A system study on the warehouse operations of the Green Cross Department of DnF Distribution and Logistics Inc

• Main Authors: Braga, Pamelo Ma I., Estacio, Emilio Raphael D., Toledo, Ivan Joaquin S.
• Format: text
• Language: English
• Published: Animo Repository 2021
• Subjects: Root cause analysis; Freight forwarders > Philippines > Quality control; Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etdb_induseng/4; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=1000&context=etdb_induseng
• Institution: De La Salle University

DnF Distribution & Logistics, Inc. is a licensed Regional Distributor for Region 2 and a Freight Forwarder for Luzon, Philippines. Established on October 8, 1998, it started with one truck and three employees in Cauayan City and has become one of the largest and fastest growing logistics operators in the region. DnF specializes in distribution operations, line haul, freight forwarding, supply chain management, and warehousing. Headquartered in Cauayan City, it currently maintains depot and satellite offices in Quezon City and the provinces of Nueva Ecija, Nueva Vizcaya, La Union, Cagayan. The company’s objective is to delight their business partners/principals, customers, employees, and the community by connecting, delivering, and continuously innovating with the market. They have been providing distribution and forwarding services for the past 20 years while maintaining a highly skilled and competent sales and operations team. After documenting and analyzing the current system of the warehouse operations of DnF which includes all processes from stock and demand collection up to sales dispatch, a SWOT analysis was utilized in order to assess the company and also to be able to determine any problems that is currently present. After conducting the said analysis, the study made use of the WOT-SUG analysis in order to be able to rank and prioritize the problems that was derived from the SWOT analysis. The WOT-SUG analysis was used in order to know which problem must be solved first. The problem that was ranked the highest was that the company was incurring 1.8% of their total sales for the year being cost of returned goods in 2019. This was seen as a problem since it deviates from the standard of company which is 1%. The problem statement was then formulated from this problem. When the problem statement was derived, an Ishikawa Diagram was used in order to identify the possible root causes of the problem. The root causes were identified through extensive interviews with the management team of the company, especially with their audit manager since because of the pandemic, there was a limitation of not being able to do personal observations. The study also made use of data analysis and conducted an analysis of the systems flowchart of the different processes that were involved in the warehouse operations of the company. The initial Ishikawa diagram was then validated and restructured that is in line with the final validated causes which will then be the meat of the final Ishikawa diagram. The general categories of the root causes seen were from the methods of the company and it was found out that the root cause of the problem was that the company was delivering damaged goods to its customers thus having returns which are damaged goods. Alternative solutions were presented in order to address the root cause of the problem and in order to know which alternative to be used for the proposed system, Kepner Tregoe Decision Analysis (KTDA) was used. This analysis made use of the different “musts” and “wants” set by the host company. The selected solution in order to address the final root cause of the problem was to establish and include quality checking in both processes of picking up stocks in GCI and during dispatch. The solution that was presented is expected to make improvements in the system as presented given that the company’s current practices does not require them to check the quality of the items rather they prioritized in getting the quantity right which makes the solution a fit and can certainly make positive impact for the company. An implementation plan as well as a Potential Problem analysis was conducted in order to ensure the success of the proposed system. Through the implementation of the alternative, the cost of returned damaged goods is expected to decrease by 45% of the total cost of returned goods which will make the cost of returned goods fall within the acceptable limit of 1% set by the company. The 45% decrease in cost of returned damaged goods will result to a new percentage cost of returned goods of at most 0.98% of the total sales. Cost benefit analysis was also conducted in order to show and prove that the benefits of the solution outweighs the costs for both quantitative and qualitative measures.