ADDIS ABABA INSTITUTE OF TECHNOLOGY

SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING

Project on Freight Transport – Structure, market and

Technology

Motor & Engineering Company of Ethiopia Ltd. S.C.

(MOENCO)

Prepared by:
Abel Kebede GSR/0269/11

Biniyam Abebe GSR/7966/11

Meseret Shiferaw GSR/9361/11

Sara Getachew GSR/3648/11

Tsion Fiseha GSR/0584/11

Submitted To: Girma Gebresenbet (Prof.)

Hilina D.

July 19, 2019

 Acknowledgement
We would like to express our special thanks of gratitude to our instructor Professor Girma
Gebresenbet who gave us the opportunity to do this project on the topic logistic and supply
chain.

Secondly, we would also like to thank MOENCO staff members for their cooperation.
Table of Contents
List of figures
Chapter 1 ................................................................................................................................................ 1
Introduction ............................................................................................................................................ 1
1.1 Company background .............................................................................................................. 1
1.1.1 About the Motor & Engineering Company of Ethiopia Ltd. S.C. (MOENCO) ....................... 1
1.1.2 Mission of the company ................................................................................................... 1
1.1.3 Vision of the company ...................................................................................................... 1
1.1.4 Products ........................................................................................................................... 1
1.1.5 Services ............................................................................................................................ 2
1.2 Objective.................................................................................................................................. 2
Chapter 2 ................................................................................................................................................ 3
Overall experiences ................................................................................................................................. 3
2.1 Information Technologies and Digitalization ............................................................................. 3
2.2 Modes of transportation .......................................................................................................... 3
2.3 Lead time and last mile services ............................................................................................... 4
2.4 Inventory ................................................................................................................................. 4
2.5 Third party engagement ........................................................................................................... 4
2.6 Customers service market coverage ......................................................................................... 5
2.7 Supply chain and Value chain management.............................................................................. 5
2.8 Cross docking system application in the company .................................................................... 5
2.9 Reverse logistic application ...................................................................................................... 5
2.10 Risk management..................................................................................................................... 6
2.11 Queue management ................................................................................................................ 6
Chapter 3 ................................................................................................................................................ 7
Recommendations .................................................................................................................................. 7
Appendix ................................................................................................................................................. 8
List of figures

Figure 1 Human resource and marketing office........................................................................................ 8

Figure 2 Show room ................................................................................................................................ 8
Figure 3 Service area ............................................................................................................................... 8
Figure 4 Vehicle reciption ........................................................................................................................ 8
Figure 5 Parking area ............................................................................................................................... 8
 Addis Ababa Institute of Logistic and supply chain
Technology MOENCO

Chapter 1

Introduction

1.1 Company background

1.1.1 About the Motor & Engineering Company of Ethiopia Ltd. S.C. (MOENCO)

The heart of Addis Ababa, around the area commonly known as Mexico, a small garage with a
capital of 200, 000 Ethiopian birr was founded by Mr. Y. D. Lappine 50 years ago in a small rented
house. His far sighted vision became reality with the help of other resourceful people, such as Ato
Menasseh Lemma, the then Governor of the National Bank of Ethiopia, and the boss of Imperial
Insurance Company.

Nine years later, MOENCO took over the TOYOTA franchise business for Ethiopia when Inchcape, a
London based international organization, became a major shareholder and injected a considerable
amount of capital. This was a milestone moment in the firm’s journey to become the MOENCO of
today. In addition to the TOYOTA business, at different times MOENCO used to represent General
Motors for various types of American vehicles and trucks; Ingersoll-Rand; WABCO, Pettibow;
Universal; Dupont; General Tire; Frigidaire; Zanussi; and Thomas De La Rue & Co. of England.

The company head office is located in Addis Ababa around bole sub city in front of Hayat Medical
College with branches located in Bahir- Dar, Mekele, Hawassa, Dire Dawa and Adama.

