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Vendor Managed Inventory or ”Order Only” customers? An investigation of customer suitability for delivery agreements at Linde Gas

Knutsson, Linda (2007) MIO920
Production Management
Abstract
Linde Gas is one division belonging to The Linde Group, which is an industrial gas
and engineering company. With its 53000 employees in 70 countries and related
sales of about €12 billion, The Linde Group is a world leading company.
Linde Gas has two different types of delivery agreements which are seen as
profitable; the customer can call in himself to place an order (”Order Only”
customer) or the customer can have a VMI (Vendor Managed Inventory)
agreement. In the latter Linde Gas is initiating the deliveries. The purpose of the
thesis is to analyze these delivery agreements in order to give recommendations
about which delivery agreement that would be best for different customers of liquid
products at Linde Gas. Planning and... (More)
Linde Gas is one division belonging to The Linde Group, which is an industrial gas
and engineering company. With its 53000 employees in 70 countries and related
sales of about €12 billion, The Linde Group is a world leading company.
Linde Gas has two different types of delivery agreements which are seen as
profitable; the customer can call in himself to place an order (”Order Only”
customer) or the customer can have a VMI (Vendor Managed Inventory)
agreement. In the latter Linde Gas is initiating the deliveries. The purpose of the
thesis is to analyze these delivery agreements in order to give recommendations
about which delivery agreement that would be best for different customers of liquid
products at Linde Gas. Planning and distribution costs for a specific customer as
well as the revenues will be taken into consideration.
A mixture of a descriptive and comparative study together with case studies has
been used as method in this thesis. A descriptive study was used in order to identify
and describe the factors that are influencing the planning- and transportation costs
and the revenues. Examples of such factors are planning time needed for different
types of deliveries, costs for a run-out in the customer’s tank and the relationship
between Linde and the customer. For these factors a description of how they
influence the costs and revenues has been made. The method used for this thesis
also has a comparative element. When describing how the factors explained above
influence the costs and revenues a comparison has been made on how these
influences are different for customers with delivery agreements ”Order Only” and
VMI. The factors investigated are only the factors for which the influences on the
costs and revenues are different depending on which delivery agreement the
customer has. (There is no need to investigate those factors affecting the costs and
revenues to the same extent for both delivery agreements.) Techniques for data
collection that have been used are interviews, analysis of internal documents and
usage of LCS (Liquid Control System), the logistics IT-system at Linde Gas where
data about deliveries are saved.
The outcome of the thesis is a check-list that can be used when deciding which
delivery agreement that a specific customer should have. One important conclusion
is that the planning horizon should be extended if the advantages of a VMI system
are to be realized. Finally, suggestions about how the organization dealing with
these delivery agreements can be improved are discussed. (Less)
Please use this url to cite or link to this publication:
author
Knutsson, Linda
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
other publication id
07/5270
language
English
id
1981137
date added to LUP
2011-06-20 15:59:00
date last changed
2011-06-20 15:59:00
@misc{1981137,
  abstract     = {{Linde Gas is one division belonging to The Linde Group, which is an industrial gas
and engineering company. With its 53000 employees in 70 countries and related
sales of about €12 billion, The Linde Group is a world leading company.
Linde Gas has two different types of delivery agreements which are seen as
profitable; the customer can call in himself to place an order (”Order Only”
customer) or the customer can have a VMI (Vendor Managed Inventory)
agreement. In the latter Linde Gas is initiating the deliveries. The purpose of the
thesis is to analyze these delivery agreements in order to give recommendations
about which delivery agreement that would be best for different customers of liquid
products at Linde Gas. Planning and distribution costs for a specific customer as
well as the revenues will be taken into consideration.
A mixture of a descriptive and comparative study together with case studies has
been used as method in this thesis. A descriptive study was used in order to identify
and describe the factors that are influencing the planning- and transportation costs
and the revenues. Examples of such factors are planning time needed for different
types of deliveries, costs for a run-out in the customer’s tank and the relationship
between Linde and the customer. For these factors a description of how they
influence the costs and revenues has been made. The method used for this thesis
also has a comparative element. When describing how the factors explained above
influence the costs and revenues a comparison has been made on how these
influences are different for customers with delivery agreements ”Order Only” and
VMI. The factors investigated are only the factors for which the influences on the
costs and revenues are different depending on which delivery agreement the
customer has. (There is no need to investigate those factors affecting the costs and
revenues to the same extent for both delivery agreements.) Techniques for data
collection that have been used are interviews, analysis of internal documents and
usage of LCS (Liquid Control System), the logistics IT-system at Linde Gas where
data about deliveries are saved.
The outcome of the thesis is a check-list that can be used when deciding which
delivery agreement that a specific customer should have. One important conclusion
is that the planning horizon should be extended if the advantages of a VMI system
are to be realized. Finally, suggestions about how the organization dealing with
these delivery agreements can be improved are discussed.}},
  author       = {{Knutsson, Linda}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Vendor Managed Inventory or ”Order Only” customers? An investigation of customer suitability for delivery agreements at Linde Gas}},
  year         = {{2007}},
}