Logistics: ALBA Company - Case Study Example

If the plants of the company are the heart of the firm, then the transportation is a blood vessels of this complicated organism. The best way to reach plants, to transport goods from one plant to another is to use land transports, which are presented by rail roads, application of trucks and other types of transports. (Geisler, 1975) However, for application of these types of transportation the infrastructure should be developed. And if there are jams in the road effectiveness of the transportation system will be decreased. Furthermore, delays of transportation can seriously affect the working of the plants. Land transportation is the primary means of cargo movement between countries connected by road network (Rodrigue & Ducruet, 2015). Its is also the primary means of cargo movement between countries connected by road network Saudi Arabia is a prominent market for companies in Bahrain and large part of the supply of goods from Bahrain to Saudi Arabia is carried through roads which connects different places in Saudi. One of the big challenges faced by shipping through road transportation is the delay caused by traffic blocks and security checks. Trucks from Bahrain to Saudi reaching certain destination, should spend many hours because of the delays on the way caued by blocks and causeway security check. ALBA Company faced difficulties to deliver the shipments in Saudi customer places and that causes problems for the company to meet their customer requirements on time. The following study explores the problem of traffic delays affected ALBA’s supply chain with their customers in Saudi and try to find out a proper solution for the problem. Aluminum Bahrain (ALBA) is an aluminum manufacturer in Bahrain, and this company is exporting aluminum products to many GCC and Middle East countries. Saudi Arabia is one of the most important markets for ALBA’s products and Alba regularly supply companies in Saudi Arabia with aluminum. As a neighboring country that is connected through King Fahad Causeway, road transportation is the method used to transfer goods from ALBA to various customer locations in Saudi Arabia.(Logistics , 2015). Trucks from ALBA regularly carry goods to Saudi Arabia and they use road network as means of transportation. One of the main problems of the road transportation from Bahrain to Saudi Arabia is the delay caused by traffic block and causeway security checking. This study is intended to explore this problem in detail to find plausible solutions. (Aluminium Bahrain B.S.C. (“Alba”)) Alba’s main products are standard and T-ingots, extrusion billets, rolling slab, properzi ingots, and molten aluminum. Bahrain’s downstream aluminum industry is the major internal customer of Alba’s products. Balexco, Midal Cables, Bahrainoptimiser, GARMCO and RAMCO are the companies supplied by Alba with their aluminum products. Alba also exports goods to GCC, Middle East, Europe and South East Asia. Kingdom of Saudi Arabia is a prominent importer of aluminum products from Alba and companies in Damam, Riyadh and Jeddah are regular buyers of Alba. Alupco, Rakco and Andulus are the main customers from Damam in Saudi Arabia. In Riyadh Al Taiseer, Altco, and Alinco are companies getting regular supply from Alba. Dural, Kannan and Aralex are the companies in Jeddah who purchases Alba products. (A pillar of modern Bahrain) 1.2 Project Background Alba is facing a serious issue of delays in delivering the metals to customers in Saudi Arabia due to the traffic congestion on King Fahad Causeway. This study is intended to explore the problem in detail and try to find solutions to solve the issue. Bahrain and Saudi Arabia is connected by road network and the method of transportation used by Alba for the movement of goods is truck transportation using King Fahad Causeway. Every day Alba sends at least 17 trucks to Saudi Arabia and it takes 440 truck trips in a month. All of these trucks are always delayed because of congested traffic and long queue in the Bahrain –Saudi causeway for customs clearance check. These delays inflict big losses on the company, and seriously damage reputation. Customer dissatisfaction by the delay of products on time also can make bad impact on their business. (Bahrain-Other Industry ) 1.3 Project Problem stated The main problem of this study is to find a solution for “how to transport ALBA products to KSA effectively”. Saudi Arabia is one of the important customer bases for ALBA and Saudi companies which are purchasing aluminum products from ALBA regularly. The Supply chain between ALBA and Saudi customers are maintained through the road transportation. Trucks are used as means to carry products from ALBA plant in Bahrain to customer locations in Saudi. The delays in traffic and causeway congestion create difficulty for the timely supply and that makes problem for ALBA with their customers. Delivery system quality improving lies in the finding proper solution for the transportation lag. This study proposes a logistic plan to overcome this problem and discusses alternative methods to improve the quality of supply through road transportation. Road transportation from Bahrain to Saudi Arabia using King Fahad Causeway became very congested in recent years. There are many jams within the road connection between Bahrain and Saudi Arabia. It is so due to the fact that road transportation needs more transports to face transportation needs. People movement and cargo shipping are doubling each year and that creates the traffic block and jams in the transportation routes. Security check in the cause way is another major obstacle for the free flow of transportation. In causeway trucks from ALBA are delayed from 24 to 48 hours and this delay along with the traffic congestions creates problem for the timely delay in the delivery of goods in Saudi customer locations. Long queues are always seen in the Saudi Bahrain causeway and in some occasions like the month of Ramadan it will be delayed more