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EXECUTIVE SUMMARY 2 .

SUPPLY CHAIN THEORY 3. Sarajevo 2.TABLE OF CONTENTS 1. RECOMMENDATIONS FOR ORBIO 3 .o. ORBICO d.o.

Returns from customers of old products which are obsolete. dirty or with expired shelf life. making the operations less than optimal. Late delivery of products Lack of understanding from the logistics department about the importance of delivery in specified times. batteries. problems of overstock and stockouts started to appear. Logistics manager had her own side of the story. with varied sales volumes and different lead times entered the supply chain of Orbico. clothes. raising costs. which are often received with 20-30% of their shelf life passed. which is part on an international distribution network with operations in 17 countries. 4 . adding new brands. Sales and brand managers found the following issues as most pressing: Lack of information about real levels of inventory and current stockouts. cosmetics. Sarajevo distributes fast moving consumer goods. Main problems pointed out by the CEO are: Lack of timely planning of sales. As the company grew. Lack of proper communication between sales department. pointing out that the biggest problems faced by this department are: Lack of information about planned sales and promotions. Their products are divided into three main sectors: P&G (including all P&G brands). Fact that particular brands are held on stock for longer than are the sales conditions provided by suppliers. Orbicod. which work together on inward and outward logistics of several hundred products. Many new suppliers from different countries. ORBICO Orbicod.o. toys and technical household items like GE light bulbs and UHU glue. glues. logistics department and suppliers. key customers.o. etc. including: food items. Short expiry dates on food products. especially during busy seasons like holidays. Each of these departments has its own sales team and logistics support team. with a lot of support from their suppliers and good communication channels with their customers.1. P&G and fine cosmetics sectors were original sectors with which the company started and they have well established supply chain within the company. new sector called “MARKET” was formed.o. fine cosmetics and MARKET sector which includes food.o. cleaning products. Sarajevo is a distribution company. motor oils. toys. Even though experienced sales and brand managers were paired with experienced logistics support staff.

Hungary. High costs of transportation. making it hard to fill a truck and minimize transportation and freight agency costs. Italy. arrive and be prepared for sales on time. in order for goods to be ordered. SUPPLY SIDE The current state is that the sales department does not provide sales forecasts or information about planned promotions on time. especially in case of items placed on promotions. Even the data that is provided is sometimes unusable because it is given in sum without indication of specific groups of articles. This problem happens because of under-ordering of these products which happens when logistics orders the goods solely based on past sales. Each of these suppliers have different lead times. Slovenia. Sales volumes of each brand are also very different which means that in order to keep required levels of inventory. Belgium. High costs of warehousing. Austria. some brands have to be ordered in small amounts. Checz republic. including: Croatia. The problems are further complicated by the fact that logistics. in regards to the customers. especially on items included in promotions. 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. ranging from 5 days for goods from Croatia to 6 months for goods from Thailand. at least one month in advance according to the logistics manager. Data also needs to be provided on time. 5 . Frequent stockouts. Lack of sales planning and forecasting. 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. are stockouts that often appear. which are held accountable for overstock and stockouts. Germany.The main problems faced by the company are: High levels of overstock on some items. often are not provided with enough authority to influence and control factors which lead to these problems. especially those sold in specific seasons. without timely input about promotions and planned sales. Turkey and Thailand. CUSTOMER SIDE The main problem faced by the company. Most of the suppliers have their own rules about minimum amounts that can be ordered. as well as times when orders can be posted and deliveries arranged.

remote towns can only be delivered goods on certain days in the week. 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. 1 2 Delivery pdf . but customers in smaller. to wholesalers.3 Distribution company can also add value to the distributed products. “Improvement in supply chain performance occurs for the following reasons: Reduction in inbound transportation cost because of truckload shipments from manufacturersto distributor. As part of the supply chain. choices have to be made about which delivery routes will be taken when. non-durable products that are sold quickly and in large quantities. because it would simply not be possible to deliver small amounts that they order. Ideal distribution network for such products is through distributors who provide delivery to customers. 2. retailers and end customers. damaged or their expiry dates have passed. by making them suitable for distribution in markets and countries other than those where they were produced. This is not a problem for customers in large cities.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. distribution and delivery of products2. distributors are able to add value by connecting many smaller customers with many supplier of products. Distribution company is a firm who’s business it is to buy products from manufacturers and sell further down the supply chain. considering that Orbico has warehouses in Tuzla and Banja Luka.sunil Om book 3 Delivery pdf . Third problem is that in order to minimize transportation costs. Products that are returned are often unsuitable for further sales either because they are dirty. Fast moving consumer goods are low-price. Reduction in outbound transportation cost because the distributor combines products from many manufacturers into a single outbound shipment. saving them efforts and costs they would have to undertake in order to deliver their product to customers. any time they order them. 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. where the supply chain includes all the relationships between all of the participants involved in production.sunil 6 . Reduction in inventory costs because distributor aggregates safety inventory rather than disaggregating at each retailer.

Improve communication about problems with deliveries 4 5 Delivery pdf .“4 In order for all the advantages to be achieved. Make better use of available ICT systems 5. 5 3. Distributors are able to offer one stop shopping with products from several manufacturers. 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.sunil Cite any supply chain book 7 . with the aim of minimizing costs of transportation 7. so that they can use these tools effectively. Calculate optimal combinations of shipments from different countries. useful information must be provided to all participants in the supply chain. Use established methods of planning sales and promotions 3. Use formal forecasting methods 4. 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. distributors are able to provide a better response time than manufacturers can. which are main causes of increased inventory costs. Installation of these systems is expensive and time must be provided for education of users. Timely. distribution company must put a lot of effort into coordinating well their sales department with logistics and transportation. stockouts and overstock. several actions need to be taken: 1. in order for them to be able to organize their activities and achieve all cost savings for which supply network was designed. In order for these problems to be resolves. 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.- By carrying inventory closer to the point of sale.

o. Interview on supply chain in Orbico d. 26. M.BIBLIOGRAPHY Nevrt.o. Sarajevo. Interviewed by Vesna Buvarović [in person] Orbico d.12.o.o.2013. 8 . Sarajevo. 2013.