STAGE CASE STUDY

Industrial Placement Student - Second Stage Case Study



Industrial Placement Student - Second Stage Case Study

In your opinion, what are the key drivers of cost in an FMCG supply chain?

Four major drivers

Facilities

Facility decisions

Production facility

Flexible versus dedicated

Product focus (fabrication and assembly) versus functional focus (fabrication or assembly)

Storage facility

Cross-docking versus storage

Transportation

Mode of transportation

Air, package carriers, truck, rail, sea, pipeline, intermodal,

Design of transportation network

Route and network selection

Inventory

Cycle inventory

Safety inventory

Seasonal inventory

Level of product availability

Information

Push vs. Pull

Coordination and information sharing

Forecasting and aggregate planning

Enabling technologies

If you were setting up with a new 3PL, what KPI's would you want measured and why?

Key Performance Indicators

Facilities

Capacity

Utilization

Flow time (theoretical and actual)

Flow time efficiency

Product variety

Average batch size

Service level

Transportation

Inbound/outbound cost

Inbound/outbound cost per shipment

Shipment sizes

Fraction transported by mode

Inventory

Average inventory

Units that have been in stock for more than a specified period of time

Fill rate (fraction of orders that were met on time from inventory)

Fraction of time out of stock

Information

Forecast horizon

Forecast errors

Ratio of demand variability and order variability

We run a Cost to Serve model that details all outbound logistics cost i.e. all warehousing and all customer transport. The data below is an example of a monthly report:

Which differences stand out?

Customer

Temp Channel

£/ Case

No. of Cases

Makro

Ambient

1.20

50,000

NISA

Ambient

0.50

51,000

3663

Frozen

1.30

569,426

Palmer & Harvey

Frozen

0.70

550,369

Why could these differences exist?

There is high cost per case. Reason being, volume of cases has been low which has caused cost per case to increase.

What would be your top 3 priorities to tackle with our customers and why?

Our top priorities should be to centralize the warehouse so that bulk quantity of cases can be bought. Secondly, alternative mode of transportation may be acquired to facilitate higher volume of cases.

We have a Shrinkage allowance with our 3PL's of 0.05% (by value of stock issued from the warehouse). Each 3PL runs a weekly book to book stock reconciliation. Below is a KPI report detailing monthly ...