Professional Documents
Culture Documents
By
Manoj Banshilal Pachouri 05BS 1741 ICFAI Business School Bangalore
A report submitted in partial fulfillment of the requirements of MBA program of ICFAI Business School Submitted To Faculty guide Prof. Bharat Kantharia ICFAI Business School Ahmedabad Company Guide Mr. Sharad Jobanputra Fairdeal Distribution Services Pvt. Ltd. Ahmedabad
This is to certify that Mr. Manoj Banshilal Pachouri has successfully completed the Project work, assigned to him at Fairdeal Distribution Services Pvt. Ltd., as part of the requirement in the MBA Curriculum of ICFAI Business School under my guidance and supervision. He has worked on the project titled Business Process Reengineering for Implementing Warehouse Management System during the period February 2006 May 2006. This project is done for partial fulfillment of the M.B.A. program from the aforesaid institute. I wish him all the best in his future endeavors and career. Yours truly, FAIRDEAL DISTRIBUTION SERVICES PVT. LTD.,
DECLARATION
I declare that the project entitled BUSINESS PROCESS REENGINEERING FOR IMPLEMENTING WAREHOUSE MANAGEMENT SYSTEM conducted at Fairdeal Distribution Services Pvt. Limited is a record of independent research work carried out by me during the academic year 2005-06 under the able guidance of my faculty guide Professor Bharat Kantharia of ICFAI Business School, Ahmedabad, and my project guide Mr. Sharad Jobanputra, promoter and Managing Director of Fairdeal Distribution Services Pvt. Ltd. (www.fairdeal.org) I also declare that this project is the result of my effort and has not been submitted to any other University or Institution for the award of any degree, or personal favor whatsoever. All the details and analysis provided in the report hold true to the best of my knowledge.
ii
Acknowledgements
The satiation and euphoric that accompany the successful completion of task, would be incomplete without the mention of the people who made it possible. After all, success is the epitome of hard work, severance, undeferred missionary, zeal, steadfast determination and most of all encouraging guidance. So, with immense gratitude, I acknowledge all those whose guidance and encouragement served as a beacon light and crowned my efforts with success. I sincerely thank Mr. Sharad Jobanputra, honorable Promoter and Managing Director of Fairdeal Distributors Pvt. Ltd. and my company guide for giving me an opportunity to take up this project. I thank him for being a constant source of inspiration, mentor and above all for his encouragement. His 30 years of experience in Sales and Distribution was itself a great source of knowledge and information for me. Despite his demanding schedule, he bestowed every possible facility to me; so as to carry on the project work without any encumbrance. I would like to express my profound sense of gratitude to Professor Bharat Kantharia - ICFAI Business School, Ahmedabad, and my project guide for guiding me as well as providing me the support to conduct this project. This IIM-A graduate with his more than 20 years of work experience in ERP implementation and Business Process Reengineering has all the tools required to guide a student. I would like to extend my warm salutations to Professor Ravi Warrior, my Marketing faculty at Bangalore campus and Mr. Rajkumar of Sequel Pvt. Ltd. for his guidance and encouragement in getting this project. With a deep sense of gratitude and indebtedness, I sincerely and whole-heartedly thank my fellow colleagues and the staff team at Fairdeal Distribution Services Pvt. Ltd. for giving me value suggestions and advice throughout the execution of the project. This project would not have been concluded successfully within time without their support and help.
iii
I would be selfish if I do not mention names of Mr. Zankar; Mr. Hemant & Mr. Aashish of Titan watches; Mr. Sunil Patel of Bharati (Motoroala); Mr. Pravin of Amara Raja Batteries; Mr. Narendra of TVS Motors; Mr. Vinod of Tata Tea; Mr. Saurabh of Voltas; and many other who gave me their valuable time from their busy schedule to help me in studying the business processes at Fairdeal Distribution Services Pvt. Ltd. I take this opportunity to thank all the library members of ICFAI Business School, Ahmedabad, friends, and my seniors who provided me with the study material on my project. Last but not the least; I thank my parents, Late Shri Banshilal Pachouri and Ms. Dhanvanti Devi, for bringing me up in a successful environment and teaching me all the basic etiquettes and ethics required for my growth in an organization.
iv
Me @ FAIRDEAL
I am among the few professionals who are privileged to get their dream project. It was always my dream to work on an ERP and BPR project in my SIP and Fairdeal provided me this opportunity. Working with the Fairdeal I have been able to understand some of the best logistics and clearing & forwarding industry practices that they follow. Around four month of my work exposure gave me tremendous insights into the companies operations. At the Fairdeal, I got the opportunity to understand the supply chain and logistics operations of many industries namely, Automobile industry, Horology industry, Foods and snacks industry, Electronic home appliances industry, Telecommunications industry and Paint Industry. Some of the companies I studied in these industries are Titan, Tanishq, Voltas, TVS Motors, MRF paints, MICO Bosch, Bharati Teletech, Motorola, Tata tea, Bell ceramics, McFills foods, BPL Sanyo, Amara Raja Batteries etc. My Interaction with Area Sales Managers (ASM), dealers, branch managers (BM) and other top management of these companies stretched my thinking nerves and gave me new perspective of looking at corporate worlds real time situations. I also got opportunity to spend some time with Mr. Pawas Agarwal; Tata tea regional manager for west zone during my project. In a very systematic manner training was offered to me. Planning Scheduling and deadlines are a part of every working individual and thats exactly what was expected of me. Though the time was clearly sketched out to me, I was given complete freedom with the style of working. Apart from external industry exposure, Fairdeals management and staff was not less than a gurukul for me. Mr. Sharad Jobanputras guidance with more than years of industry experience and his deep knowledge of various fields was more than any business school lecture. Fairdeals staff was also equally capable with industry experience in range of two to ten years.
During entire internship period I was asked to report at the end of every phase that I complete. These reports covered my basic understanding of the issue and then methodology that used for the analysis. This enhanced my knowledge to great extent and triggered in me the curiosity to know more on the subject. The prospectus of association with Fairdeal Distribution Services Pvt. Ltd. is always near to my heart. This will steer me to make myself competent enough and excel in whatever I do. In short, it was a knowledge enhancing and curiosity quenching experience that will linger in my heart.
vi
Table of Contents
CERTIFICATE ................................................................................. i DECLARATION ............................................................................ ii Acknowledgements .................................................................... iii Me @ FAIRDEAL.......................................................................... v Table of Contents...................................................................... vii List of Figures............................................................................. x List of Tables............................................................................. xi Acronyms and Abbreviations....................................................... xii Abstract..................................................................................... 1 Executive Summary .................................................................... 3 INTRODUCTION ....................................................................... 6 Objectives of the Project ........................................................... 6 Scope of the project ................................................................. 7 Limitations of the Study............................................................ 8 Proposed Methodology.............................................................. 9 Detailed tasks to be performed ................................................ 11 Project Schedule.................................................................... 15 INDUSTRY ANALYSIS ............................................................. 16 Logistics Industry .................................................................. 16 Legal Issues in Logistics Industry........................................... 18 Third party logistics ............................................................. 19 Third Party Logistics Industry: SWOT Analysis ......................... 23 Fourth Party Logistics (4PL) Industry...................................... 24 In-plant Stores Outsourcing .................................................. 25 Vendor Owned Inventory Management ................................... 25 Warehousing....................................................................... 26 Material Handling ................................................................ 26 Reverse Logistics (Returns Management) ................................ 27 Clearing and Forwarding Agents ............................................ 29 ABOUT FAIRDEAL ................................................................... 30 Vision, Mission and Business Objectives .................................... 31 History ................................................................................. 32 Directors .............................................................................. 32 Independent Directors ............................................................ 33 Business Focus ...................................................................... 34 Product Range....................................................................... 34 Locations.............................................................................. 35 Distribution Network .............................................................. 36 Awards and Achievements ...................................................... 37 Manoj Banshilal Pachouri vii ICFAI Business School
Client Companies................................................................... 37 Voltas ................................................................................ 37 Titan Industries ................................................................... 39 Tata Tea ............................................................................ 41 Amara Raja Batteries Limited (ARBL) ..................................... 43 TVS Motors......................................................................... 44 Motors Industry Company Limited (MICO)............................... 46 Bell ceramics ...................................................................... 48 Bharti Teletech.................................................................... 49 MRF Ltd ............................................................................. 51 PROCESS ANALYSIS ............................................................... 53 Processes and the Organization ............................................... 54 Sources of Data Collection .................................................... 54 Organization Structure of Fairdeal.......................................... 55 Remuneration claimed by CFA ............................................... 56 Company Wise Processes ........................................................ 57 ABC ANALYSIS ....................................................................... 81 Definition of ABC Analysis ....................................................... 82 Value Wise ABC Analysis......................................................... 83 Quantity Wise ABC Analysis..................................................... 87 Transactions Wise ABC Analysis ............................................... 91 AS-IS ANALYSIS .................................................................... 95 Definition of AS-IS Analysis..................................................... 96 Decide on an approach ........................................................... 99 Cycle Time, Wait Time measurements .................................... 100 Process Matrices [Key Performance Indicators (KPIs)]............... 103 Goods Receiving Process....................................................... 104 Storing Material Process ....................................................... 108 Cycle Count Process ............................................................. 112 Order Punching Process ........................................................ 115 Order Approval Process ........................................................ 118 Invoice/ Bill Printing/ Stock Transfer Process ........................... 121 Dispatching Process ............................................................. 123 Transportation Process ......................................................... 126 Handling Unsalable Material Process ....................................... 129 Handling Warranty Claims Process ......................................... 132 Stock Maintenance Process ................................................... 134 Initial Issues Emerged Out Of AS-IS Analysis........................... 138 Other Notes from Interviews ................................................. 140 TO-BE ANALYSIS .................................................................. 141 Preparation for Implementing Re-Designed Processes ............... 143 Assembling Warehouse Data ............................................... 143 Warehouse Layout ............................................................. 144 Manoj Banshilal Pachouri viii ICFAI Business School
Specifying the Replenishment Sequence ............................... Implementing Location Sequencing ...................................... Generating Barcode Labels.................................................. Import-Export Data To and From WMS ................................. Synchronize Fairdeal WMS and Principals ERP Module ............ To-Be Goods Receiving Process.............................................. To-Be Storing Material Process .............................................. To-Be Cycle Count Process .................................................... To-Be Order Punching Process ............................................... To-Be Order Approval Process ............................................... To-Be Invoice/ Bill Printing/ Stock Transfer Process .................. To-Be Dispatching Process .................................................... To-Be Transportation Process ................................................ To-Be Warranty Claims & Unsalable Material Process ................ TO-BE Stock Maintenance Process.......................................... SUGGESTIONS AND RECOMMENDATINS........................... Characteristics of an Ideal WMS............................................. Suggestions and Recommendations........................................ Project Activity-Time Schedule.................................................. APPENDICES ........................................................................ APPENDIX A: Key staff involved in the project ......................... APPENDIX B: Fairdeals Document Formats ............................. APPENDIX C: Flowcharting Shapes ......................................... REFERENCES ........................................................................ Bibliography........................................................................ Internet Sources.................................................................. GLOSSARY ...........................................................................
146 146 147 147 148 149 152 154 156 157 159 161 163 165 166 169 170 174 182 185 185 186 193 194 194 195 196
ix
List of Figures
Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure 1: The Implementation Process Model Project Plan ................. 9 2: Reverse Logistics Cycle ................................................ 28 3: Organization Structure of Fairdeal.................................. 55 4: Flowchart of Goods Receiving Process........................... 107 5: Flowchart of Storing Material Process ........................... 111 6: Flowchart of Cycle Count Process ................................. 114 7: Flowchart of Order Punching Process ............................ 117 8: Flowchart of Order Approval Process ............................ 120 9: Flowchart of Invoice/ Bill Printing/ Stock Transfer Process 122 10: Flowchart of Dispatching Process ............................... 125 11: Flowchart of Transportation Process ........................... 128 12: Flowchart of Handling Unsalable Material Process ......... 131 13: Flowchart of Handling Warranty Claims Process............ 133 14: Flowchart of Stock Maintenance Process...................... 137 15: Warehouse Layout ................................................... 144 16: Flowchart of TO-BE Goods Receiving Process ............... 151 17: Flowchart of TO-BE Storing Material Process ................ 153 18: Flowchart of TO-BE Cycle Count Process ..................... 155 19: Flowchart of TO-BE Order Approval Process ................. 158 20: Flowchart of TO-BE Invoice/ Stock Transfer Process...... 160 21: Flowchart of TO-BE Dispatching Process ...................... 162 22: Flowchart of TO-BE Transportation Process.................. 164 23: Flowchart of TO-BE Stock Maintenance Process ............ 168 24: Format of Gate Pass of Fairdeal ................................. 186 25: Format of Invoice .................................................... 187 26: Format of Advance Intimation of Warranty Return ........ 188 27: Format of Lorry Receipt (LR) of Fairdeal ...................... 189 28: Format of Lorry Receipt obtained by Fairdeal ............... 190 29: Format of Warranty Replacement Delivery Challan ....... 191 30: Format of Warranty Return Delivery Challan ................ 192 31: Flowcharting Shapes ................................................ 193
List of Tables
Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table 1: Project Schedule........................................................... 15 2: SWOT Analysis of 3PL Industry ....................................... 23 3: Product Range of Fairdeal .............................................. 34 4: Some examples of Titan watches .................................... 59 5: ABC Analysis - Value Wise ............................................. 86 6: ABC Analysis - Quantity Wise ......................................... 90 7: ABC Analysis - Transaction Wise ..................................... 94 8: Unloading times of Transport Vehicles ........................... 100 9: Loading & Unloading times in TVS (With four labors) ....... 101 10: Ideal Unloading times (with four labors)....................... 101 11: Fairdeals Unloading times.......................................... 102 12: Summary of Metrics .................................................. 103 13: Goods Receiving Process ............................................ 106 14: Storing Material Process............................................. 110 15: Cycle Count Process .................................................. 113 16: Order Punching Process ............................................. 116 17: Order Approval Process.............................................. 119 18: Invoice/ Bill Printing/ Stock Transfer Process ................ 121 19: Dispatching Process .................................................. 124 20: Transportation Process .............................................. 127 21: Handling Unsalable Material Process ............................ 130 22: Handling Warranty Claims Process............................... 132 23: Stock Maintenance Process......................................... 136 24: AS-IS Analysis -Important issues with priorities ............ 138 25: Example of Location Sequence Numbers ...................... 146 26: TO-BE Goods Receiving Process .................................. 150 27: TO-BE Storing Material Process ................................... 152 28: TO-BE Cycle Count Process ........................................ 154 29: TO-BE Order Approval Process .................................... 157 30: TO-BE Invoice/ Bill Printing/ Stock Transfer Process....... 159 31: TO-BE Dispatching Process ......................................... 161 32: TO-BE Transportation Process..................................... 163 33: TO-BE Stock Maintenance Process ............................... 167 34: Project Activity-Time Schedule.................................... 182 35: Gantt chart of Project Activity-time Schedule ................ 183 36: Organizational responsibility ....................................... 184 37: Key Staff Involved In the Project................................. 185
xi
xii
Abstract
More and more organizations worldwide want to develop products for global markets. At the same time, they need to source material globally to be competitive. One of today's trends to solve this problem is outsourcing logistics or using third-party logistics (3PL) to manage complex distribution requirements. Organizations have developed strategic alliances with 3PL companies all over the world to manage their logistics operations network. These alliances are also known as logistics or supply chain outsourcing and contract logistics. This is also known as Clearing & Forwarding. This project titled Business Process Reengineering for Implementing Warehouse Management System aims at improving efficiency of business processes being used at Fairdeal Distribution Services Pvt. Ltd. by implementing an Enterprise Resource Planning (ERP) Warehouse Management System (WMS) Module. Project took off with studying all the processes being carried out at Fairdeal warehouse. After thorough discussions with Fairdeals management and on the basis of need analysis, total eighteen processes and sub-processes were short-listed for detailed study; out of which, ten processes were selected for AS-IS Analysis phase which included Goods receiving, Storing, Cycle Count, Order punching, Order Approval, Invoice [refer to format of Invoice in APPENDIX B] printing, Dispatching, Transportation, Handling unsalable material and Handling warranty claims. Result of AS-IS Analysis revealed activities in certain processes were not at par with industry standards and needed improvement. Some activities were acting as bottlenecks and needed restructuring. For example: It was found that serial numbers were being scanned at the time of dispatching the material which was delaying both dispatching time as well as order cycle time. In the next phase, TO-BE Analysis was taken up for eight processes which required re-engineering. These processes were benchmarked with best practices of warehousing and clearing & forwarding industry.
Demonstrations of third party warehouse management systems (WMS) were attended to get best industry warehousing practices and interviews were organized to observe the expectations of the end user. Some of WMS softwares, I studied during this project are Intelliwms from IntelliTrack etc. Based on industrys best practices and findings of AS-IS Analysis, A detailed process restructuring plan was made and recommendations were given to Fairdeals management. Some of the suggestions implemented by Fairdeal are as follows: Scan barcode numbers at the time of storing the material and not at the time of dispatching. Pre-plan the arrival of Goods-In-Transit and keep the space ready for arriving material. Pick slip will be generated at the time of invoice printing which would be helpful in locating material in the warehouse. This pick slip will include item codes, location codes and quantity. Fairdeals staff should develop cross-functional and cross-company knowledge of different softwares and packages. Each employee should have knowledge of at least two softwares. This would reduce errors in times of absentees and attritions.
It is estimated that these recommendations after being implemented will enhance operations of Fairdeal to a great extent. Efficiency of processes will increase, dependency on specific employee will decrease, cycle time of orders will decrease and space utilization will also increase.
Executive Summary
Hello, I am Manoj Banshilal Pachouri*. I did my S.I.P. with Fairdeal Distribution Services Pvt. Ltd. (www.fairdeal.org) from February 13th 2006 to May 20th 2006. I was assigned the task of doing Business Process Re-engineering which helped the company improve efficiency of its business processes. Findings and recommendations of this project were very useful during implementation of Warehouse Management System. Profile/ Key Result Area Understanding processes in logistics industry AS-IS Analysis to find out current processes being carried out Interacting with process users to understand their needs TO-BE Analysis to benchmark best processes in logistics industry Pointing out issues and suggesting recommendations Documenting every activity during project
Reporting: I reported to Mr. Sharad Jobanputra who is founding promoter and managing director of Fairdeal Distribution Services Pvt. Ltd. A copy of report was submitted to faculty guide Mr. Bharat Kantharia as well as top management of the company. Team Constitution: This project was solely undertaken by me under guidance of company guide Mr. Sharad Jobanputra and faculty guide Mr. Bharat Kantharia. All the employees and some customers of Fairdeal were indirectly (but very closely) involved. How did I apply my learning at IBS? During this project, my learning in classroom, especially classes of ITM and Operations Management, proved to be very useful. This project was so closely related to these two subjects that I had to implement most of my learning in Supply Chain Management, Cycle times, Enterprise Resource Planning etc.
