MR 2015 Case Study Group Project 240752.pdf

8/17/2019 MR 2015 Case Study Group Project 240752.pdf

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GROUP PROJECT (LTG © 2015) MR LTD – PALMERSTON NORTH

(240.752 INTEGRATED LOGISTICS)

What are the underlying problems at MR Ltd?

The following information has been made available to you regards this MR Ltd Project.

ORGANIGRAM

MANAGING DIRECTOR

Finance Logistics Marketing

Director Director Director

Operations Planning

Manager Manager

Materials Distribution

Manager Manager

Warehouse Transport

Supervisor Supervisor

Operatives Drivers


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Note: Only the Distr ibut ion Structure is expanded so us e cos t centre approach.

SITE DATA

Warehouse and Site Plans are attached in MR Ltd 2.

You und ertook a si te tour and noted the fol lowing : -

1. Entrance

Drove onto site unchallenged. Unclear directions where to park. Turned into Vehicle Assembly area. Went into Distribution Office first, then directed to Main Office when asking for

Managing Director.

2. Yard

Vehicles parked haphazardly. Cars being washed. Fuel pumps unattended. Pallet store area full of damaged pallets. Broken fork trucks with parts missing sitting beside pallets. Cars parked alongside fuel pump.

3. Warehouse

Walked in unchallenged. Vehicles being off-loaded outside. "Careless" fork lift driving. No procedures available for stock location. No written safety policy displayed. People standing around talking, some smoking. Above average absenteeism apparent (upon discussion) Damaged product lying around. Congested despatch area. Morale seems low. Fork trucks covered with stickers. Graffiti on walls.

Toilets unclean, dirty sinks, grubby towels. Lighting good, no space heating system.


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SITE PLAN

NOT TO SCALE

FENCING (Rest of Perimeter Building Walls)

Grassed Area

Grassed PRODUCTIONGrassed

Area AREA Area

IN OUT

INMain

Office PALLET Area STORE

WAREHOUSE

VEHICLECAR PARK

PARK

OUTFUEL PUMP

VEHICLEWASH VEHICLE

ASSEMBLY

OUTIN


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Grassed Area

WAREHOUSE PLAN

SCALE 10MM = 5 METRES Building Stanchions/Pillars< 70 metres >

IN (Ground FireLevel) Exit

Receipt

Area

STORAGE AREA

90CLEAR HEIGHT metres

AVAILABLE = 15 METRES

20 PICKING DESPATCHm AREA AREAetr

e (BANKED)s W C

Fire OUTCANTEEN Exit

Office VEHICLE ASSEMBLY (RAMPED)Distribution AREA (GROUND LEVEL)


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INFORMATION AND QUESTIONS

In add i t ion to the in format ion a lready g iven you are passed the fo l lowing descr ip t ion of

the warehouse and transport op erat ions

WAREHOUSE METHODS AND DATA

Open

Monday to Saturday, 0800 to 1800 hours, 51 weeks per annum (closed 1 week for holiday).Overtime is worked from 1800 to 2000 hours to load transport vehicles.Note . Site Access is possible 24 hours a day, 7 days a week.

Receive

From on site production by production trailer shuttle system (Flat 40 foot trailers).Product palletised, 1 Line per pallet.Pallets size 1.0 x 1.2 metre.Offloaded by CBT from ground level.

Put Away to Storage Area

By Counterbalance diesel forklift truck (CBT).

Storage

Random locations.Blockstacked on pallets, two high maximum, otherwise product "crushes".

Bring Down to Pick Area

By CBT.

Picking

Manual onto pallets, placed on Hand Pallet Truck (HPT).

Pick Area to Despatch Area

By HPT.

Loading to Transport Vehicle

By CBT.


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TRANSPORT METHODS AND DATA

Loading

Picked pallets by CBT.1600 - 2000 hours each day.

Delivery

0900 - 1500 hours, Monday to Saturday, 51 weeks per annum.Daily deliveries.Each vehicle has a driver’s assistant.

Unloading at Customers

Pallets removed by HPT (supplied by customer).Cartons hand stacked onto conveyor belts by driver and his assistant.Empty pallets are returned to vehicle.Customer, tally counts/checks cartons only.

