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Case Study #13 (Logistics)
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A multi-location company dealing in office automation is confronted with a continuous build-up of inventory and a downward spiral of fund flow.
Analysis
The company uses heavy commercial vehicles to distribute the requirements of products and spare parts to their business units located in various parts of the country. The total cycle time for delivery and return of the vehicles to base vary between 2/3 weeks, during which time sizeable volumes of inventory lie idle in the factory and warehouse. Damage and delay, and the resultant costs, are a consequence of the handling and surface transportation used. Moreover, the vehicles would return empty, implying costs for unutilised capacity.
Payments from the customers are linked to the installation of the machines. However, the service engineers have no means to ascertain delivery, resulting in further delays in recovery of receivables, which impact cash flow negatively. Also, orders are skewed towards end-of-quarter deliveries, entailing large storage areas to meet these demands. The current distribution process is bleeding the organisation.
Business Solution
Blue Dart offers its logistics services and convinces the organisation to focus on its core competency. Blue Dart uses a combination of its Dart Apex (Air Package Express) and Dart Surfaceline (Surface Express) to meet the individual urgency of each shipment and provide a cost-effective solution. Time-sensitive, high-value products are sent through Dart Apex, and machines through the more economical Dart Surfaceline. This combination of services results in a faster turnaround of the order cycle, substantially lower inventories and a reduction in the idle time of machines at the factory. Blue Dart's Track and Trace system provides service engineers with an updated status and delivery information of every shipment and recovery of monies from customers are, consequently, expedited.
The earlier 48 machine-deliveries per day are now increased to 80 machine-deliveries per day, with reduced manpower, decreased distribution costs and a shortened credit period to its customers. Their management can now focus on future developments without adding an inch of warehouse space! |
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