LOGISTICS AND TRANSPORT

1. LOGISTICS AND TRANSPORT About the logistics industry Is the process that ensures that goods or services are available where and when they are needed in good condition and at competitive prices. This enables efficient management of the supply chain. Freight logistics companies either manage their own distribution system or manage it on behalf of another as ‘third-party logistics’ (3PL) Logistics industry in the UK alone is worth almost £75 billion to the economy and employs around 2.3 million people

2. THE DHL SUCESS STORY • The number one express carrier DHL
A DHL case study1: Introduction • The international express market is expanding rapidly. According to a recent report by the Boeing company, it occupied a global market share of 5% of the total international air cargo market in 1994. • This rapid growth rate is set to continue and to attain 31% of the total international air cargo market by the year 2014. • The largest share of this growing market is handled by international express carrier, DHL. This case study therefore sets out to chart how DHL Worldwide Express has created one of the greatest success stories in terms of world-wide renown, company growth and enterprise in the last quarter of the twentieth century. • Its foundation, 27 years ago (in 1969), started an entire industry - air express distribution – of which it has remained the undisputed world leader. • Today, following tremendous growth and expansion, DHL continues to drive the industry it created through a relentless pursuit of excellence in all aspects of product and service, in every operation throughout the world. Understanding the needs and concerns of customers, both globally and locally, is central to DHL’s business philosophy and lies at the heart of the leadership position maintained throughout the 223 countries it serves.

3. In the late 1960s, companies had three alternatives if they needed to send
documents and parcels overseas: • They could use the Post Office or local equivalent, geared towards private users; • They could use expensive on-board couriers who were limited by the weight they could carry; or • They could use standard air freight which usually involved built-in delays at customs • There was therefore a distinct gap in the market for a fast, reliable and cost effective method of distribution and it was the recognition of this fact which lay behind the foundation of DHL by Dalsey, Hillblom and Lynn in 1969 in California. • Initially express distribution companies, like DHL, focused primarily on emergency document delivery. However, with the maturing market, this rapidly developed to include consignments of all sizes. Far from being just a quick fix solution in a crisis, express distribution was to become an integral part of a company’s planned distribution strategy

4. Managing the supply chain THE EXEL SUCESS • Managing the supply chain for globally integrated products
Introduction • Today many of the products that we consume have been brought to us through globally integrated distribution systems. • Striking examples are the fruit and vegetables that we purchase in our local supermarket that arrive fresh from far flung corners of the globe, and the motor vehicles that we drive around in which contain components from many different countries. • We tend to take the delivery of these products for granted without realising the real complexity of the planning that is involved in making sure, that for example, all of the components for a modern VW Beetle arrive at their final assembly point at just the right time. • This case study, therefore, introduces you to some of the processes that go on behind the scenes by examining supply chain management • Supply chain managementSupply • Chain management requires specialist skills and is all about efficiently bringing together all of the links and stages involved in creating a high quality supply chain. • In this case we see how Exel manages the supply chains for many of the world’s leading businesses. Exel is a global leader in supply chain management, providing customer focused solutions to a wide range of manufacturing and retailing industries. • Exel’s comprehensive range of innovative logistics solutions encompasses the complete supply chain from design and consulting through freight forwarding, warehousing and distribution services to integrated information management and e-commerce. Exel now has contract logistics operations in 31 countries accounting for 84% of world GDP. Combined with Freight Management activities that cover over 120 countries around the world, Exel has unrivalled global coverage.

5. Case study the logistics dilemma • Sabrositas is a world leader in the manufacturing of Salty snacks. • The company wants to expand their current operations but has to decide the most efficient way to do it. • By geographically install their manufacturing plants closer to their customers (but will imply large investments in equipments, operations people large warehouses etc)

6. Sabrositas case study Create their own distribution system via individual trucking system to ensure that their snacks will be in all convenience stores and changarros You must decide the best possible option of this dilemma based on the following MUSTS: • Food products must be one week fresh • The raw materials must be stored under special conditions to preserve their good condition (potatoes, corn, oils, condiments etc)

7. Sabrositas logistics dilemma • Sabrositas expected production and sales would double in two years. They have one plant located in DF • One truck holds enough product to serve 34 customers per day • Each truck must visit every costumer every week to refill shelves and retrieve “old product” • There are 1.5 million costumers dispersed in the country • Major area cities (D.F, Guadalajara, Monterrey, estado de Mexico )account for 50% of these costumers • Decide how this distribution dilemma should be resolved

8. Additional data for Sabrositas dilemma • A production plant would require an investment of • a) 90 million dollars for a production for 500 thousand costumers • b) 70 million dollars for a production for 300 thousand costumers • c) 50 million dollars for a production plant for 200 thousand costumers • One huge trailer hold about enough product for 600 costumers and they cost about 98 thousand dollars for single box trailers • One costumer service truck costs about 28 thousand dollars

9. Sabrositas logistics Dilemma Potential costumers by zone: North east: 250 thousand North west: 200 thousand Center : 500 thousand South east: 100 thousand South west: 120 thousand Potentially the company could export to the south west US to about 300 thousand Costumers. Consider approximate travel Distances in days, Km's etc