8B19D016

Teaching Note

GATI: ACHIEVING QUALITY EXCELLENCE IN SHIPMENT DELIVERY

Soumyajyoti Datta and Rohit Kapoor wrote this teaching note as an aid to instructors in the classroom use of the case Gati: Achieving
Quality Excellence in Shipment Delivery, No. 9B19D016. This teaching note should not be used in any way that would prejudice the
future use of the case.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. 1v2e5y5pubs

Copyright © 2019, Ivey Business School Foundation Version: 2019-08-22

SYNOPSIS

The case introduces Sudhir Murarka, general manager, Process and Quality at Gati, who is worried about
the large number of complaints concerning the company’s recently-launched premium express scheme.
Incepted in 1989, Gati had become a familiar name in the area of logistics services in India. The company
was committed to providing high quality logistics services across the country through its extensive network.
The premium express scheme, developed on the basis of market research activity, was the latest addition to
the company’s customer-friendly bouquet of services. The scheme, at a premium price, guaranteed
shipment of goods within 72 hours of pickup. The service was initially restricted to the central and
northwestern parts of India to gauge customer feedback. However, since its launch, the company had
received about 231 complaints about delayed delivery, which was a major cause of concern. The case brings
out the notion of statistical quality control through adequate control charts. It uses causal analysis to study
the reasons for the delay in shipment delivery and identifies a few significant issues for further investigation.
The case also hinges on the dilemma of achieving a target defect percentage of 0.0005 per cent. Microsoft
Excel 2013 is used as a tool to perform a major part of the analysis.

LEARNING OBJECTIVES

After completion of this case, students will be able to

• understand the functioning of a large-scale logistics service provider from various managerial dimensions;
• assess the notion of statistical quality control through a p-chart using Microsoft Excel;
• understand the concept of cause-and-effect relationships using a fishbone diagram;
• use a Pareto chart to identify the important causes responsible for most of the defects and then construct
a Pareto chart using Microsoft Excel; and
• examine and connect the concepts of process capability, capability index, and defect percentage using
Microsoft Excel.
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POSITION IN COURSE

The case is relevant for courses on operations management, service operations management, and quality
management for full- and part-time students enrolled in an MSc. program in management or an MBA
program. The case is also helpful for executive development programs or short-term courses for
practitioners in the field of quality management, quality engineering, and logistics and supply chain
management.

SUGGESTED READINGS

• David S. Moore, George P. McCabe, William M. Duckworth, and Stanley L. Sclov. “Statistics for
Quality: Control and Capability.” Chap. 12 in The Practice of Business Statistics: Using Data for
Decisions, (New York: W. H Freeman and Company, 2003).
• Ken Black. “Statistical Quality Control.” Chap. 8 in Business Statistics for Contemporary Decision
Making, (New Delhi: Wiley India, 2011).
• David M. Levine, David F. Stephan, Timothy C. Krehbiel, and Mark L. Berenson. “Statistical
Applications in Quality Management.” Chap. 18 in Statistics for Managers Using Microsoft Excel,
(New Delhi: PHI Learning Private Limited, 2011).
• M.A. Sharaf El-Din, H.I. Rashed, and M.M. El-Khabeery, “Statistical Process Control Charts Applied
to Steelmaking Quality Improvement,” Quality Technology & Quantitative Management 3, no. 4
(2006): 473–491, accessed May 24, 2019, www.tandfonline.com/doi/abs/10.1080/
16843703.2006.11673127.

ASSIGNMENT QUESTIONS

1. What is the main problem that Murarka is facing?

2. How can Murarka find out if the process involved in the premium express scheme is under statistical
control? Explain the procedure using Microsoft Excel.
3. What is meant by random causes and assignable causes of variation? List a few conditions when it becomes
imperative to carefully investigate process variations even if the process is under statistical control.
4. How can Murarka identify the potential causes for the delay in the delivery of the shipments booked
under the premium express scheme?
5. Explain in detail an approach Murarka could take to identify the major causes for the delay in shipment.
6. What is meant by process capability? How can Murarka use Microsoft Excel to find out if the new
processes were meeting the target defect proportion?

TEACHING PLAN

The case can be effectively taught in an 80-minute session and can be distributed in advance to the
participants so they can become familiar with its context and facts. The case should be discussed with the
primary objective of statistical quality control or statistical control charts.

Time
Discussion topic Action
(minutes)
Provide an
Ask a student to provide the context and share some information
introductory 7
about the protagonist. Ask another student about the challenges
overview
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that Gati was facing. Note the key facts on the board. Refer to
assignment question 1.
Statistical quality Initiate a discussion on quality control and converge it with the p-
control and p - control chart. Build and discuss the p-control chart in detail. 15
control chart Refer to assignment question 2 and Exhibits TN-1, TN-2, TN-3.
Random Ask for the definitions. Draw two or three plots as per the five
variations and conditions given in assignment question 3 and emphasize that
5
assignable even if the process is under control, it calls for further
variations investigation.
Ask 1 or 2 students about the cause-and-effect relationship, and
Causal analysis construct the fishbone diagram on the board. Highlight that it is
for the delay in qualitative in nature and may change for individuals though the 10
delivery key points remain intact. Focus on the reasoning behind the cause
and effect relationship and refer to question 4 and the case.
Identifying the Initiate a discussion to identify the major causes of concern.
major causes Highlight Pareto’s 80-20 rule. Refer to Exhibit TN-5 and 5
leading to delay assignment question 5.
Constructing the Show the step-by-step construction of the chart. One or two
10
Pareto chart students can be asked to volunteer for this activity.
Ask for the definition and significance of process capability.
Process capability
Introduce capability index; calculate the sigma score and defect
and defect 10
percentage on the board. Highlight the usage of Excel function
percentage
normsdist( ). Refer to assignment question 6.
Clearing doubts Use the board for equations, diagrams, and calculations. 10
Briefly sum up the case and key learning points. Link them to the
Summarization 5
objectives of the session and relevance to the course.
A note on what Refer to the “What Happened” section in the teaching note.
3
happened later Explicitly examine the timeline of the events.

ANALYSIS

1. What is the main problem that Gati is facing?

With a zeal to provide a higher quality of service and cater to a larger catchment area, Gati had recently
launched a special shipment delivery scheme known as premium express. According to this scheme, the
shipments were assured to be delivered within 72 hours of pickup, and the service was provided to parts of
central and north-western India. The scheme also charged a markup price for this service as compared to
the usual shipment charges. However, the company observed numerous complaints concerning delays in
the delivery of shipments.
This was apparently unexpected. The scenario provides a key point to initiate class discussion on whether
the process is under statistical control, what the major causes for the delay might be, and how Gati could
achieve a specific target defect level.
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EXHIBIT TN-4: FISHBONE DIAGRAM SHOWING CAUSE-AND-EFFECT RELATIONSHIPS

NATURE OPERATIONAL STAFF

Inadequate
Low maintenance incentive policy
Accidents
Rely on vendors Low Motivation
Unscheduled halts
and slow traffic Festivals
Outdated
small trucks
Bad weather Unpunctual and
absenteeism
IT system Delay in
failure loading /
unloading Poor health

Low computer
Lack of
literacy
SOP
Lack of training

Less agile

DELAY IN
SHIPMENT
DELIVERY
Insouciant attitude
Traditional
principles Incorrect shipment
Fixed incentives

Fraudulent customers
Excessive
advertisement
Leadership Redundant paperwork

Orthodox Improper data entry

MANAGEMENT REPORTING

Note: IT = information technology; SOP = standard operating procedure.

Source: Created by the case authors based on feedback from Gati.