Project Report On

A STUDY ON THE WAREHOUSE MANAGEMENT

TECHNIQUES EMPLOYED IN TOYOTA SPARE PARTS
IN AL AIN, UAE
submitted in partial fulfilment of the requirements for the award of
degree of Master of Business Administration (CSS) of University of
Kerala

Submitted by

MOHAMED HASHIK ASHRAF

MGT1605025

Under the guidance of

Mrs. Dileepa S Hari

Faculty guide

Institute of Management in Kerala

University of Kerala
Thiruvananthapuram -695034
April 2018
 DECLARATION

I Mohamed Hashik Ashraf hereby declare that the project report

titled as “A STUDY ON THE WAREHOUSE MANAGEMENT
TECHNIQUES EMPLOYED IN TOYOTA SPARE PARTS IN
AL AIN, UAE” is an original work done by me in partial
fulfillment for the degree of Masters of Business Administration
under the University of Kerala. I further declare that this work is
not partially or wholly submitted for any other purpose and the
data included in the report, collected from various sources are true
to the best of my knowledge.

Thiruvananthapuram Mohamed Hashik Ashraf

Date: 10/06/2018 MGT 1605025
 ACKNOWLEDGEMENT

I wish to express my heartfelt thanks to respectable head of

department, Institute of Management in Kerala Dr. K S Chandrasekhar.

I place my heartfelt gratitude to my faculty guide Ms. Dileepa S Hari

in Institute of Management in Kerala who has helped me at all time with
valuable suggestions to carry out the training with great confidence and
enthusiasm.

I owe a debt of gratitude to many people notably among them are

the management, staffs and key accounts manager of Al Futtaim Motors,
Toyota, Al Ain branch for their valuable guidance and assistance. Their
whole hearted cooperation lightened my effort for the successful
accomplishment of the project.

I wish to place on record my gratitude to all others who directly or

indirectly helped me, my family, friends, and entire faculty at IMK,
Karyavattom Campus for their tolerance and support. Without them this
project would not be a success.

I express my ultimate gratitude to the god almighty that has been

instrument for enlightening me on my academic venture.

MOHAMED HASHIK ASHRAF

 CONTENTS

Chapter Title Page No

Executive Summary 1
List of Tables
List Figures
1 Introduction 2
1.1 Statement of the problem 4
1.2 Significance of the study 4
1.3 Objectives of the Study 5
1.4 Research Methodology 5
1.5 Limitation of the study 6
1.6 Chapterisation 6
2 Literature Review
3 Theoretical Framework
4 Industry Profile 7
5 Company Profile
6 Data Analysis and Interpretation

7 Findings conclusions and suggestions

Reference
Bibliography
Appendix
 LIST OF TABLES

Table No Title Page No

4.1 Increase in proportion of sale in last decade (2008-2018) 33
4.2 The list of the 15 largest manufacturers by production in 2017 34
4.3 Category segmentation 36
4.4 Geographic segmentation 37
4.5 Market value 38
5.1 Analysis of general facilities available at the warehouse 56
5.2 General analysis of Inbound operations 57
5.3 General analysis on put away and storage 58
5.4 General analysis of picking operations 59
5.5 General Analysis of Outbound area operations 60
5.6 General Analysis on Warehouse systems and equipment 61
5.7 Neatness and cleanliness issues observed in 30 days 62
5.8 Safety issues and injuries 63
5.9 Unloading methods used in inbound area in average in a day. 66
5.10 Mishandling of the product 64
5.11 Misplacement of the item 65
5.12 Delay in delivering item after receiving the order 67
 LIST OF FIGURES

Fig no Title Page No

3.1 Economic Order Quantity graph 21
4.1 CATEGORY SEGMENTATION 36
4.2 GEOGRAPHIC SEGMENTATION 37
4.3 MARKET VALUE 38
5.1 Guiding principle at Toyota 45
5.2 Toyota global vison tree 46
6.1 Warehouse Layout 50
6.2 Cleanliness and Neatness pie chart 62

6.3 Safety and Injury Issues pie chart 63

6.4 Mishandling pie chart 64

6.5 Misplacement of items pie chart 65

6.6 Unloading methods in inbound area 66

6.7 Delay in delivering item Bar chart 6.7

 EXECUTIVE SUMMARY
Every organization needs inventory fir smooth running of its activities. It serves as a
link between production and distribution processes. The investment at inventories
constitute the most significant part of current assets/working capital in most of the
understandings. Thus it is very essential to have proper control and management of
inventories. The purpose of the inventory management is to ensure availability of
materials in sufficient quantity when required and also to minimize investment in
inventories. Raw materials, work in progress and finished goods all represent various
forms of inventory. Each type represents money tied up until the inventory leaves the
company as purchased products. Because of the large size of the inventories maintained
by firms, a considerable amount of funds is required is required to be committed to
them. It is therefore absolutely imperative to manage inventories efficiently and
effectively in order to avoid unnecessary investment. A firm neglecting the
management of inventories will be jeopardizing its long run profitability and may fail
ultimately. The reduction in excessive inventories caries a favorable impact on the
company’s profitability

The study starts with an introduction to inventory management, Statement of

the problem, Review of literature, Objectives of the Project, Research Design, Scope of
the project, Limitation of the project, Industry profile, Company’s profile, its Vision
Mission, Data analysis & interpretation, Findings, Conclusions and Suggestions of the
study follow.

One of the main areas of the project is the study of Kaizen implementation in
the company for the smooth running of the inventory and the rules and regulations to
be followed in the warehouse which will help to maintain low inventory level and
equally satisfying the demand of the customers. Some of the methods used in managing
inventories are:

 Kaizen Approach
 Kanban Systems
 5S Organization methodology
 Toyota’s 7 Point Storage Technique
 Classification and Codification

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 Chapter 1
INTRODUCTION

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1. INTRODUCTION
Inventory management is primarily about specifying the shape and percentage
of stocked goods. It is required at different locations within a facility or within many
locations of a supply network to precede the regular and planned course of production
and stock of materials. The scope of inventory management 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 and demand forecasting.
Inventory management involves a retailer seeking to acquire and maintain a proper
merchandise assortment while ordering, shipping, handling, and related costs are kept
in check. It also involves systems and processes that identify inventory requirements,
set targets, provide replenishment techniques, report actual and projected inventory
status and handle all functions related to the tracking and management of material. This
would include the monitoring of material moved into and out of stockroom locations
and the reconciling of the inventory balances. Management of the inventories, with the
primary objective of determining/controlling stock levels within the physical
distribution function to balance the need for product availability against the need for
minimizing stock holding and handling costs.
Kaizen is the fastest and most powerful approach to profitability improvement,
especially for companies who have already realized most of their core manufacturing
efficiency improvement opportunities. Kanban maintain inventory levels; a signal is
sent to produce and deliver a new shipment as material is consumed. A Kanban card is
small card containing information about a specific part used in production. A Kanban
card is a signal that tells someone upstream to move, purchase, or build more of a
component for production. 5S is the name of a workplace organization methodology
that uses a list of five Japanese words which are seiri, seiton, seiso, seiketsu and
shitsuke. Transliterated or translated into English, they all start with the letter "S". The
list describes how to organize a work space for efficiency and effectiveness by
identifying and storing the items used, maintaining the area and items, and sustaining
the new order.

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1.1. STATEMENT OF THE PROBLEM

Inventory management involves a retailer seeking to acquire and maintain a

proper merchandise assortment while ordering, shipping, handling, and related costs
are kept in check. It also involves systems and processes that identify inventory
requirements, set targets, provide replenishment techniques, report actual and projected
inventory status and handle all functions related to the tracking and management of
material. This would include the monitoring of material moved into and out of
stockroom locations and the reconciling of the inventory balances. Management of the
inventories, with the primary objective of determining/controlling stock levels within
the physical distribution function to balance the need for product availability against
the need for minimizing stock holding and handling costs.

Holding inventory ties up a lot of cash. That's why good inventory management
is crucial for growing a company. Just like cash flow, it can make or break your
business. Dead stock is stock that can no longer be sold, but not necessarily because it
expired. It could have gone out of season, out of style, or otherwise become irrelevant.
Warehousing is often a variable cost, meaning it fluctuates based on how much products
are storing. When the company store too much product at once or end up with a product
that’s difficult to sell, the storage costs will go up.

1.2. SIGNIFICANCE OF THE STUDY

There must be some sort of methods and techniques to minimize the inventory
level (up to zero inventory) and still be able to deliver the product to the customer within
desirable waiting time. So identifying the right tools and technique to eliminate wastage
of time and storage space to increase productivity is very necessary. So through this
project I want to illustrate some of the tools and techniques employed in Toyota, to
eliminate wastages, increase productivity, reduce risks, ease of access and to maintain
sufficient inventory levels.

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1.3. OBJECTIVES OF THE STUDY
1. To study the various warehouse management techniques that are employed in
Toyota spare parts warehouse.
2. To analyze the effectiveness of the tools and techniques employed in the
warehouse
3. To determine the possibility of further improvement of the warehouse

1.4. RESEARCH METHODOLOGY

Research
Research is a process in which the researcher wishes to find out the end result
for a given problem and thus the solution helps in future course of action. In this
research I collected data with my careful observation and personal interaction with the
employees and the manager in charge which helped me collect most or the data for the
study

Research Design
The research design used in this project is descriptive in nature, Descriptive
research is “aimed at casting light on current issues or problems through a process of
data collection that enables them to describe the situation more completely than was
possible without employing this method.”

Data Collection
 Primary Sources
1. Data are collected through personal interviews and discussion with
stores department persons, executives of stores department.
2. Data are collected through personal interview with the manager of the
branch
3. Data are collected by observation of the day-to-day operations in the
warehouse
 Secondary Sources
1. Data are collected from the annual reports maintained by the company.

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 2. Data are collected from company’s website
3. Data are collected from various journals and reports on inventory
management and warehouse management
4. Books and articles pertaining to the topic

1.5. LIMITATION OF THE STUDY

 It does not convey all the tools and techniques employed in Toyota since other
warehouses of Toyota engage more advanced tools and techniques
 Outbound operations are limited in this warehouse due to the implementation
of kaizen.

1.6. CHAPTERISATION

The description of the study is elaborated in five chapters as follows:

Chapter 1: Introduction to the study

Chapter 2: Literature Review

Chapter 3: Theoretical Framework

Chapter 4: Industry and Company profile

Chapter 5: Data analysis and Discussion

Chapter 6: Findings, Conclusions and Suggestion

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 CHAPTER 2

LITERATURE REVIEW

7
 LITERATURE REVIEW

The aim of this chapter is to review the literature relevant to the research area.
It reviews the literature on warehouse operations warehouse systems and inventory
management its relationship with process improvement, time management and ease of
doing work. Literature on developing sop in organisations were also reviewed.