This resemblance between SIP project and my learning at IBS helped me completing this project without much hurdles and with in given time limit. Learning during SIP: This project proved to be my dream project as I learnt a lot of ERP and BPR fundamentals and concepts during this project. Though I had work experience of five years in field of software developing and marketing but this project exposed me to a new field of supply chain management and third party logistics to implement Information Technology in clearing and forwarding and warehouse management industry. I leant Microsoft Visio 2003 to draw flowcharts during AS-IS Analysis phase of this project. This project also developed my professional personality by teaching me team building, group dynamics, negotiation skills, business communication skills, time management and corporate ethics. Some of the Software packages and tools I used during the course of this project are: Microsoft Visio 2003 for drawing flowcharts Adobe Nero Express 6.0 for writing data on Compact Disk (CD) Adobe Photoshop 6.0 for editing images Adobe Acrobat 7.0 Professional for converting word document into PDF format Adobe Acrobat 5.0 for reading PDF documents HP Scanner for scanning documents Microsoft XP Paint for converting bitmap format to picture format Microsoft Notepad for writing notes Microsoft XP Word for documentation Microsoft XP Excel sheets for calculation and charts Microsoft XP Power point for making presentations Internet Explorer 6.0 for surfing internet WinZip 9.0 for archiving files
I owe my deep respects and regards to Mr. Sharad Jobanputra (Company Guide) and Mr. Bharat Kantharia (Faculty Guide) who provided me wonderful ambience to learn through out this project. Preparation/ Achievements/ Recognition: I began preparing for the project even before writing my semester II exams (31st Jan 2006 04th Feb 2006), that helped a lot. I used to surf supply chain management and logistics websites to understand third party logistics, Clearing & Forwarding and Warehousing industry. I used to discuss intricacies of business processes and BPR with my faculties of Information Technology for Managers and Operations Management. My report was highly appreciated by Fairdeals management as well as my Company Guide Mr. Bharat Kantharia. Findings of this project will be used as an important document for developing Warehouse Management System (WMS) for Fairdeal Distribution Services Pvt. Ltd. and documentation of this project would be used to train and equip employees of Fairdeal with best industry practices.
* Manoj Banshilal Pachouri, age 25 years, is a student of class of 2007 at IBS Bangalore. Prior to his MBA he was working as a software developer in Ahmedabad at .NET platform (C#.NET, VB.NET). He wants to be known as an ERP and BPR consultant and is deeply inspired by Mr. Jayant Chawala of SAP Labs who is a famous name in ERP implementation world.
INTRODUCTION
Objectives of the Project
Process Mapping To find common processes across principal companies. To find specific processes related to each company. For Example: Orders punched on internet; dispatch strictly on FIFO basis etc. Process Improvement To compare current processes of Fairdeal Distribution Services Pvt. Ltd. with benchmarked processes. For Example: Automating FIFO (First-In-First-Out); Handling multiple MRP during price revision, Inspection stock etc. To suggest refinement or changes in the processes.
T
Process Standardization To standardize processes of Fairdeal Distribution Services Pvt. Ltd. by studying their activities. To prepare process flow charts and process performing AS-IS Analysis and TO-BE Analysis. matrices after
Implement Warehouse Management System (WMS) Prepare a blueprint on how to incorporate the various processes into software, which then forms the base document for developing the WMS for Fairdeal Distribution Services Pvt. Ltd.
Proposed Methodology
Figure 1: The Implementation Process Model Project Plan
This project will be carried out in four phases namely AS-IS Analysis TO-BE Analysis Process Mapping and Findings and Recommendations
These four phases will include Studying, Analyzing, Mapping, Redesigning and Implementing the various processes of Fairdeal Distribution Services Pvt. Ltd. Description of various phases is as follows 1. Define the process and establish its boundaries, do initial data gathering (e.g. organograms, operational plans, existing process maps, performance measures), develop high-level problem hypotheses. 2. Document the "AS-IS" process, refine the problem hypotheses, establish Key Performance Indicators (KPIs), measure baseline KPIs, draw-up opportunity charts for benefits. 3. Design the "TO-BE" process, revise the process flows and define any additional interventions required, establish benefits targets, carry out gap analysis (skills, costs), do micro-organization design, define roles and responsibilities (RACI). 4. Run a pilot implementation where there are significant uncertainties about aspects of the new process or the organizational design, use this to adjust process flows, validate benefits, and develop implementation plans. 5. Implement. Put new organizational design in place, carry out training, establish performance measurements (KPIs, benefits tracking), set up Service Level Agreements (SLAs), and hand over to line management.
10
11
5. 6. 7. 8.
Processes and Technology The technology model and architecture Relating processes and technology Relating technology to processes Assessing the impact of technology change Process Measurement Types of measures Matching the measures with flow types Measures and maps AS IS and TO BE measurement Measure cycle time, queue time, resource utilization Process quality and measures Measures and best practices Workflows Workflow concepts Workflow techniques Measuring workflows Building complex workflows Using the Time Lens
Gathering cycle time, process time, and wait time Identifying value-adding activities
12
9.
The AS IS Process Suite Identifying the core processes Identifying opportunities for improvement Identifying new process opportunities Defining key process requirements Organizing the As Is document Preparing the To Be input
10. Process maps and the level of detail Macro level flow chart Functional-activity level flow chart Task and procedural level 11. The TO BE Process Suite Designing new processes Revising old processes The integration method and process Integrating multiple processes Vertical and horizontal integration Integrating across business partners
12. Migration and Transformation Identifying the process transformations Assessing the migration of enablers Identifying sensitivities Assessing alternatives Preparing the migration plan
13
To complete above mentioned tasks other activities that will be performed will include Collecting the artifacts regarding the Logistic and Warehousing. Personal interviews with warehouse staff. Preparing a document which will capture all the processes of Logistics, Warehousing and Material Management. Integrating all the data collected and preparing a knowledge bank. Preparing process flowcharts and maps and finding out processes that need to be redesigned. Proposing recommendations based on the findings of the project.
14
Project Schedule
Date
Description
16-02-06 Learning Processes and Organization 18-02-06 Introduction with warehouse and its staff 20-02-06 Learning Processes and Technology 21-02-06 Process Measurement 21-02-06 Understanding Workflows 28-02-06 Gathering cycle time, process time, and wait time 08-03-06 Complete process matrices 18-03-06 Complete AS-IS Analysis 25-03-06 Point out the processes which need improvement 02-04-06 Finish personal interviews with warehouse staff 04-04-06 Design new processes 10-04-06 Integrate multiple processes 21-04-06 Complete To-Bo Analysis 25-04-06 Identifying Process Gaps 10-05-06 Complete Industry Interaction to get best practices 15-05-06 Document all the findings of the project
15
INDUSTRY ANALYSIS
Logistics Industry
Logistics is a part of supply chain and is defined as "the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information right from the point of origin to the point of consumption (including inbound, out bound, internal and external movements) in order to satisfy customer's requirements. Logistics is also defined as time related positioning of resources. The whole concept of Logistics is based on 7 R's which are:
Purchase and Supply Material Handling Production Planning Production Control Transportation Storage Distribution Product Management Installation and Servicing Strategic Management
16
A well designed Logistics chain is expected to support the strategic objectives of:
Reduced Costs Shorter Lead Time Flexibility Enhanced Service Better Product Availability Better Product Reliability
The best configuration of the chain will vary from individual chain to chain and individual organization to organization. But, in all the case the architecture of the chain would include the following three elements - System, Technology, Relations. For example: In a manufacturing industry, Logistics plays a key role in Supply Chain Management as there is a strong inter-play of activities starting from raw materials till the finished goods. In all the activities there is a flow of goods whether it is raw materials or WIP or semifinished goods or finished goods. Logistics plays a significant role in the management of entire supply chain. The pre-requisite infrastructure required to provide logistics solutions are: Land and Building (Warehouse) Trained Manpower Material Handling Equipments Hardware and Software Transport Network Vendors Consultants
17
Legal Issues in Logistics Industry There are some legal issues involved with the operations of Supply Chain, Logistics, Warehousing and Clearing & Forwarding. Some of the legal issues involved are:
Conforming and non-conforming areas: Warehouses and transport locations can not be set up in residential areas and are not permitted by law. Excise Duty: This is the tax payable at the factory location on the value of products manufactured by the company. This tax varies on product to product basis. Local Taxes: These taxes include local sales taxes, Octoroi taxes, road taxes etc. Labor Acts: According to these acts, minimum wage has to be given to every labor under Wages Act. Also, minimum of 8.33 % of annual salary of worker has to be awarded as bonus. Pollution Act: Logistics activities should environment which may harm social set up. not pollute the
Industry Act: Being in distribution and transportation industry, every logistics provider will have to comply with distribution and transportation industry regulations. Fire Act: Insurance claims and damages due to fire come under Fire act. Material can be insured against fire up to dealers point or up to CFA point. Sanctions from appropriate bodies: There are many central and local bodies whose permission is required to carry out logistics operations. Transporters unions, Municipal Corporation are some of the examples.
18
How is logistics different from transportation? Transportation is physical movement of goods (inbound and outbound) as well as picking up of products as per customers order and delivering it to the ultimate user whereas Logistics encompasses several activities related to supply chain management such as planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information, in which transportation is a major element in the entire chain.
Third party logistics Third party logistics is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the shippers whose business processes they support. Third Party Logistics (3PL) companies or Clearing & Forwarding Agents (C&FA) all over the world have become important channel in Supply Chain Management (SCM) and Sales & Distribution (SD) to manage logistics operations network. Level of outsourcing of in-plant logistics and third party logistics is mainly of following types: Levels of Outsourcing Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company. Tactical Outsourcing: Outsourcing on a long term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility. Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency.
19
Why Use Third Party Logistics? Main reason for outsourcing Logistics or Clearing & Forwarding operations to third parties is that it allows manufacturing company to concentrate on their core competencies. Some other reasons companies opt for Third Party Logistics are following: To Save Time: Outsourcing the Logistics function can free up resources to focus on core competencies. Resource constraints: In-house logistics and supply chain management requires heavy investment in infrastructure, transportation, warehousing and IT resources which might not be possible for a medium sized or small sized company. Because Someone Else Can do it Better: Even if you have resources available, another organization within the supply chain may be able to do it better, simply because its relative position in the supply chain, supply chain expertise and economies of scale. Cost saving/ cost optimization: Economies of scale and supply chain and logistics expertise of dedicated third party logistics provider may reduce the cost of logistics. To Share Responsibility: 3PL companies can share responsibility for managing global supply chains, keeping customers and stores properly stocked, and delivering the perfect order every time. To Re-Engineer Distribution Networks: Logistics outsourcing can be a quick way to re-engineer distribution networks to meet global market demands and gain a competitive edge. For more professional and scientific approach to logistical problems: Logistics outsourcing reduces problems arisen of truck accidents, Insurance claims, Octoroi claims, Sales tax filing, reverse logistics etc which can be handled by 3PL very efficiently. Efficient management of inventory resulting in better utilization of working capital: finished goods can be transferred from one clearing & forwarding agent to other through stock transfer for better movement of goods and hence better inventory management.
20
3PL Is Growing THE Indian logistics industry is poised for a significant growth in the coming years as new companies, especially in the automotive, pharmaceutical, and manufacturing and FMCG sectors are increasingly opting to outsource their logistic requirements to specialized service providers. Industry analysts say that the key drivers for logistics outsourcing are the corporate trend of focus on core operations, competitive pressure, increasing global trade and MNCs investments in India. Third party logistics service providers in India are gearing up to meet the growth demand, incorporating value-addition in their services and customizing their supply chain management solutions. For example: Gati is planning to add new services in its portfolio, such as transportation of clinical samples for pathological labs and medical institutions and reverse logistics that involve movement of defective products from the dealers back to the factory. According to industry sources, by 2020, this industry is expected to represent almost 30 per cent of the global air cargo with an average annual growth rate of 10 per cent. Indeed, a recent study on the logistics market by Frost & Sullivan has estimated that the revenue of the logistics industry from the manufacturing sector alone was $13.46 billion in 2003, with the market likely to grow at a CAGR of 6.2 per cent during the next five years. Chemicals, metal, FMCG, cement and textiles were identified as the top five contributors to the revenues of the logistics industry. In fact, the trend in the industry is towards the third party logistics (3PL) concept the market size for this category of service was estimated at $250 million in 2003. The market for 3PL services is likely to grow at a CAGR of 20.4 per cent during the next five years, with the growth being fuelled by the entry of MNCs and export focus of Indian companies. At present, the automotive, IT hardware and FMCG companies are the major users of 3PL services. In India the logistics costs are still higher than in the developed markets it is estimated to be around 13 per cent of GDP, against 9 per cent of GDP in the US. The transportation cost accounts for nearly 40 per cent of the cost of production, with more than half the goods in India being moved by road. Manoj Banshilal Pachouri 21 ICFAI Business School
One sector that is increasingly looking for outsourcing logistics is textiles, especially as it is facing the challenges of exacting delivery requirements and multiple export markets. Analysts say that with large retailers such as Wal-Mart and Target seriously evaluating new suppliers for textiles in India, this sector is bound to outsource logistics in the coming years. Also, the retail industry is expected to jump into the 3PL bandwagon, with such large retailers as Shoppers Stop and RPG expanding to smaller cities. Realizing the potential in the outsourced logistics market, 3PL service providers are expanding their basket of services as companies are now looking for more than just transportation of their products and raw materials. The logistics firms are also focusing on related services such as customer clearing and forwarding, inbound warehousing, labeling and packaging, fleet management, order picking and inventory management.
Source: The Hindu Business Line
Achieving Strategic Outsourcing Unfortunately, only a few 3PL companies achieve strategic status with their customers. They do it by constantly innovating and maintaining operational integrity. Some use an open-book costing method to demonstrate their system's transparency.
22
STRENGTHS Quick way to re-engineer distribution networks Enhanced distribution and transportation Service Time Saving in servicing customer Flexibility in restructuring distribution networks and expansion plans Economies of scale in distribution OPPORTUNITIES Better utilization of working capital Fast expansion of principals business without investing in infrastructure and transportation resources Cost optimization as a result of fast and efficient processes Concentration on core competencies
WEAKNESSES Lesser control over outsourced third party activities. Lack of proper set of skilled man power Forged bills and claims by 3PL provider agency. Difficult to switch 3PL provider agency. Lesser co-ordination between branch offices and 3PL agency.
THREATS Value Added Tax (VAT) might effect 3PL industry as distribution channels would be trimmed. Poor transportation infrastructure of India might lower the profit margin E-Commerce is emerging as a primary threat to 3PL industry. Threat of leakage of operational competencies to competitors.
23
Fourth Party Logistics (4PL) Industry Fourth party logistics provider is a supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution to the client. A standard 4PL supply chain solution involves four distinct steps: Step I: Reinvention At this level, the overall business strategy is aligned with supply chain strategy to reengineer the supply chain of the participants. Step II: Transformation Here the focus is on coordinating specific supply chain functions such as sales and operations planning, distribution management, procurement strategy, customer support and supply chain technology, with the aid of process and organizational changes, T&D, information technology, etc. as applicable. Step III: Implementation The implementation is done on the basis of recommendations made at the earlier two levels and the transition is put across to the 4PL delivery team, taking special care to consider the dimension of human resources and organizational change. Step IV: Execution A 4PL provider's scope of responsibility also includes operational responsibility for numerous supply chain functions, besides the traditional transportation management and warehousing operations logistics outsourcing.
24
In-plant Stores Outsourcing The in-house/in-plant stores activity is managed by a 3rd party logistics provider (3PL), with clear & measurable objectives and targets. Some of the benefits of In-plant stores outsourcing are: Focused & dedicated approach to stores function by skilled & experienced warehouse personnel, leads to improved efficiency Increased control on service levels and inventory accuracy, as it is directly linked to 3PLs revenue Specialized labor management model gives substantial cost reduction in terms of labor cost, along with tremendous flexibility and improved efficiency Manufacturers can then focus and allocate their resources on specialized areas like production, Design & Development etc.
Vendor Owned Inventory Management With multiple supplier having different locations and lead times, it is becoming increasing costly for manufacturers to ensure timely inputs to production lines. VOI works on a pull based system, where the stock ownership to manufacturer happens only when it is required to be produced. Some of its benefits are: Reduced inventory holding cost, as the supplier holds the stock for the principal company With the stock point in the vicinity of the manufacturer, timely feeding to the production line can be done Your Supplier benefits by reducing his warehousing space, and avoid last minute urgent shipments Replenishment model at the VOI warehouse helps supplier plan his production in a better way
25
Warehousing A warehouse is a point in the logistics system where a firm stores or holds raw materials, semi-finished goods, or finished goods for varying periods of time. It creates time utility for raw materials, industrial goods and finished products. The proximity of market-oriented warehousing to the customer allows a firm to serve the customer with shorter lead times. This warehousing function continues to be increasingly important as companies and industries use customer services as a dynamic, value-adding competitive tool. There are as many as 700 organizations in India engaged in the business of clearing and forwarding. Material Handling Material Handling is the process of efficient short-distance movement of goods that usually takes place within the confines of a building such as a plant or a warehouse or between a building and a transportation agency. Material Handling has four dimensions: Movement Time Quantity Space
Material Handling improves efficiency by making the logistics system respond quickly and effectively to plant and customer requirements. For efficient movement of goods into the warehouse, locating stock, accurately filling orders, and rapidly preparing orders for shipment to customers, materials handling is very important to outbound logistics. In inbound logistics terms, materials handling serves company plants in the same way. Firms need to integrate materials handling requirements not only for the company's departmental needs, but also for meeting their customers' needs.
26
Reverse Logistics (Returns Management) Companies spend more time and money in fine-tuning their forward supply chains while ignoring their backward supply chains. However, in today's competitive business environment when there is both external and internal pressure, companies can no longer ignore reverse supply chains. Efficient reverse supply chains bring many benefits to the companies. However, reverse supply chains are different from forward supply chains and most of the existing forward supply chains are not designed to handle reverse supply chains. Though reuse of products and materials is a common phenomenon, companies have long ignored this part of the supply chain, known as reverse supply chain or backward supply chain. A common example of reverse supply chain is the soft drinks bottles pickup and delivery system, where soft drink bottles are returned and reused repeatedly The Council of Logistics Management defined reverse supply chain as "The process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal." As far as managing the returns are concerned companies re-use them, re-sell them, leave them to a third party or destroy them. But companies are more likely to benefit if they can also make use of the information that comes back with returned merchandise.
27
Reverse logistics also includes remanufacturing and refurbishing activities, processing returned merchandize due to damage, seasonal inventory, restock, salvage, recalls, excess inventory and recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.
28
Clearing and Forwarding Agents "Clearing and forwarding agent" has been defined as "any person; who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations, in any manner to any other person and includes a consigning agent." Normally, there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the C&F agent is entitled. A clearing and Forwarding agent normally undertakes the following activities(a) Receiving the goods from the factories or premises of the principal or his agents; (b) Warehousing these goods; (c) Receiving dispatch orders from the principal; (d) Arranging dispatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal; (e) Maintaining records of the receipt and dispatch of goods and the stock available at the warehouse; (f) Preparing invoices on behalf of the principal. For their services rendered, the C&F agent receives commission or remuneration which usually consists of two components:
o
Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled; A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.
The above two constitute the remuneration or commission paid to the C&F agent by the principal.
