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Awareness of transportation operations and challenges. Awareness of a Logistics Managers challenges of a realworld requirement. Awareness of how challenges in operations are managed by individuals. Ability to conduct a quality collection of information relevant to assignment requirements. Ability to analyze the collected information to address assignment requirements. Ability to generate conclusions about reallife challenges faced by Logistics Managers as well as how such challenges impact the overall industry.
I" declare that in submitting all work for this assessment I have read, understood, and agree to the content and expectations of the Assessment Declaration." OMGT2279 TRANSPORATION AND FREIGHT LOGISTICS CASE STUDY REPORT Vina Bubbles Cola Blows Its Top! Course Code_Course Name OMGT2279 Student name_ID number Assessment name Case Study Report Lecturer name Scott Mc Word count 2099 Pages 10 Assessment Details Vina Bubbles Cola Blows its Top! You have just been hired as the Director of Logistics for Vina Bubbles Cola (VBC) In your new role, you will have responsibility for general logistical planning including functions such as inbound and outbound freight and any logistics-related functions within VBC VBC is a 20-year-old Vietnamese manufacturer of premium cola products VBC is located in both Ho Chi Minh City and Hanoi where their manufacturing facilities, warehouses, and administrative offices are contained within single buildings in both cities VBC employs 150 staff members total spread equally between the two cities, 70 of them dedicated to manufacturing, 30 to warehouse operations, and the remaining 50 in various administrative positions VBC has positioned its product in the ‘premium’ category and is enjoying yearly growth Their primary product is a reusable shiny metal 750 ml bottle of cola that is manufactured using two primary raw materials: polished aluminum for the body of the bottle and high-density plastic for the removable lid VBC has spent considerable effort on research and development and the bottle is industry-leading in its ability to maintain cold temperatures for longer than standard bottles by 60 minutes 75% of VBC’s sales are done through an online distributor called VinSpeed which maintains a distribution center in Danang VinSpeed specializes in selling many product lines from beauty supplies to food products direct to Vietnamese consumers and uses small package providers and couriers to offer a one or two-day delivery to most Vietnamese households VBC currently ships its product over the road to VinSpeed’s distribution center and if ordered in FTL quantity, VBC pays for the freight expense When LTL quantities are ordered, VBC charges the freight expense to VinSpeed The remaining 25% of sales are done through a small group of boutique beverage specialty stores across Vietnam that have requested the product specifically to stock These sales are normally low volume and shipped via a small package or courier service to the boutique beverage specialty store We will focus on ONLY the metal used to manufacture the bottle body in this case study VBC purchases its high-quality metal from a distributor in Shenzhen, China This specialty metal is transported by an ocean carrier as LCL through the port of Hai Phong where it is then transported by intermodal rail to VBC in Hanoi and Ho Chi Minh City The metal is purchased in flat sheets and packed in wooden crates measuring 90cm long x 58cm wide x 58cm tall When filled, each crate weighs 1500 kgs x 20 crates total For both the ocean and rail portions of transportation, the crates are capable of being double stacked on top of each other to save space The standard shipping lead time is days but there are times when VBC needs their product expedited sooner Review Incoterms 2020 to understand the following statements VBC pays for freight from the supplier with two shipping options to address their production needs For Products shipped standard DDP Destination, the Supplier shall be responsible for all insurance costs, freight charges and import and/or export fees, duties, demurrage, taxes, etc incurred on each shipment, and title, as well as the risk of loss, remain with the Supplier until delivery Title, risk of loss, and freight charges shall become the responsibility of VBC if/when VBC arranges for the transport of materials from the Supplier’s factory, EXW Shipping Point Expedited shipping is defined as 2-Day or Next Day delivery and is EXW Shipping Point from the Supplier to the Destination VBC is responsible for all shipping arrangements Title and risk of loss to such Product shall pass to VBC at the time of delivery/transfer to the common carrier from the Supplier A potential new supplier of metal has been found in Bangkok, Thailand This manufacturer produces a comparable product to the Shenzhen supplier The new supplier in Bangkok would transport the metal sheets on pallets in a box car via rail or any other means to a trans-loading facility in Phnom Penh, Cambodia At the time of this writing, the railway between Thailand and Cambodia may still be under construction but let's assume the rail is still operational so we can still include it in future plans A