Enhancing Operational and Marketing Viability of NLC in the Logistic Industry

Using Technological Innovation

BY
Auon Abbas (14826)
Waquas Hassan (16001)
Furqan Ahmed Khan (16260)
Uneeb (21204)

Supervisor
Dr. Mehmood Ali

Department of Supply Chain Management

Institute of Business Management (IoBM)

Karachi

May 2019
Table of Contents
Chapter 1 Introduction.............................................................................................................................. 4
Chapter 2 Literature review ..................................................................................................................... 9
Chapter 3 Research Methodology .......................................................................................................... 15
Chapter 4 Data Analysis and Discussion ................................................................................................ 17
Strengths ............................................................................................................................................. 22
Weaknesses ......................................................................................................................................... 22
Opportunities....................................................................................................................................... 22
Threats................................................................................................................................................. 22
Chapter 5 Conclusion ............................................................................................................................... 23
References ................................................................................................................................................... 24
 Acknowledgment

We would like to thank Allah the almighty for providing strength and capabilities to pursue this
project and NLC for trusting IoBM and providing this learning opportunity to IoBM students.
Special Thanks to our course facilitator Dr. Mehmood Ali for standing with us in all odds an evens
throughout this project without his guidance it would not have been possible to accomplish this
task. Hats off to Dr. Moin Ali Khan, HOD Supply Chain, for thinking diversely and connecting
students with such big organizations NLC, helping us to groom our experiential learning and
enhancing our skill set for practical life ahead. It has been an amazing learning experience.
Best regards.
Chapter 1 Introduction
Logistics and supply chain managmenet act as an vital foot in the growth and progess of any nation.
Logistics is a key component in every organization in any sector of the economy. The key
components of logistics involved, the means of transportation, cargo handling, warehousing and
dispatch of goods. Transportation, trucking and service delivery is the strength of a effective and
efficient logistics and supply chain management system. Transportation yearly costs for 34% of
the logistics charges (logistics charges the books for 11% of the total sales or revenue).
Transportation is a key component (cost center) that determines and constitutes a major impact on
the overall optimal efficiency "Pareto Optimality" in any organization. When it comes to
minimizing the overall cost of production or overall cost of provision of services. Transportation:
means rail, road, air, sea, the size of cargo, the turnaround time (TAT), the feasibility as per the
geographic array.
The Freight system has straight and indirect relation with all the vital divisions of the country. The
scope of the freight structure shakes the economic progress of any nation. A proficient and worthy
quality freight structure contributes to trade and industry growth by minimizing manufacturing
costs.
Highways and Rail networks are the two core pillars of Pakistan's Local Transportation Structure.
The responsibilty and role of Pakistan Rail network in the cargo delivery is on the deterioration
since the actual inception. In the 50s, its portion in cargo delivery was above 80% which has
currently shrunk to 5% merely. Highway freight division in Pakistan is extremely disorganized
and informal and is ruled by drivers cum holders of one,two or more lorries.
Road And Highway Structure:
In 1947, at the period of freedom, the total roads and highways were approximatel 50,000 Km,
with no proper motorways, and the roads concreteness was not more than 0.07 Km/sq Km while
Pakistan has currently above 264,000 Km roads connecting through 579 Km boulevards and 10906
Km of freeways with a road density of more than 0.30 Km/sq Km. Pakistan has now over and
above 178,000 km High- roads and 86,000 kms Low roads. Overall road and transportation
network, which were 229,595 kms in 1990-90, increased to 264,000 km by 2005-09 ― an
escalation of 16 percent. Through the on going financial year, 3.2 percent increase in the
construction of high typed road and networks on the other hand the network of the low typed roads
has diminished to 3 percent.
Fro the construction, development and maintenance of roads and highways is under the supervision
of National Highway Authority (NHA).Road maintenance account (RMA) is also controlled by
the National Highway Authority (NHA).Repair and maintenance is highways and roads is financed
through toll revenue generated through the fiscal year. Also, in the yearly budget announcements,
Grants are also given by Federal Government to the National Highway Authority of Pakistan. The
LTV vehicles and cars on highways and roads have been expanded and increased at a sensible
pace particularly over the most recent five years there has been huge development in this area. In
the past five years, vehicle generation, including autos, trucks, cruisers, tractors, transports and
other business vehicles, has hit the roof from 195,791 units production in 2001-02 to 998,592 units
production in 2005-06 that show growth over 400 percent . Traveler autos and light business
vehicles have seen generous development; from 50,000 units/year have developed, to 200,000
units/year in genuine ascents by 300 percent according to the statistics beaureu of Pakistan . i

Railway Network in Pakistan:

