Lintas Freight & Logistics LLC
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[CHAPTER 1] Introduction
1. INTRODUCTION As part of curriculum of the Graduate Degree in Foreign Trade course at Sinhagad College of Science & Commerce, students are required to do a project in any reputed organization. For this reason, I did my project research in Lintas Freight & Logistics LLC, Mumbai. The project work was titled “Effectiveness of Logistics Management” in Mumbai and to suggest ways and means to improve the management strategic decisions.
1.1 OBJECTIVE OF THE STUDY The objectives of the Project are: •
To know about Logistics Industries
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To compare the effectiveness of logistics management at Lintas Freight and Logistics and to benchmark the organization with respect to the industry.
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To have a thorough understanding of how logistics and freight industries work.
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To know whether the customers are satisfied with the existing range of service pattern.
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1.2 METHODOLOGY OF THE STUDY The data used for the study had primary and secondary character to it. The primary data was collected through questionnaire method. The secondary data were composed through the reference of books, websites, and interviews with various executives in different organizations of the sample. The procured data was analyzed by a simple percentage method and the results are supported with graphs and charts.
1.3 SCOPE OF THE STUDY: The scope of the study is confined to Dubai Ports (Al Hamriya Port) and nearby organizations of Lintas Freight & Logistics LLC, which are into the concerned industry. The study is done only on industries dealing with Freight and Logistics in Dubai area. 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.
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b. Origin and Definition of Logistics: The term "logistics" originates from the ancient Greek "λόγος" ("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.
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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, and 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. 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)
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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 tones 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%). 2006/07 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 neighboring nations. Dates are of very less demand in Western regions of the globe.
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b.) 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.
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[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. are comparatively much higher. Integrated logistics and multimode transportation are opening up new business for logistics/ shipping companies.
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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 mainly in Conventional Departments and for Container Trucking. 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
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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.
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[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
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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 means 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.
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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.
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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.
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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 (Indian Markets) 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, excise 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.
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Arranging payment of freight and other charges or collection of payment on behalf of the client.
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Transmitting data by internet and satellite systems, enabling real time tracking and tracing of goods.
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Arranging charters for large volumes out of gauge or project movements by air and sea.
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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 o 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. Informing the shipper the rate and negotiating with him.
viii.Scheduling the arrival and department time of the vessel ix. Listing out the transshipment details and do the follow up.
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c. Clearing and Forwarding (C & F) The main function of C&F 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 & shipping bill.
vi. Procedures for assessment and payment of duties. vii. Examination of merchandize at the customs stations. viii. Prohibitions on imports and exports items. ix. Re-importation and conditions for free re-entry.
x.
Check offences under the act
xi. 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?
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Which facilities should be closed and/or consolidated?
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Is there an opportunity to make changes to the network to reduce logistics costs?
Develop the Current Financial Model:
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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. 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,
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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 are to be 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.
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f. 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
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40 Foot Dry
45 Foot Dry
vii. Open top containers viii. Flat rack for over sized cargo ix. 40 foot refrigerated containers/ reefers x. High cube containers (40 foot, 45 foot & Reefers)
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.
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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. By using Activity Based Costing (ABC) 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 improve 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
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[CHAPTER 4] Review of Literature 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.
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
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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
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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 by 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. 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
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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 F&L 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. It 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 F&L with favorable order management, and ease of doing business is attained by logistics organization like Lintas Freight and Logistics.
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.
27
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, eprocurement, 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. 4.2 Studies on Inventory, Back Order, Lost Sales, Stock Outs, Packaging and Packaging Materials, Documentation from Lintas Freight & Logistics a. 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:
28
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]
b. 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$.
29
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 amount 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.
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[CHAPTER 5] Research Methodology 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.
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
31
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. in 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 large scale AL-Hamriya Port, Dubai and having its branch office in Mumbai. The total numbers of logistics organizations in and around this port are 6000 in number, which constitutes the population. Similar, 100 organizations having major operations in the Freight and Logistics 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 managers and staff of the branch office, questionnaire was developed focusing various aspect.
