University of Žilina

Faculty of Operation and Economics of Transport and Communications

Student: Diana-Cristina

CONTENTS

1. Introduction ………………………………………………………………………….. 3 2.1 The Activity of the company………………………………………………3 2.2 Logistics activity…………………………………………..……………….4 2. The product and suppliers …………………………………………..………………....5 3. Chosen suppliers…………………………………………..………..……………….....9 4. Logistic System …………………………………………...………..………………...11 5.3 Distribution …………………………………………....………………....11 5.4 Warehousing …………………………………………....………………..12 5.5 Information flow …………………………………………....…………..12 5. Optimization of the logistic activity………………………………………………….13 6. Solving solution…………………………………………....………………................14 7. Conclusion …………………………………………....……………….......................15

1. Introduction

The company “S.C. SPICUL S.A” translated by “joint stocks Company, the (wheat) EAR, with registration code J 40/567/1991, have the central office in the district Ilfov, Rudeni Street, nr. 39, Romania. The shared capital of this company is 5,689,525 thousand RON (meaning 1,281,078.312 thousand Euros) divided in 227,581 inscribed stocks. The company “SPICUL” has an interesting background ever since 1630 when it was just a water mill. As time went on, the company developed into one of the biggest bread producers in Romania.

1.1 The Activity of the company According to the article of incorporation the main activity of the company is the production and the commercialization of the bread and bakery products.
Other activities: * Purchasing cereals from producers * Grinding the cereals, producing and selling the mill products * Purchasing, producing and commercializing food products * Producing different types of flour * Producing food packages for their own products * Purchasing, storing, selling cereals or other raw materials, etc.

2.2 Logistics activity

Regarding logistics, the company owns a special warehouse for food products with optimal temperature and humidity, a system for following the commands in real time, more than 20 cars for indents and deliveries. The logistic process is the strategic administration of purchasing, handling and storing the materials, half-finished material and finished products inside the company. The aim is to satisfy the customers with the smallest costs for the company. S.C. SPICUL S.A. chooses to handle logistics on their own, without hiring a specialized logistics company. The main raw material is the wheat for bread manufacture. The wheat is purchased either from direct producers, either from farmers. In both situations they sign a contract for minimum 70% they need. The wheat is stored in the silo, and then it is grinded and processed in their own mill. The mill is used with the maximum capacity, but its useful effort is just 60% because the mill is very old. The supplying is made by their own cars, and only if the costs of the transport are much bigger than another way of transportation, then they choose the other option. The only market they use is national one. S.C. SPICUL S.A does not export anywhere. The most requests come from Bucharest and surroundings. The distribution chain for the products consists of shops like supermarkets, hypermarkets, boutiques and en gross markets.

2. Product The most famous and traditional product of this company, beside the normal bread, is the sweet bread (cozonac). It looks like a sponge cake, it is bigger than normal bread, it is sweet and it can contain cocoa, nuts, Turkish delight, raisins, etc. The basis product only needs white flour, eggs, bakery yeast, sugar and salt.

1. Wheaten flour

For this ingredient, the raw material they use is wheat, which they flour it in their own mill. They consider this is more profitable than buying processed flour.
The suppliers from which they can buy wheat are the following:

-S.C. COMCEREAL S.A. Vrancea
Address: District of Vrancea, Focsani city, Morilor Street, nr.2
Number and date of registration (Register of companies): J39/161/1996
Biggest warehouse: in Focsani city
Capacity of the warehouse: 38.000 tons (the biggest one in this region)
Quality of the product: Approved by: IQ Net Certified management System, SRAC Certificate nr. 4214, ISO 9001, SRAC Certificate nr.788, ISO 14001 and Safety Management of the food system, certificate nr 60.
Price: 0, 85 RON/kg
Distance: 185 km