Dimitris N. Chorafs (1974)1 In his book “Warehousing” author dealt with

planning, organizing and controlling the storage and distribution of goods. In four parts
he described about warehousing fundamentals. The warehouse and its environment.
Advanced warehousing concepts and the role of the computer. The author asserts that,
in the planning stages of a warehousing development, the alternatives arise because of
compromise in the requirements and condition which should be met where these
warehousing alternatives are meaningful in terms of providing different capabilities at
different costs with benefits to the company’s business. It is necessary to array the
estimated cost and the anticipated benefits so that the company’s management can be
made aware of the available options.

Saxena J.P. (2006)2 In his book “Warehouse Management and Inventory

Control” author tried to update with the recent practice, procedures and systems for
effective management of warehouse and control of inventory. He has made attempt to
provide procedures compatible to computer applications. In his twenty chapters the
author has dwelt with aspects of planning, organizing, execution and control of
activities of warehousing and inventory control. The book also addresses the
requirements for conformance to ISO standards. Author stressed need of performance
evaluation of stores activity. He prepared the performance parameters and performance
indicators based on the domains of store keeping as a service function, quality assurance
cost reduction and inventory control.

Yeming Gong (2009)3 In his Ph.D. thesis titled “Stochastic Modeling and
Analysis of Warehouse Operations” Researcher provided an overview of his research
in Stochastic Modeling and Analysis of warehouse operations. Research thesis

8
identified uncertainty sources of warehousing systems and systematically presents
typical warehouse operations from a stochastic system viewpoint. Through a
comparison between potential and existing stochastic warehouse applications,
researcher identified potential in new research applications. This research tried to
search optimal batch sizes in a general parallel-aisle warehouse with online order 30
arrivals. The researcher has shown the existence of optimal batch sizes for a
warehousing service provider facing a stochastic demand from the perspectives of
customers and total systems.

S. Jaya Krishna (2007)4 In her paper “Warehouse Management System: The

Business Case” The author described about use of Information technology based
applications in warehousing industry. The development in the software technology and
its convergence with hardware has provided many applications for effective
warehousing. A Warehouse Management System (WMS) is a combination of software
and hardware, which can provide for tasks such as identification, tracking, labeling,
printing and communication technology, which together provide the warehouse
personnel with required capabilities for effective warehousing. The author also
expressed about the requirements of deploying warehouse management software for
warehouse and a project manager has to analyze tangible and intangible returns. The
remarkable returns are obtained by 38 improving labour productivity, inventory
accuracy, shipping efficiency, and through space utilization savings.

Van den Berg (1999)5 describes a warehouse system from different perspectives
and classifies such system into three groups: (1) Picker-to-product systems. (2) Product-
to-picker systems. (3) Picker-less systems. The author says that as the name of a picker-
to-product system already implies, manual order pickers ride in vehicles along the
products. There are numerous different vehicles available from manually vehicles to
automated vehicles which also enable vertical movement for order-picking from
elevated positions. Further, the author classifies a product-to-picker system. Such
systems can be seen as an Automated Storage/Retrieval System (AS/RS). Such systems
have been developed for use in factories and distribution centers because they improve
inventory cost, labour cost, material tracking, space utilization, average time in the
system and system throughput). Lastly, Picker-less system make use of robot-
technology or automatic dispensers, whereby two product retrieval methods are
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distinguished: unit load retrieval systems and order-picking systems. In a unit load
retrieval system complete unit-loads are retrieved. Accordingly, the vehicles either
perform one stop (storage or retrieval) or two stops (storage followed by retrieval) in a
single trip. In an order-picking system typically less-than-unit-load quantities are
picked, so that there will be multiple stops per trip (multi-command cycle).

Zijm (1999)6 refers a warehouse system to the combination of equipment and

operational policies used in an item picking or storage/retrieval (S/R) environment. Ito
and Abadi (2001)7 describes in their study the definition of a warehouse system; “A
warehouse system takes care of fluctuation and uncertainty of demands from customers
and provides just-in-time delivery of materials”. In case the exchange of orders and
materials smoothers effectively in a warehouse system it contributes to the success of
supply chain systems.

The focus of logistics is increasingly turning towards providing better services

for customers instead of minimizing the total transportation or logistics costs, or
maximizing total profits (Korpela, 2001). As a result, are becoming to larger extent
flow-through facilities that perform certain value adding functions or customer specific
activities before products continue their movement through the supply chain. This,
however, sets completely new challenges to warehousing operations. Rather than just
picking items and sending them on to packaging prior to final shipment, something
additional has to be done to the picked items

Gray and Karmaker (1992)8 research work aimed to study the design and
operation of an order-consolidation warehouse and to develop an applicable model for
effective warehouse operations. The study proposed the design and the operation of an
order-consolidation warehouse. This research paper also provides a simulation model
and shows its application. When the order is consolidated, the process of checking
follows (packing, Shipping and Cross decking).

According to Larson, T.N, March, H. Kusiak, A (1996)9 it has been found in the
literature that warehouse configurations are governed by certain policies and principles.
The implied storage policies are: randomize storage, dedicated storage, and class-based
storage. In random location, inventory is allocated in a certain location where it is
10
unoccupied at the moment. This is beneficial in terms of space whereas inefficient in
handling. The dedicated storage policy assigns material to predetermined location
based on throughput and storage requirement. The class-based storage is a mix of
random and dedicated, where storing is done based on some criterion such as demand,
product type, size etc.

Rutner and Langley (2000)10 in their study had said that the warehouse process
quality can be seen as a constrained logistics service quality problem which consists of
seven quality parameters (Seven R’s): right product, right quantity, right condition,
right place, right time, right customer, and right cost.

Rouwenhorst (2000)11 in his research article titled” Warehouse design and

control: Framework and literature review” have suggested that the warehouse design
related issues may be situated on three different levels: strategic, tactical and
operational. This hierarchical framework reflects the horizon of warehouse decisions
on long-term, mid-term and short-term time frames. The approach is practical
especially when information on current operations is not available or doesn’t exist (e.g.
starting a new warehouse facility). Because warehouse design is often started with
limited information, outlining higher level issues first provides constraints for lower
level problems and the outcome should be a more coherent design plan.
(i) Strategic level represents long-term and high investment decisions
which can be divided into two groups. The first group of decisions is
concerned with the overall design of warehouse flows. A basic flow
consists of the stages receiving, storage, order picking, and shipment.
Additional processes may be included which has a straight influence on
the selection of work tasks and technical equipment. For example, a
sorting process will require means to batch and sort processed orders.
The second group of decisions is concerned with selecting the type of
warehousing systems to be used with the specified processes. The two
groups of decisions are connected in the sense that selected processes
dictate the need for assisting systems but a process may only be
implemented if such systems are available. For example, a sorting
process may be selected only if a sorter system exists that is suitable for
handling products in the warehouse.
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 (ii) Tactical level decisions are mid-term decisions that are based on the
outcomes from the strategic level. These are decisions that have less
impact but still represent moderate investments. Therefore it is not
worth reconsidering them too often. Tactical decisions are typically
related to issues such as allocating resources, organizing warehouse
layout, or determining storage rules.
(iii) Operational level includes daily working decisions that support
decisions made on the previous levels. They are often made with less
thought and 79 their impact on operations is restricted. Operational
decisions can be preprogrammed, pre-made, or set out clearly in policy
manuals. Decisions concerning warehousing processes on the
operational level include for example allocation of free storage
locations, order sequencing and assignment to pickers, and picking
route decisions.

According to Aminoff (2002)12 warehousing comprises a set of activities or

processes that are performed to ensure the seamless flow of materials and information.
Assessing and improving the performance of these activities requires careful study of
the way warehouse flows relate to each other. Important factors influencing process
efficiency in the warehousing environment are e.g. layout choices and the policies by
which work routines are controlled.

Koster (2007)13 research work aimed analyzed on design and control of

warehouse order picking. The study found that routing problems in warehouse are
mostly solved by using these heuristics, which is due to disadvantages of optimal
routing in practice. The author names that an optimal algorithm is not available for
every layout and cannot take aisle congestion into account, while with heuristic
methods it may be possible to avoid or reduce the aisle congestion.

Ambroziak. T and. Lewczuk K (2008)14 research paper aimed to develop a

method for scheduling the goods receiving process in warehouse facilities. The paper
discussed on the role of goods receiving and shipping in warehouse environments. A
formal notation of schedules is proposed and the specific analytical examples were
shown in this paper.
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 According to Faber (2002)15 in the old days of warehousing, inventory was seen
to represent the wealth of a company. However, these days this is not the case anymore.
Instead, many companies have noticed the high cost associated with holding inventory.
In their purest form warehouses should be transshipment areas for dispatching and
receiving where products remain in the warehouse for a short period of time only.

Jochem Sprengers’s (2010)16 thesis report how firms should manage planning
and control related activities in warehouse systems in today’s world of rapidly changing
customer’s demand, small internet orders, tight delivery schedules and high service
level requirements. This literature review first describes current, traditionally planning
and control policies in warehouse systems, subsequently with new approaches to
manage planning and control policies more efficient and to reduce response time in
order to maintain warehouse performances in today’s world of rapidly changing
customer’s demand. The study concludes by stating that the main savings can be
derived in planning related activities and recommended to put more effort in the
development of new models instead of optimizing existing ones

Tommy Blomqvist (2010)17 research study aimed to develop a warehouse

design framework that supports systematic decision making, and to establish a
framework that can be used to reduce order processing cycle times and improve the
overall performance of a warehouse. The study was conducted as a case study in a
Finnish technical wholesales company. The results also imply that companies with poor
information infrastructure are unable to efficiently track operations that are performed
within the warehouse. This emphasizes the fact that management of information flows
is becoming an increasingly important criterion to successfully plan and allocate
resources within the warehouse.

Dharmapriya U.S.S. and Kulatunga A.K. (2011)18 study attempts to optimize

warehouse layout: by allocating an economical place to each type of item while
minimizing the honeycombing. However, due to the computational complexity of
finding an optimal allocation within reasonable time frame, this is mathematically
termed as NP-hard type problems. The study found in the literature that the heuristic
approaches are highly attractive than the traditional approaches for this instance. The
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Simulated Annealing heuristic was used to determine the optimal allocation of each
category once the initial solution is generated by greedy approach. Generating a shortest
route to collect all the items of a respective order is also an objective of this study. The
route was decided based on the item’s rank in the delivery route, distance in between
two consecutive types of items and the weight. The improved layout was tested on
several case studies and simulation results show that improved layout is beneficial in
terms of travel distance (reduced by 30per cent) and resource utilization.

Faber, Nynke, De Koster, Rene B. M. (2002)19 says that the use of information
systems for warehouse management is studied extensively in literature. Complexity of
warehouse management is indicated among others by amount and heterogeneity of
handled products, the extent of overlap between them, amount and type of technology
as well as characteristics of associated processes. As the complexity increases it
becomes necessary to use Warehouse management systems for handling warehouse
resources and to monitor warehouse operations. The warehouses with a high amount of
processed order lines and amount of stock keeping units will be best supported by
customized software. It is difficult to update daily operations of inventory level,
locations of forklifts and stock keeping units (SKUs) in real-time by using the bar-code-
based or manual based warehouse management systems.

