Analysis of vehicle utilization for Safcor Panalpina

Abstract: Safcor Panalpina (SAPA) is situated in South Africa and acts as a forwarder as well as a provider of supply chain solutions to clients all over the world. Due to keen competition, it is essential for Safcor Panalpina to continuously improve their business and enhance the efficiency throughout the chain. In order to achieve a higher profit, Safcor Panalpina needs to render a more efficient organization and face the competition from other actors on the market. In the present situation, Safcor Panalpina is able to supply clients by their own vehicle fleet or by an outsourced company called MPISI, which is a Black Economical Empowerment (BEE) company. BEE companies are black-owned and are a common used term introduced by the South African government, aimed to help black ownership grow their businesses. This thesis is mainly based on the cargo and vehicle flows from two facilities, Phase 1 and 2, to the clients in the Gauteng area, which is a province in South Africa including large cities such as Johannesburg and Pretoria. The facilities are based adjacent to the International Airport of Johannesburg. Safcor Panalpina claims that the utilization level for all vehicles is unacceptably low in the current situation. Since SAPA intend to reduce their own fleet, in order to expand the relationship with MPISI, they want to find the right mixture of vehicles economically viable for both parties. The purpose of this thesis is consequently to examine the utilization level of the SAPA and MPISI fleets today and further on find a new optimal fleet of vehicles. Hence, the thesis will investigate the cost perspective of the issue in order to understand what cost savings that can be achieved with this new optimal fleet. The chosen method for this thesis is an operation research approach entitled computer simulation, aiming to execute experiments, scenarios and finding the utilization level of each vehicle. The simulation model that is based on the real system, ended up to be a complex depiction of the actual system. Furthermore, experiments and scenarios were performed in order to find better solutions to the problem. However, the cost aspect has as well been taken into consideration in the simulation for all performed scenarios. This facilitates the cost comparisons between the original scenario, in other words the original simulation model, and the executed scenarios. The most cost saving alternative as well as the one with highest utilization level for the vehicles is consequently the chosen alternative in the end.