Taking a birdwiew of railways , they have certain advantage over transportations through roads
for the huge scale traffic undertaking and for the high hauling drive mutually for travelers and
freight moreover giving customers a safe and secure, economical, and environment-friendly type
of transportation service.
Evaluatng the railway network of Pakistan it compromises of more than 7000 kilometers route;
above 7,200 Km of wide scale range with 320 Km of meter scale. In total Pakistan Railway has
589 stations spread across the country in the network, and also have 1,000 Km of double track
sections rails with 300 km of electrified rails sections. All through world history, rail traffic has
had a significant influence in the improvement and monetary flourishing of countries. Railroads
are an important wellspring of work while producing a lot of income to the advantage of the
economy. Till the seventies Pakistan Railways was the basic mode of transportation of goods and
travelling in the country. Be that as it may, redirection of effectively rare assets towards the
extension of the street arrange, the presentation and the state of Pakistan Railway declined and a
lot of inland traffic diminished from 41 per cent to 10 per cent for the traveller and 73 per cent to
4 per cent for cargo traffic. Pakistan Railways (PR) is a division of the MOR and is administered
by the Railway Act of 1890. The Railway Board is the basic leadership organ and the Secretary
of the MoR fills in as its Chairman. The PR contains two practical units: the Operation Unit and
the Manufacturing and Service Unit each headed by a General Manager who is responsible to the
Railway Chairman for the presentation of the unit.
The quantity of cargo organizes on the Pakistan Railways is 19,538 including 9,700 secured
wagons, 5,276 opens wagons and 4,662 exceptional sort wagons for the carriage of fluids,
explosives, apparatus, animals, timber, and rails, and so on.. This does exclude 629 departmental
wagons and 328 brake-vans. An aggregate of 17,863 of those wagons are 4-wheelers, and the rest
are generally 8-wheelers. The quantity of cargo wagons has diminished from 1976, on the other
hand, after 1992, the rate of decrease is more. The majority of the wagons are obsolete and low
execution. They are just furnished with vacuum stopping mechanisms. A few wagons, for the most
part, the 4-wheelers, are limited to task speeds under 55 Km/hr on account of their low security.
The main elite wagons that are as of now helpful are 130 level wagons that were obtained from
China and are utilized for holder transport. The genuine vehicle time from Karachi to Lahore for
the new superior wagons is 26 hours, though that of customary wagons is around 60 hours due to
a long-running time as well as a long holding uptime. ii

Air Freight and Airports:

There are seven worldwide airplane terminals, one is at Islamabad, four at capitals of provinces
and one is at Gwadar. Other than these 19 standard airplane terminals are situated at other real
urban areas. Significant airplane terminals aside from Gwadar are worked mutually by the Civil
Aviation Authority (CAA) and the Air Force.
National Logistic Cell
The National Logistics Cell press name NLC, is a Pakistani logistics company run by the Pakistan
Army. The NLC functioned in as the sole reason for emergency managment and coordinations
development without prior warning or short intimation by the Pakistan Government. The NLC
gives state-crisis level administration services to the legislature and is one of the main emergencies
the executives government expert in the nation. It was set up in 1978 NLC and has 40 years of
Legacy.iii We are performing our research on National logistics Cell Freight Services which
provides custom made solutions to its consumers. Freight services of NLC are offering the
following services:
 1- Dry Cargo
2- Liquid Cargo
3- Water Services
4- Fleet Monitoring Services

But NLC Freight services are differentiated from its competitors because of the following services:
International Standard Rest Areas:
The National Trucking Policy of Ministry of Industries visualizes the demonstration of committed,
multipurpose parking and resting offices at areas nearby national inter states highways to fill in as
consistent assistance point by having all feasible help infrastructure. In compatibility of a similar
approach, NLC as a team with accomplices and partners is setting up International Standard Rest
Areas on the back of National Highways and CPEC courses. Drivers Emergency and Rest Areas
(DERAs) will encourage the Road Freight Industry and general sub ordinates, by giving relaxing
area and cutting edge offices. It will also deploy an extensive network of repair and recovery
services of both light and heavy vehicles all across the country here are the facilities provided to
drivers in DERA:

iv

Dry ports at NLC:

The Dry Ports overseen by NLC are known for their customer agreeable offices and cutting edge
framework. The agents and suppliers managed offices like simple traditions breathing space,
exhaustive taking care of administrations, safe and available warehousing and inland development
of commodities to any area inside Pakistan. The Dry Ports are sufficiently furnished with most
latest scanners, weight bridges, cranes, reach stackers, top lifters, fork lifters, pale flame crash,
generators, and mechanical sweepers, and so fort.v
Industry Analysis
Critical Analysis of the Porter Model in Logistic Industry of Pakistan
Five Forces Low Medium High
Supplier Power √
Buyer power √
Barriers to entry √
Substitute √
Industry Competitors √

Critical Analysis of the Porter Model in Global Logistic Industry

Five Forces Low Medium High
Supplier Power √
Buyer power √
Barriers to entry √
Substitute √
Industry Competitors √

PESTLE Analysis of Logistic Industry

Political Factor:
1. Level of corruption
2. Militant’s threat/ CPEC security
3. Bureaucracy and inference by authority
4. Trade regulation and tariffs
Economic Factors:
1. Intervention of Government in the free market
2. Interest rates
3. Inflation rates
4. Growth rate or GDP of economy
Social Factors:
1. Demographics and skill level of the people in the country
2. Standards of education in the trucking industry

Technological Factors:
1. Current technological development by rivals
2. Impact of technology on product offering
3. Impact of value chain structure in the services sector.
Legal Factors:
1. Consumer Protection
2. Health and Safety Law
3. Data Protection

Chapter 2 Literature review

2.1 Literature Review:

China-Pakistan Economic Corridor: Growth of Transport & Logistics Sector in Pakistan:

The China-Pakistan Economic Corridor (CPEC) is a blend of obligation and subsidizing of a
foreseen US $62 billion through the specialists of China to create power and foundation extends
in Pakistan. It is focused on 17.7% of its all-out CPEC venture that is US$11B to the improvement
of vehicle and coordinations benefits in Pakistan. This won't just encourage China's extension of
a substitute and transporting hyperlinks all through Central and South Asia, anyway furthermore
give stimulus to the effectively creating conveyance and coordinations part inside the nation. In
2018, understanding the significance of trade between China and Pakistan, the International
Federation of Freight Forwarders Association (FIATA) suggested a separate ministry for Transport
and Logistics. There is no such development has been made so far but his suggestion based on the
inconvenience faced by the association members to go from ministries to ministries to resolve their
basic issues. Pakistan is one of the few countries of the world where separate ministry for Transport
and Logistics has not yet been created.
The utilization and sharing of a coordinations bundle, a returnable compartment, frequently out of
stock, between Canada Post and its huge mailing clients. Institutionalizing and sharing calculated
bundling ought to bring individuals from an inventory network unmistakable advantages from
profitability and effectiveness gains. We verified that stock irregularity between supply areas and
request areas caused the issue. We found that distinctive bookkeeping strategies gave altogether
different outcomes in ascertaining the advantages. We reasoned that there is dependably an
advantage for the mailer. For Canada Post to profit, in any case, the holder must be returned
rapidly. We utilized a base cost stream model to affirm that the organization has enough
compartments to fulfil the request. With better arranging and control of the stock, Canada Post.
The new holders are prominent with workers and clients. Utilizing the holders decreases the
measure of animal power required for mail taking care of and keeps the arranged mail-in unit loads.
The compartments are cleaner and simpler to deal with than mailbags. Holders have a standard
size at present, in the gathering and dispatching arrangement of Chinese. At present, in the
gathering and dispatching arrangement of Chinese port, the extent of rail-ocean multi-purpose
transportation is exceptionally low (Mohammed, Nilssen, and Proske, 2015) , which influences
the rate of merchandise turnover and the gathering and appropriating limit of port and will prompt
the heavier weights on-street transportation of spot where the port is arranged, and the air is
seriously contaminated (Jiang, Lu, and Tan, 2015), and transport cost of compartments
additionally is expanded altogether (Weyhenmeyer, Fröberg, and Karltun, 2015). Rail-Sea multi-
purpose transportation is one of the successful approaches to take care of this issue (Wang and
Zhang, 2015). In the Internet of things condition, the unwavering quality of the coordinations
system of rail-ocean multi-purpose transportation alludes to the likelihood that the multi-purpose
transportation framework can finish the evaluated activity and the appraised volume of traffic in
the prescriptive time (Soto-Navarro, Somot, and Sevault, 2015). The customary technique utilizes
the Bayesian system to construct the flaw tree of coordinations and uncover the unwavering quality
of coordinations on this premise, to understand the dependability investigation of the coordinations
organize (Son, Choi, and Yong, 2015). There is the issue that the expense of coordinations organize
an unwavering quality investigation of rail-ocean multi-purpose transportation is high and the
proficiency of examination is low. Along these lines, the paper proposes a technique for
coordinations arrange dependability investigation of rail-ocean multi-purpose transportation
dependent on EOQ in the Internet of things condition. vi

Measuring Truck Driver Time Efficiency

According to Günter Prockl and Henrik Sternberg, 2015, for logistics company how drivers spend
their time plays a pivotal role in maximizing the profitability of the company. Estimating is the
initial step to distinguishing upgrades Furthermore, disposing of inefficient exercises. Estimating
the utilization of time beyond a shadow of a doubt exercises can turn out to be very troublesome,
particularly in enterprises where work is done without prompt supervision, for example, street
cargo haulage. However, "given the effect of driver exercises on how well engine transporters
address the issues of their flow and potential clients, the capacity of transporters to control the
activities of their drivers ought to essentially affect the company's intensity" (Mello and Hunt 2009,
20). Contingent upon the nation, time speaks to the biggest or second-biggest expense for engine
transporters, with the compensation cost of the drivers representing 20– 55 percent of the
administrator's absolute expenses. Time is likewise focal in the use of the engine bearers' armadas
and, consequently, turns into a key factor in deciding the effectiveness of engine bearer activities
(Simons, Mason, and Gardner 2004; Villarreal, Garcia, and Rosas 2009). The Motor Carrier
Efficiency Study (MCES) pointed out the noteworthiness of squandered driver time, for example,
the time wasteful aspects identified with stacking and emptying activities, which are evaluated to
cost administrators in the United States over $3 billion yearly (Belella et al. 2009). In their
investigation, Sternberg, Prockl, and Holmström (2014) found that drivers spent just 45 percent of
their working day driving, while 5.7 percent was spent on pausing and 5.4 percent on the
organization. They additionally discovered that presenting data correspondence innovation (ICT)
and improving transport forms could decrease time squandered on pausing and organization, and
feature the need to examine drivers' exercises.vii
The Time For Digitalized Transportation Solutions:

The coordinations worth chain of expedited service is a dynamic procedure with making
coordinations esteem for clients. In the customary, the "client" is the outside clients of a venture,
and the "administration" is the inward "clients". In the coordinations worth chain, joining the
inward and outside variables, the express endeavors improve the administration nature of outer
and interior clients synchronously, to get the full and proceeded with points of interest of inside
and outer assets, and after that structure the center coordinations aggressiveness.
Digital truck innovation will completely change the way freight is transported on highways around
the world. Trucks will drive not far off guided by an abundance of data from transportation
foundation and different vehicles, improving use through remote upkeep, expanding the
effectiveness, and upgrading wellbeing.
Combined with the digital supply chain, the promise of connected trucks is huge. However, the
dangers for those players who don't move to begin constructing the abilities and plans of action
expected to win in this new world are the equivalent.
The distribution centre framework allocates each truck to a stacking dock naturally, were a few
independent forklifts are prepared to empty. They at that point move the heap on to another piece
of the distribution centre, where it is arranged by machine for neighbourhood conveyance courses
and stacked for conclusive conveyance on the proper little self-ruling electric trucks.
This "digitized trucking," and the coordinations business that it is a piece of, is still later on for in
any event 10 years, yet parts of it are as of now being set up—on account of two noteworthy
worldwide patterns that are changing the trucking business. In the first place, administrative
endeavours worldwide to oversee environmental change and spare vitality and assets are
compelling the business to digitalize.viii

