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Transportation

Transportation is the movement of goods from one location to another. Logistics management is

the component of Supply Chain Management that focuses on how and when to get raw materials,

intermediate products, and finished goods from their respective origins to their destinations.

Effective and cost efficient Logistics Management can be a real point of competitive

differentiation for any business organization. To practice effective and cost efficient Logistics

Management, an organization must lay the foundation for a responsive and economical

transportation networks. Transportation decisions directly impact responsiveness and efficiency.

Faster transportation allows greater responsiveness but lower efficiency. Transportation is

directly affected by other supply chain drivers such as facilities. More facilities in close

proximity to the customers will lower the transportation costs and vice versa.

MAYS , over the years, has made successful partnership with external logistic companies who

provide effective and cost efficient services to the organization. Although MAYS owns a few

transport vehicles, it relies on external logistic companies for all its transportation needs.

In case on inbound logistics the suppliers bare all the costs of transportation. Most of the material

procurement is done locally and goods are transported from the supplier to the production facility

through local road transport. However, there are a few items that are not locally available and

have to be imported, the transportation cost of which has to be paid by MAYS .

In case of outbound logistics, MAYS bares all the costs of transportation. The normal procedure

for the delivery of goods is that finished goods are loaded in containers which are then

transported to the Karachi port through road networks. Lorries are used with three pre defined
routes. When at the Karachi port, the containers are loaded on vessels after custom clearing

which are then shipped to their destinations. For emergency delivery, air transport is used. The

containers are transported to either Lahore or Sialkot airport through road networks which after

customer clearing are loaded in planes and sent off to their destinations. If the emergency

delivery was a result of a production delay, MAYS bares all the extra cost of transportation, but

if the emergency delivery was because the customer required an urgent delivery, then all costs

are borne by the customer.

Information

Information as a supply chain driver refers to the coordination between various departments in an

organization and the various stages in a supply chain. Information sharing is crucial to daily

operations of each stage in a supply chain (production scheduling, inventory levels, etc).

Information has now become the most important drivers of supply chain. It affects all the other

drivers of supply chain (Facilities, Inventory and Transportation). Effective use of information

allows the supply chain to become more efficient and more responsive at the same time, and

reduces the need for a trade-off. Companies are becoming more and more aware of the need to

employ Information Systems to enhance coordination within the company and with external

partners. Information system is a system composed of people and computers that processes or

interprets information.

MAYS uses a customized version of Oracle Database. The system enhances coordination

between all departments of the organization making organization more effective and efficient.

Enhanced coordination between the departments aids MAYS in achieving both High
Responsiveness and Low Cost. The Oracle Database not only improves coordination between

departments but helps each department keep track of individual orders.

Another advantage of using the Oracle Database within the organization is that it will help

managers in forecasting and aggregate planning. Although, MAYS uses a Pull system of

inventory which focuses on producing only after receiving a customer order, the management

relies heavily on aggregate planning for individual orders. After receiving a customer order, the

the Production Planning and Control (PPC) department plans the execution and fulfillment of

that order keeping in mind the delivery date and the factors that can influence production and

delivery.

Problem Identification

Although MAYS has a well integrated and carefully organized supply chain system that is

adding value and providing profitability to not just the company but also to its stake holders but

still there is room for improvement.

Following are the problems that we think need to be brought under consideration in order to

maximize performance of the company:

1. Inventory

MAYS holds only work in process inventory. Goods are held in inventory until the production

against the sales contract is complete. This in our opinion is a disadvantage for the company in

case of rising demand and increasing prices. For example in case of an emergency, or

considering the current political scenario of Pakistan there can be a delay in the delivery of raw
material which can hinder production process, obviously adding in more cost and also resulting

in loss of customers.

2. Centralized Decision Making

The purchase orders for the grey fabric, which is the key input in all the products made by

MAYS , has to be approved by the Purchase Director before it can be forwarded to the vendor.

Thus this means that if the marketing director is not available in office, due to any reason, the

entire procurement process will be delayed because of which the production will also suffer.

3. Information System

The Information System currently being used by MAYS which is a customized version of the

Oracle Database, only incorporates the internal departments of the organization and does not

extend to the supply chain partners.

Solution/Recommendation

1. Inventory

MAYS has a huge facility with a massive storage capacity. No additional costs will be incurred

if they decide on keeping raw materials and finished goods inventory at hand. Therefore, it is

recommended that they keep inventory on hand to avoid losing orders to competitors and to

ensure smooth production in case of any inconvenience caused by suppliers.

2. Centralized Decision Making


MAYS should transfer authority to make procurement decisions from the Director level down to

the manager level to avoid any delay in production caused by the unavailability of the Purchase

Director. Also, doing so will speed up the procurement process, further increasing the efficiency.

3. Information System

MAYS should extend the Information System that they have employed further to incorporate all

their supply chain partners along. This will make the business process more effective and

efficient and enable the supply chain to be more responsive and cost efficient at the same time.