Logistics Management

06 Jul


Read the following case and answer the questions given at the end.

Passenger Interchange

In most major cities the amount of congestion on the roads is increasing. Some of this is due to commercial vehicles, but by far the majority is due to private cars.There are several ways of controlling the number of vehicles using certain areas. These include prohibition ofcars in pedestrian areas, restricted entry, limits onparking, traffic calming schemes, and so on. A relatively new approach has road-user charging, where cars pay afee to use a particular length of road, with the fee possibly changing with prevailing traffic conditions.

Generally, the most effective approach to reducing traffic congestion is to improve public transport. These services must be attractive to people who judge them by a range of factors, such as the comfort of seating, amount of crowding, handling of luggage, availability offood, toilets, safety, facilities in waiting areas. Availabilityof escalators and lifts, and so on. However, the dominant considerations are cost, time and reliability.

Buses are often the most flexible form of public transport, with the time for a journey consisting of four parts:

  • joining time, which is the time needed to get to a bus stop
  • waiting time, until the bus arrives
  • journey time, to acnrallg do the travelling
  • leaving time, to get from the bus to the final destination.

Transport policies can reduce these times by acombination of frequent services, well-planned routes, and bus priority schemes. Then convenient journeys andsubsidised travel make buses an attractive alternative.

One problem, however, is that people have to changebuses, or transfer between buses and other types of transport, including cars, planes, trains, ferries and trams.Then there are additional times for moving between onetype of transport and the next, and waiting for the nextpart of the service. These can be minimised by an integrated transport system with frequent, connecting services at ‘passenger interchanges’.

Passenger interchanges seem a good idea, but theyare not universally popular. Most people prefer a straight-through journey between two points, even if this is less frequent than an integrated service with interchanges. The reason is probably because there are more opportunities for things to go wrong, and experiences suggests that even starting a journey does not guarantee that it will successfully finish.

In practice, most major cities such as London and Paris have successful interchanges, and they are spreading into smaller towns, such as Montpellier in France. For theten years up to 2001, the population of Montpellier grewby more than 8.4 per cent, and it moved from being the 22nd largest town in France to the eighth largest. It has good transport links with the porti of Sete, an airport, inland waterways, main road networks and a fast rail linkto Paris. In 2001, public transport was enhanced with a 15 kilometre tramline connecting major sites in the towncentre with other transport links. At the same time, buses were rerouted to connect to the tram, cycling was encouraged for short distances, park-and-ride services were improved, and journeys were generally made easier, As a result, there lns been an increase in use of publlc transport, a reduction in the number of cars in the town centre, and improved air quality. When the tram opened in 2000, a third of the population tried it in the first weekend, and it carried a million people within seven weeks of opening. In 2005, a second tramline will add 19 kilometres to the routes.


(a) Are the problems of moving people significantly different from the problems of moving goods or Services?

(b) What are the benefits of public transport over private transport? Should public transport be encouraged and, if so, how?

(c) What are the benefits of integrated public transport systems?



Read the following case and answer the questions given at the end.

Kozmo, the Online convenience store to shut down

New York-based Kozmo, the 3-year-old company announced that it would stop delivery service in all nine cities it operates. New York-based Kozmo, which dispatched legions of orange-clad deliverymen to cart goods to customers’ doors, is the latest dot.com dream to evaporate in the market downturn. Amazon com, venture capital firm Flatiron Partners and coffee giant Starbucks were among the investors in Kozmo.

Kozmo said in December that investors promised a total of $30 million in private funding. But last month the company learned that an investor had backed out of a $6 million commitment. Kozmo executives had been working on a merger deal with Los Angeles-based PDQuick, another online grocer, sources said. The deal collapsed when funding that was promised to PDQuick did not materialize. Sources said Kozmo still has money but decided to close now and liquidate to ensure that employees could receive a severance package.

Just last month, Kozmo Chief Executive Gerry Burdo was upbeat about Kozmo’s future, saying he was looking to steer Kozmo away from its Internet-only business model and toward a “clicks and bricks” approach. But some analysts say Kozmo’s business model only made sense in the context of a densely packed city such as New York. Vern Keenan, a financial analyst with Keenan Vision, said the service had a chance to work in only a few other cities around the world, such as Lonclon, Stockholm or Paris. “This seemed like a dumb idea from the beginning,” Keenan said. “This grew out of a New York City frame of mind and it simply didn’t translate.”

Kozmo was started by a pair of twenty-something former college roommates. They got the idea for the company on a night when they craved videos and snacks and wished a business existed that would deliver it to them. Kozmo offered free delivery and charged competitive prices when it launched in New York. Though customers loved the service, the costs of delivery were high.

After co-founder and former Chief Executive Joseph park stepped down, Burdo slashed Kozmo’s overhead, instituted a delivery fee and oversaw several rounds of layoffs. The company also closed operations in San Diego and Houston. Burdo said last month that profitability was not far away. The company had reached a milestone last December when it reported profits at one of its operations for the first time. Kozmo later saw two more operations reach profitability as a result of brisk holiday business.

Online delivery companies have been among the most ravaged by the Internet shakeout. Kozmo’s rival in New York, Urbanfetch, shuttered its consumer operations last fall. Online grocers such as Webvan and Peapod have also struggled, and smaller operations such as Streamline.com and ShopLink.com have dosed down. Peapod was days away from closing last year when Dutch grocer Royal Ahold agreed to take a majority stake.