According to Heung Suk Hwang, Gyu Sung Cho (2006)20 warehousing takes up
to between 2per cent and 5per cent of the cost of sales of a corporation and with today’s
highly competitive global business environment organizations are emphasizing on
Return on Assets, and hence minimizing warehousing costs has become an important
business issue. Many firms are automating their basic warehousing functions to achieve
the increase in throughput rates or inventory turns required for their warehousing
operations to be cost effective.

Hsieh and Tsai (2005)21 define a good warehouse system once it ensures easy
and efficient access of merchandise, properly use the storage location to find the
shortest path, and finally to deliver the merchandise in a reasonable time.

Krauth (2005)22 classify around 130 indicators used for assessing warehouse
performance, such as storage surface, storage volume, storage racks, number and
14
characteristics of docks, pallets per hour, pallets per square meter, opening hours, and
assistance with customs

Jinxiang Gu (2007)23 research article aim to summaries various reviews of

earlier research work on effective warehouse operations. The authors says that the
adoption of new management philosophies such as Just-In-Time (JIT) or lean
production creates new challenges for warehouse systems, including tighter inventory
control, shorter response time, and a greater product variety. On the other hand authors
also have commented that the implementation of new information technologies (IT),
such as bar coding, radio frequency communications (RF), and warehouse management
systems (WMS), provides new opportunities to improve warehouse operations. These
operations of a warehouse consist of four basic functions: receiving, storage, order
picking and shipping.

According to McGinnis (2007)24 RFID technologies is adopted to facilitate the

collection and sharing of data in a warehouse. Tests are performed for evaluating the
reading performance of both the active and passive RFID apparatus. Implementing
RFID technologies requires a thorough cost and benefit analysis of implementation.
The costs of RFID implementation include tag reader costs, communication costs and
other infrastructure costs. RFID can improve the automatic checkout process at a retail
store, so it can reduce inventory costs as a result of more efficient shelf replenishment.
RFID technologies can support the redesign of business processes; improve data
quality; real-time data collection; synchronization and information sharing between the
players of supply chain.

Tompkins (2010)25 research work focused on facilities to be available in a

warehouse. The author suggests that the work simplification method can be used to
minimize the total process flow. This approach includes:
(i) Delivering materials, information and people to the point where actual
processes happen and eliminating any intermediate steps
(ii) Planning for the flow between two consecutive points to take place in as
few movements as possible

15
 (iii) Combining flows and operations whenever possible by planning the
movement of materials, information, and people to be combined with
the processing steps.

Ramaa (2012)26 research paper aimed to evaluate the performance levels and
enhance productivity of the manual warehouses by developing a WMS framework and
cost benefit analysis. The study concludes by stating that warehousing influences the
performance of an entire supply chain. With the boom in organized retailing it becomes
necessary for the players to continuously improve their process. The retailers have to
strive continuously to reduce their costs. Technology being an enabler improved
technology has to be incorporated into the current processes. Also, the processes have
to be designed in such a way that they provide for incorporating changes.

Knight Frank (2014)27 research report shares comprehensive analysis of the

warehousing markets of Pune and Mumbai through. The report stated that the Indian
businesses for long have ignored the significance of the logistics sector that continues
to remain one of the most under invested sectors in the country. While markets, the
inefficiencies in managing it could lead to severe disruption in the entire supply chain
network. In India, the experience with regards to this sector has not been very
encouraging, thus leading to colossal losses during transportation, distribution and
storage of goods. Today, given the substantial growth in organised retail and
manufacturing activities in India, the warehousing market has gradually gained steam
within the supply cycle that further drove demand for warehousing, thereby giving huge
impetus to the overall market.

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 CHAPTER 3

THEORETICAL FRAMEWORK

17
 THEORETICAL FRAMEWORK

What is Inventory?

Inventories are the goods available for sale and raw materials used to produce goods
available for sale. Inventory represents one of the most important assets of a business
because the turnover of inventory represents one of the primary sources of revenue
generation and subsequent earnings for the company's shareholders.

Types of Inventory

A manufacturing firm generally carries the following types of inventories:

 Raw Materials
 Bought out parts
 Work-in-process inventory(WIP)
 Finished goods inventories
 Maintenance, repair and operating stores
 Tools inventory
 Miscellaneous inventory
 Goods in transit
 Goods for resale
 Scrap Material

REASONS FOR HOLDING INVENTORY

 To stabilize production
 To take advantage of price discounts
 To meet the demand during replenishment period
 To prevent loss of order
 To keep pace with changing market conditions

MOTIVES OF HOLDING INVENTORIES

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  The Transaction Motive while facilitates continuous production and timely
execution of sales orders
 The Precautionary Motive which necessities the holding of inventories for
meeting the unpredictable changes in demand and supplies of materials
 The Speculative Motive which includes to keep inventories for taking advantage
of price fluctuation, saving in reordering cost and quantity discounts etc.

COST ASSOCIATED WITH INVENTORY

 Production cost
 Capital cost
 Ordering cost
 Carrying cost
 Shortage cost

INVENTORY CONTROL

The main objective of inventory control is to achieve maximum efficiency in

production and sales with minimum investment in inventory

Inventory control is a planned approach of determining what to order when to

order and how much to order and how much to stock, so that cost associated with buying
and storing are optimal without interrupting production and sales.

BENEFITS OF INVENTORY CONTROL

The benefits of inventory controls are:

 Improvement in customer relationship because of the timely delivery of goods

and services
 Smooth and uninterrupted production and hence no stock outs
 Efficient utilization of working capital
 Economy in purchasing
 Eliminating the probability of duplicate ordering

PRINCIPLES OF INVENTORY CONTROL

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  Inventory is only created by spending money for materials and labor and
overhead to process the materials
 Inventory is reduced through sales and scrapping
 Accurate sales and production schedule forecasts are essential for efficient
purchasing handling & investment in inventory
 Management policies which are designed to effectively balance size and variety
of inventory with cost of carrying that inventory are the greatest factor in
determining inventory investment
 Forecasts help to determine when to order materials. Controlling inventory is
accomplished though scheduling production
 Records do not produce controls
 Control is comparative and relative, not absolute. It is exercised through people
with varying experiences and judgment rules and procedures establish a base
from the individuals can make evaluation and decision
 With the consistent practices being followed, inventory control can become
predictable and properly related to sales and production activity.

INVENTORY CONTROL TERMINOLOGY

 Demand: It is the number of items required per unit of time. The demand maybe
either deterministic or probabilistic in nature.
 Order Cycle: the time period between two successive orders is called order cycle
 Lead Time: the length of time between placing order and receipts of item is
called lead tine
 Safety Stock: it is also called buffer stock or minimum stock. It is the stock or
inventory needed to account for delays in materials supply and to account for
sudden increase in demand due to rush orders
 Inventory Turnover: if the company maintains inventories equal to 3 months’
consumption. It means that inventory turnover is 4 times a year i.e. the entire
inventory is used up and replaced 4 times a year

INVENTORY COST RELATIONSHIPS

There are two major costs associated with inventory. Procurement cost and
carrying cost. Annual Procurement cost varies with the numbers of orders. This implies
that the procurement cost will be high, if the item is procured frequently in small lots.

20
The annual procurement cost is directly proportional to the quantity in stock. The
inventory carrying cost decreases, if the quantity ordered per order is small. The two
costs are diametrically opposite to each other the right quantity to be ordered is one that
strikes a balance between the two opposition costs. This quantity is referred to as
“Economic Order Quantity”.

ECONOMIC ORDER QUANTITY

A decision about how much to order has great significance in inventory

management. The quantity to be purchased should neither be small nor big because
costs of buying and carrying materials are very high. Economic order quantity is the
size of the lot to be purchased which is economically viable. This is the quantity of
materials which can be purchased at minimum costs. Generally economic order
quantity is the point at with inventory carrying cost are equal to order cost. In
determining economic order quantity, it is assumed that cost of managing inventory is
made up solely of two parts i.e. ordering cos and carrying cost. The cost relationships
are shown in below figure

FORMULA FOR CALCULATING ECONOMIC ORDER QUANTITY

2 ∗ 𝐷𝑒𝑚𝑎𝑛𝑑 ∗ 𝑅𝑒𝑜𝑟𝑑𝑒𝑟 𝐶𝑜𝑠𝑡

𝐸𝑂𝑄 = √
𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝐶𝑜𝑠𝑡

FIG 3.1 21
KAIZEN

The Japanese word kaizen means "change for better", with inherent meaning of either
"continuous" or "philosophy" in Japanese dictionaries and in everyday use. The word
refers to any improvement, one-time or continuous, large or small, in the same sense as
the English word "improvement". However, given the common practice in Japan of
labeling industrial or business improvement techniques with the word "kaizen",
particularly the practices spearheaded by Toyota, the word "kaizen" in English is
typically applied to measures for implementing continuous improvement, especially
those with a "Japanese philosophy".

Two kaizen approaches have been distinguished:

 Flow Kaizen
 Process Kaizen
Flow Kaizen
The former is oriented towards the flow of materials and information, and is
often identified with the reorganization of an entire production area, even a company.
The latter means the improvement of individual work stands. Therefore, improving the
way production workers do their job is a part of a process kaizen. The use of the kaizen
model for continuous improvement demands that both flow and process kaizens are
used, although process kaizens are used more often to focus workers on continuous
small improvements. In this model, operators mostly look for small ideas which, if
possible, can be implemented on the same day. This is in contrast to traditional models
of work improvement, which generally have a long lag between concept development
and project implementation.

Process Kaizen
Kaizen is a daily process, the purpose of which goes beyond simple productivity
improvement. It is also a process that, when done correctly, humanizes the workplace,
eliminates overly hard work (muri), and teaches people how to perform experiments on
their work using the scientific method and how to learn to spot and eliminate waste in
business processes. In all, the process suggests a humanized approach to workers and
to increasing productivity: "The idea is to nurture the company's people as much as it
is to praise and encourage participation in kaizen activities." Successful implementation
requires "the participation of workers in the improvement." People at all levels of an

22
organization participate in kaizen, from the CEO down to janitorial staff, as well as
external stakeholders when applicable. Kaizen is most commonly associated with
manufacturing operations, as at Toyota, but has also been used in non-manufacturing
environments. The format for kaizen can be individual, suggestion system, small group,
or large group. At Toyota, it is usually a local improvement within a workstation or
local area and involves a small group in improving their own work environment and
productivity. This group is often guided through the kaizen process by a line supervisor;
sometimes this is the line supervisor's key role. Kaizen on a broad, cross-departmental
scale in companies, generates total quality management, and frees human efforts
through improving productivity using machines and computing power

KANBAN
Kanban (signboard or billboard in Japanese) is a scheduling system for lean
manufacturing and just-in-time manufacturing (JIT). Taiichi Ohno, an industrial
engineer at Toyota, developed Kanban to improve manufacturing efficiency. Kanban is
one method to achieve JIT. The system takes its name from the cards that track
production within a factory. For many in the automotive sector Kanban is known as
“Toyota name plate system” and as such the term is not used by some other auto makers.

