240927 OM - Group Presentation master .pptx

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1. Analysis of Distribution and Logistic Operation Group 9 Assignment Submission O M – Group 9 6 th October 2024 Group #9 Amanda Haithcox #2368252 Petros Galanakis  # 2368037 Nelson Omech #2367997 Nasir Khan #2368047 Wid Sindi #2368218 Niki Reminder: remove names and keep only student numbers

2. Some models are quantitative, some are qualitative, but in practice a blend of qualitative and quantitative is often the most useful approach.(1) When they are well managed, operations and processes can contribute to the strategic impact of the business in four ways: cost, revenue, investment and capabilities. (2)

3. Binzagr : A Legacy of Operational Excellence in FMCG Distribution Binzagr , founded in 1881, is a leading FMCG distributor in Saudi Arabia and the GCC, covering 25+ product categories, including personal care, beverages, and household goods. With a skilled sales force of over 1,000 employees, Binzagr ensures comprehensive nationwide product distribution. Operational excellence is achieved through efficient collaboration between sales, supply, and shipping teams, ensuring timely, cost-effective deliveries and strong customer satisfaction.

4. Binzagr’s Performance Overview, Strength, Weaknesses and Recommendation Market Leadership : One of Saudi Arabia's top distributors with strong partnerships (Unilever, P&G) Operational Efficiency : Advanced logistics infrastructure and technology-driven supply chain. Customer Satisfaction : Long-term relationships with multinational brands and high service reliability. Sustainability Focus : Active in CSR and environmentally responsible practices. Reliance on Key Partners : High dependence on a few multinational brands. E-commerce Adaptation : Needs greater focus on digital transformation and last-mile delivery. Rising Operational Costs : Logistics costs and competition increasing pressure on margins. Recommendations : Diversify client base, invest in e-commerce logistics, reduce operational costs, and upskill workforce.

5. A dd data

6. drivers (data observation /we need to investigate) The FMCG wholesaler is considering a transition from its current distribution model, which relies on an external network of third-party logistics (3PL) providers, to an in-house fleet. Damaged deliveries Delivery delays Delivery issues (missing pallets/ mix of shipments) Poor customer service Limited tracking visibility 6

7. SIPOC Analysis: A holistic approach to logistics and distribution management of Binzagr Group Suppliers Global brands (e.g., Unilever) Pharma companies Packaging Suppliers FMCG companies Equipment Suppliers Technology providers Inputs FMCG Products Human capital SOPs Drugs/Pharmaceuticals IT systems for Logistic and Supply chain Process Outputs Customers Delivery lead time Expensive Network Sustainability Quality conformance High customer satisfaction HORECA Wholesalers Retailers (Supermarket) End Consumers via retail outlet

8. Binzagr’s Performance Overview, Strength, Weaknesses and Recommendation Strengths Weaknesses Opportunities Threats

9. Operational Comparison Through the 5Vs Model Binzagr Group vs Abu Dawood Group* *A competitor of Binzagr Group, both companies are prominent players in the FMCG distribution sector in Saudi Arabia Volume A Low High Variety B A Variation in Demand B A Volatility in Demand Visibility B A Reliance on 3PL and subcontractor’s services handles approximately 1,000 monthly deliveries, limiting operational reach. Serve 120 clients, benefiting from a long-standing market presence, but logistical constraints limit full utilisation . Handles a 40% increase in demand during high seasons (Ramadan, Hajj), with predictable demand variation Moderate volatility responsive to market fluctuations and demand changes Effective marketing techniques and a strong distribution network With its internal logistics, it manages 2,500 deliveries per month, offering greater control over scheduling and operations Serve around 80 clients, focusing on a more streamlined product offering to ensure logistics efficiency. Similar demand variation, managing a 35%-40% increase efficiently due to superior logistics. Similar volatility; reduces risks by adjusting to market and economic situations Investments in marketing and strong relationships with retailers B A B

10. 5Vs Volume Variety Variation in demand Volatility in demand Visibility Abudawood Binzagr High Low Despite having a wider variety of products Binzagr is constrained to lower volumes compared to Abudawood due to Inhouse operations allows higher volumes, better visibility, at

11. 5Vs aNALYSIS 11 In-House 3PL VOLUME Easier to optimize fleet for known volume. Can handle scaling up or down based on demand Limited control over volume. 3PLs can handle high volumes but flexibility is dependent on their capacity and availability. VARIETY Greater flexibility in handling different types of deliveries (small, large, urgent, etc.), since the fleet is customizable to company needs. Constraints in handling a wide variety of delivery types. Flexibility is limited to their pre-existing fleet and contracts VARIATION Higher speed, direct control over routes and schedules. In-house operations allow for handling variations in demand, routes, and last-minute changes Dependent on 3PLs routes, slower response on urgent needs VISIBILITY Full visibility, real time tracking in house Partial visibility on tracking VOLATILITY Higher resilience to market volatility due to full control over resources, though the initial investment makes rapid adjustments more challenging. Higher flexibility in reacting to market volatility since the 3PL handles operational risks. Pricing and service availability can be affected by market conditions.

