Project Synopsis submitted

For the Degree of

MASTER OF BUSINESS ADMINISTRATION

“A study on Logistices Management – A Case study of Blue Dart,a division of DHL”

SUBMITTED BY

MANU BABU.G

ENROLMENT NO : 130361929

REGIONAL CENTRE : COCHIN

REGIONAL CODE : 14

STUDY CENTER CODE : 14157

INDIRA GANDHI NATIONAL OPEN UNIVERSITY

MAIDAN GARHI,NEW DELHI-110068
YEAR 2014

INDIRA GANDHI NATIONAL

OPEN UNIVERSITY
Statement about the Project:

Logistics is concerned with getting the services and products where they are needed and when
they are desired. It is difficult to accomplish any marketing or manufacturing without logistical
support. It involves the integration of information,transportation,inventory,warehousing,material
handling and packaging. Today, in the fast pace of service delivery and rising end-user
expectations, every organization relies upon logistical support and effective use of logistics
system. The logistics management companies today strive to offer customized solutions to
every organization to assist them achieve their goals. In this work of study, a leader in the
Logistics’ industry – Blue Dart, a division of DHL has been studied and its operational
excellence has been look upon. Various wings of logistics management have been studied.

Introduction:

In today’s challenging competition in the consumer goods, the manufacturers strive for their
products to reach final customers before they turn their rival’s ones. This research attempts to
understand and investigate how Blue dart manages its logistics activities, distribution and
applying information technology to achieve competitive advantages.

What is logistics?

Logistics is about moving materials, information and funds from one business to another or from
a business to a consumer. It is vital part of the business economic system and is a major global
economic activity. In fact 10-15 percent of product costs are logistics related. Worldwide,
logistics constitutes about $2 trillion a year. For any country, the logistics cost is estimated
between 9 and 20 percent of its GDP. Every company dreams of achieving the sever R’s –
delivering the right product in the right quantity and the right condition, at the right placemat the
right time, for the right customer at the right cost. Effective logistics management alone can
make this possible. Logistics is one of the oldest and the newest activities of business
management. It involve combining diverse functions and service providers who may be
culturally and objectively different. In the past, quality of products and services was the key
differentiating factor for companies operating in the same market. In due course, quality and low
cost became the winning combination. Today, responsiveness to the customer’s is the
determining factor. An enterprise that caters instantly to the needs of the customer is the winner.
Integrated logistics can serve as a potent tool for success in today’s competitive business
environment. Logistics is an organized process of managing the flow of merchandise from the
source of supply – the vendor, wholesaler or distributor – through internal processing function
like warehousing and transportation, until the merchandise is sold and delivered to the end
customer. Logistics management aims to reduce inventory-holding costs and improve profits,
while enhancing customer satisfaction. Anything can be ordered online, but receiving a tangible
product is impossible. The difference between e-business success and failure lies in a
company’s ability to manage the logistics.
Logistics and Supply chain management

SCM (Supply chain management) is defined as “Supply chain management encompasses the
planning and management of all activities involved in sourcing and procurement, conversion,
and all logistics management activities. Importantly, it also included coordination and
collaboration with channel partners, which can be suppliers, intermediaries, third party service
providers and customers. In essence, Supply Chain encompasses the companies and business
activities needed to design, make, deliver and use a product or service. Businesses depend on
their supply chains to provide them with what they need to survive and thrive. Every business
fits into one or more supply chains and has a role to play in each of them. The pace of change
and the uncertainty about how markets will evolve has made it increasingly important for
companies to be aware of the supply chains they participate in and to supply chains will have a
substantial competitive edge in their markets. Supply chain management is the chain to achieve
the best mix of responsiveness and efficiency for the market being served. There is difference
between the concept of supply chain management and traditional concept of logistics. Logistics
typically refers to activities that occur within the boundaries of a single organization and supply
refers to networks of companies that work together and coordinate their actions to deliver a
product to market. All traditional logistics focuses its attention on activities such as procurement,
distribution and maintenance and inventory management. Supply chain management
acknowledges all of traditional logistics and also includes activities such as marketing, new
product development, finance and customer service. In the wider view of supply chain thinking,
these additional activities are now seen as a part of the work needed to fulfill customer requests.
Effective supply chain management requires simultaneous improvements in both customer
service levels and the internal operating efficiencies of the companies in the supply chain.
Customer service at its most basic level means consistently high order fill rates, high on-time
delivery rates, and a very low rate of products returned by customers for whatever reason.
Internal efficiency for organizations in a supply chain means that these organizations get an
attractive rate of return on their investments in inventory and other assets and those they find
ways to lower their operating and sales expenses.

