Darah, a 3rd party Logistics company in Dammam, is a medium scale private owned company that has its head office in Dammam and other branches in Dammam, Yambhu and Khobar. Its foundation stone was set in 1981 and the business is based in providing logistics services in addition to mover's services, product movement bulk, and small industrial and commercial product in Saudi Arabia.
At the commercial level, Darah has agreements limited to Dammam only for the movement of commercial good. For that, the company has agreement with around 10 FMCGs and works as supplier of their products from their manufacturing plants to the retail outlets as well as to warehouses. The company owns 25 commercial wagons for carrying out this business. Moreover, it also owns 4 heavy duty trucks to carry out the transportation of heavy items in bulk from port to the location where it has to be delivered. This bulk transportation business of Darah is based mainly in Khobar and Yambhu because of the reason that these two cities are primarily industry oriented resulting in Darah's cordial relations with a no. of manufacturing companies in this area. Furthermore, the company also deals in the 3rd party logistics business on stop solutions and contracts basis.
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Company now faces some problems in expanding its business that must be solved on timely basis so that the company may follow the growth that it aims for. These problems include the following:
The big cities including Jeddah and Riyadh being the potential growing markets of FMCG product movement business are not being reached by Darah because of the limited no. of transportation vehicles availability. In addition, the focus of most of the multinationals is now shifting towards market finished products so the company wants to expand on its business in warehousing sector that need resources and proper commercial business planning. Moreover the cost of operations has been seeing a continuous increase for past few years, thus being a hurdle for the company's growth. Furthermore, the company is facing lack of various resources including properly qualified human resources in addition to modern technology, thereby lagging behind in the innovation and development areas.
This case study analysis is destined to provide the audience with the in-depth analysis of the problems Darah is facing in the Operation management area and proposition of the solutions to these problems based on the theory and literature.
Darah, being a 3rd party Logistics Company deals in transportation and warehousing of the products and goods for the clients they are in contact with. Presently, the company is facing problems in four major areas of operation management that include waste and lean management, risk management, supply chain management and proper design for the operation management system. These areas are either totally ignored part of management in Darah, or are under-developed, causing the company to be unable to expand its business. In order to attain the goal of growth and increased profitability, Darah has to make systematic and strategic contributions in all the identified areas of operation management, so that it can generate sustainable competitive advantage against its competitors and expanding the business to the hot areas of market.
This case study analysis will take a detailed look into Darah's problems in the above identified areas and based on previously present studies, it will strive to make recommendations for the better working of the company.
This section will provide us with the analysis of the problems the company faces regarding lean management and devising the solutions to them based on lean management theory and literature available. Presently, the problems identified in this area include Half-filled fleets, improper planning and wastage of time that act as "waste" according to lean management theory and must be removed in order to cut the cost and add value to the company.
Womack et al. (1990) waste could be defined as any activities taking place in the organization that consume resources but don't generate any value, thereby acting as a cost for the organization. Therefore, all such activities that come under the category of Waste must be identified immediately and then depleted for the better and efficient working organization which would lead to maximum output at minimum cost (Slack et al., 2004) thus improving the organization functioning and productivity level (Bicheno & Elliot, (1997).
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This case study report is aimed to discuss how to manage Darah's business in such a way as to eliminate the waste present in the form of process wastage, time wastage and motion waste, in order to make the organization more efficient in its working (Slack et al., 2004). For this, the fleet must be managed in addition to the other resources in such a way that all the wastes could be eliminated instantaneously.
"Lean" is a term that was devised by John Karfcik (1988) to define management of Toyota's Production System and the term "Lean production" was coined and propagated by Womak, Jones and Roos (1990) by analyzing the management tools and techniques used by Toyota and Ford which were helpful in improving the quality of the whole system through (Shah & Ward, 2007). The term "lean thinking" refers to the rules and principles that aim at specification of value for the organization and elements that help in maximization of the identified value by using several tools and techniques (Womack & Jones, 1996; Arbos, 2002). Lean actually refers to the waste or the elements at workplace that consume resources of the organization but does not add value to it (Slack et al., 2004), so lean management refers to managing the waste, thereby eliminating it to increase the efficiency of organization (Slack et al., 2004; Bicheno and Elliott, 1997; Cachon and Terwiesch, 2009).