29
ABOUT FAIRDEAL
Fairdeal Distribution Services Pvt. Ltd., a company incorporated and registered in 1975 under the Companies Act, 1956 and having its Registered Office at 431, Chetan Society, Bopal-Ghuma Road, Ahmedabad, Gujarat, 380058, Republic of India (hereinafter referred to as Fairdeal which expression, unless repugnant to the context or meaning thereof, shall mean and include its successors and permitted assigns). Fairdeal has represented that it has the requisite knowledge, expertise, technical know-how, experience, resources, infrastructure and intellectual property for the management, maintenance and administration of all operations in Supply Chain Management Industry. It has a dominating presence as a Clearing & Forwarding Agent. Today, Fairdeal has invested heavily in infrastructure - warehouses and vehicles - to provide effective, efficient and reliable services. Keeping in mind the globalization of the industry and international trends, it was decided in March 2004 to widen the scope of service offering and move up in value chain. For this purpose Sequel Logistics Pvt. Ltd. was established. On 1st April, 2004, Titan Industries outsourced In-plant Logistics to both their plants, Hosur (Tamilnadu) and Dehradun (Uttaranchal) to Sequel Logistics. And today our client list includes Ashok Leyland, BPL Sanyo, Madura Garments, TVS Motor, and Precision Engineering Division of Titan Industries, in addition to Watch Division of Titan Industries. Fairdeal has a modern, well laid warehouse of over 50000 sq ft at Sharkhej in Ahmedabad, Gujarat. It is handling inbound logistics for diamond for Titan Industries from Surat. Currently, Fairdeal manages over 40,000 SKUs at 5 different locations. Material handled by the group is valued at over Rs. 3000 Crores and has employee strength of over 300 and also handles secondary movement for which have over 25 dedicated vehicles.
30
31
History
The first Group firm was established in 1975 and was carrying out business in office equipments. In 1978, the firm started FMCG distribution and was associated with The Tata Oil Mills Co. Ltd., Colgate-Palmolive etc. The firms were into retail distribution of 'Fast Moving Consumer Goods' for many years. Diversification came in 1987 by taking up 'Clearing & Forwarding Agency' of TITAN. Since then Fairdeal has grown to become a major 'Logistics Service Provider' in Gujarat and represents over twelve clients in the state of Gujarat. It also manages secondary freight for the clients.
Directors
Sharad Jobanputra
He is a science graduate in microbiology and has 30 years of experience in various businesses and founder of Fairdeal Group. S Rajkumar
He is a mechanical engineer and has done MBA from IIM-C. He has worked in Supply Chain Department of Titan Industries and worked with Madura Garment as Supply Chain Manager. Zankar Jobanputra
32
Independent Directors
Ninu Khanna
He is a science graduate and an MBA from IIM-C. He has a very wide experience of working with Colgate-Palmolive, India & China, Procter & Gamble, India, Japan & Nigeria, Dabur and currently he is Managing Director of Bombay Dyeing. He will be CEO-FMCG Vertical, Reliance Retail from June 2006. G Raghuram
He is an electronics engineer from IIT, Madras, an MBA from IIMA and a doctorate from Kellogg School of Management. He teaches Operation Research in IIMA and has special interests in Supply Chain & Logistics. He has published several books and papers in national and international publications. He is also a visiting faculty to national and international business schools. Jamshed Daboo
He is a mechanical engineer and an MBA from XLRI, Jamshedpur. He has wide experience of working with Titan Industries and Tata Quality Management Services and currently he is COO Business Hotels, Indian Hotels. These independent directors will give Fairdeal group outside view as Fairdeal grows in terms of geographical scope and physical scale.
33
Business Focus
Fairdeal Distribution Services Pvt. Ltd. provides complete Supply Chain solutions to its clients. Some of its fields of operation are: In-plant logistics Reverse logistics Third Party Logistics Manufacturing Logistics Manufacturer to Consumer (M2C) Logistics Warehousing Clearing and Forwarding Agents Transportation
Product Range
Table 3: Product Range of Fairdeal Consumer products Automotive Parts Tea, Coffee, Vegetable Oils, Vanaspati, Breakfast Cereals, Processed Food Products. Spark Plugs, Power Transmission Systems, Auto Bulbs, Auto Filters, Auto Electricals, Auto Batteries, Automobile Lubricants, Mobile Audio Systems, Industries Paints and other Coating Products. Lighting, Audio, Video, Consumer Electronics, Telecommunication, Domestic Appliances, Industrial Electricals, Watches, Jewelry Ceramic Tiles - Floor & Wall
Consumer Durables
Construction Material
34
Locations
Ahmedabad Bangalore Dehradun Hosur Surat Clearing & Forwarding at Ahmedabad Warehousing at Attibele o TVS Motor Company Limited In-plant Logistics at Bommasandra o Titan Industries Limited-Precision Engineering Division Supply Chain Management at Bangalore o Madura Garments In-plant Logistics at Dehradun o Titan Industries Limited-Watch Division In-plant Logistics at Hosur o Ashok Leyland Limited-Plant-2 o Titan Industries Limited-Watch Division Clearing & Forwarding at Hosur o BPL Sanyo Limited Inward Logistics at Surat o Titan Industries Limited-Jewellery Division
35
Distribution Network
Fairdeal has a strong distribution network all over India. It has its own transport vehicles as well as it has business contract with other transport carriers also. Local orders are dispatched through companys own vehicles and up-country orders are dispatched through its business partner carriers and courier services. Some of transporters and courier service providers carrying dispatching orders of Fairdeal are Gati, BlueDart, Unifreight, DTDC, Logisys India Limited, Indo Arya Central Transport Ltd., Transport Corporation of India, AS Transport, prasanna cargo, Shivraj Roadlines, Patel roadways, and Sai transport Agency. At present Fairdeal Distribution Services Pvt. Ltd. is handling logistics operations of various industries which include: Automobiles Industry Paint Industry Watches Industry Branded Jewellery Industry Snacks & Food products Industry Electronic home appliances industry Telecommunications Industry Tea Industry
36
Client Companies
Fairdeal Distribution Services Pvt. Ltd. is Clearing & Forwarding Agent for following companies whose brief corporate profile is given below: Voltas Established in 1954, Voltas is India's premier air conditioning and engineering services provider. It offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, climate control, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, pollution control and chemicals. The company's strengths lie in the design and manufacture of industrial equipment, the management and execution of airconditioning and public work projects, the procurement, installation and servicing of technology based systems, and in being a representative of global technology leaders. All these capabilities are ISO 9001-2000 certified. Voltas is: Leader in air conditioning projects. Largest projects exporter in Mechanical, Electrical and Public Health works. No. two brand in air conditioners. Most trusted name in mining and construction equipment. Leader in textile machinery. Premier Player in machine tools. Leader in forklift trucks.
37
Areas of business Operations Voltas' operations are organized specific clusters: air conditioning international operations business group and engineering products divisions has independent facilities servicing. into four independent businessand refrigeration business group, group, unitary products business business group. Each of these for market coverage and customer
Manufacturing Voltas manufactures industrial air conditioning and refrigeration equipment, air conditioners, water coolers, freezers, commercial refrigerators, forklift trucks and large water supply pumps. These products bear the stamp of state-of-the-art automated manufacturing plants, resulting in consistently high quality and reduced costs. Voltas has partnered with international companies, viz., LG Electronics of Korea and Fedders International of USA, for 'manufacture only' alliances producing low-cost, high-quality refrigerators and room air conditioners. Location Voltas has its head office in Mumbai and zonal headquarters in Mumbai, Kolkata, New Delhi and Chennai. It has territorial offices in Ahmedabad, Bangalore, Chandigarh, Hyderabad, Jamshedpur, Lucknow, Pune and Kochi, while the overseas offices are located in Abu Dhabi (UAE), Hong Kong and Singapore. Voltas has factories at Thane (Maharashtra), the union territory of Dadra, and Sanathnagar (Andhra Pradesh). Sources: http://www.tata.com/voltas/index.htm http://www.voltas.com/ http://www.tata.com/ voltas/media/index.htm
38
Titan Industries Titan Industries is Indias leading manufacturer of watches and jewellery and the worlds sixth largest manufacturer brand of watches. Established in 1984 as a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation, the company transformed the Indian watch market, offering quartz technology with international styling, manufactured at its state-of-the-art factory at Hosur, Tamilnadu. In 1995, the company diversified into jewellery under the brand Tanishq. Leveraging its understanding of different segments in the watch market, the company launched a second independent watch brand Sonata as a value brand to those seeking to buy functionally styled watches at affordable prices. It also entered the segment of premium fashion watches by acquiring a license for global brands such as Tommy Hilfiger. Titan has also diversified into fashion eyewear with its Fastrack Eye Gear sunglasses. Further, Titan leveraged its manufacturing competencies and branched into precision engineering products and machine building in 2003. Areas of business Titan manufactures over 7 million watches per annum and has a customer base of over 65 million. The company has manufacturing and assembly operations at Hosur, Dehradun and Himachal Pradesh. Its main products are: Watches: Titan manufactures two main brands viz. Titan for the premium segment and Sonata for the below-$25 category. The Titan brand architecture comprises several brands, each of which is a leader in its segment. Notable among them are: Titan Edge the worlds slimmest watch; Nebula in solid gold and precious stones; the Gold and Steel collection; Raga 9 to 5 for the woman achiever; Flip Indias first and only reversible watch with two movements and dial faces; and Fastrack in the sporty casual category.
39
Today, Titan has over 60 per cent of the domestic market share in the organized watch market. Its exclusive retail showroom chain World of Titan is amongst the largest in its category. Titan watches are sold through over 9,000 outlets in over 2,300 cities and internationally in over 30 countries including the UK, Spain, Greece and countries in the Middle East and Asia Pacific. Jewellery: Tanishq is Indias largest and fastest growing jewellery brand. Tanishq has 75 boutiques in 55 cities across the country with a premium range of gold jewellery studded with diamonds or colored gems and a wide range in 22kt pure gold. Platinum jewellery and designer silverware are also a part of the product range. Tanishq is one of Indias largest specialty retailers and is transforming the jewellery market in India. Precision engineering: The Companys precision engineering division manufactures dashboard clocks as OEM to car manufacturers in Europe and America. It also supplies precision components to the avionics and the automotive industry. Achievements Titan Industries has been awarded the following:
The President of Indias Award for employing the disabled. Friends of BIL Award for employing the handicapped. The Titan Design team received 7 accreditations at the NID Business World Awards, including the 'Young Design Entrepreneur of the Year'. Titan and Tanishq were adjudged 'Most Admired Brands' as well as 'Retailer of the Year' by Images Fashion Forum. Titan retained it ranking as the 'No 1 Brand' in the Brand Equity Survey, in the Consumer Durables category. http://www.tata.com/titan/index.htm http://www.indiainfoline.com/comp/titan/ http://www.titanworld.com/ http://www.tata.com/titan/media/index.htm
Sources:
40
Tata Tea Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop valued-added tea, the Tata Tea Group of Companies, which includes Tata Tea and the UK-based Tetley Group, today represent the world's second largest global branded tea operation with product and brand presence in 40 countries. Among India's first multinational companies, the operations of Tata Tea and its subsidiaries focus on branded product offerings in tea but with a significant presence in plantation activity in India and Sri Lanka. The consolidated worldwide branded tea business of the Tata Tea Group contributes to around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from bulk tea, coffee, and investment income. The company has its headquarters in Kolkata, and 51 tea estates in the states of Assam, West Bengal, Tamilnadu and Kerala and one coffee estate in Tamilnadu. Products and brands The company has five major brands in the Indian market Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini catering to all major consumer segments for tea. Tata Tea's distribution network in the country with 38 C&F agents and 2,350 Stockists caters to over 1.7 million retail outlets (ORG Marg Retail Audit) in India. The company has a 100 per cent export-oriented unit (KOSHER & HACCP certified) manufacturing instant tea in Munnar, Kerala, which is the largest such facility outside the United States. The unit's product is made from a unique process, developed in-house, of extraction from tea leaves, giving it a distinctive liquoring and taste profile. Instant tea is used for light density 100 per cent teas, iced tea mixes and in the preparation of ready-to-drink (RTD) beverages. With an area of 26,500 hectares under tea cultivation, Tata Tea produces around 60 million kg of black tea annually. Overseas business The Tata Tea and Tetley portfolios of branded offerings sourced from the India based JV, caters specifically to the Australian, Middle East, West Asia, North Africa, Poland, Russia and Kazakhstan markets. This is independent of the manufacturing and supply operations of its Tetley and other subsidiary companies.
41
Subsidiaries Tata Tea has subsidiaries in Great Britain, United States and India. The Tetley Group headquartered in Great Britain, is a leading international tea company selling over 60 Tetley branded products to over 40 countries world-wide. Tetley is the second largest tea bag brand in the world; it is the number one tea bag brand in Great Britain and Canada and has significant market shares in the United States, Australia, Poland and France. Tata Coffee with instant coffee manufacturing facilities, R&D capability and plantation assets of around 8000 hectares, producing over 9000 MT of coffee annually, is the largest coffee plantation company in Asia. Tata-Tetley is a Kochi-based EOU which services the branded business of specific Tetley and Tata Tea markets outside India. Tata Tea Inc in the United States processes and markets instant tea from its facility in Florida, based on sourcing of Instant Tea products out of Munnar, Kerala.
Sources:
42
Amara Raja Batteries Limited (ARBL) Before it became one of the leading battery makers in India, Amara Raja was, like anything else, a little dreama dream realized by Mr. Ramachandra N Galla, an NRI who incorporated the company in 1985 with a vision to transform the business. Amara Raja Batteries Limited (ARBL), an Amara Raja-Johnson Controls Company with 26% equity from Johnson Controls is the technology leader in the Indian storage battery industry and the leading player in standby VRLA batteries. In India ARBL supplies automotive batteries exclusively to Ford, General Motors, DaimlerChrysler; and preferentially to Hindustan Motors, Mahindra & Mahindra and Ashok Leyland. ARBL is also a preferred supplier to major telecom MNCs, DOT, Indian Railways, besides a host of companies in segments like UPS systems, power, oil & gas, etc. The ARBL scrip is actively traded on BSE, NSE and HSE. Amara Raja has joined hands in a strategic partnership with Johnson Controls, Inc., and is part of its global alliance. Amara Raja and Johnson Controls both share a commitment to excellence and innovation and work towards exceeding customer expectations.
Sources:
http://www.amararaja.com/
43
TVS Motors TVS Group was established in 1911 by Shri. T. V. Sundaram Iyengar. As one of Indias largest industrial entities it epitomizes Trust, Value and Service. Today, there are over thirty companies in the TVS Group, employing more than 40,000 people worldwide and with a turnover in excess of USD 2.2 billion. With steady growth, expansion and diversification, TVS commands a strong presence in manufacturing of two-wheelers, auto components and computer peripherals. It also has vibrant businesses in the distribution of heavy commercial vehicles passenger cars, finance and insurance. TVS Motor Company Limited, the flagship company of the USD 2.2 billion TVS Group, is the third largest two-wheeler manufacturer in India and among the top ten in the world, with an annual turnover of over USD 650 million. The year 1980 is one to be remembered for the Indian two-wheeler industry, with the roll out of TVS 50, India's first two-seater moped that ushered in an era of affordable personal transportation. For the Indian Automobile sector, it was a breakthrough to be etched in history. TVS Motor Company is the first two-wheeler manufacturer in the world to be honored with the hallmark of Japanese Quality The Deming Prize for Total Quality Management. Future Focus TVS Motor Company wants to be one among the top two 2-wheeler companies in India and one among the top five 2-wheeler companies in Asia. TVS foresees to have profitable operations overseas, especially in Asian markets, capitalizing on their expertise in the areas of manufacturing, technology and marketing. The Company aims to hone and sustain its cutting edge of technology by constant benchmarking against international leaders.
44
Many firsts of TVS Motors Indias first two seater 50 cc Moped TVS 50, launched in August 1980. First Indian Company to motorcycles in Sept 1984. introduce 100cc Indo-Japanese (sub-100 cc
Launched India's first indigenous Scooterette variomatic scooters), TVS Scooty in June 1994.
Introduced India's first catalytic converter enabled motorcycle, the 110cc Shogun in Dec 1996. Launched India's first 5-speed motorcycle, the Shaolin in Oct 1997. Launched TVS Fiero, Indias first 150 cc, 4 stroke motorcycles in April 2000. Launched TVS Victor, 4-stroke 110 cc motorcycles, in August 2001, Indias first fully indigenously designed and manufactured motorcycle. Launched TVS Centra in January 2004, a world-class 4-stroke 100 cc motorcycle with the revolutionary VT-i Engines for bestin-class mileage. Launched TVS Star in Sept 2004, a 100 cc motorcycle which is ideal for rough terrain. Launched TVS Victor, 4-stroke 125 cc motorcycle, in February 2005.
Sources:
http://www.tvsmotors.com/
45
Motors Industry Company Limited (MICO) MICO was incorporated in 1951 as a subsidiary of Rober Bosch, with its registered office at Madras, which was later shifted to Bangalore in 1953. In 1969, the Mysore Branch of the Central Bank of India Ltd, offered for sale 22000 shares of the Company to the public at a premium of Rs70 per share. MICO manufactures nozzles & nozzle holders, FIPs, hydraulic products and auto Electricals including spark plugs. The Company has continuously modernized and upgraded product range. In 1986 it began manufacture of mini spark plug (extension of its spark plugs range) for motor cycles, which was till then being imported. Manufacture of special purpose machines, machine tools accessories etc began in 1987. MICO embarked on manufacture of starter motors, alternators, hydraulic and pneumatic equipment etc in 1989-90. The company has since its 50th year embarked on a share buyback pursuant to its allowance by the Government. Parent company MICO is a 60.5% subsidiary of Robert Bosch, Germany. Robert Bosch, a global leader in the field of auto components, has presence in more than 130 countries. Robert Boschs other business interests include consumer goods, communication technology and capital goods. MICO has strong presence in the Indian automotive components business with a virtual monopoly in the Diesel Fuel Injection Equipment, Spark Plugs segments and also in the Electric Power Tools segment. Its other products include large number of automotive accessories as well as Special Purpose Machines, Electric Power Tools, Blaupunkt Car Audio Systems, Industrial Equipment, Auto-Electricals, Gear Pumps for tractor applications and Packaging Machines.
46
MICO has adopted the Bosch guiding principle of BeQIK- Quality, innovation and keep customer satisfied. The company plans to continue innovating by designing and developing diesel fuel injection systems taking cognizance of fuel consumption, emission and greater safety of the end users. The BeQIK philosophy has helped the company in achieving world-class quality, innovation and continuous improvement to enhance customer satisfaction. The company has over 4000 sales and service outlets countrywide. In F12/01, MICO's net sales were at Rs 14.5 bn. Company's operating profit was at Rs2.5bn and net profit was Rs 817mn for F12/01. In Q1 2002, companys total sales decreased by 8%, from Rs3.9 bn in Q1 2001 to Rs 3.6 bn. Other income increased by 23% from Rs71 mn in Q1 2001 to Rs87 mn. The operating profit declined by 20% from Rs 745 mn to Rs 594 mn in Q1 2002. Net profit declined to Rs 257 mn in Q1 2002 from Rs 269 mn in Q1 2001. Subsidiaries MICO has two 100% subsidiaries, Motor Industries Software Ltd and Motor Industries Trading Private Ltd. Plant locations MICO has 3 plants, one at Nashik for nozzles and nozzle holders, another at Bangalore for FIPs and hydraulic products and the third at Naganathapuram for auto Electricals including spark plugs. The Bangalore plant achieved international quality levels in Single Cylinder Pumps. The Nashik plant achieved new milestone in producing the 50 millionth nozzle holder assemblies. The company also has its own vocational training centers at Bangalore and Nashik imparting training in the state of the art technology to its workforce.
