Transport Management

Introduction, learning goals, practical arrangements

Welcome to the case Transport Management. In this case we will apply theory, concepts, calculations and many other things to issues, challenges and opportunities a fictious company (KdG) has.
It’s important to know that 50% of the total grading is on the case, which includes a paper (assignment in Canvas, a document, including attachments, due date to submit) and a short presentation during the oral exam. This last one also counts for the total of 50% case. Re-sit: You need to rework the existing case or a new case will be provided for the re-sit.
In this document we will introduce the company: not all information is needed and yes it could be that you are missing some stuff and you can always ask the teacher for additional questions and coaching. In a second step we will ask you a number of questions and additional information is given in this section.
How will this be evaluated? Please check the rubric at the end of this document.
Your 2 biggest enemies? I think it will be procrastination and plagiarism.
What are the learning goals?
Role 5: Accurate Worker: The Accurate Worker performs every task in a systematic and accurate way with an eye for detail.
Code Description Level
OLR IBM1.2 ‘The Bachelor International Business Management applies the appropriate rules, regulations and procedures. General
You compare the rules and regulations in your country with other regions or continents.
You fill in relevant transport documentation.
You interpret legal aspects that have an impact on transportation.

Role 13: The Supply Chain Solution Specialist plays a critical role in managing and optimizing the supply chain, solving business problems and designing supply chain solutions. He/she provides direct support and leadership to achieve significant improvements with respect to safety, quality, compliance, sustainability and productivity. He/she adopts a systematic approach in order to identify, analyze, and bring about these improvements in the existing supply chain processes.
Code Description Level
OLR GSC3.1 The Bachelor International Business Management (Global Supply Chain) manages the flow of goods, information and services, while striving for excellence throughout the entire value chain, increasing customer satisfaction and improving profitability in a sustainable way. General
You compare the different transportation modes and choose one to transport a particular commodity.
You explain the critical role of technology in managing transportation operations.
You identify principles and strategies for establishing efficient, effective, and sustainable transportation operations.

OLR GSC3.2 The Bachelor International Business Management (Global Supply Chain) analyses performance, identifies problems and inefficiencies and develops recommendations to enhance business processes, to meet quality standards and to ensure compliance. General
You compare the different transportation modes and choose one to transport a particular commodity.
You discuss how to assess the performance of transportation operations using standard metrics and frameworks.
You explain how multimodal transportation management strategies are used to improve supply chain performance.

 
The company

This assignment is based on a fictitious company (KDG or Kool Distribution Goods), in which a number of questions arise for transport management and which the student can solve with the theory and methodology learned in the lectures. Time for coaching is provided during classes. The end result (see Bloom’s taxonomy) is the creation of a solution/answer to the questions further on in this assignment.

Our company is called KDG (Kool Distribution Goods). We started in October 2020, a few friends had a great idea to start a company to become a niche player in the healthy food world. Our (currently rented) location, offices, manufacturing and warehousing is at Indiëstraat, Antwerp, Belgium.
“Start small grow big” is our vision.

We are a group of 5 people and split the daily management of our company into 5 roles:
-Manufacturing Operations (done by Serena)
-Finance (done by Francis)
-Logistics (warehousing, transport) and SCM (done by Louise)
-Sales & Marketing (done by Cynthia)
-General Manager (done by Tim)

Recently we decided to start with a new portfolio of products (juices & smoothies). We would sell the products through the existing distribution channels. So an existing healthy supermarket or bar in Belgium will not only sell our salads but also our new juices & smoothies. We are planning to launch these new products from 1 January 2024.

 
Our products (BOM):
Salads:

Product Salad Tomato Cucumber Egg Carrots Herbs Dressing Topping Total weight
Veggie salad 100g 25g 25g 25g 25g 10g 15g 75g Veggie mix 300g
Tuna salad 100g 25g 25g 25g 25g 10g 15g 75g Tuna 300g
Chicken salad 100g 25g 25g 25g 25g 10g 15g 75g Chicken 300g
Ceasar salad 100g 25g 25g 25g 25g 10g 15g 75g Ceasar mix 300g
Greek salad 100g 25g 25g 25g 25g 10g 15g 75g Feta/olive mix 300g

Each salad is packed in a plastic bowl (length x width x height 20 x 15 x 10 cm) with a paper label, 10 salads are grouped in a re-usable cardboard box (length x width x height 75 x 20 x 20 cm).
The boxes are put on a europallet (80x120cm): 4 layers of 6 boxes which equals 24 boxes or 240 salads per pallet.

