Optimizing service offerings by 3PL service providers in India: Cost minimization of TVS logistics line haul operations

Abstract

Logistics costs (i.e., inventory holding, transportation, warehousing, packaging, losses and related administration costs) have been estimated at 13-14 per cent of Indian GDP. There is a rise in the no. of companies outsourcing their logistics operations to 3PL providers. The 3PL providers provide mainly transportation services, warehousing services and inventory management. TVS Logistics Services Limited (TVS LSL) is one such 3PL company, which provides comprehensive logistics solutions primarily to the automotive industry. The inbound logistics operations of TVS Logistics deals with collecting the consignments from the suppliers according to the schedule given by the customers. TVS logistics is bound on the revenue side after signing fixed contracts with the automotive companies. To derive profitability in this business, it is imperative that the costs are cut to a minimum. The main objective of the project is to reduce the total cost of operations for TVS logistics by optimizing the material to be transported and determining the type and number of trucks to be sent to minimize transportation cost from one hub to another hub each day for the line haul operations.