DAP Delivery Project Assignment PDF
Added on 2021-04-17
7 Pages1599 Words37 Views
DAP Delivery ProjectNameDate
IntroductionLogistics is a challenging field where key considerations have to be made in order to achieve the best results and meet objectives, especially in aid related logistics, usually in developing nations where transport and communications systems, and general systems are not efficient compared to thedeveloped World (Ivanov, Tsipoulanidis and Schönberger, 2016). In this paper, a case of DAP fertilizer procurement and delivery in Kenya and Rwanda regions for the 2018 seasons is being analyzed. The goal is to deliver 2100 metric tons to Rwanda by January 7 2018 and 3500 metric tons to Kenya by December 15 2017. All fertilizers are packaged in 50 kg bags. The objective is to make a price comparison between prospective suppliers as well as their payment terms and make a clear recommendation on the best supplier to use. Another objective is to create a suitable schedule (weekly) of activities for the project in the context of the procurement and delivery of the fertilizer. The other objective is to develop a table of Key Performance Indicators to use for evaluating the performance of the team in handling the project. Price ComparisonOne of the goals of logistics management is to ensure value for money, where effort is made to get the best prices at the most suitable terms of payment (Christopher, 2016). This requires soliciting price quotations from different suppliers and then comparing the prices per unit, taking into consideration other factors such as availability, transportation costs, and warehousing costs as well as factors such as taxes (Song and Panayides, 2012). A detailed valuation of the provided quotationsare shown in the table below;SupplierPort (Ex)PackagingUnit Price in $UpfrontBalanceCostPeriod1: SaudiMsa50 kg bags65025%75%5%12025 kg bags66525%75%5%120Dar50 kg bags66025%75%5%12025 kg bags67525%75%5%1202: SaudiMsa50 kg bags64025%75%3%12025 kg bags65825%75%3%120Dar50 kg bags66525%75%3%12025 kg bags68325%75%3%1203: SaudiMsa50 kg bags64725%75%3%3025 kg bags66225%75%3%30Dar50 kg bags65725%75%3%3025 kg bags67225%75%3%30
4: Saudi, China, RussMsa50 kg bags67025%75%7%90Dar50 kg bags69025%75%7%90Reviewing the information and evaluating the possible costs from the four different suppliers and the terms offered, the most suitable supplier that would give the lowest costs compared to the rest isthe Supplier number 1 (shaded green above) from Saudi Arabia. This supplier will deliver to Mombasa at $ 18200 (upfront payment) and $ 54605.6 as the balance payment. The balance payment is given with 5% as cost of credit payable over 120 days. While it would make sense to useSupplier Number 3 because procuring from them gives the lowest overall costs; the upfront payment for the consignment would be $ 17920 ex-Mombasa while the 75% payments would total $ 53763.36 x-Mombasa, they have bad history. They have not responded to RFQs in the past and look at the organization as a competitor. Supplier one, despite being new, has good references and would be suitable for a long term partnership as partnerships are essential in logistics. Further, the Mombasa port would be the most suitable because there is a direct route to the warehouses in Western Kenya (Bungoma) which is 898 km and to Kigali City, Rwanda, which 1498 km. From the Dar es Salaam port, the distance to Rwanda is 1431 km while to Bungoma, the distance is 1233 km.The best solution is to have the Kenyan shipment offloaded at the Mombasa port where the total costs including transportation would be $ 335305.60. The Rwanda shipment should b offloaded at Dar es Salaam port and transported by road to Kigali as the total cost would be $ 388925.6 . if the same consignment was taken through Mombasa via Kenya to Kigali, it would cost an additional $ 30380. Further, while delivery to Dar es Salaam would cost a little more, the total cost is just $ 1120. This is far less than the extra $ 30380 that would be incurred using the port of Mombasa. Further, the most economic packaging for the fertilizer is in 50 kg bags because they have the lowest associated costs and would reduce the transportation charges to the respective warehouses, given that the 25 kg bag packages would require additional space and hence lead to increased costs for transportation. Further, the supplier is giving a long period for the payments (of 120 days) and a lower extra costs for the credit period of just 3% extra. The goal of procurement and getting quotations from various different suppliers is to ensure the best quality product, delivered on time, and at the most competitive cost (in this case the lowest cost), while having the best payment terms (in this case a longer credit period). So the the chosen supplier is Supplier Number 2, from Saudi Arabia Project Schedule
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