Minor Project

in
Supply Chain Management

BY

Section – A
APO – 9

Raman Garg 220201087

Saket Khandal 220201097
Saransh Makkar 220201102
Saurabh Gupta 220201106
Siddharth Arora 220201116
Vishal Toshniwal 220201130

Under supervision of

Dr. V.G. Venkatesh

(Professor Supply Chain Management)

Institute of Management Technology, Dubai

 CASE 01

1. What options does Iqbal have for buying tomato paste?

Answer :

Iqbal can obtain the tomato paste from China despite the fact that the company utilizes tomato
paste with a brix value of 36 because the brix value there is more than what suppliers in
Pakistan had to give, which was less than 26. The price difference was likewise negligible when
compared to China.
Additionally, environmental variables, such as those in Greece and Italy, contribute to the
significant lack of tomato paste that exists around the world.
The National Food can offer an expected order when tomatoes are picked in August, enabling it
to come faster and for less money than was stated in January. Although the holding price is
10%, the quality will still be excellent.

Iqbal was successful in negotiating a price reduction in 2006 for the providers from
US$1,000/ton to US$960/ton C&F Karachi Port.

The following step is to keep buying things. The corporation orders 200 tons of tomato paste,
which is supplied by Italy, and 250 tons, which is supplied by China. The final 150 tons will
come from China if there is any delay, but the Italian supplier will rapidly fill the order, enabling
the company to finish it on time.

2. What factors Iqbal need to consider before deciding on the quantity of paste to
buy and hold?

Answer :

The demand and prediction figures indicate that there is a modest growth in demand each year
and that the forecast is also rising, albeit more slowly, so Iqbal must pay close attention to them.
The corporation must therefore keep extra tomato paste on hand in order to quickly meet client
demand. Iqbal must also ascertain the paste's shelf life because if it is kept for a long time, it may
deteriorate and produce a loss.

• Due to the Pakistani election and other current political issues, there might be a little fall
in sales.
• Since tomato paste is in low supply everywhere, he wants to make sure that he orders
from specific vendors. It would ease the process of submitting orders on time or very close
to it.
3. How is this problem different than the Economic order quantity problem?

Answer :

It assumes that each item must be stocked with equal priority and that its fixed costs are constant.
You run the danger of running out of your best-selling items as a result, and you also waste
valuable space on unneeded inventory.

The question in this case, though, is who Iqbal should order from in order to immediately satiate
its demand and maximize profit. They had a projection, but it was just slightly below what the
demand was; this inaccuracy of at least 10% cost them business and left them unable to satisfy
demand. Furthermore, based on the current consumption rate, 150 tons of tomato paste would
be available when the order was placed.

4. How much paste should be bought in 2007? Explain the steps required in coming
up with your solution.

Answer :

Pakistan's food culture continued to evolve and city dwellers gravitated towards more prepared
and quick dishes. Traditional homemade sauces and chutneys have been replaced by different
types of ketchup as tastes, habits and eating habits have changed. Ketchup was popular with the
younger generation, but it is now enjoyed by adults as well. did. The ketchup market is expanding,
and food manufacturers have a great opportunity to gain market share.

As you can see from the table, demand is growing. It's grown nearly 10% over the last five years,
and over 12% over the past two years. Demand he could reach 520 tons in 2007, he increased
by 17.7%.

Iqbal assured them that they would not compromise on the quality of the national food, which is
known for its high standards. With National Foods offering a wide range of products, it is still
possible for competitors to weather the global tomato paste shortage.

Election rumors could have a positive impact on demand as various companies are supported by
political parties on their platforms, reducing costs in the packaging sector and avoiding rising
import tariffs on high-quality tomato paste. Helps offset.

However, due to the global shortage of tomato paste, Iqbal's inventory has the capacity for him
to hold 150 tons of paste, which he can use to sell to other companies.
 Case 3
1) Identify the current logistical challenges faced by Patties foods. What are the key issues
faced by the patties team in transitioning from the original arrangement to the new solution
?

The current logistical challenge is that in peak season production volume increases by almost 50
percent, leading to need for overflow external warehousing near the factory in Bairnsdale. They
will need to redesign their distribution network to resolve this issue. The total upgrade of making
a new freezer warehouse is very costly for the company, will require approximately $22 million
and 3 years of time to build it. Issue is also in the warehouse management system . Currently
they don’t require any warehouse management system but for new one they will require a
commercial off the shelf warehouse management system (COTS-WMS) for new picking
warehouse in Melbourne.

2) What are the areas of focus for the inventory controller as new procedures are
established ?

Inventory controller role will be required for the new picking warehouse in Melbourne. Its role is
that it is a part of the planning criteria that vehicles need to be loaded or unloaded within 60
minute windows in order to accommodate the safe operating procedures for freezer warehouses.
So at a time all the inventory will be managed by the new commercial off the shelf warehouse
management system (COTS-WMS) along with inventory controller role keeping track of each and
every item in the inventory.