Why the particular topic is chose?

Logistics management today is the bedrock of any business. Without selling or buying there can
be no trade and business. Buying and/or selling takes place only when goods are physically
moved from one place to the other into or away from the market. Take away any logistics
system from the system and the system will collapse. It is great importance today to understand
how a company does manage its logistical system to operate smoothly and effectively. The
logistics management companies are building and strengthening modern companies every day.
Study of logistics management will give us insight knowledge of the vast operational field of the
said industry.
Importance of Logistics management

1. Ingrates logistical activities:

In conventional management environment, carious activities of logistics work in
isolation under different management functions. Each pocket trying to sub
optimizes its objectives at the cost of overall organizational objectives. Purchase
segment trying to purchase at minimum price at the cost of what is needed by the
operations. Operations produce large quantities at minimum production cost
ignoring demand leading to doom inventory. Logistics function of management
brings all such functions under one umbrella pulling down inter-departmental
barriers.
2. Competitive edge:
In the fiercely competitive market logistics provide the edge. Due to technological
revolution most of the products are moving into the commodity market. In a
commodity market where price is controlled by competition, where there is no
product differentiation in terms of quality parameters like performance and reliability,
where brands are almost irrelevant, competitive edge is that of availability of product
and service in terms of time, place and quantity.
3. Leads to customer satisfaction:
Through superior customer service, the logistics management strives to achieve
customer satisfaction. Though higher level of quality and timely delivery could
gain customer satisfaction but in such a fast lige customer demands and needs
keep on changing, to keep up to expectations and offer tailor-made solution to
their problems, the logistics industry has to continuously innovate, create and
modify their process, product and services. The organizational objective of
P(Productivity), S(Safety), H(Health), E(Environment) are set to meet customer
expectations.
4. Support critical functions like operations and marketing:
Strong logistics support enables a company to move forward JUST IN TIME
production system for survival in a highly competitive market.
5. Logistics wins or loses war:
 British lost American war due to poor logistic.
 Rommel was beaten in the desert by superior logistic s of Allies.

About the company profile and the Industry:

The Greeks defined logistics as “The science of correct reasoning by means of

mathematics”. The first modern use of the term was in the military to identify the process of
planning and coordinating the movement of army and weapon support systems. Good logistics
brings out the ability to move faster and accurately to the battlefront. “If one applies the same to
the business organization, it is one’s ability to reach the product to the consumer at the right
time, right place, and right quantity and at the lower cost”. On similar lines, supply chain
management will mean the network of organizations involved in the process by which goods are
moved from producer to consumer and the counter flow of information, to manage the supply
chain as a single entity.
A prominent application of logistics was in World War II where weapon movements were
coordinated to ensure success. A recent instance of massive logistics initiatives is in the Gulf
war. With increasing competition in the market place, managements started focusing on
customer services in the early 1950s in developed markets such as Europe and the U.S. In late
1960s some of the logistics concepts were tested. Following the oil crisis of the 1970s and the
concept of just in time in manufacturing customer servicing standards were given more
importance and new integrated logistics integrated logistics models and solutions were born.
The emergence of organized distribution system by department stores and super fast courier
service organizations gave a boost to logistics concepts and strategies. Today all businesses
are looking for seamless transaction systems to coordinate their information and material
requirements along the value chain.
At the micro level any manufacturing and marketing company spends 5-35 per cent of
sales on logistics. The major cost components are transportation, warehousing and inventory
carrying cost. Improvements in logistics get reflected in a reduction in inventory level, shorter
delivery schedules, and improved servicing standards with significant savings in total costs.

