Cargo India is a mid-sized Indian Logistics and Supply Chain company with its pa
ID: 396317 • Letter: C
Question
Cargo India is a mid-sized Indian Logistics and Supply Chain company with its pan India presence in over 320 destinations, 1.2 million square feet of warehousing space, 1500 trucks and more than 500 routes linked to 24 super-hubs and hubs. The companies in Cargo business follow two basic models for transportation of goods to various destinations across the country. The first model in which the truck will move only between two predetermined locations, is known as Transportation model using Hub and Spoke. In this model trucks can move to and fro only between two hubs. It will not carry forward again from that particular hub to another hub. Based on the schedule, specified number of trucks start from source hub to various destination hubs irrespective of the truck load, i.e. a truck will be sent to the destination hub as per schedule even if it is empty (though occasions of sending an empty or even half filled trucks are very rare, considering the huge demand). Each hub has its specified number of trucks contracted from the local providers. Consider movement between Indore and Mumbai. It takes one day to deliver goods to Mumbai from Indore. Daily 2 trucks start from Indore at 10 pm towards Mumbai and from Mumbai towards Indore. Trucks sent from Indore will not go to any other location from Mumbai, but will return in the next day’s delivery. This model has advantages of faster delivery and higher quality of service but it is slightly costly and utilization of containers is also low. Another type of model is the Transshipment model using Hub and Spoke. In this case no preplanning is done and scheduling is done according to requirements. There is no such restriction on the movement of trucks and a particular container loads and unloads at various hubs in the route. There would be no definite time of returning of a particular container to its point of origin. Here trucks have to be dynamically contracted as per need. The advantage of this model is low cost and hence less charge to customer but quality of service and speed of delivery suffer. The chances of damages and pilferages are very high due to frequent movement and more hands getting involved. Cargo India management was looking for answers to following question, 1. Should Cargo India adopt Transshipment model? Why / Why not
Explanation / Answer
Given: The logistics of Cargo India includes 320 destinations,1.2 million square feet of warehousing space, 1500trucks, 500 routes and 24 super hubs and hubs.
Transshipment model is a transportation problem in which each origin and destination can act as an intermediate point through which goods can be temporarily recieved and then transshipped to other points or to the final destination. It usually is a multi phase transportation problem in which the flow of goods and services between the source and the origin is interrupt in at least one point. The product is not seen directly from the supplier to the point of demand rather it is first transported to a transshipment point, and from there to the point of demand or destination.
Now looking at the amount of cost involved in returning an empty container back to its destination in the existing model at Cargo India, the company should start adopting the transshipment model and build it in such a manner that the speed and quality of delivery to the customer are enhanced. It is a better alternative in the long run.Therefore Cargo India should adopt transshipment model for its logistics.