Cases

Defining an Overall Logistics Strategy Encompassing both Domestic and Export Logistics for an Indian Agrochemical Player

Challenge

The client, an Indian agrochemical player was involved in research,manufacturing and distribution of agrochemicals and specialty chemicals across the globe. The company is internally handling both the inbound and outbound logistics (both within Indian boundaries and exports) and was plagued by the following issues:

  • High freight cost for transporting raw materials (within India)
  • High demurrage costs
  • Sub-optimal warehousing/ distribution network for finished goods (managed by CFA’s within India)
  • Lack of finished goods storage space at the manufacturing unit
  • Poor service levels (both inbound and outbound)
  • High level of effort on co-ordination with truckers and shipping lines
  • No tracking mechanism to know status on consignments
  • Limited management bandwidth

Our Approach 

To define an overall logistics strategy encompassing both domestic and export logistics, UC adopted the following approach:

  • Analysed the current logistics model for both domestic and export logistics and understood the strategic intent for outsourcing (cost, management time, service level etc.)
  • Conducted a detailed analysis of the current inbound and outbound logistics cost (including ocean freight and inland haulage at destination locations for exports)

    1) Transportation cost

    2) Warehousing cost

    3) Inventory carrying cost

    4) Demurrage and other costs

  • Analysed current performance metrics

    1) Domestic (Inventory turns, on-time delivery, turnaround time etc.)

    2) Exports (transit time from factory to port, number of days sailing etc.)

  • Analysed improvement potential for both inbound and outbound logistics (continuing with in-house operations for the next two years) by considering the following options

    1) Alternate mode of transport

    2) Using a mother warehouse

    3) Utilising CFS/ICD network

Impact

The client received a detailed logistics strategy that highlighted potential for efficiency improvements for in-house operations.