Logistics and Supply Chain Management TERM PAPER ON

REAL TIME INVENTORY MODELS IN MANUFACTURING INDUSTRY A CRTICAL STUDY

Vignana Jyothi Institute of Management, Bachupally, Hyderabad.

Submitted By - Group 8: Pratheeka. P 09159 Sarath chand. A- 0409011 Pankaj kumar-0409008 Solomon victor.k- 0409014 Krishna.R.K-0409005

REAL TIME INVENTORY MODELS IN MANUFACTURING INDUSTRY

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TABLE OF CONTENTS 1. INTRODUCTION: .................................................................................................................. 3 INVENTORY MANAGEMENT:............................................................................................... 3 OBJECTIVES OF INVENTORY MANAGEMENT ................................................................. 5 TYPES OF INVENTORY .......................................................................................................... 6 NATURE OF INVENTORY ...................................................................................................... 6 REASONS FOR MAINTAINING INVENTORY ..................................................................... 7 2. i. INVENTORY MODELS IN MANUFACTURING INDUSTRIES: ...................................... 8 CONSUMER DURABLES: ................................................................................................ 8 DELL COMPUTERS ....................................................................................................... 8 NOKIA ........................................................................................................................... 14 ii. a) FMCG PRODUCTS (PERISHABLE PRODUCTS) ..................................................... 17 BEVERAGES (SOFT DRINKS) ....................................................................................... 17 COCA-COLA................................................................................................................. 17 b) DAIRY PRODUCTS ..................................................................................................... 21 AMUL: ........................................................................................................................... 21 3. CONCLUSION ......................................................................................................................... 29 4. BIBILOGRAPHY: ................................................................................................................ 30

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1. INTRODUCTION:

INVENTORY MANAGEMENT:
Inventory is defined as a stock of goods that are maintained by a business in anticipation of some future demand. Inventory management is primarily about specifying the size and placement of stocked goods. It has an impact on all business functions, particularly operations, marketing, accounting, and finance. It is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. Inventory management refers to all the activities involved in developing and managing the inventory levels of raw materials, semi-finished materials (work-in- progress) and finished goods so that adequate supplies are available and the costs of over or under stocks are low. The cost of maintaining inventory is included in the final price paid by the consumer. Good in inventory represents a cost to their owner. The manufacturer has the expense of materials and labour. The wholesaler also has funds tied up.

The major objective of inventory management and control is to inform managers how much of a good to re-order, when to re-order the good, how frequently orders should be placed and what the appropriate safety stock is, for minimizing stock outs. And also inventory management should involve to balance the conflicting economics of not wanting to hold tool much stock. Thereby having to tie up capital so as to guide against the incurring of costs such as storage, spoilage, pilferage and obsolescence and, the desire to make items or goods available when and where required (quality and quantity wise) so as to avert the cost of not meeting such requirement. Inventory problems of too great or too small quantities on hand can cause business failures. Thus, the overall goal of inventory is to have what is needed, and to minimize the number of times one is out of stock. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods
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and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. If a manufacturer experiences stock-out of a critical inventory item, production halts could result. Moreover, a shopper expects the retailer to carry the item wanted. If an item is not stocked when the customer thinks it should be, the retailer loses customer not only on that item but also on many other items in the future. The conclusion one might draw is that effective inventory management can make a significant contribution to a companys profit as well as increase its return on total assets. It is thus the management of this economics of stockholding, that is appropriately being refers to as inventory management.

Essentially, inventory management, within the context of the foregoing features involves planning and control. The planning aspect involves looking ahead in terms of the determination in advance:

(i) What quantity of items to order; and (ii) How often (periodicity) do we order for them to maintain the overall stock coordination in an economically efficient way?

The control aspect, which is often described as stock control involves following the procedure, set up at the planning stage to achieve the above objective. This may include monitoring stock levels periodically or continuously and deciding what to do on the basis of information that is gathered and adequately processed. Effort must be made by the management of any organization to strike an optimum investment in inventory since it costs much money to tie down capital in excess inventory. In recent time, attention was focused on the development of suitable mathematical tools and approaches designed to aid the decision-maker in setting optimum inventory levels.

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OBJECTIVES OF INVENTORY MANAGEMENT

There are three main objectives of inventory management, as follows:

PROVIDE THE DESIRED LEVEL OF CUSTOMER SERVICE: Customer service refers to a companys ability to satisfy the needs of its customers. There are several ways to measure the level of customer service, such as: (1) percentage of orders that are shipped on schedule, (2) the percentage of line items that are shipped on schedule, (3) the percentage of dollar volume that is shipped on schedule, and (4) idle time due to material and component shortage. The first three measures focus on service to external customers, while the fourth applies to internal customer service.

