PALS Analyze Cases – 16th Jul’19

Venue – Nandha Engg College – Erode

Case 1

Title – Supply Chain Management for a Cement Business - ACL

Azuba Cements Ltd (ACL) has manufacturing set up at sea coast of Gujarat 2011 .

Cement being a bulk commodity, transportation is a vital component in the cost calculation. ACL’s
board members understood the importance of logistics activity for cost reduction.

ACL sells the cement through a network of C&F agents and stockists.

ACL also sells product directly to large construction sites. The whole process of cement transportation
depends on the marketing plan of company. Majority of sales are normally around the nearby
consumption centres as a business practice in Cement industry considering the transportation costs
which play a role in business viability .

ACL prefers to move product by road , rail and sea for different criterion as given in data sheet below.
Currently majority of the transfer takes place by road in the absence of a clear policy. They have
packaging units to sell the product in 50 kg bag packing for final retail sales wherever it is taken in
bulk. Direct packing of 50 Kg is also done from plant wherever there is an advantage. In bulk
transportation the cement is vacuum filled into a vessel of transportation.

Other plans for ACL

a. Feasibility of transporting through inland waterways.

b. Feasibility of offering Ready Mix Concrete to large construction sites having advantages of a
faster construction period, good quality, no pollution and lower storage requirement at site.
c. Expand manufacturing capacity to the tune of 15 million tons per annum as they have enough
space in the current location.
d. They want to expand their marketing operations in East / Northeast part of the country.
e. Potential for cost saving by reorganizing logistics operations.

Points for deliberations in the Strategy meeting to come up with recommendations : ( Also list any
assumptions)

1) Considering marketing locations and future expansion, does ACL has further scope to
reduce its outbound logistics costs? If yes, how the same can be achieved?
2) What can be strategies for improving overall logistics function?
3) How will you manage competitiveness in selling product in East / Northeast India?
4) Should ACL expand for establishing Ready to Mix Concrete plants at various remote locations ?
How will it help in the growth of the company looking to current scenario of construction industry ?.
5) Should company need a vehicle tracking system? If yes, please recommend with features and why?
Data Sheet

Sl.No Item Details Remarks

1 Location of the Plant Veraval Sea Coast
2 No of C&F Agents 100 Handle in bulk like wholesalers ( from co)
3 No of stockists 3000 Next level in distribution
4 Percentage Sales In % ( see below) By turnover / sales in tons
a. Maharashtra 25
b. Rajastan 10
c. Gujarat 25 10 within 150 km
d. Central India 10
e. North India 10
f. South India 20
5 Modes of Transport Pl see below
a. By Road Upto 150 km Gujarat
b. By Rail Beyond 150 km in Interior Maharashtra , Rajastan , Central
interior areas and North India
c. By Sea Areas that have South East / South West / South
access to port
6 Current Production 10 Million Tons / yrExploring for expansion to 15 Million
Tons / yr
7. Current demand of 400 – 450 Mil Approx West 35% , North 30% , South
Cement Tons/yr 20% and East 15%
 Veraval
aaval

Note : Veraval port is approx 400 km to the south west of Gandhinagar in Gujarat
Case 2

Title – Just in time supply of axle assembly for an automobile unit ( within the same supplier
park)

Azure Axles Pvt Ltd (AAPL) manufactures Axle for automobile companies, X and Y Axles are
manufactured for its major customer ReNis Pvt Ltd (RPL) which is an automobile manufacturer . Both
X and Y undergo 2 processes namely machining (casting to machined part) and Assembly (with other
readily available child parts). Both axles are present in every vehicle of RPL. Past week demand record
of RPL is given data sheet.

Both X and Y are machined in the same cell and assembled in the same assembly line. The Details of
both Machining cell and Assembly cell are given below in the schematic diagram

Analyze the case and answer the following questions: ( Also list any assumptions)

1. Determine the ideal Cycle Time for machining and assembly to ensure Just In Time.
2. Do we need to maintain stock between machining and assembly? Justify your answer.
3. What are the ways of improving the cycle time ?
4. What are the factors by which supply chain is affected and how to increase its reliability ?
5. What is your understanding on Kanban? If it can be used in the above case, where and which
type of Kanban should be used. Show the filled in Kanban based on the sample template
provided.
6. If you are given a task of reducing the stocks, what will be your measures? Explain with
proper reasons
Data Sheet