Sources:
http://www.micobosch.com/ http://www.micoweb.in.bosch.com/
47
Bell ceramics Bell Ceramics was established in 1985. It was established with the objective to manufacture world class ceramic glazed floor and wall tiles for domestic and international markets. It has two plants, strategically located near major Indian markets with production capacity of 30,000 sq. mt/ per day which manufacture floor tiles and wall tiles in wide range of products, sizes, patterns and shades. Both plants are ISO 9001-2000 & 14001 certified. Manufacturing at plants is according to COMITEE EUROPEAN DE NORMALISATION (CEN). The plant located at Dora (near Baroda) in Gujarat, Western India, has production capacity of 10,000 sq. mtrs per day, of Monoporossa Wall tiles & Floor tiles. The second plant located at Hoskote (Bangalore), Southern India, has an installed capacity of 20,000 sq. mtrs of floor tiles per day. The plant makes use of the world-renowned multi-line dry process technology, which is environment friendly and energy efficient, with Italian collaboration. Bell has tie ups with many international players for tiles manufacturing technology, research and development. It has wide spread distribution network, comprising depots, clearing & forwarding agents, dealers and retailers which are nationally connected through world class ERP software. Export Markets: Australia, Philippines, UAE, Bahrain, Saudi Arabia, Sultanate of Oman, Qatar, Kuwait, Singapore, Mauritius, New Zealand, Bangladesh, South Africa, Kenya and many more Awards and achievements: Felicitated by many awards including award from President of India for Excellent Export Performance.
Sources:
http://www.bellceramics.com/
48
Bharti Teletech Bharti Teletech - a Bharti enterprise, is Indias leading telephone instrument manufacturing company and one of the largest in the globe. Established in 1985, the companys manufacturing operations are spread across ISO-9000 certified plants in Mapusa (Goa) and Ludhiana (Punjab) with an installed capacity of 6 mn telephone units annually upgradable to 10 mn units. An in-house Centre for Excellence with industrial and engineering design capability and equipped with facility for product reliability and life tests ensures a quality standard that compares with the best internationally. In 1985, Bharti Teletech entered into a technical collaboration with Siemens AG, the German technological giant and set up a plant in Ludhiana to manufacture telephones. Bharti Teletech produces a comprehensive basket of customer premise equipments, comprising of over 40 models spanning the basic, feature-rich and cordless telephone categories, under the Beetel brand. Beetel commands a market share of over 40% in the retail market, 95% in the PSP business and 60% in the tender market. The company has been in the forefront of growing the open retail market by providing feature-rich and world-class telephone products at affordable prices. Bharti Teletech currently exports to 30 countries in five continents, including the PTT markets. Bharti plans to double its exports in 05-06 over last year. Bharti Teletech has a tie-up with Atlinks (No.1 in home and office telephony worldwide) for marketing of GE telephones in India and neighboring countries as well as exports. Its list of credits also includes a contract with France telecom for supplies of our products for their worldwide requirement as well as supplies to Telefonica, Peru. The new initiatives of the company under the Beetel brand include Broadband Products and Set Top Box a hi-growth market in India. Both are focus areas for the company
49
In 1991, Beetel manufactured phones for 'Sprint', the American telecom mammoth. Shortly after, in 1993-94, came ISO 9001-2000 accreditations for the manufacturing units - by this time two in numbers, at Gurgaon and Ludhiana. And in a short span of time, Beetel was already the market leader. Cornering a third of the Indian market, Beetel became 'India's Favorite Phone'. Success came on both fronts and fast. The first telephone instrument to get ISO accreditations, India's first EPBT phone, the first to cross the 10 million unit mark and thereafter 20 million mark, the only Indian telephone company to be present in 30 countries mapping 5 continents, one of the largest telephone manufacturers across the globe. A brand present in every second Indian home.
About Motorola Motorola is a Fortune 100 global communications leader that provides seamless mobility products and solutions across broadband, embedded systems and wireless networks. In your home, auto, workplace and all spaces in between, seamless mobility means you can reach the people, things and information you need, anywhere, anytime. Seamless mobility harnesses the power of technology convergence and enables smarter, faster, cost-effective and flexible communication. Motorola had sales of US $31.3 billion in 2004.
Sources:
http://www.motorola.com/ http://www.bharti.com/
50
MRF Ltd MRF manufactures automobile tyres, tubes, tread rubber and precured treads. Tyres are basically of two types - cross-ply and radial. In cross-ply tyres, nylon or rayon tyre cords are arranged diagonally across. In radial tyres, polyester, nylon, fiberglass or steel cords are arranged perpendicular to the circumference. Radial technology is an improvement over cross ply and radial tyres are priced at (of 25-30%) premium. They are long lasting and have lower incidence of flats. PAINT & SPECIALITY COATINGS MRF Paints is division of MRF which deals in paint and specialty coatings. MRF manufactures specialty coatings for wide range of applications. The revolutionary 100% polyurethane finishes are available in formulations for application to metal, wood, plastics, paper, vinyl, textiles, ceramics and glass. The coatings have been developed for color and gloss retention, strong adhesion and durability. They guard against abrasion, corrosion, chemicals, bad weather and ultra-violet radiation and are virtually maintenance free. Some of products from MRF Paints are: MRF Metalcoat: MRF Metalcoat is the ideal surface finish for any metal. It is used extensively in to paint machinery, bus bodies, grills, metal furniture, grills and outdoor metal structures. It is also extensively used in chemical plants. MRF Woodcoat: MRF Woodcoat is a lasting surface finish for application on any kind of wood, protecting it against the wearing effects of the weather, abrasion, moisture and domestic spills. MRF Glasscoat: MRF Glasscoat is glass coating transparent, opaque, metallic and frosted finishes. extensively in the packaging industry. that offers It is used
51
MRF Vapocure: MRF Vapocure is used in surface coatings for wide range of applications of manufactured items such as metals, glass, plastics, wood, ceramics and paper. A catalyst in vapor form accelerates the curing of paints and coatings and eliminates the need for temperature baking of industrial paint finishes. MRF Brasscoat: This clear coating for brass items tarnishing, thereby reducing the labor of frequent polishing. prevents
MRF Autocoat: MRF Autocoat is a 100% polyurethane car finish that adds beauty and life to your car. It offers high resistance to abrasion, corrosion, chemicals and ultraviolet radiation. Source: http://www.mrf.com/
52
PROCESS ANALYSIS
Processes and Organization
53
54
55
I started with basic questions like why warehousing and third party logistics for that reason is important at all? Some of reasons that came forward in subsequent discussions are given below. The reasons why a warehouse is required are: Have all the data in one place Easy storage Fast retrieval Simple to change information Security esp. with multiple users Recovery from failures Advantages of a warehouse: Reduces redundancy Reduces inconsistency Sharing of data becomes possible Enables security restrictions Allows data independent applications. Remuneration claimed by CFA There are three components of charges claimed by CFA: 1. Fixed charges E.g.: Hardware installation charges, Rent based on square feet of area (4.5 5 Rs per square feet) occupied by the company. 2. Variable charges E.g.: Labor charges, Stationary, freight, loading/ unloading 3. Remuneration as service provider a. b. c. Fixed amount Titan Volume or tonnage based Units per piece
56
TITAN Watches
Process Owner Website Store Incharge Computer operations Factory location Company Divisions Other Brands distributed Billing points Quantity handled Value Transactions No of dealers Mr. Hemant http://trswamd/servlet/til.trs.watches.InvDocPrn/ Mr. Aashish Ms. Anal, Ms. Komal Ooty, Dehradun, and Hosur Tanishq jewellery, Sonata watches Tomy Hillfigure and Fastrack eyegear Ludhiyana, Goa, Noida, Delhi and Bangalore 366,146 660,350,996.00 5,733 211 (Includes Tanishq, Sonata, Fastrack and Hillfigure)
Watches come from Ooty factory through courier services mainly Gati, BlueDart and Unifreight. Carton is checked for any physical damage and pilferage, weighted in the warehouse to check uniformity of cartons. If weight doesnt match, carton can be opened in presence of courier boy itself.
57
Carton contains packing slip containing number of pieces and codes. This packing slip is validated against Stock Transfer Memo in which number of pieces and price of each watch is given along with trade discount and sales tax. Coding system of watches: 999xx99x or, 9999xx99x or, 999999xx99x or, 99999999xx99x Where 9 stands for a digit and x stands for an alphabet First set of digits is either 3 digits or 4 digits and denotes case code followed by two alphabets (First alphabet for case type and second for strap type) and then two digit dial code. Last alphabet in titan watch might be K which shows that leather strap is brown. Alphabets may be: Y: Yellow (Gold Plated) N: Neutral G: Gold (18 caret) M: Metal S: Steel P: Plastic L: Leather B: Bi-Metal (Gold Plated and Steel)
For example: 1233YM09K code of a particular watch means: 1233 is watch case code YM means watch is Yellow case (gold plated) and Metallic strap. 09 is code for dial type K means that the strap of the watch is brown. Note: For paired watches case code is 6 or 8 digit number. Order Taking: Orders are taken by Titan salespersons or directly placed at Shiromani office by dealers and then bill comes to warehouse for dispatching watches directly to dealers.
58
Goods Receiving: Titan and sonata comes in 1800 models and variants.
Table 4: Some examples of Titan watches Code 1348BM01 1044YM01 1184SL01 19262926YM02 Price INR (As on 21st Feb 2006) 5995/6750/6895/7500/-
Storing Goods: Watches are stored in the warehouse in numeric order of Case Codes. For example watches with codes 1044YM01 would be placed in racks before watches with codes 1348BM01 To maintain FIFO, stacking is used in which new watches are placed behind old watches. If new watches come in front, FIFO is violated.
Purchasing Cycle in Titan: Salesperson goes to dealer Dealer fills order form to purchase watches Salesperson gives order form at Shiromani office Bill is raised at Shiromani office and dispatching order along with bill sent to warehouse Material dispatched from warehouse directly to dealers
Recommendations for Titan: Billing is done at city office and dispatching is done at warehouse which increases cycle time and wait time. Billing and dispatching should be done at the same place. Barcode reader may be useful to track watches in warehouse Billing can also be done through barcodes
59
Bharti Teletech
Factory location (Billing points) Company website Process owner Computer operator Store keeper SD Module Languages and software Brands Other Brands distributed and sold Quantity handled Value Transactions No of dealers Ludhiyana, Goa, Noida, Delhi and Bangalore http://www.bhartiteletech.com Mr. Vinod Mr. Sunil Patel Mr. Raman SDNet (Sales and Distribution Network) [http://www.beetel-india.com:9080/ .jsp, J2EE. Inet crystal clear for reporting Beetel telephone instruments, Set Top Boxes Motorola mobile sets 146,888 211,538,743.29 1,611 9
Order taking: Dealer places order via phone/letter or punches it into SDNet. If order placed via phone, order has to be punched into SDNet manually by warehouse personnels. Purchasing order cycle for Bharti: Dealer Punches order or Sales person collects orders from dealers Order accepted by Carrying and forwarding agent (warehouse) Accepted order verified by regional sales officer at Mumbai Once approved, dispatch order placed on SDNet (dispatched order may be partial dispatch or short close in case there is less stock) Enter PIN and IMEI number (for Motorola only) through scanner Print invoice and IMEI details (for Motorola only)
FIFO: It was found that no particular method is followed in Bharti Teletech to ascertain FIFO.
60
Recommendations for Bharti Teletech: All Motorola cases have to be brought to SDNet terminal to scan their IMEI numbers. This consumes manpower as well as time in moving the cases. IMEI numbers can be scanned in Notepad in the beetel warehouse at the time of receiving mobile phone containers and then this text file can be sent to SDNet terminal for uploading IMEI numbers. Training to operators: No formal training is given to SDNet operators. They have learnt it by R&D and trail and error methods. For example: uploading IMEI number using text files was there from beginning but operator at Fairdeal learnt it by trail and error only after one year of his tenure. Multiple company handing: Employees should be encouraged to learn handling multiple (at least two) companies distribution channels like SAP of TATA Tea and SDNet of Bharti. This will ensure smooth operations even in case of absenteeism and job vacancies. Employees can be allotted to one companys operations and one secondary companies working can be taught to him at the time of joining. New employees will learn better than those who have been working for a long time on single SD network. For example: if one employee is absent or quits his job, there should be another employee in Fairdeal who is at least 80% efficient, if not more, in handling absent employees work. Employees should be motivated, encouraged and trained to behave courteously with channel partners (Example Area Sales officer and Logistic peoples like truck drivers etc) as well as dealers and Stockists. It has been seen that some employees lack courtesy and communication skills.
61
Software used: 1. RKM (old), 2. Amara raja e-ARIMS (VB and crystal report, local software without internet support), 3. Amara raja E-application (http://localhost/bs/, uses ASP.net and web services) 4. BsApp Software; integrated with .NET application (E-application) 5. Warehouse terminal data is synchronized with company data via dial up virtual private network (VPN).
62
Data Synchronization: Connect Internet connection Symantac Enterprise VPN client connects to company data for synchronization connect to VPN open BsApp press synchronize data button System uploads and downloads data to and from central server and number of records uploaded and downloaded is displayed. Transporters: Indo Arya Central Transport Ltd., TCI, AS Transport, prasanna cargo (from Pune), Shivraj Roadlines (from Pune), Patel roadways (from Bhiwandi), Sai transport (from Bhiwandi) Goods Receiving: Once batteries arrives the warehouse, transporters handover packing slips to store Incharge which contain serial number of batteries. Batteries are then physically checked for damage, type of battery, embossing, barcode and plastic wrapping before storing them in warehouse. IBD: Industrial Battery Division IBDs are used for Invertors and UPS systems. 4 Volt cells are used for Idea and Hutch towers. For dispatching IBDs, approval from Mumbai is required. After receiving material, upload receiving status on E-application and a mail is also sent to Chennai and Mumbai SCMs. Movement of batteries is based on serial numbers basically. Cycle Count: Book stock and physical stock is validated daily morning. Receiving Orders: Dealers place order at Premium House, Gandhigram branch office which is then forwarded to warehouse for dispatching via telephone. Invoice cum delivery challan is raised by branch office.
63
POP (Product of Promotions): Advertising material is also dispatched from warehouse against instructions from branch office. Hoardings, feature charts, T-shirts, caps, fly up stand etc. For FIFO: Batteries come in lots. Labels are stuck to batteries of one lot containing receiving date and quantity with serial numbers. Batteries of previous lots are dispatched first. This method resembles Kanban Japanese practice. Reporting: Weekly report is sent to branch office every Thursday. Weekly stock report has to be made code wise which is taken from reports generated in BsApp. These reports are generated dealer wise which are then added separately code wise and punched into Excel sheet. Reverse Logistics: Delivery challan or warranty replacement (3 copies yellow, green and white warranty sheets) are prepared out of which two copies are sent to customer (one of which comes back with signature) and one copy remains with Fairdeal. Handling Warranty Claims: In case of warranty claim, service engineer checks battery at dealers place and if satisfied, sends battery for replacement to C&FA. Free placement: < 12 months Prorata replacement: > 12 Months but less than 38 Months (Price decided based on chart) Regular: > 48 Months Amara raja warranty claim cycle: Service engineer checks battery and advance intimation Service engineer validates document and battery Battery comes to warehouse with delivery challan Advance intimation received after battery and delivery challan is received New battery with delivery challan sent to dealer (if stock available) [In case of free replacement and prorate replacement] Sign on Invoice and delivery challan received from dealers. Manoj Banshilal Pachouri ICFAI Business School
64
Handling Scrap Batteries: Scrap batteries (returned in free and prorata replacements) are stored in scrap warehouse. Serial number is noted, weight noted, permission taken from SCM and then handed over to Ganapati Metals, Indore who is All India contractor for purchasing battery scraps of Amara raja. DD is then sent to Head Office in the name of Amara Raja. Serial number is destroyed to avoid re-claims and a hole is made into battery. Notes: Battery must be charged every 40 days even in warehouse. Company has provided with a charger which can charge 32 batteries at one time. OEM battery is of white color Lead price is Rs 33/- per kg. (As in Feb 2006) Total Transaction: 6789 batteries sold in Jan 06 (Including prorata)
Recommendations for Amara Raja: Cordless scanner might be useful for scanning barcodes of batteries and in stock transfers also. Cordless scanner would eliminate physical checking of serial numbers and then punching them into terminal.
65
McFills Foods
Factory location Company website Process owner Computer operator Store keeper Software used Products Quantity handled Value Transactions No of dealers Sharkhej, Ahmedabad http://www.mcfills.com Mr. Hemant Thakkar Mr. Bharat Mr. Bharat DOS based FAS (financial Accounting system) Snacks, Wafers, Potato Chips 67,764 20,471,003.33 1233 129
Indent form is filled in .xls format and attached to email to McFills Company. Material comes next day with Transporters LR (Lorry Receipt) and cash memo. Material comes from Ahmedabad factory in medium sized trucks. It is verified for pilferages and stored in warehouse. McFills are using 2500 sq ft of space in the warehouse (As in Feb 2006). Orders from dealers are obtained by phone (sales officer) or dealer in writing with DD. Orders are then punched into data entry module of FAS, bill is printed and material is dispatched by handing over material to transporter with printed bill. FIFO: stack card is labeled to boxes containing manufacturing date, batch number; price code etc. material with earlier manufacturing date is dispatched earlier. Stock transfer is not done in McFills division of Fairdeal till date. Non- salable product like air-leaked packs, damaged packs, expired packs etc are brought back to warehouse along with written approval of sales officer and partys letter containing material details from dealers after getting approval from sales manager. This material is then sent back to McFills factory. Manoj Banshilal Pachouri ICFAI Business School
66
Recommendations for McFills: Indent form preparing is responsibility of branch manager and not of CFA personnel. This activity can be annulled. Quantity of unsalable material returned from dealers is very large compared to other companies. This is a bottleneck as a lot of time is consumed in maintaining non-moving and unsalable material. Single person is handling computer operations as well as store for McFills. Though transaction volume is comparatively lower it is creating problems for customers as computer operator is not available when he is in store.
67
Voltas
Factory location Company website Dadar, Hyderabad http://192.168.130.9/ private website for mails and communication with C & FA and dealers. It uses lotus notes. Mr. Saurabh Mashruwala Mr. Saurabh Mashruwala Ms Shreedevi srinivasan Mr. Amrit SAP R/3 Refrigerator, defreezer (for ice-creams, milk etc), vesicular (Glassed door for storing cold drinks), window and split AC, water cooler (Mfg in Hyderabad) and mini magic water dispenser (made in china), cassette evaporating unit Mini magic (made in China) 14,435 177,385,730.66 5,929 15
Process owner Computer operator F & C (Finance & Control) Incharge Store keeper Software used Products
Mr. Dharmesh joshi, Logistics Incharge Voltas, Khanpur Branch Ahmedabad gives orders to Head office. Fairdeal comes to know only when goods come to warehouse. Targets are decided in MBRM (Monthly Business Review meeting of Voltas) held for area sales managers. Receiving Goods: When truck comes to warehouse, Address of Fairdeal is checked in documents, material is unloaded, Mr. Dharmesh is intimated, receipt is given to transporter and received details are punched into SAP module.