The five principles were identified by Bicheno and Elliott (1997) which were supposed to be the foundation stone of lean thinking. They included definition of Value from the view point of the end customer, identification of the entire value stream for each and every product leading to elimination of waste, generating the value-creating steps flow needed after waste elimination, designing and provision of the products or services according to the customers' needs and the production must take place only when required by the customer, and the fifth lean principle aims at persuasion of perfection thereby avoiding every type of cost.
Just In Time (JIT) is the approach that is considered to be the second name for Lean management, which focuses on the elimination of waste through the participation of the staff and the inner will an motivation for the continuous improvement of the organization (Slack et al., 2004).
Two models for lean implementation have also been identified i.e. Full Implementation which takes the whole system under study and aligns improvement to the business strategy of the organization; and Rapid Improvement Event (RIE) focuses on bringing out small quickly introduced changes and using only the necessary tools and techniques out of the Full implementation toolkit thereby addressing only the solution of the problem at hand (Randor, Walley, Stephens & Bucci, 2006).
Application of Theory to Darah:
In Darah case study, the wastes identified that must be dealt with immediately in order to make the company more productive were related to the all the three kind of wastes i.e. wastage of time as a lot of time is wasted as waiting time; wastage related to movement which, in Darah's case is movement of half-filled fleets; and process related waste involving improper planning. In order to deal with these wastes, the company may use Rapid Improvement model for the implementation of Lean management, as it will lead to the immediate elimination of waste and dealing with the introduction of more portable replacements that are in line with the strategy of the organization.
By using this model, Darah can maintain its original management style, only changing the waste with the solutions that are needed immediately, thereby engaging the staff in in bringing the change. This will lead to more quick and favorable results (Randor, Walley, Stephens & Bucci, 2006). Moreover, this will be less costly, engaging only a limited amount of resources, time and money. By using RIE model, Darah can address the issues of half-filled fleets that can be managed in a way that the fleets could only move when they get filled, only with the exception of special cases that may be faced by the company at any time. Moreover, the waiting time must be reduced in an effective way thereby increasing the workable time/ time spent in productive activities. In addition, all the management issues must also be addressed and proper policies and procedures must immediately be formulated and implemented related to planning fostering proactive approach, for the better run business in future. The human resource of the organization must also be managed in such a way that they generate increased profits for the firm, for which, Darah has to eliminate the costs related to the Human resources through strategic implication of human resource functions in the organization. In addition to that, the organization must also eliminate the old technology and replace it with the modern one, including fleet and vehicles required in the transportation of stuff. This will do a great for the increased productivity of Darah. Moreover, while implementing the lean management in Darah, the management must take care of chalking out a proper plan for change in the light of the five building blocks / principles of lean management so that it could be implemented properly and bring the change effectively.
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So, it is recommended according to the lean management principles and models, that the whole shipping and transportation process must be aligned with the demand of the clients or the customers. Moreover, training and development of the human resources and integrated work will bring about elimination off time wastage in addition to other wastage in terms of human activities (Bicheno and Holweg, 2009).
Unnecessary movement or movement of half-filled fleets also act as waste, so changing this trend and formulating special policies regarding this issue will lead to improvements (Slack et al., 2004; Bicheno and Elliott, 1997; Cachon and Terwiesch, 2009).
In this way, lean management will help improve the resource usage in Darah, thus increasing the profitability and productivity which will help the organization expand its business in other areas where it finds potential market.
Supply Chain Management
Supply chain management is the term that is not quite an old one, as this concept has recently emerged on the horizon of business management studies. Academic researchers and practitioners are well familiar with the term as the concept has gained enormous importance since the last few years, and it is still evolving in academic as well as practical field. (Mangan, Lalwani, and Butcher, 2008; Ptak, 2004; Lu, 2011; Ramalingam, 2007)
Supply chain involves each and every step, procedure and resources that help transform the raw material into end product thereby encompassing the flow of its transformation from raw material stage to that when it reaches the end customer. Some other definitions of "supply Chain" are given as under:
"A supply chain is the alignment of firms that bring products or services to market." (Lambert, Stock, and Ellram, 1998)
"A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves." (Chopra and Meindl, 2001)
"A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers" (Ganeshan and Harrison, 1995).