-S.C. AGRICOLA S.A. Buzau
Adress: District of Buzau, Rodna Street, nr.5
Number and date of registration: J51/126/1992
Biggest warehouse: in Buzau city
Capacity of the warehouse: 42.000 tons
Quality of the product: Approved by: TUV CERT, certificate SR EN ISO 22000:2005 for high quality safety management of the food; DQS (Frankfurt Germany) certificate BRC-GFS: 2011 for implementing the global standards for the safety of the foods.
Other important information: Agricola S.A. is also an eggs supplier.
Price: 0. 80 RON/kg
Distance: 109 km

-SC INTERAGRO SA
Adress: District of Teleorman, Verii Street, nr.1
Number and date of registration: J40/6496/1995
Biggest warehouse: in Turnu Magurele city
Capacity of the warehouse: 50.000 tons
Quality of the product: it was declared the best company in agriculture from Romania by the Chamber of Commerce and Industry of Romania.
Other important information: InterAgro is a big group of british-romanian companies
Price: 0,90 RON/kg
Distance: 137 km

2. Eggs

-S.C. AGRICOLA S.A. Buzau
Adress: District of Buzau, Rodna Street, nr.5
Number and date of registration: J51/126/1992
Quality of the product: Approved by: TUV CERT, certificate SR EN ISO 22000:2005 for high quality safety management of the food; DQS (Frankfurt Germany) certificate BRC-GFS: 2011 for implementing the global standards for the safety of the foods.
Price: 0, 18/egg
Distance: 109 km

-S.C. AVICOLA .S.A
Address: District of Sibiu, Viile Sibiului Street, nr 8
Registration code: J40/12/1991
Quality: Quality management System, SR EN ISO 9001:2001
Price: 0, 20/egg
Distance: 275 km -S.C. AVICOLA CREVEDIA S.A
Address: District of Dambovita, Crevedia Street
Registration code: J15/259/1991
Quality: Quality management System, SR EN ISO 22000:2005, SR EN ISO 14001:2005, Isa cert certificate nr IS-118014, etc.
Price: 0, 22/egg
Distance: 27 km

3. Bakery yeast

-S.C. BOOM S.R.L.
Address: District of Dambovita, Targoviste city, Paulesti Street, nr.16
Number and date of registration: J29/929/1998
Products: BOOM S.R.L. is authorized to supply Lesaffre si Zeelandia products
Packages: 500 g
Price: 14 RON/KG
Distance: 78 km

- SC. LESAFFRE ROMANIA SRL
Address: District of Ilfov, Otopeni Street, nr.68
Number and date of registration: J23/246/1999
Products: imported from France, Hungary
Packages: decided by contract
Quality: certificate ISO 9001, quality controlled by HACCP
Price: 12,5/KG
Price of the transport: free, if the quantity isn’t bigger than 100 Kg

- S.C.SPICOM SRL
Address: District of Covasna, Targu Secuiesc city, Grigore Balan Street, nr 52
Number and date of registration: J45/642/1994
Products: Saf-Leuvre, Budafok, Magimix
Packages: from 10 to 25 kg
Quality: there is no precise informations about the quality of the products.
Price: 12 Ron/kg
Distance: 224 km

4. Sugar
- SC AGRANA Romania S.A.
Adress: district of Buzau, Idustriei Street, nr.7
Number and date of registration: J40/4411/2008
Quality: is certified by ISO 9001 and HACCP. Plus, Agrana Romania is a member of one of the biggest sugar producers in Europe.
Other important information: performant logistic system; it is the only company in Romania which can deliver with the best methods: in big-bags, cistern or container.
Price: 2.45 RON/KG
Distance: 111 km - SC ZAHARUL LUDUS SA
Address: District of Mures, Fabricii Street, nr.3
Number of registration: J26/237/1991
Quality: French quality, no certificate founded.
Price: 2.85 RON/kg
Distance: 341 km

-S.C. LEX GROUP S.R.L
Address: District of Brasov, Harmanului Street, nr.29 B
Number of registration: J08/195/2009
Quality: S.G.S Inspection for Quality and Quantity Service at Seller's Cost shall inspect the Commodity at Place of Loading
Price: 2.50 RON/KG
Distance: 167 km

