Case 5
Zapak Ltd
Service Supply Chain Delivery Optimization
Zapak Ltd is the global leader in verification, testing, inspection and certification services. It has excellent geographical network with an employee strength of 42, 000 spread over 845 offices, 338 laboratories located in 102 countries. Zapak is basically a service provider.
In 2007, Zapak was involved in the replacement of 700 laptops and desktops in their offices spread over different locations in India. The new machines were to be procured from Lenovo, Singapore, as per the global contract. The first consignment of 200 machines was dispatched to Chennai in July 2007 and the same was to be shipped to 34 offices throughout the country. Figure 1 illustrates the material flow in distribution network.
The courier dispatched the machines through rail instead of road as agreed. Due to transportation by rail most of the boxes were damaged and they arrived at the offices with a foul smell of fish. Fortunately, none of the machines were damaged.
But it is obvious that the consignment was subject to risk during travel. Hence, corrective action was a must. Time taken by train travel was also more, which resulted in delay in material supply and availability of machines. The following corrective steps were taken to avoid the above.
The courier company was hauled up and rates were renegotiated as per rail transportation, which was almost 50 per cent less than road transportation. Two other logistics service providers were approved, and all consignments were to be handled by these three service providers.
As the consignments were to arrive every quarter for the next 2 years, Zapak entered into a long-term contract with all the three parties on special terms. The schedule for dispatch for each one was also worked out. With the new arrangement the flow illustrated in Figure 2.
The logistics companies picked up the consignments directly from the Chennai port and delivered to various sites by road and saved 6 days in total. This resulted in damage-free delivery and saving of time by 6 days.
REVIEW QUESTIONS
- Explain the term ‘optimization’ in connection with supply chain.
- How did Zapak achieve optimization in delivery of laptops?
- What are the benefits Zapak can derive in delivery optimization?