From the above definitions, we can assume that Supply Chain includes all the operational/ functional activities taking place in an organization which results in the transformation of raw material to the finished products and delivering them to the end customers. It involves many stakeholders including suppliers of raw materials, manufacturers, warehouses and storage houses, and the customers; and supply chain management involves assimilating all of them in such an efficient and effective way that production and distribution of goods is done at "right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements.
Supply chain management is the combination and amalgamation of all these activities, improved relationships along the whole supply chain, resulting in generation of a sustainable competitive advantage over the competitors of the organization.
A very well devised definition of supply chain management was given by Mentzer et al. in 2001 which states:
"The systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole" (Mentzer et al., 2001).
Another definition that is broader in its scope was given by Ballou (2004), which states as under:
"Supply chain management is defined as the systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole." (Ballou, 2004).
Supply chain management is the integration of all the elements of supply chain in such an effective way that it results in achieving efficiency and responsiveness to the market that the business is destined for. It helps focus on what actually is the need and demand of the customer, considering all the facilities that adds up into the cost for the organization, aiming at making the whole system cost effective as well as efficient.
Anderson, Britt and Favre (1997) gave seven principles for effective supply chain management which are explained as under:
The customers must be segmented and categorized on the basis of their needs and demands for specific products and services and the supply chains must be adjusted in order to accommodate the demands of the customers of each segment profitably.
The supply chains or logistics network must be made contingent to each segment, there by ignoring the monolithic approach to serve everyone and replacing it with the new approach which caters special needs for each segment, thus generating more profitability.
Being more sensitive to the market, planning beforehand and adopting proactive approach for supply chain management and resource allocation.
Differentiate product closer to the customer and speed conversion across the supply chain.
Strategically manage the resources in such a way that the total cost related to them is reduced.
Develop a strategy encompassing use of modern technology supporting every level of decision making thereby making the system more efficient and enhancing the communication system.
Channel-spanning performance measures must be adopted in order to assess the overall collective performance of the organization. Strategic measures must be taken in order to devise appropriate strategy for it. This will ensure if all the organizational units are striving for the same goal.
A no. of difficulties may also be associated with the implementation of an effective supply chain management system. They are complex in nature and difficult to be implemented at first place; special care is needed to devise well-formulated strategically aligned supply chain management system. This is because supply chain management cannot be governed in isolation as it is in a strong connection with the development chain of the organization, implying that it is connected with the whole system of the organization. Moreover, it is also not a piece of cake to devise a system that can help reduce the system wide costs at once in addition to maintaining the same level of service providence and goods provision. Huge amount of uncertainty and risk are associated with it as the deployment of supply chain management system is associated with a no. of other sub-systems of organization that are different in nature and may have conflicting objectives working in different directions (Anderson, Britt and Favre, 1997).
According to Lu (2011), successfully integrated supply chain can be achieved through information sharing and operational planning in addition to outsourcing the strategies and services where required. Customer value must also be determined which contributes a major part in driving towards successful strategy formulation and implementation for the supply chain management system.
Application to Darah:
Until now, Darah has relied extensively on its market reputation in addition to their friendships and personal relationships in industrial sector. According to the supply chain management system approach, the company must align all the elements of supply chain with the overall business strategy in order to improve the whole system. For that, Darah has to improve its business in the areas of Supply contracts, and distribution strategies in addition to the communication system improvement. The improved supply contracts will help improve Darah's current business to expand its scope from the limited one to broader one where they will have contracts with the suppliers other than their personal contacts, dealing with them in a win-win situation. This will lead them build new relationships which will increase the productivity of the organization in return.
Secondly, the distribution strategies for Darah must be devised that ensure the promotion of the overall business objective of expansion and growth. So they must decide on how much to centralize or decentralize the system. So Darah must devise strategies for how they have to collaborate with their strategic partners and their clients for the distribution of the goods from one place to another. They have to devise plans for quick and efficient distribution system that would satisfy each of their clients, keeping in mind that the costs associated with it must also be reduced. For that, they have to make sure that the practice of half-filled fleet movement has to be avoided and eliminated, replacing it with the practice of movement of fully filled fleets with the goods that are to be delivered at the areas situated at closer vicinity.