FIRST IMPRESSIONS - QUESTION (1)

From ALL of the information given to you so far:-

What comments would you make about observations? Why?

What possible operational short falls can be identified in the MR operation?

What logistics management practices appear questionable?

What loss aspects might apply at MR Ltd?

o Identify what types of losses you believe could exist, where, and what causesyou to believe this?

o How might MR Ltd minimise losses.

What immediate improvements would you suggest? (Note: the site cannot beextended)


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PRODUCT DATA

You are given the following data in addition to that already provided.

PRODUCT DATA

Product is dry, kept at ambient temperature.

Number of Lines 350

Gross Kilos per carton 13 Kg

Dimensions, metres (L.W.H) per carton 0.5 x 0.4 x 0.4

Cartons per pallet 24

Pallet dimensions 1.0 x 1.2 metres.

PRODUCTION TO WAREHOUSE METHODS and DATA

Open

Monday to Saturday, 0800 to 1800 hours, 51 weeks per annum (closed 1 week forholiday).

Overtime is worked from 1800 to 2000 hours to load transport vehicles.

Note. Site Access is possible 24 hours a day, 7 days a week.

Receive

From on site production by production trailer shuttle system (Flat 40 foot trailers).

Product palletised, 1 Line per pallet.

Pallets size 1.0 x 1.2 metre.

Offloaded by CBT from ground level.

Put Away to Storage Area

By Counterbalance diesel Fork Lift Truck (CBT).

Storage

Random locations. Blockstacked on pallets.

Two high maximum, otherwise product "crushes".

Bring Down to Pick Area

By CBT.


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Picking

Manual onto pallets, placed on Hand Pallet Truck (HPT).

Pick Area to Despatch Area

By HPT.

Loading to Transport Vehicle

By CBT.

MATERIALS MOVEMENTS AND DATA

Loading

Picked pallets by CBT.

1600 - 2000 hours each day.

Delivery

0900 - 1500 hours, Monday to Saturday, 51 weeks per annum.

Daily deliveries.

Each vehicle has a driver’s assistant.

Unloading at Customer

Pallets removed by HPT (supplied by customer).

Cartons hand stacked onto conveyor belts by driver and his assistant.

Empty pallets are returned to vehicle.

Customer, tally counts/checks cartons only.


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RESOURCE DATA

(People and Equipment)

Warehouse

Pickers 6 CBT drivers 6 CBT equipment 6 HPT equipment 6

Transport

Drivers 60 Driver's Assistants 60 Vehicle numbers 60

GVW - Rigid 7.5 tonnepayload - Tonnes 3.5capacity - Pallets 10

Administration

Order clerks 2 Transport clerks 2 Supervisors 2 Manager (Distribution) 1

Note: Al l equ ipment is own ed, but is external ly main ta ined on Sunday.

COST DATA

All per annum (unless otherwise stated).

Manpower

Based on 40 hour week, 52 weeks with 4 weeks holiday.

Warehouseman $30000 Vehicle Driver upto 7.5 tonne GVW $30000

over 7.5 tonne GVW $35000 Supervisor $40000 Admin. Assistant $28000 Vehicle Assistant $28000

(Note. Overt ime is paid pro rata at t ime and half . eg, if work 60 hours , are paid 40hours basic and the overt ime of 20 hours, is pa id as 30 hours).


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Establishment Costs – ops/yr

Rent and Rates $160.00 per sq metre Heat and light $80.00 per sq metre Manager $80000 Security (night) $120000

Other overheads $160000 Product damage $350000 Pallets $700000

Warehouse Equipment/unit/yr

HPT $150 CBT $14500

Transport Equipment

Fixed Cost, excluding people $25000 Variable cost, per KM $0.30

(Note. Variable cost includ es external maintenanc e).


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CUSTOMER DATA

Two major JIT manufacturers are supplied. Throughputs are shown on the volume data sheet. The percentage split of volume is:-

Wellington Customer 70%

New Plymouth Customer 30%

Customer Service

Is paramount, as daily deliveries are required. (Because of this MR Ltd hadtaken the decision to gear up to cover peak requirements with all their ownresources. Management is sure this should continue, so it is currently BoardPolicy).

