• March 16th, 2016

Physical Logistics Management

Paper, Order, or Assignment Requirements
Preface

This document contains details of group coursework forming the assessment of the second year Physical Logistics Management module (the ‘Logistics Consultancy Project’). The coursework has been developed with the kind support of the Business Development team at Gist. (Further information on Gist can be found through the Gist website www.gistworld.com).

For the completion of this project, you and your team are to take on the role of a team of consultants, providing advice to a client on the size, design and location of a new distribution centre. You will be required to produce a report of your findings (in a format suitable for submission to a client in a professional environment) and make a presentation to an audience that includes senior managers from industry.

Section A of this document – ‘Project Guidance Notes’ contains information on the programme, timescales, and deliverables of the project, together with notes to assist you with this challenge.

Section B of this document – ‘Client Briefing Notes’, provides an overview of the client’s requirements for a new distribution centre. It is against these requirements that you will provide your professional advice.

A. PROJECT GUIDANCE NOTES
1. Coursework Overview
The Logistics Consultancy Project in total accounts for 40% of the marks of the Physical Logistics Management module. This is a group assessment, issued in the Autumn term for submission in the Spring term.
For the completion of the project, you are to take on the role of a team of consultants, providing advice to a client on the design of a logistics facility.

• Project Report (75% of project marks) Submission Date: 28/02/16 (23:59)

• Project Presentation (25% of project marks) Presentation Date: w/c 28/02/16

The marking criteria for each element of the assessment is available through Unilearn.
In addition to the above, you will be invited to a review in late January, where you will discuss progress against plan and team dynamics.

2. Scenario
For the purposes of this project you and your team, as experts in warehouse design and operations, have been engaged as consultants to provide preliminary advice on the size, design and location of a new distribution centre. Successful completion of this stage of the consultancy project may lead to the opportunity for your company to undertake further valuable consultancy work for the client.

The client company has provided you with information on their requirements and supporting data to enable you to develop an appropriate solution – this is contained in section B of this document and supporting appendices. It should be noted that the information is high level – you will be given the opportunity to submit relevant questions on the client requirements, however, there will be limitations to the available information and you may need to make assumptions (these should be documented in your work).

3. Submission Requirements
3.1. Project Report
The project report should be a professionally prepared and presented document that sets out the advice of your project team to the client for the size, design and location of a new distribution centre facility. The content should reflect the client’s requirements stated in section B2 of this document.
Your report should detail your recommendations to the client and the underlying rationale – this should be based on analysis of the data and information provided by the client and relevant theory and industry sourced information. You should include layout plans, charts and diagrams.
Your report should be a business style document, although academic referencing (in standard University format) should be used. The word count should be 4,000 words.
The completed report should be submitted by 23:59 on 28/02/16 via Unilearn.

3.2 Project Presentation
The team will be required to give a professional presentation of consultancy advice to a mock meeting with the client – the audience will include industry managers. You should present in the role that you have played as part of your project team.
A maximum of ten minutes presentation time will be allowed – this will be strictly enforced. There will be an additional five minutes for questions and answers – you should be prepared to justify your recommendations.
All members of your team should take part in the presentation. The mark will be awarded based on the overall effectiveness of the presentation and it is therefore in the interest of all members of the team to ensure that proper preparation and rehearsal has taken place.

4. Additional Notes
You will have the opportunity to ask questions regarding the client requirements. These should be submitted as a single set of questions from each team by email to David Leach by 24th January 2016 (23:59). A complete set of questions and answers will then be circulated to all teams that have raised questions within one week of this deadline.

