Functions i. Preparation of various kinds of bill of entry and shipping bill ii. Arrival and clearance of vessels iii. Determination of value for assessment iv. Conversion of currency v. Nature and description of documents to be filed with kinds of bills of entry and shipping bill vi. Procedures for assessment and payment of duty vii. Examination of merchandize at the customs stations viii. Provisions of the Trade and Merchandize Marks Act, 1958 ix. Prohibitions on imports and exports x. Bonding procedure and clearance from bond xi.
Re-importation and conditions for free re-entry xii. Check offences under the act xiii. Refund procedures, appeals and revision petitions d. Network Design A Logistics Network Design initiative is a strategic analysis of entire supply chain. Some of the strategic questions are: • To ensure enough facilities to meet future capacity requirements? • Which facilities should be closed and/or consolidated? • Is there an opportunity to make changes to the network to reduce logistics costs? Develop the Current Financial Model Before making sensible decisions on what changes to make the network, a ‘base case’ financial model needs to be developed.
It should include the costs of all logistical activities such as Warehouse costs, Transportation costs, Inventory costs and Order Processing costs. Software Selection Due to the complexity of this analysis, a network optimization software package is in order. The software selection phase may be completed concurrently with the financial model-building phase above. One person on the project team should be responsible for sourcing the right software to meet the projects modeling needs. Data Gathering & Validation This is one of the key drivers to a successful project.
It is imperative that the data from your current data warehouse (transactional data) be accurate. For example, when an item is received into the warehouse, are the correct product characteristics captured accurately? Some characteristics of interest would be cube, weight, carton dimension, hazardous materials, etc. One of the activities further into the project will be to create a summary of the product flows. This is accomplished by creating family groupings of products. If the data is not ‘clean’ the flows will be misrepresented and this will affect the accuracy of the model. Create the Growth Plan
Typically, a strategic analysis should meet the objectives of the network for a 5 year period. Although it is difficult to project the future with absolute certainty, growth rates should be estimated over the next 5 years. Ensure that representatives from other major areas such as Sales & Marketing provide their input into the future growth plans. Analyze Current State of Operations A throughput and capacity analysis should be completed for the existing operations. This will help determine if there is additional capacity in the existing facilities or if there is excess capacity available. This will help develop the ‘scenarios’ later on.
The impact to the other logistical operations may then be identified. e. Warehousing A warehouse is a commercial building for storage of goods. Warehouses are commonly used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.
Most warehouses are completely automated, with no workers working inside. The pallets and product are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers and computers running logistics automation software. These systems are often installed in refrigerated warehouses where temperatures are kept very cold to keep the product from spoiling, and also where land is expensive, as automated storage systems can use vertical space efficiently. These high-bay storage areas are often more than 10 meters high, with some over 20 meters high.
The direction and tracking of materials in the warehouse is coordinated by the WMS, or Warehouse Management System, a database driven computer program. The WMS is used by logistics personnel to improve the efficiency of the warehouse by directing putaways and to maintain accurate inventory by recording warehouse transactions. Modern warehouses are also used at large by exporters/manufacturers as a point of developing retail outlets in a particular region or country. This concept reduces the end cost of the product to the consumer and thus enhance the production sale ratio.
Warehousing is an age old concept which can be used as sharp tool by original manufacturers to reach out directly to consumers leaving aside or bypassing importers or any other middle agencies or person. The Warehouse in the Factory & Sales Offices are equipped with adequate stocking facilities, follow the FIFO system & are well guarded with safety provisions to counter pilferage, fire, floods & other calamities. The Warehouses are in convenient locations & well connected by roads to facilitate on time delivery to customers. The plant Warehouse is at Al-Hamriya port at Dubai accessible to locations for trade. . Crossdocking – Containerization Crossdocking is a practice of logistics of unloading materials from an incoming semi trailer truck and loading these materials to outbound trailers or rail cars, with little or no storage in between. This may be done to change type of conveyance, or to sort materials intended for different destinations or to combine material from different origin. An increasing popular method of shipment is containerization. A container is a large box made of durable material such as steel, aluminum, plywood and reinforced plastics. A container varies in size material and construction.
