Logistic study for an argentinean company to feed parts from Brasil.

1. PARANA METAL
LOGISTIC BUSINESS CASE
STUDY PROPOSAL
FOR FORD DO BRASIL
MARCH – 2010
Rev.0
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2. CURRENT PROCESS AND LOGISTIC FROM
ARGENTINA TO BRASIL
BACKGROUND
 PARANA METAL SELLS ENGINE BLOCKS TO FORD BRASILAND BRAKE
DRUMS TO AUTOMETAL BRASIL;
 FORD BRASILAND AUTOMETAL BRASIL SEND REQUIREMENTS
SCHEDULES TO PARANA METAL;
 TRANSPORT COMPANIES ARE CONTRACTED BY FORD BRASIL TO PICK
UP PRODUCTS , IN ARGENTINA, AND DELIVER THEM TO FORD BRASILAND
AUTOMETAL BRASILAT THEIR PREMISES IN TAUBATE, STATE OF SÃO PAULO,
BRASIL;
 CUSTOMS AND IMPORT PROCESSES IN BRASIL, FOR BOTH CUSTOMERS,
ARE HANDLED BY FORD BRASIL;
 ONCE PRODUCTS ARE RECEIVED AT THE BRASILIAN PREMISES, THEY
ARE PROPERLY STORE AT THEIR OWN INTERNAL WAREHOUSES, TO LATER
ON FEED THEIR PRODUCTION LINES;
 CURRENT COST OF THIS OPERATION IS US$....... MILLIONS/MONTH.
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3. CURRENT PROCESS AND LOGISTIC FROM
ARGENTINA TO BRASIL
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4. ISSUES OR CONTRAINTS - 01
 BOTH CUSTOMERS ARE CURRENTLY USING THEIR OWN INTERNAL
WAREHOUSE SPACE TO STORE INCOMING PRODUCTS;
 CONSIDERING 5 DAYS TRANSIT LEAD TIME FROM ARGENTINA TO BRASIL,
PLUS ONE DAY OF SAFETY STOCK, OUR CUSTOMERS MUST BE USING
WAREHOUSE SPACE OF AT LEAST 6 DAYS PRODUCTION;
 IF TOTAL PLANT INVENTORY, CONSIDERING ALL PARAMETERS OF SUPPLY
CHAIN AND LEAD TIME, IS OF ONE MONTH, THEN OUR SPACE
REQUIREMENTS WOULD BE OF A WAREHOUSE OF , AT LEAST, 10.000 sq.mts.
WITH USEFUL HEIGHT OF 5 mts. ( FLOOR CAPACITY MUST BE OF 10 tons per
sq.mt.)
 COST OF UTILIZED WAREHOUSE SPACE, AT US$ 500 per sq.mt., MUST BE
AROUND US$ 5 millions, WHICH, ON A YEARLY BASIS SHOULD RESULT IN A
FINANCIAL LOSS OF US$ 9.8 millions;
 RETURNABLE CONTAINERS/RACKS, IF COLLAPSIBLE, SHOULD HAVE A
COST OF, AT LEAST, 10% OF NORMAL FREIGHT FROM ARGENTINA TO
BRASIL;
CURRENT PROCESS AND LOGISTIC FROM
ARGENTINA TO BRASIL
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5.  INVENTORY COST, CONSIDERING ONE MONTH AT THE PLANTS, SHOULD BE
HIGH, RESULTING IN FINANCIAL LOSSES;
 IN-TRANSIT INVENTORY SHOULD ALSO BE CONSIDERED;
 IF THERE ARE 20 TRUCKS SHIPMENTS FROM ARGENTINA TO BRASIL, ON A
WEEKLY BASIS, THE CURRENT TRANSPORT COMPANY MUST BE USING, AT
LEAST, A FLEET OF 40 TRUCKS;
 THE ABOVE FLEET CURRENTLY BEING USED HAS A COST THAT IS PROBABLY
BEING CHARGED TO THE CUSTOMER;
 WE UNDERSTAND THAT THE CUSTOMER IS CURRENTLY USING A 2PL ? OR 3PL?
OR 4PL? PROVIDER (PENSKE) PLEASE CONFIRM THIS!!!!!!!!!
CURRENT PROCESS AND LOGISTIC FROM
ARGENTINA TO BRASIL
ISSUES OR CONTRAINTS - 02
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6. THIRD PARTY LOGISTIC PROVIDER ( 3PL)
CONCEPTS AND TYPES OF 3PL – (Part 1)
 Third party logistic provider (3PL) is a firm typically specialize in integrated
operations, warehousing and transportation services that can be scaled and
customized to customer’s needs based on market conditions and the demands and
delivery service requirement for their products and materials.
 Standard 3PL provider.
 This is the most basic form of a 3PL provider. They would perform activities
such as, pick and pack; warehousing; distribution.
 Service developer.
 This type of 3PL provider will offer their customers advanced value-added
services such as, tracking and tracing; cross-docking; specific packaging, or
providing a unique security system. A solid IT foundation and a focus on
economies of scale and scope will enable this type of 3PL provider to perform
these type of tasks.
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7. CONCEPTS AND TYPES OF 3PL – (Part 2)
 The customer adapter.
 This type of 3PL provider comes in at the request of the customer
and essentially takes over complete control of the company ‘s logistic
activities. The 3PL provider improves the logistic dramatically, but
do not develop a new service.
 The customer developer.
 This is the highest level that a 3PL provider can attain with respect
to its processes and activities. This occur when the 3PL provider
integrates itself with the customer and takes over their entire logistic
function. All of the previous types of 3PL and their functions will be
included in this one, as well as Customs (Import/Export) processes
and documentation required. These providers will have few
customers, but will perform extensive and detailed tasks for them.
THIRD PARTY LOGISTIC PROVIDER ( 3PL)
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8. PRELIMINARY ANALYSIS
 IF PENSKE IS THE CURRENT 3PL HIRED BY FORD, THEY ARE ONE OF
THE FEW LOGISTIC COMPANY WITH A STRONG INFRASTRUCTURE , IN
BRASIL, TO DEVELOPA CROSS-DOCK OPERATIONS WITH A LOCAL
WAREHOUSE ;
 IF THE SOLUTION THAT WE COULD OFFER IS TO CHANGE THE
RETURNABLE EQUIPMENTS BY WOODEN BOXES, THIS DOES NOT IMPLY
TO ELIMINATE THEM, AS THEY WILL CONTINUE TO BE USED IN THE
CROSS-DOCK OPERATIONS BETWEEN THE 3PL WAREHOUSE AND THE
FACTORIES;
 COST REDUCTION EVALUATION SHOULDE BE MADE FOR THE
PACKAGING SUBSTITUTION, THAT IS TO SAY WHAT IS THE CURRENT
COST WITH EQUIPMENT TRAVELLING BACK AND FORTH, COMPARED
WITH THE COST OF THE NEW WOODEN BOXES , THEIR HANDLING,
THEIR UNBOXING AND THEIR DISPOSAL ;
 TOTAL COST OF A 3PL, CONSIDERING OPTION “ THE CUSTOMER
DEVELOPER”, WILL BE HUGE COMPARED WITH CURRENT CUSTOMER
COST. 8
CURRENT PROCESS AND LOGISTIC FROM
ARGENTINA TO BRASIL