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CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

INTRODUCTION

Supermarkets are scattered all around the Philippines, Robinson’s is the 2nd

largest supermarket chain in the Philippines. Being one of the large companies in

this business they have their own warehouse and transport system for their

consumer goods. Robinson’s can be considered to be almost the same as wet and

dry public market that we have in our cities, municipalities, even in barangays. There

are varieties of fast moving consumer goods (FMCG) or consumer packed goods

(CPG) available, such as pre-packaged foods, soft drinks, candies, and toiletries

that have high turnover rates.

By fast moving consumer goods, it is defined to have a short shelf life,

meaning it does not stay too long in shelves of grocery aisles. The reason may be

because of the high consumer demand or because the product deteriorates fast, the

only example within Robinson’s warehouses that expires in a short period of time

are eggs.

Now if the products of a certain supermarket are fast moving, inventories,

deliveries and everything related to the products arriving at the store to compensate

for the consumers’ demand is complicated and must be monitored very well. Thus

manual labor are of high demand to properly execute and monitor the step by step

process within the warehouse of supermarkets.

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Products that are sold at the store come from different manufacturers, but

most of the products within it comes directly from a warehouse where manufacturers

deliver bulks of their own products. The distribution in different areas starts, when

the request to replenish sold goods from the supermarket is received by the people

who maintain and monitor the warehouse.

Distribution of product goes along with different kind of processes like

inventory of the products that are in the warehouse, to identify when to replenish its’

stocks directly from the manufacturer, scheduling of the deliveries to different

provinces, municipalities, cities when is the best time to start traveling to achieve the

optimal estimated time of arrival (ETA), communication with the trucking services to

ensure the safety and security of the consumer goods, and many more.

Complications in the distribution and delivery commonly starts within the

warehouse. Example, error in scheduling of the delivery in a certain branch causes

for certain products to be out of stock which may or may not have a high consumer

demand. Since most of the operations are manually done we cannot exclude human

errors that may occur, in example, checking the consumer goods before loading it to

the delivery truck. Lost documents may also occur since documents are handled by

multiple people before finalizing and encoding the process into the system.

An improvement and a solution is what the researcher aim to achieve in this

study which will be the automation of the transport management system of a

distribution center.
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Like petroleum companies searching out new sources of oil, enterprises are

continually seeking new ways to cut costs in their quest for competitive advantage.

Service delivery automation, or SDA, is an umbrella term for the technologies that

automate a series of human actions in a business Service delivery automation can

lower payroll costs by automating repetitive, high-volume transactional processes. It

can yield cost reductions of 35% to 65% for onshore process operations and 10% to

30% in offshore delivery. It can take just six to nine months to recover your

investment. (Computerweekly.com, 2016)

BACKGROUND OF THE STUDY

Established in 1985, Robinsons Supermarket is the 2nd largest supermarket

chain in the country with 140 stores by end of 2016.  The first major retailer to

promote health and wellness, they commit to bring together healthy selections and

affordable prices in a refreshingly clean and organized shopping destination, a bold

lifelong commitment to educate and empower its customers to make healthy

choices. (Robinson’s Supermarket, 2016)

Supermarket retailing is a highly dynamic industry. Hundreds of products are

introduced and delisted week to week. To remain relevant to its customers,

Robinsons needs to ensure it offers the right products, at the right place, at the right

time, and at the right price.

According to Robina Gokongwei-Pe, president and chief operating officer at

Robinsons Supermarket, “As the supermarket is a non-discretionary format that

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serves the daily needs of our customers, we have to ensure that the products that

meet these needs are always available on-shelf. (Robinsons Supermarket, 2017)

Robinson’s Supermarket Mega Distribution Center encounters incomplete

deliveries caused by miscounting products before loading for delivery or by pilferage

by the trucking services assigned to deliver. To make it short, manpower productivity

is to low compared to the load of job that they are capable of finishing. Too much

use of paper, after being entered to the system by the time the delivery is

completed, paper documents becomes waste, it is a cost that can be minimized by

automating the process with one system for every process that are all related. It can

also help the environment in lessening wastes continuously produced by the

company. Additional to these, present delivery discrepancy reports exceeds the

acceptable number of discrepancy reports in the warehouse.

Automation of the transport management system enables the Robinson’s

Supermarket Mega Distribution Center to handle different processes before, during

and after the delivery of consumer goods, from picking and arranging the products

requested by the store, checking the products before loading, maximizing the

capacity of a truck to minimize delivery costs up to monitoring of the truck from

departure from the warehouse to the arrival at the destined store location through

global positioning system (GPS), everything being automated.

Automation of the above mentioned processes may cause the company to

manpower reduction, savings on man-hours, increase productivity, and minimize

pilferage, paper documents and human interferences.

