Part 3 Caselets

STRATEGIC APPROACH IN MANAGING LOGISTICS

1. CPMC Relocation and Logistics Pvt. Ltd.—Relocation Logistics
2. Nokia—Reverse Logistics Initiatives for Used Mobile Phones
3. Global Logistics Supply Chain Model for Value Creation

CPMC Relocation and Logistics Pvt. Ltd.—Relocation Logistics

CPMC-RLPL, a Kolkata based specialized logistics service provider, was founded in the year 2000, keeping in mind the sweeping changes in the whole concept of re-location business globally. The company identified the need of this service in the given sector, particularly the relocation-related services. The company’s mission has been to become a lifetime packer for its clients. Since 2005 it is an ISO 9001:2000 company. In the last eight years, its corporate client base increased to hundred plus. The company has been successful in expanding the business of packing and also moving into the areas of warehousing and fund management. This organization was formed with a handful of hardworking and enthusiastic individuals who have helped the company attain the respect and status that it enjoys today. The company offices are located in most of the major cities in India, for example Kolkata, New Delhi, Bangalore, Mumbai and Hyderabad. The company also employs a host of professionally trained movers who take exceptional care and pride while moving household and office items.

CPMC-RLPL is now one of the leading packers and movers of India. It offers a specialized and personalized logistics services to its valued customers to cover:

• Relocation of houses (personal effects)
• Relocation of cars
• Relocation of offices
• Local shifting of personal effects (within the city)
• Rearranging within the houses
• Risk coverage for all types of goods
• Storage facility including risk coverage
• Relocating big animals (giraffe and elephants)
• Management of records

Packing is one of the greatest strengths of this company and it has handled complex assignments meant for local, national and international movements. It knows exactly what materials and methods are applicable to a particular item for packing. The company provides domestic relocation and international door-to-door services by road, rail and air. The entire logistics support covers handling the entire operation such as packing, documentation, customs clearance, forwarding of consignments to foreign destination, customs clearing, inland haulage, unloading and unpacking of goods at the foreign destination.

To ensure safe relocation of animals from one zoo to another and from India to anywhere on the globe, CPMC-RLPL prepares animal-specific transport containers. These are constructed as per IATA specifications for international relocation. For movements within India, local authority guidelines are followed for the construction of containers.

Today all business houses are forced to cut their cost. This has led to outsourcing their non-core business activities. Thus the concept of managing records came into existence. CPMC-RLPL has already started management of records in its Kolkata unit and soon it would start all over India.

Packing is one of the most important aspects of moving goods from one place to the other. While packing, it takes care of health hazards involved in packing. Job managers deputed for packing are available for extending help to its valued customers on all fronts, attend to their apprehensions and invoke confidence while every single item is packed. The inventory for risk coverage is prepared by the supervisor in consultation with the owner. Special care is taken while packing fragile items. They are individually wrapped with proper packing materials and then packed into specially made carton boxes marked FRAGILE. At the time of packing, colour codes are used to indicate the source from where the items are collected; these are shown by colour stickers on the cartons. At the destination, coloured cards hung at the doors facilitate easy segregation of the packages on delivery. The fragile and highly polished furniture are also packed into crates to protect them from breakage and scratch. Proper inventory check is done prior to loading the packages. Required documentation is prepared. The truck movement is monitored and necessary information and feedback regarding the truck is available to the customers.

While moving from one place to another, clients are given 100 per cent guarantee of careful and safe handling of their goods. CPMC-RLPL offers risk coverage for all goods and personal belongings. As a value-added service company, provides the risk coverage on goods to be relocated within the city, within India and also outside the country. The normal risk charges vary between 2.5 and 3.5 per cent, depending on the risk involved and coverage in the individual consignment. The risk charges need to be paid in advance, prior to dispatch of the goods. A comprehensive risk coverage attracts the maximum charges.

For transporting goods, the company generally uses ordinary trucks, container trucks, and container-trailer trucks and LCVs (for part load). Strictly, the direct truck and no transhipment on the route are encouraged. During the delivery to the destination, the company takes care of the following:

• Personalized care of the goods
• Constant tracking for the location of the goods
• Liaison with the office concerned
• On-the-spot troubleshooting
• Supervision on unloading and arranging

Corporate relocations require special hands on involvement. CPMC-RLPL have a strategy to prepare the move to flow in a logical matter. Every item to be moved out is identified and labelled so that it may be exactly placed at the destination location. A tag attached to the box/item carries instructions on how to handle that item and where to place it. For example, the tag number will identify the placement of furniture and equipment at the new facility, not by name but by number. Thus, proper tagging is a key factor in achieving an organized and smooth-flowing move. It will save the customer’s time and money.

