The Hog Problem Case Study Integrated Logistics free essay sample

The hog slaughtering plant located in Brendon, Manitoba has the capacity to slaughter 2. 5 million hogs per year, around 50,000 per week and 10,000 per day. Hogs arrive at the slaughter plant from all over Manitoba and certain parts of Saskatchewan via truck. Every farm is located within a different distance from the slaughter facility and delivery lead times vary from as low as half an hour to as high as three and a half hours. Farms vary in size, which impacts the lot sizes for each respective farm. This variation in size subsequently affects the loading/unloading time span, which vary from one and half hour to four and half hours. The number of farms does not necessary pose a logistics problem for the plant’s Logistics Manager. Through careful analysis, the main issues for the slaughtering plant have been identified as fleet routing and scheduling. Due to a variation of lead times over the year, the plant struggles with the task of determining optimum fleet size and composition. We will write a custom essay sample on The Hog Problem Case Study: Integrated Logistics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The problem basically consists of finding the optimum set of routes that represent the lowest possible total cost and/or total travel time. The plant is dealing with the repositioning of trucks to serve its supply demand and determining a number of transportation units that optimally balance supply requirements against the cost of maintaining the transportation units. In order to increase truck utilization and achieve better performance, the plant has to adequately and efficiently ensure the scheduling of a steady supply of hogs. My decision is to recommend that the slaughter plant outsource its logistics to a qualified third party logistics supplier. Table of Contents Executive Summary2 PART 1 ISSUE IDENTIFICATION4 Time Constraints4 Truck Utilization4 Dependency on Farmers Delivery5 Lead Time Fluctuation5 PART 2- ENVIRONMENTAL AND ROOT CAUSE ANALYSIS5 PART 3 ALTERNATIVES AND OPTIONS7 Alternative 1 – Utilize Owned Fleet7 Alternative 2 – Utilize Third Party Logistics Provider8 Alternative 3 –Integrated Logistics/Operational Solution8 PART 4 RECOMMENDATION AND IMPLEMENTATION9 Recommendation9 Contingency Plan10 Implementation10 PART 5 MONITOR AND CONTROL11 PART 6 CONCLUSION MANAGEMENT PLAN11 ? PART 1 ISSUE IDENTIFICATION Through careful analysis, the main issues for the slaughtering plant have been identified as fleet routing and scheduling. Due to a variation of lead times over the year, the plant struggles with the task of determining optimum fleet size and composition. The problem basically consists of finding the optimum set of routes that represent the lowest possible total cost and/or total travel time. The plant is dealing with the repositioning of trucks to serve its supply demand and determining a number of transportation units that optimally balance supply requirements against the cost of maintaining the transportation units. In order to increase truck utilization and achieve better performance, the plant has to adequately and efficiently ensure the scheduling of a steady supply of hogs. These strategic logistical problems are symptoms of the following underlining complex issues faced by the plant. Time Constraints Nature: StrategicTiming: Short Term and Long Time The slaughtering operation at the plant runs from 7am to 5pm. Live hogs are received between 7am and midnight. There are also restrictions on pick-up times. In addition, loading operations at the suppliers’ premises run from 7a. m. to 9 p. m. This has implications for the number of pens, and the way inventory is managed on a daily basis. Truck Utilization Nature: StrategicTiming: Short Term and Long Time One load of hogs has to be transported from its pick-up location (farms) to its delivery location (plant). From the plant a truck is sent empty to its next farm destination. A truck visits only one farm on any given trip. When a truck arrives at a location early, or if the farmer is too busy to load the hogs, then the truck has to wait until the loader becomes available. These waiting times severely delay trucks and thus increase the cost of transportation and extend the lead times. Moreover, the trucks inefficient utilization have negative affects on the fixed cost of owned vehicles. ? Dependency on Farmers Delivery Nature: TacticalTiming: Short Term Approximately 25% of the shipments to the plant arrive in farmer-owned trucks. These shipments vary in size from 50 to 200 hogs. The farmer’s scheduled delivery affects the overall hogs supply, and the plant is heavily dependent on the farmers schedule accuracy. Lead Time Fluctuation Nature: TacticalTiming: Short Term Lead time varies significantly, which affects the inventory cycle. The plant has to set a safety stock that will protect the production against stock outs, vehicle breakdowns, weather related delays and the shortage of supply from farmers and hogs barns. PART 2- ENVIRONMENTAL AND ROOT CAUSE ANALYSIS The hog slaughtering plant located in Brendon, Manitoba has the capacity to slaughter 2. 5 million hogs per year, around 50,000 per week and 10,000 per day. Hogs arrive at the slaughter plant from all over Manitoba and certain parts of Saskatchewan by trucks. Every farm is located within a different distance from the slaughter facility and delivery lead times vary from as low as half an hour to as high as three and a half hours. Farms vary in size, which impacts the lot sizes for each respective farm. This variation in size subsequently affects the loading/unloading time span, which vary from one and half hour to four and half hours. The following tables identifies the variances between lot sizes, distance from different farms and respective transit time from each farm. AreaAnnual Hog Supply from This Ares (100’s)Average DistanceAverage One-Way Transit Time From Area to Plant A – Brandon local10025 km30 min B – Brandon regional 10075 km1. 0 hour C – Portage la Prairie 100150 km2. 0 hours D – Winnipeg 450200 km2. 5 hours E – Morris 450250 km3. 0 hours F – Steinbach 450300 km3. 5 hours G – Teulon 150250 km3. 0 hours H – Arborg 100300 km3. 5 hours I – Dauphin 100150 km2. 0 hours J – Roblin 100200 km2. 5 hours K – Saskatchewan SE100150 km2. 0 hours L – Saskatchewan SW100250 km3. 0 hours M – Saskatchewan NE100250 km3. 0 hours N – Saskatchewan NW100300 km3. 5 hours Total2500 The number of farms does not necessary pose a logistics problem for the plant’s Logistics Manager. The main issues are the location and size of the various operations, which requires the Logistics Manager to know exactly where and when to arrange pickup for hog shipments. Hogs are processed for slaughter either in finishing barns or in farrow-to-finish operations and each barn holds approximately 2,000 hogs, which require on average 16 weeks to reach marketable weight. Three batches of 2,000 hogs are processes annually at each barn, which represents approximately 6,000 hogs a year. Nearly 80% of the hogs on the market come from finishing operations compared to only 20% from smaller operations. Manitoba Pork Marketing is a producer-controlled marketing agency, which maintains assembly yards for small farms that are not able to produce enough hogs to fill a full truckload. In addition, Manitoba Pork Marketing collects hogs from these various small farms to enable the fulfilling of complete truckload shipments to be delivered to the slaughter plant in Manitoba. The slaughter plant enters into agreements with either the farrow-to-finish farmers or Manitoba Pork Marketing. Every shipment is received from a single point of origin, which may consist of a single barn in a finishing operation, a single farrow-to-finish farm or an assemble yard. Roughly 25% of the shipments arrive in farmer owned trucks, which vary in lot size between 50 to 200 hogs per shipment, and 75% shipments arrive from other arrangements made by the plant. The data within the following table represents the average number of hogs and size of shipments that arrive in farmer owned trucks versus shipments that are arranged by the Logistics Manager.