Kanban became an effective tool to support running a production system as a

whole, and an excellent way to promote improvement. Problem areas are highlighted
by measuring lead time and cycle time of the full process and process steps. One of the
main benefits of Kanban is to establish an upper limit to work in process inventory to
avoid overcapacity.
A goal of the Kanban system is to limit the buildup of excess inventory at any
point in production. Limits on the number of items waiting at supply points are
established and then reduced as inefficiencies are identified and removed. Whenever a
limit is exceeded, this points to an inefficiency that should be addressed.

23
Toyota's Six Rules
Toyota has formulated six rules for the application of Kanban:
1. Each process issues requests (Kanban) to its suppliers as it consumes its
supplies.
2. Each process produces according to the quantity and sequence of incoming
requests.
3. No items are made or transported without a request.
4. The request associated with an item is always attached to it.
5. Processes must not send out defective items, to ensure that finished products
will be defect-free.
6. Limiting the number of pending requests makes the process more sensitive and
reveals inefficiencies.

CLASSIFICATION AND CODIFICATION OF MATERIALS

Classification and codification of materials are steps in maintaining stores in a

systematic way. Materials are classified in such a way that storing, issuing and
identifying of materials become easy. Generally, materials are classified on the
basis of their nature. Materials may be classified as raw materials, consumable
stores, components, spares and tools. This classifying materials on different bases
such as nature, quality and utility is called classification of materials.

For the purpose of identification and convenience in storage and issue of

materials, each item of materials is given a distinct name. such a process of giving
names and symbols to different items of materials is called codification of materials.
Good store-keeping requires proper classification and codification of various items
of stores on stock. Stores are generally classified either by their nature or by their
usage. The former method of classification or classification by nature of materials
is most commonly used. Under this method of classification, the various items of
stores are divided into specific groups like construction materials, consumable
stores, spare parts and so on. All the items are grouped so that each items of stores
will be conveniently codified on alphabetical, numerical or alpha numerical basis
and given a distinctive store code number. Codification of materials can also be
24
termed as the identification of materials. This deals with uniquely identifying each
item in the inventory. It is used in requisitioning items or the operational
departments, in placing orders by the purchase department, in receiving and
expediting the items on receipt from the supplier, in having a unique record of each
of the items in stores and in work-in-process or in warehouse so as to facilitate the
control over the inventory levels, and also in having a good control over the loss,
deterioration, obsolescence, non-movement, or pilferage of the items in the
inventory. Unique identification of the materials whether they are raw materials,
work-in-process or finished goods – is the first step towards a good materials
management system. Without it, control over inventory by vigorous exercises such
as inventory techniques is not very effective without it, confusion might prevail in
the operational departments. Moreover, for a good quality control system a unique
identification s a pre-requisite. There are many other advantages such as variety
reduction and standardization etc.

It is amazing to find that in many of our large public and private sector
corporations, a considerable amount of inventory lies in the stores or elsewhere
because of confused nomenclature and lack of proper identification system. Many
items in inventory such as pipes, rods, angles, electrical switches, cables, valves,
similar equipment, spare parts and even nuts, bolts and such items in inventory are
available under different names and codes thereby reducing the actual availability
of the item for operational needs. An item may be called a nut and bolt by one
section of the organization, whereas another may call is a fastener and because of
thins there are two separate requisitions made, two separate purchase orders sent
out, and two separate inventory levels of the items built into the system, one section
might call an item a pipe whereas another might call is a conduit in fact both sections
using the same item. this increases the inventory level unnecessarily prevention of
duplication is one of the important benefits of a good materials coding system.

Needless to say, for proper stock taking a good identification is of immense

help. Many cases have been observed in large corporations where the concerned
people do not even know what materials have been lying in the inventory for a large
duration of time. These materials could easily be eliminated from the list, salvage
value recovered and the storage space freed. It is also not uncommon to observe
25
 that although a material is available with the stores in reality due to duplication of
identity it is often quoted as not available and thus, many production of inventory
items helps in simplification of all the processes such as storing, receiving,
procuring, manufacturing, warehousing and this results in a multiplicity of benefits
to the company. It is a simple concept. If followed it might produce results of
proportions equivalent to that of a rigorous application of the inventory control
principles with, perhaps much less effort.

Principles of Classification and Codification

The following principles should be observed while establishing an effective
classification and codification system

i. There must be a consistency in the point of view so that the bass of

classification should remain unchanged for all items
ii. The system of classification must cover the entire range of items for which,
it is devised and at the same time, allow reasonable scope for extension. This
principle is that of comprehensiveness
iii. The third principle is that of mutual exclusiveness which means, that there
must be only one code number possible for any item.
iv. The system developed should be simple enough it be understood and easily
adopted by the non-specialist personnel. This also means that the
codification basis when once understood, the code numbers should be self-
explanatory to certain extent.

Numerical Codification System

In numerical codification, each item is allotted a number. The numbering
maybe straight or in groups or blocks. This method is suitable for those companies
where the numbers of items are very large

Alphabetic Codification System

In alphabetic codification, each item is denoted by a combination of the
alphabets, for example A for nut B for screw and so on. This system is not suitable if
there are large number of store items

26
Alpha-numeric Codification System
In alpha numeric codification, alphabets along with numbers are used for
coding.
Decimal Codification System
The decimal codification system is more commonly used. The number of digits
in the code will depend upon the extend of classification required. The greater the
number of details to be covered the greater will be the number of digits.

Advantages of classification and codification of materials.

Following are the advantages of classification and codification of materials.
 Quick and easy identification of materials.
 Helps ensure a proper material control.
 Secrecy of materials.
 Saving of time in material handling.
 Eliminating the chance of wrong issue

Codification by Group Classification

What do we mean by coding? By this we give a unique number to a particular item in
the inventory. For instance, 010277 might mean a specific item in inventory such as a
particular kind of gasket, of a certain material, of a certain shape and of a certain
dimension. Of course each of these numbers or groups of numbers (within the total
identification number) should convey some unique information.

MRP Inventory Management

MRP stands for “Material requirement Planning” and is an inventory control system
used by production manager to establish more efficient production, manufacturing and
delivering process, while maintaining a low and therefore efficient stock of inventory.
There are several phases to an MRP planning. One, MRP ensures a flow of products
for manufacturing, while it also ensures products are quickly delivered to customers.
Two, MRP allows you better organization so your inventory doesn’t pile up, creating
inefficiencies in the work place. Three, MRP creates a framework where you can plan
purchasing, manufacturing and delivering schedules.

27
How does MRP work?

The MRP system is system of “inventory control” through simple planning. When a
company orders more materials than it needs, that is wasted capital that could be used
for better commercial purposes. Also, shipping unneeded supplies wastes on manpower
and shipping costs while an over-packed plant or warehouse means the workers are
working around material that are in the way, often forcing them to move the excess
products and materials several times instead of once. If orders for wok materials are
consistently short this creates lag times in manufacturing, which loses the company
money.
Therefore, establishing simple planning procedures, inventory efficiency and skilled
use of elementary statistics allows a company to maintain peak production. MRP is
about more than just getting orders right, though. MRP inventory management is about
selecting the right time to begin production, so deadlines are met and peak production
occurs.

Implementing or improving MRP can provide the following benefits for the company:

 Reduced inventory levels.

 Reduced component shortages.
 Improved shipping performance.
 Improved customer service
 Improved productivity
 Simplified and accurate scheduling
 Reduced purchasing cost
 Improve production schedules
 Reduced manufacturing cost.
 Reduced lead times
 Less scrap and rework.
 Higher production quality
 Improved communication

28
  Improved plant efficiency
 Reduced freight cost
 Reduction in excess inventory
 Reduced overtime
 Improved supply schedules
 Improved calculation of material requirements
 Improved competitive position

MRP is a time phased priority-planning technique that calculates materials

requirements and schedule supply to meet demand across all products and parts in one
or more plants. Information technology plays a major role in designing and
implementing MRP systems and processes as it provides information about
manufacturing needs (linked with customer demand) as well as information about
inventory levels. MRP techniques focus on optimizing inventory. MRP techniques are
used to explore bills of materials to calculate net material requirements and plan future
productions.
MRP system use four pieces of information to determine what materials should be
ordered and when.

 The master production schedule which describes when each product is

scheduled to be manufactured.
 Bill of materials, which list exactly the parts of materials required to
make each product.
 Production cycle time and materials needs at each stage of production
cycle time
 And suppliers lead times.

The master schedule of bill of material indicates what materials should be ordered, the
master schedule, production cycle times and supplier lead times then jointly determines
when order should be placed.
The Master Production Schedule include quantities of products to be produced at a
given time period. Quantities are included both at aggregate and detailed levels.

29
Aggregate may refer to monthly production and detailed may refer to weekly or daily
production.
Bills of materials gives information about the product structure, i.e., parts and raw
material units to manufacture one unit of the product of interest.

INPUTS TO A STANDARD MRP PROGRAM

Demand for Products: Product demand for end items stems from two main reasons.
The first is known as customers who have placed specific orders, such as those
generated by sales personnel or from interdepartmental transactions. The second source
is forecast demand. Demand from known customers and demand forecast are combined
and become the input to the master production schedule.

Bills of Materials Files: The bills of materials file containing the complete product
description, listing materials, parts, and components but also the sequence in which the
product is created. The BOM file is often called the product structure file or product
tree because it shows how a product id put together. It contains the information to
identify each item and the quantity used pr unit of the item of which it is a part.

Inventory Record Files: Inventory records file under a computerized system can be
quite lengthy. Each item in inventory is carried as a separate file and the range of details
carried about an item is almost limitless. The MRP program accesses the status segment
of the file according to specific time periods. These files are accessed as needed during
the program run.

MRP COMPUTER PROGRAM

The MRP program works as follows:
o A list of end items needed by time periods is specified by the
master production schedule.
o A description of the materials and parts needed to make each
item is specified in the bills of materials file.
o The number of units of each item and material currently on hand
and on order are contained in the inventory file.
30
o The MRP program “works” on the inventory file. In addition, it
continuously refers to the bills of materials file to compute
quantities of each item needed.
o The number of units of each item required is then corrected for
on hand amounts, and the net requirements is “offset” to allow
for the lead time needed to obtain the material.

31
 CHAPTER 4
INDUSTRY PROFILE

32
 INDUSTRY PROFILE

Global Scenario of Automobile Industry

The global auto industry is a key sector for every major economy in the world.
The industry has recorded overall 30% of growth over the past decade. The global
automobile demand will continue to raise and auto sales volumes will likely to climb
6% year-on-year in both 2012 & 2013 after rising 4% in 2011. Total global demand for
four wheeler and two-wheeler is 45 million and 43 million units, is expected to increase
to 70 and 76 million units respectively by 2020. 1 Auto industry is also getting a helping
hand from increased auto lending across the globe- especially in emerging nations,

Increase in proportion of sale in last decade (2008-2018)

Total North Western Eastern South

Sales America Europe Europe Asia America India China

1.25 0.93 0.82 1.57 2.10 1.89 2.30 2.99

where loan growth is approaching 40% y-o-y growth. Global auto job growth is 2.0%
y-o-y, in BRIC countries job creation in auto industry is 4% y-o-y basis.'