68
SPT 1800 communication software (written in VB) is used for goods received and Barcode scanning. Cordless Barcode scanner is imported from Singapore. Operating cordless scanner: VDS -> goods received -> scan barcode from Voltas products Mr. Dharmesh is intimated again so that he can punch orders of dealers into SAP module. Schedule line Message tick is to be removed from SAP module only then outbound of material is permitted. Voltas SAP Module: VL 10 C: Sales orders Items (for Pending orders and current orders punched by dealers) [Only orders approved by F&C are displayed in this module, orders not approved by local F&C go into Escalated orders] VA 03: Display Sales Order (displays sales order party name wise with dispatch address and order number) This order number is noted down manually into long book. VL 01 N: Create outbound delivery with order reference number Shipping point: 259 (for Fairdeal) Order number: from VA 03 Module GR/ GI Slip: vehicle number Bill of land: Collecting mode e.g. transporter etc Goto Goto Goto Header Header overview Loading options Number of packages
Post Goods Issue (PGI) - outbound delivery number is generated in status bar which comes in VF 01 VF 01: Create billing document All outbound delivery numbers are displayed here. Select one number and click save button which will generate Invoice number. Manoj Banshilal Pachouri ICFAI Business School
69
Inbound procedure: Transporter gives invoice to warehouse from which delivery number is putted in SAP module to get all details and all serial numbers. VF 31: To print Invoice Tick invoice lists and lists from [Inv no] to [Inv no]. To prints bills of specified invoice numbers. Orders manually noted down in long book from VL 10C i.e. sales order items with order number. Outbound Process: Invoice or bill is given to transporter who dispatches the material. After material is dispatched received receipt is collected back. /N MIGO/ GR: Goods received outbound delivery /N: for switching transactions Delivery note: Invoice ID Bill of landing: LR (Lorry receipt) number Header text: transporter name Tab panes in page: Material, Quantity, where, serial numbers Click check box named Item OK and click post button. Message: Material document number 9999 posted is displayed To get time any order was approved: Follow the following procedure in SAP R/3 application to get the time when any order was approved. VA 03 choose Environment changes execute [click watch icon] -
70
Notes: 0.6 ton window AC and 0.6 & 0.8 ton split ACs imported from china. Amul, Vadilal, Pepsi, Gokul have agreement with VOLTAS to supply their sticker putted products. Training for SAP module is given at Mumbai for 3 days. Inwards from Hyderabad have to be done using scanner as SAP is not implemented there. Dadar material is not required to be scanned as delivery number can be used in SAP module to get all serial numbers.
Recommendations for Voltas: Voltas trucks have to wait for unloading material in absence of required number of labors. There should be preplanned arrangement of labors and storing space to avoid wait time.
71
MICO
Factory location Company website Process owner Computer operator Store Incharge Store keeper Software used Products Spare parts Quantity handled Value Transactions No of dealers Nashik, Pune, Secundarabad, Chennai, Bangalore and Nepal http://www.mico.com Mr. Hemant Mr. Salim Mr. Rajesh Mr. Pramod IN4VANCFA - Rally for AS/ 400 Automobile spare parts, Engine oils, filters, Overhauling kits, Spark plugs, Batteries. Automobile spare parts 4,918,625 531,072,000.00 31,926 7
Material comes through courier/ Transport Material is stored at primary as well as secondary locations. Padali branch office, Mr. Bhavasar is notified MAN (Metropolitan Area Network) is being used to print pick slips by branch office at Fairdeal warehouse. Pick slip is then validated against IN4VANCFA software module (Menu 1, Option 9) DC (Delivery Challan) is then printed by warehouse people. DC, LR, gate pass are made in triplet. 1 copy with Fairdeal, 1 copy with MICO branch office and 1 copy with transporter are maintained.
72
FIFO: Colored codes with month number are labeled to bulk items. Loose material (less quantity) Recommendations for MICO: Rally for AS/ 400 Software used in MICO is very old and due to lack of proper maintenance speed of system is very slow. Computer operator has to wait for a long time after entering a command. It should be replaced with some advanced software like SAP R/3.
73
TVS Motors
Factory location Company website Process owner Computer operator Store keeper Software used Brands Spare parts Quantity handled Value Transactions No of dealers Hosur, Tamilnadu and Mysore http://www.tvsmotor.co.in/ Mr. Mitesh Shah Mr. Narendra Mr. Mohan SAP R/3 TVS Victor, TVS Centra, TVS Apache, TVS Pep, TVS Star TVS bikes spare parts 46,668 1,464,980,532.82 2,057 34
Operations in TVS Motor are purely clearing & forwarding. Trucks come to warehouse from factory location. After verifying documents, trucks are unloaded. At the time of unloading, bikes are checked for Key, Battery, Rearview mirror, Tool box and other accessories. It is also checked for any physical damage or scratches. If scratches or damages are found, bikes are stored in scrap warehouse. After inspection bikes are stored brand wise and lorry number is noted down on the seats of bikes. Orders are taken by branch office and conveyed to computer operator of Fairdeal via telephone. Computer operator then validates it against SAP R/3 by entering order number. Store keeper then goes to warehouse and writes down serial numbers of ordered brands. These numbers are used to prepare bill. Due to scratches on barcode labels or lack of proper lights, there are problems in noting down serial numbers. Store keepers get confused between digits 8 & 3 and 0 & 8.
74
FIFO: Manufacturing weak number is present on number plate of bikes with Engine numbers and frame numbers. At present bikes received first are dispatched first but this rule is not followed strictly. Some times there is error of Cross-Dispatching, i.e. bikes billed for one dealer are dispatched to other dealers. This error occurs due to labor picking wrong bikes or error in noting down serial numbers. Notes: 5000 bikes dispatched per month all over Gujarat. Physical stock sometimes does not tally with book value. In case of cross-dispatching, Bill has to be made in Excel sheet.
Recommendations to TVS: TVS division has two computers, one for SAP R/3 operations and other for assistant works. These computers should be connected to each other through network connection. As of now, data has to be transferred using Floppy disks from one machine to another. Transporters should be encouraged to intimate Fairdeal in advance about their arrival. This will help Fairdeal in arranging for bikes space and avoid parallel unloading. Cordless barcode scanner can be used to scan serial numbers instead of doing it manually. This will reduce human errors as well as increase efficiency of receiving and dispatching also. TVS should ask SAP R/3 to provide them with integrating software which can transfer data to and from cordless barcode scanner and SAP R/3 module.
75
Bell Ceramics
Baroda,
Hoskote
near
Process owner Computer operator Software used Products Quantity handled (Sq mts) Value (INR) Transactions No of dealers
Mr. Hemant Thakkar Mr. Hemant Thakkar MFG Pro wall and floor tiles 250,426.93 47,127,843.96 4,464 100
Bell ceramics has tiles in 200X300 mm, 300X300 mm, 397X397 mm and 400X400 mm categories. Wall tiles are manufactured at Dora and Hoskote plant manufactures floor tiles only. Tiles are checked for physical damages and If damages are up to Rs 4000/- or less, damage is claimed from transporter, else it is claimed from insurance company. Order is taken on phone by Fairdeal. At present, dealers have to keep pre-signed cheques with depot. If cheques of dealer are not present, no order will be made. If cheques are present, invoice is printed and material is dispatched with gate pass and LR copies. Data in MFG Pro software is uploaded by emailing Microsoft Excel (.xls) sheets.
76
Notes: Tile Shades vary every batch. There is at least 2% to 3% variation in shade for every batch change.
Recommendations for Bell Ceramics: All orders in bell ceramics are placed either via telephone or written order is sent to depot. This increases Fairdeals work as orders have to be punched manually by Fairdeal staff. Further, this company does not have any branch office in Gujarat and Area Sales Manager Mr. Ramesh Desai works from Fairdeal premises itself. Fairdeal should negotiate with Bell management to provide them with better infrastructure to operate its activities better.
77
IM Technologies
Process Owner Store Incharge Factory location Quantity handled Value (INR) Transactions No of dealers Mr. Aashish Mr. Aashish Noida 502,000 10,072,500.00 19 1
SIM cards come from Noida (imported from abroad) through courier. Carton is checked at time of receiving and stored at ground floor itself from where it is dispatched to Idea Cellular, Gandhinagar.
MRF Paints
Factory location Head Office Branch Manager Process owner Computer operator Software used Products Quantity handled Value (INR) Transactions No of dealers
Chennai Mumbai Mr. Himanshu P. Maniyar Mr. Vinod Mr. Tushar MS Dos based InvMenu, IMS and Bill Printing Paint products and speciality coatings 33,396.3 8,368,599.93 2,605 65
78
Notes: RCB Menu: Software for taking payment from party SRCN: Expired material coming back to depot IBTA: Stock transfer (Inter depot) DSO: Direct Sales Order IMS: Inventory Management System Recommendations to MRF: MRF paint is using very primitive softwares and need immediate attention towards this field. Its softwares are almost obsolete and many of its modules are either out of date or not upgraded.
79
Security at Fairdeal Distribution Services Pvt. Ltd Process Owner: Mr. Ram Prakash Singh Kushwah Material is loaded in presence of security guard, Godown keeper and truck driver and signed by all three also. Gate pass is checked for quantity (short or excess both) and validated against physical goods at the time of dispatching at main gate. Inward and outward registers are maintained company wise and day wise also. Staffs register tracks In and Out time of employees. Truck daily register records vehicle number, drivers name, Party name (transporter or dealers name), loading or unloading, In time, Out time, security guards sign At Main warehouse, Fairdeal has eight security guards.
These company wise processes study in this phase will make the basis for further research in next phases, ABC Analysis and AS-IS Analysis phases, of the project.
80
ABC ANALYSIS
Value Wise and Quantity Wise
81
82
LANTERN
GAS TABLE
83
Value (INR)
Value (INR)
McFills Data
McFills Value (INR) Total 20,471,003.33
IM Technology Data
IM Technology Value (INR) Total 10,072,500.00
84
MICO Data
MICO Value (INR) Total 531,072,000.00
Voltas Data
Voltas Value (INR) Total 177,385,730.66
Annual sales for the financial year 2005-06 for Gujarat state were tabulated in descending order of their turnovers as follows: Companies in descending order of turnovers
Company
TVS Motor Titan MICO Bharti Voltas Amara Raja Bell Tata Tea McFills IM Tech MRF Paints BPL Sanyo
Value (INR)
1,464,980,532.82 660,350,996.00 531,072,000.00 211,538,743.29 177,385,730.66 112,960,900.98 47,127,843.96 32,850,286.31 20,471,003.33 10,072,500.00 8,368,599.93 1,017,597.78
85
Table 5: ABC Analysis - Value Wise Company TVS Motor Titan MICO Bharti Voltas Amara Raja Bell Tata Tea McFills IM Tech MRF Paints BPL Sanyo TOTAL Value (INR) 1,464,980,532.82 660,350,996.00 531,072,000.00 211,538,743.29 177,385,730.66 112,960,900.98 47,127,843.96 32,850,286.31 20,471,003.33 10,072,500.00 8,368,599.93 1,017,597.78 3,278,196,735.05 % of total value 44.69% 20.14% 16.20% 6.45% 5.41% 3.45% 1.44% 1.00% 0.62% 0.31% 0.26% 0.03% 100.00% Cumulative % 44.69% 64.83% 81.03% 87.49% 92.90% 96.34% 97.78% 98.78% 99.41% 99.71% 99.97% 100.00% Category A A B B C C C C C C C C
Total of all values was calculated which was used to calculate percentage of total value contributed by each company as follows: Percentage of total value = Turnover of company ---------------------------------Total turnover of companies
After this, cumulative percentage is calculated for companies sorted in descending order of values. These cumulative percentages are used to categorize companies in A, B and C categories using formula, If, Cumulative percentage < 70% => A Category Else if, Cumulative percentage > 70% but < 90% => B Category Else, C Category It is evident from table that contribution of TVS motor is largest with 44.69% and that of BPL Sanyo is least with 0.03%.
86
87
Quantity (pcs)
Quantity (pcs)
McFills Data
McFills Quantity (boxes) Total 67,764
IM Technology Data
IM Technology Quantity (pcs) Total 502,000
88
MICO Data
MICO Quantity (pcs) Total 4,918,625
Voltas Data
Voltas Quantity (pcs) Total 14,435
Total quantities dispatched for the financial year 2005-06 for Gujarat state were tabulated in descending order of their quantities as follows: Companies in descending order of quantities
Company
MICO (pcs) IM Tech (cards) Titan (pcs) Tata Tea (kg) Bell (sq. mts) Bharti (pcs) McFills (boxes) Amara Raja TVS Motor (bikes) MRF Paints (ltr) Voltas (pcs) BPL Sanyo (pcs)
Quantity
4,918,625 502,000 366,146 277,341 250,427 146,888 67,764 58,560 46,668 33,396 14,435 644
89
Table 6: ABC Analysis - Quantity Wise Company MICO (pcs) IM Tech (cards) Titan (pcs) Tata Tea (kg) Bell (sq. mts) Bharti (pcs) McFills (boxes) Amara Raja TVS Motor (bikes) MRF Paints (ltr) Voltas (pcs) BPL Sanyo (pcs) TOTAL Quantity 4,918,625 502,000 366,146 277,341 250,427 146,888 67,764 58,560 46,668 33,396 14,435 644 6,682,894 % of total Quantity 73.60% 7.51% 5.48% 4.15% 3.75% 2.20% 1.01% 0.88% 0.70% 0.50% 0.22% 0.01% 100.00% Cumulative % 73.60% 81.11% 86.59% 90.74% 94.49% 96.69% 97.70% 98.58% 99.27% 99.77% 99.99% 100.00% Category A B B B C C C C C C C C
Method for categorizing companies in A, B and C categories is same as that used in aforesaid value wise ABC Analysis. It is evident from table that contribution of MICO is largest with 73.6% and that of BPL Sanyo is least with 0.01%.
90
91
Transactions
McFills Data
McFills Transactions (No) Total 67,764
IM Technology Data
IM Technology Transactions (No) Total 19
92
MICO Data
MICO Transactions (No) Total 31,926
Voltas Data
Voltas Transactions (No) Total 5,929
Total transactions done by company to dispatch aforesaid quantity for the financial year 2005-06 for Gujarat state were tabulated in descending order of their transactions as follows: Companies in descending order of transactions
Company
MICO Voltas Titan Bell Amara Raja MRF Paints TVS Motor Tata Tea Bharti McFills BPL Sanyo IM Tech
Transactions
31,926 5,929 5,733 4,464 4,136 2,605 2,057 1,806 1,611 1,233 59 19
93
Table 7: ABC Analysis - Transaction Wise Company MICO Voltas Titan Bell Amara Raja MRF Paints TVS Motor Tata Tea Bharti McFills BPL Sanyo IM Tech TOTAL No of Transactions 31,926 5,929 5,733 4,464 4,136 2,605 2,057 1,806 1,611 1,233 59 19 61,578 % of total Transactions 51.85% 9.63% 9.31% 7.25% 6.72% 4.23% 3.34% 2.93% 2.62% 2.00% 0.10% 0.03% 100.00% Cumulative % 51.85% 61.47% 70.79% 78.03% 84.75% 88.98% 92.32% 95.25% 97.87% 99.87% 99.97% 100.00% Category A A A B B B C C C C C C
Method for categorizing companies in A, B and C categories is same as that used in aforesaid value wise ABC Analysis. It is evident from table that contribution of MICO is largest with 51.85% and that of IM Technology is least with 0.03%.
94
AS-IS ANALYSIS
Process Matrices
95
14. Make stack cards 15. Place stack cards on goods 16. Re-pack material, if required 17. Re-labeling of goods 18. Stock Maintenance 19. Receive orders from customers 20. Receive stock transfer requests 21. Punch orders 22. Collect cheques from customers 23. Check availability of ordered goods 24. Check availability of customers checks with Fairdeal 25. Intimate customers about insufficient cash 26. Make pending orders 27. Short close orders in case of shortage of goods 28. Print invoice 29. Prepare Gate pass 30. Verify ordered quantity against invoice 31. Load material on vehicle 32. Dispatch goods 33. Check stock in warehouse after dispatching 34. Receive goods received acknowledgement from customers 35. Pay Octoroi if applicable 36. Receive unsalable material 37. Receive warranty returns 38. Intimate principal about warranty claims 39. Intimate principal about scrap material 40. Generate weekly and monthly reports 41. Claim Octoroi claims from company 42. Claim transport charges from company
97
All the processes and sub-processes mentioned here are not under control of Fairdeal. Some processes are initiated outside Fairdeal and some are partially or fully controlled by outside sources like dealers and branch offices. Out of these procedures and sub-procedures, eleven most vital procedures were shortlisted as main processes for further analysis and remaining out of 42 were classified as sub-processes of these main processes. The main processes are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Goods Receiving Storing Material Cycle Count Order Punching Order Approval Invoice/ Bill Printing/ Stock Transfer Dispatching Transportation Handling Unsalable Material
10. Handling Warranty Claims 11. Stock Maintenance These processes are general processes common to all companies handled by Fairdeal Distribution Services Pvt. Ltd. Those Processes which are specific to a particular company are indicated by company name in the parentheses. These processes were then again studied and process matrices were prepared for each process. Process Matrix contains activities that are undertaken in every process. All activities might not be followed in the process and some activities are alternate activities. All the process matrices are shown graphically also which are drawn using Microsoft Visio 2003. This phase also includes main issues with related priorities and excerpts from interview of warehouse labours, clerks, store keepers, security guards, process owners, managers, and directors of Fairdeal.
98
Decide on an approach
Analysis of every process and its activity steps will decide the future of the process, i.e. whether it will be redesigned or leaved as it. There are five possible courses of action: Drop/abandon: This process is not necessary, or the benefit will never justify the cost. Outsource: It would be a more effective use of resources to have a supplier carry out the process. Traditionally, this has been the choice for generic, infrastructure activities such as cleaning and catering. Leave as is: The process is fine; the issues were elsewhere (e.g., no one follows the process, or training is needed). Improve: The basic structure of the process is okay, but specific improvements are possible. Redesign: The process should be fully redesigned.