Past week Despatch trend for part x and y for Customer RPL is given below (Units in nos)
Description Mon Tue Wed Thu Fri
X 620 600 580 640 560
Y 600 630 570 600 600

Current policy of finished goods stock – 2 days of average requirement at warehouse

Current of no of working days per week : 6

Current no of shifts per day : 1

Total Time Available/Shift: 9Hrs

Tea Breaks (TB) : 10Min/break (twice a shift)

Brief / Review / Instructions / Learning (BRIL) : 10 min (at the beginning of each shift)

Changeover time from X-Y in machining cell : 30 min

Changeover time from X-Y in assembling cell : Nil

Despatch will be done in multiples of 300 sets/ Skid ( trip )

Sample Kanban Card : ( Types – Production , Supplier , Emergency , Express , Through , Withdrawl)

ITEM NO. ITEM IMAGE

100002
ITEM
DESCRIPTION
INSERT PHOTO

PRODUCT LINE

WORK STATION LINE SIDE RACK LINE SIDE LOAD

NO. NO. QUANTITY

REPLENISH
REPLENISH REPLENISHMENT
FROM
TRIGGER QTY QUANTITY
LOCATION
Case 1 – Sample Answers

Points for deliberations in the Strategy meeting to come up with recommendations : (Also list any
assumptions)

1) Considering marketing locations and future expansion, does ACL has further scope to
reduce its outbound logistics costs? If yes, how the same can be achieved?

Ans : Yes. Currently it is not organised and mostly through road. Cost details per ton by rail , ship
( bulk ) , rehandling , repacking in 50 Kgs and local freight have to be worked out. Also explore inland
waterways which the government is encouraging

2) What can be strategies for improving overall logistics function?

Ans : Essentially it has to be a mix of multi modes keeping the total cost of movement ( per ton ) from
the plant to end customer minimum. Use of appropriate numerical / analytical tools. Consolidation
between locations for different products can also be explored.

3) How will you manage competitiveness in selling product in East / Northeast India?

Ans : Entry pricing , direct supplies to major customers ( keeping sales costs lower) , benchmarking
performance of ACL with respect to competition etc. Based on data given , there is a huge opportunity

4) Should ACL expand for establishing Ready to Mix Concrete plants at various remote locations ?

Ans : Yes , selectively . Identify major users and their requirements. Work on commercial benefits of
direct supply of concrete. In remote locations it may be an advantage.

5) Should company need a vehicle tracking system? If yes, please recommend with features and why?

Ans : Yes. Supply chain efficiency decides the profitability of any commodity business . The tracking
system should do the following :
a. Location of the vehicle always.
b. GPS enabled travel through the shortest route
c. Down time and rest hours for the driver
d. Geo fencing option to check the entry and exit within the region
e. Availability of historical data on travel , distance , mileage , maintenance etc
Case 2 – Sample Answers

Analyze the case and answer the following questions: ( Also list any assumptions)

1. Determine the ideal Cycle Time for machining and assembly to ensure Just In Time.

Ans : 24 min for each cell operation and 51 sec for assembling

2. Do we need to maintain stock between machining and assembly? Justify your answer.

Ans : Yes , if the variations are more than the average planned ( Here it is 600 units )

3. What are the ways of improving the cycle time ?

Ans : Automation , Reduce changeover time , Explore simultaneous machining centers etc

4. What are the factors by which supply chain is affected and how to increase its reliability

Ans : Machine up time , quality issues , change in cycle time , material handling between
machining and assembly , delay in raw material arrival , quality issues in raw material , skill
levels of the operator etc

5. What is your understanding on Kanban? If it can be used in the above case, where and which
type of Kanban should be used.

Ans : Means signboard or billboard in Japanese. It is a scheduling system for lean

manufacturing and just-in-time manufacturing . It can be used between machining and
assembly (through ) , raw material issue (supplier) , dispatch to warehouse (withdrawl ).Show
a filled in details on the format given

6. If you are given a task of reducing the stocks, what will be your measures? Explain with
proper reasons

Ans : It is possible only with a strong supply chain which includes manufacturing. The
measures will be :
a. Adequate stocks of raw material
b. Minimise breakdown of machines through preventive maintenance and care
c. Initiate “ zero defects” at the shop floor.
d. Adequate training to operator for knowledge and skill level
e. Consistency in the quality of raw material