1.1.2 Mission of the company

The basic mission of the company is to attract and attain customers with high-valued products and
services and the most satisfying ownership experience in Ethiopia.

1.1.3 Vision of the company

The vision of the company is to be the most successful and respected car company in Ethiopia.

1.1.4 Products

Automotive

Toyota Yaris, Corolla, Land Cruiser, Land Cruiser Prado, Land Cruiser Hardtop, Land Cruiser Pickup,
Fortuner, Hilux, Hiace, Coaste, Ambulance hardtop, Ambulance Hiace, DAIHATSU and Terios.

Construction

KOMATSU Dozers, Motor Graders, Excavators, Wheel Loaders, Backhoe Loaders, HAMM-Rollers
Asphalt Pavers, VOGEL Asphalt and Concrete Paver, Wirtgen- Milling Machine and Slip Pavers,
PHOENIX

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Technology MOENCO

1.1.5 Services

Free Service Check-up

All passengers and commercial vehicles purchased from MOENCO are entitled for free maintenance
check-ups at 1,000km and 5,000km except for replacement of lubricants and filters. Through such
maintenance check-ups, we are able to make sure that customers are satisfied with their new
vehicle and every aspects of the vehicle are in good condition.

Express Maintenance Service

MOENCO provides its valued customers with Express Maintenance Service for TOYOTA, DAIHATSU
& LEXUS vehicles at its Main Branch in Addis. Our State-of-the-art service center is equipped with
the most advanced automotive equipment and the service provided by our qualified technicians
enables us deliver Toyota’s quality service to our esteemed customers.

The Express Maintenance Service is available for standard maintenance check-up services of all
models vehicles with mileage up to 50,000km.

During the Express Maintenance Service customer can watch the entire check-up process on
his/her vehicle through the window of the comfortable customer waiting lounge.

General Repair

MOENCO’s Service Centers also provide General Repair Service for all sophisticated general
mechanical and electrical system on all TOYOTA, DAIHATSU & LEXUS Vehicles. Our General Repair
Service comprises of units overhauling (like engines, automatic and manual
transmissions/transaxles, fuel injection pumps, differentials, steering gearboxes, vane pumps,
starters, alternators, etc.), and diagnosis & repair of any malfunctions on the vehicle using the state-
of-art equipment and tools available in our Service Centers. For details please contact one of our
Service Centers. To enjoy the quality general repair work on your vehicle, please book an
appointment by calling our Service Centers on the above contact numbers.

1.2 Objective

The objectives of this project are:

 To assess moenco’s logistics and supply chain management approach
 To implement the theoretical knowledge acquired in the class room in to a practical
situation that exists in companies.

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Technology MOENCO

Chapter 2

Overall experiences
2.1 Information Technologies and Digitalization

- Information technology and digital economy present new opportunities for all sectors of the
economy. Today economy is undergoing fundamental changes as a result of the rapid development
of information technology and its use is also very fast.

- MOENCO utilizes mainly the following logistic tools for the increased emphasis on customer
services:

 Electronic fund transfer including money wire transfer and bank CPOs during
payments
 Electronic data interchange for communications between various points and
branches
 Bar codes for Automatic vehicle Identification
 GPS for tracking products from ports to delivery point.
 Digital equipment is used mainly for service area and maintenance wards where
modern vehicles use computerized systems.

- The company controls the transportation of its product via the following communication
mechanisms:

 By using the leading time set and related documents

 By invoice
 By certification of origin letter provided by DHL
 Online document tracking from DHL websites

2.2 Modes of transportation

- The different modes of transport are air, water and land transport which includes Rail ways, road
and off road transport.

- MOENCO utilizes mainly:

 Multi- modal transportation system.

 Water transport with ships from product origin to ports
 Rail way system from the port to customs.
 Road transport from customs to the company hub and the different branches of the
company throughout the country.