99
100
Table 9: Loading & Unloading times in TVS (With four labors) TVS Motors
Loading (20 - 26 Bikes) IN OUT Unloading (50 - 56 Bikes) IN OUT Loading Time (Hrs) Unloading Time
10:15 14:24 15:15 12:00 13:30 14:20 16:45 18:20 18:30 18:45 12:30 18:00 18:45 13:45 16:35 17:45 18:30 14:40 16:35 18:00 18:20 18:55
13:00 16:15 17:00 13:10 14:15 16:30 18:15 19:30 19:45 19:00 14:00 20:00 20:00 14:45 18:00 18:30 19:45 16:50 18:05 19:10 19:25 19:10
10:35 12:10 13:10 15:30 7:50 10:30 15:45 15:30 10:00 11:20 11:30 12:50 14:45 16:00 16:30 10:45 11:30 10:00 10:30 18:10 10:00 11:10
12:05 13:05 15:10 17:15 8:50 12:15 15:00 18:00 11:10 12:55 12:45 14:15 16:00 17:45 18:00 12:00 13:30 11:00 11:40 19:20 11:00 13:30 Avg. Time
2:45 1:51 1:45 1:10 0:45 2:10 1:30 1:10 1:15 0:15 1:30 2:00 1:15 1:00 1:25 0:45 1:15 2:10 1:30 1:10 1:05 0:15 1:21
1:30 0:55 2:00 1:45 1:00 1:45 1:15 2:30 1:10 1:35 1:15 1:25 1:15 1:45 1:30 1:15 2:00 1:00 1:10 1:10 1:00 2:20 1:28
Table 10: Ideal Unloading times (with four labors) Industry Automobile (TVS) Food & Snacks (McFills) Batteries (Amara Raja) Home appliances (Voltas) Telecommunications (Bharti) Tiles (Bell Ceramics) Ideal Unloading Times 1 hour 30 Min 2 hours (Due to security check for acids) 1 hours 30 minutes 2 hours
101
Table 11: Fairdeals Unloading times Industry Automobile (TVS) Food & Snacks (McFills) Batteries (Amara Raja) Home appliances (Voltas) Telecommunications (Bharti) Tiles (Bell Ceramics) Fairdeals Average Unloading Times 1.28 hours 1.22 Min 2.33 hours 1.13 hours 41 minutes 3.04 hours
It is clearly visible from above tables that Cycle time and Wait time of Fairdeals unloading activities are far more than ideal industry measures. Some of the reasons for deviations in these measures are as follows: 1. Lack of space to unload material 2. Lack of sufficient labours 3. Security checks at gate 4. Physical inspection of material 5. Delay in issuing material received acknowledgement Moving and Non-moving materials Average cycle time of processes can not be calculated because almost all companies have fast moving, slow moving and non-moving goods categories. Cycle times of individual products or brands only can be calculated which is out of scope of this project. I would calculate Cycle times of individual products if time permits after completion of this project.
102
103
Give acknowledgement to transporter Acknowledgement of goods received is given to transporter either by signing on copy of LR or by issuing a separate document. Any damage or shortage has to be mentioned in the document. Scan barcode serial numbers A Bar code is a series of wide and narrow bands and spaces which represent numbers and letters. These bar codes, in machine-readable format, can be printed on package labels or cases. They can also be specially printed on labels by a dot matrix, ink-jet or full character impact printer.
104
The codes are read by a light pen or a fixed-beam reader scanner. The readers are interpreted by a micro-processor decoder. Decoders are used to record and identify goods received and goods issued. They are linked to a computer which updates the inventory control data base, adjusting records of stock levels automatically. Make shortage-claim or Damages-claim If some items are found to be missing or damaged, the first thing done is to segregate the defective unit or packages. This is the responsibility of the Store Incharge to sign for the receipt of the consignment. Where packages are obviously damaged on the outside, the contents are checked carefully. The transporter's representative then countersigns the endorsement. The Depot Incharge may choose to send the goods back. Alternatively, he has been instructed to qualify his signature on the delivery note by writing a comment. Once the loss or damage has been verified, it is notified to the supplier straight away. He can then make a claim against the carrier, or other parties. Intimate shortage claim or damages claim to branch office If the full complement of items ordered is not received (shortage) or if goods arrive damaged, compensation has to be claimed from the insurance company according to company norms. Storage claim or damages claim are intimated to Area Sales Manager (ASM), Supply Chain Manager (SCM) and transporter. Unload inbound material After inspection of material is complete, material is scanned (if applicable as in Voltas) for barcode serial numbers and off-loaded from the lorry. Generally two to four labors are used to off-load material in Fairdeal. In TVS motors, Bikes are checked for battery, accessories, tool kit etc at the time of off-loading.
105
Table 13: Goods Receiving Process Process 1 Goods Receiving Goods arrive from factory locations or other locations in case of StockActivities 1.1 Transfers. 1.2 Area branch office is notified about arrival of material. [Voltas] STM is received from transporter or courier person containing GRN and 1.3 outbound number. In case of courier service, Individual carton is weighed and verified 1.4.1 against printed weight on carton. [Titan watches] If weight of carton does not match with printed weight, Carton will be 1.4.2 opened before courier person. [Titan watches] Docket wise Cartons are opened and watches are checked with packing 1.4.3 slips which are inside the carton. [Titan watches] 1.5 Material unloaded from Lorry. Material is manually inspected for any physical damage and accessories 1.6 E.g. TVS bikes are checked for whether key and tool kit is with bike or not, rear view mirror and battery is attached with bike. In case of physical damage or short supply: Supply Chain Manger is informed. 1.7 Local ASO (Area Sales Officer) is informed. Damage claim or Shortage claim is prepared. 1.8 Serial numbers are scanned using cordless barcode scanner. [Voltas] 1.9 Goods received acknowledgement given to logistics person. 1.10 Material is stored in warehouse. 1.11 Upload receiving status on applications like SAP R/3, SDNet, MFG Pro 1.12 Mail is sent to Supply Chain Managers. [Amara raja batteries]
Responsibility People Involved Location Frequency Input Output Reports
Godown Keeper 6 Persons Warehouse 22,277 pieces per day (300 working days) Material status from Goods in transit Module Invoice cum delivery challan, LR receipt Material received notified to branch office through mail Material received receipt given to transporter Monthly report generated Current Inventory Status Current stock in warehouse STM should match goods in transit
106
107
108
Make stack cards Stack cards are prepared to ensure proper maintenance and delivery of material. They are also used tat the time of safety measures and cycle count. Stack card contains name of product, name of brand, number of quantity, batch number, manufactured date etc. Stack cards can be substituted by barcode labels for better efficiency. Place stack cards on goods After stack cards are prepared, they are placed on goods as follows: If material is stored in racks, stack card is pasted on rack. If material is stored on pallets, stack card is putted on it. If material is putted on bitumen sheets, stack card is placed in box.
109
2 2.1.1 2.1.2 2.2.1 2.2.2 2.2.3 2.2.4 2.3.1 2.3.2 2.4 2.5 2.6 2.7 2.8 2.9 2.10
Storing Material Separate locations are allotted for product of different companies. Same company goods are stored product wise. Yellow lines are marked on the floor of warehouse and material has to be stored within those lines only. Bitumen set or pallets are used to store material as par the policy of company. Stacking is done according to stacking norms of company. (e.g.: nine items per stack). Stacking always is honey comb. [Tata Tea] Titan products are stored code wise. Newer Titan products are stacked behind older one to ensure FIFO. Tiles in Bell Ceramics are stored batch wise as shades change every batch. Lorry number is noted down on seats of TVS bikes and stored brand wise. Engine number and frame number are also noted down. Material is checked for damage. If it is damaged material is stored separately in scrap warehouse. Stack cards are placed on lots containing manufacturing date, batch number, and received date to ensure FIFO. FMCG products are stored to ascertain FEFO. [McFills] Batteries are charged every 40 days. [Amara raja] Physical stock is verified against book value on daily basis. Godown Incharge 4 Persons Warehouse 22,277 pieces per day (300 working days)
Invoice cum delivery challan Soft copy of stock sent to branch office [Amara raja batteries] Physical stock register updated Monthly report generated Order receiving modules Location of scrap and finished goods must be different
110
111
112
Cycle Count Bikes in TVS Motor are counted brand wise and variant wise daily. FMCG goods in McFills are counted packs wise and carton wise weekly. Amara Raja batteries are counted pallet wise or item wise daily. Bell ceramic tiles are counted on fortnightly basis. Voltas home appliances are counted item wise weekly. Accessory items are counted piece wise or weight wise Titan watches are not counted physically. IM Technology SIM card pieces are not counted as they are crossdocked the same day. Godown keeper 10 Persons Warehouse Company specific ( varies from daily to fortnightly) Book value register ASM notified Update physical value register for date and quantity Differences report Physical stock and Book value stock reports generated daily Storing Material, Stock Maintenance Physical stock must be exactly equal to book value
113
114
115
4.3
Order Punching Orders are taken by sales officer along with DD or in writing by sending DD to Fairdeal. Dealers can also place orders in E-Applications namely; SAP R/3 and SDNet; or via phone. Check whether signed blank cheques of concerned dealer are available with Fairdeal or not. If not, inform the concerned dealer. [Tata Tea, Bell Ceramics and McFills] If company is using SAP R/3, Stock is checked for availability in warehouse/ depot even before punching the order as SAP R/3 does not allow order punching (though pending order can be made) if stock is not present. [Voltas, Tata Tea] If order placed via phone it has to be punched into SDNet manually by warehouse personnel. [Bharti] DD is submitted in Bank and deposit receipt obtained. DD details punched into order received form. Computer Operator 4 persons Shiromani office and warehouse 60 orders per day (300 working days) Order details in e-application Demand Draft or Cheques from dealer Order number generated Pending orders report SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register Order entry not done if signed blank cheques of dealers are not with Fairdeal. [Tata Tea, Bell Ceramics, McFills Foods]
Existing Integrations
Controls
If stock is not present, order can not be punched into SAP R/3 Module. Though pending orders can be made. [Voltas]
NOTE: Orders are punched into Titan, Bell, Amara Raja, MRF Paints,
116
117
118
5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10
Order Approval Stock is checked for availability in warehouse/ depot. If stock is present order is approved. Order is sent for verification by regional sales officer Once approved, dispatch order is generated on SDNet. [Bharti] If stock is not present, order can be partial dispatched or short closed. Notification sent to dealer. Check physical stock for threshold stock. If stock is below threshold value, place order at company head office. Update book stock value Stock is checked for availability in warehouse/ depot. Computer operator 8 persons Shiromani office and Admin office at warehouse 73 orders per day (300 working days) Order details from ERP module Demand Draft or Cheque from dealer Dispatching order Invoice SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register DD details are must for order approving. [Bharti Teletech]
NOTE: Orders are approved in Titan, Bell, Amara Raja, MRF Paints, TVS Motor, Tata Tea, Bharti and McFills Ltd.
119
120
Invoice/ Bill Printing/ Stock Transfer If SAP R/3 or any other ERP package is being used invoice is printed directly from Print Invoice menu by entering order number. If SAP R/3 or any other ERP package is not being used, bill is printed manually. Invoice contains product specifications along with product value. Stock transfer document is printed from Stock Transfer menu Stock transfer decision is taken by regional sales manager. Stock transfer order is then forwarded to nearest C &FA depending on availability of stock. No sales tax or VAT is applicable on stock transfers as ownership of material does not change. Computer Operator 8 Persons Shiromani office and Admin office at warehouse 205 invoices per day (300 working days) Invoice number e-application Dispatching order Invoice Printout SDNet, SAP R/3, raja e-ARIMS Order Punching, Physical Stock Register Material movement out of warehouse
121
122
Dispatching Process
Pick slip is generated and sent to warehouse for picking material. Every dispatch order and is signed by process manager. When an order is received in warehouse, it is checked for the correct signature. Gate pass is then prepared and material is loaded on vehicle or handed over to courier person. Some of the main activities in this process are: Verify ordered quantity against invoice Issues are only made against orders which have been properly authorized. Sample signatures and initials of all authorized signatories must are made available to warehouse staff so that they can verify orders. Load material on vehicle At this stage, ordered items are picked from pallets, bitumen sheets, shelves or racks and assembled in the goods-out area. Here they are packed, marked and loaded onto trucks for delivery or handed direct to waiting customers. Check stock in warehouse after dispatching It is initiated by store Incharge at the time of loading material. If material, being dispatched, is found to be below a threshold value, store Incharge intimates process manager who in turn will notify ASM and SCM. This material will be indented to factory location for replenishment.
123
Dispatching Take material from warehouse on the basis of FIFO or FEFO. Bring material from secondary location to primary location. Tiles are dispatched according to batch. Material is Loaded on vehicle. Gate pass is made to allow goods outside warehouse. LR, gate pass and two copies of invoice are given to transporter. Transport vehicle is checked for gate pass and physical goods. Depot Incharge 15 persons warehouse 22,200 pieces per day (300 working days) Dispatching details in e-application Material specification from computer operator Dispatching number Acknowledgement SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register No order can be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person.
124
125
Transportation Process
This process is extension of dispatching process and is carried out after material is loaded on the vehicle. Fairdeal provides transportation to local orders where as outsourced carriers and courier service providers provide transportation to upcountry orders. Some of the main activities in this process are: Prepare Gate pass Gate pass [refer to format of gate pass in APPENDIX B] is prepared after material is loaded into lorry or handed over to courier person in the presence of security Incharge, store keeper and transporter. Purpose of this document is to keep track of the outbound material leaving the warehouse. Pay Octoroi, if applicable Octoroi is payable in select cities decided by state governments. It ranges from 4% to 5% of invoice value depending on the type of the product and city in which Octoroi is payable. Fairdeal pays Octoroi on behalf of its principal which it claims later. Receive goods received acknowledgement from customers When material is supplied to a customer, received acknowledgement from customer delivery. This document is given back to remains with transporter which is used reimbursement. Claim Octoroi claims from company As mentioned in Pay Octoroi sub process, Fairdeal pays Octoroi on behalf of its principal which it claims later. Octoroi is paid on the material which is transported through its own vehicles or contracted vehicles. There is no obligation to pay Octoroi when customers take the delivery at warehouse premises since ownership changes at warehouse in this case. transporter takes goods as a proof of correct Fairdeal and one copy at the time of freight
126
Transportation Local orders are dispatched through Fairdeals own vehicles or dealers collect their order from warehouse directly. Up-country orders are dispatched through transport or courier services. Octoroi is paid in metropolitan cities. Material is unloaded at dealers place. Dealer returns back one signed copy of invoice as acknowledgement of goods received. Acknowledgement copy of invoice given back to Fairdeal. Octoroi charges are claimed from concerned company. Transportation Incharge 10 persons warehouse 22,200 pieces per day (300 working days)
Gate pass from store Incharge Goods Received Acknowledgement Freight reimbursement report Current stock, goods in transit Storing Material No order can be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person.
127
128
129
9 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11
Handling Unsalable/ Non Moving/ Slow Moving Material Dealer claims material as Unsalable. Sales officer inspects material. If material is found unsalable, sales officer recommends it to area sales manager. Area sales manager approves material as Unsalable. Material is brought back to Fairdeal warehouse along with written approval of sales officer and dealers letter containing material details. Unsalable material is stored in scrap warehouse at different location. After enough stock piles up, notification is sent to company Company approves removal of unsalable material Transporter is sent to collect the material Total quantity is verified against book value Material is loaded on vehicle and sent to company locations. Store Incharge 12 persons warehouse 150 Cartons per month
Specification of unsalable material sent by dealer to Fairdeal DD details and scrap details mailed to SCM. Specification of unsalable material sent by Fairdeal to Company Monthly scrap material report Financial Accounting System (FAS) Physical Stock Register Scrap can be sold to company contracted scrap dealer only.
130
131
10 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.11 10.12 10.13 10.14 10.15 10.16
Handling Warranty Claims Customer claims product replacement under warranty from dealer. Dealer notifies service engineer about warranty claim. Service engineer inspects product. If satisfied, service engineer approves warranty claim. Product comes to Fairdeal warehouse with product specification and warranty letter signed by service engineer. New product is dispatched to dealer to replace defected one. Company is notified about warranty claim. Defected product is stored in scrap warehouse. After enough stock piles up, notification is sent to company Company approves removal of defected stock. Stock is sent to company if it can be repaired or serviced. If material is unrepairable it is considered as scrap Serial numbers of scrap material are destroyed to avoid re-claims. Scrap material sold to companys scrap dealer DD of scrap material sent to company Head Office. Store Incharge 4 persons warehouse 100 pieces per month Warranty claim details in SD module Warranty claim letter Electronic notification to company Invoice of replaced product Monthly Free replacement report Amara raja E-application (http://localhost/bs/) Scrap Stock Register Service Engineer must approve warranty claim
132
133
134
Re-pack material, if required If packing or carton of material is found damaged or material is required to repack for distribution, company provided tape and seal are applied to it. Re-labeling of goods This is value added service provided by Fairdeal to its principal companies. Re-labeling is done when a new promotional scheme is launched or a new labeling is required due to price change or seasonal scheme has to be given. In this process, Fairdeal provides with the labors who will stick new labels provided by company to the material. Fairdeal claims the labeling charges as value added services later with reimbursements. Generate Reports Weekly and monthly reports are generated for the purpose of controlling, tracking, inspecting and reimbursement. Freight claims, Octoroi claims, value added services claims and Clearing & Forwarding Agent reimbursements are charged on the basis of these reports. Apart from these, these reports are also used to track inventory and movement of goods.
135
Protecting Material Slow-moving and Non-moving goods are inspected by checking its stack cards or batch number and manufactured date Bikes are inspected for scratches and damages. FMCG goods are protected against moisture, rodents, contamination, micro organisms. Batteries are charged every 40 days in warehouse. Moisture content is controlled depending on products Fire extinguishers maintained for emergency situations Re-pack material packing or cases, if pilferaged during storing Re-label packs or glue stickers to packs for promotional schemes under value added services Generate reports for the purpose of controlling, tracking, inspecting and reimbursement of stock maintenance Depot Incharge 2 Person Warehouse No strict schedule followed Check last date from Maintenance register No of pieces destroyed notified to ASM Update maintenance register Maintenance reimbursement report when asked by management Storing Material, Cycle count Rodents, expiry dates, theft
136
137
High
Medium High
High
Low
Medium High
High
138
Issues/Observations Some employees need HR training to motivate them and to develop their business communication skills, listening skills. Gate pass is mandatory for taking goods outside warehouse. Attrition of employees is hindering smooth operations Principal companies co-operation to implement barcode readers Salary structure of employees
139
Data gathered during this phase would make basis for research in next phase, TO-BE Analysis.
140
TO-BE ANALYSIS
141
Definition of TO-BE Analysis The goal of To-Be Analysis design is to produce one or more alternatives to the current situation, which satisfy goals of the enterprise as stated in the business case analysis and which satisfy the change-requirements. AS-IS Analysis phase of this project highlighted the processes which needed either modification or re-engineering. This phase was aimed at detailed documentation of activities being carried out in each and every process. TO-BE phase aims at benchmarking processes being carried out against best industry practices. To achieve this, processes were studied from various Warehouse Management Systems. Some of the processes were benchmarked against other companies processes. For instance, dispatching process was benchmarked against Hindustan Lever Limited (HLL)s dispatching process. Furthermore, I discussed all the processes with process owners and process users of every company handled by Fairdeal. They provided me with many suggestions and their usefulness about how efficiency of Fairdeal can be improved. I also discussed the issues with Mr. Zankar Jobanputra and Mr. Sharad Jobanputra about benchmarking processes. Initially, it was planned to take demos of some four or five warehouse management systems to get best practices from them. It was also planned to visit some other warehouses nearby so as to study their processes. But due to lack of time during year-end operations in March and implementation of VAT in Gujarat from April 2006 afterwards, this plan could not materialize. To compensate this, I download 300 mb WinZip version of IntelliTracks Intelliwms and studied it thoroughly after installing it. This demo version gave me a lot of inputs about Kitting, Waves, Cubing and many other warehousing concepts.