REVIEW QUESTIONS

1. Discuss why relocation logistics services are required and how CPMC-RLPL is offering these services to different market segments.
2. Discuss the value addition CPMC-RLPL is making in its logistics service offerings. Can you think of a new addition for the competitive advantage?

Nokia—Reverse Logistics Initiatives for Used Mobile Phones

Distribution centres face new challenges daily. One of the major challenges is how to handle the inflow of returns from retail vendors, seasonal goods, damages, excessive inventory and so on. Reverse logistics is an interesting area for mobile phones. In India every month 6–7 million new mobile handsets are added to the market. Even ahead of China, India now is the top mobile market in the world. Moreover, it is not all about low-end ones, increasing numbers of middle and upper-end mobiles are also being sold. Reverse logistics is an important strategic operational tool in the modern business era. This is particularly important for short life cycle industries such as the mobile phone industry. As estimated by Nokia, the average life cycle of a mobile handset the world over is 18 months. However, in India, it is about 24–30 months, but is shrinking drastically due to the changing consumer behaviour. Interestingly, in the war for market share of new handsets sold, retailers are exchanging old ones for the new at their shops. And what happens to the old ones? Even if 30 per cent of Indians replace their mobile handsets, that is nearly 80 million a year, there is a huge opportunity for reverse logistics for mobile handset companies here. Nokia has come up with an interesting concept for recycling its phones. It launched its “We Recycle” campaign sometime back. Within this, it has demonstrated how it will make mobiles using recycled aluminium, circuits and plastic. In Europe it has started putting up bins in the Nokia Care Centres, where people can dump their old mobiles. Something similar can also be done in India. There are e-waste companies such as Inforek Syscom and Trishiya (bought by SIMS Australia last year) that can recycle mobiles and computers. They get their stuff filtered up through the “kabadi” chain. The theoretical recycling ability of Nokia mobile devices ranges from 65 to 80 per cent. Nokia supports the concept of recycling as its drive towards environmental concerns. Nokia is currently developing awareness-building programmes that fit into existing recycling infrastructure and local cultural norms as well as regulatory framework local legal requirements. Old phones might seem worthless, but they still contain many usable and valuable materials. Nokia’s idea is to make it easier for the consumers to act as a ‘eco-conscious’ citizen by offering the possibility to return old, unused phones and accessories. Authorized Nokia sales and service points are all possible channels for returning used products.

Equipment sold via Nokia networks is traceable with recycling possibilities included in the commercial contracts. Nokia is offerings this service since 1999 in Europe. Currently, efforts in the United States are that pre-addressed, postage-paid envelopes will be included in sales packs, providing the customers with an easy method for returning used products for recycling, at no cost to them. The consumer simply places the contents in the bag and then puts it in the mailbox. In post-consumer collection, the composition of collected products and materials is verified by professional pre-treatment. For the recycling of obsolete mobile devices and batteries, Nokia selects companies audited through its set of “Requirements for Service Providers.”

REVIEW QUESTIONS

1. Why did Nokia take the initiative of ‘reverse logistics’ for used cell phones?
2. What are the major issues in reverse logistics?
3. How can the “kabadi” network be deployed in the reverse logistics system?
4. How can the issue of e-waste be addressed in India?

Global Logistics Supply Chain Model for Value Creation

The firm, a European manufacturer of ready-made garments, is marketing the products in American markets. It has a Hong Kong-based local coordination office to look into the movements of the inventory. The initial conceptualization and design of the garments is done in Hong Kong. The cotton yarn is brought from Korea and dyed and woven in Taiwan. Japanese zippers are sourced from a factory located in China. Finally, all these components are shipped to Thailand where a consignment of 50,000 garments is split into five batches of 10,000 each for further processing in five separates factories. The ready-made garment may bear a “made in Thailand label,” which does not reflect the reality. The entire consignment will then reach Hong Kong where the final inspection and packing will be done. The final product will reach the destination in five weeks’ time. Similar networks are also in operation for products like Barbie dolls and entertainment electronics.

In the above global model, the shift is from value chain to value network. The product passes through several countries and many factories employing thousands of workers with diverse cultural and linguistic backgrounds. Each stage in the logistics supply chain is identified to be the most efficient and cost-effective. For example, Japanese zippers are good in design and performance, but to source them from a factory located in China is a cost-effective option. The low-cost option of the Chinese manufacturer is a motivating factor for incorporating them in the value network. Due to the prevailing quota system, Thailand is the best location option for final manufacturing. The country option in the value network may change due to changes in the local regulations and business environment. For a long-term competitive advantage, the logistics manager has to look into the best options available for inventory movement across the global supply chain network. The logistics cost may go up but it will be more than compensated by the benefits (value additions at different locations) without compromising on quality.

REVIEW QUESTIONS

1. What are the factors affecting the global supply chain operations?
2. How is value created in the above supply chain model?
3. What are the barriers in achieving the service-cost-time equilibrium in the above case?