Introduction

Nippon Express

Session: 2014-2016

SUMMER INTERNSHIP REPORT ON

“Effectiveness of Logistics Management : A case of Nippon Express”

Under the guidance of

Mr. Ajay Mishra

Sr. Manager (Logistics)

NIPPON EXPRESS

GURGAON

Submitted By:

SAURABH MAURYA

Roll no: 15

MBA-IB 3rd Semester

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DECLARATION

I,Saurabh Maurya, student of Delhi School of Economics, University of Delhi hereby declare that I have completed my Summer Internship project in Nippon Express, Gurgaon from 01-06- 2014 for a period of 8 weeks on the project entitled- ““Effectiveness of Logistics Management : A case of Nippon

Express”” The contents of the report are written by me and are exclusively based on my own experience during the Internship period.

Date: Saurabh Maurya

Place: MBA-IB 3rd Semester

Dept. of Commerce

Delhi School of Economics

University of Delhi

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ACKNOWLEDGEMENT

This report has been possible due to the help and support of a lot of people. First of all, I would like to thank my organizational guide, Mr. Ajay Mishra Sr. Manager (Logistics)NIPPON EXPRESS GURGAON for guiding me throughout my summer internship project. His encouragement, time and advice are highly appreciated.

I would also like to express my sincere gratitude to Mr. Nidheesh Sankaran, Incharge Operations, NIPPON EXPRESS GURGAON also under whose guidance I carried out my project. I am extremely grateful to him for his guidance, constant support and patience throughout the project. This project would not have been successful without his help.

I would like to thank the respondents of the survey who offered their opinions and suggestions and sometimes critical views throughout the survey and helped me to update myself constantly.

Saurabh Maurya

MBA 3rd Semester

Roll No.: 54

Dept. of Commerce

Delhi School of Economics

University of Delhi

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1. INTRODUCTION

As part of curriculum of the MBA(IB) , Dept. of Commerce , Delhi School of Economics ,

University of Delhi , students are required to do a Summer Internship in any reputed

organization. For this reason, I did my Summer Internship in Nippon Express, Gurgaon . The

project work was titled “Effectiveness of Logistics Management” in Delhi and to suggest ways

and means to improve the management strategic decisions.

1.1 OBJECTIVE OF THE STUDY

The objectives of the Project are:

To know about Logistics Industries

To compare the effectiveness of logistics management at Nippon Express and to

benchmark the organization with respect to the industry.

To have a thorough understanding of how logistics and freight industries work.

To know whether the customers are satisfied with the existing range of service pattern.

1.2 METHODOLOGY OF THE STUDY

The data used for the study had primary and secondary character to it. The primary data was

collected through questionnaire method. The secondary data were composed through the

reference of books, websites, and interviews with various executives in different organizations of

the sample. The procured data was analyzed by a simple percentage method and the results are

supported with graphs and charts.

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1.3 SCOPE OF THE STUDY:

The scope of the study is confined to Dubai Ports (Al Hamriya Port) and nearby organizations of

Nippon Express, which are into the concerned industry. The study is done only on industries

dealing with Freight and Logistics in Dubai area.

a. Introduction to Logistics Management

Logistics management is that part of the supply chain which plans, implements and controls the

efficient, effective forward and reverse flow and storage of goods, services and information

between the point of origin and the point of consumption in order to meet customers'

requirements. A professional working in the field of logistics management is called a logistician.

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing

complexity of supplying one's business with materials and shipping out products in an

increasingly globalized supply chain, calling for experts in the field who are called Supply Chain

Logisticians. This can be defined as having the right item in the right quantity at the right time at

the right place for the right price and it is the science of process having its presence in all sectors

of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply

chains and resultant efficiencies.

b. Origin and Definition of Logistics:

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word,

calculation, reason, speech, oration"). Logistics is considered to have originated in the military's

need to supply themselves with arms, ammunition and rations as they moved from their base to a

forward position. In ancient Greek, Roman and Byzantine empires, there were military officers

with the title ‘Logistikas’ who were responsible for financial and distribution of supplies.

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The Oxford English dictionary defines logistics as: “The branch of military science having to do

with procuring, maintaining and transporting material, personnel and facilities.”Another

dictionary definition is: "The time related positioning of resources." As such, logistics is

commonly seen as a branch of engineering which creates "people systems" rather than "machine

systems"....

c. Prospects of Growth in the Industry

In years gone by, the traditional warehousing and logistics facility was located by railroad tracks,

a water port, and/or freeways, usually in the least desirable parts of cities or large towns. This

stereotype then faded as gigantic, state-of-the-art facilities began to sprout in more rural areas on

the outskirts of transportation and population hubs. The World started beginning to see such

facilities showing up in even less "traditional" areas. Modern warehouses now are being located

in carefully manicured industrial parks that are sprouting as fast as the corn and wheat once did

in these open spaces-often in out-of-the-way places. Why the emphasis on such locations for

logistics companies?

Much of it is due to the great flux that the logistics industry has been undergoing in the first three

years of the 21st century. Most of these changes are being driven by a growing trend in the

manufacturing and retail sectors to form partnerships with companies to which they can

outsource non-core logistics competencies-3PL providers.

In turn, 3PL providers are continually looking to provide innovative supply chain solutions to

customers by focusing on value-added capabilities, differentiating themselves from the

competition. They focus on key objectives, such as implementing information technologies,

instituting effective management processes, integrating services and technologies globally, and

delivering comprehensive solutions that create value for 3PL users and their supply chains. This

need to partner with customers and become more integrated into their supply chain processes has

created the ancillary need to locate close to these customers.

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That isn't to say the need for easy access to transportation hubs and different modes of

transportation won't continue to be important. But the above shift in business strategy, along with

the advances in technology and enhanced communication, has opened the door for logistics

facilities to operate effortlessly in a myriad of locations.

Profit warnings, share price pressures, mergers, reorganizations, relocations, disposals, painful

layoffs and great geopolitical uncertainties can sweep away even the most comprehensive

logistics strategies – and that’s despite outstanding management over many years. These are

exceptionally difficult times and it has never been more important to connect logistics and freight

planning to executive board thinking than now. It’s easy to lose sight of the bigger picture in the

rush to cut infrastructure cost and conserve cash. Hopefully organization succeed in protecting

the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale

and momentum?

To be a logistics winner in the coming years organizations need to use the downturn to reshape

for growth, propelled by an unshakeable conviction that the mission is still important, that more

prosperous times lie ahead, and that in some way the company infrastructure is helping to build a

better kind of world.

Logistics is inevitable in the future and essentially the management policy also has a significant

role in the future of world. Generally the study is being featured with all aspects of management

in Logistics and Freight areas. (Logistics include Transportation, Warehousing, Network Design,

Crossdocking, and Value Adding)

d. General Import / Export Market

a.) Market Analysis

UAE sea freight exports rose in volume and value during recent years. UAE’s largest exporting

state, Dubai, led these increases with substantial increases in volume and value of exports. All

states showed an increase in export value and many states having an increase in export volume.

Abudhabi, Rasalkhaimah, and other states showed small decreases in export volume compared to

Dubai.

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Total freight import values increased 16.3% in 2006/07. China remains largest import market.

Exports to other largest sea freight export markets showed substantial growth, namely Africa

(25.8%), India (28.4%) and other Asian Markets (28.4%). Over the last 6 years, import volumes

and value to China and India have consistently grown, while imports from Japan increased

following three consecutive years of decline. Most of this increase can be attributed to a large

increase in sea freight imports from China, which rose 86,629,230 tones or 218.5%. Other

substantial increases in import volume were seen from Taiwan (23.7%), India (22.2%), Italy

(14.9%), New Zealand (14.9%) and Mexico (70.4%), while noteworthy decreases in export

volume were seen to Netherlands (-14.0%) and USA (-25.2%).