Its dimension is typically 8 foot high and 8 foot wide lengths usually varying. A container can accommodate most cargo but is most suitable to packages of standard size and shape. Containers can take case of most of 4 main packing problems. Because of container construction, a product does not have to have heavy packaging, it gives protection against: i. Breakage ii. Moisture iii. Temperature controlled iv. Pilferage and Theft There are mainly 2 types of containers v. Dry Containers vi. Special Purpose Containers ? Types / Size ? 20 Foot Dry ? 40 Foot Dry ? 45 Foot Dry vii. Open top containers viii. Flat rack for over sized cargo x. 40 foot refrigerated containers/ reefers x. High cube containers (40 foot, 45 foot & Reefers) [pic] 3. 5 Organization Structure Organization is headed by Organization Head, and all other employees report to him. Firm comprises of 12 employees for internal works and other team for activities including freight forwarding, logistics, clearing and forwarding. Organization acts as a 3PL for other firms on behalf of carry/ forward, logistics. Warehouse activities are being outsourced based on the demand situations, as goods are being stocked in different warehouses, and is based on the customer requirements. pic] 3. 6 Business Drivers The following are the business drivers in logistical operation: a) Cost Drivers: The average materials moved by manufacturers to export market is low, but where as to import market is high in figure. The high technology portion reaches to 60% to 72% of imports. Number of labour hours is a factor, tonnage of imports; size of inventory, number of suppliers, number of batches, number of employees etc. are all major concern in cost. Lintas Freight and Logistics keep a major favourable concern on the above, as from the basic get-together of employees during the off peak hours in work.
I was able to figure out, employees were not happy with their present situations in office and in the working hours. The situation has a major impact in operational stability. The situation leads to lengthening/of delivery bills and other major invoice forms. As to manager’s words, it is deciphered that situations are improving day by day. Another important factor in costing based on Activity Based Costing (ABC). By using this method of costing the organization can identify unprofitable warehouse practices, other cost measures in logistics. If Lintas Freight and Logistics implement cost based on ABC, the firm can mprove and eliminate unprofitable situations, improve and implement new facilities with much broader focus on future. To any organization cost reduction is the ultimate method to get a much wider profit. As with the help of questionnaires and through formal interviews with officials not many organizations have this generally. All organizations will be implementing the cost method within the near future. b. Core Competency The concept of core competencies was developed in the management field. C. K. Prahalad and Gary Hamel introduced the concept in a 1990 Harvard Business Review.
A core competency is something that a firm can do well and that meets the following three conditions: i. It provides consumer benefits ii. It is not easy for competitors to imitate iii. It can be leveraged widely to many products and markets A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers. It may also include product development or culture such as employee dedication. Core Competency includes services that an organization must do to be in an industry. [Chapter 4] | |Review of Literature | 4. Review of Literature a. Demand Chain Management Understanding demand requires a comprehensive knowledge of your customers, You should know what products / services are demanded by your customers; how do they make their purchases, how often they order and what constraints they face on the purchasing process. Very few companies have mastered this concept.
Lintas Freight and Logistics was able to know all the above concepts through considerable focus into customer needs and grievances. b. Achieving Competitiveness in Logistics, Freight, Supply Chain [pic] Reduced lead time, inventories, lower operating costs, product availability and customer satisfaction are the benefits which grow out of effective logistics and supply chain management. The decisions usually carried on by Lintas Freight and Logistics (3PL), cover both the long term and short term. Strategic decisions deal with the corporate policies, and look at overall design and logistic chain structure.
Tactical, Operational decisions are those dealing with everyday activities and problems of the organization. Change is the inevitable factor for each and every day situation within and outside the organization. The decisions must take into account the strategic decisions already in place. Therefore organization must structure the logistics ideas through long term analysis and at the same time focus on every time situations. Furthermore, market demands, customer needs, transport considerations and pricing constraints are the factors in order to structure the logistics, freight.
Lintas Freight and Logistics realized the fact and are prepared to face any unexpected situations like inflation/ deflation in the economy, price factors, climatic problems etc. c. Operational Fleet Routing & Loading The organization derives routes in transportation are mainly long-haul (Optimization). For short haul deliveries, there are ready solutions that are tightly integrated to warehouse management systems (outsourced facility), to efficiently route fleets of vehicles and vessels and plan picking and loading.