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The Conceptual Framework

Input Process Output

-Average Load plan

2018 Automated
-CBM of all items per -Fishbone Figure Transportation
1. Schematic Diagram
box diagram Management
-Personnel profile -SWOT System
of the study
-Average standard Analysis
time of loading -Cost Benefit Theoretical Framework
-Average cost per analysis
case of 2018
The “Fishbone” or

Ishikawa Diagram is one of the

seven basic tools of quality which are Check Sheet, Control Chart, Stratification,

Pareto Chart, Histogram, Scatter Diagram, and the Ishikawa Diagram.

Ishikawa Diagram was created by Kaoru Ishikawa, beside Fishbone Diagram

it is also called herringbone diagrams, cause-and-effect diagrams, or Fishikawa.

Common uses of the Ishikawa diagram are product design and quality defect

prevention to identify potential factors causing an overall effect. Each cause or

reason for imperfection is a source of variation. Causes are usually grouped into

major categories to identify and classify these sources of variation. (Wikipedia,

2019)

Fishbone diagrams 

Fishbone diagram is used during brainstorming in order to categorize ideas,

however they can be used by individuals and groups to cluster ideas. Basically they

involve causes being classified under certain headings, this makes analysis easier.
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The headings on a fishbone can be varied depending on the product but popular

headings include; 1) Measurement, 2) Equipment, 3) People, 4) Methods, 5)

Environment, 6) Materials.

A different application of the Fishbone Diagram for failed deliveries. 5 Whys is

used to investigate a specific cause in more detail, it is therefore useful to use it to

investigate ideas generated in the brainstorm further. The technique is relatively

simple as it involves asking why something has happened repeatedly for example in

the case of a failed Business to Consumer delivery.

Why? Because the parcel was stolen from the customer garage

Why? Because the customer was not in to take delivery

Why? Because the customer had not been informed of the delivery time

Why? Because the order had come in late and the planning staff wanted to go home
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Why? Because the staff are not paid overtime and there are poor relations between

management and employees

The example above shows the power of this simple approach. Without using

this method we may have simply thought the failed delivery was a simple threat

however the technique identifies a number of deeper issues. (Richard Faint-

Logistics Manager and Consultant at Hull Uni Logistics, 2011)

Cost Benefit Analysis

A cost-benefit analysis is a process businesses use to analyze decisions. The

business or analyst sums the benefits of a situation or action and then subtracts the

costs associated with taking that action. (Investopedia.com- Will Kenton, 2019)

In making important decisions in any aspect of work, there are many varieties

of analysis that can help in deciding whether to continue in conducting certain

project or not. Cost-benefit analysis’ objective is to identify and evaluate all the

potential costs and benefits a project will incur. From the word cost as a result we

can have the opportunity cost which can help in deciding.

Relating it in automation of the transport management system, a cost-benefit

analysis (CBA) should begin with compiling a comprehensive list of all the costs and

benefits associated with the project or decision.

The costs involved in a CBA might include the following:

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 Direct costs would be direct labor involved inventory, raw materials,

employees’ salary.

 Indirect costs might include electricity, overhead costs from management,

rent, and utilities.

 Intangible costs such as impact of pursuing a new strategy, project, or,

delivery delays of product as a result of the initial application of the strategy,

employee impact.

 Opportunity costs such as alternative investments, lessening the cost of

damaged product being manhandled, and less pilferage.

 Cost of potential risks such as regulatory risks, competition, and

environmental impacts.

Benefits might include the following:

 Revenue and sales increases from increased delivery output.

 Intangible benefits, such as improved employee safety and morale, as well as

customer satisfaction due to faster delivery.

 Competitive advantage or market share gained as a result of the decision.

After finishing and gathering all possible financial factors, subtract the cost

associated in doing the automation from the cost of the benefits and additional

revenue that will be incurred as a result of the action to be taken.

Limitations of Cost-Benefit Analysis

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For projects that involve small- to mid-level capital expenditures and are short

to intermediate in terms of time to completion, an in-depth cost-benefit analysis may

be sufficient enough to make a well-informed, rational decision. For very large

projects with a long-term time horizon, a cost-benefit analysis might fail to account

for important financial concerns such as inflation, interest rates, varying cash flows,

and the present value of money. (Investopedia, 2019)

SWOT (Strength, Weakness, Opportunities, Threats) Analysis

SWOT analysis, with a little thought, it can help you uncover opportunities

that you are well-placed to exploit. And by understanding the weaknesses of your

business, you can manage and eliminate threats that would otherwise catch you

unawares. (Dag Øivind Madsen. 'SWOT Analysis: A Management Fashion

Perspective,' International Journal of Business Research, 2016)

SWOT Template

Strengths

 What advantages does the process have?

 What does the system do better than any other system?

 What unique or lowest-cost resources can be drawn upon that others can't?