packaging facility operates adjacent to the rail terminal in Phnom Penh where the metal sheets would then be packaged in the same wooden crates currently being used by the Shenzhen supplier for delivery over the road to VBC This would add more cost to the process that needs to be addressed The crates would be loaded onto trucks and driven to Ho Chi Minh City only 230 kilometers away and additional trucks or ocean liners sent to Hanoi being 1,490 kilometers away You have not been given costing information at this point but you have been asked to prepare a preliminary report that would highlight the logistical differences between the two options Compare and contrast the two suppliers’ use of transportation and what impacts (cost/time discovered through your research) this would have on VBC Then develop and present a final logistics plan for the company When you have made a final decision, explain why you (the VBC Director of Logistics) chose your supplier as the best choice of the two Remember that YOU are a Director of the company and expected to produce a report without asking for help from your boss Specifically, you have been asked to (read very carefully as they are not the same): Task - Compare and contrast the standard and expedited modes of transportation used by the Chinese supplier versus the supplier from Thailand and what impacts this would have on VBC The same shipping terms apply to both suppliers Provide recommendations to improve the cost, lead time, and/or delivery options if any from both suppliers Describe any issues or challenges VBC may have to deal with at local, national, and global levels that you identify and explain the linkages between these levels (#AoL1a) Task - Discuss the new VBC transportation/freight model if they change suppliers or keep the same one by applying what you learned in class in terms of carrier & route selections to develop a detailed logistics plan for the given departure and arrival points Provide an outcome with recommendations for the Board of Directors Your response should be approximately 2000 words +/- 5% and contain a brief introduction, your analysis, recommendations, and finally a conclusion You can use the below templates to get started Please submit your assignment in Word (.doc or docx) format Think of Task and as you did your Math problems in high school The teacher does not want to see the answer to the problem without you showing your work resulting in your solution! So, Task is the compare/contrast so you have a clear answer as to why your Task "Logistics Plan" makes sense Task shows your work and Task is the solution to the problem Compare / Contrast Ocean+Rail+Truck (China) versus Rail+Truck (Thailand) and possible ocean from HCMC or any combination of these modes Introduction Briefly state the objective of the report which includes the problem statement(s) Task Define the challenge Consider the options Evaluate the options Provide a recommendation Task Define the challenge Consider the options Evaluate the options Provide a recommendation Conclusion References If applicable, include any computation tables, reference material, or citations not required in the discussion portion of your submission here At least 10 quality references minimum Appendix (supporting materials not produced by you) I INTRODUCTION An effective transportation model is imperative to remain competitive and increase the speed of doing business (Thacker et al 2019) This report aims to help Vina Bubble Cola (VBC) choose a better transportation model and includes tasks Task compares and contrasts two transportation models used by Chinese and Thai suppliers, their impacts, and potential challenges, with small improvements for existing shipping models Task clarifies which model is best for VBC and provides recommendations to improve it regarding carriers and routes II ANALYSIS TASK 1: COMPARE/ CONSTRACT ANALYSIS OF TRANSPORTATION MODES FROM SHENZHEN – VIETNAM versus BANGKOK – VIETNAM A Calculation Routes Shenzhen Hai Phong Modals Lead time Sea days (transit time) Transport Time Total Shipping lead time days Shenzhen - Hanoi Hai Phong - Rail + 2.5 days 2.5 days hours Hanoi Truck hours 5.5 days hours Hai Phong Shenzhen - HCMC Ho Chi Rail + 3.5 days 11 2.5 days day 11 hours Minh City Truck hours 6.5 days 11 hours (HCMC) Table 1: Calculation of lead time from Shenzhen to Hai Phong to Hanoi and HCMC (Shipa freight 2021) Bangkok Phnom Penh Modals Lead Time Transport Time Total Rail hours 0.5 day 0.5 day hours Shipping lead time Bangkok Phnom HCMC Penh Truck day day hours days hours HCMC days hours Bangkok - Hanoi HCMC Truck hours day hours day 10 hours Hanoi 4.5 days Table 2: Calculation of lead time from Bangkok to Hanoi and HCMC (Siam Shipping 2023) Routes Modals Costs ($ / ton / CBM) Total Shenzhen - Hai Phong Sea 163 163 80 Shenzhen - Hanoi Rail: 30 Truck: 50 243 150 Shenzhen - HCMC Rail: 50 Hai Phong - HCMC Rail + Truck Truck: 100 313 Table 3: Transportation costs from Shenzhen to Hanoi and HCMC (Shipa Freight 2021; VinaLogs 2023) Hai Phong - Hanoi Rail + Truck Routes Modals Costs ($ / ton / CBM) Bangkok - Phnom Penh Rail 400 - 417 Total Bangkok - HCMC 1448 - 1567 Bangkok - Hanoi HCMC - Hanoi Truck 508 1956 - 2075 Table 4: Transportation costs from Bangkok