32
[CHAPTER 6] Data Analysis and Interpretation Secondary Data: Books of Logistics Management for literature reference, Internet Web Portals, Websites of each firm, Company Brochures. 5.6 Statistical Tools: Percentage Analysis Bar Diagrams Pie Charts 5.7 Limitations of Study: •
A few organizations did not publish the exact values for each question especially in sales turnover and other similar figures.
•
The study was conducted in the Mumbai area only aiming at the main Dubai Centre and confined to the freight division of the logistics management.
•
Certain monetary values were not being filled by organizations.
•
Due to organizations security reasons documents like Bills, Warehouse Bills, etc could not be gained.
•
Most of the questionnaire answers were filled over internet email facility; therefore contact was through phone and emails.
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
33
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.
a) Which are the logistics services organizations offers?
Table -1 Service Offer Sl. No. 1 2 3 4 5
Service Freight Warehousing Crossdocking Network Design Value Adding
Chart-1 Service Offer
Percentage 100 89 88 66 98
34
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 Sr. No. 1 2 3 4
Decisions Operational Stability Cost Effectiveness Customer Needs Other
Percentage 11 10 36 96
Chart-2 Operate With Logistical Providers
35
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 36% have operations with other providers as per customer needs. Only 11% and 10 % were providing service along with other providers for the purpose of operational stability and cost effectiveness respectively. It is stated that 96% of organizations operate with other logistical providers and remaining 4% as standalone. c) What is the mode of decisions regarding the operations? Table-3 Mode of Decision Sl.
Operational Decision
No. 1 Strategic 2 Tactical 3 Operational
Percentage 37 88 63
Chart-3 Mode of Decision
36
The pie chart above shows the mode of decisions regarding the operations. The pie chart shows 88% of organizations take tactical decisions followed by 63% with operational decisions and 37% strategic decisions. Most of the organizations have a mixture of all the decisions in their day to day as well as in long and short term plans.
d) Which is the area of the activity, that organizations feel best in their service?
Table-4 Best Activity Sl. No. 1 2 3 4 5
Service Freight Warehousing Crossdocking Network Design Value Adding
Chart -4 Best Activity
Percentage 98 86 87 4 97
37
The pie chart above shows the best activity which organization feels in their operations. The pie chart shows 98% of organizations have freight in the predominant area, followed by 86% of warehousing. Another significant area is Crossdocking with 87% as best activity. There is only a minor activity based on network design with 4% in pie graph. Most of the organizations have a mixture of all the activities in their day to day and 97% of organization says other activities bring in more revenue and the best of their activities, which includes packaging, labeling etc.
e) Number of employees in each type of the service rendered of the organizations
Table-5i Employees Sl. No. 1 2 3 4 5 6
Departments In Organizations Top Management Operations Accounts / Finance Marketing Human Resource Documentation /Others
Number of
Percentage
People in Each 452 468 451 517 371 1847
11 11 11 13 09 45
Table- 5ii Employees in Lintas F&L Sl.
Lintas F&L : Departments
Number of
Percentage
38
No. 1 2 3 4 5 6
People 3 4 4 3 0 8
Top Management Operations Accounts / Finance Marketing Human Resource Documentation /Others
14 18 18 14 0 36
Table-5iii Employees % of both.
Lintas F&L Employees Percentage Other Organization Employees %
Docu ment ation/ Other s
Top Manage ment
Operatio ns
14
18
18
14
0
36
11
11
11
13
9
45
Acc./Finan Marketin ce g
HR
Chart-5i Employees
The line charts above shows the comparison of employees in each functional division of organization with Lintas Freight and Logistics. The line chart shows around 14 percentages of people belong to top management and industry standards has 11 percent, followed by 18% for
39
operations and industry standards has 11%. Human Resource has to be enhanced and need to be further improved or need to start in the organization. Documentation also needs to be further strengthened. Marketing comprises of 14% working in the said area. Most of the organizations have a mixture of top management with marketing in their activities and functional area. Human Resource comprises of 371 people and other main area is documentation and workers in the areas of loading, operational area. This comprises of only 36% and industry standards are of 45%.