Customer Orders

Orders typically must follow a daily cycle as below:-

Orders Taken By. Delivered By.

1000 hours Monday 1500 hours Tuesdayto to

1000 hours Friday 1500 hours Saturday1000 hours Saturday 1500 hours Monday

Each customer order would typically include each product line.

VOLUME DATA

In Cartons

MONTH RECEIVE DELIVER STOCK

JANUARY 75000 90000 170520FEBRUARY 75000 108000 137520

MARCH 75000 162000 50520 APRIL 75000 99000 26520

MAY 75000 72000 29520JUNE 75000 63000 41520

JULY 75000 54000 62520 AUGUST 75000 36000 101520

SEPTEMBER 75000 45000 131520OCTOBER 75000 54000 152520

NOVEMBER 75000 63000 164520DECEMBER 75000 54000 185520

900000 900000


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PRODUCTIVITY - QUESTION (2)

What is the current warehouse capacity?

Is it adequate for monthly throughput?

What key cost elements within MR Ltd. Your answer should include the elements andtheir values.

What are the monthly operational costings for MR Ltd.

What is your “possible” warehouse capacity? (Options must be justified and costed)

Can you justify would be the Cost/Benefit of the investment

NOTE: You should us e your profess iona l judgement to decide what areas you are going to cos t

and at what depth! Show just i f ica t ion for your d ecis ion. Note however , that you wi l l use these

costs la ter in the course to com pare them against the costs you calcu la te af ter recomm ending

improvements.

NOTE: Vehicles c urrent ly average three del iveries per w eek and 45,000 kms per year,

each veh icle.

CURRENT UTILISATION - QUESTION (3)

What is the current utilisation of resources across MR Ltd?

Select and define the areas within MR Ltd where you believe that method study is asuitable means of improving productivity.

Performance data

The Supervisors believe the following currently apply:

1. Warehouse CBT can move about 15 pallets per hour per operation.

2. Each Picker can manage about 150 cartons per hour (which includes moving pickedpallet to despatch area).

3. Transport Vehicles currently average 3 deliveries per week, and around 45000miles per annum. (The Transport Supervisor is aware vehicles are not always fullyloaded, but says "customer service is King around here").


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NOTE: You should be looking at those areas w here resources of people , space and equipment

are used. Do not try to u se standards which can be calcu la ted from formal methods of

investigation , - just us e the “historical standards”.

Note: See the fol low ing info rmation t o aid analysis .

ANALYSIS DATA - PERFORMANCE

You may find the following performance data will help in your analysis.

Warehouse Performance Data

Fixed Times

Simple Manual OperationsPick up/Put down 20 seconds per piece/package.

Truck Operations

Pick up/Put down 65 seconds per piece/package. Hoist up/Hoist down 6 seconds/metre

19.7 seconds/metre

Variable Times

Man walking, empty handed 61m/min

Man walking with HPT 30.5m/min

Man driving CBT 122m/min

Man driving other trucks 91.5m/min

Transport performance data - Loading/Unloading

Fixed Time 10 mins per stop(eg, stopping vehicle, opening doors, documentation, etc.)

And, to cover physical unloading per piece/package, add the following:-

Fixed/Variable Times, as warehouse performance data.

Travel Times

Average Road Speeds Motorway 80 kphClass 2 Roads 75 kph

Urban Roads 40 kph. Distance. (Crow Fly Factor) Straight line plus 20 per cent.


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IMPROVEMENT DATA

You may find the following data useful for improvement purposes.

Warehouse

Capital Cost Cost per annum

CBT LPG $32000 $16000CBT Electric $25000 $12000

Narrow Aisle Reach Truck (NART) $44000 $16000

Turret Truck (TT) $80000 $24000Multi Level Picker Truck (MLPT) $40000 $18000

Conveyor $1500 per metre $150 per metre p.a.