Worldwide auto industry employs 9 million people directly and about 41 million
indirectly. It is observed that the GDP per capita increases with motor vehicle sales
(excluding two wheelers). The production contribution of China in global production
is 23%, which is about 9% more than that of the both USA and Japan. The majority
(78%) of vehicles are cars. General Motors, Yolks-wagon, Toyota, Hyundai and Ford
are five major auto producer companies in the world. India's Tata Motors (18th),
Mahindra (33rd) and Ashok Leyland (49th) are among 50 key auto -makers.

Auto industry is also major innovator in the world, investing over 84 billion Euros
in Research and Development and production innovations. It also plays key role in the
technology improvement level of the other industries also. The global government revenue
contribution is about 400 billion Euros.

33
THE LIST OF THE 15 LARGEST MANUFACTURERS BY PRODUCTION IN 2017

Rank Group Country Vehicles

1 Toyota Japan 10,213,486

2 Volkswagen Group Germany 10,126,281

3 Hyundai South Korea 7,889,538

4 General Motors United States 7,793,066

5 Ford United States 6,429,485

6 Nissan Japan 5,556,241

7 Honda Japan 4,999,266

8 Fiat Chrysler Automobiles Italy / United States 4,681,457

9 Renault France 3,373,278

10 PSA France 3,152,787

11 Suzuki Japan 2,945,295

12 SAIC China 2,566,793

13 Daimler Germany 2,526,450

14 BMW Germany 2,359,756

15 Changan China 1,715,871

34
AUTOMOBILE INDUSTRY IN MIDDLE EAST

The Middle Eastern automotive manufacturing industry has had some periods of
decline in recent years which has been tempered by periods of strong growth. The
industry is expected to produce good growth through to the end of the forecast period
in 2028.

The Middle Eastern automotive manufacturing industry had total revenues of $14.5bn
in 2017, representing a compound annual growth rate (CAGR) of 7.0% between 2013
and 2017. In comparison, the Egyptian industry grew with a CAGR of 7.6%, and the
Saudi Arabian industry grew with a compound annual growth rate (CAGR) of 5.7%,
over the same period, to reach respective values of $9.5bn and $3.5bn in 2013.

Industry production volume increased 4.1% between 2009 and 2017, to reach a total of
242.8 thousand units in 2017. The industry's volume is expected to rise to 348.9
thousand units by the end of 2020, representing a CAGR of 7.5% for the 2017-2020
period.

Trucks had the highest volume in the Middle Eastern automotive manufacturing
industry in 2017, with total production of 183.9 thousand units, equivalent to 75.7% of
the industry's overall volume. In comparison, production of motorcycles had a volume
of 33.2 thousand units in 2013, equating to 13.7% of the industry total.

The performance of the industry is forecast to accelerate with an anticipated CAGR of

8.6% for the five-year period 2013 - 2020, which is expected to drive the industry to a
value of $21.9bn by the end of 2020. Comparatively, the Egyptian and Saudi Arabian
industries will grow with CAGRs of 9.8% and 6.7%, respectively, over the same period,
to reach respective values of $15.1bn and $4.9bn in 2020.

35
MARKET SEGMENTATION

CATEGORY SEGMENTATION

Trucks is the largest segment of the automotive manufacturing industry in Middle East,
accounting for 75.7% of the industry's total volume. The Motorcycles segment accounts
for a further 13.7% of the industry.

Category 2018 %
Trucks 183.9 75.7%
Motorcycle 33.2 13.7%
Cars 25.6 10.6%
Total 242.7 100%

Industry Volume

10%
14%

TRUCKS
MOTORCYCLE
76% CARS

FIG 4.1

36
GEOGRAPHIC SEGMENTATION

When we consider the market segmentation, segmentation based on geographic

location plays a significant role. It can be found that Egypt accounts for 65.2% of the
Middle East automotive manufacturing industry value. Saudi Arabia accounts for a
further 24.2% of the Middle East industry.

Geography 2018 %
Egypt 9.5 65.2%
Saudi Arabia 3.5 24.2%
Israel 0.8 5.4%
United Arab Emirates 0.7 5.1%
Total 14.5 100%

Geographic segmentaion : % share, by

value

8%
5%
Egypt
23%
Saudi Arabia
64%
Israel
United Arab Emirates

FIG 4.2

37
MARKET VALUE
The Middle Eastern automotive manufacturing industry grew by 7.3% in 2018 to reach
a value of $14.5 billion. The compound annual growth rate of the industry in the period
2013–18 was 8%.

Year $ Billion % Growth

2013 14.5 7.3%
2014 15.8 8.7
2015 17.8 9.0
2016 18.7 8.9
2017 20.2 8.3
2018 21.9 8.0

Market Value
25

20

15

10

0
2013 2014 2015 2016 2017 2018

$ Billions % Growth

FIG 4.3

38
 CHAPTER 5
COMPANY PROFILE

39
 COMPANY PROFILE

COMPANY HISTORY

1920s-1930s
In 1924, Sakichi Toyoda invented the Toyoda Model G Automatic Loom. The principle
of jidoka, which means the machine stops itself when a problem occurs, became later a
part of the Toyota Production System. Looms were built on a small production line. In
1929, the patent for the automatic loom was sold to the British company Platt Brothers,
generating the starting capital for the automobile development.
The production of Toyota automobiles was started in 1933 as a division of Toyoda
Automatic Loom Works devoted to the production of automobiles under the direction
of the founder's son, Kiichiro Toyoda. Its first vehicles were the A1 passenger car and
the G1 in 1935. The Toyota Motor Co. was established as an independent company in
1937
Vehicles were originally sold under the name "Toyoda" from the family name of the
company's founder, Kiichirō Toyoda. In April 1936, Toyoda's first passenger car, the
Model AA, was completed. The sales price was 3,350 yen, 400 yen cheaper than Ford
or GM cars.
In September 1936, the company ran a public competition to design a new logo. Of
27,000 entries, the winning entry was the three Japanese katakana letters for "Toyoda"
in a circle. But Rizaburo Toyoda, who had married into the family and was not born
with that name, preferred "Toyota" because it took eight brush strokes (a lucky number)
to write in Japanese, was visually simpler (leaving off the diacritic at the end), and with
a voiceless consonant instead of a voiced one (voiced consonants are considered to have
a "murky" or "muddy" sound compared to voiceless consonants, which are "clear").
Since toyoda literally means "fertile rice paddies", changing the name also prevented
the company from being associated with old-fashioned farming. The newly formed
word was trademarked and the company was registered in August 1937 as the Toyota
Motor Company.

40
1940s–1950s
From September 1947, Toyota's small-sized vehicles were sold under the name
"Toyopet". The first vehicle sold under this name was the Toyopet SA, but it also
included vehicles such as the Toyopet SB light truck, Toyopet Stout light truck Toyopet
Crown, Toyopet Master, and the Toyopet Corona. The word "Toyopet (Japanese
article)" was a nickname given to the Toyota SA due to its small size, as the result of a
naming contest the Toyota Company organized in 1947. However, when Toyota
eventually entered the American market in 1957 with the Crown, the name was not well
received due to connotations of toys and pets. The name was soon dropped for the
American market, but continued in other markets until the mid-1960s.

1960s–1970s
By the early 1960s, the US had begun placing stiff import tariffs on certain vehicles.
The so-called "chicken tax" of 1964 placed a 25% tax on imported light trucks. In
response to the tariff, Toyota, Nissan Motor Co. and Honda Motor Co. began building
plants in the US by the early 1980s.

1980s
Toyota received its first Japanese Quality Control Award at the start of the 1980s and
began participating in a wide variety of motorsports. Due to the 1973 oil crisis,
consumers in the lucrative US market began turning to make small cars with better fuel
economy. American car manufacturers had considered small economy cars to be an
entry-level product, and their small vehicles employed a low level of quality to keep
the price low. Conservative Toyota held on to rear-wheel-drive designs for longer than
most; while a clear first in overall production they were only third in production of
front-wheel-drive cars in 1983, behind Nissan and Honda. In part due to this, Nissan's
Sunny managed to squeeze by the Corolla in numbers built that year.
In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one
company, the Toyota Motor Corporation. Two years later, Toyota entered into a joint
venture with General Motors called the New United Motor Manufacturing, Inc,
NUMMI, operating an automobile-manufacturing plant in Fremont, California. The
factory was an old General Motors plant that had been closed for two years. Toyota
then started to establish new brands at the end of the 1980s, with the launch of their
luxury division Lexus in 1989.
41
1990s
In the 1990s, Toyota began to branch out from producing mostly compact cars by
adding many larger and more luxurious vehicles to its lineup, including a full-sized
pickup, the T100 (and later the Tundra), several lines of SUVs, a sport version of the
Camry, known as the Camry Solara. They would also launch newer and arguably more
iconic iterations of their sports cars, namely the MR2, Celica, and Supra during this era,
all of which have already become icons of the 1990s.
With a major presence in Europe, due to the success of Toyota Team Europe, the
corporation decided to set up Toyota Motor Europe Marketing and Engineering,
TMME, to help market vehicles in the continent. Two years later, Toyota set up a base
in the United Kingdom, TMUK, as the company's cars had become very popular among
British drivers. Bases in Indiana, Virginia, and Tianjin were also set up. In 1999, the
company decided to list itself on the New York and London Stock Exchanges.

2000s
In 2001, Toyota's Toyo Trust and Banking merged with two other banks to form UFJ
Bank, which was accused of corruption by Japan's government for making bad loans to
alleged Yakuza crime syndicates with executives accused of blocking Financial Service
Agency inspections. The UFJ was listed among Fortune Magazine's largest money-
losing corporations in the world, with Toyota's chairman serving as a director. At the
time, the UFJ was one of the largest shareholders of Toyota. As a result of Japan's
banking crisis, UFJ merged with the Bank of Tokyo-Mitsubishi to become the
Mitsubishi UFJ Financial Group.
In 2002, Toyota managed to enter a Formula One works team and establish joint
ventures with French motoring companies Citroën and Peugeot a year after Toyota
started producing cars in France.
A youth-oriented marque for North America, Scion, was introduced in 2003.
Toyota ranked eighth on Forbes 2000 list of the world's leading companies for the year
2005 but slid to 55th for 2011. The company was number one in global automobile
sales for the first quarter of 2008.
In 2007, Toyota released an update of its full-sized truck, the Tundra, produced in two
American factories, one in Texas and one in Indiana. Motor Trend named the Tundra
"Truck of the Year", and the 2007 Toyota Camry "Car of the Year" for 2007. It also
began the construction of two new factories, one to build the RAV4 in Woodstock,
42
Ontario, Canada, and the other to build the Toyota Prius in Blue Springs, Mississippi,
USA. This plant was originally intended to build the Toyota Highlander, but Toyota
decided to use the plant in Princeton, Indiana, USA, instead. The company has also
found recent success with its smaller models—the Corolla and Yaris.