5. Salt
-SALROM SRL
Address: district of Prahova, Slanic Street, nr.2
Registration code: J32/320/2002
Quality: IQ Net certified management system, SRAC Certificate nr. 1306(OHSAS 18001), 663(ISO 14001), 2220 (ISO 9001), Quality management System ISO 22000
Price: 0,28 RON/kg
Distance: 103 km

-SALT STAR CORPORATION SRL
Registration code: J23/2420/2012
Address: district of Ilfov, Jilava Street, nr 33.A
Quality: the company doesn’t provide specific information about quality. The only thing we know is that they produce sea salt.
Price: 0,55 RON/kg
Distance: 10 km

3. Chosen suppliers

Considering this information the company will decide to sign a contract with the following companies:

For wheat: S.C. Agricola S.A. (Buzau) because it is the closest company, the price is the best and the quality of the product is very good (it is cultivated in the most fertile land in Romania).

For eggs: S.C. Avicola Crevedia S.A. (Crevedia, Dambovita) even if the price is bigger than the price of S.C. Agricola S.A, this company is closer, so they will spend less money on the transport. The transport price to Buzau is forth times bigger than the transport price to Crevedia. Plus, the quality of the Crevedia eggs is better.

For yeast: SC. Lesaffre Romania SRL (Ilfov) This is the closest company, the transport will be free, while they will command just 100 kg, and the quality is very good. S.C. BOOM S.R.L sells the same product, but it is more expensive because they are an intermediary company. S.C.Spicom Srl it is too far and even if the price reflects the quality, while they are not giving information about this subject.

For sugar: SC Agrana Romania S.A (Buzau) Obviously, this is the best option for sugar. Knowing the fact that S.C. SPICUL S.A will supply 2 materials from Buzau, the company will decide to transport the wheat and the sugar using railway transport, because the quantity they will buy is big, and the costs will be lower than using road transport. In this case, they will need 2 wagons for wheat and one for sugar. This supply chain is graphically shown in Figure 2.

Figure 2

For salt: SALROM SRL(Slanic Prahova) The company chooses this supplier because the salt they produce is suitable for their products. Plus, they will command a big amount because they will need salt for producing the bread and the other bakery products, so it will be profitable to buy from this company.

Figure 3

As we can see in Fig.3 S.C. SPICUL S.A. chose the closest suppliers, and they mostly use classic transport chain, from point-to-point, using just trucks. Only for sugar and wheat they are changing the type of transport, railway and road transport, as Fig. 2 shows. The supply chain is following the classic model, as figure number 4 shows.

Figure 4 4. Logistic System S.C. SPICUL S.A uses Just in time system as they produce food products which have to be delivered immediately after producing. Also, some of the raw materials such as eggs can’t stay too much in the warehouse; they need to be used as soon as possible. Transportation of the products is one of the main logistic activities in this company because it is considered the most important part of the logistic system. The most important decisions regarding transportation of the products are: choosing the most suitable car (gauge, size) or type of transport (railway or road), creating a good system for following the orders in real time. Every car is well prepared for this type of products they deliver. 4.1. Distribution S.C. SPICUL S.A produces goods that are consumed very fast and they are used every day as staple food; that’s why commercializing has o be very wide, in a big number of stores. The retail units are: -own centers (33 stores, 12 of them are in Bucharest) -state units (S.C Panduri S.A, S.C Delficom S.A, S.C Practic S.A, military units, hospitals -private units (supermarkets like Real, Selgros, Metro, Carrefour, etc) -other stores (Dorali, Titan, Mega Image, etc)
The distribution of the bread and other bakery products has to be done in a very short time, direct and contiguous. Each bread manufacture has its own distribution park.
The distribution system they used is pre-sale: the products are preordered and delivered in 24/48 h. In this way, the Just in time system is accomplished because they use the minimal time for producing and commercializing the products.