Logistics Management Process

Michael Porter in his famous book “Competitive Advantage” has spoken of the value
chain approach and emphasized logistics as one of the most important tools for competitive
advantage.
The various processes and elements that are part of logistics as a discipline are
Inbound logistics: Purchasing, Inbound transportation, Inventory Management.

Manufacturing: Production planning systems, Machine scheduling system.

Outbound logistics: Order booking process, Distribution management, Out bound transportation,
and warehouse management systems.

As customers started demanding improved servicing standards, fast cycle time has become the
key factor for business success, whether it is custom made tailoring service in Hong Kong or
development of a new car in Detroit.
Scenario of Logistics in India
At present, companies specializing in logistics operations in India use traditional
technologies and cater to stand alone services like transportation, warehousing, clearing and
forwarding. There is tremendous scope to upgrade the technology, integrate the entire supply
chain, improve productivity levels and bring down operating cost. Any technology that can
improve productivity in transportation operations will be a great boom to the economy both
directly and indirectly with opportunities for 10-12 per cent reduction in costs. Besides the
savings on downstream user of transport will be much higher and the cost multiplier effect on
the economy will be reduced to that extent.
Given the emerging business and technological trends there are possibilities for
adoption of innovative logistics solutions specifically designed for India. In addition, there is a
requirement for an integrated strategy towards developing logistics and its related IT
infrastructure and also enhancing its industry base.
In recognition of the growing need for technology-enabled solutions in logistics in Indian
and abroad, many companies such as eLogistics are taking shape. In fact, there are a dozen
multinational logistics companies such as Ecel, Bax Global and Menlo which have started
operations in India during the last few years. Today logistics management in India hs become
complex with about ten million related outlets to cater to the needs of 1000 million people. The
logistics market in India is estimated to be Rs.260,000 crores and constitutes 13 per cent of the
GDP. It is much higher that for the US but lower when compared to countries like China and
Korea. A reduction in logistics costs by one percent point will mean a saving of $4.8billion or
Rs.21,600 crores annually . Besides, significant benefits can be reaped through the multiplier
effect of better logistics on all economic sectors.

About Customer Service

According to LaLonde and Zinszer have researched various ways that customer service
can be viewed.1) In terms of performance levels.2)as an activity and 3) as a philosophy of
management. Viewing customer service in terms of performance levels has relevancy providing
it can accurately measured. The notion of customer service as a philosophy of management
exemplifies the importance of customer-focused marketing. All three dimensions are important
to understand what is involved in successful customer service. A broad definition of customer
service should embody elements from all three perspectives aLonde and his associated offer
the following definition:
“Customer services are a process for providing significant value – added benefits to the
supply chain in “cost-effective way”. This definition illustrated the trend to think of customer
service as a process-focused orientation that includes supply chain management concepts.
It is clear that excellent customer service performance seems to add value for all
members of the supply chain. Thus, a customer service program must identify and prioritize all
activities important to accomplish operating objectives. A customer service program also needs
to incorporate measures for evaluating performance. Performance needs to be measured in
terms of goal attainment and relevancy. The critical question in planning a customer service
strategy remains, does the cost associated with achieving the specified service goals represent
a sound investment and if so , for what customers?
Finally, it is possible to offer key customers something more than high-levels basic
service. Extra service beyond the basics is typically referred to as value-added. Value added
services, by definition, are unique to specific customers and represent extensions over and
above a firms’ basic service program.
The three fundamental dimensions of customer service were:

1. Availability
2. Performance
 3. Reliability.

About Logistics & Customer service

Logistics contributes to an organization’s success by providing customers with timely

and accurate product delivery. The key question is who is the customer? For logistics the
customer is any delivery destination. Typical destination range from customer homes to retails
and wholesale businesses to the receiving docks of a firm’s manufacturing plants and
warehouse. In some cases the customer is a different organization or individual who is taking
ownership of the product or service being delivered. In many other situations the customer is
different facility of the same firm or a business partner at some other location in the supply
chain. Regardless of the motivation and delivery purposes, the customer being services is the
focal point and driving force in establishing logistical performance requirements. It is important
to fully understand customer service deliverables when establishing logistical strategies.