2010s
In 2011, Toyota, along with large parts of the Japanese automotive industry, suffered
from a series of natural disasters. The 2011 Tōhoku earthquake and tsunami led to a
severe disruption of the supplier base and a drop in production and exports. Severe
flooding during the 2011 monsoon season in Thailand affected Japanese automakers
that had chosen Thailand as a production base. Toyota is estimated to have lost
production of 150,000 units to the tsunami and production of 240,000 units to the
floods.
On February 10, 2014, it was announced that Toyota would cease manufacturing
vehicles and engines in Australia by the end of 2017. The decision was based on the
unfavorable Australian dollar making exports not viable, the high cost of local
manufacture and the high amount of competition in a relatively small local market. The
company plans to consolidate its corporate functions in Melbourne by the end of 2017.
The head office will remain in Port Melbourne and the Altona plant will be retained for
other functions. The workforce is expected to be reduced from 3,900 to 1,300. Both
Ford Motor Company and General Motors (Holden) followed suit, ending Australian
production in 2016 and 2017 respectively.
The automaker narrowly topped global sales for the first half of 2014, selling 5.1
million vehicles in the six months ending June 30, 2014, an increase of 3.8% on the
same period the previous year. Volkswagen AG, which recorded sales of 5.07 million
vehicles, was close behind.
In August 2014, Toyota announced it would be cutting its spare-parts prices in China
by up to 35%. The company admitted the move was in response to a probe
foreshadowed earlier in the month by China's National Development and Reform
Commission of Toyota's Lexus spare-parts policies, as part of an industry-wide
investigation into what the Chinese regulator considers exorbitantly high prices being
charged by automakers for spare parts and after-sales servicing.

43
VISON AND PHILOSOPHY
Since its foundation, Toyota has been using its Guiding Principles to produce reliable
vehicles and sustainable development of society by employing innovative and high
quality products and services.

GUIDING PRINCIPLES
1. Honor the language and spirit of the law of every nation and undertake open
and fair business activities to be a good corporate citizen of the world.
2. Respect the culture and customs of every nation and contribute to economic and
social development through corporate activities in their respective communities.
3. Dedicate our business to providing clean and safe products and to enhancing the
quality of life everywhere through all of our activities.
4. Create and develop advanced technologies and provide outstanding products
and services that fulfill the needs of customers worldwide.
5. Foster a corporate culture that enhances both individual creativity and the value
of teamwork, while honoring mutual trust and respect between labor and
management.
6. Pursue growth through harmony with the global community via innovative
management.
7. Work with business partners in research and manufacture to achieve stable,
long-term growth and mutual benefits, while keeping ourselves open to new
partnerships.

FIVE MAIN PRINCIPLES OF TOYODA

 Always be faithful to your duties, thereby contributing to the company and to
the overall good.
 Always be studious and creative, striving to stay ahead of the times.
 Always be practical and avoid frivolousness.
 Always strive to build a homelike atmosphere at work that is warm and friendly.
 Always have respect for spiritual matters, and remember to be grateful at all
times.

44
TOYOTA CODE OF CONDUCT
The “Guiding Principles at Toyota” (originally issued in 1992, revised in 1997)
summarize the corporate philosophy and reflects TOYOTA’s vision of what kind of
company TOYOTA would like to be. The “Guiding Principles at Toyota” were created
with the expectation that we would understand and share our fundamental management
principles, and that we would contribute to society by referring to these principles.

The “Toyota Way” and the “Toyota Code of Conduct” serve as important guiding tools
when implementing our daily business operations to realize the “Guiding Principles at
Toyota”. “Toyota Way” (issued in 2001) describes the values and methods to be shared
for the people of the global TOYOTA organization.

The present “Toyota Code of Conduct” (originally issued in 1998, revised in 2006)
seeks to provide a basic code of conduct and to serve as a model and compass. It also
provides detailed explanations and examples of the actions and issues that we must be
aware of when carrying out actual business activities (including in our jobs and daily
business operations) and living in our global society.

FIG 5.1

45
TOYOTA GLOBAL VISION

“Toyota will lead the way to the future of mobility, enriching lives around the
world with the safest and most responsible ways of moving people. Through
our commitment to quality, constant innovation and respect for the planet, we aim
to exceed expectations and be rewarded with a smile. We will meet challenging
goals by engaging the talent and passion of people, who believe there is always a
better way.”

Lead the way

Toyota will be a frontrunner. We will seize opportunities and invest in the future.

Future of mobility
We'll develop new forms of transportation and pursue new ways to connect technology
with people.

Enriching lives around the world

Through the concept of monozukuri, we will create jobs, develop people and contribute
to society

Safest & most responsible ways of moving people

Safety is our number one priority – for our employees and our customers. Nothing is
more important.

Commitment to quality
We constantly raise our standards for dependability, reliability and customer
satisfaction.

Constant innovation
Our goal: “Always better cars.” We continually reinvent ourselves, introduce new
technologies and stay ahead of our competition.

46
Respect for the planet
In everything we do, we will show consideration to the planet. We investigate and
promote systems and solutions that are eco-friendly.

Exceed expectations
Our attitude is to anticipate and deliver to the needs of those we serve.

Rewarded with a smile

Customer satisfaction is best expressed with a smile. It promotes a behavior of gratitude
and appreciation in all that we do.

Challenging goals
We aim high and work together... that’s who we are.

Engaging the talent and passion of people

The power of our organization comes from the skill and diversity of our team members
and business partners... solving problems and creating new ideas.

There is always a better way

The spirit of kaizen... reaching higher and challenging ourselves to find a better way in
everything we do... every single day.

FIG 5.2

47
 CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

48
 5. DATA ANALYSIS AND INTERPRETATION

In this chapter, the data which are collected through direct observation and personal
interview are been explained in details with the interpretation of each set of data that re
been analyzed.

This chapter will discuss the following topics for the better interpretation of the data
and to obtain a reliable and sensible conclusion. The topics that will be discussed in this
chapter are:

1. Observed layout, tools and techniques employed in the warehouse and its
interpretations.
2. Check-list analysis of operations in the warehouse and its interpretation
3. Percentage analysis of the effectiveness of techniques used in the warehouse

5.1 OBSERVED DATA

5.1.1 LAYOUT

Layout plays an important role in the overall efficiency of the warehouse when
considering the overall effectiveness of the warehouse. The proper utilization of the
space and cubic area of the warehouse determine the overall cost utilization in the
process of warehousing. Therefore, I gave primary importance to the layout of the
warehouse. Which is the baseline factor in managing a warehouse.

In Toyota spare parts warehouse, they employ simple but very effective layout
in the warehouse which gives proper space utilization and convenience for the
employees or staffs to access the product easily. It not only helps to reduce time to pick
the product from the racks but it also allows to load the products into the rack with ease.

The racks are sufficiently spaced according to the size of the product in the bins
so as to conveniently place and pick up the order at the needed time. There is a
mezzanine floor which are kept to increase the capacity of the warehouse if necessary.
The mezzanine floor are kept empty as of now since the B to B sales are done directly

49
to reduce cost as an implementation of lean. The layout of the warehouse is depicted on
the next page.

FIG 6.1

As we can see the heavy items are stored near to the loading/ receiving end of the
warehouse which will eliminate the carrying of heavy objects across the warehouse.
The heavy items will be delivered through the loading area itself.

50
 We can also observe that the fast moving items are placed next to the customer
dealing desk in which will make it easy for the staff to easily access the items while a
customer gives an order directly.

There is separate sorting area at the receiving end of the warehouse which will
make the staff easier to bin the items in place. Pallets and forklifts are placed next to
receiving end so that it will be easy for employees to pick heavy items easily to bins

Inference
The layout implemented in the Toyota at present is the optimal layout for the current
operations and it will be still efficient even if the products are double of its size as of
now.

5.1.2 ‘5S’ APPROACH

The 5 S method is one of the way to improve the performance of a warehouse which
is been implemented in Toyota. "5S" is a philosophy or method or 5 steps that need to
be taken to create a "clean and organize" workplace. The 5 steps to do to get a clean
and organize workplace as per in 5S are:
1. Seiri means Sort,
2. Seiton means Arrange,
3. Seiso means Clean,
4. Seiketsu means Standardize
5. Shitsuke means Maintain.

1. Seiri
By this process all Warehouse staffs are required to identify, sort-out and removes all
the unnecessary things from their Warehouse.
Unnecessary things include:
 The unnecessary direct stocks
 The unnecessary indirect stocks
 The unnecessary equipment
 The unnecessary documents
 The Unnecessary items

51
 2. Seiton
After the staffs sorted-out and removed the unnecessary things at their workplace, the
second step in 5S is to arrange the necessary things (things that left behind after
SEIRI).
The things that are arranged include:
 Necessary stocks
 Necessary Indirect stocks
 Necessary Equipment
 Necessary Documents & other general items
Most frequently used equipment are placed near to the staff who uses it the most and
in the place it is been used the most. This method will eliminate the unnecessary
travelling time. The arrangement is based on the frequency of movement.

3. Seiso
Every employee is instructed to clean their respective work area and the equipment
they use to work 5 minutes before the work and 5 minutes after the whole day work.
Cleaning is also inspecting. During cleaning process, the employees can detect any
abnormalities in the equipment which can help to do proper maintenance on time.

4. Seiketsu
The standardized procedure and processes are displayed in the warehouse at the
location of the action. Which include the display of good vs bad practices in different
areas of warehouse, standard procedure for order pickup and delivery, etc. so that
everyone can follow easily.

5. Shitsuke
The last process in followed in 5s is to maintain the high standard that are achieved
through continuous improvement and implementation of the above four steps in the
warehouse. The 5S will be repeated in time to time with more optimized procedure
for improving the efficiency of the warehouse.

52
Inference
By following 5s in the warehouse Toyota is able to
 Make warehouse clean and neat
 Improve warehouse productivity
 Improve the Quality of Works
 Save Warehouse Operation Cost
 Improve Delivery Performance
 Improve Safety aspects
 Eliminate wastes ("Muda" in Japanese)
 Improve Warehouse staffs' morale

5.1.3 TOYOTA’S 7 POINTS STORAGE TECHNIQUES

Toyota follows a certain simple but very effective techniques for storing items in
the warehouse. All the warehouse of Toyota follows this seven steps for the
convenience and ultimately for the increase in the productivity of the warehouse. The
warehouse does not add any value to the product therefore any action or movement in
the warehouse with the product is a waste of time and money. So Toyota has formulated
these 7 steps for the smooth running of its inventory and to increase its productivity.

The seven points storage techniques of Toyota are:

1. One part one bin
2. Storage according to moving class
3. Storage within easy reach
4. Store heavy parts down low
5. Store parts vertically
6. Group similar parts together
7. Visually grasp within irregularity movement

1. One part one bin

Every product which are listed will have a specific bin or place to be kept. The product
cannot be binned in any other location since the placing is electronically surveyed with
barcode scanner. The parts can only be binned in the proper location. Else it will not be
registered in stock until it is binned or marked as returned.

