ConSight-20 Case

Challenge
Logistics
Instructions

▪ The case has two parts – For the 1st Round (Poster Presentation), submit the solution
for part 1 of the case in an A3 format highlighting key strategies.
▪ For the 2nd Round – Strategic Outlook analysis, the participants should elaborate the
strategy designed in Round 1 and, also solve the part 2 of the case.
▪ Scoring for Round 1 submissions will be as per the criteria's mentioned on D2C portal
▪ Scoring for Round 2 submissions will be as per the following criteria –
• Weightage for elaborating Round 1 solution: 60%
• Weightage for solving part – 2 of the case: 40%
Part - 1
Problem Statement

COSMONO is a medium scale logistics company. It provides 3PL support to its

clients in several businesses. The company started out with a single Dispatch
warehouse in Thane with a unique IoT model that would help them track the
location and status of all its consignments. Now it operates from 2 locations
(hubs) around Mumbai and conducts its operations from 3 warehouses.
COSMONO’s unique feature helped it get a client base that was more into
perishable goods and wanted to track the health of its products while on transit.
Within no time its business grew many folds. COSMONO started with an initial
investment of $20 Million. Though its business grew, the profits were
substantially low. COSMONO is at a point where it has been observing stagnant
business, though voluminous, but rapidly declining profits.
 COSMONO’s Operations

• COSMONO operates • Through this, • Small scale FMCG

Products and Services

with a fleet of 20 COSMONO Ensures companies, fast food
Trucks vehicle efficiency and chains and dairy
Fleet Management

• Each truck is fitted security. companies' approach

Sales and Motive

with an AIS 140 GPS • Asset enhancement COSMONO for their
sensor at three points, and tracking becomes logistics solutions
Ignition, Power and easy for its clients • The operating scale of
Ground • Clients get a detailed COSMONO is
report on vehicle relatively small when
location and compared to other
diagnostics on Email smart logistics
or SMS solution providers like
DHL and Rivigo
 Current Operational Snapshot
Revenue Volumes Transported

28% 39%
40% 46%

20%
12%
7% 8%
Dairy Products Foodgrains Fruits Vegetables Dairy Products Foodgrains Fruits Vegetables

Warehouse 1 Warehouse 2 Warehouse 3

Categories Stored: Fruits and Vegetables
Storage Cost: Fruits - 15% of cost (per kg);
Vegetables – 10% of cost (per kg)
Transportation Cost from Hub 1: ₹ 0.8/kg/km (Distance – 100 kms)
Transportation Cost from Hub 2: ₹ 0.5/kg/km (Distance – 200 kms)
Categories Stored: Food grains Categories Stored: Dairy Products
Storage Cost: 3% of cost (per kg) Storage Cost: 5% of cost (per L)
Transportation Cost from Hub 1: ₹ 0.2/kg/km (Distance – 250 kms) Transportation Cost from Hub 1: ₹ 1/L/km (Distance – 170 kms)
Transportation Cost from Hub 2: ₹ 0.3/kg/km (Distance – 110 kms) Transportation Cost from Hub 2: ₹ 1.2/L/km (Distance – 150 kms)
Major costs centers in a logistics company (One is
free to elaborate on the points and add new ones)

Manpower in warehouse for

storage of material in various
categories of perishable
Warehousing products
Picking processes for
dispatching the product

Fuel
Drivers
Transport
Fleet Maintenance
Route Optimization

Packaging material
Packaging
Warehouse personnel
Questions – Optimizing Operations

• The challenge is to analyze the value chain of the company and identify the areas
where the company has been losing money based on the operating expenses of a
typical logistics company
• Suggest some measures to identify the areas in the company’s operations or
technology to enhance the operational efficiency. Propose any innovative service
model that would help COSMONO differentiate itself from a traditional 3PL
company
• Based on your identified issues and recommendations for the operating model,
kindly suggest a strategic roadmap for the company’s expansion plans

*Note: Teams may make use of relevant and reasonable data available online. Please quote the references and assumptions made in the process
Part - 2
 Strategic Outlook (1/4)

Having reaped results in the logistics game, COSMONO are Exhibit 1: Factory setup and maintenance cost
(all in ‘100000 INR)
contemplating whether to enter the manufacturing game as
well. In particular, the company is looking into the growing Maintenance Cost
Locations Factory Setup Cost
market of sustainable packaging material. (1st year)

After careful research, the company decided to set up

factories in 3 locations in India- Baddi, Ankleshwar and
Baddi 100 5
Nagpur. The costs of setting up and continuing operations in
the respective locations are given (Exhibit 1)
• Maintenance cost is paid annually at the end of the year Ankleshwar 110 6
and is expected to increase by 15% every year
• Setup cost is a one-time investment paid at the beginning
of the 1st year Nagpur 95 5

• The opportunity cost of capital is 10%

 Strategic Outlook (2/4)

Exhibit 2: Projected Earnings

(all in ‘100000 INR)
To understand their projected earnings, COSMONO
consulted a third-party consulting firm Gain and Co. After Year Total Earnings
analyzing all the market factors in combination with
government regulations and customer patterns, Gain 1 180
concluded that the factory and other assets would be good
for the next 5 years, post which they would not have any value. 2 275
(There is no concept of depreciation)
Using demand forecasting and historical data of similar 3 400
products, Gain & Co. submitted the projected earnings for
each year to COSMONO (Exhibit 2) 4 600

The earnings for each year is assumed to be realized at the

end of the year. 5 775
 Strategic Outlook (3/4)

To kickstart their business, COSMONO plans to target the 5 metro cities i.e. Delhi, Mumbai, Kolkata, Bangalore and
Chennai. The demand for these 5 cities will be fulfilled from the 3 plants. The respective demand of the cities and the
capacity of the 3 plants are given below (Exhibit 3 & 4 respectively)
It is known that the capacity of the plants are fixed, but the demand for the cities are projected to increase by 15% every
year (round up for decimals).
Demand
City Plant Capacity
(Year 1)

Delhi 11
Baddi 30
Mumbai 12

Kolkata 9 Ankleshwar 40

Bangalore 10
Nagpur 30
Chennai 8
Exhibit 3: City Wise Demand Exhibit 4: Plant Capacity
(all in ‘100 Tonnes) (all in ‘100 Tonnes)
 Strategic Outlook (4/4)

Next comes cost of goods sold (COGS), which majorly includes the cost of raw materials and transportation. Transportation
is possible only through train or through road (trucks). Note that some locations are not accessible through a mode of
transport. The below exhibits give the total cost (raw materials + transporting) of the materials (for year 1) from the various
plants to the cities. It is assumed that all costs are realized at the end of each year.
It is known that the total cost of each cell is projected to increase at 10% every year (round up for decimals).

Delhi Mumbai Kolkata Bangalore Chennai Delhi Mumbai Kolkata Bangalore Chennai

Baddi 3 2 - 4 1 Baddi 5 4 - - 4

Ankleshwar 2 8 5 3 4 Ankleshwar 4 6 7 6 3

Nagpur 4 5 6 5 5 Nagpur - 6 3 - 3

Exhibit 5: Total Cost of transporting 100 tonnes through train Exhibit 6: Total Cost of transporting 100 tonnes through road
(all in ‘100000 INR) (all in ‘100000 INR)
Questions – Strategic Outlook

• As per the data provided for strategic outlook of the company, should COSMONO
venture into the business of manufacturing sustainable packaging materials and
servicing the 5 metro cities? Justify?

*Note: Attach working solution in Excel file