2006/07 saw a mixed result for Chinese and other Asian sea freight exports. Increasing

import value was led by Base Metals (principally Copper Cathodes and Lead), despite recording

a small decrease in import volume in the group. Mineral Products (mainly Liquid Gas and Iron

products) and Prepared Foodstuffs (mainly packed FMCG products) were the other major

commodity groups showing an increase in value, also backed by increasing commodity prices for

these groups. Prepared Foodstuffs have shown a continual increase in import value over the last

6 years. The 2006/07 increase in Mineral Products and Base Metal Products imports follows 3

years of import value decline in these products. (Base metals used mainly for Automobiles,

Batteries etc.)

The most substantial decrease in export volume was seen in Vegetable Products (grains and

other plant products), with an associated drop in export value. Transport Equipment also saw a

large drop in export value and volume. A decrease in export value continues 3 consecutive years

of decreases in export value in these groups. The most constant export is for dates to neighboring

nations. Dates are of very less demand in Western regions of the globe.

b.) Perishable Items- Animal Products: Meat, Dairy & Seafood

UAE import products in the Animal Products category include meat, seafood and dairy. Chicken

and lamb meat imports are UAE’s largest sea freight imports in this category. Both Chicken

(110%) and Lamb (22.6%) saw increases in sea freight import value during 2006/07, with

smaller increases in total volume, reflecting the increased price for these commodities during the

period. Lamb imports by air also rose in 2006/07, but imports by air account for only 3.7% of the

total chicken and lamb exports. Over the last 5 years, sea freight lamb imports have been quite

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consistent and at a high level. The dramatic growth in chicken imports during 2006/07 comes on

top of steady growth since 2000/01.

The other single largest Animal product commodity is Tuna, with 2006/07 sea freight imports

totaling $65,134,998 and 5,178 tonnes. This is well below the 2002/03 peak of $201,066,102,

with decreases in export value seen during the previous years. In addition to the sea freight

imports, Tuna is also imported by airfreight. Similar decreases were seen in both sea and

airfreight imports.

Frozen Prawns, increased in volume and value (7.0%) during 2006/07. Grated Cheese (including

Cheddar) remains an important dairy import by sea with yearly exports fluctuating between $36

and $49 million over the last 6 years. Cheese curd exports increased substantially during

2006/07. Imports are mainly from Denmark, Switzerland.

Grain: Wheat, Rice is UAE’s single largest volume import commodity. Import volume and value

dropped across most major commodities in the grain category. Actually had an increase in

import volume for Rice and Wheat for the year 2006-07.

[CHAPTER 2]Industry Profile

2. Logistics Industry

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2.1 LOGISTICS (UAE - Middle East)

Logistics is the management of the flow of goods, information and other resources, including

energy and people, between the point of origin and the point of consumption in order to meet the

requirements of consumers. Logistics involve the integration of information, transportation,

inventory, warehousing, material-handling and packaging. In terms of value, global logistics

industry has been estimated to be more than USD 235 billion and make up significant part of the

GDP with regard to India. The Middle East is currently India's top export destination for a

burgeoning consumer electronics sector. Exports reached $175 million in 2005-06, an increase of

96 percent over the previous year, according to the Electronics and Computer Software Export

Promotion Council (ESC). The growing trade reciprocity with China, 63 percent of respondents

to a recent China supplier survey,  Middle East Export / Import Opportunities, cited the Middle

East as the next "hot" import market for Chinese-manufactured goods.

UAE is now in a stage of transition from an import substitution closed economy model to an

outward oriented trade regime. The importance of logistics as an enabler of trade and economic

growth is worth mentioning. Massive improvement in infrastructure for transportation leads to

present and future development in trade, resulting in the economic growth of the nation. While

around Dh.200, billion of investments have been made during last 5 years to augment port

facilities in the country (UAE), equally massive investments have also been made in road

networks. The logistics/shipping/freight sector has received keen attention from both investors

and government.

On the positive point of view, new opportunities are opening up for the sector. Trade volumes

both overseas and inland are growing very fast. The pace of growth in the specialized sectors like

Liquid Natural Gas (LNG), Containers, Goods, Electronic Equipments etc. are comparatively

much higher. Integrated logistics and multimode transportation are opening up new business for

logistics/ shipping companies.

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2.2 Logistics Management and Logistics Management Software

Logistics management is that part of the supply chain which plans, implements and controls the

efficient, effective forward and reverse flow and storage of goods, services and related

information between the point of origin and the point of consumption in order to meet customers'

requirements. A professional working in the field of logistics management is called a logistician.

Software is used for automating logistics activities which helps the supply chain industry in

automating the work flow as well as management of the system. Very few generalized software

are only available in the new market in the said topology. This is because there is no common

rule to generalize the system as well as work flow even though the practice is more or less the

same. Most of the commercial companies do use one or the other custom solution. There are

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various software that are being used within the departments of logistics mainly in Conventional

Departments and for Container Trucking.

a. Business Logistics

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing

complexity of supplying one's business with materials and shipping out products in an

increasingly globalized supply chain, calling for experts in the field who are called Supply Chain

Logisticians. This can be defined as having the right item in the right quantity at the right time at

the right place for the right price and it is the science of process having its presence in all sectors

of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply

chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus

(outbound logistics) covering the flow and storage of materials from point of origin to point of

consumption. The main functions of a qualified logistician include inventory management,

purchasing, transportation, warehousing, consultation and the organizing and planning of these

activities. Logisticians combine the professional knowledge of each of these functions so that

there is a coordination of resources in an organization. There are two fundamentally different

forms of logistics. One optimizes a steady flow of material through a network of transport links

and storage nodes. The other coordinates a sequence of resources to carry out some project.

b. Production Logistics

The term is used for describing logistic processes within an industry. The purpose of production

logistics is to ensure that each machine and workstation is being fed with the right product in the

right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow through the value

adding processes and eliminate non-value adding ones. Production logistics can be applied in

existing as well as new plants. Manufacturing in an existing plant is a constantly changing

process. Machines are exchanged and new ones added, which gives the opportunity to improve

the production logistics system accordingly. Production logistics provides the means to achieve

customer response and capital efficiency. Production logistics is getting more and more

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important with the decreasing batch sizes. Even a single customer demand can be fulfilled in an

efficient way. Track and tracing, which is an essential part of production logistics - due to

product safety and product reliability issues - is also gaining importance especially in the

automotive and the medical industry.

[CHAPTER 3]Company Profile

When it comes to supply chain management, the answer is:

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“Leadership, Innovation and Quality Solutions”

What Nippon Express does:

Freight Movement Cargo/ Freight Management Solutions

Full Truckload & Solution Providers

Contract Packaging & Other Services

Warehouse Operations (Outsourced) and Management

Logistics 3PL

3. Nippon Express Overall View:

3.1 Vision and Mission

Nippon Express:  Best People. Best Processes. Best Value.

a. Vision

To become a leading freight, transportation, clearing and logistics company in the Middle

East. To be the recognized industry leader, through total commitment to customer service, by

maintaining our uncompromising integrity, in the support and development of our People,

Communications and Systems in sustained growth and profitability.

b. Mission

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To set the standard for excellence in global logistics through total commitment to quality in

people and customer service, with superior financial results. To solve reliable transportation and

logistics services to the needs of the business community. Reliable services means on-time

delivery, undamaged goods, and correct documentation in case of deviations. To perform

continuous business improvement in order to meet and exceed customer expectation, To create

sustainable business growth in order to enhance the prosperity of employee and benefit

shareholders.