Putting the brakes on transportation cost:

With a strong economy-boosting truck shipment volumes, the articulation "shipper of choice" has
maneuvered into thought. "Bearers can be explicit," says Brad Stewart, pioneer of Rock homestead
Supply Chain Solutions. They will pick shippers that are definitely not hard to work with. Without
a doubt, a couple of drivers go online to rate shippers, much like clients rate diners. Here are a few
different ways you can be a not too bad assistant and rein in trucking costs: Agree on what "on
schedule" signifies. Does it allude to when truckers get through the distribution center door or the
time they touch base at the stacking dock? A misconception can mean trucks sit inactive. "On the
off chance that shippers need to lower trucking costs, they need to assess to what extent trucks will
sit in the yard, not profiting," says Richard Stewart, Ph.D., teacher, transportation and
coordinations the executives, University of Wisconsin, Superior. At that point they have to limit
that time. Transporters that face reliable deferrals at a specific area may choose to stay away from
it, constraining the shipper out into the market—and higher rates. Distinguish transporters in your
path. Most bearers that as of now have resources on your courses can include stops at your areas
more effectively than a transporter from outside the district. Influence membership benefits that
give anonym zed information on what different organizations pay for a specific path and mode.
"With every one of the information focuses, you can rapidly make sense of a sensible range," says
Jonathan Eaton, head and national production network practice pioneer with bookkeeping and
counseling firm Grant Thornton. This data can place you in a superior arranging position. Band
together with your transporter. Since driver maintenance is so significant, numerous transporters
offer inclination to shippers that become solid accomplices. Drivers frequently like to work with
shippers whose items, individuals, and courses they've come to know and like. Over these
movements, the limit in numerous transportation modes has fixed. The truck driver deficiency has
been among the main three basic issues confronting the North American trucking industry for 12
of the previous 14 years, finds an ongoing study by the American Transportation Research
Institute. The deficiency resounds past the trucking business, the same number of shippers go to
other vehicle modes to move their products rapidly and productively.ix

Using Porter's Framework Analyzing Freight Transportation Infrastructure in Pakistan

Pakistan Geo-Strategic area manages that accentuation out and about cargo area to broaden the
offices at ports to differenet nations, particularly the Asian States, which can create it a territorial
center aimed at universal exchange through incorporating it with the global transportation
framework. Expanding exchange capacities, mutually at the residential and territorial dimension
requests this division to redesign and furnish itself with armada meeting TIR shows. In this manner
upgrading productivity by diminishing the expense to the economy causing the type of street harm,
higher fuel costs. A proficient trucking framework is a pre-imperative to become a territorial
exchange center point, for Pakistan. Consequently, the trucking armada need to be technologized
in request to encourage extending exchange exercises and beat misfortunes emerging out of area
wasteful aspects. Porter's analysis of the logistics industry addresses the bargaining power of
suppliers, bargaining power of the buyer, Barriers to entry, Substitute, and Industry competitors.
Bargaining power of supplier in the logistics industry is low as there is a major informal player in
the road freight sector. Conversely, the dealing intensity of the purchaser is high attributable to the
casual and divided nature of specialist organizations. Furthermore, Barriers to section are low
inferable from effectively accessible capital and joint effort with the products conveying
organizations. A rearing ground for people business people and is simple as loaning cash from the
bank, purchase the truck and work.x

Problems and Opportunities in Pakistan for Logistics Service providers

Some ongoing examinations led to break down the earth to work together on the generally speaking
Global Competitive Index (2010-11) led by the World Economic Forum. Pakistan was positioned
as 123 out of 139 nations scored beneath Kenya (106) and Ghana (114) as per the World Bank
study of 2010, Logistics Performance Indicators rating were given dependent on a few parameters
of the nation's presentation. There The difficulties confronting us today because of exchange
progression and globalization are that of keeping up our universal intensity. These new impulses
have put colossal weights on us and horrible showing in only one part of our coordinations
inventory network could genuinely influence the aggressiveness of our traded items. Accordingly,
a proficient and financially savvy supply of coordinations administrations has turned out to be
indispensable for our survival. were 155 nations that were dissected on these records. The general
LPI of Pakistan was positioned at 110 To progress and understand this vision, we have to by and
large work on framework advancement. Improving our fundamental framework is a key segment
that will legitimately and significantly influence our nation's worldwide intensity and the capacity
to draw in speculations. Sadly, our nation's present framework is as yet deficient and in a few
territories need redesigning. Improving our vehicle system will reshape the nation's physical and
financial setup. From divided island economies, the nation can build up a brought together and
incorporated economy where individuals and merchandise can move and exchange quickly and
effectively. It is with this vision that we have to centre our endeavours in reinforcing our network
and exchange aggressiveness transport framework and exchange assistance. Ideally and in the long
run, they become our vehicle in getting to world markets and coordinate our household economy
to the bigger worldwide economy, The administration should bolster national exchange assistance
changes and systems, further, The overarching loan cost in the nation and the absence of financing
offices has been a genuine test for the improvement of coordination and cargo sending industry,
One of the real explanation behind not upgrading our progression of merchandise is broken down
arrangement of various co-related capacities. NHA, Railways, Ports and Shipping,
Communications, Post Office - we have these dis-coordinated capacities bringing no consolidated
efficiencies and improving an incorporated methodology. These capacities have storehouses
techniques with no coordination with one another. Our trucking armada structure does not satisfy
the need for worldwide measures. According to worldwide principles explained trucks (trailers)
ought to be in any event half of the truck armada while, in Pakistan, enunciated trucks are just 12%
of the piece.
Alongside difficulties, there are numerous open doors for coordinations suppliers as Pakistan's
geological area can possibly turn into a solid Hub for course through traffic among Asia and
Europe. Our Geographical network to China on one side and Europe by means of Iran and Turkey
on the opposite side makes us a consistent exchange passage and coordinations Hub.

