IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Logistics Engineering and Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choices & Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. Analysis method in which evaluation of alternative design configuration using multiple criteria is:
a. Level of repair analysis
b. Maintenance task analysis
c. Evaluation of design alternatives
d. None of the above
2. Orientation of Logistic are:
a. Product among organization
b. Total benefits among organization
c. Towards managing of labour
d. Towards managing the physical flow of material & product among organization
3. LMI stands for:
a. Logistics Management Information
b. Legal Management Information
c. Logistics Managerial Information
d. None of the above
4. Technical performance measures (TPMs) is applied for:
a. Evaluation of prime mission related system & elements for expenses
b. Evaluation of prime mission related system & elements for labour
c. Evaluation of prime mission related system & elements for support
d. None of the above
5. System structure should facilitate:
a. Design on an evolutionary basis
b. Design a system within a minimum cost
c. Design on an evolutionary basis & with minimum cost
d. Both (a) & (b)
6. Conceptual design is initiated in response of:
a. Identification of customer need
b. Identification of consumer demand
c. Identification of Industry demand
Examination Paper: Operation Management
5
IIBM Institute of Business Management
d. None of the above
7. Industrial engineering refers to:
a. Design & development of a product
b. Design & development of industrial tools
c. Design & development of expenses
d. Design & development of production capability
8. Contractor logistic support (CLS) refers to:
a. System maintenance activities
b. System evaluation activities
c. Both (a) & (b)
d. None of the above
9. Discounting refers to:
a. Application of selected rate of interest
b. Application of selected difference measure
c. Application of selected of interest & measure differences
d. None of the above
10. A plan which is directed towards covering of logistic support for a system is:
a. System Retirement Plan
b. Post production Support plan
c. Facilities plan
d. Computer Resource plan
Part Two:
1. Personal training requirement are based on what factors?
2. What is meant by Design criteria? Provide some examples.
3. Briefly describe evaluation of logistic’s elements.
4. What are the advantages & disadvantages of functional organization?
END OF SECTION A
Examination Paper: Operation Management
6
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Company Profile
Indian Steels Limited (ISL) is a Rs 6000 crore company established in the year 1986. The company
envisaged being a continuously growing top class company to deliver superior quality and cost effective
products for infrastructure development. The company performed with a mission to attain 7 million ton
liquid steel capacity through technological up-gradation, operational efficiency and expansion; to produce
steel with the international standards of cost and quality; to meet the aspirations of the stakeholders. The
production started in the year 1988 and initially, it manufactured Angles, Pig Irons, Beams and Wire Rods
that were mainly used for constructing roads, dams and bridge. The products were mainly supplied to
Public Sector Undertaking such as Railway ,Public Work Department (PWD), Central Public Work
Department (CPWD), Rashtriya Setu Nigam, Audyogik Kendrya Vikas Nigam Ltd.and various foundry
units. The company had its headquarters at Raipur with three stockyards
The company has establish itself well and is said to be considering its expansion plan and proposed
merger with another steel making giant in the country. The company was awarded ISO 9001, ISO 14001
and ISO 18001 certifications. The temperature in the plant premises is reportedly about 6 degrees Celsius
lesser than that of the township, thanks to the greenery being maintained therein.
Logistics Outsourcing
Outbound logistics, which basically connects the source of the supply with the sources of demand with an
objective of bridging the gap between the market demand and capabilities of the supply sources, was
always a problem for companies operating in this industry. Consisting of components like warehousing
network, transportation network, inventory control system and supporting information systems, outbound
logistics was always playing a key role in making the right product available at the right place, at the right
time at the least possible cost. In 1996, owing to the cut throat competition in the emerging dynamic
global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in
focusing on its core competency and outsourcing the rest to its reliable partners. Outsourcing of its
outbound logistics was one such move in the direction.