Darah must expand their scope of clientele for the expansion of their business. Presently, they deal with the clients who have closer and personal ties with them, they have to expand their relationships with other industrialists and build a reputation through efficient working in order to attract other big fish from the market, thereby increasing their clientele. This will require identification of customer needs and assessment of their response towards the services provided to them, so they must focus on the customer-feedback driven system in order to improve the performance.
Darah must also take necessary steps to cut the costs related to the transportation, thereby aligning it with the overall business strategy. The most important defect in this system that Darah ignores presently is the movement of half-filled fleets for the quick delivery of products and goods, ignoring the fact that it adds a huge amount of cost to the system thereby making it inefficient. For that purpose, Darah has to devise a proactive, pre-planned system regarding cargo consolidation, routing of the fleet, scheduling for the vehicles for specific areas and introducing check and balance system on the cargos. Moreover, they also have to maintain a proper inventory management system I addition to focusing on introduction of technology based system that would eliminate the paper handling culture, making Darah more efficient in its functioning.
Darah has to place a special emphasis on improving its communication and relation building system in order to expand itself to the hot areas of market. For this they may emphasize on the extended supply chain that encompasses all those entities that have no direct contacts with Darah, but they are somehow related to Darah's clients.
The implementation of an appropriate supply chain management system may be a very tiring and exhaustive job, but it ensures the achievement of the goal of business leading the organization towards growth and expansion. It helps add time and place value in addition to customer value to the business thereby reducing all the costs related to its functions. This results in making the business efficient in its working. So, based on supply chain management system, it his highly recommended for Darah to improve its relationship building with clients, communication and transportation system must be made efficient in addition to making new contacts with the new suppliers.
The term "Risk" is not a new one at all; in fact it is used by every one of us in our daily lives quite often. But the meaning of this term differs with the context in which it's being used (Kloman, 1990), which governs the audience to reach a particular decision based on the specific context where it's used (Charette, 1990). So there is no standard definition of the term "risk" as it is context specific and keeps changing its meaning from one industry to another (Alberts & Dorofee, 2010), but there are certain factors that are found common among all the definitions of risk that include potential for loss, uncertainty with respect to eventual outcome; and a decision must be made in order to divert the uncertainty (Charette, 1990). Following this concept, Dorofee (1996) gave his definition of risk as "Risk is the possibility of suffering loss".
Alberts and Dorofee (2010) identified that there were three measure that were attached to the risk including probability of risk occurrence which depicts the chance of the occurrence of threat, impact of risk identifies the loss that actually occurs if the threat is encountered; and risk exposure defines the size of risk on the basis of probability and impact.
Risk management can be defined in the light of all the above definitions of risk, as a strategic approach to management that aims at minimization of all the potential losses being faced by the organization. It is a systematic approach that strives for the assessment of risks beforehand and planning and implementing actions that can lead to the decreased possibility of those pre-identified risks (Alberts & Dorofee, 2010). European federation for welding, joining and cutting (2008) defined risk management as "a group of actions that are integrated within the wider context of a company organization, which are directed toward assessing and measuring possible risk situations as well as elaborating the strategies necessary for managing them".
There are three kinds of activities that are associated with the risk management system that include assessment of risk and forecasting for each kind of threat that can be encountered by the organization, planning for the mitigation of the identified risks, and implementing the plan devised (Alberts & Dorofee, 2010).
Two major types of risks were identified by European federation for welding, joining and cutting (2008) which included external risks that account for unfavorable laws, negative market conditions, unfavourable conditions arising at the competitors' edge etc.; whereas the other type is internal risks that account for the risks related to operations and functioning of the organization.
Alberts (2009) defined risk management framework as the activities that are carried out to manage the potential risk effectively. Alberts & Dorofee (2010) identifies that the aim and objective of risk management framework is to define the sequence of activities that must be executed for the appriate risk management system. The specification of risk management activities comes under phase-II of the risk management framework, which also involves the specification of activities that include preparation for the risk management (phase-I), that must be followed by the maintenance and improvement of the risk management practices and policies (phase-III).
Phase I is actually the preparation phase which aims at getting ready for the other two phases by preparing for the risk management for an organization by taking a proactive approach. Phase II is associated with the actual performance of the tasks identified in the first phase which is about the actual management of risk and phase III is the follow up phase that involves maintenance as well as improvement of the risk management system of an organization and its up-gradation with time (Alberts & Dorofee, 2010).
