Evaluation of Logistics Service Level in Multiple Modes of Transportation

Abstract

The project has been initiated in the aftersales department of an automotive company. Since the company has had recently record years in gaining market share and further efforts are being done to gain a competitive edge over the competitive brand by selling more aftersales parts. Which in turn makes it challenging for logistics to manage the in-creasing inflow and outflow of parts. For the case company, logistics processes form the critical loop involving both the company performance in logistics and customer experience. The company realizes that logistics costs can vastly impact overall business performance. Hence, an opportunity is presented at the case company to expedite regular stock-orders by utilizing available space inside emergency-order trucks instead of using shipping containers. The idea behind this proposed modification is that it will reduce lead time and increase logistics service quality. But the actual problem in this situation is the lack of knowledge to understand company-specific logistics service quality and then the evaluation framework which can help the management to decide whether to proceed or oppose the business idea.

Literature was reviewed to define the objectives of service levels and how to measure service quality. Based on the previous literature, a theoretical framework was developed which served as a guiding principle for the latter empirical analysis. The data collection was conducted through semi-structured interviews and information was acquired from a logistics management software. The results from both the quantitative and qualitative analysis uncovered that the case company has substantial profit margins to proceed with the proposed logistics activity leaving enough room for overhead costs. The logistics process does involve multiple challenges, but after performing sensitivity analysis, it was found that the process is flexible enough to handle challenges. Thus, the study provides a positive indication to proceed with this opportunity for a pilot test-run project.