53
2. Storage according to moving class
The products are stored according to the demand of the product. So the fast moving and
small items are stored near to the retail desk so as to reach the product easily which will
reduce the movement of the staff and will reduce the waiting time of the customer to
receive the product. Which will ensure customer satisfaction and increase in
productivity by reducing time wastage. These steps can be seeming silly but in long run
it makes a huge difference.

3. Store within easy reach

The products are stored in a such a way that it can be accessible easily by the staff. It is
maximum cared that the products are stored in the reach of the staff do that he does not
have to use ladder or climbers to reach for the product, which will waste the time in
picking as well as placing the product. The ultimate aim of this process is to eliminate
wastage of time.

4. Store parts vertically

It is widely seen manner to store the products vertically or to stack them on top of the
other. It is more efficient way to utilize the cubic area of the warehouse and to organize
the warehouse accordingly. It is easier for the forklift to unload the items on the racks
with the pallets. The main concern of this steps is to maximize utilization of the cubic
area of the warehouse.

5. Store heavy parts down low

The heavy parts and products are instructed to store in the down low racks to the staffs
so as to minimize the accidents and or danger of storing the item in height. This is due
to the concern of the safety of the staffs, products and the warehouse itself. It is more
convenient for the pickers to take the heavy products from low racks than from higher
racks.

6. Group similar parts together

Grouping of similar parts will make it easier for the pickers to search for the similar
items even though the location of the parts will be mentioned in the picking list, it will
be more convenient and will reduce unnecessary motion if the similar products are
placed together.
54
7. Visually grasp within irregularity movement
If there is any irregularity in the movement of the product such as overstock, a visual
indication is held outside the main rack and the specific location of the irregularity so
as to find it easily and solved quickly while giving next order. Visual indicators or
Kanban is more effective for easily identifying the overstock or empty slot

Inference
The seven points storage technique of Toyota make the warehouse more efficient and
safe to operate. The following are the advantages of the seven points storage technique
of Toyota:
 No misplaced items in the warehouse
 Faster pickup and delivery of products
 Maximum utilization of the cubic area
 Safer working condition for the staffs
 Low chance of mishandling heavy products
 Convenient way to bin and pick the items when needed.

55
5.2 CHECK-LIST ANALYSIS
5.2.1 Analysis of general facilities available at the warehouse
Table 5.1

Sl.
Item No Poor Good Excellent N/A
No
Personnel security checks on
1 X
entry and exit
2 All exits are secure X
Is there a disabled access into the
3 X
warehouse
4 Intruder alarm systems installed X
Floor surface in good condition
5 X
(clean and dry)
6 Warehouse is clean and tidy X
Sufficient bays for loading and
7 X
unloading goods
Adequate space for parking the
8 X
goods vehicles
Sufficient natural lighting is
9 X
available
Sufficient space between racks
10 X
ends and external walls

Analysis: Through the general observation conducted on the external and internal
premises of the warehouse, it was founded that out of 10 items impacted the work
processes. All entries and exits of the warehouse and bays were secure and has intruder
alarms installed. Personnel security checks on entry and exit were good. Floor surface
of warehouse were satisfactory but it was not always clean and tidy. There were 7 bays
in total for loading and unloading sufficient for day to day operations. There is adequate
space for parking vehicles. Warehouse have sufficient natural as well as artificial
lighting available for conducting operations. The space between racks end and external
walls are also good so that it is easier for the staffs for binning and order picking when
necessary.

56
5.2.2 General analysis of Inbound operations
Table 5.2
Sl.
Items No Poor Good Excellent N/A
No
1 Scheduling of vehicle arrivals X

2 Vehicle booking in system X

Notification of goods to be
3 X
received
Docking area clear of stored
4 X
materials and obstruction?
Sufficient space for empty
5 X
pallet storage
Sufficient space for layout
6 X
goods for checking
Product quantity and
7 X
conditions check
8 Is the goods received sorted? X

9 Recording of unloading time X

Quarantine area for non-
10 X
compliance
All non-conforming stock
11 X
dealt with quickly
Are returned items dealt with
12 X
immediately

Analysis: From the observation study conducted on the inbound section, it was
observed that there is scheduled vehicle arrivals i.e. three times a day (9:30am, 12:30pm
and 4:30pm) A detailed list of items to be received is available ready in storekeeper.
The docking area was clear of stored materials and obstructions since all the items are
either binned or cleared to the customers. Warehouse had clear and marked spaces for
sufficient storage of empty pallets and it also has sufficient space for goods checking.
The product quantity and condition checks were good and the goods received were
sorted correctly. There was no official recording of unloading time. There was no
sufficient space for quarantine area for non-compliance goods but all non-conforming
stocks and all returned items were dealt with in good manner.

57
5.2.3 General analysis on put away and storage

Table 5.3
Sl No
Items No Poor Good Excellent N/A
1.
System directed put away X
2.
Management directed put away X
3.
Location IDs are marked clearly X
4. Are items stored in the correct
X
location
5.
Stock picking method used X
6. Is space usage monitored and
actions taken to minimize wasted X
or excess space
7. Racking condition is checked
X
regularly
8. Are high value goods stored
X
securely
9. Perpetual inventory counting
X
takes place
10. Stock counting accuracy is
X
measured
11. Errors are investigated
X
thoroughly

Analysis: From the above table its evident that the warehouse uses both system directed
put away strategy rather than management directed strategy. Location ID’s marked are
Excellent, each part has own location and marked evidently on the bin. The items are
stored in exactly same location with the help of barcode in both product and the
location. Goods to picker stock picking method was used for picking. Space/shelves
usage monitoring is good and racking condition is checked periodically. Perpetual
inventory counting’s are excellent and stock counting accuracy is also good. Error
happened are investigated thoroughly

58
5.2.4 General analysis of picking operations.

Table 5.4
Sl.
Items No Poor Good Excellent N/A
No
Pick locations are replenished
1 X
efficiently
Replenishment takes place
2 X
during picking
Sufficient stock held in each
3 X
location for each shift
Fast moving items are in the
4 X
most accessible location
The pick list provides an
5 X
efficient pick path

6 Heavier items are picked first X

Sufficient equipment available

7 X
for picking
Pick accuracy is measured and
8 X
monitored

9 Sufficient number of employees X

Analysis: From the above table, it is evident that pick operations is working efficiently
as it should be. Pick locations are replenished separately and not at the time of picking.
Stock held during each shift are also satisfactory. Goods are stored according to their
movement(FSN) fast moving goods are stored near to delivery area. Also picking list
does provide an efficient pick path so that the staff have to travel minimum distance for
the pickup. Availability of equipment for picking and method of stacking are sufficient.
Pick accuracy is not measured or monitored in this branch but those practices are held
in other major warehouse of Toyota. The picking area however have sufficient number
of employees to run the current operational needs.

59
5.2.5 General Analysis of Outbound area operations.

Table 5.5

Sl.
Items No Poor Good Excellent N/A
No
Departure times are
1 X
planned
Sufficient space to layout
2 X
dispatches
Products are in the correct
3 packing without any X
tampering
4 Checking and Labelling X
Products are stacked to
5 X
minimize transport costs
Empty pallets are moved to
6 X
assigned locations.
Sufficient number of
7 X
employees

Analysis: In outbound section, planning of departure times cannot be assigned since

the outbound operations happens only at the time of ordering, Space for lay out
dispatches are also rated Good. Product packaging conditions were also rated Good.
But the checking and labelling is not done in the warehouse since the product is already
labelled properly. Products loading to vehicle was rated Good for maximum utilization
of space. Space for empty pallet storing is provided near to the loading area so it is to
the area after loading. Employee availability in outbound area is rated as Excellent.

60
5.2.6 General Analysis on Warehouse systems and equipment.

Table 5.6
Sl. No Items No Poor Good Excellent N/A
Is there a warehouse
1 X
management system in place?
Is the system adequate for the
2 X
current operations?
Proper documentation carried
3 out for inbound and outbound X
operations
Are there enough repacking
4 and labelling stickers X
available to storekeepers?
Are there enough PDTs for
5 X
storekeepers
Regular checking and
6 maintenance of equipment’s X
are carried out?
Are tools and packing
7 materials are stored in their X
designated areas?
Sufficient employees at IT
8 X
office

Analysis: From the observations the warehouse management system implemented in

the place was rated excellent. The system is adequate for current operations and rated
Good. The documentation process was rated Good. There was also enough repacking
and labelling stickers even though they are not necessary. They were rated Good. There
was enough PDT’s for the storekeepers. It was rated Good. Proper Checking and
maintenance of equipment were done and also rated Good. The tools and packing
materials were stored in their designated places. It was also rated Good. Employee
strength at IT office was rated Good.

61
5.3 PERCENTAGE ANALYSIS

5.3.1 Neatness and cleanliness issues observed in 30 days

Days No of Issues Comments

1-5 0
5-10 1 Wet floors made foot
stamps for a day
10-15 0 Cleaned and cleared
15-20 1 Waste cartons were
kept in loading area
20-25 0
25-30 0

Cleanliness and Neatness

7%

No issues Found
Issues Found

93%
FIG 6.2

Inference
It is observed that almost all the days the warehouse has been kept neat and tidy,
which is very suitable for the working condition. The warehouse is being cleaned
twice in a day. The small errors or the 7% of issues found are very negligible and
minute compared to the daily operations carried out in the warehouse

62
5.3.2 Safety issues and injuries

Days No of Issues Comments

1-5 0
5-10 0
10-15 0
15-20 0
20-25 0
25-30 0

Safety and Injury Issues

0%

No issues Found
Issues Found

100%

FIG 6.3

Inference
There were no safety issues were found on the observation period of the 30 days.
On enquiring there were very few or almost no record found on safety issues or
injuries happened to the staffs in the warehouse which shows the effectiveness of
the layout and the way of handling heavier parts in the warehouse.

63
5.3.3 Mishandling of the product

Days No of Issues Comments

1-5 0
5-10 3 3 windshield were
damaged while unloading
from the truck
10-15 0
15-20 0
20-25 0
25-30 0

Mishandling

3%

No issues Found
Issues Found

97%
FIG 6.4

Inference
Three windshield were damaged while unloading from the truck and returned back.
This happened due to an accident while unloading with the forklift, the windshield
slipped out of the pallet which caused the damage. The damage occur during
inbound or outbound operations is very rare in the warehouse.

64
5.3.4 Misplacement of the item

Days No of Issues Comments

1-5 0
5-10 0
10-15 0
15-20 0
20-25 0
25-30 0

Misplacement of items
0%

No issues Found
Issues Found

100%

FIG 6.5

Inference
There were no issues observed in misplacement of items in my 30 days of study.
Since the item can be stored only in the specific location meant for the product, else
it cannot be registered as stocked. This is done by scanning the barcode in the
product which shows the location of the product to be binned and the barcode of
the location is also scanned to register the item in the bin/ location.