Stipulated time windows for pick-ups and deliveries and vehicular weight and spatial capacities would be used, as will constraints such as delivery within specified period minutes upon pickup (useful for perishable goods). Time required at various stops – in terms of fixed time to park and variable time dependent on amount to be loaded or off-loaded – can be specified. Travel speeds along various types/zones of roads can be stipulated for both peak and non-peak hours or piped in either from GPS systems mounted on the vehicles or real-time traffic information services.
The organization schedules arrival and departure times for each stop can thus be worked out quite accurately. Routes can be generated dynamically and ad hoc backhaul or other opportunities can also be assigned to the most suitable vehicle. The benefits of operational fleet routing include considerable reduction in fleet operating cost and improved customer service with better estimated arrival time. d. Vendor Managed Inventory Vendor managed inventory, coordinated by an integrated logistics system, allows inventory to be optimized together with transportation.
Lintas Freight and Logistics try to know the product value as well as storage capacity (mainly warehouse – how much to outsource). As a routine job the company collects information on consumption rate, current inventory levels, forecasted demand and status of shipments. Thus the system can optimize the right quantities of replenishments to be sent at the right time to ensure that service levels are maintained while minimizing cost of inventory and transportation.
As company does this with considerable efforts and even product mixing is a part of it and is based on the customer requirements. Generally is not being done in a regular way. e. Mode of Transportation Transportation generally is movement of product, goods, raw materials to different stages in supply chain. Essentially in supply chain logistics plays a major role, the manner in which product is moved from one location to another is through road, rail, truck, air, sea. Lintas Freight and Logistics essentially uses only 2 modes for their operation they are air and sea.
The goods being delivered to end customer is brought to port or to the place through containers or other methods like wagons, or cold enclosures like frozen storage. As in UAE rail transport does not exist, so it has got a relevant drawback for the company, as company has to stick on road for short routes and even routes between states of UAE and which is very much expensive and increases the operational cost. Lintas Freight and Logistics strategically manage the procurement, movement, and storage of materials, parts and finished inventory through the organization and its marketing channels.
Essentially from companies’ angle, there are two categories, initially inbound logistics, i. e. , handling goods that are brought into the company, through road transport and storing and making them available. Another main phase is the outbound logistics, taking the cargo or the goods through channels, and is being done with considerable effort to various parts of the world as per the customer requirements. i. Intermodal Transportation System Used This is the use of one or more than one mode of transport to move a shipment to its destination.
Lintas Freight and Logistics use this in an efficient way. Variety used is road and sea in the case of organization. Referring to Global trade, this is the only option as factories and markets may not be next to ports. Intermodal transportation helps reduce cost in operation. Helps reduce cost that cannot be matched by single mode. Essentially it is very convenient for shippers as well as consignee. ii. Attributes: The price charged is reasonable with regard to the consignee, as organization has got a long term relation with all the customers.
Usually goods being transported are electronics and frozen stocks from warehouse. The relevant focus is on warehouse, transportations services offered. Service is another aspect which focuses the advanced need of the customer, initially with proper timing maintenance, order management. As the consignee is offered service by 3PL like Lintas Freight and Logistics with favourable order management, and ease of doing business is attained by logistics organization like Lintas Freight and Logistics. Overall satisfaction is attained by organization in each case and in certain ase it can lead to dissatisfaction, mostly happen due to lack of infrastructure facilities related to information technology. f. The Challenge Faced by Organizations In today’s world, competence is taking on new dimensions. The ability to compete is being determined by the degree of responsiveness to customers and key issues handling. How fast you deliver the goods/ products, what the price paid by customers and what value customer is getting throughout the service is considered in a schematic and ordered way.
Markets are quick demanding and customization of each logistics activities is essential for each customer, and has become the essential factor in logistics management. Lintas Freight and Logistics faces lot of ups and downs in each operation and improves operation on each situation while dealing with each customer. Lintas freight and Logistics dominant improvement methods used are: i. What are the customer expectations? ii. How are your competitors performing in each aspect of operations? iii. Determining the gaps in each phase and try to fill it. iv. Close each gap. g.