142
All of the storage locations within the warehouse should be clearly defined, including the boundaries that separate them. Also determine whether these locations accommodate all the item types, shapes and sizes that are required. This may include zones, aisles, rows, and storage areas in a controlled environment for storing hazardous, valuable, or temperature controlled materials. Items Define the items the warehouse handles. These items can be defined in SKUs (Stock Keepting Units). Available Space (to support the Cubing feature) Calculate the space available for item storage to support the cubing feature. Material Flow in the Warehouse After the usable warehouse space and item size have been determined, identify the process by which material is moved through the warehouse (i.e., material flow).
143
Warehouse Layout
Figure 15: Warehouse Layout
Warehouse should be divided into in to different sites like Receiving site, Dispatching site, Scrap site etc. Each site should be coded accordingly. For instance receiving site can be coded as REC 01, REC 02 etc, Bulk storing site can be coded as A-01, A-02 etc, and Dispatching site can be coded as D-01, D-02 etc to locate it easily. Further, yellow lines can be marked on the floor to specify storing space. Locations are then added to each site. Locations reside within a Site and are added to a site at the Locations form in WMS. When locations are created for a site, the warehouse space is divided into specific sites. The following information is required to add a location, and must be entered in the Locations form in WMS:
144
Site: the warehouse/facility where this location resides. Location Identifier: a unique system identifier that you create for this location, entered in the Location cell. Description: a description of the location (i.e., forward pick, staging, receiving, picking, storage). Cube Size: The cubic size of a location represents the storage space available in that location, it may be an exact number, or a close estimate, depending on storage requirements and WMS objectives. For example, a location with a cubic size of one hundred can hold one hundred items with a cubic size of one or it can hold two items with a cubic size of fifty. Pick sequence: assign the location travel sequence when picking items (picking process) in this cell Put away sequence: assign the location travel sequence for putting away items (receiving process) in this cell.
NOTES: When location sequencing is implemented, the sequence number directs the user, with an RF portable, to a predefined location when picking and/ or putting away order items. (WMS sorts line items into the sequence defined and presents the line item in sequential order.) This reduces the travel time when putting away and picking orders. Before establishing a location sequencing for picking orders, putting away orders, and replenishing stock, it is a good idea to identify the process by which material is moved through warehouse (i.e., material flow), in order to determine the most efficient travel sequences. A good starting point would be the movement of the top twenty percent of inventory.
145
Specifying the Replenishment Sequence When a forward pick (or prime) location is restocked, it is possible to use a replenishment sequence to guide in the put away process. The replenishment sequence is an inventory move based on the pick sequence of the bulk storage location. When replenishing a forward pick location, an item location may be specified. If replenishment is implemented: WMS sorts items requiring restock in a sequence based on locations where the bulk stock resides and the pick sequence assigned to that location. WMS guides the picker to the lowest picking sequence location for the first item requiring restock.
Implementing Location Sequencing To implement location sequencing, a pick and/or put away sequence number is assigned to a location. (The lower the location sequence number, the higher its priority as a pick or put away location.) Often, a location with the lowest primary pick sequence number will have the highest put away sequence number. The table below highlights a typical location number sequence.
Table 25: Example of Location Sequence Numbers Location FP-001 FP-002 REC SHP1 01-A-01 01-A-02 Description Forward Pick Forward Pick Receiving Staging Bulk Storage Bulk Storage Pick Sequence 1 1 0 0 9 8 Put Away Sequence 8 8 0 0 1 2
Locations REC and SHP1 have a pick and put away sequence number of zero, which is outside the sequence number range; hence these locations are excluded from location sequencing.
146
Generating Barcode Labels WMS should be able to generate barcode labels for material stored in the warehouse. Barcode printing should be integrated with company specific ERP modules so that material specifications can be directly imported from these modules. Other facilities that are required for barcode generation are as follows: Label Printing Setting Label Characteristics Creating Sequential Number Label Creating Custom Data Label Adding a Customized Label Format
Import-Export Data To and From WMS The Import-Export Utility allows for the importing of data into WMS and exporting of data from WMS through the following interfaces:
Data Interfaces Host Picking Host Receiving Inventory Export Inventory Import Item Export Item Import Location Export Location Import Picking Export Picking Import Receiving Export Receiving Import Description Communicates picking order activity back to a host system. Communicates receiving order activity back to a host system. Exports specified inventory data to a specified text file. Imports inventory data from a specified text file into the WMS database. Exports specified item data to a specified text file. Imports item data from a specified text file into the WMS database. Exports specified location data to a specified text file. Imports location data from a specified text file into the WMS database. Exports specified picking data to a specified text file. Imports picking data from a specified text file into the WMS database. Exports specified receiving data to a specified text file. Imports receiving data from a specified text file into the WMS database.
147
Synchronize Fairdeal WMS and Principals ERP Module To ensure smooth and errorless flow of data from principal companys ERP module to Fairdeals WMS and vice-versa, some integrating software should be used with the help of principal company. Trying to insert data manually in either of ERP module or WMS will increase chances of erroneous entries which would defeat the purpose of automating Fairdeals operations. Once both the software packages are integrated, Import-Export interfaces could be used for transferring data to and from one system to another. Though convincing every principal company to provide with integrating software package is not an easy task and it will take a fairly good amount of time before this concept comes to reality; but it is also certain that if data of WMS and ERP module can be synchronized, operations of Fairdeal will become very easy to execute and maintain.
148
149
1 Goods Receiving Receive Goods at Warehouse Clearing and Forwarding Dataflow Soft copy of Stock Transfer Memo (STM) Documents Invoice cum delivery challan, LR receipt, Goods Return Note Dataflow Update Goods-in-Transit module of ERP Documents Acknowledgement to transporter Reports Stock receipt report, Inventory report
Activities
Process Steps
1.6.2
Plan labor and space required for material. If space or labor is not sufficient, make arrangements for coming material. Goods arrive from factory locations or other locations in case of StockTransfers and Goods Returns. Lorry or Courier vehicle entry made in Gate Register at main gate. Documents received from transporter or courier person containing material specification. Material unloaded from vehicle. In case of Titan, Individual carton is weighed and verified against printed weight on carton. In case of mismatch, carton will be opened in presence of courier person. Material manually inspected for any physical damage and accessories E.g. TVS bikes are checked for key, tool kit, rear view mirror and battery. In case of physical damage or short supply: Supply Chain Manger is informed. Local ASO (Area Sales Officer) is informed. Damage claim or Shortage claim is prepared. Transporter copy of STM acknowledged. Material stored in warehouse. Upload Goods-In-Transit module Synchronize data of ERP module and Fairdeal WMS
Main Godown Keeper WMS, Goods Storing, Inventory stock Can Fairdeal convince its clients to provide with integrating software? SAP and WMS data synchronized with each other. Damages report, shortage report if material found damaged or short respectively
150
151
Storing Material
Store goods in warehouse Warehousing Dataflow Material specification imported from SAP module. Documents Copy of STM with material serial numbers and specifications Dataflow Barcode labels Documents Reports Physical stock register updated Current stock report, Inventory report
Activities
Process Steps
Decide the site of material i.e. scrap site or finished goods site Sort the material product wise as applicable Check material for packing and physical damage. If it needs repacking 2.3 or taping, apply taping and other fixes. 2.4 Update goods specifications in WMS inventory module 2.5 Scan serial numbers of finished goods and transfer them to WMS. Generate barcode labels for goods lot wise, pallet wise, product wise 2.6 or batch wise, as required 2.7 Stick barcode labels to goods or locations, as applicable Store goods at their allotted locations according to company specified 2.8 regulations. E.g. Batteries, home appliances and tiles are stored on pallets where as watches are stored in racks Depot Incharge ERP module, Goods receiving, Inventory stock Care to be taken while sticking barcode labels so that mismatch does not occur RFID could be used to locate and quantify the stock Additional physical stock register can be maintained for use of physical verification
2.1 2.2
152
153
Cycle Count
Finding any discrepancy in physical stock against book value Stock keeping Dataflow Cycle count alert displayed to depot Incharge on set day Documents Printout of current stock from WMS Inspection date updated in WMS Physical stock register updated Differences report
Activities
Output
Process Steps
Sites inspected for moisture level, rodents, temperature, infestation and security issues. FMCG goods checked for air-leaks, damages, expired dates. Titan Carton checked for any physical damage and pilferage, weighted in the warehouse to check uniformity of cartons. Batteries physically checked for damage, type of battery, embossing, barcode and plastic wrapping. Battery must be charged every 40 days in warehouse. Bikes inspected for scratches, damages and Engine number slips.
Store keeper Current Inventory stock It is practically not possible to take physical stock of small products like watches and spare parts frequently RFID could be used to verify physical stock smoothly Specialists may be hired for checking micro-organism level in food products location
154
155
156
Order Approval
Approving orders placed by dealers Order verification and dispatching Dataflow Order punched by dealer Documents Cheque or Demand draft for order placed Order approved or rejected, Invoice number generated Monthly sales report, Cash report, Current stock report
Activities
Output
Process Steps
Stock is checked for availability in warehouse/ depot If stock is present in required quantity, order is accepted and approved else order can be partial dispatched or short closed. If company is Bharti Teletech, order is sent for verification by regional sales officer. Once approved, Pick slip is generated from approved order Pick slip sent to store Incharge Check inventory stock for threshold value If stock is below threshold value, place order at company head office. Synchronize order approval data on WMS and ERP modules
Computer Operator Pending orders, Dispatching, Credit limits of dealers, Current stock available All dealers might not be capable of placing orders online ASM might ask to approve orders to fulfill his targets All order placing should be automated without any paper work Credit cards be used to replace Demand drafts and Cheques If material is not present in warehouse, order should not be accepted by ERP package when dealers place it.
157
158
Issue a document as a proof of change of ownership Invoice / Bill/ Stock transfer memo printing for handing it over to transporter Dataflow Invoice number generated during order approval Documents Material ready to be issued acknowledgement form store keeper Order completed notification Invoice/ Stock transfer memo printout Total transactions report
Activities
Output
Process Steps
Invoice printed directly from Print Invoice menu of ERP package by entering invoice number. Print stock transfer memo from Stock Transfer menu Hand over the printed document to transporter
Computer Operator Dispatching, Pending orders Invoice will not generate if barcode serial numbers or other data is wrongly punched Companies replace their legacy IT systems with modern ERP packages If material is not present in warehouse, order should not be accepted by ERP package when dealers place it.
159
160
Dispatching
Transfer ordered quantity from warehouse to dealers place Picking material from warehouse and load it on transporter vehicle Dataflow Dispatching details in e-application Documents Pick slip Notification sent to dealer and branch office Gate pass and LR Monthly current inventory report
Activities
Output
Process Steps
Pick slip comes to Store keeper Material picked from locations based on predefined picking sequence or kit. Material loaded on vehicle in presence of store keeper, security personnel and driver of vehicle. Gate pass made to allow goods outside warehouse. LR, gate pass and two copies of invoice given to transporter. If order is local, Octoroi amount given to transporter to be paid at toll tax point. Transport vehicle checked for physical goods at main gate
Check dispatched material after picking. If sufficient quantity is not present at primary location, bring material from secondary location to primary location. Depot Incharge Current stock, Labor Incharge, Security checking at main gate No order should be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person as breech in security check can prove fatal for operations of Fairdeal. RFID could be used to locate and pick ordered material easily Copy of signatures of all authorized persons should reside with security team at main gate to verify gate pass signatures.
161
162
Transportation
Transport ordered quantity to dealers place Transporting Dataflow Documents Gate pass from store Incharge Mail to dealer about goods in transit Goods Received Acknowledgement from Dealer Monthly freight reimbursement reports
Activities
Output
Process Steps
If order is local, use Fairdeals own vehicles else use outsourced carrier. Loaded vehicle leaves warehouse after security check Octoroi paid in metropolitan cities, if applicable Material off-loaded at dealers place Dealer returns back one signed copy of invoice as acknowledgement of goods received Acknowledgement copy of invoice given back to Fairdeal. Octoroi charges and freight charges claimed from concerned company
Transportation Incharge Labor Incharge, Security checking at main gate No lorry should leave warehouse without proper security checks. Fairdeals own vehicle are provided additional amount for fuel and maintenance while contracted vehicles charge freight charges on monthly basis
163
164
165
166
11 Stock Maintenance To maintain stock safety Inventory Management Dataflow Reminder alerted by WMS on set day Documents Check last date from Maintenance register Dataflow No of pieces destroyed, measures taken notified to Depot Incharge Documents Update maintenance register Reports Monthly maintenance reimbursement report
Activities
Process Steps
Proper shading for items stored outside or on roof. Bikes are inspected for scratches and damages. FMCG goods are protected against moisture, rodents, 11.3 contamination, micro organisms. 11.4 Batteries are charged every 40 days in warehouse. 11.5 Moisture content is controlled depending on products 11.6 Fire extinguishers maintained for emergency situations 11.7 Re-pack material packing or cases, if pilferaged during storing Re-label packs or glue stickers to packs for promotional schemes 11.8 under value added services Generate reports for the purpose of controlling, tracking, inspecting 11.9 and reimbursement of stock maintenance Depot Incharge Current Stock module No lorry should leave warehouse without proper security checks. Fairdeals own vehicle are provided additional amount for fuel and maintenance while contracted vehicles charge freight charges on monthly basis
11.1 11.2
167
168
169
170
Third Party Catalog Third party accounts (Customers, Shippers, Salesmen/Collectors, Forwarders and Shipping Agencies) should be created as contacts in the address book. This option eliminates redundant data entry and reduces errors. It simplifies the management of enterprise-wide information by using one central database. Depending on the business relation with the organization, a contact should be identified as a supplier, a vendor or both at the same time. Information should be consolidated in the same place and made available to all modules, where required. Third Party Information Third parties should be classified by categories. This feature is important for segregation in order to provide exceptional reporting flexibility. Contact name, main business, contact information, full address including the default dealing currency help in answering the information needs and improving the vital relationship with the third partys organization. Credit Limits & Payment Terms A well planned WMS should provide a flexible definition of the credit conditions, like the credit limit or payment terms, to accommodate with a diverse customer and vendor base. The client credit limit should be controlled when preparing a sales order or a direct invoice. Debit limit and terms of payments are defined per supplier. They provide an important feature to streamline cash flow process and help saving money. Bill of Lading A quality WMS should have features to allow an easy creation and printing of the Bill of Lading. This direct entry facilitates the management and tracking per container and per client of single and consolidated shipments. The system should also be flexible to create a Clearing file from each Bill and should allow the addition of the related expenses to each file and to generate invoices for the rendered Forwarding/Clearing services. Manoj Banshilal Pachouri ICFAI Business School
171
User Defined Cost Elements In Clearing and Forwarding, the cost elements can be classified into items that can be invoiced (i.e. insurance, freight etc.) and others that cannot (i.e. customs, duties etc.). The user can create an unlimited number of user-defined cost elements. When posted to the Financial Systems, items that cannot be invoiced and are billed at cost, should not affect the Expenses and Revenues Ledgers, and thus should not influence the turnover of the company. Invoicing The system should allow the option to print two separate invoices, one for the expenses that cannot be invoiced and the other for the ones to invoice, is also available. Once all Forwarding and Clearing expenses are processed and invoiced, the Client File could be closed. If additional expenses need to be added to a closed file, the file could be re-opened or an amendment file should be created. Cost/profitability reports should also be generated later on for any file (i.e. parent or child) or for a parent file and all its amendments. Security WMS should ensure that the right to use all crucial business processes is secure. Effective tools must be provided to manage security and provide users with a secure access to Clearing & Forwarding. Security groups can be created to restrict access to specific functions. Groups can be assigned different authority levels that filter the rights of each user belonging to a group. Data Backup There should be proper data backup functionalities in any good Warehouse Management System to ensure unstopped and smooth operations during unexpected system failures due to earth quakes, fire, water or any unforeseen natural calamity. Backed up data should not be stored at the same premise where WMS is installed because there is danger of loss of both WMS data and backed up data at the time of damage to this premise.
172
Reports A well integrated WMS should provide the required flexibility to produce effective reports and enable the users to export all report data to an external file, utilizing most of the standard supported data types, like ASCII, Rtf or Excel. Furthermore, the system should be able to generate the following, inclusive but not exhaustive, periodic analysis reports: Tracking of expenses by date, for a specific client and a specific shipment, List of invoices filtered by date, customer, invoice status, collector and currency Statistics of containers detailed by commodity Statistics of containers Expected cargo List of client shipments per vessel List of customs per client, per file Total sales by salesman
173
Salary Structure of Employees Presently, salary structure of employees is fixed salary structure in which employees are paid a fixed amount per month. Salaries are decided based on designation and years of work experience of employee. It will be important to notice here that since Fairdeal has to deal with less educated employees who are just matriculate or preuniversity pass-outs, it is difficult to implement all HR practices for them. Also it is not possible to give increments in salary regularly to them because in such case Cost to Company (CTC) of Employee will increase marginal productivity of Labor (MPL) which will be against interests of Fairdeal. Recommendations: Salary structure should be modified to variable salary structure in which one component should be fixed and other should be kept variable as incentives and bonuses. Clearly measurable targets should be defined and communicated to employees which would be basis for deciding incentives and bonuses of individual employee. These targets can be defined in such a way that neither they are too impractical to achieve nor they are too easy to achieve because if target are too easy, every employee will meet them and there will be no utility of setting variable salary, and if targets are too difficult to achieve they will not motivate employees to work hard and objective of variable salary to motivate employees will be lost. Current Status: This issue has already been taken up by management and it is planned to implement variable salaries from year 2006.
