A system study on the logistics operations of Company A's pick-up and delivery services

• Main Authors: Antonio, John Revin S., Go, Erika Mae S., Orial, Julian Rose D.
• Format: text
• Language: English
• Published: Animo Repository 2018
• Subjects: Express service—Production control; Cargo handling—Production control; Operations Research, Systems Engineering and Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18668
• Institution: De La Salle University

Company A is an express and logistics company that specializes in international cargo delivery. The logistics solutions or services that the company offers include freight forwarding (air and sea services), customs brokerage, cargo handling, local distribution (pick-up and delivery services), and warehousing. Company A has been operating for over 30 years with the head office located in Paranaque, Philippines. Company A's Pickup and Delivery department has incurred penalty costs of 466,559.84 pesos (which consists of lead time penalty and promised delivery time penalty costing 233,279.92 pesos each) which in total is 466,559.84, between QI 2017 to Q3 2017 as their average ship to deliver lead time is 3.763 days, exceeding the target lead time of 3 days by 25.43%, with only 79% of the parcels being delivered on time instead of the target 90%. This constitutes of the parcels having an average time in the company of 6.912 hours, exceeding the target of 6 hours by almost I hour and the average delivery time for third party agents is 2.3 days exceeding the average target of I day by 1.3 days. This is considered the problem statement of the study. From the late deliveries, different scenarios composing of the combination of delays were evaluated using Pareto analysis. From this tool, it was recognized that five scenarios reached the 80 percent mark. These scenarios along with its percent contribution to the problem is further discussed in the final causes validation and verification. After evaluating the generated alternatives, it was found that for the time spent of parcels from pick up to line haul, the best solution would be to optimize in-warehouse processes and tools. For the employee overtime, the best solution would be to set up a Courier Reporting System and Job Task Review. Finally, for the incomplete/unserviceable parcels being delivered, the best solution would be to create a Delivery Monitoring System. The main problem of lead time was addressed with the solution of improving the system process and the new confirmation process. The total lead time was reduced from 3.7 days to 2.61 days. This reduction leads to savings in terms of avoiding paying penalties due to lead time extending beyond 3 days. These penalties amount to PHP 466,559.64. Additional effects of the system improvements and confirmation process is the reduction of other penalties such as delivered on promised date penalty (PHP 233,279.92). The total cost of overtime from January to September 2017 has a total of PHP 2,458,661.36, and Php506,484.24 is attributed to late deliveries (late deliveries = 20.6 % then 2,458,661.36 x 0.206 = 506,484.24). Reallocation of workers also led to a reduction of PHP 506,484.24 from the overtime cost. This leads to a grand total savings of PHP 973,044.08 and a Net Present Value of Php2,826,477.75 for five years.