Economic Ordering Quantity (EOQ) Efficient order quantities consider the Purchase Order Cost (POC), the Annual Demand rate (AD), the Inventory Carrying Rate (ICR), and Unit Inventory Volume (UIV). Large Order Quantities yield high inventory levels and high inventory carrying costs but fewer orders and lower ordering costs. High ordering costs and demand rates suggest large order quantities. High ICRs and high unit inventory values suggest small order quantities. Generally during research the analysis shows, few organizations believe EOQ analysis is outdated and quite few with enhanced focus on it.
There is relevant need for EOQ in this era. EOQ analysis should be completed as a part of any inventory strategy. The analysis suggests appropriate reordering intervals for all items each organization is handling. Competitors focus on reducing the costs of placing purchase orders. The lower the purchase order cost, the more economical it becomes to order in small increments and the less inventory will be there in the system. The purchase order costs is typically dominated by the labour and paperwork costs of planning, negotiating, executing and tracking purchase orders.
Large number of organization extent to which these functions can be automated via automated purchase order planning, e-procurement, online catalogs, online bidding and online exchanges, is the extent to which inventory levels and lost sales costs may be reduced in the supply chain and there to the efficiency of logistic operations. Lintas Freight and Logistics has a considerable drawback in this scenario comparing to the other firms. Cost is high in this situation for ordering costs to the firm. h. Advanced Inventory Control Policies Large numbers of organizations have advanced policies compared to Lintas Freight and Logistics.
The analysis shows organizations have advanced inventory control policies as defined: • Joint, Coordinated Replenishments • Distribution Requirements Planning (DRP) • Continuous Replenishment i. Joint Coordinated Replenishments To leverage the cost of ordering, joint, coordinated purchases should be arranged for those items with common Economic Time Supplies (ETS). The ETS is the optimal time between replenishments based on the EOQ for the item. The ETS is expressed in years as the EOQ divided by the FAD. Fixed cycle replenishment schedules should be established with each vendor.
A dedicated volume should be scheduled on the cycle with forecasted purchase orders converted to firm POs as the latest possible date. To take advantage of handling and transportation economies, order quantities should round up or down to case, layer, pallet, and /or container quantities. ii. Distribution Requirements Planning (DRP) The function of determining the need to replenish inventory at branch warehouses. A time phased order point approach is used where planned orders at the branch warehouse level are exploded via DRP logic to become gross requirements on the supplying source.
In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent and standard DRP logic applies. In certain cases where the distribution is for a limited number of items, but a balance must be maintained between multiple warehouse sites, master schedules based on actual schedules sales orders and sales forecasts may be used to drive the planning process through standard DRP logic.
This may result in master production schedules for one or more production sites. If multiple warehouses or distributor inventories are present, the DRP system will attempt to balance their inventories by shifting available units between inventories based on parameters established by the user that indicate the level at which inventories may interact with one another. iii. Continuous Replenishment Program Continuous Replenishment Program (CRP) is a vital tool in the implementation of the Efficient Consumer Response (ECR) strategy.
Continuous Replenishment has been defined as the “Practice of partnering between distribution channel members that changes the traditional replenishment process from distributor-generated purchase orders, based on economic order quantities, to the replenishment of products based on actual and forecasted product demand”. CRP is “the program that triggers the manufacturing and movement of a product through the supply chain when the identical product is purchased by an end user. ” The basis for the CRP system is the co-operation between supplier and retailer and it enables optimization of the business chain.
The purpose of such a system is to help in reduction of costs and enable an efficient customer response system and thereby add value for consumers. “CRP is based on the principle of « pulled » logistics, where the replenishment of a store takes place on the basis of information about sales and the resultant prognoses. The system is based on the exchange of information about the current stock level, supplies, and the volume of sales, at the levels of both retailer and wholesaler.
This system makes it possible to better monitor the store and the expected demand, which leads to more effective planning in regard to production and the management of store levels and supply to retailers. » The goals of CRP are as follows: i. Improve inventory turnover ii. Reduction in inventory iii. Reduce the chances of stock outs iv. Improve customer service levels v. Improve warehouse efficiency vi. Enhance trading partners’ perception of value. 4. 2 Studies on Inventory, Back Order, Lost Sales, Stock Outs, Packaging and Packaging Materials, Documentation from Lintas Freight & Logistics . Inventory Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. There are three basic reasons for keeping an inventory: i.