 What do people in the market see as strengths?

 What is your organization's Unique Selling Proposition  (USP)?

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Consider strengths from both an internal perspective, and from the point of view of

customers and people in the market.

When looking for strengths, think about it in relation to competitors. For

example, if all competitors provide the same time of delivery as the company, then

that time of delivery is not a strength in the delivery systems’ market, it's a necessity.

Weaknesses

 What could be improved?

 What should be avoided?

 What factors lose revenue?

Consider this from an internal and external perspective: do other people

seem to perceive weaknesses that are not visible yet? Are the competitors doing

any better? It's best to be realistic, and face any unpleasant truths as soon as

possible.

Opportunities

 What good opportunities can be seen?

 What interesting trends are present?

 Useful opportunities can come from such things as:

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- Changes in technology and markets on both a broad and narrow scale.

- Changes in government policy related to your field.

- Changes in social patterns, population profiles, lifestyle changes, and so

on.

A useful approach when looking at opportunities is to look at strengths and

see whether these open up any opportunities. Alternatively, look at weaknesses and

notice if it could open up opportunities by eliminating them.

Threats

 What obstacles are present?

 What the competitors are doing?

 Are quality standards or specifications for the services changing?

 Is changing technology threatening the process?

 Are there bad debt or cash-flow problems?

 Could any of the weaknesses seriously threaten your business?

In carrying out the analysis, be realistic and rigorous. Apply it at the right

level, and supplement it with other option-generation tools where appropriate.

STATEMENT OF THE PROBLEM

This research study aims to ensure that business is running at optimum level

and increase transport management efficiencies, affordability and to optimize the

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entire logistics process. Also, to manage data more efficiently and to assess routes

being taken and time allocated to each route, allowing them to create more efficient

schedule. It seeks answers to the following problems:

1. How to decrease the high percentage of DDRs (Damage and Discrepancy

Reports)?

2. How to avoid low productivity of manpower?

3. How to decrease the high cost per case?

4. How to minimize excessive paper documents?

5. Trucker’s Reliability?

6. How to prevent pilferage?

7. How to avoid poor Load Planning?

Hypotheses

1. Null Hypothesis (Ho) – Loading, dispatching and delivery of items for some

stores will be pending for a day.

2. Alternative Hypothesis (Ha) – Loading, dispatching and delivery of items for

stores will be finished within the day.

SIGNIFICANCE OF THE STUDY

This study aims to improve company’s current operation by automating its

current transportation system. This study is advantageous to the following:

Robinsons Supermarket Corporation will benefit in improving current

transportation system. Reducing the time, cost and more efficient operation.
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IE Students will better understand and come up with ideas in improving

business operations by applying IE principles

Future Researchers can use this as a guide for further research

Scope and Delimitation/Limitation

This study will cover the problem of transportation department concerning the

problems stated above. The researchers will automate company’s current manual

transportation system operation.

DEFINITION OF TERMS

Fast Moving Consumer Goods - products that are sold quickly and at a relatively

low cost.

Robinsons Supermarket - a supermarket chain in the Philippines, a division of

Robinsons Retail Holdings, Inc.

Global Positioning System - a system of satellite, computer and receivers that is

able to determine the latitude and longitude of a receiver on Earth by calculating the

time and difference for signals from different satellites to reach the receiver.

Transportation Management System - it’s a logistics platform that enables users

to manage and optimize the daily operations of their transportation fleets.

Fishbone Diagram - visualization tool for categorizing the potential causes of a

problem in order to identify its root causes.

Cost-Benefit Analysis - is a process businesses use to analyze decisions.

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SWOT (Strength, Weakness, Opportunities, Threats) Analysis- type of analysis

that can help uncover opportunities that are well-placed to exploit while learning

risks that are present.

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CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter presents the related literature and studies of other researchers.

The review of the related literature provides some insight regarding strong points

and limitation of the previous studies. It enables them to improve their own

investigation and to arrive the proper prospective of the study.

A Transportation Management System is a vital tool for shipping

professionals. It helps to coordinate all of the available data points in a transport

network, including rates, route options, warehouse supply, and distribution. A TMS

allows shippers to automate the processes they have in place and receive valuable

insights to save time and reduce spend on future shipments. (Cereses, 2016, C.H.

Robinsions).

Implementing TMS can rapidly reduce your overall transport spend by as

much as 30% by automating processes and integrating and streamlining logistics

planning, execution and shipping costs across all modes of transport. The level of

automation and planning provided can improve filling rates and significantly reduce

the risk of costly unexpected events.(CGI Group INC 2013). By automatically

tracking multiple products, shipments, and solutions, the TMS organizes all the

information into precise and easy-to-read lists, which help managers to make

decisions quickly and efficiently. Automation also eliminates human errors, which

often result in bad decisions. Errors and damages are reduced or eliminated

because procedures are primarily or completely handled by technology. Data-

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driven decision making produces the lowest possible shipping costs. ( Cereses,

2016, ShipHawk 2017).