Recognizing the growing demand for its products from the big, diversified and geographically dispersed
customers, the company started expanding the number of warehousing stockyards. From a humble
beginning, the company today has 26 stock yards; most of them is outsourced. Each of the outsourced
stockyards was managed by the third party, which the company referred to sa Consignment Agent in the
area. The CA was selected on the annual basis through competitive bidding process. The performance of
CA was closely monitored by a company representative. The CA was responsible for the entire
distribution of the products within the geographical limits of the allotted market segments and was paid
by the company according to the loads of transaction dealt by him. Based on the sales turnover, CAs were
trifurcated into A, B, and C categories. The CAs with a monthly turnover of Rs 150-200 crore fell under
A category, whereas those with Rs 100-150 crore were B and less than Rs 100 crore were C category.
In addition to the company representative, a team of marketing division operated in the town where the
site of CA was located. This department was responsible for estimating the-future demand, translating it
into orders and sending to the manufacturing plant. Material dispatch was done using either one or a
Examination Paper: Operation Management
7
IIBM Institute of Business Management
combination of the two modes: rail, road. While rail as the mode of transportation, the company had a
choice to book a Normal Rake or a Jumbo Rake. At times, the company was engaging the services of the
CONCOR (Container Cooperation of India) where a train of 62 to 70 wagons, each wagon with about
26tonnes capacity was used for transportation. Instead, if the company decided to send the material by
road, the company had a choice between Trailer (25 to 30 tones) and Truck (52 to 20 tones). The choice
of transportation mode was majorly based on the quantity of dispatch.
As soon as the material was dispatched from the manufacturing plant, the respective CA used to get a
Stock Transfer Chalaan electronically through Virtual Private Network, which was develop by a
professional software service provider. In-transit, monitoring was generally done with the help of Indian
railways, if the mode was Rail. Otherwise, truck/trailer drivers were contact through mobile phones.
Transit generally took 5-6 days, providing time for CA took plan for receiving material. The CA use to
utilize this time for arranging material handling devices like: Heavy cranes and required labour. The
material thus unloaded was reaching the warehousing stock yard where CA was responsible for arranging
the material as per the warehousing norms of ISL.
The company broadly classified materials into Long Products and Rounds. Products following into each
category were further classified by their size, shape and utility and the company used a distinct colour
code for this purpose. Each sub category of material had a specific place for down loading. The company
used Bin System for this purpose. While downloading the material in stockyard, the company norms
insisted that CA arrange for providing Dunnage Material. This unable the CA to store material without a
direct contact with land surface and thus reduced the probability of material deterioration. Material was
stored in the stockyard until an authorized representative of the customer used to come and collect it.
While dispatching material to the customer, a Loading Slip was generated against the Delivery Order. The
company also belived in maintaining long-term relationships with the suppliers as well as the buyers. It
always prioritized the needs of its regular and important customers over others and this worked out to be a
win-win strategy.
Operational problems were majorly because of uncertainties in transportation, fluctuations in supply of
electricity and the load bearing capacity of the soil in the stockyard. Some more problems were
encountered whenever there was a change in CA and these were overcome by training the employees of
the new CA and keeping the old CA responsible for the material in his stockyard for six months after the
contract as well. Observations reveal that, at times there were situations wherin CAs had to do those
things which they were not legally supposed to do because of the pressures mounted by political leaders
with selfish interests.
Conclusions
Despite these problems, this model of outsourcing logistics was working out very well for the company.
The practices, which were started in the year 1996 have sustained major changes in the environment and
are being practiced even in 2006. It has enhanced the supply chain competency of the company by
enabling it leverage more on its core competency, which leads to increased productivity.
Questions:
1. Analyze the case in view of the logistics outsourcing practices of the ISL.
2. Discuss the importance of logistics outsourcing with reference to Supply Chain Management.
Examination Paper: Operation Management
8
IIBM Institute of Business Management
Caselet 2
Introduction
S.K Das established ABC Pharma in 1961 in New Delhi, marketed antibiotics and became brand leaders
in Amphicilin and Cephalexin orals. The company went public in the year 1973. In 1983, ABC
established a plant in Mandideep (MP, India) with various dosage form facilities. In 2004, it became
India’s largest pharmaceutical company, manufacturing and marketing world-class generics, branded
generic pharmaceuticals and active pharmaceutical ingredients. It was ranked amongst the top 10 generic
companies worldwide. The company’s products were sold in over 100 countries with manufacturing
operations in 7 countries and ground presence in 44. The company had an expanding international
portfolio of affiliates, joint ventures and representative offices across the globe with joint venture/
subsidiaries in US, UK, Germany, France, Spain, Ireland, Netherlands, India, China, Brazil, South Africa,
etc.While ABC aggressively pursued the internationalization of its business, the growth strategy equally
focused on enhancing market share n India. The company had a strong brand marketing team and
distribution network in India.