Juices/smoothies:

Product Pack 1 liter Pet 0.3 liter Orange Mango Vitamin C
Orange-1L 1 0.200
Orange C-power – 1L 1 0.150 0.050
Orange-Mango – 1L 1 0.190 0.010
Orange – 0.3L PET 1 0.060
Orange C-power – 0.3L PET 1 0.045 0.015
Orange-Mango – 0.3L PET 1 0.057 0.003

Except of the ingredients we use water (H2O). You don’t need to purchase, plan or store water ????

Packaging of the juices/smoothies:
1L (9x6x19 cm): 12 bottles of 1L fit in one box (20x40x20 cm), 12 boxes per layer (120×80 cm), 5 layers per pallet (100 cm height), equals 720 bottles of 1L (and 1 kg) per pallet
0.3L (ø6.5 cm x 22 cm): 18 bottles of 0.3L fit in one box (20x40x23 cm), 12 boxes per layer (120x80cm), 5 layers per pallet (115 cm height), equals 1080 bottles of 0.3L (and 0.3 kg) per pallet

 
Transport:
We have bought two vans (for transportation within Belgium) which have a maximum capacity of 3 europallets (80 x 120 cm) per van. There is an additional limit on the pallet height of 120cm (in the DC) and a max of 2500 kg load per van. This type of van will be the standard for our global expansion.

Sales:
Total average sales are relatively flat. There is some variance per season (x-percentage up/down) for all our products we sell. The month of June is our “baseline” month, in some months we sell more or less compared to this month as you can see in the table below.

Monthly sales January February March April May June July August September October November December
Variance up/down % -30% -25% -15% -10% -5% +0% +20% +20% +10% -5% -20% -20%

Our current suppliers:

commodity product Supplier name Supplier details
Vegetables Salad, cucumber, tomato, egg, carrots Vegentable Ghent, Belgium
General fresh food Herbs, dressing, toppings Gen-FF Bruges, Belgium
Packaging Plastic bowls PB plastics Imola, Italy
Packaging labels Itallabel Lecce, Italy
Packaging Cardboard boxes Huelva Cartonnadas Zaragoza, Spain
Packaging 1L cardboard bottles Tetrapack Brussels, Belgium
Packaging 0.3L PET bottles Resilux Antwerp, Belgium
Raw materials Orange juice Nada Fruta Valencia, Spain
Raw materials Mango juice DakkaMango Dakar, Senegal
Raw materials Vitamin-C Superschmutz Dresden, Germany
Kitchenware All materials we use in the making of the salads Cuisines de Paris Paris, France
Office supplies All consumables we use in the back-office Office & more Hasselt, Belgium
Consultancy Specific consultancy assignments AYS at your service Antwerp, Belgium
Interim staffing Temporary interim labour we need in case of absence/peaks SSS Sprint Staffing Support Antwerp, Belgium

All packaging & office supplies are delivered when needed, based on a minimum stock level, we use a Kanban system for these.
Consultancy and interim staffing are ordered when needed for particular cases.

