Asset Management

CW1

Management report

Derby Business School

LUBOSLAVA HACKOVA 100520078

www.derby.ac.uk/dbs
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 CONTANTS
PAGE

TITLE PAGE ………………………………………………………………………….1

CONTANTS PAGE …………………………………………………………………2

EXECUTIVE SUMMARY………………………………………………………….3

CORE SOLUTIONS………………………………………………………………4,5
WAREHOUSES………………………………………………………4.1
STAFF……………………………………………………………………4.2
VEHICLES………………………………………………………………4.3
RISKS…………………………………………………………………….5.1

REFERENCES ……………………………………………………………………….7

TABLES:

WAREHOUSE TABLE………………………………………………………………………4

STAFF TABLE …………………………………………………………………………………4

VEHICLE TABLE ……………………………………………………………………………..4

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 Executive summary and Introduction

This management report will show which location is the most effective for Tip Top Logistic
for the next 4 year. The purpose of this report is to summarise options and abilities for best
company performance over this period.

Tip Top logistics Ltd. was founded in 2008 by Mike Smith and John Clarke. Company
currently operate from warehouse in Derby. Company has storage and delivery contract
with Central Midlands Furnishings to collect assembles Wardrobes from Derby Factory. This
contract is due to expire in 2024. Company has 10 drives, 2 warehousemen and a
supervisor. Company has 8 x 3.5 tonne Ford Transits on contract lease. Contracts for five of
these expire in May 2021 and the remaining three in May 2023.

Leeds based manufacturer of beds and matrasses is proposing contract for collecting,
storing and delivering job for next four years. Deliveries are going to be spread around these
three locations. First location is Yorkshire with 50% of deliveries, Lancashire with 20% of
deliveries and finally Midlands with 30% from all deliveries, which only account for 2-3% of
overall business.

From the organizational perspective, performance of a storage area is essentially dependent

on two variables:
The space reserved for allocation of materials and the time for their handling needed. One
approach to the issue of achieving a proper solution is the allocation of the products in
warehouse is the one provided by a warehouse. Warehouses are important links between
the production sites and the customers. High performance provides a competitive
advantage, so many companies invest on the warehouse operation to improve their position
in the market.

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 4.1 WAREHOUSE

PLACE PRICE per sq. ft. *SIZE (warehousing TOTAL

+adjustable pallet
racking)
YORKSHIRE 6.95£ 25 000 sq. ft. 173 750£
LANCASHIRE 7.50£ 25 000 sq. ft. 187 500£
MIDLANDS 6.95£ 25 000 sq. ft. 173 750£

*Size for warehouse is 25,000 sq. ft. of warehousing include 6000 sq. ft. of adjustable pallet racking.
Options for warehouses is to ether rent the place or buy. It this case the best option is to
rent a place because contract is only for 4 years.

Based on this options and whole report the conclusion is that Yorkshire is best location to
place our warehouse. Not even the percentage of our deliveries are going to be located
there but the prices for goods are one of the cheapest.

4.2 STAFF

DRIVERS WAREHOUSEMEN SUPERVISORS

16x24000 4x21000 2x27000
384 000 84 000 54 000

Total price for staff salary is 522 000 £ per year. In 4 years of contract company going to
spend in total 2 088 000£ for salary.

4.3 VEHICLES

QUANTITY PURCHASED (per LEASED (per 1) CONTRACT HIRED (per 1)

1)
3.5 tonne transits 5 33 995 450 (1 month) 573 per week
7.5 tonne rigid truck 3 35 000 1 076 (1 month) 810 per week

Vehicles could be purchased, leased or contract hired. Purchased cars are paid by full price
for vehicle witch not including boring money or paying monthly payments. Car on a lease is
a contract for the use of the car. Monthly payment in addition to the final balloon payment
will likely exceed the new value of the car. Contract hire car is option that allow you to lease
a vehicle for certain period of time.

