Logistics Optimization: A Case Study of Alcan Fine Coatings in Benelux

This case study examines Alcan Fine Coating Company's current logistics strategy, which involves high conveyance costs for fine-grained alumina powder containers. The company is considering three options to reduce conveyance and storage costs. The analysis assesses the expenses and conveyance duration of each option, ultimately recommending the utilization of the organization's own distribution warehouse and the Pro Transport network to reduce delivery times and gain a competitive advantage. The report compares available options and suggests improvements, considering factors such as transportation costs, warehousing expenses, and delivery time. The company's need to address increasing operational costs while maintaining customer satisfaction due to high bargaining power is also highlighted.

Alcan Fine Coating Company 1
Alcan Fine Coating Company
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I. Executive summary
Actually the present methodology implemented by the Alcan Fine Coating Company
incorporates higher expense related with conveyance of compartments of fine grained alumina
powder. The organization comprises of three choices that can be chosen for decreasing the
conveyance and capacity costs. This research proposal breaks down the expenses and
conveyance duration provided by every option and consequently talks about the practicality of
every choice. The organization needs to choose the most achievable alternative that diminishes a
prospective expense and the conveyance time. Thus as suggested, organization consider
diminishing its delivery duration in order to gain an upper hand over its immediate rivals. Lastly
the report will outline a correlation of every single accessible option and proposal using
organization's own distribution warehouse for harboring various inventories and the utilizing of
Pro Transport networks used in making the conveyances (Purenovic, J., Mitic, V., Paunovic, V.
and Purenovic, M. , 2011).

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Table of Contents
I. Executive summary.......................................................................................................1
II. Background................................................................................................................1
III. Situation Analysis......................................................................................................4
IV. Alternative Proposals.................................................................................................6
V. Euro direct.................................................................................................................7
VI. Railway shipment workstations...............................................................................10
VII. Conclusion and Recommendations......................................................................12

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II. Background
Alcan Aluminum Limited is the second-biggest aluminum organization on the planet.
Headquartered in Montreal, Canada, Alcan has activities in about 30 nations. Alcan produces
aluminum, with around 90 percent of its incomes coming from the sale of aluminum in ingot and
manufactured shape. The organization is the best maker of level moved aluminum, the dominant
part of which is utilized to make drink jars. Alcan is associated with bauxite mining, alumina
refining, and aluminum purifying, and producing. Among this items made by Alcan are wires,
car parts, and rigid synthetic compounds. Alcan serves clients in a wide range of businesses,
including transportation, development, electrical, and bundling (Acimovic, Z., Terzic, A.,
Andric, L., Stojanovic, V. and Pavlovic, M., 2014). Alcan likewise produces hydroelectric power
and is one of the greatest worldwide recyclers of aluminum.
The utilization rate of aluminum has risen rapidly from 2002 and attained about 1,080 KT
by 2006. Towards 1990 to 2002, the utilization remained relatively dormant, with around 500-
600 KT. The key buyer ventures in Canada are control, transportation, customer durability,
bundling and development. The greatest consumption rate is power (about 44% of aggregate)
trailed by framework (17%) and transportation. Notwithstanding, universally, the example of
utilization is agreeable to transportation, fundamentally because of expansive scale aluminum
utilization by the flying space. The company Alumina business process constitutes of various
researches of fabricated products, manufacturing and recycling, aluminum smelting, bauxite
mining, and alumina refining. Moreover, the packaging processes of the company’s products
include the use of plastic bottles, cartridges and other products. With its prominence in the

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logistic industry the company uses the delivery duty mechanism in conveying there prospective
goods their potential customer’s jurisdiction.
III. Situation Analysis
The Alcan fine coating company situational analysis entails the conveyance of delivering to its
potential clients obliged on daily duty payments. The company caters for all costs identified
through the transportation of merchandise and consequently is in charge of the products until the
point that they are exchanged and purchased by the buyer. On the other hand, the transportation
obligations paid premise incorporates the paying for the delivery systems, obligations with
different costs which are acquired in transportation the products to client area. Alcan Company
takes 2 days to convey the request to the client area (Rutanen, 2012). Therefore the fundamental
contenders of the organization additionally considers deals on conveyance obligation paid
premise and take 2 days to convey the requests. Along these lines, the organization isn't at a
focused disadvantage; in any case, it doesn't have an aggressive edge as far as shorter
conveyance time or lesser lead times.
Clients of Alcan Fine Coatings Company comprise of elevated bartering force as being
expansive clients of the organization. In the event that a large portion of the offers of an
organization go to a couple of clients, at that point the clients have a high haggling force and the
organization can't bear to lose such clients. Relatively 95% of the offers of the organization go to
ten huge clients. Moreover, the organization has focused on a solitary market of Benelux and
substantial extents of its deals are made to this territory. Deals requests are not steady and
fluctuate fundamentally throughout the year. Amid those years, the business request fluctuates