f) What are the locations to which the company caters to? Table- 6i Catering Locations Sl. No. 1 2 3 4 5 6 7 8
Catering Locations Asia Europe USA Australia Africa Russia Middle East Other
Percentage 100 6 89 86 71 98 98 90
Table – 6ii Catering Locations Asia Lintas Freight Other Organization s
Europ e
USA
Austral ia
Africa
Russi a
ME
Othe r
100
0
100
100
0
100
100
100
100
6
89
86
71
98
98
90
40
Chart- 6i Catering Locations
Chart – 6ii Catering Locations
1 0.8 0.6 0.4
Lintas Freight
0.2
Other Organizations Lintas Freight Other
ME
Russia
Africa
Autralia
USA
Europe
Asia
0
The pie chart above shows each organizations catering location in the world. The chart shows 100% of organizations cater to Asian region followed by 6% to Europe and 89 % to USA. Each organization has tremendous catering locations with 86% to Australia, 71% to Africa, 98% to Russia, 98% to Middle East, and 90 % to other locations. Locations mentioned as other is company catering frequently with repeat orders of customers. Chart 6ii shows Lintas Freight and Logistics can enter European markets and other favourable market is Africa. This can be looked into very seriously in future business.
41
g) Which division of logistical activity earns the maximum rate of profit for each
organization on a scale of 1-10 and overall profit of each organization?
Table-7i -Maximum Rate of Profit (Lintas F&L Compared with Industry Average) Profit Scale (1 - 10) Lintas F&L Profit Scale Industrial Profit Average
Freight 9 7
Wareho using 4 6.41
Crossdocki ng 5 5
Chart-7i - Maximum Rate of Profit
Network Design 0 5
Othe r 6 6
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Table-7ii –Profit of Organization (All Services Combined) Profit Level in Percentage
Lintas F&L
Industry Standards
13
15.39
Chart - 7ii –Profit of Organization (All Services Combined)
The bar chart shows each organizations maximum rate of profit in each area on scale of 1-10, where 1 denotes least profit and 10 denotes the service that fetches excellent profit. The chart shows Lintas F&L has ample amount of profit in Freight area followed by Crossdocking and other value adding activities with 9 and 6 in scale. The chart 7i shows industry average value is 7
43
for freight followed by 6.41 for warehousing. It is inferred that freight is giving ample amount of profit and Cross-Docking, Other including labeling and packaging has industry standards. The chart 7ii shows profit percentages said by each organization. We can infer that overall profit percentage for Lintas F&L has 2.39 percentages lesser compared to industry average. The organization should implement more strategies to reach industry mark.
h) Comparison of service offered by Lintas F& L and rating of other organization in the
industry on a scale of 0- 4. Table-8 Service Comparison (Scale 0-4)
Lintas F&L Industry Average
Ease of Service 3 3.84
Client Handling 4 3.76
Customer Service 4 3.82
Chart-8 Service Comparison
Website 2 3.29
Employee Efficiency 3 3.83
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The chart shows Ease of Service is not up to the mark, it shows only 3 for Lintas F&L and the industry standards is 3.84. So organization can increase their Ease of Service. Client handling is satisfactory compared with industry standards. Customer service also has remarkable value compared with industry. Major area to look into is Website easiness, Employee Efficiency. It can be brought up with a considerable effort by proper handling of human activities by Human Resource Department.
i) What is the significant lead-time for each service rendered with previous years data of
each organization? Table – 9ii Lead Time in Days LEAD TIME IN DAYS(LT)
Lintas F&L Industry Average
Freight LT
Warehou sing LT
Crossdoc king LT
Network Design LT
Other LT
21 23
20 22
30 24
0 10
21 24
Chart – 9ii Lead Time in Days
45
The above chart shows the service executed last year in logistics area and the significant leadtime of each area. The chart shows 4122 numbers of freight service jobs has been executed with average lead-time of 21 days. Similarly warehousing jobs with 224 and lead-time of 22 days. While comparing with industry standards Freight is dominating and similarly the main lucrative area is other (Packaging, Labeling etc.), which has 833 in number and 21 days lead-time. Organizations lead-time is excellent except for Crossdocking. Focus should be to reduce leadtime and increase more service.
j) Average elapsed time between order receiving and delivery of the service (Inventory).