Whereas logistics is not capability that contributes to overall success, it is fundamental to

servicing customers. In typical marketing situation, the desired customer service performance
changes over time. To plan marketing strategy in a dynamic will serve to illustrate how logistical
customer service requirement related to a specific product/segment situation will change over
time. The product life cycle structure offers a useful frame work for viewing the dynamics
associated with customer service requirements planning.

In terms of overall logistical performance, the basic customer service platform or

program should be the level of support provided to all customers.

ABOUT BLUE DART:

BLUE DART is South Asia’s leading integrated air express carrier and premium logistics-
service provider. It has the most extensive domestic networks covering over 13,880 locations,
and service more that 220 countries and territories worldwide through its Sales alliance with
DHL, the premier global brand name in express distribution services. BLUEDART’s vision is to
establish continuing excellence in delivery capabilities focused on the individual customer. In
pursuit of sustainable leadership in quality services, they have evolved an infrastructure unique
in the country today with state of the art technologies, indigenously developed, for track and
trace, MIS, ERP, customer service, space control and reservations. Blue Dart Aviation has
dedicated capacity to support their time-definite morning deliveries through night freighter flight
operations.

Blue Dart has warehouses at 14 locations across the country as well as bonded
warehouses at the 6 major metros of Bangalore, Chennai, Delhi, Mumbai, Kolkata and
Hyderabad. It received ISO9001-2000 countrywide verification by Lloyds Register Quality
Assurance for their entire operations, products and services.

Blue Dart, South Asia’s premier express air and integrated transportation, distribution
and Logistics Company, offers secure and reliable delivery of consignments to over 25,498
locations in India. As part of DHL group(DHL Express, DHL Global Forwarding and DHL supply
chain), Blue Dart accesses the largest and most comprehensive express and logistics network
worldwide, covering over 220 countries and territories offering and entire spectrum of
distribution services including air express, freight forwarding supply chain solutions and
customer clearance.

Being a part of this core customer-driven industry, customer centricity is at the center of
everything Blue Dart does. Their mobile field staffs are the face of the organization to the
customer, they are a direct touch point and hence the company ensures that they provide
optimal customer service. Their mobile field force not only has good communication skills but
also possesses excellent knowledge of the local geography and language, to ensure exemplary
customer service and timely deliveries.

Obectives of the project:

Primary Objectives:

 To know the effectiveness of logistics management of Blue Dart.

 To have a thorough understanding of how logistics system works in Blue
Dart.

Secondary Objectives:

 To know about Logistics industry

 To understand the value of the selected organization
 To know whether the customers are satisfied with the existing service
patterns.

Scope of the project study:

In order to understand the concepts of logistics in terms of practical usage and to

glimpse into how a real company or organization uses logistics as a formidable tool to gain
customer satisfaction, reduce overall cost and increase efficiency. Today`s sharp and
competitive market is forcing every industry to stand on toes to offer best possible solutions to
customer demands and problems. How does logistics system offer help and solution to all these
problems? The answer can be obtained only if the working patterns of logistics industries are
studied.

Methodology:

The study is considered as qualitative single-case study, Data is collected from the
interviews with several parties involved with the selected company for study. Secondary data is
retrieved from the information systems, research and reports, publication sources as well as
internet sources. The multi-data collection methods are employed from various sources of data
to ensure the validity and reliability of the research. The sources of data include the chosen
firm`s representatives, including the staff in distribution center. Additionally, interviews were
done with other supply chain members such as Blue Dart`s supplier and company that provide
transportation services to Blue Dart. The interview with business analyst was conducted to gain
more market environment and trend of the industry. The study also includes both primary and
secondary data throughout the data collection and analysis part. Subsequently, a description of
the data analysis followed by the validity and reliability of this thesis are provided.

Qualitative Research:

Qualitative research seeks out the “why” and the “how” of its topic throughout the
analysis of unstructured information – things like interview transcripts and recordings, emails,
notes, feedback forms, photos and videos. The qualitative research does not only rely on
statistics or numbers, which are the domain of quantitative researchers, qualitative method is
used to gain insight into attitudes, behavior, motivation, culture or lifestyles. Focus groups, in-
depth interviews, content analysis and semiotic are among the many formal approaches that
have been used in this study.