In the last century the main aim of all industrial developments has been the

automation of processes, from the automation of the production line at the beginning

of the century, to support systems decision making and integration of existing

information integration, (Viswanadham, 2002), the study and practice of physical

distribution and logistics emerged in the 1960s and 1970s, when the costs of

worldwide logistics process varied between 15 and 25% of gross domestic product

of industrialized nations. (Ballou, 2007). It was an immediate need for further

industry growth in this field and embarks on a path toward improving processes,

unifying and find areas through the planning and execution of logistics activities, the

level of costs and services that help you stay in the market

Logistics processes automation uses control systems and informatics

technology to reduce human intervention in a process. An automatized supply chain

increases production, reduce costs and generate large benefits to minimize risk to

the operator. (García M. N., 2012) They offer full control of the process, which

means product traceability at any time, with data points as location, weight,

dimension, input, output, and above all, accurate and detailed control of the

inventory at any time, among other details.

They went from having a human resource to implement trucks carrying

conveyor belts for this purpose and are now palletized deliveries to ride and unload

goods. In transport, they have been concerned with improving the loading of trucks
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by technologies that enable them to measure the cubic space used in the vehicle

(Heinze, 2006). They are also using route optimization models in delivery of goods,

enabling the design of truck loading plan.

Also been using satellite tracking technology for the vehicles that allows them

to calculate fuel consumption and identify location to find high-risk areas , therefore ,

the customer can check the status of your order in real time (Bajaj, Ranaweera, &

Agrawal, 2002).

A cost-benefit analysis is a process businesses use to analyze decisions. It is

the process used to measure the benefits of a decision or taking action minus the

costs associated with taking that action. Cost–benefit analysis (CBA) is the

systematic and analytical process of comparing benefits and costs in evaluating the

decision to pursue a project. CBA can be applicable to transportation projects,

environmental and agricultural projects, land-use planning, social welfare and

educational programmes, urban renewal, health economics and others.(Will Kenton

& Euston Quah, JBS Haldane, 2007)

CBA is defined as the process which identifies and evaluates net benefits

associated with alternatives for achieving defined public goals. In discussing the

structure of decision problems and the choice of criteria in CBA, it is advised that the

net present value criterion is generally accepted as the proper decision criterion to

be used in CBA. It is preferred in contrast to annual value because of its clarity and

to a benefit-cost ratio because of its superiority and general applicability. Also

reviewed are the several forms of decision problems, identifying the problems
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associated with project interdependence, and capital constraints. (Peter G Sassone,

William A Schaffer)
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CHAPTER III

RESEARCH METHODOLOGY

This chapter explains the quantitative research method which will be used in

the development of the ATMS. It is also covers the techniques and procedures of

gathering data, and the statistical tools and techniques necessary for analysis of

data.

Research Method/Design

A quantitative research was implemented in this research and the priority

given to identify existing communication barriers and strategies implemented in the

warehouse industry.

A quantitative research is a type of educational research in which the

researcher decides what to study; ask specific, narrow questions; collects

quantifiable data from participants; analyzes these numbers using statistics; and

conducts the inquiry in an unbiased, objective manner.

Research Instruments/tools

One of the most important components of a research design is the research

instrumens because they gather or collect data or information.

In this study, the researcher will using the interviews and Excel. Interviews

will be used to meet face-to-face with individuals to interact and generate ideas

coming from the interviewee. It is an interaction in which oral questions are posed by

the interviewer to get and produce oral response from the interviewee. And the
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excel, it can be programmed to pull in data from external sources such as stock

market feeds, automaticallu running data through formula such as financial models

to update such information in real time.

Excel also contains fairly powerful programming capabilities for those who

wish to use them that can be used to develop relatively sophisticated financial and

scientific computation capabilities.

Data Gathering Procedures

For the purposes of this research, the researcher visits the Robinsons

Supermarket warehouse to used depth interviews and discussion about the

problem.

In depth interviews are personal and unstructured interviews, whose aim is to

identify participant’s emotions, feelings, and opinions regarding a particular research

subject. The main advantage of personal interview is that they involve personal and

indirect contact between interviewer and interviewees, as well as eliminate non-

response rates, but the interviewers need to have developed the necessary skills to

successfully carry an interview (Fisher, 2005, Wilson, 2003). What is more,

unstructured interviews offer flexibility in terms of the flow of the interview, thereby

leaving room for the generation of conclusions that were not initially meant to be

derived regarding a research subject. However, there is the risk that the interview

may deviate from the pre-specified research aims and objectives (Gill & Johnson,

2002).