European federation for welding, joining and cutting (2008) also identified eight phases of risk management of an organization that must be considered as an important part of the system. They included
Context definition which involves defining the business, its potential threats and opportunities based on the business it deals with.
Risk identification involves identification of risks that may be encountered by the organization based on the type of business it deals with.
Risk assessment involves a pro-active approach to measurement of the risks that may be encountered by the organization, planning for devising the better risk management activities.
Risk treatment involves decision making regarding what should be the best possible treatment for the risk management and implementing it reduce the risk.
Communication is the transference of the whole process and their outcomes to the related stakeholders.
Planning involves all the risk control methods, their acquisition and development for the proper functioning.
Checking and supervision involves checking and supervising while risk management implementation.
Process review involves reviewing the risk management process and its effectiveness.
Application to Darah:
Darah is a third party logistics company and is currently ignorant about the area of risk management, neglecting the fact that it a very critical area for any business to be successful. The risks, as identified by Alberts& Dorofee (2010), Charette (1990), Kloman (1990); are context specific so there are specific kind of risks that are associated with the companies involved in the logistics business. Therefore Darah must also have specific risks that are associated with it including health and injury risks for the employees who are involved in unloading and reloading of the goods, drivers and other staff involved in movement of goods from one place to another, and all the other employees involved in the business. Moreover, the risk of accidents is also faced by Darah as it involves movement of fleets from one place to another for the transportation of goods. These risks must be mitigated through formulation of policies for the health as well as fleet insurance. Moreover, employee friendly policies must also be formulated and implemented addressing the risks related to their immediate physical environment, occupational health hazards and other work related issues including overwork, night work etc. they must also address the risk of accidents thereby providing them with first aid box in addition to other mechanics related complexities associated with the better working of the fleet. In addition to all that, new technologies must also be introduced in addition to modern fleet availability for the product movement as the business grows, this will lead to the better run business of Darah.
The other risks that might be encountered by Darah, being a third party logistics company, include carrier delays and non-performance on delivery, capacity and allocation volatility, port and land network congestion, environment regulation, regulatory an trade compliance, custom and security compliance, loss due to damage and pilferage, customer claims, financial instability of large global accounts; and these all areas must be treated and made risk free before they do great harm to the company.
Risk management area is the most ignored one in Darah, which has to take necessary measures for the formulation and implementation of a well-devised risk management system. For Darah, being a third party logistic company, the identified risks include health and injury risks n addition to risk of damage to machinery and fleet. Moreover risks related to occupational hazards, physical environment and other work related issues may also be witnessed in Dar. So systematic, well-devised risk management must be implemented for Darah addressing the above mentioned issues, combating them as a result. The solutions may include life, health and fleet insurance in addition to other measures taken to avoid various kinds of damages.
Designing and improving operations
Logistics functions have become an important factor that can ensure the better performance of any business making the supply of products, goods and information easy and smooth throughout the organization (Sum et al., 2001), making it a critical basis of generating competitive advantage for the company (Bowersox and Closs, 1996; Bowersox and Daugherty, 1995; Christopher, 1992). Logistic functions include activities of storage, transportation and distribution of products, goods and services of any sort (Gunasekaran & Ngai, 2003). More recently, people have taken up logistics functions as a business and this business has grown from single-party up to fifth-party business. Among them, third-party logistics business is the one that is contractual in nature that is more focused on regional operations. Gunasekaran & Ngai (2003) identified the main objectives of 3rd party logistics as meeting demand fluctuations reduction in operating costs, and reduction in capital investment.
There is a very significant role of IT in improvement of logistics business as explained by Chui (1995), who presented a framework showing the impact of IT in improvement and increased efficiency of 3rd party logistics along with some other researchers whose studies were based on the same lines including Baglin et al. (1996), Christopher (1997); and Cooper (1994).
3rd party logistics companies can be broadly categorized into two main type vis-à-vis asset based and non-asset based 3PLs. the asset based companies have their own carriers and warehouses whereas non-asset based companies do not have these assets in their possession (Srinivasa & Swarup, 1995). Current changing trends in the market are pushing the 3PLs to change their structure and become more market friendly in order to generate sustainable competitive advantage.
