Company Background:
You are the Logistics Manager for the Middle East Division of Pharma Global, an international company manufacturing pharmaceutical and cosmetic products.
You are responsible for managing the company's Middle East Regional Distribution Centre in Jebel Ali where you currently receive pharmaceuticals from a factory in Hamburg, Germany and cosmetics from a factory in Charleston, USA. The goods are consolidated in your Jebel Ali Regional Distribution Centre before supplying distributors located in the Gulf Cooperation Council Countries.
The company's sales across the globe have grown significantly and the two factories supplying the Middle East have been running at full capacity for some time. A year ago a new pharmaceuticals factory was built in Bangalore, India and a new cosmetics factory in Sao Paulo, Brazil. Until now these factories have been supplying their domestic markets only.
As the factories in Germany and the USA have insufficient capacity to continue supporting the Middle East market, a decision has been made whereby the Middle East will be supplied from the two new factories in future.
Since neither of the factories have experience in supplying foreign markets you have been asked to visit each location and ensure you and the Export Manager at each factory fully understand the logistical issues involved in transporting the goods from the production site to Jebel Ali.
The factories focus on manufacturing and do not have any of their own vehicles.
Volumes:
Each factory will ship approximately 250 containers annually.
Goods are normally shipped in 20ft containers (50% dry, 50% reefer to maintain +25c).
A small percentage of goods are likely to be transported by air when there is a requirement for goods to be dispatched urgently.
Inventory held in Jebel Ali
When sourcing from the existing factories, the company policy is to hold the following inventory levels in Jebel Ali to safeguard against fluctuations in sales and potential supply problems:
Pharmaceuticals (Hamburg, Germany)
Cosmetics (Charleston, USA)
1 Logistics:
Discuss the various logistical issues you would have to consider before commencing the import of products from the two new factories, taking into account the various procedures that need to be considered, the modes of transport you may need to use and the port you will select to export the products.
2 Transit Times and Inventory Levels:
(a) Produce a table showing the transit time by sea from your current suppliers' ports of export, Hamburg and Charleston, to Jebel Ali, compared to the ports you are likely to use for exporting from Brazil and India.
(b) Based on the new transit times discuss whether you would consider reviewing the level of inventory you hold in Jebel Ali of pharmaceuticals and cosmetics giving an explanation of any proposals you may put forward.
A further 20 marks for overall structure, clarity, conclusion and recommendations you may put forward with regard to successfully implementing the new logistics operation.