Submission date: 4th April 2021

 National University of Modern Languages

Islamabad, Pakistan

2020

1. Why do all the logistics costs seem to be rising at the same time?

Logistics costs are rising because of sales forecast problem and poor demand planning. The rise
in logistics cost is basically due to the high transportation and inventory cost. The transportation
department seemed not to be in control of the transportation policies and how to manage it
efficiently. As the firm holds more inventory, carrying cost increases but there are still
occasional shortages.

2. What do you think are the basic problems in Friedland?

Basic problems of Freedland Timbers are:

 Late deliveries to some important customers.

 Shortage of a key raw material disrupted the production plans.
 High stocks causing space problems.
 In order to reduce material cost purchasing large quantity of stocks and delaying orders to
get bigger discounts.
 High inventory and transportation costs.
  Delay in payments due to shortage in the company’s cash flow
 Poor sales forecasts by the marketing department.
 Underestimated demand and low planned production.
 Disordered purchasing policy.

What would you recommend Johann do?

The company can reduce its main problem of high logistics cost predicting the demand properly
and  planning operations such as production schedule, transit times from pick-up and
delivery to shipping routes move as planned. This will also reduce delays and missed
deadlines. Logistics costs can also be reduced by tracking and managing control over your
products huge shipment delays can be reduced quickly. Alternate routes of supply can be
implemented faster which will lead to better cost control. The transportation department
should make proper transportation policies and manage them efficiently making
transportation better and proper warehousing by investing in systems that will help to
manage stocks and seek ways to reduce stocks. In order to deal with the transportation costs,
Friedland should consider centralizing purchasing and leveraging volumes approaches.