Analyzing administrative processes in a 3PL company Mapping of administrative processes and identification of key time drivers Master of Science Thesis in the Master Program, Supply Chain Management DAVÍÐ ÞÓR FRITZSON KRÍA SÚSANNA DIETERSDÓTTIR Department of Technology Management and Economics Division of Logistics and Transportation CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden, 2012 Report No. E2012:096 REPORT NO. E2012:096 Analyzing administrative processes in a 3PL company Mapping of administrative processes and identification of key time drivers Master thesis in the Master´s Program Supply Chain Management DAVÍÐ ÞÓR FRITZSON & KRÍA SUSANNA DIETERSDOTTIR Department of Technology Management and Economics CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2012 Analyzing administrative processes in a 3PL company Mapping of administrative processes and identification of key time drivers DAVÍÐ. FRITZSON & KRÍA. DIETERSDÓTTIR © DAVID. FRITZSON & KRIA. DIETERSDOTTIR, 2012. Technical report no E2012:096 Department of Technology Management and Economics Chalmers University of Technology SE-412 96 Gothenburg Sweden Telephone: + 46 (0)31-772 1000 Chalmers Reproservice Gothenburg, Sweden 2012 Abstract As administrative services for 3PL companies can be very specialized and customer unique it can be difficult to estimate and specify the amount of administration needed for a future client. At Schenker Logistics Landvetter this has become one of the most problematic factors when quoting possible clients i.e. to estimate the manning need in the Control Towers (CT), where the majority of administration is performed. Therefore, the main purpose of this thesis is to analyze what drives time in the CT and how much. In order to fulfill this, two main sources of data were needed. Firstly, in order to increase the knowledge on what activities are performed in the CT, all processes for the customers covered in thesis were mapped and described in detail. This was made possible by observing the processes and interviewing the staff responsible for each customer, identifying which processes were executed and from there going through each step of the process in detail. Secondly, a time study was performed by measuring the time duration per process and identifying different time drivers from direct observation, interviews and time templates. These results were then consolidated in to a generalized framework that was used to create an algorithm that is supposed to calculate the basic CT manning need for a future client. This then leads to the discussion part of the thesis where improvement recommendations were suggested both in relation to pricing the CT function in a more precise and accurate way as well as general improvements identified by the CT staff and authors. Keywords: process mapping, administrative processes, time drivers, pricing administrative services i ii Table of Contents 1 Introduction ..................................................................................................................................... 1 1.1 Background ................................................................................................................... 1 1.2 Problem discussion ........................................................................................................ 2 1.3 Purpose and research objectives .................................................................................... 3 1.4 Delimitations ................................................................................................................. 4 1.5 Thesis outline ................................................................................................................ 4 2 Literature review ............................................................................................................................. 5 2.1 Processes ...................................................................................................................... 5 2.1.1 What is a process? ........................................................................................................... 5 2.1.2 Process mapping .............................................................................................................. 5 2.1.3 How to perform process mapping ................................................................................... 6 2.1.4 Process mapping techniques and icons ........................................................................... 6 2.2 Time studies .................................................................................................................. 8 2.2.1 Time drivers ..................................................................................................................... 9 2.3 Cross training ................................................................................................................ 9 3 Method .......................................................................................................................................... 11 3.1 Research approach ...................................................................................................... 11 3.2 Data collection ............................................................................................................ 12 3.2.1 Interviews and observation ........................................................................................... 12 3.2.2 Time study ..................................................................................................................... 13 3.2.3 Literature review ........................................................................................................... 13 3.2.4 Other source of data ..................................................................................................... 14 3.3 Method assessment ..................................................................................................... 14 4 Empirical data ................................................................................................................................ 15 4.1 Schenker Logistics Sweden (SLOG Sweden) ................................................................... 15 4.1.1 Schenker Logistics Landvetter (SLL) ............................................................................... 15 iii 4.2 Main processes in the CT ............................................................................................. 16 4.2.1 Inbound ......................................................................................................................... 16 4.2.2 Outbound ...................................................................................................................... 16 4.2.3 Returns .......................................................................................................................... 16 4.2.4 Meetings ........................................................................................................................ 17 4.2.5 Invoicing ........................................................................................................................ 17 4.2.6 Support and problem solving ........................................................................................ 17 4.3 Process mapping and descriptions ................................................................................ 18 4.3.1 Customer A .................................................................................................................... 18 4.3.2 Customer B .................................................................................................................... 32 4.3.3 Customer C .................................................................................................................... 49 4.3.4 Customer D .................................................................................................................... 60 4.3.5 Administrative processes in the CT ............................................................................... 75 4.4 Time-study .................................................................................................................. 75 4.4.1 Customer A .................................................................................................................... 76 4.4.2 Customer B .................................................................................................................... 80 4.4.3 Customer C .................................................................................................................... 82 4.4.4 Customer D .................................................................................................................... 84 4.5 Pricing of CT services ................................................................................................... 86 4.5.1 Current pricing approach .............................................................................................. 86 4.5.2 Problem discussion ........................................................................................................ 87 4.5.3 Improvement suggestions ............................................................................................. 87 5 Analysis .......................................................................................................................................... 88 5.1 Most time consuming processes .................................................................................. 88 5.1.1 Customer A .................................................................................................................... 88 5.1.2 Customer B .................................................................................................................... 88 5.1.3 Customer C .................................................................................................................... 89 5.1.4 Customer D .................................................................................................................... 89 5.2 Possible time drivers .................................................................................................... 89 5.2.1 Customer A .................................................................................................................... 89 5.2.2 Customer B .................................................................................................................... 91 iv 5.2.3 Customer C .................................................................................................................... 93 5.2.4 Customer D .................................................................................................................... 94 5.3 The algorithm .............................................................................................................. 95 5.3.1 Volumes sheet ............................................................................................................... 97 5.3.2 The calculation sheet ..................................................................................................... 98 5.3.3 Front page ................................................................................................................... 103 5.3.4 Limitations of the algorithm ........................................................................................ 104 6 Discussion and recommendations .............................................................................................. 105 6.1 Pricing of the CT ......................................................................................................... 105 6.2 Getting customers routined ........................................................................................ 107 6.3 Staff cross-training ...................................................................................................... 110 6.4 Communication between CT and production ............................................................... 110 6.5 Improvements in the invoicing process ....................................................................... 110 6.6 Improvements in the return process ........................................................................... 111 7 Conclusions .................................................................................................................................. 112 7.1 Concluding remarks .................................................................................................... 112 7.2 Future studies ............................................................................................................ 113 8 References .................................................................................................................................. 114 Appendix A ............................................................................................................................ 115 Appendix B ............................................................................................................................ 116 v vi