3) Discuss the target level of utilization in the new warehouse. What should that level be
in your view? Explain the rationale behind your decision.

The target level of utilization in the new warehouse is 85 per cent for it to be considered a full
warehouse. 10000 pallet is the total capacity of the new freezer warehouse. So 8500 pallets
should be there in it any time for it to be considered a full warehouse. I think so it is too much as
only 1700 pallets are produced in a week also in peak season 50 % increase is there meaning
2550 pallets stored at a time. So according to me 25 per cent utilization should be target for it to
be considered a full warehouse.

6) Explain the cost savings you anticipate with your design to double the size of the
warehouse. In what areas do you expect a cost increase?

Cost savings will be very much as we will not have to depend on external warehousing. We will
not have to give contracts to warehouses externally in peak season. Distribution cost will also
become less as we will have to ship to a single warehouse only to and fro instead of delivering
here and there at 3 different warehouses. Cost increase will be to maintain such a huge
warehouse, racking system , building it initially and expensive management system software.
8) Assume you are logistical consultant engaged to assist the group manager logistics in
developing the business case for the new warehouse. Compile a list of questions for the
GML that will assist in your task.

The list of questions for the GML that will assist in our task are as follows:

• Will Land size be enough for the new warehouse?

• Racking system will be comfortable for frequently needed items?

• How the cost for building new warehouse will be funded ?

• Is it beneficial to switch to this new system of developing a single warehouse? Is it cost

efficient compared to earlier 3 warehouse distribution system?

• Will the new warehouse be able to distribute products everywhere strategically? Is it

centrally located to distribute to the whole target place?

• Is the distribution network ready for the demand of the customers? Are the roads near the
warehouse well built?
 Case 4

Question 01: Develop a network Map of Kiwirail as it services Fonterra

Answer : Fonterra ships its products from production centres to the South and North
Islands. The north island's main ports are Auckland, Tarunga, and Napier, whereas the
south island's principal export port is Lyttelon (Christchurch). Fonterra's primary focus is
on exporting from Auckland to Christchhurch, which takes less than 11 hours.

Kiwirail exports items from its industrial hubs to warehouses. With headquarters in
Auckland, the products are first loaded on railway ferries, then relocated to warehouses,
and finally shipped to Christchurch, South Island via Kiwirail.

Also, the corporation may employ an inter-model approach to export items halfway
between rail and coastal modes, which will save time and money.

North Island : Ports of Auckland and Tarunga

South Islnd : Ports of otogo and Christchurch

Question 02 : Discuss the nature of export dairy product range and how it affects
overall logistics solutions

Fonterra makes dairy products that have a short shelf life. As a result, while distributing
and transporting these items, variables such as packaging, temperature, humidity, time,
and cost must be considered. Fonterra makes three major product categories: dairy
ingredients, branded dairy products, and bakery and restaurant products. Dairy
components such as whole milk powder, butter, cheese, and other nutrient-dense meals
are available. Because these items have an extremely short shelf life, they must be
delivered to clients as soon as possible. A high delivery velocity is required. The usage
of economies of scale is also required due to the enormous quantity of commodities.
Because of the volume and shelf life, we can employ trucks for local distribution and rail
for international export.
Question 03 : Discuss the suitability of intermodal solution for this particular
product

Answer: The fundamental aim of intermodal solutions are to reduce the negative environmental
and communication consequences of freight transit while boosting the effectiveness and cost of
freight transportation. Consolidating freight and utilizing rail and marine transportation when
needed can help to alleviate highway congestion. The proximity of freight-related projects to
major ports or transportation networks—shipping, rail, and state highways—will assist alleviate
future road problems caused by freight and allow for the relatively easy flow of freight
throughout a region and across the country. Furthermore, locating large, freight-dependent
enterprises near major transportation hubs can provide as a buffer between them and
surrounding residential areas, reducing difficulties with reverse-sensitive concerns.
Question 04: What alternatives are available for moving Fonterra exports
shipment to the ports

Although large trucks are the most visible vehicles on the road, small trucks, vans, and
courier vans can also be used to convey products to ports. Inland ports can be utilized
to combine road-based freight loads and rail them to sea ports via urban centers, but
trains and ships are more commonly employed to carry freight between regions.

Efficiency may be enhanced by arranging freight traffic, selecting the best delivery
mode, and constructing infrastructure such as freight bypass lanes and dedicated
freight lights. Costs will fall as efficiency improves.
Question 05: As the largest customer of Kiwi rail, what position would you take in
working with the company and why?

Answer: Because Fonterra has a large distribution network and manufactures dairy products
that require a precise regressive distribution system due to their limited shelf life, I will be in
charge of supply chain management. Because people of all ages use it on a daily basis, this
industry is also highly dangerous. Working in this industry will greatly boost your skills and
understanding.

The most exciting aspect is that I will understand how many means of transportation are used at
the same time. It will allow me to get diverse regional perspectives on transportation and land
use, as well as develop advocacy and planning tools for an effective freight strategy.