3.5 tonne transit (van) from research cost 33 995£ from company Mercedes-Benz. Research
showed that this company has the best price for quality they offer. Leasing for this type of
car was from the other hand best from company Ford they offered 450£ per month for
vehicle. Contract hire van was best to purchase website truck and van rental. They offered
best price from all of them. Final price for purchased vans is 33 995 £ for five of 3.5 tonne
vans. Leasing would be 27 000 £ for 48 months. And contract hire 110 016 £ for four years
of usage. In this case company already owns 3 3.5 tonne vans until May 2023.

7.5 tonne truck from research cost 35 000£ from company Ford. This company offered the
best price for quality. Most relatable offer for leasing for 7.5 tonne truck was from website

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ok truck who offers 1 076 £ per month for 1 truck what is 154 944£ for 48 months per 3
trucks. Contract hire for truck is from online website truck and van rental. Total price is 466
560 £ for 3 7.5 tonne trucks for 4 years.

Based on this information and additional research in both cases contract hire cars are not
the option for company. This option is relatively fine if it’s for curtained amount of time but
not for more than 3 months. The purchase option for vehicles was from the beginning
winner but after additional research on car companies’ websites the leasing contract for
both car types are the cheapest of them al. However, the paying contract is for 48 months
which means 4 years.

Based on running contract from premises in Derby, Total estimated mileage per vehicle is 45
000 miles per year. 3.5 tonne van consume on average 25 miles per gallon of fuel. For 4
years of contract use 3.5 tonne vehicle will cost on average 7929.29 £ per vehicle. With 7.5
tonne truck it would be on average 11012.91 £ per vehicle. In total company would need to
paid for fuel for all the vehicles in four years 96469.83 £.

5.1 Risks

Most common risk in warehouse are falls from height. Employees could suffer severe injuries. To
overcome this risk all staff is given strict instructions about climbing and are monitored by
supervisors. Proprietary forklift worker for changing bulbs. Cage supplier’s information shows it is
manufactured to standard. Traffic movement which means that staff and visitors being hit by
vehicles or falling form vehicles. To overcome this risk floor and traffic routes are suitable for the
vehicles using them. Parking of cars and vans are only allowed in marked spaces away from dispatch
area. Corona virus, staff could suffer of virus. To overcome this risk area needs to be clean and staff
wearing masks and keep social distancing. When we’re looking into operational risks, we can find
machinery or system failure, thefts and sabotages, supply chain failure, inventories obsolescence,
natural disasters, earthquakes. For most of this risks company needs cameras all over the place.
Strategic risks are most common risks. Changes in consumer preferences, unexpected actions by
competitors, new competitors, substitute products. Impact and likelihood of this risks is high.

6.1 Contract

Run contracts together has advantages and disadvantages. The ability to share and spread risk, a
greater capacity to produce more goods and services. However, if joint contracts are not structured

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and run correctly, misunderstandings between on the contracts can all lead to conflicts. To ensure
your contracts agreement, all sides of the contracts must to be 100% certain of the rights,
obligations but most of all responsibilities. In the end, run contracts together offer business a
resource in order to develop a specific project. If the other side of the contract involved in the
agreement is loyal there is no need why the project should not be successful. On the other hand,
single contract offers benefits like most coordination risks are allocated to the contractor. With this
type of contract company need less management resources what are required for documentation,
tendering and contract administration than for running contracts together. However, it has a risk
too. Cash flow requirements may not be done, since the contractor has control over it once the
contract is awarded. Programming is also controlled by other side of the contract which means that
after it’s awarded and if staging or early completion are required, acceleration costs may be
incurred.

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References

David V, 2018, Report and Model Contract Clauses from the Working Group to Draft Human
Rights Protections in International Supply Contracts, ABA Business Law Section

Woods M., 2001, Risk Management in Organizations, Routledge Oxon

https://propertylink.estatesgazette.com/warehouse-for-rent/yorkshire-and-the-humber-region
https://propertylink.estatesgazette.com/warehouse-for-rent/lancashire
https://www.ford.co.uk/
https://www.mercedes-benz.com/en/
https://www.oktrucks.co.uk/