B. CLIENT BRIEFING NOTES
1. Project Background
The client is a leading global manufacturer and distributor of consumer electronics products. Product is manufactured in the Far East (where the parent company is based) and sold to retail customers across Asia, the US and Europe through subsidiary sales and distribution organisations.
In 2002 the European organisation rationalised its European distribution network, creating a single central highly automated European Distribution Centre (EDC) based in the Netherlands to directly serve all major markets within the European Union – at that time existing domestic distribution centres were closed.
Following considerable sales growth across Europe and particularly in the UK, the EDC has reached its maximum capacity and the company is considering establishing a UK National Distribution Centre (NDC) to supplement the existing EDC facility. Under this scenario, product destined for the UK would be shipped direct from production plant to the new NDC, bypassing the EDC. The EDC would continue to serve other European markets.
The UK NDC would receive, store, order process and dispatch product for delivery to retailers in the UK. It would also handle associated reverse logistics operations. The client envisages the development of a new “showcase” distribution centre on a greenfield site to perform these activities.
The client has provided outline volume forecasts for the year commencing April 2017 (the anticipated opening date for a new facility). High level growth expectations for the following decade have also been provided. For reasons of commercial sensitivity, the client is reluctant to provide additional detail at this stage – should they decide to take the project to the next stage, detailed information will then be made available. Information on product ranges and volumes can be found in section 3 and Appendices A and B.

2. Client Requirements
From the available data, you have been requested to:
• calculate storage requirements and advise on an appropriate storage solution
• define the basic processes to be adopted for the flow of goods through the distribution centre
• quantify operational labour resource requirements
• specify the material handling equipment and picking media to be employed
• calculate receipt, storage, order processing & dispatch space requirements
• specify the size, height & layout of the facility, including layout plans of the building and site
• demonstrate how the site could be expanded to meet future growth expectations over the next decade
• advise on the factors that should be considered when deciding where to locate the new facility
• Provide an estimate of the annual cost of the warehouse operation
Following issues with the flexibility, capacity and utilisation of the automated EDC, the client has specified that the use of automation within the NDC for storage, retrieval and order processing should be avoided. The client would, however, be interested in your advice as to the circumstances when the use of automation may be appropriate.
The client will require a report that summarises your advice – this should include details of any underlying assumptions and should provide the supporting rationale for your design. You will be invited to present your findings to the company and defend your proposals.
3. Product and Volume Information
3.1. Product Information
The product portfolio currently comprises 11 different product groups and approximately 400 different stock keeping units (SKUs). Products are not flammable or hazardous but are of high value and should be handled with a reasonable degree of care.
Appendix A, Table 1 contains details of the product groups, SKU quantities, and associated product characteristics (units per case, cases per pallet, pallet maximum stack height, unit volumetrics and unit weight data).
3.2. Volume Information
Stock (at case level) is loose loaded in to containers at production sites for transit to distribution centres. There is an average of 56 cubic metres of product per container (FEU).
Appendix A, Table 2 contains details of the projected stock volumes as at 1st April 2017 (the estimated start date). Table 3 contains details of the projected inbound volumes (in units) for the year commencing 1st April 2017.
Projected sales unit volumes for each product group for each month of the year commencing April 2017 can be found in Appendix A, Table 4. The total projected annual sales units by SKU for the same period are detailed in Appendix B, Table 8.
Product will primarily be dispatched to UK customers on UK pallets (base 1.2m x 1m). Orders may be dispatched as full pallets (80% of volume), part or mixed pallets (18% of volume) and loose parcels (2% of volume).
Appendix A, Table 5 contains a breakdown of the projected number of orders and order lines for each month of the first year of operation. Table 6 provides a frequency distribution for the number of order lines per order. On a peak day, a maximum of 120 orders may be dispatched. Orders are received on day 1 for delivery on day 2.
Approximately 1% of sales volumes are returned by retail customers – the NDC will need to have the capability to process returned goods, including inspection, testing and repackaging facilities (in total requiring approximately 200 square metres of processing space). Up to 3 months of returns will be stored in a segregated area with product then dispatched to specialist processing companies for export, reclamation or disposal.
3.3. Growth Forecasts
UK sales volumes have grown at the rate of 7% per annum for the past 5 years. It is expected that growth will continue over the next decade, although at a reducing rate as the market matures. Through more efficient inventory management, stock levels will increase at a slower rate than sales.
Annual growth forecasts for sales and inventory can be found in Appendix A, Table 7

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