Time – The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amount of inventory to use in this « lead time » ii. Uncertainty – Inventories are maintained as buffers to meet uncertainties in demand, supply and movements of goods. iii. Economies of scale – Ideal condition of « one unit at a time at a place where user needs it, when he needs it » principle tends to incur lots of costs in terms of logistics. So Bulk buying, movement and storing brings in economies of scale, thus inventory. [The Management of Business Logistics, Coyle, Bardi, Langley] . Back Order A company having to back order an item that is out of stock will incur expenses for special order processing and transportation. The extra order processing traces the back orders movement, in addition to the normal processing for regular replenishments. The customer usually incurs extra transportation charges because a back order is typically a smaller shipment and often incurs higher rates. The seller may need to ship the back ordered item a longer distance. The seller may need to ship the back order by a faster and more expensive means of transportation.
We could estimate the back order cost by analyzing the additional order processing and additional transportation expense. If customers always back ordered out of stock items, the seller could use this analysis to estimate the cost of stockouts. The seller could then compare this cost with the cost of carrying excess inventory. [The Management of Business Logistics, Coyle, Bardi, Langley] c. Lost Sales Most companies have competitors who produce substitute products, and when one source does not have an item available, the customer will order from another source. In such cases the stock out has caused a lost sale.
The seller’s direct loss is the loss of profit on the item that was unavailable when the customer wanted it. Thus, a seller can determine the direct loss by calculating profit on one item and multiplying it by the number the customer ordered. E. g. : If the order was 100 units and the profit is 10$, the loss is 1000$. If the effort is made by a sales man and if the effort is wasted and in that sense it is an opportunity loss. Whether including such a cost is valid would depend upon whether the company uses sales people in its marketing effort. Another aspect is determining the mount of a lost sale may be different and difficult in certain circumstances. Numerous companies customarily take orders by telephone. A customer may initially just enquire about items availability without specifying how much is desired. If an item is out of stock, the customer may never indicate a quantity and the seller will not know the amount of the loss. d. Stockout Cost incurred to a firm when current inventory is exhausted for one or more items. Lost sales revenue costs are incurred when the firm is unable to meet current orders because of a stockout condition. e. Packaging and Packaging Materials
Mainly this is a main division in warehouses. Packaging interacts with the logistics system in number of different and important ways. The size of and protection afforded by the package affect the type of materials handling equipment used and the level of product damage incurred. The package has an impact on the stacking height of the product in the warehouse and thereby on the utilization and cost of the warehouse. Packaging is quite important for effective damage protection, not only in the warehouse but also during transportation. Packaging may contribute nothing to a products value but its influence on logistics costs is considerable.
Packaging size may affect a company’s ability to use pallets or shelving or different types of materials handling equipment. Many companies design packages that are too wide or too high for efficient use of either a warehouse or transportation carrier. So, coordinating packaging with warehousing and with transportation is quite important. We need to note, poor packaging can contribute to higher handling charges and result in lower future sales if the goods arrived damaged. Two types of packing exist: consumer packaging and industrial packaging.
Consumer packaging provides information important in selling the product. i. e. giving the product most visibility when it comes with others on the retail shelf. On the other hand industrial packaging is of primary concern to the logistics. The packaging protects goods that a company will move to store in the warehouse and also permits the company the effective use of transportation vehicle space. Materials generally used in previous years was wood and other harder materials for no breakage, but it added considerable shipping weight to the transport and it further increased transportation cost.
Generally new era has come up with efficient packaging materials, organization nowadays use most cost effective packaging with focus on security and minimizing cost. Cushioning materials protect the product from shock, vibration, and surface damage during handling. Cushioning materials include shrink wrap, air bubble cushioning, cellulose wadding, and plastics. Companies often use shrink wrap for consumer packaged goods. Packaging also helped reduce pilferage and product tampering in warehouse and during transport. Air bubble cushioning is made of plastic sheets that contain air pockets.