Milestones
By the end of December 31, 2004, global sales had reached US $ 1178 million and registered a growth of
21%. Overseas market accounted for 78% of the global sales. US accounted for 36%, while Europe and
BRIC (Brazil, Russia, India and China) countries contributed 16% and 26% to global sales, with a
combined turnover of US $924 million. The company’s vision was to achieve significant business in
proprietary prescription products with a strong presence in developed markets. It also aspired to be
amongst the top 5 generic players with a US $5 billion sale by next decade. To translate these objectives
into reality and to optimize value creation, the Company had adopted a multi-pronged strategy. The major
thrust areas for future were acquisition of brands overseas, emphasis on brand marketing in the US and
Europe and entering high potential new marets with value added product offerings.
The company had established state-of-the-art multi-disciplinary R&D facilities at Gurgaon, India. ABC
was one of the largest investor on R&D in the Indian pharmaceutical industry, with 7% of its sales during
2004. The company’s major research focus was in the areas of Urology, Anti-invectives, Respiratory,
Anti-inflammatory and Metabolic disorders segments. ABC’s continued focus on R&D had resulted in
several approvals in developed markets and significant progress in New Drug Delivery Response
(NDDR).
Fourth Party Logistics (4PL)
The company believes in building strong and long term relationships with limited number of logistics
service providers. They also focoused on outsourcing the activities like warehouse management, packing
and custom clearance through Freight Forwarders. They always believed in their core competencies. The
logistics service providers took care of storage and inventory management and ensured the availability of
the right product at the right place and at right time. Through outsourcing, they achieved focus on the core
competencies, cost saving, effective supply chain management, cross-pollination of better available
practices and wider and effective geographical coverage. The company practiced Fourth Party Logistics
(4PL) services by providing ERP as a backbone system for the third party logistics service providers. The
palette packing services were outsourced from a local company including the packing material. The
responsibility of complete documentation and custom clearance for import and export of goods had also
been outsourced through Custom House Agents (CHA) and Freights Forwarders (FF) under the
supervision of GM – Global Supply Chain.
The warehouse management was done with the help of Bar-code Technology, which facilitied in tracing
of materials on a single click of a mouse resulting into smooth inward and outward flow of materials. In
future, ABC was planning to have Radio Frequency Identification (RFID) Technology to manage the
warehouse activities in a more effective and efficient manner. The company had divided its global
Examination Paper: Operation Management
9
IIBM Institute of Business Management
operations into four regions viz., R1-Middle East with headquarter at India; R2-CIS, Africa and Europe
with headquarter at London; R3-Far East ad Latin America with headquarter at Singapore; R4-US with
headquarters at New York on the basis of convenience, market potential and market share.
Collaborative Relationship
The company established its global supply chain hub at Mandideep (near Bhopal, India). They managed
their operations with one GM-Supply Chain, one Senior Manager Commercial and four Shipment
Officers. Each Shipment Officer had four support employees outsourced through freight forwarders.
These people were responsible for the day-to-day activities under the administrative control of ABC. GMSupply
Chain was responsible for managing the relations with Supply Chain Partners, Freight forwarders
and Custom House Agents (CHA). The company had been a pioneer in launching the genetic versions of
products on the same day at which the product to get off patent, which helped them in getting an edge
over competitors. They managed to maintain the dignity, discipline and business ethics without violating
the laws of patent. This was possible because of the strong and long term relationship with logistic service
providers. There was a strong level of belonging, faith and trust amongst the supply chain partners. To
maintain the good relations, the company practiced making timely payments to the service providers.
They also opened the account in the same bank in which the service providers had their account so that
prompt money transfer could take place. As a result of this, service providers were so concerned about the
shipments of the company that they dedicated 25 refrigerated cargos each equipped with location tracking
facility to track the status of the shipments.