Racking - Normal APR $120 per pallet space $12.00 per pallet space

Racking - Drive In $200 per pallet space $20.00 per pallet space

Racking - Flow $300 per pallet space $35.00 per pallet space

Aisle Width requirements Shortside Longside

- CBT 3.3m 3.0m- NART 2.5m 2.13m- TT/MLPT 1.5m 1.32m

(Based on pallet 1.0 x 1.2m)


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Building changes

CAPITAL COST COST PER ANNUM

FIRE EXIT $2000 -

GOODS DOOR $20000 $2000

OPEN CANOPY $500 per square metre $30 per square metre

SPACE HEATING $40 per square metre $20per square metre

WAREHOUSE EXTENSION $1000 per square metre $55 per square metre

YARD EXTENSION $600 per square metre $60 per square metre

Transport

TYPE CAPACITYCAPITAL

COSTFIXED COSTPER ANNUM

VARIABLECOST PER

KMTONNES PALLETS

3.5T GVW RIGID 1.75 6 $45000 $5000 $1.00

7.5T GVW RIGID 3.5 10 $56000 $12000 $1.00

17T GVW

RIGID 11 14 $120000 $40000 $1.65 24T GVW

RIGID 16 14 $240000 $88000 $1.95 32T GVW

ARTIC/12M TRAILER 19 24 $480000 $140000 $2.70 35T GVW

Drawbar/2 bodies 21 28 $550000 $150000 $3.00 38T GVW

ARTIC/12M TRAILER 24 24 $490000 $140000 $2.30 12 METRE TRAILER - 24 $45000 $4500 $0.50

DRAWBAR DEMOUNT

BODY - 14 $25000 $2500 $0.30

DRAWBAR TRAILER - - $15000 $2500 $0.24

Note: Fixed cos ts exclud e people.

Variable cos ts includ e maintenanc e.

Pal let capacity based o n s ize of 1.0 x 1.2 x 2.5 metres.


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IMPROVED PERFORMANCE - QUESTION (4)

Carry out work measurement/time study in those areas of MR Ltd that you feel are

appropriate.

Using the cost elements given above and apply these to improve ALL operations toproduce better operational costings.

Note: Your answer shou ld show storage costs, warehouse hand l ing cos ts for each part

o f the ov eral l opera t ion , and transp ort costs for each custo mer.

Draw up a budget for MR Ltd for the next year based on the current cost elements butapplied to the improved operation.

How you present the budget is up to you but it should identify the individual costs for

each part of the business. (Note: You do not need to consider income, as this is not

available to you).

FUTURE OPERATIONAL QUESTIONS (5)

The Managing Director of Mr Ltd is looking to expand, and requires your outlinerecommendations on these possible future changes: -

1. The effect of a two-fold volume increase.

2. The introduction of different product types.

3. The introduction of Europallets.

Volumes

Current volumes are to double.

Product

Introduce to same customer base the following: -

Toxic chemicals, in plastic kegs, weighing 30 kilos each keg. Paint in aerosols, in cartons, weighing 10 kilos each carton. (No volume

indications available.)


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Pallets

Possible changes to Euro-pallets (1.2 x 0.8 metres).

[Recall the Managing Director is looking for your outline recommendations only on the

above].

FUTURE TASK REQUIREMENTS (6)

Using the information to you along with any previous calculations that you have made,what are: -

The current resource use?

The intended resource use (i.e. after your improvements)?

OVERALL PROJECT OUTPUTS

1. You are required to answer ALL questions within the above sections and formulateyour responses into a professionally written and presented Group Project Report which will be submitted for assessment at the end of the Block Course.

2. Your report must be summarised to a Powerpoint presentation that all members of

your group will present part of to the class on the last day of the Block Course. Youwill be given a fixed time to present and will be stopped once you exceed the time.This Powerpoint will also be submitted and assessed at the end of this blockcourse.

3. You will individually be required to submit your own assessment of the workcontributions that each of the other team members of your project team made to theoverall work effort.

4. WORKLOAD – you will be expected to work outside class hours to complete thisGroup Project. It is over to each group as to how much time they will allocate.Consider this project in the same manner as one you would do in the workplace.

MR 2015 Case Study Group Project 240752.pdf

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