Chapter 3: Research Methodology

Research Methodology can be any of the one, qualitative and quantitative, in Value Chain
Analysis (VCA). There is no restriction to use anyone out of these approaches. But, Hellin and
Meijer (2006) while describing guidelines for Value Chain Analysis strongly emphasize that the
initially qualitative approach should be used to identify factors to be work on then to follow a
quantitative approach to assess the significance of the problem.

3.2 The case study

National Logistics Cell a name few know as a logistic provider. Currently, NLC has no significant
impact on the Logistics industry. NLC tries to transform its processes into modern organizations
to compete in the industry but so far, it is unsuccessful. The issues which remain constant over the
years are lack of customer services, inaccessibility to the formal market, high compliance cost, no
core competency, and strict pricing policies. Before the problem, there are few ground obstacles
which restrict NLC to dominate in the market. These factors include a centralized decision-making
process, lack of digitalization, old vehicles and inexperienced professionals to lead the
organization. However, we also observed a few pros which ensure the potential of NLC include
the associated name of an integral institute of Pakistan, the infrastructure of the work and a large
portfolio.

Investment is considered as the remedy of organizations to getting them older. Logistic business
is completely based on vehicles used for transportation. Interestingly, NLC has vehicles as new as
20 years ago. According to IRS, the U.S government agency responsible for the collection of taxes
and enforcement of tax laws, assets that have an estimated useful life of 05 years includes cars,
taxis, buses, trucks, and computer and office machines. Without taking care of useful life, NLC is
using the vehicles up to 4 times over the useful life. Customer service is considered as a key to
retaining the existing customer while attracting the new ones. NLC customer service is one of the
low rating services considered in logistics companies. NLC has no call center, no one window
operations and no facility centers for customers to assist with their orders. NLC also do not
approach formal markets where most cargo is based upon. The issue also persists with high
compliance costs NLC has to bear as an organization while having less amount of orderings. Other
logistics companies and particularly unofficial logistic providers usually evade taxes, overlook
policies of NHA and other related institutions to save money and provide low-cost services to
customers. NLC lacks in identifying its core competency. In this digitalized world, not every
company can provide all the services required for customers. Few have to leave while few have to
opt but in NLC they just opt what they want and they leave what they do not. After all these
services, in some cases, NLC charge like tier A logistic provider which also burdens their bottom
line to be positive.

3.2 Data collection

In this research, due to time constraint, we followed the Qualitative approach to identify the factors
which have an impact on the performance of the National Logistics Cell. In this regard, we
conducted interviews with different level of management at National Logistics Cell. Further, we
compared it with market practices and benchmark a few dominant names of the Logistic Industry.
To further strengthening our data, we take references from different research papers and with the
help of different newspapers, journals and business magazines we include different articles to
provide substantial pieces of evidence to our recommendations.

Chapter 4: Data Analysis and Discussion

The nature of the questionnaire was descriptive so unanimously agreed upon views are being
incorporated about the analysis done below.
This discussion not only involves officials of NLC but also includes a fruitful discussion with the
leading freight forwarders (Potential customers of NLC) such as Yusen Logistics Mount Shipping
and Logistics, Pak link Shipping, Yaseen Shipping Venus Global, etc.
The generic discussion revolved around strength and the weakness (Internal factors followed by a
huge pool of opportunities (untapped markets) and the threat of existing competition for NLC in
the logistics industry.

4.1 Value Chain Analysis Methodology (VCA):

We planned to design strategy through a value chain analysis framework so as we can identify
which activities consume high operating costs and which activities bring higher value for the
organization. Value chain analysis helps any organization to identify its activities into primary and
supporting and also bring information about activities that enhance value to final services and
evaluate these primary and supporting activities to minimize cost and surge diversity.
Source: "Image: Everything You Need to Know About Value Chain Analysis | Smartsheet", 2015

Basically, through Value Chain analysis we identify NLC internal activities that help NLC in
converting offerings into services to its customers. We identified that Freight services of the
National logistics cell are facing the following problems in their respective departments.
• Right Person, Right Job

In Freight services, the right person for the right job is not available. We analyze this issue by
carefully looking into the human resource management department where we found that for certain
positions in the NLC, officials are appointed from Pakistan forces like army, airforce, and navy.
These officials are appointed for two years in different regions of Pakistan. In these two years, the
first years are wasted on the training and development of these officers and in the second year,
these officers just perform the daily basis duties and contribute nothing innovative in the
organizational development, as they haven’t got specialized skills in their assigned task.

• Customer Service
A discussion with the Khawja Saleem(Head of Marketing), we found there is no concept of
customer service in Freight services. NLC does not hold after the customer service department.
 • Product Portfolio
We also analyze that NLC having a wide range of strategic business units lacks product portfolio
in freight services units. As with advance technological development in the trucking industry
globally, NLC is maintaining the product portfolio of the 70's and 80's era.

• Market Access
Evaluating the NLC we also found that Freight services do not have proper market access. In
Freight services, the process does did not ensure that the customers would get benefit from supply
chain management, and get fast and sustained access to the company's services at the right time
and the right place.