ACHIEVE COST-EFFICIENT OPERATIONS:

Inventories can be facility for the cost-efficient operations in several ways. Inventories can provide a buffer between operations so that each phase of the transformation process can continue to operate even when output rates differ. Inventories also allow a company to maintain a level workforce throughout the year even when there is seasonal demand for the companys output. By building large production lots of items, companies are able to spread some fixed costs over a larger number of units, thereby decreasing the unit cost of each item. Finally, large purchases of inventory might qualify for quantity discounts, which will also reduce the unit cost of each item.

MINIMIZE INVENTORY INVESTMENT: As a company achieves lower amounts of money tied up in inventory, that companys overall cost structure will improve, as will its profitability. A common measure used to determine how well a company is managing its inventory investment (i.e., how quickly it is getting its inventories out of the system and into the hands of the customers) is inventory turnover ratio, which is a ratio of the annual cost of goods sold to the average inventory level in dollars.

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TYPES OF INVENTORY
Raw materials: The purchased items or extracted materials that are transformed into components or products. Components: Parts or subassemblies used in building the final product. Work-in-process (WIP): Any item that is in some stage of completion in the manufacturing process. Finished goods: Completed products that will be delivered to customers. Distribution inventory: Finished goods and spare parts that are at various points in the distribution system. Maintenance, repair, and operational (MRO) inventory (often called supplies): Items that are used in manufacturing but do not become part of the finished product. Independent Vs Dependent Demand Inventory: Some inventory items can be

classified as independent demand items, and some can be classified as dependent demand items. While we need to make the timing and sizing decisions for all inventory items, we must be careful in the manner in which we make those decisions for these two types of items. Independent demand inventory item: Inventory item whose demand is not related to (or dependent upon) some higher level item. Demand for such items is usually thought of as forecasted demand. Independent demand inventory items are usually thought of as finished products. Dependent demand inventory item: Inventory item whose demand is related to (or dependent upon) some higher level item. Demand for such items is usually thought of as derived demand. Dependent demand inventory items are usually thought of as the materials, parts, components, and assemblies that make up the finished product.

NATURE OF INVENTORY: Adding Value through Inventory

QUALITY - inventory can be a buffer against poor quality; conversely, low inventory levels may force high quality SPEED - location of inventory has gigantic effect on speed
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FLEXIBILITY - location, level of anticipatory inventory both have effects COST Direct: purchasing, delivery, manufacturing Indirect: holding, stock out.

REASONS FOR MAINTAINING INVENTORY

TIME: The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amounts of inventory to use in this "lead time." and also to provide effective customer service. UNCERTAINTY: Inventories are maintained as buffers to meet uncertainties in

demand, supply and movements of goods. ECONOMIES OF SCALE: Ideal condition of "one unit at a time at a place where a user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory. ANTICIPATION INVENTORY OR SEASONAL INVENTORY: Inventory are often built in anticipation of future demand, planned promotional programs, seasonal demand fluctuations, plant shutdowns, vacations, etc. FLUCTUATION INVENTORY OR SAFETY STOCK: Inventory is sometimes carried to protect against unpredictable or unexpected variations in demand. LOT-SIZE INVENTORY OR CYCLE STOCK: Inventory is frequently bought or produced in excess of what is immediately needed in order to take advantage of lower unit costs or quantity discounts. TRANSPORTATION OR PIPELINE INVENTORY: Inventory is used to fill the pipeline as products are in transit in the distribution network. SPECULATIVE OR HEDGE INVENTORY: Inventory can be carried to protect against some future event, such as a scarcity in supply, price increase, disruption in supply, strike, etc.

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MAINTENANCE, REPAIR, AND OPERATING (MRO) INVENTORY: Inventories of some items (such as maintenance supplies, spare parts, lubricants, cleaning compounds, and office supplies) are used to support general operations and maintenance.

2.

INVENTORY MODELS IN MANUFACTURING INDUSTRIES:

The manufacturing industries which we consider are divided in to two, one is nonperishable products and second one is perishable products. Under non-perishable products, consumer durables are under taken and under perishable products, FMCG products like beverages (soft drinks) and milk products are considered.

i.