 
Questions

1. City distribution US NYC (incl cost calculation van)
   We want to start-up a new affiliate in NYC (US). One of the potential customers is Mc Donalds US. We’ve received a RFQ from them to start-up a pilot in 10 Mc Donalds locations in NYC. The pilot would start 1st of January 2024. In a first step we need to make some internal calculations to support the quotation we want to make.
   The ten delivery points are listed below. At every location we need to deliver the same amount of goods per day. They’re open every day of the week incl Holidays. Our goods will be consolidated at the Mc Donalds Distribution Center, address below, we can rent space from them in the trial period, it’s open as from 6 am, except on Sundays when they’re closed. It is Mc Donalds primary requirement to have deliveries done before 8 am. Rush hour in traffic is starting as from 7 am. Reason is because they will need our products to support breakfast they’re offering in the morning. After deliveries to the Mc Donalds restaurants, the van(s) need to return to the DC. The total amount of time needed multiplied by the number of vans (including the drivers) will be a first indication to calculate the cost price.
   In this pilot, we need to deliver every Mc Donalds restaurant a quantity of 300 bottles (150 pcs x 1 L bottle and 150 pcs x 0.3 L bottle). The average fuel consumption of a van is 30 liter/100 km (in the US they would say x miles to a gallon). The average estimated price for the fuel is 2 € per liter. We would need to change the tires every 12 months, one set of new tires including installation is 1.000 €. The NYC police is perhaps not our friend, we have to pay fines and admission to Low Emission Zones (LEZ’s)…let’s assume this will cost us 1.500 € yearly. We are absolutely sure this pilot will be a success, and more business is to come, so let’s buy a new van: 75.000 € euro incl VAT, a depreciation of 5 years with a remaining value of 5.000 € after 5 years. The driver will be paid (all-in) 3000 € per month. Add some insurance (4.000 €), taxes (6.000 €) and overhead (20.000 €) to the yearly cost.
   What I need from you is:
   -calculate the fixed and variable costs per van, include the total fix, variable and sum of both costs.
   -map the different locations (e.g. use google maps), create a transport planning (routing DC to A to B to …and return) supporting Mc Donalds request. Calculate the total time per day. Take into account that loading at the DC takes half an hour and every stop at a McDonalds location takes 5 minutes (unloading, documents etc). When returned at the DC: cleaning the inside of the van, returning keys etc will take you 20 minutes.
   -purely based on our internal costs: what’s the sum in $ for every day, every week and 3 months (the duration of the pilot is 3 months, starting from 1/01/24 till 31/03/24)
   -try to be as realistic as possible: find a recent & reliable source that will give you input to the average speed to use (a van, 6am, rush hour…) in your calculation. Think about the capacity limits of the van, the requested number of items…this will be important to calculate the number of vans we would need (and thus the total cost)
   -try to be innovative to come up with an attractive proposal. The DC is open from 6 am till 10pm, the drivers have a shift of 8 hours (including breaks).

Mc Donalds NYC locations:
1: 160 Broadway, New York, NY 10038, US
2: 102 1st Avenue, New York, NY 10009, US
3: 724 Broadway, New York, NY 10003, US
4: 39 Union Square W, New York, NY 10003, US
5: 541 6th Avenue, New York, NY 1011, US
6: 686 6th Avenue, New York, NY 10010, US
7: 809 Avenue of the Americas, New York, NY 10001, US
8: 429 7th Avenue, New York, NY 10001, US
9: 1528 Broadway, Times Square, New York, NY10036, US
10: 966 3rd Avenue, New York, NY 1022, US
Distribution center Mc Donalds NYC: 176 Palisade Avenue, Jersey City, NJ 07306, US

2. Road Milkrun Poland to UK combining with Ferry or Eurochunnel
   We have an opportunity to ship 90 pallets of 0,3 L smoothies/juices to the UK. Take into account this country is not a part of the EU (Brexit). On a network event we’ve met the company Europegaz, they are located in Poland (see address below) and ship every week 2 Megatrailers FTL (66 europallets, 33 x 2 pallets high) to Belgium & the UK. At a location very close to ours, they deliver 16 pallets from trailer 1 and 26 pallets from trailer 2. These products have food certification. The remaining capacity can be used by us at a very interesting transport cost/rate. Reason why: the customers of the remaining volume are also in the UK (London South, 10 miles from Maidstone). The 90 pallets of our products (0,3 L or 1.080 pieces per pallet) need to be shipped to 3 Distribution centers of the NHS (who will distribute them to hospitals in their neighborhood in smaller vans). Every NH DC needs 30 pallets. After the last delivery, the truck needs to drive back (empty) to Europegaz in Poland.
   What I need from you is:
   Put the different locations on a map (googlemaps), create the ideal scenario (when to arrive, leave, etc) to ship from Belgium to the UK with the information given to you. A suggestion would be to create a milkrun , e.g. create two deliveries in one planned truck (trip). Important to know: the NHS is only accepting goods until 4 PM GMT and we have a fixed delivery window of 15 minutes (which means that if we are too late: we need to make a new appointment). Europegaz can be at our DC in Belgium at Thursday morning 6 am CET. Don’t forget to apply the European law (you can use it as well in the UK) on truck drivers (time: travel, break, sleep), but the drivers will arrive fully rested at our premises. We need to do this weekly (routine). Try to be as realistic as possible: find a recent & reliable source that will give you input to the average speed of the truck to use in your calculation.
   Perform some data research on what goods/suppliers can potentially be loaded in the UK to avoid that the truck travels back empty to Poland. (UK supply vs Poland demand).