Table-11 Elapsed Time Elapsed Time
Lintas F&L 3 Chart- 11 Elapsed Time
Industry Standards 6.9
46
The above chart shows the physical verification check and average elapsed time between order receiving and delivery of the service. The chart shows 89% of organizations have physical verification. Average elapsed time between order receiving and delivery of service has an average of 6.9 days. The total value of elapsed time is 613 days for 89 organizations, hence the average days are 6.9 as explained in the figure for Industry average. Lintas elapsed time is remarkable compared to industry standards.
k) Were there any shortage/ excess of stocks noted, in the last verification done? Table -12i Inventory Shortage Inventory Short
Lintas F&L 12
Industry 19.8
47
Chart-12i Inventory Shortage
Table- 12ii Inventory Excess Inventory Excess
Lintas F&L 0
Industry 4.8
Chart-12i Inventory Excess
The above charts show the Inventory Excess and Shortage faced by organization during verification. It is evident that shortage faced by Lintas F&L is less compared to industry standards; there is a difference of 8. Another aspect is regarding the excess of inventory; in this scenario, Lintas F&L has a remarkable lead with comparison to industry.
l) Average number of customer complaints generated and industry average.
Table- 14 Complaints (Lintas with Industry Average)
48
Complaints Generated Last Year
Lintas F&L 290
Industry Average 179.71
Chart – 14 Complaints (Lintas with Industry Average)
The above chart shows average number of complaints. The complaints for Lintas F&L is 290 and whereas to industry average is around 180 in number. Hence organization should try to reduce the complaints arising. This can be achieved by increasing new modern methods and facilities to customers. Organization need to heavily focus onto the issue to reduce number of complaints arising in operations, customer satisfaction and other similar areas.
m) How does the organization follow up to retain customers. Table-15 Customer Retention Sl. No. 1 2 3 4 5
Service Customer Complaints given preference Phone Service Intimation Gifts Email
Rating 100 100 100 3 100
49
6 7
Fax Other
11 100 Chart-15 Customer Retention
The above chart shows preference of complaints and how organization follow up to retain customers. Its been noted that cent percent of organization follow up with customers for customer complaints. Most of the preferable methods for contacting customers for new service intimation and customer realtionship are telephone, email and other methods like marketing / sales, customer office visit with 100 rating. The least preferred are gifts and fax with 3 and 11 in rating.
n) Does the organization has proper system for handling customer handling, and does customer know whom to contact when a problem arises, ascertain the level of satisfaction, feedback by customer and is customer suggestion given preference in the organization? Table- 16 Proper System Sl No. 1
Service Proper System
Rating 100
50
[CHAPTER 7] 2 Customer Know 3 Contact Whom Findings and Suggestions 4 Customer Feedback 5 Customer Suggestion
100 94 88 83
Chart-16 Proper System
The above chart shows all organization in sample has propers system for handling customer complaints. Its been revealed that 100% from sample, customers know the sytem of handling customer complaints in the firm. Whom to contact in case of complaints is having rating of 94. Customer feedback and customer suggestion is having rating of 88 and 83 respectively.
Findings i)
The quality of service as rated is above average in the case of Lintas compared to industry. But the organization should continuously try to improve the quality aspect as is being done by other players in the field. This is quite a necessity as otherwise the figures may fall down. Continuous improvement is a must so that the customers will prefer Lintas Freight & Logistics LLC as their first choice in Logistics and Freight
51
industry category. This can be achieved with more modern equipments and proper guidance to employees and the rating can go high to excellent service. ii)
Pricing of service is satisfactory, which organization can further enhance with proper management. Present employee strength is satisfactory compared to other organization but more focus should be made to documentation areas where the firm has lesser employees compared to other organizations.
iii)
Network Design is an area that the organization should not start immediately due to low rate of returns is recorded as the industrial average. Design of new warehouse areas and proper allocation of work with more sophisticated software facility can be done through outsourced way during implementation.
iv)
Decision making is excellent for organization with respect to other organization in the industry.
v)
Operation with other logistical providers should be given more preference to achieve cost effectiveness.
vi)
Rearrangement of employees may be a better solution. Down sizing of personnel in the Finance and Accounts section and deploying them for the HR function separately is recommended.
vii)
The organization client handling, ease of service and customer service is having remarkable difference from the industry standards. The main focus need to be on the ease of website and employee efficiency. From the data we can infer that areas which need to be improved are Website and employee efficiency. Employee efficiency can be improved with a proper Human Resource department.