There are other factors while considering packaging they are environmental protection. They are considered in situations of perishable items like food and drugs. [pic] |[Chapter 5] | |Research Methodology | 5. 1 Objective of the Study: • To compare the effectiveness of logistics management at Lintas Freight and Logistics and to bench mark the organization with respect to the industry. To have a thorough understanding of how logistics and freight industries work. • To identify the drivers behind Logistics and Freight. 5. 2 Research Problem The need for the study was to assess the effectiveness of Logistics Management in the Lintas Freight & Logistics LLC, compared with other organization in the same industry. The organization also needs relevant data as to how it can improve its management policies in order to gain future market share. 5. 3 Research Methodology The type of research is analytical. Data regarding the division of logistics management such as Freight, Warehousing, Crossdocking, Network Design etc. n which Lintas Freight and Logistics are at present in business were collected from other similar firms in the industry. The indicators selected are ease of service, client handling, customer service, website information, employee efficiency in general. Other indicators for the freight and warehouse divisions are lead-time, inventory management, product availability; time elapsed in transit, operating cost and customer satisfaction. The collected data was analyzed and performance of Lintas Freight & Logistics LLC was evaluated.
As to my study I believe I have selected the right mix of techniques for the comprehensive approach, which can be suited well for the organization. 5. 4 Sample Selection Convenience sampling is used for study, as I’ am interested here in getting an inexpensive approximation of the truth. Operations of Lintas Freight & Logistics LLC are mainly concentrated at AL-Hamriya Port. The total numbers of logistics organizations in and around this port are 6000 in number, which constitutes the population. From this population, 100 organizations having major operations at the AL-Hamriya Port have been selected as sample for the survey.
The selection was based on the sampling said above. 5. 5 Method of Data Collection Primary Data: The major tool used was interview with top officials and employees of each firm, comprehensive questionnaire was developed focusing the management aspect. Secondary Data: Books of Logistics Management for literature reference, Internet Web Portals, Websites of each firm, Company Brochures. 5. 6 Period of Study The relevant topic “Benchmarking the Effectiveness of Logistics Management” study is performed at Lintas Freight & Logistics
LLC, Dubai starting from date 17. 03. 2008 to 16. 05. 2008. 5. 7 Statistical Tools: ? Percentage Analysis ? Bar Diagrams ? Pie Charts 5. 8 Limitations of Study: • A few organizations did not wish to reveal the exact values for each question especially in sales turnover and other similar figures. • The study was conducted in the Dubai area only and confined to the freight division of the logistics management. • Certain monetary values were not being filled by organizations. • A few organizations were not allowing me to enter the firm due to security reasons. Most of the questionnaire answers were filled over internet email facility; therefore contact was through phone and emails. • Study is being conducted mostly in SME (Small and Medium Enterprise). Due to security reason in warehouses and other major MNC offices, I was unable to contact them even through phone or email. |[Chapter 6] | |Data Analysis and Interpretation | 6.
Data Analysis and Interpretation The data collected through the questionnaire are analyzed to know about the respondents opinions about various particulars asked in the questionnaire. The data collected from the questionnaire was entered into spread sheet and the data has been interpreted. The questionnaire comprises of fourteen questions with subparts for each. The topics covered are with decisions of each operational area, employee numbers of each firm, profitable area in operation, catering location, service offering, organizational effectiveness, inventory, location, product availability and customer satisfaction. ) Which are the logistics services organizations offers? Table -1 Service Offer |Sl. No. |Service |Percentage | |1 |Freight |100 | |2 |Warehousing |89 | |3 |Crossdocking |88 | |4 |Network Design |66 | 5 |Value Adding |98 | Chart-1 Service Offer [pic] The pie chart above shows the service offer of each organization. The chart shows that 100% of the respondents provide freight service and almost 90% provide Warehousing and Crossdocking. Only 66% were providing service of Network Design. Other service includes value adding, which represents 98% of the sample. It includes packaging, labeling etc. b) Operating with other logistical providers and reasons for decisions Table -2 Operate With Logistical Providers Sl. No. |Decisions |Percentage | |1 |Operational Stability |11 | |2 |Cost Effectiveness |10 | |3 |Customer Needs |36 | |4 |Other |96 | Chart-2 Operate With Logistical Providers [pic]
The pie chart above shows the operational decisions and reasons for operations with other logistical providers. The chart shows that 96% of the respondents operate with other service providers for different reasons like coordination, clearance, bulk operations etc. Almost