• Decision Maling Process

Looking into the hierarchy of NLC we also study that the decision-making process in the
organization is centralized and lengthy. For instance, if Truck requires new tires; the concerned
person has to take approval from three department heads. Because of this, trucks remain idle for a
certain period of replacement of tires, which results in a loss that couldn't happen if there is a
decentralized authority system.

• Responsibility and Authority Framework

One more issue Freight services face is that there is no proper structure of responsibility and
authority framework. The employee responsible for a certain job does not hold the authority to
improve any task and take any action without following prior approval and authorization process.
And the employee in charge of authorization does not hold the responsibility towards the tasks.
• No Core Competence
Regarding the Freight service of NLC, we also discover that Freight services do not have any
unique selling proposition in the market. They are just selling the same services like any other
service provider.

• Brand Loyalty
Looking into the internal activities and discussion with Khawaja Saleem we also discovered that
there is no concept of Brand Loyalty in the organization. NLC hasn't got any framework for
creating brand loyalty within customers and employees. Because of this, another problem arises
that employees lack a sense of ownership and achievement.

4.2 SWOT Analysis Methodology:

We routed the SWOT analysis by taking into consideration the core competencies (Strength)
followed by the operational efficiency analysis (Internal Factors weakness ) in which the major
flaw that we identified is the lack of logistics fleet and traditional mindset still prevailing at NLC
even in this new millennium where the technology is playing an immense role in business
expansion of the logistics industry globally.
We were astonished to hear that NLC has not acquired any new vehicle for more than a decade
which means that capital expenditure is lacking leading to a shortcoming in the logistic
infrastructural development.
One of the legal cases being discussed with Mr. Asad Gill, the owner of cosmic transportation &
chartering network Pvt. ltd in which a legal hearing was being discussed related to monopolistic
behavior being practiced by NLC in the segment of NATO Supplies in Afghan Transit initially it
was a golden sparrow that was being rewarded by govt of Pakistan to NLC taking into
consideration their strong affiliation with Pakistan Army and reputation in handling DG and non-
DG goods especially in Afghan Transit, however, instead of establishing a benchmark in the
segment NLC outsourced the fleet from the local truck owners and left no stone unturned to
maximize the profit which ultimately led freight forwarders (their core customers) with no
financial feasibility in terms of operating in this sector (Afghan Transit) this would have been a
game-changer in terms of financial viability if NLC would have kept this market intact with profit
satisficing model. Unfortunately, this did not happen.
National Logistic Cell, being a national logistic have huge opportunities to undertake the end to
end supply chain process not only in logistic but in international as well till now a restricted service
portfolio of NLC in itself is the biggest challenge and as well as an opportunity for the organization
strategic collaboration with the national flag carrier PNSC (Pakistan National Shipping
Corporation) will provide NLC to enter in the sea freight segment globally similarly, a strategic
alliance with Pakistan International Airline can open new gateways in the AFF sector for NLC this
will not only help NLC to grow multi-dimensionally as a brand but it will also provide financial
risk diversification and cash flow divesting to manage the overall product portfolio profitably this
collaboration will ad on the two new SBUs under the umbrella of NLC product portfolio range
Logistic industry is generally being derived by the international trade a significant impact of the
recent devaluation of the currency which is approximately 21.09% in US dollar against the rupee
parity the core component of the logistics industry is fuel which unfortunately Pakistan has to
import and as per the Petrodollar restriction, therefore, the cost of operation in logistics has
increased significantly as the research studies claim that 80% of the cost of logistics and operation
industry comprises of fuel. The impact of imported inflation along with the devaluation of the
currency is putting a hammering impact on the import prices not only on the finished goods but
also on the capital goods which are being used by the manufactures of the county for manufacturing
export-oriented goods. This significant rise in the cost of production in almost every industry
namely (Manufacturing, textile, and pharmaceuticals) is discouraging the production level hence
reducing the volume of goods to be transported if this dollar-rupee parity (devaluation) continues
to increase at such a rapid rate, this will significantly impact the logistics industry of Pakistan in
general as the volume of the goods being produced will dictate the TEUs (trade volumes) of the
logistics industry
trengths
1. Strong brand equity
2. Most reliable perception in the
logistics industry, followed by 40
years of legacy.
3. Well-developed infrastructure.
4. Edge over Afghan transit and NATO
5. Strong alignment of SOPs as per
PPRA and NHA rules
Opportunities
1. Private middle man services are still
having a question mark on the
reliability
2. End to the end supply chain can
provide a huge customer base hence
long-term profitability
3. Can align with Pakistan National
Shipping cooperation, PIA and
Speedex for end to end at a very
reasonable rate
Weaknesses
1. Lack of customer services
2. Inaccessibly to the formal/commercial
market
3. High compliance cost
4. No core competency
5. Strict product pricing
6. Lack of service portfolio (AFF and
shipping services
7. No CRM technology
8. Loss of the Monopoly in Nato
Supplies
Threats
1. Huge competition by the private sector
brands namely Agility, BSL, IBL,
PTN, etc.
2. Private contractors constitute up to
99%
3. A significant increase in import duties
has put pressure over the competitive
logistic pricing.
 4. Strict regulations in the fiscal policies 4. Variations in policies are creating big
by this new government will create a question mark on the sustainability of
competitive edge against the free the business
riders in the industry

SWOT Analysis:
Recommended Strategies:

Opportunities Threats
(External, positive) (External, Negative)

Strengths The unreliability of Marginal impact on NLC as

(Internal, Positive) middlemen can be easily already following
encashed by NLC owing to compliances regularly.
strong brand equity.

