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EXECUTIVE SUMMARY 2 .
Sarajevo 2.o.TABLE OF CONTENTS 1. RECOMMENDATIONS FOR ORBIO 3 .o. SUPPLY CHAIN THEORY 3. ORBICO d.
motor oils. pointing out that the biggest problems faced by this department are: Lack of information about planned sales and promotions. cleaning products. Sarajevo is a distribution company. making the operations less than optimal. Sales and brand managers found the following issues as most pressing: Lack of information about real levels of inventory and current stockouts. raising costs. Short expiry dates on food products. logistics department and suppliers. toys. which work together on inward and outward logistics of several hundred products. Logistics manager had her own side of the story. key customers. etc. Orbicod. P&G and fine cosmetics sectors were original sectors with which the company started and they have well established supply chain within the company. adding new brands. Fact that particular brands are held on stock for longer than are the sales conditions provided by suppliers. 4 . which are often received with 20-30% of their shelf life passed. fine cosmetics and MARKET sector which includes food. batteries. toys and technical household items like GE light bulbs and UHU glue. including: food items. glues. Main problems pointed out by the CEO are: Lack of timely planning of sales.o. with a lot of support from their suppliers and good communication channels with their customers. with varied sales volumes and different lead times entered the supply chain of Orbico. ORBICO Orbicod. As the company grew. new sector called “MARKET” was formed. Late delivery of products Lack of understanding from the logistics department about the importance of delivery in specified times. Each of these departments has its own sales team and logistics support team. especially during busy seasons like holidays. Lack of proper communication between sales department.o. Their products are divided into three main sectors: P&G (including all P&G brands). Many new suppliers from different countries.o. cosmetics. dirty or with expired shelf life. Returns from customers of old products which are obsolete.o. which is part on an international distribution network with operations in 17 countries.1. problems of overstock and stockouts started to appear. Sarajevo distributes fast moving consumer goods. Even though experienced sales and brand managers were paired with experienced logistics support staff. clothes.
especially in case of items placed on promotions. including: Croatia. at least one month in advance according to the logistics manager. The problems are further complicated by the fact that logistics. without timely input about promotions and planned sales. Complexity of inbound logistics of MARKET sector brands is increased by the fact that most of the brands are being provided by different suppliers from many different countries. Each of these suppliers have different lead times. Germany. some brands have to be ordered in small amounts. High costs of warehousing. 5 . in order for goods to be ordered. Slovenia. especially those sold in specific seasons. arrive and be prepared for sales on time. Data also needs to be provided on time. Belgium. SUPPLY SIDE The current state is that the sales department does not provide sales forecasts or information about planned promotions on time. making it hard to fill a truck and minimize transportation and freight agency costs. Lack of sales planning and forecasting. especially on items included in promotions. often are not provided with enough authority to influence and control factors which lead to these problems. which are held accountable for overstock and stockouts. ranging from 5 days for goods from Croatia to 6 months for goods from Thailand. It appears that the main causes of these problems are lack of proper communication between sales and logistics and lack of serious approach to planning and forecasting sales. Hungary. Most of the suppliers have their own rules about minimum amounts that can be ordered. in regards to the customers. are stockouts that often appear. High costs of transportation. Italy. as well as times when orders can be posted and deliveries arranged.The main problems faced by the company are: High levels of overstock on some items. Austria. Frequent stockouts. CUSTOMER SIDE The main problem faced by the company. Turkey and Thailand. This problem happens because of under-ordering of these products which happens when logistics orders the goods solely based on past sales. Even the data that is provided is sometimes unusable because it is given in sum without indication of specific groups of articles. Checz republic. Sales volumes of each brand are also very different which means that in order to keep required levels of inventory.
3 Distribution company can also add value to the distributed products.sunil Om book 3 Delivery pdf . distributors are able to add value by connecting many smaller customers with many supplier of products. 2. where the supply chain includes all the relationships between all of the participants involved in production. 1 2 Delivery pdf .sunil 6 . Reduction in inventory costs because distributor aggregates safety inventory rather than disaggregating at each retailer. because it would simply not be possible to deliver small amounts that they order. SUPPLY CHAIN FOR DISTRIBUTION COMPANY Distribution can be defines as a set of activities “taken to move and store a product from supplier to a customer in the supply chain”1. Distribution company is a firm who’s business it is to buy products from manufacturers and sell further down the supply chain. saving them efforts and costs they would have to undertake in order to deliver their product to customers. Reduction in outbound transportation cost because the distributor combines products from many manufacturers into a single outbound shipment. distribution and delivery of products2. any time they order them. choices have to be made about which delivery routes will be taken when. but customers in smaller. Ideal distribution network for such products is through distributors who provide delivery to customers. considering that Orbico has warehouses in Tuzla and Banja Luka. A more stable order stream from distributor to manufacturer (compared to erratic orders from each retailer) allows manufacturers to lower cost by planning production more effectively. remote towns can only be delivered goods on certain days in the week. non-durable products that are sold quickly and in large quantities. Third problem is that in order to minimize transportation costs. to wholesalers.The second problem are frequent returns from customers who are in such a bargaining position that the company is forced to accept returns in order to keep the customer. “Improvement in supply chain performance occurs for the following reasons: Reduction in inbound transportation cost because of truckload shipments from manufacturersto distributor. damaged or their expiry dates have passed. As part of the supply chain. retailers and end customers. by making them suitable for distribution in markets and countries other than those where they were produced. Products that are returned are often unsuitable for further sales either because they are dirty. Fast moving consumer goods are low-price. This is not a problem for customers in large cities.
Timely. Use formal forecasting methods 4. Use established methods of planning sales and promotions 3. Installation of these systems is expensive and time must be provided for education of users. Make better use of available ICT systems 5. so that they can use these tools effectively. Accuracy and timeliness of information can greatly be improved if the company uses modern ICT system than can connect suppliers and customers and make all the information available unfiltered and in real time. stockouts and overstock. in order for them to be able to organize their activities and achieve all cost savings for which supply network was designed.“4 In order for all the advantages to be achieved. distributors are able to provide a better response time than manufacturers can. Calculate optimal combinations of shipments from different countries. In order for these problems to be resolves.- By carrying inventory closer to the point of sale. Establish better collecting of information from customer and better communication with customers in general 2. Better match responsibilities and authorities of those held accountable for high levels of inventory 6. 5 3. useful information must be provided to all participants in the supply chain. RECOMMENDATIONS FOR ORBICO From all the interviews it can be concluded that two main issues in Orbico are lack of adequate sales planning and adequate communication between sales and logistics departments. which are main causes of increased inventory costs. Improve communication about problems with deliveries 4 5 Delivery pdf . with the aim of minimizing costs of transportation 7. several actions need to be taken: 1.sunil Cite any supply chain book 7 . Distributors are able to offer one stop shopping with products from several manufacturers. distribution company must put a lot of effort into coordinating well their sales department with logistics and transportation.
Sarajevo.o. Interviewed by Vesna Buvarović [in person] Orbico d. 2013.o.o.o. 8 . M.2013. 26. Sarajevo.BIBLIOGRAPHY Nevrt.12. Interview on supply chain in Orbico d.
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