Decisions can impact the success of the company as much as the performance of the supply

chain. No matter what industry or region of the world other organization do business in, the

supply chain is an integral part to the success as same as the products, the services, and the

people. In 2002, Nippon Express, LLC was formed to build on the global distribution experience

to help other companies lower distribution costs while improving customer service and brand

loyalty.

Nippon Express is a technology-based company providing customized solutions that transform

distribution to a source of competitive advantage. Main motive is to provide integrated solutions

from managing transportation, inventory, and distribution centers to sophisticated forecasting,

information management, and network consulting services. Today, Nippon Express serves more

than 305 client companies, globally, in an array of different market sectors.

The organization mission is to provide best value, integrated freight and logistics solutions to

clients in time-sensitive, service-critical businesses. Organization tries to leverage and

continuously improve the capabilities. Our clients trust us and depend on our Best People and

Best Processes to help them succeed.

3.2 Nippon Express

Today, Nippon Express employ many professionals in their branch offices and in fields (Ports),

dedicated to helping freight, transportation, clearing, forwarding and logistics needs. Young,

energetic, professional, and passionate: their humble beginnings, satisfying customer needs has

been the driving force behind every Nippon Express employee.

 

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 Nippon Express provide these services around globally and main focus to UAE and Indian markets

Nippon Express, focus on main areas they are:

a. Customer service to a higher level.

b. Partnering to seeking the right answers.

c. Finding solutions that optimize cost and service.

d. And always asking, how can we serve you better?

e. Analyzing every opportunity, every challenge to provide a custom solution that works best for customer.

3.3 Continuous Improvement in the Organization

Nippon Express employees and other contracting people and other exceptional people are the

cornerstone of organizations service, they are experts in their fields. Energetic, always looking

for ways to drive cost out of the supply chain and all the while working to improve the service.

Initially from the beginning, organization has hired only the best and brightest. The most

committed. Every member of the team is empowered to create and implement client-centered

solutions. Deploying the management team regionally means decision-making and is kept local,

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on-the-scene. The team structure means good ideas can come from anywhere within the

company.  

a. Customers need solutions now. Nippon Express get them on that moment.

With world-class technology as the backbone of the solutions and service.  Integrating

systems and providing real-time information to help reduce cost by moving the products

of customers to market as efficiently as possible. Organizations “Can Do” culture is

rooted in customer service, flexibility and innovation.  It’s been that way since the

Nippon Express organization was launched over 5 years ago.  Organization has got a rich

tradition of redefining service for the supply chain management, freight management and

logistics industry. This commitment to quality customer service led Nippon Express to

become the third-party logistics provider to be certified by UAE as best system standards.

Today, the Quality Management System not only serves as the foundation of the on-

going Continuous Improvement in day-to-day procedures, it also serves as the

cornerstone of the Nippon Express. The process driven approach to problem-solving

helps the organization exceed customers' expectations, as the organization helps tackle

service and cost issues within their supply chains.

3.4 Organization Functions:

a. Freight Forwarding

Departments typically arrange cargo movements to an international destination. This department

has the expertise that allows them to prepare and process the documentation and perform related

activities pertaining to international shipments. A freight forwarder organizes the safe efficient

movement of goods on behalf of an exporter, importer or another company or person, sometimes

including dealing with packing and storage. Taking into account the type of goods and the

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customer’s delivery requirements, freight forwarder array, the best means of transport, using the

services of shipping lines, airlines or road and rail freight (Indian Markets) operators.

Functions:

i. Researching and planning the most appropriate route for a shipment. Taking account of

the perishable or hazardous nature of the goods, cost transit time and security.

ii. Arranging appropriate packing. Taking account of climate, climate, terrain, weight,

nature of goods and cost, delivery or warehousing of goods at their final destination.

iii. Obtaining, checking and preparing documentation to meet customs, excise and insurance

requirements, packing specifications and compliance with overseas countries regulations

and fiscal regimes.

iv. Offering consolidation services by air, sea, and road.

o Ensuring cost effective and secure solutions to small shippers with sufficient cargo to

utilize their own dedicated units.

o Liaising with third parties to move goods by road, air or sea in accordance with

customer requirements.

o Arranging insurance and assisting the client in the event of a claim.

o Arranging payment of freight and other charges or collection of payment on behalf of

the client.

o Transmitting data by internet and satellite systems, enabling real time tracking and

tracing of goods.

o Arranging charters for large volumes out of gauge or project movements by air and

sea.

o Acting as broker in customs negotiations worldwide to guide the freight efficiently

through complex procedures

o Arranging courier and specialist hand carry services

o Maintaining visibility and control through all phases of the journey, including the

production of management reports and statistical and unit cost analysis

o Acting as consultant in customs

o Maintaining current knowledge of relevant legislation, political situations and other

factors that could affect the movement of freight

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o At more senior level, the role may also involve managing staff and overseeing

activities within a department or specializing in a particular area, such as sea freight

or air freight.

b. Logistics Field: Bulk Operations

The main function in this department includes identifying the customers and collecting

information about the amount of material to be exported, the product, place of exports. The

department also undertakes cargo booking, provides information on the rates, the schedules, the

arrival, departure time, name of the ship, transshipment details and does the follow up.

Functions

i. Identifying the customers by the marketing person of this department.

ii. Convincing the shipper of the services that company provides to be better than the other

shipping service providers.

iii. Enquire about the place or commonly referred to as the destination port to which the

shipper would like to export the cargo.

iv. Enquire about the type and quantity of the cargo, that he would like to export.

v. The type of container and the number of containers that the shipper would like to take.

vi. Analyzing the rate the shipper expects from his cargo movement .

vii. Informing the shipper the rate and negotiating with him.

viii.Scheduling the arrival and department time of the vessel

ix. Listing out the transshipment details and do the follow up.

c. Clearing and Forwarding (C & F)

The main function of C&F department is to undertake the customs formalities on behalf of the

exporters or importers. The documentation process and clearing activities are done by this

department.

Functions

i. Preparation of various kinds of bill of entry and shipping bill.

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ii. Arrival and clearance of vessels.

iii. Determination of value for assessment.

iv. Conversion of currency.

v. Nature and description of documents to be filed with kinds of bills of entry & shipping

bill.

vi. Procedures for assessment and payment of duties.

vii. Examination of merchandize at the customs stations.

viii. Prohibitions on imports and exports items.

ix. Re-importation and conditions for free re-entry.

x. Check offences under the act

xi. Refund procedures, appeals and revision petitions.

d. Network Design

A Logistics Network Design initiative is a strategic analysis of entire supply chain.

Some of the strategic questions are: To ensure enough facilities to meet future capacity requirements? Which facilities should be closed and/or consolidated? Is there an opportunity to make changes to the network to reduce logistics costs?

Develop the Current Financial Model:

Before making sensible decisions on what changes to make the network, a ‘base case’ financial

model needs to be developed. It should include the costs of all logistical activities such as

Warehouse costs, Transportation costs, Inventory costs and Order Processing costs.

Software Selection:

Due to the complexity of this analysis, a network optimization software package is in order. The

software selection phase may be completed concurrently with the financial model-building phase

above. One person on the project team should be responsible for sourcing the right software to

meet the projects modeling needs.

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Data Gathering & Validation:

This is one of the key drivers to a successful project. It is imperative that the data from your

current data warehouse (transactional data) be accurate. For example, when an item is received

into the warehouse, are the correct product characteristics captured accurately? Some

characteristics of interest would be cube, weight, carton dimension, hazardous materials, etc.

One of the activities further into the project will be to create a summary of the product flows.

This is accomplished by creating family groupings of products. If the data is not ‘clean’ the

flows will be misrepresented and this will affect the accuracy of the model.

Analyze Current State of Operations:

A throughput and capacity analysis should be completed for the existing operations. This will

help determine if there is additional capacity in the existing facilities or if there is excess capacity

available. This will help develop the ‘scenarios’ later on. The impact to the other logistical

operations may then be identified.

e. Warehousing

A warehouse is a commercial building for storage of goods. Warehouses are commonly used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.