CONSUMER DURABLES:
DELL COMPUTERS

DELL, as is currently the world's personal computers and servers in the market-leading computer company, one of its competitive advantage lies in its lowest in the industry cost structure, and this cost structure due in part to DELL raw materials management strategy. DELL has established a complete information system throughout the entire materials management has always been the ultimate goal is that apart from being between the suppliers and the delivery of the original DELL accessories, the inventory of raw materials removed all the supply chain, so that the original parts without going through inventory directly assigned to the all aspects of production, effectively to replace inventory with information. While its Internet ordering and procurement and supply systems also enables companies to achieve synchronization of demand and supply, through the balance of supply and demand additional minimize obsolete inventory for DELL tremendous cost advantage. As for the raw material suppliers, DELL with its sharing of critical data, so that they can grasp the latest trends in demand for the original parts information, and self-prediction and provide exactly the quantity and quality to meet the needs of DELL original accessories.

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Behind the direct sales model in the DELL is its excellent supply chain management, and its success in supply chain management has its unique origin of the raw materials management strategy: 1. Raw material procurement strategies 2. e-VMI and JIT management techniques in combination 3. The total purchase volume discounts Strategy

1. Raw material procurement strategies

DELL company's strategic choice of pre-purchase of raw materials is the ERP management technology, this is as a way to integrate external resources, but can not be proven ERP helps companies to achieve this goal, so the company turned to a combination of VMI and JIT raw material procurement management techniques.

2. e-VMI and JIT management techniques in combination

VMI and JIT procurement of raw materials a combination of the specific process technology, are: first through the establishment of supply chain information platform, the use of information systems to receive orders from customers; and then through the supply chain management platform will be the news of the various orders passed to each of the original parts suppliers ; At the same time, DELL timely demand forecasts, three times a day the results of the latest forecasts available to the core of the network providers, informing them of the relevant information required for parts, while suppliers can be based on the forecast results of the production of timely and relevant organizations and rapidly organized shipments to the assembly plant, thus ensuring the production of DELL. In this process, DELL speed in order to ensure the supply of raw materials, its entire process through the Internet or other electronic devices to carry out, so that it to take the management of technology is the combination of electronic VMI and JIT technology.

DELL in the purchase of raw materials on the use of such technology can not only sensitive to respond to changes in market demand, there is increasingly conducive to achieving zero stocks of spare parts; the same time make DELL inventory burden on the purchase and distribution of
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the original parts to shift the burden to the supplier, thereby reduced inventory risk and cost of storage of the original parts; the same time using e-procurement management technology, and expand the scope of the procurement market, shortening the distance between supply and demand, simplify the procurement process, shortening the procurement time, reduce procurement costs, thereby increasing work efficiency.

However, in actual operation of the process, the management there are still some risks and disadvantages: First, management techniques such as enterprise information systems and the supply of the operational requirements of the business are particularly high; Second, because technology is the purchase of raw materials such as low-volume, multi - frequency of purchase, making it difficult to enjoy volume discounts, and purchase too many times, it will certainly increase the cost of procurement; And then there are thanks to increasingly zero inventory, the company is not available for the buffer stock of raw materials, then once experienced management, network, or other errors , it may lead to the production disruptions and losses.

To deal with these shortcomings, DELL purchasing volume, supplier selection, as well as the absence of buffer stocks against disruption caused by the issue of making the corresponding adjustments, select a reasonable response strategies through the following three strategic coordination, better control of a result of the introduction of electronic VMI and JIT technology combining the management of risks to make up for its shortcomings to ensure timely and accurate implementation of the production.

3.The total purchase volume discounts Strategy

DELL trend of raw materials due to the implementation of zero inventory, and therefore can not be through the introduction of large-scale procurement of raw materials to enjoy volume discounts, replaced by small-scale multi-frequency purchases. DELL In response to such smallscale procurement of multi-frequency brought about the rising costs of procurement problems, develop strategies to reach out a total order, namely suppliers to commit to a total amount of the annual purchase of raw materials, in order to obtain a total amount of the total volume discounts. Would not only avoid this kind of increase in procurement costs, while also help with suppliers
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to maintain "long-term cooperative" relationship.

THE

ORIGINAL

PARTS

SUPPLIER

SELECTION

STRATEGY

WIN-WIN

STRATEGY

For suppliers, DELL require not only that they have a strong R & D, manufacturing, finance and quality, cost control, can respond to a fast paced DELL; while also requiring them to have a broad vision, a wide range of customers, and thus matter sorted out market remains very closely linked. Not only that, DELL suppliers also set up a special evaluation team evaluation of each vendor in terms of cost, technology, and service performance, and a day appraisal scores published on the Internet, so that suppliers can improve the shortage of time, to be progress and development.