Weakness Integration with the national Implementing tech-based

(Internal, Negative)
flag carrier both Air and Sea solutions and service
will increase the service portfolio will bring a
portfolio. paradigm shift in the
customer's mindset related
to NLC.

Chapter 5: Conclusion
Keeping the above factors into consideration NLC must opt for diversification in the portfolio
and revise its pricing model by negotiating with regulatory authorities to develop a centralized
(government-oriented) air and sea international trade services. Technology adaptation as
recommended above will not only improve the operation efficiency but it will help them to
compete for head to head with the existing competitors who are having this technological
advances such as DEMCO, BSL, IBL, Agility, etc. as we all know that technology-oriented
organization will ultimately excel in future as it is a direct culmination of red tapes in any
industry.

References

i
Analyzing Pakistan's Freight Transportation Infrastructure Using Porter's Framework and
Forecasting Future Freight Demand Using Time Series Models by Muhammad Abbas
Choudhary, Nawar Khan, Muhammad Arshad, Aisha Abbas
(http://climateinfo.pk/frontend/web/attachments/data-
type/0084Choudary%20et%20al%20(2009)%20Analyzing%20Pakistans%20Freight%20Transpo
rtation%20Infrastructure.pdf)
ii
Analyzing Pakistan's Freight Transportation Infrastructure Using Porter's Framework and
Forecasting Future Freight Demand Using Time Series Models by Muhammad Abbas
Choudhary, Nawar Khan, Muhammad Arshad, Aisha Abbas
(http://climateinfo.pk/frontend/web/attachments/data-
type/0084Choudary%20et%20al%20(2009)%20Analyzing%20Pakistans%20Freight%20Transpo
rtation%20Infrastructure.pdf)

iii
https://en.wikipedia.org/wiki/National_Logistics_Cell
iv
http://www.nlc.com.pk/strategic-units/nlc-dera-ir
v
http://www.nlc.com.pk/strategic-units/dry-ports-borders
vi
https://karandaaz.com.pk/blog/china-pakistan-economic-corridor-transport-logistics-sector-
growth-potential-pakistan/
vii

https://www.jstor.org/stable/10.5325/transportationj.54.2.0275?Search=yes&resultItemClick=tru
e&searchText=technology&searchText=and&searchText=truck&searchUri=%2Faction%2FdoB
asicSearch%3FQuery%3Dtechnology%2Band%2Btruck&ab_segments=0%2Ftbsub-
1%2Frelevance_config_with_tbsub&refreqid=search%3A0a41883c2b2d09c9f8a352fed621cd3b
&seq=1#page_scan_tab_contents
viii
https://www.strategyand.pwc.com/media/file/The-era-of-digitized-trucking.pdf
ix
https://www.inboundlogistics.com/cms/article/putting-the-brakes-on-transportation-costs/
x

https://www.researchgate.net/profile/Muhammad_Choudhary2/publication/228758137_Analyzin
g_Pakistan%27s_Freight_Transportation_Infrastructure_Using_Porter%27s_Framework_and_Fo
recasting_Future_Freight_Demand_Using_Time_Series_Models/links/53f09ebf0cf26b9b7dce0a
ef/Analyzing-Pakistans-Freight-Transportation-Infrastructure-Using-Porters-Framework-and-
Forecasting-Future-Freight-Demand-Using-Time-Series-Models.pdf?origin=publication_detail
Appendix-I

QUESTIONNAIRE ( VALUE CHAIN ANALYSIS)

The following are interview questions that we will use in an undertaking of value chain analysis
of NATIONAL LOGISTICS CELL(NLC). This questionnaire, "Questionnaire for Value Chain
Analysis" is conducted with employees at all designations of the NLC, and are designed to:

1. Search out for the primary activities in the value chain, their responsibilty, and links between
different organization deparments
2. Identify different market needs and trends within the internal and external process of value
chain
3. Identify limitations and opportunities that are diminishing growth and competitive advantage
of the organization

We have divided these questionnaires into two parts:

1- Part 1 is related to the identification of factors that affect NLC internally and externally.
2- Part 2 is related to different departments of NLC that play a vital role in organizations
profits.

Following are basic interview questions:

• Can you explain how you work?

• How NLC operates Truck throughout the country?
• What Services does NLC offer?
 PART # 1

This part is related to the identification of organizational factors that affect the organization
internally and externally.

MARKET GOVERNANCE, TRENDS, AND ACCESS

1. What do you see as your chances in getting to business sectors and accessing markets?

2. To whom do you sell your item or services (huge firms, medium sized firms, wholesalers,
exporters, retailers, direct to purchasers, and so on.)? What rate goes to each?

3. Portray the connections you have with these purchasers (who figure out what to deliver, item
particulars, costs, and sum obtained?). How much info do you have?

4. How would you advance and market your items and services?

5. How solid is the market for your product / services at the present time? One year from now?
What patterns do you see?

6. Are some client gatherings superior to others as far as deals and income development? Which
ones?

7. Do you ever team up with different firms on advancement and additionally promoting?

8. Who are your significant rivals?

9. Do you have methods for conveying data about your firm to other people? (Connect any
handouts, rundown of items, and so on.)

STANDARDS AND CERTIFICATIONS

1. What benchmarks or standards pre-requisites do your services need to fit in with?

2. Who is responsible for setting these requirements and standards?

3. Who causes you to fit in with these guidelines and prerequisites?

4. Do you have any issues in such manner?

 TECHNOLOGY / PRODUCT DEVELOPMENT

1. What are your real needs in product plan and assembling or service delivery?

2. What different items do you produce/sell? What rate does every product speak to as far as
your gross income?

3. What is your latest advancement in improving your services or products?

4. Is present equipment or machinery an barrier to growth? Clarify. Provided that this is true,
what sort of hardware or equipment can enahnce your services and products?