Most warehouses are completely automated, with no workers working inside. The pallets and product are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers and computers running logistics automation software. These systems are often installed in refrigerated warehouses where temperatures are kept very cold to keep the product from spoiling, and also where land is expensive, as automated storage systems can use vertical space efficiently. These high-bay storage areas are often more than 10 meters high, with some over 20 meters high.

The direction and tracking of materials in the warehouse is coordinated by the WMS, or Warehouse Management System, a database driven computer program. The WMS is used by

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logistics personnel to improve the efficiency of the warehouse by directing putaways and to maintain accurate inventory by recording warehouse transactions.

Modern warehouses are also used at large by exporters/manufacturers as a point of developing retail outlets in a particular region or country. This concept reduces the end cost of the product to the consumer and thus enhance the production sale ratio. Warehousing is an age old concept which can be used as sharp tool by original manufacturers to reach out directly to consumers leaving aside or bypassing importers or any other middle agencies or person.

The Warehouse are to be well guarded with safety provisions to counter pilferage, fire, floods & other calamities. The Warehouses are in convenient locations & well connected by roads to facilitate on time delivery to customers.

f. Crossdocking – Containerization

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Crossdocking is a practice of logistics of unloading materials from an incoming semi trailer truck

and loading these materials to outbound trailers or rail cars, with little or no storage in between.

This may be done to change type of conveyance, or to sort materials intended for different

destinations or to combine material from different origin.

An increasing popular method of shipment is containerization. A container is a large box made

of durable material such as steel, aluminum, plywood and reinforced plastics. A container varies

in size material and construction. Its dimension is typically 8 foot high and 8 foot wide lengths

usually varying. A container can accommodate most cargo but is most suitable to packages of

standard size and shape. Containers can take case of most of 4 main packing problems. Because

of container construction, a product does not have to have heavy packaging, it gives protection

against:

i. Breakage

ii. Moisture

iii. Temperature controlled

iv. Pilferage and Theft

There are mainly 2 types of containers

v. Dry Containers

vi. Special Purpose Containers

Types / Size

20 Foot Dry

40 Foot Dry

45 Foot Dry

vii. Open top containers

viii. Flat rack for over sized cargo

ix. 40 foot refrigerated containers/ reefers

x. High cube containers (40 foot, 45 foot & Reefers)

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3.5 Organization Structure

Organization is headed by Organization Head, and all other employees report to him. Firm comprises of 12 employees for internal works and other team for activities including freight forwarding, logistics, clearing and forwarding. Organization acts as a 3PL for other firms on behalf of carry/ forward, logistics. Warehouse activities are being outsourced based on the demand situations, as goods are being stocked in different warehouses, and is based on the customer requirements.

3.6 Business Drivers

The following are the business drivers in logistical operation:

a) Cost Drivers: The average materials moved by manufacturers to export market is low, but

where as to import market is high in figure. The high technology portion reaches to 60%

to 72% of imports. Number of labour hours is a factor, tonnage of imports; size of

inventory, number of suppliers, number of batches, number of employees etc. are all

major concern in cost. Nippon Express keep a major favourable concern on the above, as

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from the basic get-together of employees during the off peak hours in work. I was able to

figure out, employees were not happy with their present situations in office and in the

working hours. The situation has a major impact in operational stability. The situation

leads to lengthening/of delivery bills and other major invoice forms. As to manager’s

words, it is deciphered that situations are improving day by day. By using Activity Based

Costing (ABC) method of costing the organization can identify unprofitable warehouse

practices, other cost measures in logistics. If Nippon Express implement cost based on

ABC, the firm can improve and eliminate unprofitable situations, improve and implement

new facilities with much broader focus on future. To any organization cost reduction is

the ultimate method to get a much wider profit. As with the help of questionnaires and

through formal interviews with officials not many organizations have this generally. All

organizations will be implementing the cost method within the near future.

[CHAPTER 4]Review of Literature

4. Review of Literaturea. Demand Chain Management

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Understanding demand requires a comprehensive knowledge of your customers, You should

know what products / services are demanded by your customers; how do they make their

purchases, how often they order and what constraints they face on the purchasing process. Very

few companies have mastered this concept. Nippon Express was able to know all the above

concepts through considerable focus into customer needs and grievances.

b. Achieving Competitiveness in Logistics, Freight, Supply Chain

Reduced lead time, inventories, lower operating costs, product availability and customer

satisfaction are the benefits which grow out of effective logistics and supply chain management.

The decisions usually carried on by Nippon Express, cover both the long term and short term.

Strategic decisions deal with the corporate policies, and look at overall design and logistic chain

structure. Tactical, Operational decisions are those dealing with everyday activities and problems

of the organization. Change is the inevitable factor for each and every day situation within and

outside the organization. The decisions must take into account the strategic decisions already in

30

place. Therefore organization must structure the logistics ideas through long term analysis and at

the same time focus on every time situations. Furthermore, market demands, customer needs,

transport considerations and pricing constraints are the factors in order to structure the logistics,

freight. Nippon Express realized the fact and are prepared to face any unexpected situations like

inflation/ deflation in the economy, price factors, climatic problems etc.

c. Operational Fleet Routing & Loading

The organization derives routes in transportation are mainly long-haul (Optimization). For short

haul deliveries, there are ready solutions that are tightly integrated to warehouse management

systems (outsourced facility), to efficiently route fleets of vehicles and vessels and plan picking

and loading. Stipulated time windows for pick-ups and deliveries and vehicular weight and

spatial capacities would be used, as will constraints such as delivery within specified period

minutes upon pickup (useful for perishable goods). Time required at various stops - in terms of

fixed time to park and variable time dependent on amount to be loaded or off-loaded - can be

specified. Travel speeds along various types/zones of roads can be stipulated by traffic

information services. The organization schedules arrival and departure times for each stop can

thus be worked out quite accurately. Routes can be generated dynamically and ad hoc backhaul

or other opportunities can also be assigned to the most suitable vehicle. The benefits of

operational fleet routing include considerable reduction in fleet operating cost and improved

customer service with better estimated arrival time.

d. Vendor Managed Inventory

Vendor managed inventory, coordinated by an integrated logistics system, allows inventory to be

optimized together with transportation. Nippon Express try to know the product value as well as

storage capacity (mainly warehouse – how much to outsource). As a routine job the company

collects information on consumption rate, current inventory levels, forecasted demand and status

of shipments. Thus the system can optimize the right quantities of replenishments to be sent at

the right time to ensure that service levels are maintained while minimizing cost of inventory and

transportation.

e. Mode of Transportation

31

Transportation generally is movement of product, goods, raw materials to different stages in

supply chain. Essentially in supply chain logistics plays a major role, the manner in which

product is moved from one location to another is through road, rail, truck, air, sea.