The relationship and commitments of service providers was endorsed on January 10, 2003 when Ramipril
was going off patents in Europe. ABC having strong presence n Germany wanted to encash the
oppournity by making its Rampril available in Germany right on January 11, 2003, so as to take lead in
available generic market. However, ABC did not know the number and size of competition they would be
facing. The underlying fear of getting the shipment late and therby losing the advantage of being first was
very clear on the faces of ABCs top managers. The task was urgent and important; any delay in
availability was to cost heavily. The D-day was January 10, 2003 and the shipment was to be airlifted
from Mumbai so as to reach Germany after midnight of January 10, 2003 but before dawn of January 11,
2003. Two Boeing were chartered to lift the goods from Mumbai Airport, but the task was not simple, as
the goods were to be surface transported from Mandideep to Mumbai in a carvan of 70 cargos. To worsen
the things, the transporters had announced strike during that period.
The urgency was briefed to freight forwarder, who was caught between relationship with ABC and
membership of the Transporters’ Association. He had the option of pleasing any one of them. The long
association and the relationship with ABC got priority and the freight forwarder assured ABC’s Senior
Commercial Manager to carry out the assigned responsibility. Going against the directives of association,
the freight forwarder contacted the police authorities and obtained a security cover throughout
Maharastra. The freight owner consider himself as one of the responsible members of ABC and was
personally receiving the cargo and getting it loaded at Mumbai airport. The scheduled departure had a
lead-time of two days. However, he freight forwarder insisted and stayed at Mumbai at his own cost to
see the goods leaving India successfully. It was a mission for ABC and the freight forwarder in which
collaborative relationship surpassed all limitations and the goods landed in Germany-just-in-time.
Questions:
1. What modification would you suggest in enhancing the existing logistics system?
2. Critically analyze the efforts of ABC in launching generic versions of products going off
patents.
END OF SECTION B
Examination Paper: Operation Management
10
IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Define Logistic support in the context of the production /construction phase. What are the
elements of Logistic support?
2. Define reliability & maintainability. What are their major characteristics?
END OF SECTION C
IIBM Institute of Business Management
Examination Paper MM.100
Logistics Engineering and Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choices & Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. Analysis method in which evaluation of alternative design configuration using multiple criteria is:
a. Level of repair analysis
b. Maintenance task analysis
c. Evaluation of design alternatives
d. None of the above
2. Orientation of Logistic are:
a. Product among organization
b. Total benefits among organization
c. Towards managing of labour
d. Towards managing the physical flow of material & product among organization
3. LMI stands for:
a. Logistics Management Information
b. Legal Management Information
c. Logistics Managerial Information
d. None of the above
4. Technical performance measures (TPMs) is applied for:
a. Evaluation of prime mission related system & elements for expenses
b. Evaluation of prime mission related system & elements for labour
c. Evaluation of prime mission related system & elements for support
d. None of the above
5. System structure should facilitate:
a. Design on an evolutionary basis
b. Design a system within a minimum cost
c. Design on an evolutionary basis & with minimum cost
d. Both (a) & (b)
6. Conceptual design is initiated in response of:
a. Identification of customer need
b. Identification of consumer demand
c. Identification of Industry demand
Examination Paper: Operation Management
5
IIBM Institute of Business Management
d. None of the above
7. Industrial engineering refers to:
a. Design & development of a product
b. Design & development of industrial tools
c. Design & development of expenses
d. Design & development of production capability
8. Contractor logistic support (CLS) refers to:
a. System maintenance activities
b. System evaluation activities
c. Both (a) & (b)
d. None of the above
9. Discounting refers to:
a. Application of selected rate of interest
b. Application of selected difference measure
c. Application of selected of interest & measure differences
d. None of the above
10. A plan which is directed towards covering of logistic support for a system is:
a. System Retirement Plan
b. Post production Support plan
c. Facilities plan
d. Computer Resource plan
Part Two:
1. Personal training requirement are based on what factors?
2. What is meant by Design criteria? Provide some examples.
3. Briefly describe evaluation of logistic’s elements.
4. What are the advantages & disadvantages of functional organization?
END OF SECTION A
Examination Paper: Operation Management
6
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Company Profile
Indian Steels Limited (ISL) is a Rs 6000 crore company established in the year 1986. The company
envisaged being a continuously growing top class company to deliver superior quality and cost effective
products for infrastructure development. The company performed with a mission to attain 7 million ton
liquid steel capacity through technological up-gradation, operational efficiency and expansion; to produce
steel with the international standards of cost and quality; to meet the aspirations of the stakeholders. The
production started in the year 1988 and initially, it manufactured Angles, Pig Irons, Beams and Wire Rods
that were mainly used for constructing roads, dams and bridge. The products were mainly supplied to
Public Sector Undertaking such as Railway ,Public Work Department (PWD), Central Public Work
Department (CPWD), Rashtriya Setu Nigam, Audyogik Kendrya Vikas Nigam Ltd.and various foundry
units. The company had its headquarters at Raipur with three stockyards
The company has establish itself well and is said to be considering its expansion plan and proposed
merger with another steel making giant in the country. The company was awarded ISO 9001, ISO 14001
and ISO 18001 certifications. The temperature in the plant premises is reportedly about 6 degrees Celsius
lesser than that of the township, thanks to the greenery being maintained therein.
Logistics Outsourcing
Outbound logistics, which basically connects the source of the supply with the sources of demand with an
objective of bridging the gap between the market demand and capabilities of the supply sources, was
always a problem for companies operating in this industry. Consisting of components like warehousing
network, transportation network, inventory control system and supporting information systems, outbound
logistics was always playing a key role in making the right product available at the right place, at the right
time at the least possible cost. In 1996, owing to the cut throat competition in the emerging dynamic
global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in
focusing on its core competency and outsourcing the rest to its reliable partners. Outsourcing of its
outbound logistics was one such move in the direction.
Recognizing the growing demand for its products from the big, diversified and geographically dispersed
customers, the company started expanding the number of warehousing stockyards. From a humble
beginning, the company today has 26 stock yards; most of them is outsourced. Each of the outsourced
stockyards was managed by the third party, which the company referred to sa Consignment Agent in the
area. The CA was selected on the annual basis through competitive bidding process. The performance of
CA was closely monitored by a company representative. The CA was responsible for the entire
distribution of the products within the geographical limits of the allotted market segments and was paid
by the company according to the loads of transaction dealt by him. Based on the sales turnover, CAs were
trifurcated into A, B, and C categories. The CAs with a monthly turnover of Rs 150-200 crore fell under
A category, whereas those with Rs 100-150 crore were B and less than Rs 100 crore were C category.
In addition to the company representative, a team of marketing division operated in the town where the
site of CA was located. This department was responsible for estimating the-future demand, translating it
into orders and sending to the manufacturing plant. Material dispatch was done using either one or a
Examination Paper: Operation Management
7
IIBM Institute of Business Management
combination of the two modes: rail, road. While rail as the mode of transportation, the company had a
choice to book a Normal Rake or a Jumbo Rake. At times, the company was engaging the services of the
CONCOR (Container Cooperation of India) where a train of 62 to 70 wagons, each wagon with about
26tonnes capacity was used for transportation. Instead, if the company decided to send the material by
road, the company had a choice between Trailer (25 to 30 tones) and Truck (52 to 20 tones). The choice
of transportation mode was majorly based on the quantity of dispatch.
As soon as the material was dispatched from the manufacturing plant, the respective CA used to get a
Stock Transfer Chalaan electronically through Virtual Private Network, which was develop by a
professional software service provider. In-transit, monitoring was generally done with the help of Indian
railways, if the mode was Rail. Otherwise, truck/trailer drivers were contact through mobile phones.
Transit generally took 5-6 days, providing time for CA took plan for receiving material. The CA use to
utilize this time for arranging material handling devices like: Heavy cranes and required labour. The
material thus unloaded was reaching the warehousing stock yard where CA was responsible for arranging
the material as per the warehousing norms of ISL.
The company broadly classified materials into Long Products and Rounds. Products following into each
category were further classified by their size, shape and utility and the company used a distinct colour
code for this purpose. Each sub category of material had a specific place for down loading. The company
used Bin System for this purpose. While downloading the material in stockyard, the company norms
insisted that CA arrange for providing Dunnage Material. This unable the CA to store material without a
direct contact with land surface and thus reduced the probability of material deterioration. Material was
stored in the stockyard until an authorized representative of the customer used to come and collect it.
