CASE STUDY

Velky Potraviny Prague

Course Name : BPMM 6073 LOGISTICS
MANAGEMENTS
Prepared By
: KHAW CHAI HOON (814795)
LIEW KONG WANG (814613)
QUAH ENG HONG (817290)

Introduction
Juraj Zdenek warehouse manager received
complain from employee about the bonus
system.
The bonus system depend on quality &
performance of work each penalty/ error will
deduct the bonus payout.
Juraj knew some of error are explainable.
Juraj call meeting to discuss compensation
issue and others issues may arises.
Juraj has cost spending constraints to
consider.

Brief on Velky Potraviny

One stop, low cost grocery store.

Establish in Czechoslovakia in 1991.
Open first store in Prague 1992.
In 1996, 37 stores in Prague.
Each store full service supermarket carried 1,300 SKUs.
Each store 6400 -7500 ft2.
Plan extend to 67 stores within 2 years
Warehouse area 9000 sq. m ( approx. 2X soccer field)
7500 palettes (Shelving + floor space)
Average value stock 75mil CZK
Warehouse inventory turnover is 18-24days.

About Velky Potraviny

Warehouse -Task Flow & Responsibilities by

Job Title

Warehouse -Task Flow & Responsibilities by

Job Title

Warehouse -Task Flow & Responsibilities by

Job Title

The Czech Background

Czech gained independence in 1918.
One of the most prosperous economies in Central
Europe Capitalism flourished.
During WWII, lost independence occupied by Nazi
Germany, then liberation by Red Army and
become Soviet sphere and fell behind Iron
curtain - Change from Capitalism to Communism.
In 1968, Czech first attempted to change the
nature of Communism The Velvet revolution
In mid 1990s, freely elected government was
formed.

Q1.What are the problems that

Zuraj Zdenek is facing in the
warehouse?

EXTERNAL PROBLEM
High inflation due to price liberalization.
Non convertible currency.
Poor distribution system
poor transportation infrastructure lack of road,
overburdened railway system
Lack of warehouse space
Evolving business, unclear regulatory, legal & tax system.

Cultural, habit & Perception of buyer

not use to buy groceries in large quantity or do one stop
shopping
prefer shop daily at neighborhood specialty store ex : bakery,
fruit merchant
Specialty store better quality and knowledge of the product.

EXTERNAL PROBLEM
Face fierce competition in Prague

INTERNAL PROLEM
Poor bonus system
Lack of real time data / communication.
Retail store are not fully computerized, some orders send via modem & some
manual orders 2-3times a week.
Buyer did not have an update information on inventory level for material planning.
Warehouse didnt operate the perpetual inventory system.

Un-matching business growth between numbers of retails

store vs. warehouse capability and activities.
Error rate for warehouse is 3%
Breakage issue
Goods not follow FIFO
Manual control on the operation - conscious eye.

Wrong KPI measurement function group

Buyer stock out of warehouse

 Poor supplier management

Quantity discrepancy on delivery buyer order buffer
Poor communication on delivery and order no telling when the goods deliver.

Inefficient warehouse layout design

Ramp on west side not being used because the height of ramps not match with
height of Velkys van.
Only 2 doors for receiving docks although the south ramp can accommodates up to
6 vans.
Office strewn all over the warehouse
Unoccupied space in North-west office.

Unorganized return empty bottles by customer from

retails store causing space constraint.
Occupied unused ramps and flow to receiving and shipping ramps ( at least
1000pallets)
Hard time to negotiate with vendor to collect the assorted bottle vendor only
collect standardized glass bottles

Q2. Evaluate the processes within

the warehouse and suggest ways to
streamline the flows.

Q3. Provide detailed short-term and

long-term action plan for managing
the warehouse.