Il Case Study
Logistics planning
Regal Auto Ltd being an export oriented company has to focus mainly on building an optimum logistics network. Logistics planning is crucial because the logistics cost is main component of the product cost:
The following considerations are to be made for the effective logistics planning: 1. Product form 2. Selection of mode of transport 3. Logistics service provider selection 4. Selection of intermediaries 5. Route planning 6. Inco terms considerations 7. Custom duties and Tax considerations
Product form:
It is very important for the logistics planner to decide on the form of the product in which the product is being shipped. Shipping the car in the completely knocked down (CKD) form would provide an advantage for the company in terms of reduced freight cost and reduced taxes. The freight cost will be reduced as the CKD form would occupy less volume when compared to that of fully assembled car. Certain countries would offer tax relief on the imports in the form of CKD. Ultimately the customer will be benefited. Hence Regal Auto ltd ships the product in CKD form to the dealer in the UK. The Product will be assembled at the dealer’s end before selling the product to the consumer.
Selection of mode of transport:
Value to weight ratio of automotive products will be lower than that of electronic products. Usually electronic products are air lifted because of their higher value to weight ratio. Hence, Ocean mode is the most appropriate mode of transport for this type of products. Hence, Regal Auto Ltd uses the ocean mode for transporting the product in CKD form.
Logistics service provider selection:
The list of logistics service providers who provide maritime services are to be identified who can provide reliable transportation services. Some of the leading shipping lines which are available in India are:
1. Maersk 2. APL Logistics 3. CEVA Logistics 4. Mercator lines 5. Inter ocean group 6. Trans Asia line 7.
Regal Auto Ltd being an export oriented company has to focus mainly on building an optimum logistics network. Logistics planning is crucial because the logistics cost is main component of the product cost:
The following considerations are to be made for the effective logistics planning: 1. Product form 2. Selection of mode of transport 3. Logistics service provider selection 4. Selection of intermediaries 5. Route planning 6. Inco terms considerations 7. Custom duties and Tax considerations
Product form:
It is very important for the logistics planner to decide on the form of the product in which the product is being shipped. Shipping the car in the completely knocked down (CKD) form would provide an advantage for the company in terms of reduced freight cost and reduced taxes. The freight cost will be reduced as the CKD form would occupy less volume when compared to that of fully assembled car. Certain countries would offer tax relief on the imports in the form of CKD. Ultimately the customer will be benefited. Hence Regal Auto ltd ships the product in CKD form to the dealer in the UK. The Product will be assembled at the dealer’s end before selling the product to the consumer.
Selection of mode of transport:
Value to weight ratio of automotive products will be lower than that of electronic products. Usually electronic products are air lifted because of their higher value to weight ratio. Hence, Ocean mode is the most appropriate mode of transport for this type of products. Hence, Regal Auto Ltd uses the ocean mode for transporting the product in CKD form.
Logistics service provider selection:
The list of logistics service providers who provide maritime services are to be identified who can provide reliable transportation services. Some of the leading shipping lines which are available in India are:
1. Maersk 2. APL Logistics 3. CEVA Logistics 4. Mercator lines 5. Inter ocean group 6. Trans Asia line 7.