4.2. Warehousing
S.C. SPICUL S.A owns different types of warehouses; each of them is specialized according to each product requirements. For instance, the wheat is warehoused in a big silo with 24 cells and a capacity of 4800 tons. The eggs or the yeast are kept in a special warehouse where the temperature is low. All products are warehoused in best conditions, in cool and dry places.
The processed flour is stored in a special silo with 8 cells. It is then transported with a pneumatic system for packing or for using it in the manufacture.
4.3. Information flows
The informational system of this company represents more than a database or the system of following the commands. They also use statistical and mathematics methods for making decisions and for controlling the logistic system.
The informational flows represent an important part of the logistic system which facilitates the progress of the entire logistic activity. Having actual, sufficient and relevant information data helps the company for making efficient, strategic and operational decisions. The logistic information makes the course of planning and controlling operations possible.
The offers and the information from S.C. SPICUL S.A are sent to the customers trough sales agents. The clients receive the information about the characteristics and utilization of the products. They also are informed about the new products or discounts.

5.Optimization of the logistic activity
The logistic services of the company SPICUL represent a complex of operations which makes sure all the necessities of the customers are satisfied in the process of handling the material, supply financial and informational flows.
For achieving a higher level of professionalism the company should improve the logistic activity. The best solution in this case is to hire a logistic company, because they have better knowledge about this area; they are professionals. In this scenario, the logistic activity won’t face organizational problem, and the employees of the company will do their jobs better because they don’t have to think about logistic issues.
The company should also pay great attention to the vehicles they use to deliver the products. The cars are properly equipped for delivering the bread and the bakery products, but they don’t have suitable cars for the raw materials they sell. Plus, they should improve the distribution chain, as they don’t have a good organized route for distribution. For each store they deliver the products by one car. A better solution is to use one car for many distribution points. They have to find the best routes so they will cover an entire area. One example is in the figure number 3.

Figure 4

6. Solving solution The biggest problem of the company is the raw material. The company prefers to buy wheat and then to process it in their own mill even though the mill is very old and its efficiency is getting lower. Thus, the production is getting slowed so, in a short time, the company will not be able to accomplish all the demands. This problem may have 2 solutions: 1. The company will purchase a new modern mill. The investment is quite big but it will be quickly amortized. The new mill will be faster, the quality of the flour will be better, they won’t spend extra time for processing the flour, and they will need fewer employees for supervising the mill and for handling the finished product. Another advantage is that from wheat they will not produce just flour but semolina or bran too. In this way, they will continue to sell these products as raw materials and it will be very profitable. 2. The company gives up buying wheat instead of buying flour. The costs for this raw material will not be much bigger than the old method they used before, they will not need employees for supervising the mill, they will not need the wheat silo anymore, the transport costs for flour will be smaller than wheat transport, as the quantity will be smaller. The disadvantage will be the fact that they will have to abandon the wheat silo and they will not sell anymore the raw products or the surplus of flour.

In my opinion, the best solution is the first one: buying another mill. The company cannot continue using the old mill anymore because they risk a big failure. The mill can damage every moment and this involves stopping the production, the impossibility of sending the goods and losing the contracts. This problem can call forth even the bankruptcy. So the best solution is to replace it with a better and a modern one. In this case, they will not lose any contract; the prestige of the company will not suffer at all, as it might do, if they will not supply the companies wherewith they signed contracts before. The company will also increase the budget by selling the processed flour and the other mill products. This solution brings advantages for everybody: the company SPICUL, its employees, its partners.

7. Conclusion As a conclusion, the company S.C. SPICUL S.A has proved to have a good logistic system but it has to be improved.
The company took the best decisions regarding the suppliers, because they didn’t judge only by the prices, but by the location and the quality too.
In every company, the main aim is gaining profit. Thus, the company has to maximize the production with the lowest costs. The best solutions have to be found for the business to be a successful one.
In this project I tried to find the gaps in the logistic system of SPICUL S.A. and also find some solutions to solve these problems. I also believe that this company needs some professional logistics guidance, because they are the only ones who can come with the best organizational and logistic system.