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from 5 to 17 holders of alumina powder every day (Bazhin, V., Savchenkov, S. and Kosov, Y.,
2016). The organization conveys the transportation to client areas in a roundabout way. Thus
compartments are transported from Daggett Straight to Benelux showcase by means of
Zeeburgge and Grange mouth.
Figure 1: The present distribution channel
Since the conveyances are produced using Zeebrugge, while beds are put away at
Zeebrugge distribution center for around 4 to 8 days. On the off chance that a bed is put away for
6 days overall in Zeebrugge distribution center, the organization would need to tolerate the
capacity expenses of £49.20 per bed. Thus a 7% expansion away expenses and 5% further ascent
in the conveyance expenses would expand the expenses of conveyance fundamentally at last
diminishing productivity.
Dalgety Bay Grangemouth Zeebrugge Benelux

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IV. Alternative Proposals
There has been high competition in the sale of Aluminum products which posses’ huge challenge
on the Alcan fine coating company upholds their current marketing position. There has been the
emergence of parties which comprise of vertically integrated group of manufacturers. Moreover,
the high increase in the number of competitors in the Aluminum markets is the main reason
which makes the company’s total sales decline. The company’s potential rivals include VAW,
Alcoa, Norsk Hydro, and Hoogovens. These outlined companies are the top greatest aluminum
manufacturing firms since they employ primary aluminum use in turning the acquired raw
materials into finished products.
The elective recommendations accessible to the organization may diminish the general
expenses of conveyance and furnish the organization with an upper hand. Prior to assessing the
elective recommendations, a few presumptions have been made. Due to this reason the paper has
integrated various alternative measures that the company can use in creating dominance in the
Aluminum producing sector. These alternatives are shown below:
 There would be no extra cost acquired in conveying the heaps other than capacity
and conveyance costs
 The normal offers of the organization would continue as before
 The costs given by Euro Immediate, Expert Transport and TDG would not change
 Majority of the deals would go to the Benelux Market

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The expenses of current tasks are expanding altogether which would decay organization's
productivity or convey it to a focused inconvenience if the organization builds its costs to repay
the expanded expenses. Relatively 95% of organization's deals go to 10 vast clients. As
contended that if the offers of an organization are concentrated to a portion of the clients, these
substantial clients have high haggling force and impact to shape organization's methodology. As
the clients of Alcan Fine Coatings have high bartering force, they can change to another provider
if the organization plans to build the expenses.
The loss of such expansive clients can result in noteworthy decline in absolute deals. In
addition, these vast clients may hinder the organization to change its evaluating methodology. In
the event that the expanded costs change the delivery mode and diminish the travel time, it very
well may be legitimized to some degree. Changing delivery mode may turn out to be practical
even it builds the transportation costs. The creators gave the motivation to this contention that the
adjustment in transportation mode may decrease enough expenses as far as stock speculation to
legitimize the expansion in delivery cost. Consequently, the organization needs to consider an
elective system with the end goal to control the expanding conveyance and capacity costs (Shah,
U., Zhang, C. and Zhu, J., 2006).
V. Euro direct
Euros direct is situated in Harwich and is putting forth warehousing and other European
transport benefit. Alcan Fine Coatings can change to Euro Coordinate; be that as it may, a few
components should be considered before settling on such choice. Euro Direct would convey the
shipments to Hoek of Holland rather than Zeebrugge. Those shipments would be put away in