Europegaz location: Księdza Piotra Wawrzyniaka 2, 62-052 Komorniki (South-West from Poznan) , Poland
Location 1: NHS SC, Express Park, Bristol Rd, Bridgwater TA6 4RN, UK
Location 2: NHS SC, West Way, Cotes Park Industrial Estate, Alfreton, Derbyshire, DE55 4QJ, UK
Location 3: NHS SC, St Barnabas Close, Allington, Maidstone, Kent, ME16 0LW, UK
 

3. SSS vs Road vs Rail: Zaragoza – Barcelona – Rome (Civitavecchia) – Napoli & return (incl CO2 emissions)
   We are looking to potentially acquire a supplier of oranges in Spain. This company is located in Zaragoza, Spain, see address below. The advantage of this vertical integration is to cover 80% of our needs on the number one ingredient for our juices: oranges (concentrate). We would become less dependent from our incumbent supplier. About 60% of the export of this supplier in Zaragoza goes to Italy. The location of the Italian DC in Napoli is below as well. They are currently using road transport (Zaragoza to Barcelona highway, Coastline Northern Spain – Southern France – Northern Italy – West Coast of Italy – to Napoli) for a 3-times a week FTL to the Italian DC.

What I need from you is to discover the alternative possibilities:
• Zaragoza by road to Barcelona, rail from Barcelona to Civitavecchia (Westbound from Rome), road to Napoli
• Zaragoza by road to Barcelona, SSS RoRo ferry from Barcelona to Civitavecchia (Westbound from Rome), road to Napoli
Please include the total time needed (incl breaks, meal, sleep to EU laws), the total distance in km, the energy consumption (TTW & WTW) and GHG emissions in CO2 equivalent tonnes.
Make this comparison visible with a map and calculations.
Which one of the 3 solutions would be your preference, and of course: why would you prefer this one? Which one is the worst solution and why?
BD: Poligono Empresarium, Calle Retama, 1, 50720 Zaragoza, Spain
Napoletana Plastica: Via Ex Aeroporto, Percorsi Consorzio Il Sole, 80038 Pomigliano d’Arco NA, Italy
 

4. Expansion (Panama) research

Ok, once started in Belgium, our first steps in the UK for additional customers, a further vertical integration with the acquisition of a supplier in Spain, fingers crossed that the trial with McDonalds runs well…let’s think ahead on how to organize the further expansion of KdG (Kool Distribution Goods). One of the (crazy) ideas we have is to create an affiliate in Panama (Middle America). As quite some ocean vessels are using the Panama canal, it’s relatively close to North & South America, why would this not being a good option? With affiliate we mean: manufacturing close to sources of raw materials we use, warehousing & distribution close to our customers, doing business (a FDI) in a foreign country with some support from the local government.

My question to you is: why is Panama a great location with great connections to North & South America? What are the transit times by air and ocean to the largest (air)ports, capitals and cities in these continents? What transportmodes are available within Panama? What are from (trade point of view) the advantages of Panama? But of course: what are some issues that Panama has in the last few years? Please answer these questions in one fluently written text and use reliable, recent and relevant sources.

5. Presentation
   The total grading on the case is 50%, the remaining 50% is on the oral exam. During this exam you need to present very shortly your case (max 4 slides, one for every question), the evaluation of this presentation happens within the grading of the case. Expect questions about the case on your exam.
   What’s the routine:
   15 minute preparation on the oral exam
   15 minute presentation case incl Q&A
   15 minute oral exam
   So what I expect from you are 4 slides, one per question, with the key items of your case, what is crucial. They are not a mini version of your paper, but compelling slides.