because of the limited staff members and facilities at causeway to check the vehicles. The problem of delay in the traffic network has particular importance for ALBA because the main type of transportation used to carry goods from ALBA plant to customers in the kingdom of Saudi are roads. The delay caused by the movement of goods will affect company’s business interests and growth. Reducing time delays in delivery of goods from Bahrain to Saudi customers is the main challenge faced by ALBA. Current delays caused by the traffic jams and causeway security time lags affect the delivery of ALBA products on time and that affects the customer satisfaction. ALBA trucks fail to reach the customers. In tim. The system of transportation used to carry goods from Bahrain to Saudi location and it needs to be improved. The main problem is that the causeway security check is part of government’s security policy to check unauthorized and illegal activity and that cannot be avoided. Road traffic jams between Bahrain and Saudi Arabia is not a new phenomenon, because vehicles and cargo movement annually increases. Bahrain tried to improve the road network by developing new roads, bridges and removing several rounds about which causes traffic jams. Road development in Bahrain was very high in the last few years and many new roads are developed to reduce the traffic congestion. In causeway delays, Bahrain faces difficulties because security check became tougher by the order of government to fight illegal and antinational activities and that makes the movement of trucks in causeway delayed. Detailed checks on each and every vehicle are mandatory and that creates the trouble of truck delays in King Fahad Causeway. Lack of enough staff in the causeway and in some cases the passive nature of the employees in causeway security also makes the problem worse (Geisler, 1975). For ALBA, time delays in delivery of products needs to be reduced because they need to achieve customer satisfaction to maintain the business relationship for future. Aluminum industry becomes more competitive in recent years and company can face considerable challenges in the market soon. If ALBA fails to maintain the customer’s satisfaction, it can face loss of customers and that will ultimately affect the future of ALBA. If supply of products to customer locations can be done in time it would improve customer’s satisfaction and it will develop a sustained relationship with the customers. Traffic delays also increases the cost of delivery of good for ALBA because company needs to pay the expenses like vehicle staff’s overtime allowance, additional fuel used etc. Finding a proper remedy for the traffic lagging in shipping is a very urgent matter for ALBA . These problems adversely affects the company’s interests. So finding solutions to the traffic problems as well the Causeway delays require an urgent attention. 3.1.3 Communication: As for communication, it occurs between the companies itself (ALBA), the transport company and the client. Alba prepares delivery notes that include the price in Bahraini Dinars (BD), weight in tons and the distance covered in Kilometers (Km), to facilitate the communication between Alba and the customerss that is located in King Fahad’s Causeway. Moreover the communication can be maintained between Alba and the truck driver through phone if there is any cancelation/ addition to the delivery. 3.1.4 Auxiliary Services: The main aspect that is covered by the auxiliary services includes truck maintenance and petrol station. Alba deals with a specific transport, with company that provides the flatbed truck for transporting metal as mentioned. Al-Wardi, Tariq, National and AmeenCo are all suppliers of the flatbed truck for Alba. Therefore, these companies are responsible for supplying the trucks if any damages or accidents occur. While for the petrol station, Alba owns one and it is located in the campus. It serves the trucks with diesel and Alba is responsible for the price. Recommendation After carefully revising the three solutions above, the conclusion was to implement the use of barges, as it seems the quickest and most efficient among the rest. A rear-loading barge would carry a very large amount of material and could withstand heavy load and transport it through the sea to Saudi Arabia. It is designed to hold large and heavy cargo due to its thick, tough deck. It also comes with roll on/roll off or a lift on/lift off mechanism to move the large objects. In this case, the LOLO mechanism would be preferred. The barges have built-in ramps, which would ease the movement of the cargo from and to the barge. The rear-loading barge would avoid long distance travelling and the use of trucks to pass through the crowded King Fahad Bridge. It is also much safer than other methods of transportation, as it would not engage in traffic and much less susceptible to accidents and injury to the workers. Some barges are also environment friendly. To implement this idea, it would require the approval of authorities of ALBA, head of transportations, & more paperwork from several authorities. After the purchase of the rear-loading barge, the trucks would carry the shipment to Salman Harbor. From Salman Harbor, the shipments would be loaded to the barge belonging to ALBA. The barge would carry the shipment from Bahrain to the most idealistic destination, which would be King AbdulAziz Port at Dammam. The cargo would offload at the port, and then transported to various locations through trucks, which are Riyadh and Jeddah. The barge would remain at King Abdul-Aziz Port until another shipment is loaded and return to Bahrain, and if there were no further orders, it would return to its base at Bahrain. This may be applied, or ALBA could sort out a route system, which is the most efficient in carrying shipments and minimizing losses. References Geisler, M. (1975). Logistics. Amsterdam: North-Holland Pub. :. Williams, H. (2004). Road and rail transportation. New York: Facts on File. Read More