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Harwich and afterward further transported to Belau showcase. Euro Direct would utilize an
elective course to transport the shipments and would utilize Ro-Ro ship benefit for the
transportation (Campbell, 2009). There are four Ro-Ro ship sailings every day among Harwich
and Hoek of Holland. It shows the shipments would be transported in one day.
The course of transportation would be changed and extra data with respect to the
conveyance time of shipments from Daggett Cove is required for investigating whether the
general conveyance time would be decreased or not. Through Euro Coordinate, the shipments
would be conveyed from Daggett Narrows to Hoek of Holland and after that to Benelux Market.
Other the other hand, the conveyance time from Daggett Inlet to Harwich distribution center
would decrease to 12 hours when contrasted with 40 hours taken to convey from Daggett Sound
to Zeebrugge. The time taken in conveying the heaps from Harwich to clients in Benelux
showcase has been task to be 12 hours. The gathered time taken from Daggett Sound to Benelux
showcase has been anticipated to be 24 hours. This choice would diminish the conveyance time
from 2 days to 24 hours.
Figure 2: Distribution channels for the Euro Direct
Dalgety Bay Harwich
Hoek of Holland Benelux

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In this case the transportation costs provided by the Euro Coordinate are £16 for each
pallet trunk and conveyance of 26 bed loads with £18 per bed for conveyance of 20 bed loads.
Such expenses are higher compared to the expenses provided by the Zeebrugge distribution
center.
Figure 3: Euro Direct & Zeebrugge distribution expenses
The transportation costs per bed offered by Euro direct are higher than the expenses
offered by Zeebrugge. The expense per bed for 26 bed stack offered by Euro Coordinate is 14%
higher than the current expense at Zeebrugge after the expansion. Then again, the expense per
bed for 26 bed stack offered by Euro Coordinate is 12% higher than the expense at Zeebrugge. It
would not be practical to change to Zeebrugge based on transportation costs (Huang, Q., Zhang,
H. and Zhu, J. , 2010). In any case, the investigation of capacity expenses and conveyance time
offered by Euro Direct can additionally uncover that either the advantage is accomplished by
changing to Euro Coordinate as far as time or expenses.

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On the other hand, the warehousing costs offered by Euro Coordinate are fundamentally
lower than Zeebrugger distribution center. These capacity costs make a huge extent of the
general conveyance costs. The capacity cost per bed every day is £5.80 which is 29% lower than
the expense at present acquired at Zeebrugger distribution center. In the event that a bed is put
away for a normal of 6 days, the expense of capacity per bed would be £34.80 that is 29% not
exactly the expenses at Zeebrugger. In spite of the fact that, the expenses of transportation
offered by Euro Coordinate are marginally higher than the expenses at Zeebrugger, the capacity
costs are altogether lower. Besides, the conveyance time would be lessened to 24 hours;
subsequently, this choice is superior to the current technique.
Table 1: Euro Direct alternatives for Transportation duration, shipping costs, and cargo space expenses
VI. Railway shipment workstations
In the event when a rail cargo terminal is chosen, vast number of heaps would be
transported from Grange mouth to Harwich, Daggett Cove to Grange mouth, and afterward
Harwich to Benelux advertise. Therefore the time duration involved with the conveyance from
Grange mouth to Harwich is always 15 hours. Thus heap of goods would be transported from
Harwich to Benelux showcase in the travel time of 12 hours. Consequently the aggregate
conveyance time would progress towards 27 hours. In any case, the stock would need to be
moved from the plant in Daggett Cove to Grange mouth. While the time taken for the

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conveyance from Daggett Narrows to Gangemouth is not specified thus it is important to
discover the aggregate travel time of this alternative.
Figure 4: Distribution TDG pathways
TDG rates identified with transportation have been given by per wagon. Therefore each
wagon limit is set to be about 43 pallets while the rail wagon expenditure is £788 which has been
promoted. Thus each expense for each pallet will fall to £17 showing greater value compared to
the expenses provided through Euro Coordinate. Such choices are not achievable since the
conveyance duration increase of 25 hrs because of the resultant conveyance of Grange mouth
stock which is similar to Daggett from where it is stacked for further transportation. All in all,
the travel time would build the gauge of 22 hours. Such choices have longest travel time when
contrasted with the other accessible choices.
Determination of this choice would not give enough productivity in the store network and
dissemination that decreases the travel time extensively. The provider conveyance execution has
been assessed as the most critical measure identified with the provider execution. Alcan Fine
Coatings need to choose an elective that enhances its conveyance execution subsequently
Dalgety
Bay
Grange
mouth
Harwich
Hoek of
Holland
Benelux