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viii)
Service offer presently has good impact with other organizations service offers. The remarkable areas are Freight, Crossdocking, and Value Adding. Company can further enhance operations of Value Adding through proper methods.
ix)
As logistics industry is concerned Freight is the dominant service followed by Warehousing and Cross-Docking. Another important area where organizations feels very lucrative is Value Adding .
x)
It is observed that most of the organizations operate with other logistical providers. 96% of organizations are doing it and remaining 4% organizations stays independent. It is inferred that for efficient logistical activity, support from other organizations is essential.
xi)
Tactical decisions are mostly followed by organizations followed by operational and a few strategical.
xii)
Freight and Value Adding is considered to be the best service which organizations offer in industry. Another major observation is about Network Design, it has low value and no organization feels it to be lucrative area in industry.
xiii)
Organization can enhance operations to European areas and another major favourable area is Africa. From data Lintas can get good market share if they cater to African regions.
xiv)
Organization profit is good compared to industry standards for freight and can further work on warehousing. This shows a difference of 2 points from industry standards. Whereas for Cross Docking it shows same as to industry standards.
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xv)
Commenting on ease of service, website and employee efficiency, the organization needs to further improve.
xvi)
Freight Service when compared with other industry freight service has got more value. Warehousing has a difference of 30 and is negligible but Cross-Docking need to be reviewed. Another favourable area as mentioned earlier is Value Adding and it shows a difference of 447 works done compared to industry standards.
xvii)
From the observation 89 organizations have inventory verification. The lowest observed days for elapsed time for Lintas F&L are 3 days and industry standards with 6.9 days. Hence it is a remarkable value for Lintas F&L.
xviii)
In the sample taken only a few organizations has inventory short and excess. Values are 119 and 29 for shortage and excess. Lintas F&L had shortage, but no excess in inventory and while comparing with industry Lintas F&L have remarkable value.
xix)
The efficient methods for retaining customers are Phone, Email, Sales Agents and least preferred methods are Fax and Gifts.
Suggestions i)
Organization can further strenghten the employee strength in the documentation department. This can lead to further rapidity for operations.
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[CHAPTER 8] Conclusion ii)
Organization can initiate Human Resource Department to further enhance employee motivation. This will have favourable impact for the operational as well as total strenghtening of organization
iii)
Decision making is quite effective and can be followed for future operations
iv)
Operations with other logistical providers need to be enhanced further for operational effectiveness, more focus should be given to customer delight and cost effectiveness.
v)
Quality of service can be further enhanced to increase customer delight.
vi)
Client handling and service need to be followed in the same way and can be further enhanced with more support. This can be achieved by proper guiding of employees and other workers in the logistical area
vii)
Lintas can enter other markets in the Middle East especially to Saudi Arabia where the potential of market is very high for Logistics industries and can even diversify to other areas in logistics.
viii)
Lintas can focus to African regions for freight handling, as from the data the potential market is high for those regions.
Conclusion The universe everyday is witnessing unimaginable growth in majority of the industries. The logistics and freight industry is one such industry that is rapidly growing. Worldwide logistics
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[CHAPTER 9] Bibliography industry is distinguished by fast technological advances and is growing rapidly than most other industries over the past years. With stiff competition around, the company is likely to reduce the profitability But with proper management of operations and by proper customer desired services, and also effectively utilizing its alliances it can maintain and improve the performance. Joint operational ventures for developing the customized services for its steady growth. The organization has enormous opportunities to grow beyond the expectations. Lintas Freight& Logistics LLC has come a long way from being just a service provider. The organization now has the value of being an ultimate service provider for Freight, Transportation, Cross-docking and Value Adding as per customer needs. The present scenario and the future of the organization with regard to the management are satisfactory. The organization can increase the market share by improving with more state of art technology. The organization can diversify into related other business areas like Warehouses for lease to other organizations, state of art technology providers for other organizations. More importance is to be given for HR development by having a separate department for it. With the development of such a department, several favourable impacts such as increase in out put per employee, increased loyalty, team spirit etc can be generated. As far as Lintas Freight & Logistics LLC is concerned it can be stated that through its excellent service and aggressive logistics service, organization has shown a noticeable increase in the market share. However, there are some areas where the company is not at the top-most position but it can certainly gear up in the near future and is committed to acquire that spot. On implementation of the above recommendations, the management can lead Lintas to the top most position when bench marked in the coming years.
