Established in 2001, Barloworld Logistics has grown into a significant supply chain solutions business in southern Africa with complimentary operations in the Middle East. Combining a smart approach with innovative thinking and supply chain foresight, we design, implement, manage and operate smart supply chain solutions that grow our clients’ bottom lines. Smart Partnerships form the cornerstone of creating a competitive advantage for our clients. Not only do they enable us to create truly customised supply chain solutions, but a culture of collaboration and accountability. Through partnerships with key industry players, Barloworld Logistics has developed numerous in-house and world-class competencies and received many industry and supplier accolades and awards. As an international provider of smart supply chain solutions, Barloworld Logistics’ focus on specific industries enables us to create depth of experience and invaluable expertise within the chosen sectors. We are then able to leverage this knowledge for the benefit of our clients.
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You have recently joined Barloworld Logistics Southern Africa as an operations manager, and you have been given a brief of the areas that you will need to prioritise in your first 100 days on the job. These have been summarised in the form of questions in a report and thus you have been requested by the Executive Management to provide a brief on how you would individually address these.


QUESTION 1 (20 Marks)
Barloworld Logistics has been contemplating constructing a warehouse in Durban, South Africa to cater for its growing import and export market. The search team has now earmarked 2 locations, first a site located by the Durban Harbour which was previously occupied by a production company which is closing its operations. The second one is a piece of virgin land in Cato Ridge (a small town in KwaZulu Natal which lies between Durban and Pietermaritzburg) which is available for sale. Critically discuss which option you would recommend for the construction of the warehouse.

QUESTION 2 (20 Marks)

You have been given information in the table below relating to one of the projects involving the installation of control devices. You are expected to determine the following,
• Completion time of the project and the activities that are on the critical path.
• Probability of completing this project in 53 days
• The days that allow for 99% probability completion for the project.
Relevant illustrations should be provided in your response. (Round off to 2 decimal places)

Activity Immediate Predecessor Optimistic Time Most Likely Time Pessimistic Time
A 4 6 7
B 1 2 3
C A 6 6 6
D A 5 8 11
E B,C 1 9 18
F D 2 3 6
G D 1 7 8
H E,F 4 4 6
I G,H 1 6 8
J I 2 5 7
K I 8 9 11
L J 2 4 6
M K 1 2 3
N L,M 6 8 10

QUESTION 3 (20 Marks)
In the context of Barloworld Logistics critically discuss how each of the operations management decision areas can be managed to improve its competitive advantage. You need to make use of practical examples and concepts.
QUESTION 4 (20 Marks)
The following data has been provided relating to one of the essential supplies that is utilised for Barloworld Logistics operations. Usage is approximately 10 brackets per day during the year. The brackets are purchased from a supplier 90km away and the costs incurred include holding costs per bracket per year of R1.50, order cost per order of R18.75. The lead time is 2 days and working days per year is 250 days. Advise the management on the following inventory management issues.
Examine the factors that you will prioritise at Barloworld in ensuring that inventory management adds value to the organisation and improves on its competitive advantage. (10 marks)
What would be the economic order quantity? The annual inventory holding costs. How many orders would be made each year? What would be the annual order cost? What is the time between orders and the reorder point (ROP)? (10 marks)

QUESTION 5 (20 Marks)
You are requested to submit recommendations citing the strategic importance of scheduling for Barloworld Logistics and to critically assess the strategies that you would consider in influencing demand and capacity. Relevant examples should be considered.

Answers to Above Question on Operations Management

Answer 1

In the case of a logistics business, it is important to make a wise selection of locations for warehouses. This is mainly because a logistics company is required to move packages from one place to another, and having a centralised location with better connectivity through all modes of transport is highly favourable. In the given Scenario of BarloLogistics, the company has two locations available to set up its warehouse. Out of the two locations provided, the most favourable one is the first one which is located by the Durban Harbour compared to a small piece of virgin land in Cato Ridge (small town in KwaZulu Natal) because a smaller town will definitely have a lower level of connectivity compared to a larger urban area.


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