174
Location of barcode scanning in Bharti Teletech All Motorola cases have to be brought to SDNet terminal upstairs from Godown to scan their IMEI numbers. This consumes manpower as well as time in carrying the cases from one place to other. Recommendations: IMEI numbers can be scanned in Notepad in the Motorola warehouse at the time of receiving mobile phone containers and then this text file can be sent to SDNet terminal for uploading IMEI numbers. Current Status: This suggestion has been partially accepted as scanning in beta testing phase has been done in Godown itself but scanning at time of receiving is still to be implemented. Training to Computer Operators No formal training is given to SDNet operators in Bharti Teletech. They have learnt it by R&D and trail and error methods. For example: uploading IMEI number using text files was there from beginning but operator at Fairdeal learnt it by trail and error only after one year of his tenure. Recommendation: Formal training sessions should be arranged by experienced trainers arranged either by Bharti Teletech or Fairdeal. These sessions should be off-the job type as well as on-the job type. Current Status: Pending
Multi-company operations Fairdeals employees are specialized in one company operations only. Since there is only one computer operator and one Godown keeper in most of the companies, smooth operations of Fairdeal are disturbed when computer operator of Godown keeper is at leave. Operations in such situations are handled either by process owner or by Mr. Zankar Jobanputra, COO of Fairdeal. Recently in April 2006, this issue was highlighted in Bharti Teletech when its computer operator Mr. Sunil Patel resigned from the job. The operations which were handled by him alone could not be handled by
175
process owner, COO, Sales officer of Bharti Teletech and even Mr. Sharad Jobanputra had to scan serial numbers himself. Investing COO time or process owners time in such activities is not advisable for development of a company. Recommendations: Employees should be encouraged to learn handling multiple (at least two) companies distribution channels like SAP R/3 of TATA Tea and SDNet of Bharti. This will ensure smooth operations even in case of absenteeism and job vacancies. Employees can be allotted to one companys operations and one secondary companies working can be taught to him at the time of joining. New employees will learn better than those who have been working for a long time on single SD network. For example: if one employee is absent or quits his job, there should be another employee in Fairdeal who is at least 80% efficient, if not more, in handling absent employees work. Also, Employees should be motivated, encouraged and trained to behave courteously with channel partners (e.g. Area Sales officer and Logistic peoples like truck drivers etc) as well as dealers and Stockists. It has been seen that some employees lack courtesy and communication skills. Current Status: Initiatives have been taken to impart multi-operational skills in employees. Noting down serial numbers of bikes in TVS Motor When serial numbers and frame numbers of TVS bikes are noted down manually, there are human errors in noting down numbers because of confusion in 0 & 8, 3 & 8 which look similar when printed by dot matrix printer. This also happens because of scratches on barcode labels or insufficient lighting. Recommendation: Cordless barcode scanner can be used to scan serial numbers instead of doing it manually. This will reduce human errors as well as increase efficiency of receiving and dispatching also. TVS should ask SAP R/3 to provide them with integrating software which can transfer data to and from cordless barcode scanner and SAP R/3 module. Current Status: This issue has been communicated to TVS head office at Hosur and barcode scanners are soon to be implemented.
176
Damages in TVS Motor at time of Loading In TVS Motor, there are instances of damages to bikes at the time of loading. It is noted that sometimes bikes are loaded on transport vehicles by riding them. During one such loading, a bike fell off the loading track and there was severe damage to both labor and bike. Though these damages were sometimes claimed from outsourced labor contractor, measures should be taken to avoid these types of human errors. Recommendation: To ensure proper loading of vehicles, Company regulations of vehicle loading must be strictly followed according to which bikes are loaded by dragging them from handle. Current Status: Waiting for managements approval Bring down TVS bikes from roof Stairway is used when bikes are required to bring down from roof or when it is required to take them to store on roof. It is to be noted that this stairway, in TVS Godown, is constructed at right angle. Also it does not have any protection grill which adds fuel to fire and bikes may fall anytime at time of taking them downstairs or upstairs. Recommendation: A new straight stairway should be constructed which should be properly grilled to avoid any accident. Further, a lift can be used to substitute stairway. Current Status: Waiting for managements approval Shading of TVS Godown Roof TVS Godown roof does not have any shading and vehicles are lying in direct sunlight even in scorching heat of Ahmedabad summers. Direct heat in summer damage seats of bikes and shining of paint fades away. To prevent these damages, bikes are brought downstairs when space is available. It is a time consuming process and costs Fairdeal in form of money and labor hours. Recommendation: This Roof should have tin or cement shading which will ensure time saving in taking vehicle down and bikes will be secure against heat and water during rainy season. Current Status: Waiting for managements approval
177
Interconnectivity of computers in TVS Motor TVS division has two computers, one for SAP R/3 operations and other for assistant works. As of now, data has to be transferred using Floppy disks from one machine to another. Recommendation: These computers should be connected to each other through network connection. Current Status: Both computers have been connected through LAN. Preparation for space for goods in transit in TVS Motor Many a times, Lorries have to wait for a long time to unload bikes as there is no space in warehouse to store them. Bikes are only unloaded when some bikes are dispatched to dealers and space is created. Though, it does not have any adverse effect on Fairdeals operations, it consumes transporters time and resources. Suggestion: Transporters should be encouraged to intimate Fairdeal in advance about their arrival. This will help Fairdeal in arranging for bikes space and avoid parallel unloading. Although, Fairdeal can get arriving consignment from goods in transit module of SAP R/3, it is not possible to get the exact date and time of arrival. Hence if transporters can intimate 24 hours before arriving warehouse, it will be beneficial for both transporter and Fairdeal. Current Status: Status quo Lack of group dynamics There is no group dynamics and feeling of team work among employees working for different companies. My personal interview with warehouse staff and computer operators revealed that juniors are not getting co-operation form seniors. Seniors are afraid of sharing information with juniors because they are afraid of loosing referent power over juniors. Suggestions: Information sharing should be encouraged in Fairdeal. Current Status: Matter forwarded to management
178
Goods Receiving in Titan When material is received in Titan, boxes are weighted and verified against printed weights on boxes. If weights are found normal, these boxes are then opened and watches are verified for number of pieces per code. This is a time consuming process as sometimes more than 10,000 pieces are received in a single transaction. Adding to it, chances of human errors are also there in taking down incorrect code. Recommendation: Box must not be opened and barcode scanner should be used to scan barcode labels which are printed on box itself. These barcode labels will get the number of watches code wise. Moreover, these scanned barcodes could be used at time of billing because presently computer operator has to punch all material codes manually at time of billing. Note: This is already being practiced in Bharti Teletech for Motorola mobiles. Current Status: Discussions in progress with management Goods Returns in McFills There are more sales returns in McFills compared to any other company. This material consumes time in segregating material, storing and maintaining it. This is a bottleneck as a lot of time is consumed in maintaining non-moving and unsalable material. Also, Single person is handling computer operations as well as store for McFills. Though transaction volume is comparatively lower it is creating problems for customers as computer operator is not available when he is in store. Suggestions: Sales returns and unsalable material should be sent back to company as soon as possible. Current Status: Status quo
179
Obsolete softwares in McFills and MRF Paints McFills and MRF Paints are using very primitive software which has erroneous entries. It is not in position to implement VAT through its software. Apart from that, McFills data cannot be audited from software as most of the quantities are showing negative stock. Though type of software to be used is decided by principal companys management but since Fairdeal is paying for computer operators, cost of any erroneous transaction is bore by Fairdeal. Recommendations: Fairdeal should communicate this issue with its principal companies. Current Status: Status quo Speed of Internet Connections Bell Ceramics, MICO, McFills and MRF paints are using dial up connections for information sharing. Their online portals use utilities which require high speed broadband connection. There is severe problem in sending attachments to company administration also as uploading speed of internet is slow. For example: when file attachments of more than 2 mb are to be sent to McFills head office, there is problem of uploading these files. At such times, computer operator has to wait for off-time when internet connection speed is relatively more. Suggestions: Fairdeal should ask these companies to implement broad band connections. Current Status: Discussions going on with principal companies Material Indentation in McFills Material is indented by Mr. Bharat in McFills which is responsibility of Area Sales Manager and not of CFA personnel. Suggestions: This activity can be annulled. Current Status: Status quo
180
Unloading in Voltas and TVS Motors Voltas and TVS Motor trucks have to wait for unloading material in absence of required number of labors. Since, Voltas and TVS Motor products require more than one labor for a single item, a minimum number of labors are required to unload the truck, failing to which material can not be unloaded. Recommendations: There should be preplanned arrangement of labors and storing space to avoid wait time. Current Status: Mater forwarded to labor Incharge Implementing Warehouse Management System (WMS) Most of the operations of Fairdeal are executed manually which consume a lot of time and money. Paper work is major mode of communication with dealers and principal companies which is again a time consuming and costlier process. Moreover, processes of all principal companies are handled separately and there is no link between them because of which employees know operations of one company only. Reports of reimbursements for value added services like re-labeling, re-packing; freight charges; Octoroi claims; Warehouse rents; labor charges etc are prepared into Microsoft Excel sheets and printed. This process can be annulled if WMS can be implemented as most of the reports can be generated from it directly. Recommendations: WMS should be implemented as soon as possible as it will automate most of the processes. It will reduce paper costs and processing times as well. All divisions will be integrated and it will be possible to use data of one division in another. In long run, this WMS can be extended to other locations of Fairdeal like Surat, Hosur, Dehradun and Bangalore also. Current Status: Management has taken up this issue with utmost priority and negotiations are in progress with WMS vendors. Demo of WMS have been seen and WMS that fulfills company requirements would be implemented in 2006.
181
Table 34: Project Activity-Time Schedule Activity Code 01 Activity Description Study org. structure and processes Understanding process workflows Draw process matrices AS-IS Analysis Personal interviews of warehouse staff Complete TOBE Analysis Identifying Process Gaps Document findings of the project 01 Code of Immediate Predecessor Activity Start Date 13-02-06 Activity End Date 25-02-06 Deliverable work product Project Proposal Workflow notes Matrix charts Interim Report Interview Document Person Responsible Manoj Pachouri Manoj Pachouri Manoj Pachouri Manoj Pachouri Manoj Pachouri
02
20-02-06
27-03-06
03 04 05
02 01 01
06 07 08
04 04 01
182
Activity Code 01
Week number 1 2 3 4 5 6 7 8 9 10 11 12 13 14
02
03
04
05
06
07
08
183
Table 36: Organizational responsibility Activity Description Study organization structure and processes Understanding process workflows Draw process matrices Fairdeal Provided relevant documents None ICFAI
Provided Guidelines
None
184
APPENDICES
APPENDIX A: Key staff involved in the project
Table 37: Key Staff Involved In the Project Contact Mr. Zankar Mr. Vinod Mr. Hemant Thakkar Mr. Saurabh Mr. Mitesh Shah Mr. Vinod Ms. Anal Ms. Komal Mr. Bharat Mr. Praveen Mr. Sunil Patel Mr. Narendra Mr. Tushar Mr. Devadutt Mr. R. P. Singh Mr. Shabbir Mr. Raman Mr. Mohan Mr. Santosh Ms. Stuti Designation Chief Operating Officer (COO) Process Owner Process Owner Process Owner Process Owner Chief Accountant Computer Operator Computer Operator Computer Operator & Store Incharge Computer Operator Computer Operator Computer Operator Computer Operator Computer Operator Security Incharge Store Incharge Store Incharge Store keeper Security Guard Receptionist
185
186
187
188
189
190
191
192
193
REFERENCES
Bibliography
1. iimcal_paper.pdf: A Survey of the Third-Party Logistics (3PL) Service Providers in India by Subrata Mitra (subrata@iimcal.ac.in) 2. Fairdeal Distribution Services Pvt. Ltd. documents and manuals 3. ICFAI Business School SAP R/3 study material 4. SAP R/3 - Sales and Distribution by Tata McGraw Hills publication 5. SAP R/3 Material Management by Tata McGraw Hills publication 6. White paper DELIVERING RESULTS: EVOLVING BPR FROM ART TO 7. ENGINEERING by Richard J. Mayer, Ph.D.; Associate Professor of Department of Industrial Engineering Texas A&M University. 8. White paper Business Process Analysis [1] by Bob Glushko (glushko@sims.berkeley.edu) 9. User manuals & catalogs of IntelliTrack Warehouse Management System software. 10. 3PL is Growing - The Hindu Business Line, Monday, Mar 01, 2004
194
Internet Sources
1. 2. 3. 4. 5. 6. 7. 8. 9. http://www.web.uct.ac.za/ http://www.fairdeal.org http://www.fairdealdistribution.com http://www.informationweek.com http://www.localegovnp.org.uk/webfiles/national/projects/Ryogen http://www.mrf.com/ http://www.voltas.com/ http://www.tata.com/voltas/index.htm http://www.tata.com/titan/index.htm
10. http://www.titanworld.com 11. http://www.tatatea.com 12. http://www.beetel-india.com:9080/ 13. http://localhost/bs/ 14. http://web.uct.ac.za/ 15. http://en.wikipedia.org/wiki/Warehouse_management_system/ 16. http://www.intelliTrack.net/ 17. http://www.bestwms.com/ 18. http://www.about.com/ 19. http://www.logisticsfocus.com/ 20. http://www.pasa.doh.gov.uk/pharma/docs/sup_chain/03_Phase% 202%20Report%201pasav2.1.pdf 21. http://www.logisticsfocus.com 22. http://www.softwaredesign.com.lb
195
GLOSSARY
ABC Analysis: ABC Analysis is an inventory management tool based on the tenets of Pareto Analysis. It categorizes inventory by its highest value and greatest volume. With this information, inventory managers can focus on increasing those inventory SKUs with the greatest potential positive return for the organization. Activity Based Costing: An accounting method that enables a business to better understand how and where it makes a profit. As-Is Analysis: As-Is Analysis phase of BPR is aimed specifically at identifying disconnects within existing business processes and their specified intent. By disconnects, we mean anything that prevents the process from achieving desired results (e.g., inconsistency between the functions of a process that cause failings of the existing process to achieve its intent.) The steps taken to describe the AS-IS process also includes a documentation of the sequence in which activities are performed. Barcode Scanner: An instrument used to decode information coded in parallel bars format and labeled to products. Bar Code Labels: Labels that use bar code symbols to capture inventory information. These labels can be created within the WMS application or a separate bar code application. Bill: It is a printed document like Invoice which contains product specification along with its value. Only difference between invoice and bill is that while bill is raised in case of cash purchase, invoice is raised in case of credit purchase Business process: A business process is simply the series of steps or activities needed to convert some input into the required output. Business Process Reengineering: It is a methodology for either significant improvement to a business process, or for radical change in, or complete replacement of, such a process.
196
Central Warehousing Corporation (CWC): CWC is under the Ministry of Food and Civil Supplies. It is complemented by 16 State Warehousing Corporations (SWC). Together, the CWC and the SWC have a monopoly in overseeing a network of 1,515 warehouses which are spread all over the country. Challan: Challan is a printed document containing description of products sold or transferred. It is generally raised when goods are sold on credit or when instant money transfer is not involved. Computerized Truck Routing: method of using computers to generate truck routes based on stop locations, delivery appointments and backhauls. Courier agency: It is a commercial concern engaged in the door-todoor transportation of time-sensitive documents, goods or articles utilizing the service of a person, either directly or indirectly, to carry or accompany such documents, good or articles. Cycle Count: It is regularly scheduled inventory count that cycle through inventory. Cross Docking: Cross docking enables an operator to place newly received inventory directly into a staging area, as opposed to putting the item into a storage location. Cycle time: It is the total elapsed time, end to end, from the time the cycle starts or is triggered until the cycle completes with all results accomplished. It is sometimes called calendar time, or wall-clock time for shorter cycles, because it is the time that would pass on the calendar or clock on the wall during the cycle. Enterprise Resource Planning (ERP): ERP Facilitates company wide information system covering all functional areas and performs core corporate activities and increases customer service augmenting corporate image. It attempts to maximize productivity through restructuring and reorganizing the different divisions and departments in the organization FEFO: Abbreviation of First Expiry First Out. It is a stacking practice in warehousing non-durable products which aims at ensuring that material that is expiring first is dispatched first.
197
FIFO: Abbreviation of First In First Out. It is a stacking practice in warehousing which aims at ensuring that material that is stored first is dispatched first. Idle time: During idle time, the process is just waiting, perhaps because the work is not on a critical path, or because it has not been routed expeditiously, or just because the process is designed that way. Invoice: Invoice is a printed document containing description of products sold along with their value. It is raised after challan and contains value of product also. Kitting: A kit represents a preset group of items, of varying quantities. When the kitting process is used in the warehouse management system, predetermined items that are part of a kit are picked from inventory when the kit item number is selected as part of a pick order. Non Moving Material: Non moving material is that material which is not being demanded by dealers for various reasons including product becoming obsolete or out-of-date, product expired etc. These materials occupy a significant amount of space in the warehouse. Octoroi: It is a tax levied by Municipal Corporations of Metropolitan cities on goods purchased or used inside Municipal Corporation region. Pallet: Pallets provide an alternate storage area for inventory. Because they are portable, if pallets are used, it is possible to move large amounts of inventory at once. Additionally, pallets improve inventory tracking and control efficiency when moving large amounts of material (same or unlike items) around the warehouse. Queue time: It is the time an item is lined up before a critical or bottleneck resource. The work item is ready to go on, but is waiting for the resources for the next step to get to it. In a manufacturing environment, partially finished goods will stack up before a bottleneck machine during queue time.
198
Radio Frequency Identification: Known as RFID in short, it is a relatively new technology which uses chips embedded in products in conjunction with transmitters located across a logistics chain to determine the exact location of merchandise anywhere in the world. When an item having RFID tag passes through electromagnetic zone of RFID, an antenna captures the information from this tag and passes this information to central computer. Setup time: It is the time required for a resource to switch from one type of task to another. This is also most obvious in a manufacturing situationthe operator might need to mount a different bit on a milling machine before beginning work on a new lot of a different product type. Slow Moving Material: slow moving material is that material which is in less demand in the market and inventory stock in warehouse is more than budged stock. Staging Area: Area in the warehouse from which goods are shipped. Stock-Transfer: This is inter - distributor or inter depot transfer of material in case of shortage of stock at one location to supply material to customers at time. Stock Transfer Memo: This document is used in transferring material from one location to another when change of ownership is not involved. Invoice is used in transferring material when change of ownership is involved. Supply Chain: supply chain may be defined as Flow of materials through procurement, manufacture, distribution, sales and disposal. Supply Chain Management: Supply Chain Management may be defined as "the integrated management of all linkages and value added activities from the supplier's supplier to the customer's customer in such a way that enhanced customer value is achieved at lower costs. Supply Chain Management is interplay of all the functions and integrates marketing, planning, distribution and purchases with the entire manufacturing process.
199
SWOT Analysis: It is an analysis tool that forces decision makers to look their strengths, weaknesses, opportunities and threats associated with their business environments. Time worked: Time worked counts the actual work hours of work expended on the process. Sometimes more than one person (or other resource) is working on the process at a time: this measure would be the total hours paid for if workers are the resource being measured. If only one person at a time works on the process, work time and time worked are the same. To-Be Analysis: The goal of To-Be Analysis design is to produce one or more alternatives to the current situation, which satisfy goals of the enterprise as stated in the business case analysis and which satisfy the change-requirements. Transit Time: It is the time spent in transit between steps. Strictly speaking, when the work is being moved, that is a step in itself, but no other value is being added other than transport. Unit of Measure: A unit of measure (UOM) allows measuring the amount of an item in a structured and distinct unit. Units of measure define a base unit of measurement such as each, and then higher increments of the base unit such as carton, bundle, and case. Unsalable Material: This term unsalable material is widely used in FMCG goods and non durable goods. It consists of air-leaked packets, damaged packets, expired packets etc. Vendor Managed Inventory: The practice of retailers making suppliers responsible for determining order size and timing usually based on receipt of retail POS and inventory data. Its goal is to increase retail inventory turns and reduce stock outs. WIP: Work In Progress. This term is used in manufacturing industry where raw material is in under the process of converting to the finished goods but is not yet completed. Warehousing: It is the part of materials management concerned with the storage of the kind and quantity of goods that consumers and users require.
200
Workflow: Workflow integrates the entire organization with flexible assignment of tasks and responsibilities to locations, positions, jobs, groups, or individuals. It integrates every employee in the 'value chain' by providing a versatile inbox (universal inbox) at his or her workplace, which can be configured individually. Work time: It is the time the process is actually being worked on. Most processes have at least some time during which processes are waiting and not being worked on; if all this non-productive time could be eliminated, cycle time and work time would be the same.
201