While dispatching material to the customer, a Loading Slip was generated against the Delivery Order. The
company also belived in maintaining long-term relationships with the suppliers as well as the buyers. It
always prioritized the needs of its regular and important customers over others and this worked out to be a
win-win strategy.
Operational problems were majorly because of uncertainties in transportation, fluctuations in supply of
electricity and the load bearing capacity of the soil in the stockyard. Some more problems were
encountered whenever there was a change in CA and these were overcome by training the employees of
the new CA and keeping the old CA responsible for the material in his stockyard for six months after the
contract as well. Observations reveal that, at times there were situations wherin CAs had to do those
things which they were not legally supposed to do because of the pressures mounted by political leaders
with selfish interests.
Conclusions
Despite these problems, this model of outsourcing logistics was working out very well for the company.
The practices, which were started in the year 1996 have sustained major changes in the environment and
are being practiced even in 2006. It has enhanced the supply chain competency of the company by
enabling it leverage more on its core competency, which leads to increased productivity.
Questions:
1. Analyze the case in view of the logistics outsourcing practices of the ISL.
2. Discuss the importance of logistics outsourcing with reference to Supply Chain Management.
Examination Paper: Operation Management
8
IIBM Institute of Business Management
Caselet 2
Introduction
S.K Das established ABC Pharma in 1961 in New Delhi, marketed antibiotics and became brand leaders
in Amphicilin and Cephalexin orals. The company went public in the year 1973. In 1983, ABC
established a plant in Mandideep (MP, India) with various dosage form facilities. In 2004, it became
India’s largest pharmaceutical company, manufacturing and marketing world-class generics, branded
generic pharmaceuticals and active pharmaceutical ingredients. It was ranked amongst the top 10 generic
companies worldwide. The company’s products were sold in over 100 countries with manufacturing
operations in 7 countries and ground presence in 44. The company had an expanding international
portfolio of affiliates, joint ventures and representative offices across the globe with joint venture/
subsidiaries in US, UK, Germany, France, Spain, Ireland, Netherlands, India, China, Brazil, South Africa,
etc.While ABC aggressively pursued the internationalization of its business, the growth strategy equally
focused on enhancing market share n India. The company had a strong brand marketing team and
distribution network in India.
Milestones
By the end of December 31, 2004, global sales had reached US $ 1178 million and registered a growth of
21%. Overseas market accounted for 78% of the global sales. US accounted for 36%, while Europe and
BRIC (Brazil, Russia, India and China) countries contributed 16% and 26% to global sales, with a
combined turnover of US $924 million. The company’s vision was to achieve significant business in
proprietary prescription products with a strong presence in developed markets. It also aspired to be
amongst the top 5 generic players with a US $5 billion sale by next decade. To translate these objectives
into reality and to optimize value creation, the Company had adopted a multi-pronged strategy. The major
thrust areas for future were acquisition of brands overseas, emphasis on brand marketing in the US and
Europe and entering high potential new marets with value added product offerings.
The company had established state-of-the-art multi-disciplinary R&D facilities at Gurgaon, India. ABC
was one of the largest investor on R&D in the Indian pharmaceutical industry, with 7% of its sales during
2004. The company’s major research focus was in the areas of Urology, Anti-invectives, Respiratory,
Anti-inflammatory and Metabolic disorders segments. ABC’s continued focus on R&D had resulted in
several approvals in developed markets and significant progress in New Drug Delivery Response
(NDDR).
Fourth Party Logistics (4PL)
The company believes in building strong and long term relationships with limited number of logistics
service providers. They also focoused on outsourcing the activities like warehouse management, packing
and custom clearance through Freight Forwarders. They always believed in their core competencies. The
logistics service providers took care of storage and inventory management and ensured the availability of
the right product at the right place and at right time. Through outsourcing, they achieved focus on the core
competencies, cost saving, effective supply chain management, cross-pollination of better available
practices and wider and effective geographical coverage. The company practiced Fourth Party Logistics
(4PL) services by providing ERP as a backbone system for the third party logistics service providers. The
palette packing services were outsourced from a local company including the packing material. The
responsibility of complete documentation and custom clearance for import and export of goods had also
been outsourced through Custom House Agents (CHA) and Freights Forwarders (FF) under the
supervision of GM – Global Supply Chain.