Nippon Express essentially uses only 2 modes for their operation they are air and sea. The goods

being delivered to end customer is brought to port or to the place through containers or other

methods like wagons, or cold enclosures like frozen storage. As in UAE rail transport does not

exist, so it has got a relevant drawback for the company, as company has to stick on road for

short routes and even routes between states of UAE and which is very much expensive and

increases the operational cost. Nippon Express strategically manage the procurement, movement,

and storage of materials, parts and finished inventory through the organization and its marketing

channels. Essentially from companies’ angle, there are two categories, initially inbound logistics,

i.e., handling goods that are brought into the company, through road transport and storing and

making them available. Another main phase is the outbound logistics, taking the cargo or the

goods through channels, and is being done with considerable effort to various parts of the world

as per the customer requirements.

i. Intermodal Transportation System Used

This is the use of one or more than one mode of transport to move a shipment to

its destination. Nippon Express use this in an efficient way. Variety used is road

and sea in the case of organization. Referring to Global trade, this is the only

option as factories and markets may not be next to ports. It helps reduce cost in

operation. Helps reduce cost that cannot be matched by single mode. Essentially it

is very convenient for shippers as well as consignee.

ii. Attributes: The price charged is reasonable with regard to the consignee, as

organization has got a long term relation with all the customers. Usually goods

being transported are electronics and frozen stocks from warehouse. The relevant

focus is on warehouse, transportations services offered. Service is another aspect

which focuses the advanced need of the customer, initially with proper timing

maintenance, order management. As the consignee is offered service by 3PL like

Nippon Express with favorable order management, and ease of doing business is

attained by logistics organization like Nippon Express.

f. The Challenge Faced by Organizations

32

In today’s world, competence is taking on new dimensions. The ability to compete is being

determined by the degree of responsiveness to customers and key issues handling. How fast you

deliver the goods/ products, what the price paid by customers and what value customer is getting

throughout the service is considered in a schematic and ordered way. Markets are quick

demanding and customization of each logistics activities is essential for each customer, and has

become the essential factor in logistics management.

Nippon Express faces lot of ups and downs in each operation and improves operation on each

situation while dealing with each customer. Nippon Express dominant improvement methods

used are:

i. What are the customer expectations?

ii. How are your competitors performing in each aspect of operations?

iii. Determining the gaps in each phase and try to fill it.

g. Economic Ordering Quantity (EOQ)

Efficient order quantities consider the Purchase Order Cost (POC), the Annual Demand rate

(AD), the Inventory Carrying Rate (ICR), and Unit Inventory Volume (UIV). Large Order

Quantities yield high inventory levels and high inventory carrying costs but fewer orders and

lower ordering costs. High ordering costs and demand rates suggest large order quantities. High

ICRs and high unit inventory values suggest small order quantities.

Generally during research the analysis shows, few organizations believe EOQ analysis is

outdated and quite few with enhanced focus on it. There is relevant need for EOQ in this era.

EOQ analysis should be completed as a part of any inventory strategy. The analysis suggests

appropriate reordering intervals for all items each organization is handling. Competitors focus on

reducing the costs of placing purchase orders. The lower the purchase order cost, the more

economical it becomes to order in small increments and the less inventory will be there in the

system. The purchase order costs is typically dominated by the labour and paperwork costs of

planning, negotiating, executing and tracking purchase orders. Large number of organization

extent to which these functions can be automated via automated purchase order planning, e-

procurement, online catalogs, online bidding and online exchanges, is the extent to which

inventory levels and lost sales costs may be reduced in the supply chain and there to the

33

efficiency of logistic operations. Nippon Express has a considerable drawback in this scenario

comparing to the other firms. Cost is high in this situation for ordering costs to the firm.

4.2 Studies on Inventory, Back Order, Lost Sales, Stock Outs, Packaging and Packaging

Materials, Documentation from Nippon Express .

a. Inventory

Inventory is a list for goods and materials, or those goods and materials themselves, held

available in stock by a business. Inventory are held in order to manage and hide from the

customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease

the effect of imperfections in the manufacturing process that lower production efficiencies if

production capacity stands idle for lack of materials.

There are three basic reasons for keeping an inventory:

i. Time - The time lags present in the supply chain, from supplier to user at every stage,

requires that you maintain certain amount of inventory to use in this "lead time"

ii. Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand,

supply and movements of goods.

iii. Economies of scale - Ideal condition of "one unit at a time at a place where user needs it,

when he needs it" principle tends to incur lots of costs in terms of logistics. So Bulk

buying, movement and storing brings in economies of scale, thus inventory.

[The Management of Business Logistics, Coyle, Bardi, Langley]

b. Back Order

A company having to back order an item that is out of stock will incur expenses for special order

processing and transportation. The extra order processing traces the back orders movement, in

addition to the normal processing for regular replenishments. The customer usually incurs extra

transportation charges because a back order is typically a smaller shipment and often incurs

higher rates. The seller may need to ship the back ordered item a longer distance. The seller may

need to ship the back order by a faster and more expensive means of transportation. We could

estimate the back order cost by analyzing the additional order processing and additional

34

transportation expense. If customers always back ordered out of stock items, the seller could use

this analysis to estimate the cost of stockouts. The seller could then compare this cost with the

cost of carrying excess inventory.

[The Management of Business Logistics, Coyle, Bardi, Langley]

c. Lost Sales

Most companies have competitors who produce substitute products, and when one source does

not have an item available, the customer will order from another source. In such cases the stock

out has caused a lost sale. The seller’s direct loss is the loss of profit on the item that was

unavailable when the customer wanted it. Thus, a seller can determine the direct loss by

calculating profit on one item and multiplying it by the number the customer ordered.

E.g.: If the order was 100 units and the profit is 10$, the loss is 1000$.

If the effort is made by a sales man and if the effort is wasted and in that sense it is an

opportunity loss. Whether including such a cost is valid would depend upon whether the

company uses sales people in its marketing effort.

Another aspect is determining the amount of a lost sale may be different and difficult in certain

circumstances. Numerous companies customarily take orders by telephone. A customer may

initially just enquire about items availability without specifying how much is desired. If an item

is out of stock, the customer may never indicate a quantity and the seller will not know the

amount of the loss.

d. Stockout

Cost incurred to a firm when current inventory is exhausted for one or more items. Lost sales

revenue costs are incurred when the firm is unable to meet current orders because of a stockout

condition.

e. Packaging and Packaging Materials

35

Mainly this is a main division in warehouses. Packaging interacts with the logistics system in

number of different and important ways. The size of and protection afforded by the package

affect the type of materials handling equipment used and the level of product damage incurred.

The package has an impact on the stacking height of the product in the warehouse and thereby on

the utilization and cost of the warehouse. Packaging is quite important for effective damage

protection, not only in the warehouse but also during transportation. Packaging may contribute

nothing to a products value but its influence on logistics costs is considerable.

Packaging size may affect a company’s ability to use pallets or shelving or different types of

materials handling equipment. Many companies design packages that are too wide or too high

for efficient use of either a warehouse or transportation carrier. So, coordinating packaging with

warehousing and with transportation is quite important. We need to note, poor packaging can

contribute to higher handling charges and result in lower future sales if the goods arrived

damaged.

Two types of packing exist: consumer packaging and industrial packaging. Consumer

packaging provides information important in selling the product. i.e. giving the product most

visibility when it comes with others on the retail shelf. On the other hand industrial packaging is

of primary concern to the logistics. The packaging protects goods that a company will move to

store in the warehouse and also permits the company the effective use of transportation vehicle

space.

Materials generally used in previous years was wood and other harder materials for no

breakage, but it added considerable shipping weight to the transport and it further increased

transportation cost. Generally new era has come up with efficient packaging materials,

organization nowadays use most cost effective packaging with focus on security and minimizing

cost. Cushioning materials protect the product from shock, vibration, and surface damage during

handling. Cushioning materials include shrink wrap, air bubble cushioning, cellulose wadding,

and plastics. Companies often use shrink wrap for consumer packaged goods. Packaging also

helped reduce pilferage and product tampering in warehouse and during transport. Air bubble

cushioning is made of plastic sheets that contain air pockets. There are other factors while

considering packaging they are environmental protection. They are considered in situations of

perishable items like food and drugs.

36

[CHAPTER 5]Research Methodology

5.1 Objective of the Study:

To compare the effectiveness of logistics management at Nippon Express and to bench

mark the organization with respect to the industry.

To have a thorough understanding of how logistics and freight industries work.

To identify the drivers behind Logistics and Freight.

