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Evaluation of air freight replenishment

Hagberg, Carl LU and Daadooch, Sarmed LU (2017) MTT820 20171
Engineering Logistics
Abstract
The case company is a major Swedish industry listed on the stock market and the company is going through organisational changes that has led to two product areas being merged together. These two product areas need to understand and evaluate their current global distribution network. This thesis has helped the case company to evaluate air freight distribution and optimize the material flow from a European central hub to five different distribution centres around the globe. Today, the case company has no set shipping strategy and their logistics costs are around 15% of COGS, which is very high, compared to other product areas within the company where the logistics cost only represents 6% of COGS. The thesis has contributed with a shipping... (More)
The case company is a major Swedish industry listed on the stock market and the company is going through organisational changes that has led to two product areas being merged together. These two product areas need to understand and evaluate their current global distribution network. This thesis has helped the case company to evaluate air freight distribution and optimize the material flow from a European central hub to five different distribution centres around the globe. Today, the case company has no set shipping strategy and their logistics costs are around 15% of COGS, which is very high, compared to other product areas within the company where the logistics cost only represents 6% of COGS. The thesis has contributed with a shipping profile for the different product characteristics and for each destination. The authors conclude that most of the items should change transportation mode from air to ocean freight, since their characteristics do not fit air freight. Only high value items should be replenished by air freight. By changing transportation mode and implementing a reliable supply chain, the potential transportation savings can be around 50%. (Less)
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author
Hagberg, Carl LU and Daadooch, Sarmed LU
supervisor
organization
course
MTT820 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Logistics, distribution, optimisation, distribution network, air freight, spare parts, transportation cost, ocean freight, shipping profile, after market
report number
5835
language
English
id
8914786
date added to LUP
2017-06-13 13:48:15
date last changed
2017-06-13 13:48:15
@misc{8914786,
  abstract     = {The case company is a major Swedish industry listed on the stock market and the company is going through organisational changes that has led to two product areas being merged together. These two product areas need to understand and evaluate their current global distribution network. This thesis has helped the case company to evaluate air freight distribution and optimize the material flow from a European central hub to five different distribution centres around the globe. Today, the case company has no set shipping strategy and their logistics costs are around 15% of COGS, which is very high, compared to other product areas within the company where the logistics cost only represents 6% of COGS. The thesis has contributed with a shipping profile for the different product characteristics and for each destination. The authors conclude that most of the items should change transportation mode from air to ocean freight, since their characteristics do not fit air freight. Only high value items should be replenished by air freight. By changing transportation mode and implementing a reliable supply chain, the potential transportation savings can be around 50%.},
  author       = {Hagberg, Carl and Daadooch, Sarmed},
  keyword      = {Logistics,distribution,optimisation,distribution network,air freight,spare parts,transportation cost,ocean freight,shipping profile,after market},
  language     = {eng},
  note         = {Student Paper},
  title        = {Evaluation of air freight replenishment},
  year         = {2017},
}