The warehouse management was done with the help of Bar-code Technology, which facilitied in tracing
of materials on a single click of a mouse resulting into smooth inward and outward flow of materials. In
future, ABC was planning to have Radio Frequency Identification (RFID) Technology to manage the
warehouse activities in a more effective and efficient manner. The company had divided its global
Examination Paper: Operation Management
9
IIBM Institute of Business Management
operations into four regions viz., R1-Middle East with headquarter at India; R2-CIS, Africa and Europe
with headquarter at London; R3-Far East ad Latin America with headquarter at Singapore; R4-US with
headquarters at New York on the basis of convenience, market potential and market share.
Collaborative Relationship
The company established its global supply chain hub at Mandideep (near Bhopal, India). They managed
their operations with one GM-Supply Chain, one Senior Manager Commercial and four Shipment
Officers. Each Shipment Officer had four support employees outsourced through freight forwarders.
These people were responsible for the day-to-day activities under the administrative control of ABC. GMSupply
Chain was responsible for managing the relations with Supply Chain Partners, Freight forwarders
and Custom House Agents (CHA). The company had been a pioneer in launching the genetic versions of
products on the same day at which the product to get off patent, which helped them in getting an edge
over competitors. They managed to maintain the dignity, discipline and business ethics without violating
the laws of patent. This was possible because of the strong and long term relationship with logistic service
providers. There was a strong level of belonging, faith and trust amongst the supply chain partners. To
maintain the good relations, the company practiced making timely payments to the service providers.
They also opened the account in the same bank in which the service providers had their account so that
prompt money transfer could take place. As a result of this, service providers were so concerned about the
shipments of the company that they dedicated 25 refrigerated cargos each equipped with location tracking
facility to track the status of the shipments.
The relationship and commitments of service providers was endorsed on January 10, 2003 when Ramipril
was going off patents in Europe. ABC having strong presence n Germany wanted to encash the
oppournity by making its Rampril available in Germany right on January 11, 2003, so as to take lead in
available generic market. However, ABC did not know the number and size of competition they would be
facing. The underlying fear of getting the shipment late and therby losing the advantage of being first was
very clear on the faces of ABCs top managers. The task was urgent and important; any delay in
availability was to cost heavily. The D-day was January 10, 2003 and the shipment was to be airlifted
from Mumbai so as to reach Germany after midnight of January 10, 2003 but before dawn of January 11,
2003. Two Boeing were chartered to lift the goods from Mumbai Airport, but the task was not simple, as
the goods were to be surface transported from Mandideep to Mumbai in a carvan of 70 cargos. To worsen
the things, the transporters had announced strike during that period.
The urgency was briefed to freight forwarder, who was caught between relationship with ABC and
membership of the Transporters’ Association. He had the option of pleasing any one of them. The long
association and the relationship with ABC got priority and the freight forwarder assured ABC’s Senior
Commercial Manager to carry out the assigned responsibility. Going against the directives of association,
the freight forwarder contacted the police authorities and obtained a security cover throughout
Maharastra. The freight owner consider himself as one of the responsible members of ABC and was
personally receiving the cargo and getting it loaded at Mumbai airport. The scheduled departure had a
lead-time of two days. However, he freight forwarder insisted and stayed at Mumbai at his own cost to
see the goods leaving India successfully. It was a mission for ABC and the freight forwarder in which
collaborative relationship surpassed all limitations and the goods landed in Germany-just-in-time.
Questions:
1. What modification would you suggest in enhancing the existing logistics system?
2. Critically analyze the efforts of ABC in launching generic versions of products going off
patents.
END OF SECTION B
Examination Paper: Operation Management
10
IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Define Logistic support in the context of the production /construction phase. What are the
elements of Logistic support?
2. Define reliability & maintainability. What are their major characteristics?
END OF SECTION C
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