Information on alternative inventory strategies and to balance supply and demand strategies. DELL small quantities of raw materials procurement, the trend of raw materials to achieve zero inventory, but it also could easily lead to the absence of buffer stocks, as well as production interruptions caused by imbalance between supply and demand risks. To solve this problem, DELL selected information alternative inventory strategies, namely, by setting up a special organization, the use of efficient information system to collect the world's supply of computer parts and components possible emergencies, and its possible time, the degree of the specific circumstances leading to an accurate forecast to predict to ward off risks. DELL is also the same time, in line with the strategic balance between supply and demand, when the raw material procurement and supply can not meet the online ordering system, its low cost will be temporarily out of date or additional materials to manipulate other similar requirements, and thereby to adjust the balance between supply and demand.

MATERIALS AND INVENTORY MANAGEMENT STRATEGY

DELL trend of raw materials to zero inventory strategy in their production factories to save at the most productive use for the 8-hour parts inventory, the whole production process all orders
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and there is absolutely no more than 3 days. Chemo tactic zero inventory strategy has led to savings of storage space and cost of raw materials, but such a strategy to DELL stock itself and its suppliers, staff have put forward a very high demand; and because the residence time of raw materials of such a strategy is very short, requires the supply of operators can make a quick response to production needs, while the supply of products to protect the high quality of reliability; And then there are such strategies require DELL must ensure that the lowest failure rate of production machinery and equipment replacement time for each process should be carried out quality inspection, the only way to ensure smooth production.

THE DISTRIBUTION OF RAW MATERIALS MANAGEMENT STRATEGY

DELL use of orders due to post-production (build-to-order) and JIT (just-in-time) mode of production, its assembly plant does not set any storage space, so the original parts are directly sent to the assembly line, and through "Kanban management" technology in the supply chain on various aspects of the distribution. That is based on customer demand for product analysis of each distribution of raw materials in various processes, then all processes from raw materials to the production line of table near the point of receiving on-demand inventory to suppliers instructions issued by the supply of various raw materials. This Kanban allocation of raw materials, it can be to ensure the procurement and distribution of the DELL products only the required number of raw materials, does not give the same time, the upstream will strictly control the quality, not to bad raw materials available to the process, and strictly control the quantity and quality of to prevent the waste of raw materials will help to achieve a balanced production, to keep the turnover rate of raw materials to achieve zero inventory trend.

IMPLEMENTATION OF CRM STRATEGY:

Dell created a supply chain management (SCM) system that ensured that the right computer parts were always available when and where needed. Dell has developed a strong relationship with both its suppliers and customers that allow it to ensure that computer components are available from suppliers to meet customer demands. It also ensured that a system was in place to

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get the product shipped and delivered to the customer effectively and efficiently. This direct customer focus resulted in Dells competitive advantage.

Dell utilizes database software, which is effective and efficient with customer relationship management. These particular databases store tables of data that can be mined for information about clients and used to generate promotional campaigns. The databases would include customer information, their interests, and products. The customer database helps increase profits because the database contains client information that helps determine effective and efficient ways to target and segment the customers. Dells business strategy focuses on creating one of the most effective supply chain management systems via the i2, which would streamline the supply chain process by linking Dells suppliers and planners together to meet demand and customer requirements. The software that Dell uses to increase relationship marketing is made by Hotlink. Hotlink is a marketing automation software program used to aid e-marketers in effective targeting, efficient marketing communications, and real-time monitoring of customer and market trends . This program strengthens the sales-customer relationship. This also gives Dell free advertising word of mouth. The bottom line to CRM systems is that it directly impacts its customer base, ensuring that better service is offered. A second type of software that Dell uses is a transparent online system called Premier Pages, which are custom-designed Web pages containing purchase data. This system also has a paperless ordering process, with the customers existing technology configurations already captured. Dell states that the idea behind Premier Pages was to gain less information about customers they already know about them and more to create a real win-win situation. The process of knowing the customer begins when the customer orders a PC. The PC is built after the customer orders it. This means that Dell has to have a direct relationship with the customer. The final system that Dell is using to maximize CRM is implementation of an enhanced CRM system with the help of IS Partners, an information systems company. ProClarity offers in-depth analytical abilities, resulting in positive and negative areas of business being clearly highlighted. Sales are also broken down by region, with an overview of each sales team, enabling Dell to measure trends and successes Sales, marketing, financial and management segments benefit significantly from this software. The Dell staff has easy access to the detailed demographic information about customers, customer sales history and trade relationships. Sales management can track activity within
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accounts, and lapsed quotes can be acted on. The marketing department can track customer activity, product sales, and marketing mixes. In addition, Dell deployed the e-Business software i2 Supply Chain Planner, i2 Collaboration Planner, and i2 Factory Planner to meet it supply chain needs. This new i2 technology was used to coordinate the build-to-order processes from order placement to customer support. By using the software Dell is able to profile customers, target them using their medium of preference, and also measure the results. Dell integrated the supply and demand side of the business by using unique software that would eliminate inventory overages. The i2 system enables Dell to pull material into its factories every two hours based on real time customer orders. This system tracks backlog numbers, stock status, and supplier commitments. It lets the supplier know what parts to deliver to which factories and be assembled to meet customer demand.