5. Is the present degree of your labourer's preparation keeping down development? Provided that
this is true, what extra preparing do they need?

MANAGEMENT/ORGANIZATION

1. In the sector of association and the executives, what are your significant needs/openings?

2. Who does the majority of the work in the sector of general administration/supervision, item
configuration, buying, generation, shipping, bookkeeping, advertising, fixes, and so on
proprietor, representatives, or outer?

3. What activities do you subcontract?

4. Do you here and there team up with different firms to create and convey client orders?

5. Which parts of your business do you plan to change in the following 2 years, equipement,
hardware, PCs, new items, promoting procedure, quality control, the executives framework,
specialist aptitudes, and so forth ?

6. What the executives' skills might you want to re-inforce to develop your business?
 INPUT SUPPLY

1. What are your significant needs/openings in the territories of info cost, quality, and
accessibility?

2. Who are your most significant providers and what do you purchase from each?

3. Are there issues in acquiring some significant data sources?

4. Have you at any point acquired sources of information or supply together with different
organizations?

FINANCE

1. Where do you go when you need cash for your business?

2. Do you get credit from your vendors and service providers? What are the terms?

3. Do you get financing from your purchasers? What are the terms?

4. Do you require extra financing right now? Provided that this is true, what might it be utilized
for?

5. What sources (formal or casual) have brought you closer to debts and loans, and what have
been the key issues, if any?

6. Other (reimbursement rates in the segment, risk management, and so forth.)

POLICY/REGULATION

1. What government arrangements/guidelines advantage your business (enrollments,

assessments, appropriations, impetuses, and so on.)?

2. What government strategies/guidelines are hindrances to developing your business?

 INFRASTRUCTURE

1. What are the most significant framework requirements influencing your business'
development and benefit (street/transport conditions, telephone utility, electric supply,
corruption, stock-piling, and so on.)

2. What is your industry doing about these issues?

BUSINESS MEMBERSHIP ORGANIZATIONS

1. Is your industry/exchange segment represent to national or international business affiliations?

Assuming this is the case, if you don't mind name them.

2. Is your organization is a member? If not, why?

3. What are the essential capabilities and advantages of these affiliations?

4. What extra serives should they give?

FINAL OPEN-ENDED QUESTIONS

1. What are the significant benefits you have for advancing change in your value chain?

2. What limitations or risks do you face in promoting these ventures?

3. What do you believe are the qualities of your industry locally and globally?

4. What are the fundamental lacking or weakness of your industry?

5. What do you believe is the biggest challenge confronting your industry today?

6. Would you be able to name some entrepreneurs in your industry who are pioneers – for
instance, regarding innovation, item structure, quality, or promoting?

7. How you find stable ways to remain your business?

 PART # 2

This part is related to different departments of the organization according to their role in the
organization.

FINANCE

Q1: What are the Fixed costs for NLC?

Q2: What are the Variable costs for NLC?
Q3: How much revenue, per mile, is generated monthly by NLC?
Q4: What is the fuel cost per truck (litters)?
Q5: What is the percentage of budget allocated to marketing?
Q6: What is the cost allocated to each department?
Q7: What are the fixed costs per truck that cannot be discarded/reduced?
Q8: What component of your organization’s total service cost would you assign to INBOUND
LOGISTICS costs? Please provide the details.
Q9: What component of your organization’s total service cost would you assign to OUTBOUND
LOGISTICS costs? Please provide the details..
Q10: What is the credit policy of NLC?
Q11: What price do NLC charge according to the type of Truck and Service?
Q12: How many types of the truck does NLC have?

COMPENSATION POLICY FOR DRIVERS

Q1: What are NLC's Compensation and benefit policy for its drivers?
Q2: What are the recruitment and retention policy of NLC drivers?

TRUCKING AND COMPLIANCE

Q1: What is the engine capacity of trucks and its variants?

Q2: What is the average time a truck takes to complete a cycle?
Q3: How many trucks/prime movers NLC have?
Q4: Is NLC allowed by Government to outsource vehicles from the private sector?
Q5: Does NLC sublet its vehicles?
Q6: In what aspects NLC faces competition irrespective of cost?
Q7: How many corporate customers does NLC have?
Q8: How may Services does NLC provide in Trucking unit?
Q10: How redundant and idle trucks are utilized?
Q11: How much time does it take for delivery of product after receiving of order?
Q12: What is the damage policy of NLC?
Q13: Are there any hidden charges that NLC charge to customers?
Q14: What policies and regulation of government help you to get benefit for your busines?
Q15: Which policies of government are limiting your profitability?

LOGISTICS

Q1: What are the Logistics automation software used in NLC?

Q2: How NLC DERA project works?
Q3: How drivers get benefits from the DERA project?
Q4: How DERA add value to NLC?
Q5: How NLC track trucks throughout the country?

CUSTOMERS AND SUPPLIERS

Q1: What is your relationship with the suppliers /Customers?

Q2: How you maintain your relationship with your suppliers/customers?
Q3: What are the reasons that suppliers and customers switch from NLC?
Q4: What is the category of suppliers and customers?
Q5: How you communicate with Customers and Suppliers?
Appendix 2
VMS Link
https://xd.adobe.com/view/667fe29e-1486-42f1-4e36-9f35a5a44ef8-104e/?fullscreen