Logistics Time and Cost Analysis Case of Lubricant Supply of Libya Oil Ethiopia Limited
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Date
2015-02
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Addis Ababa University
Abstract
Efficiency of logistics and supply chain can be source of distinct competitive advantage
for an organization. On the other hand failure on properly undertaking logistics and
supply chain activities can cause organization to incur big costs in the form of demurrage
and storage that will affect company profitability. This research is done to review the
logistics aspect of lubricant supply of Libya Oil Ethiopia limited by reviewing the
logistics time and cost dimension and the impact it will have on the company
profitability. The whole import transactions during the years 2012 and 2013 are reviewed
using the company data base as a source .As part of quantitative analysis lead time on
lubricant importation and cost per liter of lubricant is determined using average and
compared. As part of qualitative analysis key informant interview, review of contracts
and intercompany correspondence is made. The researcher found out the lead time for
lubricant importation to be 6.34 and 4.48 months in the years 2012 and 2013 respectively.
Delays after vessel arrival until uplifting containers from either of the ports and delays
until delivering back empty containers are found to be major source of demurrage and
port storage charges which affect company profitability. The researcher also found out Ex
work cost and logistics costs to be major component of the total lubricant cost per liter. It
is the recommendation of this research that any endeavor that reduce the production lead
time and the time it take to get foreign currency approval will have substantial impact in
an attempt to reduce supply chain lead time. On top of this, as Ex work cost is major
component of the cost of product, focused effort to get lubricant at reduced ex factory
cost will substantially reduce the total cost of products and ultimately improve company
profitability. It is also the recommendation of this research for further studies on lubricant
logistics and supply chain to be conducted in the context of Ethiopia
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Keywords
Lubricant Supply of Libya Oil Ethiopia Limite