to HCMC and Hanoi (Siam Shipping 2023) Phnom Penh - HCMC Truck 1048 - 1150 Compare and Contrast suppliers’ shipping models Suppliers Sea Modes Selection Shenzhen (China) Rail + (Shenzhen Hai Phong) Bangkok (Thailand) Rail + Truck Truck (Hai Phong (Hai Phong - Hanoi) - HCMC) Rail Truck Truck (Bangkok - (Phnom Penh (HCMC - Phnom Penh) - HCMC) Hanoi) Mass = 1500 kgs x 20 = 30000 kgs = 30 tons Capacity Volume = [(90 cm x 58 cm x 58 cm) x 20] / 1000000 = 6.0552 CBM Adoptable for 30 tons of cargo or 6.0552 CBM Lead time Costs $ / ton / CBM Shenzhen - Hanoi Shenzhen - HCMC Bangkok - HCMC Bangkok - Hanoi 5.5 days hours 6.5 days 11 hours days hours 4.5 days The lead time of Thailand supplier shipping is more competitive than Chinese Shenzhen - Hanoi supplier Shenzhen - HCMC Bangkok - HCMC Bangkok - Hanoi 243 313 1448 - 1567 1956 - 2075 The shipping cost of Chinese supplier is more economical than Thailand supplier Table 5: Compare and Contrast possible mode selection criteria of models Regarding capacity, all intermodal from two suppliers are adaptable for the frequent demand of VBC of 30 tons of cargo or 6.0552 CBM 20 crates can be contained in a 20’ dry standard container Shipping LCL from China via sea is more economical because it can be consolidated for shipping with other suppliers at a lower price The lead time of the Shenzhen supplier, including ocean, intermodal rail, and truck transportation, is within days, which can be longer than Bangkok The Chinese supplier utilizes sea freight, which is the method with the longest transit time Double handling and congestion in Hai Phong port also increase freight lead time, leading to a jump in transit time, and potentially causing VBC to experience supply chain delays (An 2021) Shenzhen's shipping costs are more competitive than Bangkok's due to its combination of sea and rail freight, which is the most economical method for transporting over long distances Bangkok's trucking service accounts for two thirds of routes, which is more costly than rail and ocean freight Customs clearance is doubled on routes from Bangkok to Vietnam, increasing customs compliance fees and VBC costs VBC can save money from Chinese shipping option through Standard DDP by transferring responsibility for arrangements and shipping costs to the supplier, and when time is of the essence, VBC can switch to EXW for expedited shipping Overall, Chinese supplier shipping model’s times are low but prices are very competitive and Thailand supplier’s option is opposed B Challenges faced by VBC At the local level, VBC truck transportation is hindered by different local regulations in Hanoi and HCMC, regarding different weight and length restriction regulations for freight trucks and trailers, which restricted the amount of cargo carried, causing delays and rising transportation costs because carriers must change routes or split cargo to comply with local regulations (Nguyen 2019) Nationally, VBC struggles with Vietnam's complex and time consuming customs clearance processes, which take up to to days to complete (VNS 2017) Customs clearance process at Hai Phong port takes roughly 2.5 days to complete due to abundant paper and manual tasks, increasing the likelihood of cargo damage, delays, and extra costs that lower VBC's profitability (An 2021) Additionally, VBC faces Vietnam’s high logistics costs, which are 1.5 times higher than the regional average, and a congested rail network due to inadequate and degraded infrastructure (Nguyen 2019) Globally, VBC faces challenges in importing metals from China, Thailand, and Cambodia due to differences in regulatory requirements and customs clearance procedures (Khan et al 2020), causing delays and fines if not aware of the specific requirements of each country VBC may face damage in products, times, and costs at Cambodia trans-loading facilities if they purchase from Thailand, as skilled labor is employed to handle goods at low wages (Lawreniuk and Parsons 2017) C Recommendations Reducing lead time from Shenzhen to Hanoi and HCMC To solve challenges of long lead time to VBC's facilities, VBC needs to work with reputable and reliable ocean carriers and freight forwarders to optimize lead time for overseas shipments To this, they must have experience and expertise in managing overseas shipments and customs clearance in different nations Professional carriers are well qualified to prepare customs clearance documents, shipping documents, and freight permits for trucks and trailers, as well as packaging, warehousing, and intermodal transportation to optimize shipping time (Chu 2014) They are capable of dealing with Vietnam's inefficient customs clearance process and differently complicated local specific truck and trailer regulations for freight transportation in Hanoi and HCMC (Tan and Sundarakani 2021) They are adept at providing valuable guidance and assistance in navigating complex regulations and customs procedures, optimizing transit time and transportation costs (Chu 2014) For example, VBC can use services of Bach Viet Transport Company or PL Logistic Corporation to reduce ocean transit time They are the top ocean carriers in Vietnam's Northern region and provide direct shipping services, making the transportation time from Shenzhen