Case Study No. 7
(Mumbai Uni Nov 2003)
M/s Modern Garments is the manufacturer of ladies and gents garments, such as tops,
shirts, undergarments, etc. Their manufacturing technology is advanced and, at the same
time, there are several players who have access to such latest technologies. The supply
chain for M/s Modern Garments includes significant purchases of raw materials, stitching
of garments, packaging of finished products and supply of goods to its customers.
The logistics functions are the key competitive elements in the market. M/s Modern
Garments is considering to take over the control over its inbound and outbound logistics
functions. These have a direct bearing upon the inventories, reduction in the losses due to
transit delays and improvement in transit time and service reliability. However, the
company has to look into the cost implications of such changes.
M/s Modern Garments have been the leader in the readymade shirts market in India for a
number of years. After liberalization, they entered into a joint venture with a French
company to expand its business in the area of trousers and T-shirts. Despite the new joint
venture, M/s Modern Garments still continues to manufacture its shirts at Thane near
Mumbai and has started a new state-of-art garment manufacturing plant at Pune in
Maharashtra, to compete with other market players. The company has planned to
undertake the distribution of garments made and packed in its plants at Navi Mumbai and
Kalyan so as to retain the control over the design, quality and service channel of its
products.
After liberalization, the market has grown more matured and the expectations of the
customers towards the features of the product have increased and also the technology and
the design has improved considerably. Now, in the market only the garments with good
delivery quality are acceptable. All the competitors have equally good quality product in
the market. Presently the area of logistics distribution, customer service and satisfaction
are the areas of prime concern in order to have extra value addition to the product. The
product defects due to stitching, cutting and transportation are now under increasing
scrutiny.
From the cost control point of view, the amount of money held up in distribution pipeline
is significant. The large variety of garments now means more raw materials and
components are to be held in stock. Presently, the incoming supplies are arranged by the
vendor firms and also, they may have to be persuaded to opt for jointly approved
transporters. Due to product variations, the order fulfillment and its processing are of
considerable importance. The traditional information system has become inadequate.
There are over 500 retail outlets through which the finished products are distributed with
the help of more than 50 transporters. Lead-time variability is creating problems of buffer
stocks with the distributors. The transit time fluctuations are due to the breakdown of
trucks, improper documentation and unfair practices of over charging of the vehicles, etc.
Such variability has to be reduced. Major portion of logistics cost was allocated in fleet
management whereas warehousing, raw materials management and information
networking have insignificant costs. On the basis of the above case, answer the following
questions:
a)
b)
c)
d)
e)
Examine the possibility of alternatives in transportation of the inbound and
outbound materials
How to reduce the cost of the inbound and outbound logistics functions?
What could be the major problems in exploiting the inbound and outbound logistics
functions?
Is it advisable to have a dedicated transport system to operate packaged materials
mainly for the company?
What arrangements have to be made to ensure the service quality for the customers?