Srinivasa & Swarup (1995) identified that business intelligence can positively impact the third party logistic business in three ways including improvement in service provision, Information technology based services and improvement in organizational support functions.
They have also identified that third party logistic companies must take into account the appropriate management policies for different services that are provided by them. These include Transportation management and warehouse management, where transportation management involves planning and managing the transportation services that they provide to different parties for the movement of their goods from one place to another. This area, in particular, be optimized in performance through different means with the help of some business intelligence functions including evaluation of carrier performance by assessing the activities such as on-time delivery and cutting costs related to this area as well as sticking to the benchmarks set by the suppliers; assessment of the costs and values associated with the usage of different modes of transportation and making it more cost effective for the company; assessment of compliance with the suppliers is another important factor in the better management of transportation facility; managing carrier relationships by having transparent and direct relationships with all the suppliers; planning for capacity building to accommodate the whole load that is apparently forecasted by the company; making schedules for the routes for efficient fleet movement; evaluating the performance of drivers and the vehicles; and analyzing the causes for the accidents and damages to the transportation facilities and making arrangements for combating them.
Warehouse management must involve extensive inventory analysis at each level of the supply chain of warehouses, analysis of warehouse performance; assessment of the costs associated with this section; and space utilization analysis and managing it for the effective usage of warehouse space.
Application and recommendations for Darah:
At present 3rd party Logistics is a thriving business in KSA, and Darah wants to expand its business into the other cities that are the potential markets for logistics business. For that it has to modify and enhance structure and design and plan and implement a well-devised structure for the better run business. As for Darah, there are a no. of pitfalls that restraints it from growing and exploring the hot areas of the market. These may include it's under-emphasis on managing its transportation services as well as warehouse management, maintaining them in the light of the above mentioned literature. Moreover, there must be other modifications in the system and procedures including management of value added services which are part and parcel of 3rd party logistics companies. These services may include packaging, labeling, managing light assembly along with many other services. This can be done only after carrying out an extensive cost-benefit analysis for each service and adapting only those that are more suitable for increasing profitability to Darah. Furthermore, they must also be capable of handling customer returns and assembly analysis which can add great deal of value to the company.
Introduction of modern IT based system organization wide will also do a great deal for Darah to move towards growth and expanding in its size. According to many studies, as described above, introducing IT based system in an organization leads to the better managed firm, making it more efficient and strategically aligning all the parts of it, integrating it in a systematic way and leading to greater profitability. Darah currently ignores this fact and is currently managing exhausting paper based organization system that must gradually be replaced with a paper free-IT based system thus making it more transparent and efficient in return. This system must integrate supply chain management along with forecasting and planning for the organization.
Marketing management is another ignored area of Darah that must be taken into account while proposing a new modified structure for efficient and better working organization, as it is a very important management function that has to be effectively planned in order to make remarkable advances in the business.
In addition to marketing management, Human resource of Darah must also be managed in such a way that it should be more profit generating for the organization. For that, performance of Darah's employees must be managed, manpower must be allocated on requirement basis, maintenance of accurate data related to the employees and their performance must be maintained on employee portal, training and development must also be focused for the better working employees and to enhance their performance.
Customer relationship management must also be made a part of Darah in order to make the company's communication more transparent with the clients, thereby assuring the clients that there is no communication gap existing between them
So the new modified structure for Darah must be strategically aligned, equipped with modern technology and IT based efficient transportation and warehousing system, adapting efficient management practices and policies. This will generate a unique and sustainable competitive advantage for the Darah as compared to its competitors, thus increasing its profitability and helping to attain the goal of expanding to other areas of KSA.
This case study analysis has made us understand the significance and need of operation management in third party Logistics Company that strives to attain the goal of growth and expansion to other parts of the country. It helps identify the problems that a 3PL might encounter in the areas of Lean management, Supply chain management, Risk management and coping with them through adopting practices and policies formulated in the light of already available theoretical base and practice. It also helps understand how to design an operation management system that suits such organizations in the light of previous studies and theories can help improve the 3PL companies. It allows study the importance of a systematic and strategic integration of all theses systems for the proper working of an organization in third party Logistics sector.