12. Analysis of Operational Performance of Binzagr and Abu Dawood Group* Criteria Binzagr Group Abu Dawood Group Quality High standards in product handling and distribution. [4] Focus on delivering high-quality products via well-known brands. [3] Strong quality control measures [4] Regular quality assessments to ensure standards. [3] Speed Efficient logistics network enabling timely deliveries. [3] Strong distribution capabilities with a focus on fast delivery times. [4] Improved warehouse management facilitates quick order processing. [3] Investments in logistics technology to enhance speed. [3] Depend-ability Consistent performance with a reputation for reliability. [4] Established reliability in meeting customer needs. [3] Long-term relationships with multinational clients demonstrate trust. [4] Focus on maintaining service continuity and brand trust. [3] Flexibility Adaptable to changing market conditions and diverse product needs. [3] Flexible operations that can quickly respond to market shifts. [4] Capable of managing fluctuations in demand effectively. [3] Ability to introduce new products and services based on market trends. [4] Cost Competitive pricing through economies of scale and efficient operations. [2] Competitive pricing strategy, leveraging supplier relationships. [3] Focus on cost management while maintaining quality. [2] Efforts to optimize operational costs without compromising service quality. [3] *A competitor of Binzagr Group, both companies are prominent players in the FMCG distribution sector in Saudi Arabia

13. Profiling operational priorities Volume Quality & product conformance Broad Geographical coverage Price competitiveness Dependable deliveries Customer support services Sustainability Lead time 4 3 3 3 4 4 4 3 2 2 4 2 3 2 2 5

14. Revise the numbers if needed. Performance Objectives Importance Performance Lead Time 1 7 Geographical Coverage 3 7 Volume 5 8 Quality & Product Conformance 1 3 Price Competitiveness 4 3 Dependability 4 6 Customer support services 2 4 Sustainability 8 5 14

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17. Problem statement Binzagr is facing increasing operational challenges with its third-party logistics providers, including damaged deliveries, delays, and shipment discrepancies, with urgent issues identified in volume management, geographical coverage, and lead times. The identified logistics problems are directly impacting operational efficiency, increasing costs due to damaged goods, lost revenue opportunities from low volume capacity and delayed shipments, and overall customer dissatisfaction. Addressing these challenges is critical for the company's long-term competitiveness and operational sustainability.

18. Transition distribution model for fmcg wholesaler Objectives Improve Operational Efficiency Reduce Costs Increase control over service Enhance Flexibilities Scalability: Scale fleet size in line with demand growth Enhance brand visibility in market: Use of branded trucks 18

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20. Distributions network today 20

21. Transportation network tomorrow 21

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23. IMPORTANCE/PERFORMANCE MATRIX 23 1 2 3 4 5 6 7 8 9 9 8 7 6 5 4 3 2 1 QUALITY SPEED FLEXIBILITY DEPENDABILITY PERFORMANCE IMPORTANCE INHOUSE FLEET 3PL PARTNER QUALITY FLEXIBILITY SPEED DEPENDABILITY

24. 5. Fleet Distribution: To efficiently handle this split, the fleet could be distributed as follows: Urban Fleet : Small to medium-sized trucks or vans for frequent city deliveries (75% of fleet). Suburban Fleet : Medium trucks with capacity for suburban routes (20% of fleet). Rural Fleet : Larger trucks for long-haul routes, covering rural areas (5% of fleet). Summary of the Optimal Split: Riyadh Urban Core : 50-60% of deliveries (frequent, short-distance). Suburban/Peripheral Areas : 25-30% (moderate frequency). Rural/Remote Areas : 10-15% (low frequency, longer distances). 24

25. Cost efficiency Current Costs with 3PL : Cost per delivery, total logistics spend, service fees, and fuel surcharges. Projected In-House Costs : Fleet purchase or leasing costs, fuel, maintenance, driver wages, insurance, vehicle depreciation, and technology investment (e.g., GPS, telematics). Break-even Point : When the investment in an in-house fleet pays off compared to continuing with 3PL. Average cost/pallet in Saudi is 55$/pallet with external partner and 40$ as inhouse cost 25

26. Delivery split volume Daily volume is 1000pal to 150 different delivery points 3 different delivery zones Riyadh central zone , Jeddah, and Dammam Riyadh Urban Core : 75% of total volume . This includes central Riyadh and high-density commercial zones where most demand will be concentrated. Frequent, daily deliveries using a dedicated urban fleet. 30 delivery points – 750pl Suburban and Peripheral Areas (within 100-150 km radius) : 21% of total volume . Deliveries made 2-3 times per week to suburbs and secondary cities. These deliveries can be made using a mid-sized fleet capable of handling larger distances efficiently. 100 delivery points - 210pl Rural and Remote Areas : 4% of total volume . This would cover far-flung rural areas and industrial zones, requiring less frequent trips, likely once or twice a week. Larger trucks with longer routes but fewer deliveries. 20 delivery points – 40pl 26

27. Cost Analysis: In-House Fleet vs. 3PL Partner 27

28. Utilization efficiency Fleet Utilization : Optimize route planning to ensure high fleet utilization (measured by loads per trip, fuel efficiency). Delivery Lead Times : Potential reductions in delivery time by eliminating third-party scheduling conflicts. Downtime Reduction : Ability to control and schedule maintenance, reducing delivery delays due to external logistics network issues. 28

29. Service Quality & Customer Experience: Service Level Agreement (SLA) Adherence : Measure compliance with delivery windows, on-time delivery rates, and fewer missed or delayed deliveries. Customer Satisfaction Scores : Improvements in consistency and reliability to increase customer satisfaction. Flexibility in Customer Requests : Capacity to handle last-minute orders, returns, or changes. 29

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31. Performance Matrix

32. Service Process Model

33. Process Layout Functional Layout Cell layout Mixed layout ????????

34. Process Design and Configuration

35. Process Mapping