NOKIA

Nokia is an active member of Tele management Forum Board and the OSS through Java Initiative, which brings a new level of openness and interoperability to network and service management environments. This work reflects Nokias commitment to encouraging standardization and industry collaboration in order to gain new efficiencies through plug and play OSS solutions.

Nokia is the world leader in mobile communications, driving the growth and sustainability of the broader mobility industry. Nokia is dedicated to enhancing peoples lives and productivity by providing easy-to-use and secure products like mobile phones, and solutions for imaging, games, media, mobile network operators and businesses. Nokia is a broadly held company with listings on five major exchanges.

Operators face a fragmented business environment in which organizations; processes and information are divided into silos. There is no end-to-end, consistent view of networks and services, information is difficult to access, process automation is limited and existing resources

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are not used efficiently. To improve the situation, operators are consolidating their inventory in long, complex projects that have no guarantee of success.

The Nokia Siemens Networks Inventory solution offers an end-to-end view of fixed, mobile and converged networks. It allows you to maximize end-user quality of experience while achieving cost savings. Deployment and integration times are reduced considerably, due to a new, modern architecture suitable for complex multi-vendor networks, together with the combined Telco and software integration expertise of Nokia Siemens Networks.

NOKIA CHALLENGES:

The last few years have seen Communication Service Providers (CSPs) being acquired or merging, changing organizations significantly and fragmenting processes and systems. CSPs need to operate multi-vendor and multi-technology access, transport, switching and IP networks, as well as find resources to support an ever increasing number of product and service
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offerings. A very dynamic and complex business environment with high costs emphasizes the need for accurate data on how resources are used.

Nokia inventory solution offers CSPs a simple and efficient way to access all types of information about networks, services and subscribers from a single, consistent data repository. This keeps them informed about, for example, network capacities and investments as required by the Sarbanes Oxley Act.

Flexibility is fundamental for inventory. As a critical part of a future-proof network and service management concept, nokia inventory solution not only models the networks existing technologies but is also open to the integration of any future technology.

The solution has the flexibility to meet customer requirements and processes. It provides uniform information management in multi-vendor and multi technology communication networks, harmonizing existing inventory systems. A modern object-oriented and scalable architecture allows fast introduction of new technologies, interfaces and functionality. This, together with our combined telco and software integration know-how, cuts deployment and integration times considerably.

The main benefits of nokia inventory solution are: Significantly reduced deployment times compared to systems based on traditional architectures Highest flexibility for new technologies and new equipment due to future proof technology Complete object orientation guarantees fast modeling of highly complex data structures and easy integration of applications Experienced integration experts and telco specialists available worldwide Mature and feature rich solution: tools to manage the network in all dimensions, from cable to services, subscribers and handsets, with end-to-end and multi-technology views High data quality through excellent data synchronization capability
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Inventory management, as the core of customer-centric service management, enables a high quality experience through, for example: Improved customer care and network quality of service Enhanced service portfolio that better reflects end-users life styles Reduced service provisioning times.

A better quality of experience for end-users improves the rate of retention and acquisition of both consumer and business users.

ii.

FMCG PRODUCTS (PERISHABLE PRODUCTS) a) BEVERAGES (SOFT DRINKS)

COCA-COLA

Coca-Cola is

a carbonated soft

drink sold

in

stores,

restaurants,

and vending

machines internationally. The Coca-Cola Company claims that the beverage is sold in more than 200 countries. It is produced by The Coca-Cola Company in Atlanta, Georgia, and is often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the United States since March 27, 1944). Originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman As a Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink market throughout the 20th century. The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world. The bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail
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stores and vending machines. Such bottlers include Coca-Cola Enterprises, which is the largest single Coca-Cola bottler in North America and Western Europe. The Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food service distributors. The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand name. The most common of these is Diet Coke, with others including Caffeine-Free CocaCola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla, and special editions with lemon, lime or coffee.

