Cost reduction in parts distribution

University essay from Lunds universitet/Förpackningslogistik

Abstract: This thesis is divided into two parts (1&2) with different but related scopes, they are both partly a response to Volvo Truck Australia's (VTA) wish to improve their supply chain. In 1998 this wish resulted in a global benchmark, of VTA's total inbound transports, being submitted to 13 global transporting companies. Being one of the responding companies, Volvo Transport delegated the different tasks to its subsidiaries Today Volvo Group Logistics North America (VGLNA)are responsible for, and are conducting the consolidation of flows and transports from the 121 suppliers in the US and Canada to VTA's truck plant in Wacol, Australia. In the benchmark, VOLNA included a modelling of alternatives in order to find the most cost and service effective consolidation point in the US. The result of Part I is a formalized way of calculating inland transportation costs from supplier to consolidation point (section 3.5 Inland Transportation Cost (Calculation Method, a choice of consolidation point/points, and an inland transportation cost price table associated with it. The final recommendation is a switch from the current consolidation in Chesapeake, Virginia, to consolidation in Dublin, Virginia. For ocean service the recommendation is to stay with Wilhelmsen Lines but, in order to reach a weekly sailing to Australia, complement this with P&O NedLloydfBluestar service out of Los Angeles on the West Coast. In enclosure 1 the inland transportation cost price table is presented for the recommended choice of consolidation point As a result of the construction of the price table an evaluation test of the formalized cost calculation method was possible, this is presented in section 4.9. Part 2 is looking at the transportation to Australia from North America from a packaging perspective, how the supply chain can be improved to improve ocean bad factors. Here concentration is paid to the cabs as they have always been a black sheep for VGLNA/VTA as they practically are an eggshell containing mostly air. The main recommendation from part 2 is to switch from the current way of shipping cabs on bolster/flat rack to shipping in containers. This change demands a reconstruction of the pallet to secure and protect cabs during transport. This suggested way of transporting cabs opens up a window of opportunity for ?stuffing? cab with goods, most important here is the bumper. An estimation of potential gains is done (section 7.5), this in combination with for 1999 predicted production (250 cabs) sums up to a total potential saving of USS 100,000. From part 2 also raises a number of minor adjustments recommended to improve the supply chain: ? Enrol more suppliers in the Volvo packaging system ? Educate suppliers on how to use Volvo packaging ? Respect cut-off times at shipper's agent

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