T it le : M ea s u ri ng L o gi s ti c s pe rf or ma nc e f o r c om pe ti ti v e n es s – Fo od & be ve ra g e

c om pa ny c as e S tu dy

G ro up : 8

G R O U P ME MB E R S : R o ll N o

 J oy ab ra t a B u rm an
 N iti n Sh an k a r
 P B a la k r is hn a B an di
 M ad hu k i ra n S he tt y
 B as av es wa rl u B o ya pa ti
 N av ee n S in gh

Group Member contributions

Page 2 - Main text
Introduction: Performance measurements and metrics play a vital role in achieving
organizational objectives. It is more so in measuring logistics performance.
In recent times, customers’ expectations are increasing in terms of quick delivery, short
lead time, lowest price, and customization. To improve the performance of logistics,
measurement is very important.

Some of Industry metrics used to measure the logistics performance

1 Sales to logistics cost (%)

2 Total logistics Cost (lakhs)
3 Inventory Turnover Ratio
4 Order process per labour unit
5 Productive hours to Total available hours
6 On-Time Delivery
7 Perfect Order Fulfilment
8 Overall Customer satisfaction
9 Line-Item Fill time in Hours
10
Outbound Products Units Processed per Warehouse Labour
Unit
11 Capacity of Warehouse vs Space Utilization (%)

Company profile: FoodFare is a local Food& Beverage company involved in the

manufacture and distribution of various food and beverage products in south India It has
manufacturing plant and large warehouse. The warehouse facility consists of Raw material
warehouse which supplies to production lines to manufacture finished goods and the
finished goods warehouse where the final products received from production and sold to
customers.

Problem statement : FoodFare company was experiencing several challenges in the outbound
processing of the customer orders such as high logistics cost , On time delivery
performance ,low customer satisfaction ,low inventory turnover and warehouse processing
inefficiency in the finished goods warehouse.

After identifying the foodfare challenges mainly in the finish goods distribution , the analysis
was conducted based on the data collected over period of 3 year . The data was collected
based on the company’s Management Information Report, annual returns ,published
reports .
Based on the analysis done , below are finding of the metrics

Sl.No. Metrics Year 1 Year 2 Year3

1 Sales to logistics cost ( %) 7.75 8.08 8.88
2 Total logistics Cost (lakhs) 1265 1376 1546
3 Inventory Turnover Ratio 11.00 10.16 8.72
4 Order process per labour unit 14 11 9
Productive hours to Total available hours
5 (%) 85 75 60
6 On-Time Delivery (%) 75 65 60
7 Perfect Order Fulfilment (%) 80 75 68
8 Overall Customer satisfaction (%) 75 62 56
9 Line-Item Fill time in Hours 2.50 2.00 1.75
Outbound Products Units Processed per
10 Warehouse Labour Unit 40 32 28
Capacity of Warehouse vs Space
11 Utilization (%) 90 80 70

Based on the above outcome of the analysis done for the 3-year period , It is observed that
the metrics at Foodfare over period of 3 years is constantly declining ( Refer to figures
section ) . FoodFare needs some critical modification in its finished goods distribution in
order to retain its competitiveness in the food and beverage market .

Application of concepts learnt .( will have to expand little more on the below approach- need
inputs from team members )
Based on the metrics it is found that Foodfare should take below approach to changes its
logistics distribution landscape .
1. Outsource the finished goods inventory to a 3PL who has better efficiency to
manage the finished goods stocks in the warehouse and distribute to the customers of
Foodfare with minimal transportation cost .
2. Cross docking of the finished goods received from production plant of Food fare
are assigned and loaded directly into the trucks of the 3PL . Cross-docking not only
reduces material handling, but it reduces the need to store the products in the
warehouse. In most cases, the products sent from the manufacturing area to the
loading dock have been allocated for outbound deliveries.
Figures section

sales to logistics cost

9
8.8
8.6
8.4
8.2
8
7.8
7.6
7.4
7.2
7
Year 1 Year 2 Year 3

Figure 1

Total logistics cost

1600
1200
800
400
0
Year 1 Year 2 Year 3

Figure 2

Inventory turnover ratio

12

10

0
Year 1 Year 2 Year 3

Figure 3
 Orders per labour unit
16
14
12
10
8
6
4
2
0
Year 1 Year 2 Year 3

Figure 4

Labour productivity in Percentage

90
80
70
60
50
40
30
20
10
0
Year 1 Year 2 Year 3

Figure 5

On time deliveries in Percentage

80
70
60
50
40
30
20
10
0
Year 1 Year 2 Year 3

Figure 6
 Perfect Order Fulfilment (%)
82
80
78
76
74
72
70
68
66
64
62
Year 1 Year 2 Year 3

Figure 7

Overall Customer satisfaction (%)

80
70
60
50
40
30
20
10
0
Year 1 Year 2 Year 3

Figure 8