Coca-Cola to implement QAD Advanced Inventory Management to streamline warehousing operations

Coca-Cola will use AIM to help optimize warehouse operations at its plant by determining warehousing processes and physical aspects of stock management that can be streamlined for greater efficiency. QAD, a provider of enterprise solutions for global manufacturers, Coca-Cola plant will implement the QAD Advanced Inventory Management (AIM) solution to enhance its deployment of QAD's enterprise application, MFG/PRO, and achieve greater flexibility in warehouse and stock management. AIM provides real-time management of warehouse operations, helping extend traditional inventory management capabilities and increase supply chain responsiveness. Users are able to control inventory management processes in more sophisticated ways, utilizing technologies such as barcode scanners and radio frequency systems and leveraging user-definable put-away and picking algorithms. Intermec radio frequency equipment supplied by Proscan is being used with this implementation. Advanced Inventory Management will help them to manage their manufacturing operations; AIM will provide a system that is information and not material flow driven. A paperless system, enabled via the introduction of bar coding and scanning equipment as elements of the system, will replace manual recording activities. As a basis for most data collection that enables total traceability of all products in the warehouse, the bar coding will play a vital role in the total process. Communication to
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employees will be conveyed via handheld scanning screens. Overall, AIM should interoperate seamlessly with our MFG/PRO deployment, effectively eliminating a layer of hardware, software and labour dedicated to warehousing, for more efficient operations." Coca-Cola will work closely with QAD to design the AIM implementation and efficient processes to help the company reduce the time lapse from order receipt to shipment of goods. By collecting inventory movement data in real-time, Coca-Cola expects to achieve greater inventory accuracy and reduce the need for periodic manual inventory counts. The manufacturer expects to fully deploy AIM by April 2004. QAD Advanced Inventory Management helps manufacturers bring greater efficiency to the warehouse, where real-world business conditions put supply chain initiatives to the test. This warehousing solution will help customers drive efficiency at a crucial point in their supply chains." Advanced Inventory Management (AIM) will help Coca-Cola plant to automate and streamline all aspects of warehousing, including inventory control, replenishment, put-away and picking logic, and labour management. User-defined rules ensure inventory stock movement and related processes are configured to minimise time to distribute and replenish goods, so that inventory can be allocated for prioritised shipping, and total inventory holdings can be minimized to reduce cost of operations.

PHYSICAL INVENTORY FOR COCA COLA

Coca Cola Enterprises came to manage their vending machine inventory process. Coke has a vast number of vending machines, both new and in various states of reconditioning, which are housed at various remanufacturing facilities throughout the U.S. Prior to joining forces with Bar Code Software, the inventories on this machinery were performed manually a time-consuming, labor-intensive task, to say the least. Information on each of their vending machines, i.e., location, state of condition, etc., was already housed in Cokes mainframe computer system. By
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working with this existing information, Bar Code Software was able to design an inventory system that worked with their mainframe database, without causing any changes to it. The new system is called as Track It. It consists of specialized software that pulls the information from Cokes mainframe database and transfers it to handheld terminals with built-in laser scanners. This is how the Track It system works in Coca Cola.

Printed bar code labels are generated and placed on every machine, old and new. The bar code indicates the machines special asset number, as assigned by Coke. When it is time to perform a physical inventory, Track It pulls information on existing inventory from Cokes mainframe using queries and ODBC drivers. This process generates a record on each piece of machinery with all pertinent information. Next, this information is transferred from the PC in its entirety to each handheld scanning terminal using Track It specialized software. Multiple terminals are used simultaneously to scan the bar codes on each machine throughout Cokes remanufacturing facilities. As each vending machines bar code is scanned, the asset number is compared to each number on the list that had been downloaded from Track It. A report listing those assets found and not found is then displayed on the handheld terminals display. The new information is then transferred from all of the portable terminals back to Track It, and the database on the PC is automatically updated. Reconciliation inquiries and reports are now available at the click of a mouse.

Coca Cola Enterprises reports that the new system has cut physical inventory time at their larger remanufacturing facilities from days to mere hours. Because they were able to develop this system without affecting any of the information or data structures on Cokes mainframe, they avoided the use of their information services department, saving them even more money and manpower. This illustrates the ability to use the customers existing databases and integrate the latest bar code technology to improve performance and save our customers time and money while delivering value and also to mange the inventory.

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b) DAIRY PRODUCTS
AMUL:

Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement in India. It is managed by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF). Established in Gujarat, India, Amul is the leading manufacturer of dairy and food products in India competing with several players in the dairy industry. These include several largest dairy products and manufactures. Amuls diary plant manufactures a varied range of dairy products including dairy ingredients for food industries such as cheese, milk fat and cream, milk powder; foodservice cheese from all regions of the country; foodservice milk cream and butter. Amul aims to be the first choice suppliers of all dairy product users in the country. Their market leadership is evidenced by the numerous accolades they have received from the Official Agencies and the Government of India.

