Question 1: Total Marks: 20 Marks

Karachi Shipyard and Engineering Works (KSEW)

Karachi Shipyard and Engineering Works (KSEW) is the only national entity engaged in Ship Construction, Maintenance and Repair activities. KSEW can rightly be called the major heavy mechanical engineering industry of Pakistan. Although Karachi Shipyard is mainly designed for shipbuilding, however, its role in support of industry and developmental engineering is prominent. It has a long record of service to industry and during slump in the shipbuilding industry, has promoted further diversification of its general engineering activities. KSEW was established in mid-fifties as a project of Pakistan Industrial Development Corporation (PIDC) and incorporated as a public limited company in 1957, managed by a Board of Directors with Managing Director as the Chief Executive. KSEW is situated at West Wharf Karachi and spread over an area of 71 acres. It has a large shipbuilding hall, two block fabrication areas, three shipbuilding berths, two dry docks, a well-equipped machine shop and a large grit blasting and painting facility with modern machinery for paint application under controlled environment as per international standards. A ship lift and transfer system with a lifting capacity of 7881 tons and 13 number parking stations is being installed which is planned to be completed soon. KSEW is the only shipyard and oldest heavy engineering establishment of Pakistan, catering for shipbuilding, ship repair and general heavy engineering. It has played a historical role in transferring of technologies and broadening the industrial base of country.

Recently KSEW has received a huge order of around US $500 million for the construction of four Ships. This order is also crucial from project management perspective as it requires a major up-gradation of existing facilities (including the procurement of specialized equipment) and construction of some including stores before the commencement of work. KSEW has already awarded contracts to the leading construction companies in this regard. It is important to note here that majority of ship construction material is planned to be imported from different countries (no local procurement). Things were going as per schedule till February 2020 when China announced the lockdown due to COVID-19. Afterwards, due to its rapid spread WHO has declared COVID-19 as a global pandemic. This has also affected the project progress as almost all partnering suppliers have invoked Force Majeure clause according to which inability to perform contractual activities shall not make the contractor liable to penalties or order cancellations. Not only that, local contractors have also shown their inability to carry out tasks as their working staff was either quarantined of moved to their native towns. Situation has now become even worse as when the global market is opening, cases of COVID-19 are all time high. KSEW has taken strict measures to ensure the health of all its employees and workers. KSEW has also issued SOPs to all the contractors working inside the premises. Though up-gradation work has been resumed, yet its lagging behind the schedule by quite a large margin.

Recently one of the suppliers based in China has intimated that the consignment of Steel plates is ready to be shipped. This intimation comes as an unpleasant surprise for the management as facilities are far from complete. Storage requirements of steel plates are; 300 square meters of area with max temperature of 45 degrees Celsius and humidity not more than 85%. This steel cannot be placed outside for more than 3 months. Then comes paint and welding material which requires extra precautions as they are highly flammable and demands specialized storage facility with the state of art fire extinguishing system. This material cannot be left on port once it is arrived as it will cost KSEW in form of heavy demurrage / Wharfage charges.

KSEW has to make prompt decision in this regard as other orders are also in queue that are scheduled to be started after the construction of these ships. Inability to initiate these orders on-time may result in serious financial consequences as customers will impose heavy penalty / fine for the non-conformance / delays.

Requirement:

As a supply chain manager, you are asked to propose your detailed decision regarding:

1. Resolution of issue pertaining to storage of steel plates. (05)
2. What objectives are to be planned to address the delays in up-gradation of facilities? (07)
3. Suggest a strategy to accomplish the objectives planned (in part b). (03)
4. How to manage orders those are queued for which it is confirmed that they will be delayed and penalty is inevitable? (05)

Question 2: Total Marks: 10 Marks

SWAT - SWITZERLAND OF THE EAST

Swat, generally known as Switzerland of the East, has one of the beautiful valleys in the world. No doubt Swat is one of the most popular tourist destinations in Pakistan. The main tourism season for Swat is from spring to autumn (April-October). Peak season for tourism in Swat are June- August and November-December. Vacationing families and Pakistani families on extended holidays make the summer months (June to August) as the most popular times to visit Swat. Interestingly, during the peak seasons many locals leave the Swat valley which is good in a sense that Swat feels less crowded even while tourism is high but also becomes challenging in a way that the local hotels and restaurants get deprived of human resource when it needs the most.

Based on the above scenario; how do you think the local tourism in Swat can manage human resource capacity required to provide hospitality industry in Swat?

Question 3: Total Marks:20 Marks

TRANSPORTATION SERVICE

Faw Motors, Inc., was incorporated in Volkswagen on July 01, 2003. It has 4 plants across the China that design, manufacture, and market earth moving, construction, and materials handling equipment. It also manufactures engines for earthmoving vehicles and tractor-trailers.

Faw Motors products are distributed worldwide. Net income last year totaled $350,000,000. Faw Motors has developed a Transportation Quality program in order to reduce shipping damages to its equipment and to ensure its just-in-time production and inventory system. The program consists of two parts. The first part ensures proper lifting and tie-down provisions by working with engineers in the design process. The second part focuses on internal practices to prepare the product for shipment.

The chief transportation quality engineer has developed a carrier certification program for both inbound and outbound freight. The program establishes standards requiring the carrier to adhere to 100 percent performance. Use of fewer certified carriers increases the amount of business given to each one. The price is obtained through competitive bidding. It is a function of the travel distance and the weight and density of the shipment.

At the present time, Faw Motors is considering one of three carriers to add to its list of certified carriers.

Carrier X has 10,000 trucks and a claim rate of 1.5 percent payment to revenue. The companys pickup/delivery time meets the industry average of four days to transport from Beijing to Hong Kong.

Carrier Y implements a quality program for its 9,000 trucks to meet on time delivery. It has a 1 percent claim rate.

Carrier Z has 9,500 trucks and an excellent safety record, but it has not met the average pickup/delivery time. Its claim rate is 1 percent. (See Exhibit A for price estimates.)

EXHIBIT A

Price Estimatesper ton-miles (PPTM):

Carrier X: PPTM $1.05

Carrier Y: PPTM$1.15

Carrier Z: PPTM$0.95

Requirement:

1. Develop a checklist of items that should be considered when selecting a carrier. (08)
2. What are the advantages of certifying the carriers? (03)
3. Is price the most important factor in evaluating carriers? Justify your answer with an example. (03)
4. What are the key factors regarding Faws carrier needs? (03)
5. If you were selecting the carrier, which carrier would you select and why? What are the alternatives? (03)