5.2 Research Problem:

The need for the study was to assess the effectiveness of Logistics Management in the Nippon

Express, compared with other organization in the same industry. The organization also needs

relevant data as to how it can improve its management policies in order to gain future market

share.

5.3 Research Methodology:

The type of research is analytical. Data regarding the division of logistics management such as

Freight, Warehousing, Crossdocking, Network Design etc. in which Nippon Express are at

present in business were collected from other similar firms in the industry. The indicators

selected are ease of service, client handling, customer service, website information, employee

efficiency in general. Other indicators for the freight and warehouse divisions are lead-time,

inventory management, product availability; time elapsed in transit, operating cost and customer

satisfaction. The collected data was analyzed and performance of Nippon Express was evaluated.

As to my study I believe I have selected the right mix of techniques for the comprehensive

approach, which can be suited well for the organization.

5.4 Sample Selection:

37

Convenience sampling is used for study, as I’ am interested here in getting an inexpensive

approximation of the truth. Operations of Nippon Express are mainly concentrated at large scale

AL-Hamriya Port, Dubai and having its branch office in Mumbai. The total numbers of logistics

organizations in and around this port are 6000 in number, which constitutes the population.

Similar, 100 organizations having major operations in the Freight and Logistics have been

selected as sample for the survey. The selection was based on the sampling said above.

5.5 Method of Data Collection:

Primary Data: The major tool used was interview with managers and staff of the branch office,

questionnaire was developed focusing various aspect.

Secondary Data: Books of Logistics Management for literature reference, Internet Web Portals,

Websites of each firm, Company Brochures.

5.6 Statistical Tools:

Percentage Analysis

Bar Diagrams

Pie Charts

5.7 Limitations of Study:

A few organizations did not publish the exact values for each question especially in sales

turnover and other similar figures.

The study was conducted in the Mumbai area only aiming at the main Dubai Centre and

confined to the freight division of the logistics management.

Certain monetary values were not being filled by organizations.

Due to organizations security reasons documents like Bills, Warehouse Bills, etc could

not be gained.

Most of the questionnaire answers were filled over internet email facility; therefore

contact was through phone and emails.

38

[CHAPTER 6]Data Analysis and Interpretation

6. Data Analysis and Interpretation

The data collected through the questionnaire are analyzed to know about the respondents

opinions about various particulars asked in the questionnaire. The data collected from the

questionnaire was entered into spread sheet and the data has been interpreted. The questionnaire

comprises of fourteen questions with subparts for each.

The topics covered are with decisions of each operational area, employee numbers of each firm,

profitable area in operation, catering location, service offering, organizational effectiveness,

inventory, location, product availability and customer satisfaction.

a) Which are the logistics services organizations offers?

39

Table -1 Service Offer

Sl. No. Service Percentage

1 Freight 100

2 Warehousing 89

3 Crossdocking 88

4 Network Design 66

5 Value Adding 98

Chart-1 Service Offer

The pie chart above shows the service offer of each organization. The chart shows that 100%

of the respondents provide freight service and almost 90% provide Warehousing and

Crossdocking. Only 66% were providing service of Network Design. Other service includes

value adding, which represents 98% of the sample. It includes packaging, labeling etc.

b) Operating with other logistical providers and reasons for decisions.

40

Table -2 Operate With Logistical Providers

Sr. No. Decisions Percentage

1 Operational Stability 11

2 Cost Effectiveness 10

3 Customer Needs 36

4 Other 96

Chart-2 Operate With Logistical Providers

The pie chart above shows the operational decisions and reasons for operations with other

logistical providers. The chart shows that 96% of the respondents operate with other service

providers for different reasons like coordination, clearance, bulk operations etc. Almost 36%

have operations with other providers as per customer needs. Only 11% and 10 % were

providing service along with other providers for the purpose of operational stability and cost

effectiveness respectively. It is stated that 96% of organizations operate with other logistical

providers and remaining 4% as standalone.

c) What is the mode of decisions regarding the operations?

41

Table-3 Mode of Decision

Sl.

No.

Operational Decision Percentage

1 Strategic 37

2 Tactical 88

3 Operational 63

Chart-3 Mode of Decision

The pie chart above shows the mode of decisions regarding the operations. The pie chart shows

88% of organizations take tactical decisions followed by 63% with operational decisions and

37% strategic decisions. Most of the organizations have a mixture of all the decisions in their day

to day as well as in long and short term plans.

d) Which is the area of the activity, that organizations feel best in their service?

42

Table-4 Best Activity

Sl. No. Service Percentage

1 Freight 98

2 Warehousing 86

3 Crossdocking 87

4 Network Design 4

5 Value Adding 97

Chart -4 Best Activity

The pie chart above shows the best activity which organization feels in their operations. The pie

chart shows 98% of organizations have freight in the predominant area, followed by 86% of

warehousing. Another significant area is Crossdocking with 87% as best activity. There is only a

minor activity based on network design with 4% in pie graph. Most of the organizations have a

mixture of all the activities in their day to day and 97% of organization says other activities bring

in more revenue and the best of their activities, which includes packaging, labeling etc.

e) Number of employees in each type of the service rendered of the organizations

43

Table-5i Employees

Sl.

No.

Departments In Organizations Number of

People in Each

Percentage

1 Top Management 452 11

2 Operations 468 11

3 Accounts / Finance 451 11

4 Marketing 517 13

5 Human Resource 371 09

6 Documentation /Others 1847 45

Table- 5ii Employees in Nippon Express

Sl.

No.

Nippon Express : Departments Number of

People

Percentage

1 Top Management 3 14

2 Operations 4 18

3 Accounts / Finance 4 18

4 Marketing 3 14

5 Human Resource 0 0

6 Documentation /Others 8 36

Table-5iii Employees % of both.

Top Management

Operations

Acc./Finance

Marketing HR

Documentation/Others

Nippon Express Employees Percentage 14 18 18 14 0 36Other Organization Employees % 11 11 11 13 9 45

44

Chart-5i Employees

The line charts above shows the comparison of employees in each functional division of

organization with Nippon Express. The line chart shows around 14 percentages of people belong

to top management and industry standards has 11 percent, followed by 18% for operations and

industry standards has 11%. Human Resource has to be enhanced and need to be further

improved or need to start in the organization. Documentation also needs to be further

strengthened. Marketing comprises of 14% working in the said area. Most of the organizations

have a mixture of top management with marketing in their activities and functional area. Human

Resource comprises of 371 people and other main area is documentation and workers in the

areas of loading, operational area. This comprises of only 36% and industry standards are of

45%.

f) What are the locations to which the company caters to?

45

Table- 6i Catering Locations

Sl. No. Catering Locations Percentage

1 Asia 100

2 Europe 6

3 USA 89

4 Australia 86

5 Africa 71

6 Russia 98

7 Middle East 98

8 Other 90

Table – 6ii Catering Locations

Asia Europe USA Australia Africa Russia ME OtherNippon Express 100 0 100 100 0 100 100 100Other Organizations 100 6 89 86 71 98 98 90

Chart- 6i Catering Locations

Chart – 6ii Catering Locations

46

Asi

a

Eur

ope

US

A

Aut

ralia

Afri

ca

Rus

sia

ME

Oth

er

Lintas Freight 0

0.2

0.4

0.6

0.8

1

Lintas Freight

Other Organizations

The pie chart above shows each organizations catering location in the world. The chart shows

100% of organizations cater to Asian region followed by 6% to Europe and 89 % to USA. Each

organization has tremendous catering locations with 86% to Australia, 71% to Africa, 98% to

Russia, 98% to Middle East, and 90 % to other locations. Locations mentioned as other is

company catering frequently with repeat orders of customers. Chart 6ii shows Nippon Express

can enter European markets and other favourable market is Africa. This can be looked into very

seriously in future business.

