Karnataka Engineering Company A case study: Logistics & Supply Chain Management

Course: Logistics & Supply Chain Management

Professor: TAS Vijayaraghavan

-:Submitted By:- PGCBM-19

Rana Sarkar (RB11018/108138) Vikrant Singh (RB11014/108825)

Sangita Sharma (RB11077/108553)

Company Background

Based in Raichur Entered in to two wheeler industry in 1981 with Mopeds Started scooter production in 1983 19 branches all over India managed by Branch Manager The minimum throughput that would justify setting up of a branch in any state would be 4.25 lakh per month (78 Mopeds or 33 Scooters per month or any other combination)

Marketing offices are located in most of the states Mopeds and Scooter are transported by a specially adapted trucks with a capacity of either 80 Mopeds or 50 Scooters or combination of both

Secondary transportation is arranged by marketing offices by LCVs or trucks

Marketing Offices of KEC Ltd

Srinagar

Chandigarh

Jaipur

Delhi

Lucknow

Calcutta

Hyderabad

Chennai

Ranchi

Bhopal

Cochin

Bangalore

Mumbai

Ahmadabad

Delhi

J

ai

p

ur

Chan

digar

h

Srinagar

Business in Andhra Pradesh Marketing office is situated in Hyderabad Operating with two branch ware houses one at Adoni and other at Mahbubnagar

Selection criteria: first major town close to production facility

Hyderabad collects orders, communicate to both warehouses Secondary transportation responsibility with ware house manager Difficulty in arranging secondary transportation

Some Factual data Sales in Jan-Jul 1998 are 465 Mopeds and 78 Scooters

In Jan-Jul 1998 AP contributed around 5.3 % of KEC’s total moped sales and 3.6% total scooter sales

Average monthly off take in AP during Jan-Jul 1998 are 1925 Mopeds and 288 Scooters

The current rate of tax : 4 % CST Current sales in AP Rs.14.33/- million PA At this rate the money out flow to exchequer Rs.573260/- Cost for setting up of one branch Rs.17000/- to Rs.21000/- pm ie Rs.204000/- to Rs.252000/- PA

So up to two branches could be set up in the state at the current rate of tax and sales

Issues

At what volumes is the opening of a warehouse in a state justified primarily on the grounds of the 4% CST for transaction across states ?

How many warehouses do you think are required of KEC’s products in Andhra Pradesh? What could the candidate locations of the warehouse be? What would be the criteria on which to select the candidates?

Determine the optimal selection of warehouse and the best allocation of the demand points to the selected warehouses.

What are the best choices for the shipment (truck) size from the warehouses to the demand points? Given the size, what routing would you recommend for a typical despatch run.

Analysis The following table shows the coordinates of the Branch office locations

Sl No Name

X-Coordinate

Y Coordinate

Moped Offtake Rate

1 Adoni 2.2 10 41 4.8 2 Chittore 5 4 106 4.8

3 Nellore 6.5 7 44 4.8 4 Ongle 6.5 9.5 20 4.8

5 Chirala 7 10.5 54.8 4.8

6 Cuddappah 4.5 7.1 61.4 4.8 7 Hindupur 2.4 5.8 71.2 4.8

8 Anantpur 2.8 7.8 76 4.8 9 Kurnool 3.4 10.2 24.8 4.8

10 Tiupati 5.5 5 90.6 4.8

11 Guntur 7 11.8 119 4.8 12 Vijaywada 7.5 12.1 253 4.8

13 Kammam 6.9 14.1 104 4.8 14 Warangal 6.5 15.8 89 4.8

15 Rajanundry 9.1 13.3 80 4.8 16 Kakinada 9.9 13 76.4 4.8

17 Vizag 11.2 15.2 124.6 4.8

18 Vijayanagarm 11.5 16 38 4.8 19 Mehboobnagar 3.2 13.2 36 4.8

20 Hyderabad 4.2 14.5 728 4.8 21 Nizamabad 3.5 18 69 4.8

22 Karim Nagar 5.1 17.8 79 4.8

Using Logware

Selecting 1 location for warehouse

Selecting 2 location for warehouse

Selecting 3 location for warehouses

Selecting 4 location for warehouses

It is evident from the Screenshots of Logware ……

3 Ware Houses are required as per Multiple center – of – Gravity Location Method , If you increase more than 3 ware houses cost getting increase as shown in above MultiCOG Method.

Best Locations also identified to supply various Demand points mentioned in Map of Andhra Pradesh from ware houses and X & Y Coordinates for ware houses are also shown in figures (Near to Hyderabad, Vijaywada and Cuddappah) .

Based on our analysis on demand and rate per km, we have identified the old and new distribution method as shown in given below table.

OLD NEW

Place BIG MED SMALL BIG MED SMALL

Adoni 0 0 0 0 0 0

Anantpur 1 0 0 1 0 0

Chirala 0 1 0 0 1 0

Chittore 1 1 0 1 1 0

Cuddapah 1 0 0 1 0 0

Guntur 1 1 0 1 1 0

Hindupur 1 0 0 1 0 0

Hyderabad 9 0 0 9 0 0

Kakinada 1 0 0 1 0 0

Karimnagar 1 0 0 1 0 0

Khammam 1 1 0 1 1 0

Kurnool 0 1 0 0 1 0

Mehbubnagar 0 0 0 0 0 0

Nellore 0 1 0 0 1 0

Nizamabad 1 0 0 1 0 0

Ongole 0 0 1 0 0 1

Rajamundry 1 0 0 1 0 0

Tirupati 0 2 0 0 2 0

Vijayawada 3 0 1 0 0 0

Vizag 1 1 0 1 1 0

Vijayanagaram 0 1 0 0 1 0

Warangal 1 0 1 1 0 1

Total Trucks 24 10 3 21 10 2

Conclusion The company should have 3 ware houses and the points to where it has to supply is shown in the screenshot below.

The no of truck required will be reduced by 3 big truck and 1 small truck. The warehousing decisions will ensure better response times to satisfy customers requirement and lower the total cost by optimized cost related to distribution.