AMUL is the largest food brand in India and world's Largest Pouched Milk Brand. Every day Amul collects 447,000 liters of milk from 2.12 million farmers (many illiterate) and it converts the milk into branded, packaged products, and delivers goods worth Rs 6 crore (Rs 60 million) to over 500,000 retail outlets across the country. Its supply chain is easily one of the most complicated in the world. It all started in December 1946 with a group of farmers keen to free themselves from intermediaries, gain access to markets and thereby ensure maximum returns for their efforts. Based in the village of Anand, the Kaira District Milk Cooperative Union (better known as Amul) expanded exponentially. It joined hands with other milk cooperatives, and the Gujarat network now covers 2.12 million farmers, 10,411 village level milk collection centers and fourteen district level plants (unions) under the overall supervision of GCMMF(Gujarat Cooperative Milk Marketing Federation). There are similar federations in other states. Right from the beginning, there was recognition that this initiative would directly benefit and
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transform small farmers and contribute to the development of society. Markets, then and even today are primitive and poor in infrastructure. Amul and GCMMF acknowledged that development and growth could not be left to market forces and that proactive intervention was required.

Two key requirements were identified. The first, that sustained growth for the long term would depend on matching supply and demand. It would need heavy investment in the simultaneous development of suppliers and consumers. Second, that effective management of the network and commercial viability would require professional managers and technocrats. To implement their vision while retaining their focus on farmers, a hierarchical network of cooperatives was developed, it forms the robust supply chain behind GCMMFs endeavors. The vast and complex supply chain stretches from small suppliers to large fragmented markets. Management of this network is made more complex by the fact that GCMMF is directly responsible only for a small part of the chain, with a number of third party players (distributors, retailers and logistics support providers) playing large roles. Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by low consumer prices supported by a low cost system. Developing demand- low cost strategy

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money. Introducing higher value products- product mix

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition of higher value products while maintaining the desired growth in existing products.
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Despite competition in the high value dairy product segments from firms such as Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the sequence in which Amul introduces its products is consistent with the core philosophy of providing milk at a basic, affordable price. DISTRIBUTION NETWORK:

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This JUST-IN-TIME INVENTORY (JIT) strategy improves dealers Return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations. Umbrella branding strategy

The network follows an umbrella branding strategy. Amul is the common brand for most product categories produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and condensed milk. Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name. By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an opportunity for the union members to cooperate in developing products.

SUPPLY CHAIN MANAGEMENT:

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Even though the cooperative was formed to bring together farmers, it was recognized that professional managers and technocrats would be required to manage the network effectively and make it commercially viable. A typical supply chain network spans several levels of suppliers, manufacturers/assemblers, distributors, wholesalers, and retailers. It is now quite well recognized and well documented that cooperation among the members is necessary to manage such chains effectively and efficiently. Increased cooperation among network members has resulted in a number of changes at all levels -- operational, tactical and strategic, and has led to the emergence of practices and strategies

For improving the chain's performance most prominent among these include the following:

(i) Information sharing: often dynamically, to improve planning and execution. Sharing of POS data is a classic example for minimizing the distortions due to bull-whip effect and reducing perceived variability of demand by the partners in the chain. Typically, information sharing extends to costs as well.

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(ii) Focus on core competence of each player in the chain. The objective is to ensure that each task is performed by the entity best suited for it. As a result, firms have become willing partners in ceding control to a network partner for improving performance. VMI in many industries is a direct result of such change in management thinking. Similarly, the role of third parties for providing specific expertise such as logistics has grown substantially with emphasis on supply chain. (iii) Help network partners in improving their capability and making them competitive. Again, this represents a sea change from the past when such entities were viewed as rivals in a zero sum game. The new thinking is motivated by the recognition that helping partners become competitive will make the chain more effective and lead to higher growth in revenues and profits, thus leading to a win-win situation for all parties. Helping suppliers with process improvements and implementation of JIT methods are examples of such initiatives leading to overall improvement. Coordination Given the large number of organizations and entities in the supply chain and decentralized responsibility for various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a major role in this process and jointly achieve the desired degree of control. Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control. The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities. These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities.

