Reference no: EM133288767

Case Study Project

Students should analyze the case and answer the questions. No more than 7 pages excluding the references, written according to APA 7 having at least 5 references.

Logistics Operations
DEF Ltd. is the country's largest manufacturer of spun yarn with well-established market. DEF Ltd. has a good reputation for quality and service. Their marketing department identified that the potential for the global market is expanding rapidly and hence the company undertook an exercise for expansion of the capacity for export market.

The company formed a team of Marketing and Materials department to study the global logistics possibilities. After an extensive study, the team came up with a report on global logistics and submitted that global logistics is essentially the same as domestic due to the following similarities:

• The conceptual logistics framework of linking supply sources, plants, warehouses, and customers is the same.
• Both systems involve managing the movement and storage of products.
• Information is critical to t h e effective provision of customer service, management of inventory, vendor product and cost control.
• The functional processes of inventory management, warehousing, order processing, carrier selection, procurement, and vendor payment are required for both.
• Economic and safety regulations exist for transportation.

The company had a very economical and reliable transportation system in existence. For exports as well they decided to evaluate the capabilities of their existing transporter and entrusted them with the job of transport till port. For customs formalities they engaged a good CHA after proper cost evaluation and entered into contract for freight with a shipping company agent.

The response for the company's export was very good and the company could get as many as15 customers within the first two months and reached to a level of USD 250,000 per month by the end of the first half of the year. Based on this response the export volumes were expected to grow to a level of USD 400,000 per month by the end of the

year. When the review was made at the end of the year, company found that export volumes had in fact come down to the level of USD 120,000 which was much lower than it had reached in the first half of the year.

The managing committee had an emergency meeting to discuss this and the export manager was entrusted with the task of identifying the reasons for this decline. Mr. Ganesh decided to visit the customers for getting the first hand information. When he discussed the matter with the customers, the feedback on the quality and price was good but the customers were very upset about the logistic services due to delayed shipments, frequent changes in shipping schedules, improper documentation, improper identifications, package sizes, losses due to transit damages etc.

After coming back, the export manager checked the dispatch schedules and found that production and ex-works schedules were all proper. Then he studied the logistics systems and found that the logistics cost was very high and all the logistics people were demotivated due to overwork and were complaining of total lack of co-ordination and the system had become totally disorganized.

Question 1. Explain the problems experienced by DEF Ltd. What is the main cause of these problems?

Question 2. What logistics model should the company go for to ensure proper operations of the company?