Bibliography Reference: a) Logistical Management – Tata McGraw 2000 Edition.
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Written by Donald. Bowersox, and David. Closs. b) The Management of Business Logistics – 7th Edition:
Written by Edward J. Bardi, C.John Langley, and John Joseph Coyle c) Logistics and Supply Chain Management: Creating Value - Adding Networks Written by Martin Christopher. Websites: i) Source: http://www.idsc.com.sg/images/service_logistics_img1.jpg ii) http://www.indexuae.com/Top/Business_and_Economy/Services/Logistics iii) http://www.lintasfreight.com/ iv) http://www.uae-shipping.net/Lintas-Freight-Logistics-L.L.C..html
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Annexure
Logistics Survey ------------------------------------------------------------------------------------------------------------Details of the Organization Name: ___________________________________________________ Location:_________________________________________________ How long are you there in Business? _____________________Years _______________ ---------------------------------------------------------------------------------------------------------------------
58
1. a) Which are the various Logistics Services you offer? Freight
Warehousing
Network Design
Crossdocking
Other Value Adding Services if any
2. Number of employees in each type of the service rendered
S Divisions / l. N Functional area o.
Number of Employees in your various logistics division Freight Warehousi Network ng Design
Crossdocki Other ng
1 Top Management 2 Operations 3 Accounts/Finance 4 Marketing/Sales 5 Human Resources 6 Others if any
3. Which is the area of activity; you feel you are the best?
Freight Network Design
Warehousing
Crossdocking
Other Value Adding Services if any
Total
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4. Which division of logistical activity earns the maximum rate of profit?
Rate them on Scale of 10 (Best 10 Average 5 Worst 0) Freight Warehousing Crossdocking Network Design Any Other (specify)___________
5.
a) What are the locations to which your company caters to? i) Asia ii) Europe iii) USA iv) Australia v) Africa vii) Within Middle East only viii) State if any other locational specialization
vi)Russia
___________________________________ ___________________________________
b) Please rate the service offered by your organization Excellent
Ease of Service Client handling Customer Service
Good
Fair
Poor
Very Poor
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Website Information Employee Efficiency
d) What is significant lead time in days for each consignment and Number of service executed last year. (Kindly mention with previous year’s data)
i)Number of Service Executed in last year (2007) Service
ii.) Number of transport orders that have been executed, such that the delivery is on time as per the agreed lead time?
Freight Warehousing Crossdocking Network Design Value Adding Note: Kindly mention the answers with last year’s data (2007) from questions 10 to 12.
10. Inventory a) What is the average elapsed time between the time of receiving order from the customer to your firm to release the item from the ware house and the time the item is ready for moving from the ware house with proper documentation. ________________________ Days
ii)
Were there any shortage / excess of stocks noted, in the last verification done? No shortage / excess of stocks noted
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Shortage of stocks noted Excess of stocks noted
11. Customer Satisfaction
a) Is customer complaints given preference in organization: Yes / No
b) How your organization follow up to retain the customers (Put Number 1 on desired coloumn)
No.
Method
1
Phone Call
2
New Service Intimation to Customers
3
Gifts
4
Email
5
Fax
6
Other methods if any ________________
Number
c) What is the total number of customer complaints received in each division last year? ______________Number
d) Do you have a proper system of handling customer complaints? Yes / No
e) Do you have a system of contacting customers after completing all the formalities of an order, to enquire whether they have any complaint and to ascertain the level of satisfaction the customer enjoyed? Yes / No
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f) What is the number of customers you had business last year? _________________ Numbers
g) Out of the above how many are there who availed your services repeatedly? _________________ Numbers
h) How many of them avail same services from others (your competitors) as well _________________ Numbers