to Hai Phong only about days, day shorter than standard shipping time (Pham and Yeo 2019) Reducing transit time and costs from Bangkok to HCMC and Hanoi VBC should engage a third party logistics (3PL) provider for trans-loading in Cambodia because it can outsource the handling and packaging of merchandise to experts in this field, resulting in a reduction in risks and costs by avoiding unskilled labor (Wang et al 2020) Using this option will allow VBC to avoid delays, damage to goods, and incurred costs when handling and packaging at Cambodia's trans-loading facilities where the abundance of unskilled workers is employed at low wages I suggest CH Robinson, which is a leading global logistics provider with a proven track record and experience in managing complex logistics operations is capable to optimize costs and times for VBC (Hamani and Simon 2020) TASK 2: LOGISTICS PLAN ‘RECOMMENDATIONS’ VBC should stick with the current supplier in Shenzhen for long-term operation, as it will save costs and maximize profits Standard DDP shipping option provided by Shenzhen is more economical for VBC to deal with Vietnam's rising logistics costs (Incoterm 2020) Shipping directly from China to Vietnam's ports is more efficient and frugal due to FTAs such as RCEP, which expedite customs clearance processes between China and Vietnam (Terada 2018), and also benefit from cheaper ocean freight rates offered by Chinese supplier VBC faces slow customs clearance and port congestion at Hai Phong port when transporting from Shenzhen With days for transit time, combined with 2.5 to days for double cargo handling and customs clearance completion, rail transport to HCMC is relatively slow, to days due to congestion so over 6.5 days of lead time potentially touches the red line of VCB's requirement (An 2021) Therefore, other advantageous alternative ports of destination should be chosen to steer clear of these issues I recommend shipping merchandise directly from Shenzhen to Cat Lai port (Southern Vietnam), which has a high speed for handling cargo and 90% of 10 customs clearance process applied electronic procedures (VNS 2017) It is equipped with five cargo container scanning devices, combined with smart gates incorporating AI practices to automate customs clearance at port (Thu and Thanh 2022) This reduces handling and customs clearance process time, with to 2.5 days for completion, less than half the time in Hai Phong Port, resulting in a decreased lead time from Shenzhen to VBC facilities Besides, selecting reputable carriers is essential to ensure a smooth shipping process Hapag Lloyd and Alpha Trans are two reputable ocean carriers for cargo shipping from Shenzhen to Cat Lai port Hapag Lloyd has a thorough understanding of the regulatory and customs clearance requirements of different nations, while Alpha Trans has proficiency in managing customs clearance procedures and shipping processes in both China and Vietnam (Hapag Lloyd 2022; Alpha Trans 2022) Carriers Hapag Lloyd Alpha Trans Lead time days 10 hours days Costs 150 - 178 92 - 100 $ / ton / CBM Safety (in handling and transporting 10 years of experience 13 years of experience freight overseas) Table 6: Suggestion for Ocean carriers’ selection from Shenzhen to Cat Lai (Hapag Lloyd 2022; Alpha Trans 2022) Freight trucking is used to transport cargo from Cat Lai port to HCMC and Hanoi warehouses to provide door to door services and avoid delays due to rail congestion in Vietnam Two reputable logistics carriers in Vietnam have seniority in logistics field, shown in Table Carriers 11 Maersk NEWTRANSPORT Routes Cat Lai - HCMC Cat Lai - Hanoi Cat Lai - HCMC Cat Lai - Hanoi Time hour days hour days hours Costs ($ / ton / CBM) 440 550 310 445 Safety 30 years of experience years of experience Table 7: Suggestion for Truck carriers from Cat Lai port to HCMC and Hanoi warehouses, (Maersk 2022; NEWTRANSPORT 2022) For example, to deliver metal from Shenzhen to HCMC and Hanoi, it recommends VBC use ocean carrier Alpha Trans, and Maersk for truck services Alpha Trans (Shenzhen - Cat Lai) Time days Costs ($ / container) 92 - 100 Total Maersk Cat Lai HCMC Cat Lai Hanoi Shenzhen HCMC Shenzhen Hanoi hour days days hour days 990 1082 - 1090 Table 8: Time and Costs of new transportation model Time Costs Shenzhen - Hai Phong - Hanoi HCMC (Ocean + Rail + Truck) Shenzhen - Hanoi: 5.5 days hours Shenzhen - HCMC: 6.5 days 11 hours Shenzhen - Cat Lai Port - HCMC - Hanoi (Ocean + Truck) Shenzhen - Hanoi: days Shenzhen - HCMC: days hour 556 1082 - 1090 Table 9: Costs and time comparison between existing and new shipping models 12 Changing routes, transportation models and incorporating reputable carriers can reduce lead time but require extra costs for Chinese shipping model However, VBC can negotiate to use Standard DDP with Chinese supplier to save costs III CONCLUSION In conclusion, two suppliers offer different shipping models with advantages and drawbacks VBC faces challenges, including different local regulations, ineffective Vietnam customs clearance, high logistic costs, congestion, and complicated requirements VBC can partner with experienced carriers and freight forwarders, changing routes or transportation modes to reduce lead time for Shenzhen shipping model 13