Managing Third Party Service Providers: From the beginning, it was recognized that the core activity for the Unions lay in processing of milk and production of dairy products. Accordingly, the Unions focused efforts on these activities and related technology development These include logistics of milk
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collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, some veterinary services etc. It is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed. Hence, while third parties perform the activities This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously implement best practices across all elements of the network: the federation, the unions, the village societies and the distribution channel. In developing these practices, the federation and the unions have adapted successful models from around the world. It could be the implementation of small group activities or quality circles at the federation. Or a TQM program at the unions. Or housekeeping and good accounting practices at the village society level. More important, the network has been able to regularly roll out improvement programs across to a large number of members and the implementation rate is consistently high. For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office, be it a department or a branch or a depot to discuss their various quality concerns. Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out through improved availability of products at depots and also the implementation of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in terms of acidity and sour milk. (Undertaken by multi-disciplined teams, Kaizens are highly focussed projects, reliant on a structured approach based on data gathering and analysis.) For example, Sabar Union's records show a reduction from 2.0% to 0.5% in the amount of sour milk/curd received at the union.
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AMUL DAIRY: INVENTORY MANAGEMENT BY ERP SYSTEM.

Amul is a leading player in the dairy industry in India. It offers a wide range of dairy products including all Milk products, foodservice cheese etc. To support its impending growth, Amul integrated its operations with an Enterprise Resource Planning (ERP) solution. It also needed item tracking and expiration management capabilities to better manage its range of dry, chilled and frozen produce, by which improve its sales and distribution system, warehouse management and inventory control. Amul also gains the capabilities to meet accounting and tax legislative requirements. Increased management control and visibility enables more informed and faster decision making.

As one of the fastest growing dairy manufacturers, Amul is operating in a highly competitive environment. In this context of, the Amuls needs to meet the demands of fastchanging consumer preferences and tough competition from other players. Amul recognized that to become a major industry player, it faced a number of problems with its existing information systems which had to be resolved. Essentially, the systems user interfaces were cumbersome, it was difficult to integrate it with other company systems, and proving to be expensive to modify and maintain due to the legacy technology used. To sharpen its competitive edge in the fast-growing and competitive marketplace, the Amuls Management saw the importance of replacing its existing core system with a quality Enterprise Resource Planning (ERP) package to support its impending business and integrate it with the rest of its systems. So a system was design so that it would address the long-term business and IT needs of the Amul Keeping many challenges in mind, Amul also initiated a review of its existing system and notified several challenges to be addressed such as: comprehensive survey of the ERP implantation vendors and four major reasons: 1) a 100 percent Microsoft specialists, 2) an

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easy and quick implementation of ERP module experience 3) excellent support, and 4) Scalable and cost effective than other competitors.

Coordinating disparate contributing agencies is often crucial to resolving problems. Working with this end in view. The business processes in sales and Distribution was re-designed in a manner that incorporates best-of-breed practices. The processes were also designed scalable enough to accommodate changes easily Enabled the deployment of newer SD, CRM and Inventory Management modules across the corporate infrastructure of Amul. Considering the size of the client and the scope of its activities, this was a complicated exercise in itself, Amul conceptualized, defined and implemented the solution.

Amul implemented the Finance, Sales, Purchase, Warehouse Management, Order management System of ERP and assured the client of their ability to meet its day-to-day demands During the implementation, Amul team worked well with the internal project team to understand the business needs and quickly overcome any issues that arose during the implementation Amul developed solution to define and manage various master entries such as divisions, departments, inventory, locations, reason codes for products return, expiry return, expenses reasons etc to control inventory costs, as well as monitor the utilization of resources has implemented cost effective ERP solution that are customized to suit Amuls diary manufacturing industry requirements.

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3. CONCLUSION
Inventory management has become highly developed to meet the rising challenges in most corporate entities and this is in response to the fact that inventory is an asset of distinct feature. Inventory management is pivotal in effective and efficient organization. It is also vital in the control of materials and goods that have to be held (or stored) for later use in the case of production or later exchange activities in the case of services. In manufacturing industry the effective inventory management can make a significant contribution to a companys profit as well as increase its return on total assets. It is thus the management of this economics of stockholding, that is appropriately being refers to as inventory management. The manufacturing industries which here consider are divided in to two, one is non-perishable products and second one is perishable products. Under non-perishable products, Consumer Durables (Dell, Nokia) are under taken and under perishable products, FMCG products like beverages (soft drink- coco cola) and Dairy products (Amul) are considered. The different inventory models have been using by the above manufacturing industries to mange their inventory at different stages.

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4. BIBILOGRAPHY:
Book Referred: David Simchi-Levi, Philip Kaminsky, Edith Simchi- Levi, Ravi Shankar DESIGNING AND MANAGING THE SUPPLY CHAIN, third edition

Websites: www.google.com www.emeraldinsight.com www.nokia .co. in www.amul.com

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