From the very beginning, supply chain management was to be a core competency of Kozmo. The promising dot.com would deliver your order everything from the latest video to electronics equipment in less than an hour. The technology was superior, the employees were enthusiastict, the customers were satisfied. But eventually, Kozmo ran out of time and money.


(a) What, in your opinion, is the major reason for the failure of Kozmo?

(b) Do you think that Kozmo promised what its supply chain could not bear? What could have prevented its shut-down?



Read the following case and answer the questions given at the end.

Case Study:

ABL is one of the leading Producers of medical instrumentation. It manufactures equipment for use in Hospital. This large, high tech machines cost significant amount. Each machine is tailored to hospital requirements and installed in a specially prepared space. These units are manufactured in ABL’s plant in UK and shipped for installation to hospitals all around the world. ABL’s Supply chain manager has passion for integrated supply chain management.

He and his team always have multiple improvement projects underway. Their goals up are:

  • Bring the order to delivery cycle time down below three weeks. While improving quality and lower cost.
  • Involving product designer to change the design for easier manufacturing, installation and customization.
  • Reducing supplier base so that 20 key supplier provide about 90 percent of supplier volume.
  • Obtaining the same performance from the internal supplier that is expected of external.
  • Involving suppliers in evaluation, design and analysis process.
  • Using simple order transaction based on electronic media.
  • Enhance Customer Satisfaction.
  • Measures monitor and improve the same systematically.

Currently ABL is using a state of the art ERP software couple with SCM functions. It has also developed information system for their suppliers. ABL has also lined up with expressway, a leading logistic company by which the delivery times are monitored continuously. ABL believes in delivering a perfect order.


a) What is ABL’s strategy for good supply chain Management?

b) Give any two goals set up by ABL and list their implications on ABL.

c) What is the software being use at ABL? Apply that software to theoretical used and explain.

d) What is perfect order in this case?



Read the following case and answer the questions given at the end.

Case Study:

Farm Equipment manufactured limited (FEML), established in 1965. Is one of the world’s leading producers of agriculture equipments. FEML’s latest efforts on supplier relationship have their origins in the plant redefining its business strategies during the 1990s. As a result of their redefinition, the factory was focused on sheet steel stampings, weddings, assembly and paint as core manufacturing process. With this strategy purchased passed costs began to represent an increasing percentage of the FEMS’s manufactured costs. This laid the first corner stone in FEML’s re-examination of supplier relations. The second corner stone fell in place when, because of capacity constraints, steel stamping dept was unable to fill the factory’s total stamping requirements and this led to the development of external stamping sources.

Now the third corner stone was laid: Discussion began to arise as to whether the internal stamping dept should be treated the same as external stamping suppliers with the implication that the internal stamping dept should compete for business and receive the same level of support at any other outside source.

Typically FEMC’s suppliers are small and medium sized manufacturers. Increasingly, such companies have been under industry wide competitive pressure to reduce overhead and trim costs. Many of them have reduced their employees to minimum necessary to run daily operations. Planning and implementation of new manufacturing strategies is beyond the capabilities of these companies because of lack of manufacturing strategies is beyond the capabilities of these companies because of lack of expertise. This realization led to the fourth and final corner stone. A vigorous debate began on “why don’t strategic outside sources receive the level of support provided to FEML’s internal sources”?

In 1995, Mr. sonawala, GM-scm at FEMC’s jeadquarters, initiated a pilot supplies development programme.  The aim was to resolve the debate via a pilot experiment to support 16 suppliers. An agreement was forged with the pilot suppliers that would entitle FEML to share in any savings obtained from the improvements over next 18 months. FEML’s engineers were sent out to work with the suppliers who participated in the project. The result showed price reduction that resulted for FEML enabled it to more than recoup the investment it made.

Based on these results, in 2001, the FEML works formed a dedicated supplier development group on providing resource to assist strategic supplies in implementing SCM. Recent improvement efforts have targeted lead – time reduction in supplier’s factories. In addition to providing personnel to work at the supplier’s facilities, FEML has provided training and education for supplier’s staff. As a result of these efforts, FEML has seen reduction of more than 90./. in lead time at some supplier’s and resulting price reductions to FEML (after providing suppliers share) have been as much as 15./


a) What should be the basis for sharing benefits between FEML and its suppliers?

b) “Managing lead time is more important than reducing the inventory in a supply Chain”. Defend the statement in the context of FEML.

c) Explain the brief performance indicators at FEML and its suppliers end.

d) List at least four factors on which suppliers of FEML needs to be evaluated.



Q 5. “There are many possible structures for supply chain, but the simplest view has materials converging on an organisation through tiers of suppliers and products diverging through tiers of customers.” Elaborate.

Q 6. Elobrate clearly the meaning of “World-Class” in World-Class Supply Chain Management (WCSCM). What are the features of World-Class Companies ? Give your answer highlighting different characteristics pertaining to management level, quality control, operations/production and technological advances.

Q 7. What are the essential differences in the Supply Chain Management of Products vs. Services? Discuss the application of Supply Chain Management principles in Financial Services.

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