Logistics for Coffee

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Company Background
• Since the early 1900's, when Luigi Lavazza first invented the concept of the blend, the art of mixing coffee of different origins to obtain a harmonious and tasty product. Today Lavazza is the leader when it comes to quality and is the symbol of Italian espresso and Italian identity worldwide. • Expertise in selecting the best qualities of coffee directly from the countries of origin. Every year, Lavazza purchases 2.1 million bags of green coffee from 25 countries around the world. The selection and choice of coffee as a raw materials are decisive factors in the quality of Lavazza blends. This careful, painstaking process starts with an examination of the plants and their fruits. Lavazza’s attention to detail when buying raw material ensures the same high quality is maintained throughout the year. From Africa the Central and South America and on to Asia, there are different types of coffee that vary in terms of body, sweetness, fragrance and acidity – elements that, in objective terms, denote high-quality coffee. Each year, the cuppers from the Quality Laboratory, together with their colleagues from the Lavazza Coffee Buying Department, go on site to examine and taste the various types of newly produced coffee. This helps standardise the quality and helps in the selection of coffees that best fit Lavazza’s needs. LAVAZZA have two difference factories to produce the coffee beans & coffee capsules items respectively with warehouse storage and one more warehouse to keep POSM & Coffee Machines in difference location.

Problem Statement
Highest internal deliver cost creates due to the clients order pattern changed. Because 90% clients’ orders combined containers for all range of products. The IT system cannot to support and powerful enough to planning sales forecasting, manage the raw materials (BOM) and inventory control, then also cause the logistics department disordered shipment schedules (Inbound & Outbound) and due to the raw materials shipment delay create the delay production and out of stock problem also. They commit the clients to release the goods within 2 weeks from factory’s warehouse and normally need 1 more week to arrange the internal delivery + 1 more week for logistics to planning the loading schedules & customs clearance. So they need 4 weeks to complete the order actually. It causes serious customer’s complaints around the world and affect Company’s image. Current Logistics Flow

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Main duties for Daily Logistics Operation:-
|No. of Inbound Shipment |30-50 TEU | |No. of Outbound Shipment |60-80 TEU | |No. of Internal Delivery |80 Truck | |Customer orders |300-400 order | |Customers enquires |At least 500 call | |3 Storage Warehouse |5000 CBM | |SKU (including spare parts) |10,000 SKU |

Cause-and-effect diagram [pic]

Top drivers of Customer Dissatisfaction
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| | | | | | | | | |10% |20% |30% |40% |50% |60% |70% |80% |90% | | Improve Supply Chain & Production Process
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