47

g) Which division of logistical activity earns the maximum rate of profit for each

organization on a scale of 1-10 and overall profit of each organization?

Table-7i -Maximum Rate of Profit (Nippon Express Compared with Industry Average)

Profit Scale (1 - 10) Freight Warehousing

Crossdocking

Network Design

Other

Nippon ExpressProfit Scale 9 4 5 0 6Industrial Profit Average 7 6.41 5 5 6

Chart-7i - Maximum Rate of Profit

48

Table-7ii –Profit of Organization (All Services Combined)

Nippon Express Industry StandardsProfit Level in Percentage 13 15.39

Chart - 7ii –Profit of Organization (All Services Combined)

The bar chart shows each organizations maximum rate of profit in each area on scale of 1-10,

where 1 denotes least profit and 10 denotes the service that fetches excellent profit. The chart

shows Nippon Express has ample amount of profit in Freight area followed by Crossdocking and

other value adding activities with 9 and 6 in scale. The chart 7i shows industry average value is 7

for freight followed by 6.41 for warehousing. It is inferred that freight is giving ample amount of

profit and Cross-Docking, Other including labeling and packaging has industry standards. The

chart 7ii shows profit percentages said by each organization. We can infer that overall profit

percentage for Nippon Express has 2.39 percentages lesser compared to industry average. The

organization should implement more strategies to reach industry mark.

49

h) Comparison of service offered by Nippon Express and rating of other organization in the

industry on a scale of 0- 4.

Table-8 Service Comparison (Scale 0-4)

  Ease of Service

Client Handling

Customer Service

Website Employee Efficiency

Nippon Express 3 4 4 2 3Industry Average 3.84 3.76 3.82 3.29 3.83

Chart-8 Service Comparison

The chart shows Ease of Service is not up to the mark, it shows only 3 for Nippon Express

and the industry standards is 3.84. So organization can increase their Ease of Service. Client

handling is satisfactory compared with industry standards. Customer service also has

remarkable value compared with industry. Major area to look into is Website easiness,

Employee Efficiency. It can be brought up with a considerable effort by proper handling of

human activities by Human Resource Department.

50

i) What is the significant lead-time for each service rendered with previous years data of

each organization?

Table – 9ii Lead Time in Days

LEAD TIME IN DAYS(LT) Freight LT

Warehousing LT

Crossdocking LT

Network Design LT

Other LT

Nippon Express 21 20 30 0 21Industry Average 23 22 24 10 24

Chart – 9ii Lead Time in Days

The above chart shows the service executed last year in logistics area and the significant lead-

time of each area. The chart shows 4122 numbers of freight service jobs has been executed with

average lead-time of 21 days. Similarly warehousing jobs with 224 and lead-time of 22 days.

While comparing with industry standards Freight is dominating and similarly the main lucrative

area is other (Packaging, Labeling etc.), which has 833 in number and 21 days lead-time.

Organizations lead-time is excellent except for Crossdocking. Focus should be to reduce lead-

time and increase more service.

51

j) Average elapsed time between order receiving and delivery of the service (Inventory).

Table-11 Elapsed Time

Nippon Express Industry Standards

Elapsed Time 3 6.9

Chart- 11 Elapsed Time

The above chart shows the physical verification check and average elapsed time between order

receiving and delivery of the service. The chart shows 89% of organizations have physical

verification. Average elapsed time between order receiving and delivery of service has an

average of 6.9 days. The total value of elapsed time is 613 days for 89 organizations, hence the

average days are 6.9 as explained in the figure for Industry average. Nippon Express elapsed

time is remarkable compared to industry standards.

52

k) Were there any shortage/ excess of stocks noted, in the last verification done?

Table -12i Inventory Shortage

 Nippon Express Industry

Inventory Short 12 19.8

Chart-12i Inventory Shortage

Table- 12ii Inventory Excess

 Nippon Express Industry

Inventory Excess 0 4.8

Chart-12i Inventory Excess

53

The above charts show the Inventory Excess and Shortage faced by organization during

verification. It is evident that shortage faced by Nippon Express is less compared to industry

standards; there is a difference of 8. Another aspect is regarding the excess of inventory; in this

scenario, Nippon Express has a remarkable lead with comparison to industry.

l) Average number of customer complaints generated and industry average.

Table- 14 Complaints (Nippon Express with Industry Average)

Nippon Express Industry AverageComplaints Generated Last

Year290 179.71

Chart – 14 Complaints (Nippon Expresswith Industry Average)

54

The above chart shows average number of complaints. The complaints for Nippon ExpressF&L

is 290 and whereas to industry average is around 180 in number. Hence organization should try

to reduce the complaints arising. This can be achieved by increasing new modern methods and

facilities to customers. Organization need to heavily focus onto the issue to reduce number of

complaints arising in operations, customer satisfaction and other similar areas.

m) How does the organization follow up to retain customers.

Table-15 Customer Retention

Sl. No. Service Rating

1 Customer Complaints given preference 100

2 Phone 100

3 Service Intimation 100

4 Gifts 3

5 Email 100

6 Fax 11

7 Other 100

Chart-15 Customer Retention

55

The above chart shows preference of complaints and how organization follow up to retain

customers. Its been noted that cent percent of organization follow up with customers for

customer complaints. Most of the preferable methods for contacting customers for new service

intimation and customer realtionship are telephone, email and other methods like marketing /

sales, customer office visit with 100 rating. The least preferred are gifts and fax with 3 and 11 in

rating.

n) Does the organization has proper system for handling customer handling, and does

customer know whom to contact when a problem arises, ascertain the level of

satisfaction, feedback by customer and is customer suggestion given preference in the

organization?

Table- 16 Proper System

Sl No. Service Rating

1 Proper System 100

2 Customer Know 100

3 Contact Whom 94

4 Customer Feedback 88

56

5 Customer Suggestion 83

Chart-16 Proper System

The above chart shows all organization in sample has propers system for handling customer

complaints. Its been revealed that 100% from sample, customers know the sytem of handling

customer complaints in the firm. Whom to contact in case of complaints is having rating of 94.

Customer feedback and customer suggestion is having rating of 88 and 83 respectively.

[CHAPTER 7]Findings and Suggestions

Findings

i) The quality of service as rated is above average in the case of Nippon Express

compared to industry. But the organization should continuously try to improve the

57

quality aspect as is being done by other players in the field. This is quite a necessity

as otherwise the figures may fall down. Continuous improvement is a must so that the

customers will prefer Nippon Express as their first choice in Logistics and Freight

industry category. This can be achieved with more modern equipments and proper

guidance to employees and the rating can go high to excellent service.

ii) Pricing of service is satisfactory, which organization can further enhance with proper

management. Present employee strength is satisfactory compared to other

organization but more focus should be made to documentation areas where the firm

has lesser employees compared to other organizations.

iii) Network Design is an area that the organization should not start immediately due to

low rate of returns is recorded as the industrial average. Design of new warehouse

areas and proper allocation of work with more sophisticated software facility can be

done through outsourced way during implementation.

iv) Decision making is excellent for organization with respect to other organization in the

industry.

v) Operation with other logistical providers should be given more preference to achieve

cost effectiveness.

vi) Rearrangement of employees may be a better solution. Down sizing of personnel in

the Finance and Accounts section and deploying them for the HR function separately

is recommended.

vii) The organization client handling, ease of service and customer service is having

remarkable difference from the industry standards. The main focus need to be on the

ease of website and employee efficiency. From the data we can infer that areas which

need to be improved are Website and employee efficiency. Employee efficiency can

be improved with a proper Human Resource department.

58

viii) Service offer presently has good impact with other organizations service offers. The

remarkable areas are Freight, Crossdocking, and Value Adding. Company can further

enhance operations of Value Adding through proper methods.

ix) As logistics industry is concerned Freight is the dominant service followed by

Warehousing and Cross-Docking. Another important area where organizations feels

very lucrative is Value Adding .

x) It is observed that most of the organizations operate with other logistical providers.