The purpose of this study casts the main interests on how logistics activities are handled
and in what essence have them been regarded to. In this study, naturalism and
enthnomethodoly have been employed which was found to be most suitable method.

Case Study method:

A case study is and extensive examination of a single instance of a phenomenon of

interest, It involves gathering detailed information about the unit of analysis with a view to
obtaining in depth knowledge. Characteristics of a case study tend to explore a certain
phenomenon and offer the understandings in a particular context. The multiple methods can be
used in the collection of data which encourage the researchers to gain more opportunities in
searching up the data to provide a sound analysis.

Collection of data:

Two main data collection method have been used. First, the primary data is from the
interviews. The secondary data gives supporting data in to fulfill the gap from the interviews in
this study. Both data collection methods are explained below:

 Primary data – Interviews have been used as a primary source of data. Why
interview? This question may seem surprising, however the majority of published
qualitative research article use interviews and moreover compared to other
method, Interviews are relatively economical in terms of time and resources. The
definition of three types are:
1. Structured Interview: Data collection technique in which an interviewer
physically meets the respondent, reads them the same set of questions in a
predetermined order, and records his or her response to each.
2. Semi-structured interview: Wide ranging category of interview in which the
interviewer commences with a set of interview themes but is pupated to vary
the order in which questions are asked and to ask new questions in the
context to the research situation.
3. Unstructured interview: Loosely structured and informally conducted
interview that may commence with one or more themes to explore with
participants but without a predetermined lit of questions to work through.
This study applies a semi-structured interview and an in-depth interview in retrieving primary
data. The interviewees are involved with Blue Dart as employees, suppliers of Blue Dart.
Also, one interviewee was the ex-management level of the firm. He was interviewed by
using unstructured interview. The questions to him were broad and seeked for his
experience and perception on many themes. However, some questions were the same in
the context as the other interviewees, and the supplier were intended to describe the
functions and how each actors process these activities accordingly to others chain
members. Questions regarding working environment and relationships were included. The
financial analyst within the commerce sector provides the industry view and competition
environment within the country of operation. The interviews lasted between 40 minutes to
one hour. Most of the interviews were conducted by telephone. There were some cases
researcher used emails and internet communications. Questions about the working process
or the flow were raised. The interviewees also gave the reflections about the way the
process helps or hinders the performance. Details in the process were comprised further
from secondary data. The researcher had cross-checked data with the secondary data, to
validate the information. Most of the interviews were executed by telephone and internet.
The researcher was aware of the risks concerned the misinterpretation of the answers. The
sessions were recorded to ensure the correction of the content to be analyzed later. Due to
the limitation of time, resources as well as the well-round data can flaw the research quality.

 Secondary data
The researcher has used “Dark research” approach on secondary data. Desk
research is the term that is used loosely, and it generally refers to secondary
data or that which can be collected without fieldwork. Desk research use the
existing information from the website, company data and sources, directories,
magazines or other published sources. The researcher has gathered data from
company annual report, quarterly report and from its website. The data are
trusted resources since the company selected in the case study is a listed
company with more than one country which is obligated to provide financial and
operations performance, and future plans to investors. The auditor`s report is as
well used to verify data. The websites in retrieving data are the company website,
the websites concern with analyst consensus , newspaper website, business
research data journals, magazines as the newspaper interviews with Blue Dart
are used as data in this study. Especially in the interviews with management
level of the firm the management perspective was made clear. The data were
compared and cross checked before being included in the study. Secondary data
entails the proactive seeking of the existing data in both qualitative and
quantitative research. It can also help to interpret the primary data.

Limitations:
 Qualitative and quantitative researches have their own methodological limitations
which impose restrictions on the study.
 Customer satisfaction being a qualitative matter, it cannot be studied with cent
percent accuracy and this brings limitation to the analytical work.
 The fast pace of aggressive change in the market compels product, processes
and solutions change over a very short span of time and hence time limitations
are always imposed on the study.
 Many wings of operational works running hand-in-hand makes it critical for a
researcher to study each wing at the same time with same accuracy, this
sometimes distorts the work.