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Technology MOENCO

2.3 Lead time and last mile services

- A lead time is the latency between the initial and execution of a process. In our case, the lead time
between the placement of an order and delivery of a new vehicle from the manufacturer is the lead
time.

- Due to the current shortage in foreign currency exchange the lead time for delivery of a new car
extends up to 8 months on average.

- The last mile service is in Addis Ababa and some times in the branch offices.

2.4 Inventory

- The importance of precise vehicle inventory management has never been more clearly defined
than it is today. It is well known that precise vehicle inventory management can be the difference in
whether or not to operate the stores at a profit or loss.

- Regarding the key questions/fundamental inventory decisions the company performs the
following basic decisions.

 How many products or vehicles to order based on the customer request and amount
of safety stock for spares. Currently the safety stock is low due to the prevailing
foreign currency shortages.
 When to place the orders depends on the customer interest and likewise the
availability of foreign currency.
- Regarding the Inventory costs though we could not mention the figures related to each
factors the costs mainly depend on:
 Service costs
 Storage costs
 Ordering costs
 Carrying costs
 Risk cost

2.5 Third party engagement

- Third party engagement is based on outsourcing of activities. The entity that performs the
intended activity is called the third party.

- In the case of MOENCO the shipping companies, the transport company for the delivery of
products from the ports to customs, the transistors for customs clearance and transporters
to the hub like DHL and branch offices of the company are outsourced and they are the third
parties involved.

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Technology MOENCO

2.6 Customers service market coverage

- The consistency of the company’s service depends on the right:

 Item
 Cost
 quality
 Condition
 Place
 Time and customer
- But the above are not met consistently due to uncertainty of foreign currency shortage, LC
problems like prolonged waiting times, times related to transportation and problems on
ports regarding loading and unloading.
- Apart from the above problems the government has special provision which adds up th the
consistency of the service via pre custom clearance.
- The market coverage is throughout the country with its branch offices.

2.7 Supply chain and Value chain management

- Supply chain management in the company involves the movement and storage of raw
materials of work in process inventory and of finished goods from point of origin to point
of consumption.
- The company adds value based on:
 Outbound logistics: which is the process related to the storage and movement of
the final product in this case, vehicles and spares in the related information flows
from the end of the production line to the end user in this case, customers.
 Service: which includes all the activities required to keep the product/service
working effectively for the buyer after it is sold and delivered.

2.8 Cross docking system application in the company

The company applies cross docking system for branches closer to dry ports while delivering
the product for customer.

2.9 Reverse logistic application

- This concept is for all operations related to the reuse of products and materials. It is the
process of moving goods from their typical final destination for the purpose of capturing
value or proper disposal.

- Regarding this concept the company sells used accessories and spares for further utilization.

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2.10 Risk management

- Risk management is the identification, evaluation, and prioritization of risks followed by

coordinated and economical application of resources to minimize, monitor, and control the
probability or impact of unfortunate events or to maximize realization of opportunities.

- The risks related could be obsolescence, shrinkage, damage, relocation and theft.

- The company’s activities are covered under insurance for minimizing risks.

2.11 Queue management

- The queue management is branch of operation research to make business decisions about
resources needed to provide service.

- The company applies this concept in maintenance services and the maximum queue of one
week for available spares and necessary conditions are met.

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Technology MOENCO

Chapter 3

Recommendations
The following recommendations are made based on our visit to the company.

1. There are some problems related to consistent service for customers. To improve the
situation it’s better to sell some shares of the company so that problems related to currency
will be minimized.
2. Introducing updated logistic and supply chain management system which the company is
currently adopting.
3. Sorting out problems to be solved that are related to lead time for better customer service.
4. Modifying the management system in the hub and the branches company for information
availability for those who need information regarding the company’s performance.

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Technology MOENCO

Appendix

Pictures taken during site visit

Figure 1 Human resource and Figure 2 Show room

marketing office

Figure 3 Service area Figure 4 Vehicle reception area

Figure 5 Parking area

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