96% of organizations are doing it and remaining 4% organizations stays independent.

It is inferred that for efficient logistical activity, support from other organizations is

essential.

xi) Tactical decisions are mostly followed by organizations followed by operational and

a few strategical.

xii) Freight and Value Adding is considered to be the best service which organizations

offer in industry. Another major observation is about Network Design, it has low

value and no organization feels it to be lucrative area in industry.

xiii) Organization can enhance operations to European areas and another major favourable

area is Africa. From data Nippon Express can get good market share if they cater to

African regions.

xiv) Organization profit is good compared to industry standards for freight and can further

work on warehousing. This shows a difference of 2 points from industry standards.

Whereas for Cross Docking it shows same as to industry standards.

59

xv) Commenting on ease of service, website and employee efficiency, the organization

needs to further improve.

xvi) Freight Service when compared with other industry freight service has got more

value. Warehousing has a difference of 30 and is negligible but Cross-Docking need

to be reviewed. Another favourable area as mentioned earlier is Value Adding and it

shows a difference of 447 works done compared to industry standards.

xvii) From the observation 89 organizations have inventory verification. The lowest

observed days for elapsed time for Nippon Express are 3 days and industry standards

with 6.9 days. Hence it is a remarkable value for Nippon Express

xviii) In the sample taken only a few organizations has inventory short and excess. Values

are 119 and 29 for shortage and excess. Nippon Express had shortage, but no excess

in inventory and while comparing with industry Nippon Express have remarkable

value.

xix) The efficient methods for retaining customers are Phone, Email, Sales Agents and

least preferred methods are Fax and Gifts.

Suggestions

i) Organization can further strenghten the employee strength in the documentation

department. This can lead to further rapidity for operations.

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ii) Organization can initiate Human Resource Department to further enhance

employee motivation. This will have favourable impact for the operational as well as

total strenghtening of organization

iii) Decision making is quite effective and can be followed for future operations

iv) Operations with other logistical providers need to be enhanced further for

operational effectiveness, more focus should be given to customer delight and cost

effectiveness.

v) Quality of service can be further enhanced to increase customer delight.

vi) Client handling and service need to be followed in the same way and can be

further enhanced with more support. This can be achieved by proper guiding of

employees and other workers in the logistical area

vii) Nippon Express can enter other markets in the Middle East especially to Saudi

Arabia where the potential of market is very high for Logistics industries and can

even diversify to other areas in logistics.

viii) Nippon Express can focus to African regions for freight handling, as from the data the

potential market is high for those regions.

[CHAPTER 8]Conclusion

Conclusion

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The universe everyday is witnessing unimaginable growth in majority of the industries. The

logistics and freight industry is one such industry that is rapidly growing. Worldwide logistics

industry is distinguished by fast technological advances and is growing rapidly than most other

industries over the past years. With stiff competition around, the company is likely to reduce the

profitability But with proper management of operations and by proper customer desired services,

and also effectively utilizing its alliances it can maintain and improve the performance. Joint

operational ventures for developing the customized services for its steady growth. The

organization has enormous opportunities to grow beyond the expectations.

Nippon Express has come a long way from being just a service provider. The organization now

has the value of being an ultimate service provider for Freight, Transportation, Cross-docking

and Value Adding as per customer needs. The present scenario and the future of the organization

with regard to the management are satisfactory. The organization can increase the market share

by improving with more state of art technology. The organization can diversify into related other

business areas like Warehouses for lease to other organizations, state of art technology providers

for other organizations. More importance is to be given for HR development by having a

separate department for it. With the development of such a department, several favourable

impacts such as increase in out put per employee, increased loyalty, team spirit etc can be

generated.

As far as Nippon Express is concerned it can be stated that through its excellent service and

aggressive logistics service, organization has shown a noticeable increase in the market share.

However, there are some areas where the company is not at the top-most position but it can

certainly gear up in the near future and is committed to acquire that spot. On implementation of

the above recommendations, the management can lead Nippon Express to the top most position

when bench marked in the coming years.

[CHAPTER 9]Bibliography

Bibliography

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Reference:

a) Logistical Management – Tata McGraw 2000 Edition.

Written by Donald. Bowersox, and David. Closs.

b) The Management of Business Logistics – 7th Edition:

Written by Edward J. Bardi, C.John Langley, and John Joseph Coyle

c) Logistics and Supply Chain Management: Creating Value - Adding Networks

Written by Martin Christopher.

Websites:

i) Source: http://www.idsc.com.sg/images/service_logistics_img1.jpg

ii) http://www.indexuae.com/Top/Business_and_Economy/Services/Logistics

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Annexure

Logistics Survey -------------------------------------------------------------------------------------------------------------

Details of the Organization

Name: ___________________________________________________

Location:_________________________________________________

How long are you there in Business?  _____________________Years _______________

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---------------------------------------------------------------------------------------------------------------------

1. a) Which are the various Logistics Services you offer?

Freight Warehousing Crossdocking

Network Design Other Value Adding Services if any

2. Number of employees in each type of the service rendered

Sl. No.

Divisions  /       

Functional area

Number of Employees in your various logistics division

Total

Freight Warehousing

Network Design

Crossdocking

Other

1 Top Management        

2 Operations        

3 Accounts/Finance        

4 Marketing/Sales        

5 Human Resources        

6 Others if any        

3. Which is the area of activity; you feel you are the best?

Freight Warehousing Crossdocking

Network Design Other Value Adding Services if any

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4. Which division of logistical activity earns the maximum rate of profit?

Rate them on Scale of 10(Best 10 Average 5 Worst 0)

Freight

Warehousing

Crossdocking

Network Design

Any Other (specify)___________

5. a) What are the locations to which your company caters to?

i) Asia ii) Europe iii) USA iv) Australia v) Africa vi)Russia vii) Within Middle East only viii) State if any other locational specialization

___________________________________

___________________________________

b) Please rate the service offered by your organization

Excellent Good Fair Poor Very Poor

Ease of Service

Client handling

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Customer Service

Website Information

Employee Efficiency

d) What is significant lead time in days for each consignment and Number of service executed last year. (Kindly mention with previous year’s data)

Service

i)Number of Service Executed in last year (2007)

ii.) Number of transport orders that have been executed, such that the delivery is on time as per the agreed lead time?

Freight

Warehousing

Crossdocking

Network Design

Value Adding

Note: Kindly mention the answers with last year’s data (2007) from questions 10 to 12.

10. Inventory

a) What is the average elapsed time between the time of receiving order from the customer to your firm to release the item from the ware house and the time the item is ready for moving from the ware house with proper documentation.________________________ Days

ii) Were there any shortage / excess of stocks noted, in the last verification done?

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No shortage / excess of stocks noted

Shortage of stocks noted

Excess of stocks noted

11. Customer Satisfaction

a) Is customer complaints given preference in organization:Yes / No

b) How your organization follow up to retain the customers (Put Number 1 on desired coloumn)

No. Method Number

1 Phone Call

2 New Service Intimation to Customers

3 Gifts

4 Email

5 Fax

6 Other methods if any ________________

c) What is the total number of customer complaints received in each division last year?______________Number

d) Do you have a proper system of handling customer complaints?Yes / No

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e) Do you have a system of contacting customers after completing all the formalities of an order, to enquire whether they have any complaint and to ascertain the level of satisfaction the customer enjoyed?Yes / No

f) What is the number of customers you had business last year?_________________ Numbers

g) Out of the above how many are there who availed your services repeatedly?_________________ Numbers

h) How many of them avail same services from others (your competitors) as well_________________ Numbers

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