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Velky Potraviny: Supply Chain Management
Velky Potraviny: Supply Chain Management
Velky Potraviny
December 8, 2011
Presented by:
Ahsan Khawar 12020378
Fahd Iqtidar Mir 12020367
Nabeel Siraj 12020325
Umair Babar Chishti 12020157
Question 1
Warehousing Space:
Currently they have 37stores but they plan to expand it 67 retail stores in a few years so this will obviously need
more warehouse space. The current warehouse is having problems managing the workload, so how will it
manage when the retail stores to be served increase by 81%! But if we analyze the details carefully we would
see that there is a lot of space not used effectively because of the information asymmetry and poor coordination
among employees. But he might need more space, which would increase the already high costs.
Further when we see the layout of the warehouse it is so disorganized that it disrupts operations, nor is it used at
its full capacity. In total four ramps could not be operated, two because of their height and two because there is
“Work In Progress” lying in front of them. So this disrupts the smooth flow of goods across the warehouse, it
increases time to unload and thus increases the cost. Also the offices are setup at different segregated areas in
the warehouse, which might reduce the between the employees. Further, because we would need to provide
facilities like Wi-Fi/kitchen/clean water etc. at multiple locations this will further increase the costs. Further
there is empty space as well which should be utilized in such a way as to not disrupt the current flow of the
goods, but to improve it,
Receiving Process:
The first issue in the receiving process is the fact that deliveries are not scheduled. So there are times when two
or three supply trucks come in together and during such times the receiving process gets overburdened. At such
times it is important for the receiver to make sure that all suppliers deliver complete orders and quantities.
Besides an erratic delivery schedule, the receiver had no idea about how much quantities were going to be
delivered during the coming day or week. This happened because the supplier either went short on an order or
they would deliver an order very late due to the infrastructure problems. Resolving this issue requires
improvements at multiple levels. Firstly, there is a need of building stronger relationships with the suppliers.
Such relationships would reduce the number of orders that are shorted by the suppliers and also reduce the
delays in deliveries. Also, by dealing with a select number of suppliers who are more reliable, the receivers will
be able to better forecast the delivery schedule and hence plan ahead.
Stepper Process:
The main issue in this process is the fact that the stepper only cares about making sure that FIFO is being
followed. The stepper doesn’t care if the items are placed in the wrong place or the wrong shelve and this is
mainly because the SKU #’s are too small to read and hence the stepper or the receiver makes a lot of errors
while receiving and assorting the goods in the shelves. The need for having better SKU tags is imminent.
Firstly, it can reduce the number of misplaced items and reduce the picking time by a great extent. Secondly, it
will also improve the shipment process by making it easier for the driver to spot shipments for specific stores.
Another issue is that the stepper replenishes the picking area only on the basis of visual observation. This
increases the chances of the picking area being out of stock when the picker starts filling orders. It can be
avoided by using a formal replenishment system such as minimum stock levels and reorder points.
Empty Bottles process:
The warehouse faces another problem of empty bottles strewn all over the place that are not being accepted by
the suppliers. As a result, there is a huge shortage of storage space in the warehouse and also since the return of
bottles is restricted, the handling costs of these bottles are very high. This problem could be improved at the
retail outlets by making sure that there are different cartons for each type of bottle so that the customers dump
each bottle in its related carton. This would reduce the overall space required for storing these bottles and also
reduce the time required to assort them into different sizes. The ultimate solution would be to have proper
contracts with the suppliers about the handling of these bottles. If the suppliers refused to pick them up, Velky
could sell off the bottles to some recyclers to reduced its storage cluttering and make some extra cash.
Question.3
Office relocation: Apart from this, some short term actions include relocating all the offices in the warehouse to
a single area to increase warehouse space and efficiency.
Warehouse layout: As mentioned above in q2, the company also needs to make changes to the warehouse itself.
The ramps that currently aren’t being used have to be made compatible with the company vans. The empty
bottle issue (mentioned above) has to be taken care off to get extra space. More steppers need to be hired,
because the pickers have complained that they rarely get hold of them as the steppers are usually occupied with
the receivers.
Job Clarity: The roles of each employee need to be clearly defined and a framework has to be made. This can be
done by having similar meetings like the one mentioned in the case, to clearly define the roles of each employee
and sort out any confusion between two employees regarding job functions. This would lead to the process
being more effective.
Clear Policies: Lastly, the bridge between the management and the employees need to be reduced. Currently,
the employees do not know the exact responsibilities of the management, as was evident in the meeting when
someone asked the manager as to what exactly does he do. This can be done again by the management adapting
and implementing fixed policies that increase the trust of the employees. The changing policies of the
management have left the employees confused. Hence a cross functional team can be made representing all
functions that meets regularly to chalk out strategies and address issues facing every function.