65
5.3.5 Unloading methods used in inbound area in average in a day.

Sl. No Methods Frequency Percentage

1 Pallet jacks 41 29.3%

2 Manual 86 61.4%

3 Conveyer belts 0 0%

4 Cage/Trolley 0 0%

5 Forklift trucks 13 9.3%

TOTAL 140 100%

Unloading methods in inbound area

100
90 86

80
70
61.4
60
50 Frequency
41
40 Percentage
29.3
30
20 13
9.3
10
0 0 0 0 FIG 6.6
0
Pallet jacks Manual Conveyer belts Cage/Trolley Forklifts

Inference
Its inferred that out of 140 observations 61.4% manual work was done instead of using
pallets, since most of the items unloaded are small parts and materials which can be
unloaded and binned manually than using pallet jacks or forklift. It is also inferred that
29% of items are unloaded by pallet jacks and very few i.e. 9.3% items are loaded by
forklift.

66
5.3.6 Delay in delivering item after receiving the order.

Days Average delay No of items

1-5 6.5 230
5-10 5 160
10-15 4.4 130
15-20 6.5 240
20-25 7 300
25-30 5.5 210

Time Delay
8 350

7 300
6
250
5
200
4
150
3
100
2

1 50

0 0
1 to 5 5 to 10 10 to 15 15 to 20 20 to 25 25 to 30

Average Delay No of items

FIG 6.7

Inference

The average delay in delivering the product after a customer placing an order will
depend upon the number of orders placed. The time delay that occurred is negligible
since it’s the minimum time required to process the order and deliver the item to the
customer. Hence we can say that the delivery system of Toyota is efficient enough to
deliver the product to the customer in time and to attain customer satisfaction.

67
 CHAPTER 5

FINDINGS, CONCLUSION AND SUGGESTIONS

68
FINDINGS

1. The layout implemented in the Toyota at present is the optimal layout for the
current operations
2. The ware house is maintained neat and clean. The floors are cleaned regularly
3. The machines and equipment that are used for loading and unloading are
maintained regularly
4. The empty pallets are arranged and kept in the place provided for them after each
unloading or loading process
5. Items are stored according to the moving items.
6. Heavy items are stored in the lower racks which will avoid accidents and make it
easy for staffs to pick up.
7. Every parts are stored in individual bins allotted for them. No item is misplaced in
the warehouse
8. Every items are binned with the help of barcode scanner which will identify the
location of the part to be kept
9. Warehouse management system is implemented in the warehouse which will
notify the level of stocks and stock outs to the vendor to supply products to the
warehouse.
10. Larger amount of inbound and outbound operations is done manually since the
items are small in packages and individual items are to be kept in different
locations
11. Very less delay in delivering the product to the customers, as compared to the
number of products delivered to the customers.
12. All the important procedure to carry out things more efficiently are being displayed
in the places of action so as to achieve higher performance in employees and to
motivate them
13. Irregularity of movements is notified with signals, such as overstock under stock
etc.

69
CONCLUSIONS

The research entitled “A STUDY ON THE WAREHOUSE MANAGEMENT

TECHNIQUES EMPLOYED IN TOYOTA SPARE PARTS IN AL AIN, UAE”. The
research highlights the various warehouse management techniques for a warehouse in
an organization. From this research it is evident that an effective implementation of
certain steps of method which may look simple in action but will results in huge
difference in the performance of a warehouse. The proper functioning of warehouse in
enterprise is a prerequisite for the smooth flow of material goods in logistic systems.
Therefore, warehouse management has an important role and directly influences of
enterprises and the supply chain efficiency. In the modern warehouse requires the use
of better technologies and management methods processes

I conclude that the effectiveness of overall operations of a warehouse can be

considerably enhanced by proper decision on objectives for efficient warehousing. In
the study it’s found out that availability and use of equipment’s, better WMS, Vendor
management practices, storage technique, pick operations etc. affects the efficiency of
warehouse greatly. Warehousing network plays a major role in the success of the
physical distribution of products. In the scenario of growing competition and to meet
the customer expectations for cost and service, implementation of appropriate
warehousing strategies plays significant role. Warehouse complexity affects the
planning and control structure through the comprehensiveness of the work to be done
Nonetheless, a complex warehousing operation requires a control structure that has a
great deal of information, data, and knowledge about products, processes, customers,
and resources readily available.

70
SUGGESTIONS

1. In this technically advanced era Toyota can implement more advanced systems
in the warehouse which can further improve the performance of the warehouse.
2. The Kanban system can be implemented thoroughly for easy identification of
requirements
3. Pick to light system can be implemented for easy picking of the item
4. Voice picking system can also be installed in which the staff will be
continuously instructed the things to do.
5. More automation can be implemented since most of the process are repetitive
in nature.
6. Employee training programs can me conducted not only for higher officials but
also for small staffs to do their job efficiently.

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REFERENCE

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Distribution of Goods; Published by The Macmillan press Ltd. London (1974)

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Publishing House Pvt. Ltd. (2003)

3. Yeming Gong (2009) “Stochastic Modeling and Analysis of Warehouse

Operations” a Ph.D. Thesis submitted to Erasmus University, Rotterdam.

4. S Jaya Krishna (2007): “Warehouse Management System-The Business Case”, E-

Business, The ICFAI university press, march-2007

5. Van Den Berg J.P (1999): A literature survey on planning and control of
warehousing systems, IIE Transactions, Volume No. 31.

6. Zijm, W.H.M. (1999): Models for warehouse management: Classifications and

examples, International Journal of Production Economics, Volume No.59

7. Ito T. and Abadi S.M. (2001): Agent –based material handling and inventory
planning in warehouse. Journal of Intelligent Manufacturing, Volume No.13

8. Gray A. E, Karmarkar. U. S and Seidmann. A (1992): Design and operation of an

order-consolidation warehouse: Models and application, European Journal of
Operational Research, Volume No. 58

9. Larson, T.N, March, H. Kusiak, A, (1996): A heuristic approach to warehouse

layout with class-based storage, IIE transaction

10. Rutner, S.M. and Langley, John C. (2000): Logistics value: Definition, process
and measurement, The International Journal of Logistics Management, Volume No.
11, Issue No. 2.

11. Rouwenhorst B, Reuter B, Stockrahm V, van Houtum, G.J, Mantel, R.J. and Zijm,
W.H.M. (2000): Warehouse design and control: Framework and literature review,
European Journal of Operational Research, Volume No. 122, Issue No. 3

12. Aminoff A, Kettunen and Pajunen-Muhonen H. (2002): Research on Factors

Affecting Warehousing Efficiency, International Journal of Logistics, Volume No. 5.

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13. Koster, de R., Le-Duc, T., Roodbergen, K.J. (2007): Design and control of
warehouse order picking: A literature review, European Journal of Operational
Research, Volume No. 182

14. Ambroziak T and Lewczuk K (2008): A method for scheduling the goods
receiving process in warehouse facilities, Total Logistic Management, Volume No 5.

15. Faber and de Koster, R.B.M., Van de Velde, S. (2002): Linking warehouse
complexity to warehouse planning and control structure, International Journal of
Physical Distribution & Logistics Management, Volume No. 32, Issue No. 5

16. Jochem Sprengers’s (2010): Planning and control in warehouse systems, Bachelor
Thesis Organization and Strategy, Premaster Operations management and Logistics.

17. Tommy Blomqvist (2010): A warehouse design framework for order processing
and materials handling improvement - Case Etra Oy, Logistics Master's thesis,
Department of Business Technology, Aalto University, School of Economics

18. Dharmapriya U.S.S. and Kulatunga A.K. (2011): New Strategy for Warehouse
Optimization – Lean warehousing, Proceedings of the 2011 International Conference
on Industrial Engineering and Operations Management, Kuala Lumpur, Malaysia

19. Faber, Nynke, De Koster, Rene B. M. (2002): Linking warehouse complexity to

warehouse planning and control structure: An exploratory study of the use of
warehouse management information systems, International Journal of Physical
Distribution & Logistics Management [online], Volume No. 32.

20. Heung Suk Hwang, Gyu Sung Cho (2006): A performance evaluation model for
order picking warehouse design, Computers and Industrial Engineering, Volume No.
51.

21. Hsieh L.F and Tsai L, (2005): The optimum design of a warehouse system on
order picking efficiency, International Journal of Manufacturing Technology, Volume
No.28

22. Krauth E, Moonen H, Popova V. & Schut M. (2005): Performance Indicators in

Logistics Service Provision and Warehouse Management – A Literature Review and
Framework, http://www.cs.vu.nl/~schut/pubs/mcs-Krauth2005a.pdf

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23. Jinxiang Gu, Marc Goetschalckx, Leon F McGinnis (2007): Research on
warehouse operation: A comprehensive review, European Journal of Operational
Research, Volume No. 177, Issue No.1.

24. Gu, McGinnis L.F. (2007): Research on warehouse operation: A comprehensive

review, European Journal of Operational Research, Volume No. 177

25. Tompkins J A, White, J A, Bozer Y A and Tanchoco J. M. A. (2010): Facilities

Planning, Wiley, New York, New York, 4th edition

26. Ramaa. A, Subramanya K.N and Rangaswamy T M (2012): Impact of Warehouse

Management System in a Supply Chain, International Journal of Computer
Applications (0975 –8887), Volume No. 54, Issue No. 1

27. Knight Frank (2014): India Logistics and Warehousing Report,

http://content.knightfrank.com/research/677/documents/en/india-warehousing-and-
logistics-report2326.pdf

74
BIBLIOGRAPHY

Books:
1. Gwynne Richards; Warehouse Management, A complete guide to improving
efficiency and minimizing costs in the modern warehouse; Kogan Page, Second
Edition, 2014

2. P Narayan and Jaya Subramanian; Inventory Management, Principles and

practices; Excel Books, First Edition, 2008

3. Donald J Bowersox, David J Closs; Logistics Management- The integrated

supply chain process; Tata McGraw Hill, 2000

4. Saxena J.P; Warehouse Management and Inventory Control; Vikas Publishing

House Pvt. Ltd., 2003

5. S L Ganapathi, S K Nandi; Logistics Management; Oxford University Press,

2015

Internet Resources:
1. www.warehousebuilgings.blogspot.com/2011/06/standard-operating-
procedure-sop.htm

2. www.bizmanualz.com

3. www.supplychain247.com/dock_scheduling_and_retail_industry.htm

4. www.arabianbusiness.com/luluhypermarket_warehouse_system.htm

5. www.supplychain247.com

6. www.wikipedia.org/sap_hana.htm

7. www.emmaylogistics.com

8. www.lulugroupinternational.com

9. www.youtube.com/watch?v=mp7hgcAGDnE

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 APPENDIX

 CHECKLIST

General

Item No Poor Good Excellent N/A Comments

Personnel security checks
on entry and exit
All exits are secure
Is there a disabled access
into the warehouse
Intruder alarm systems
installed
Floor surface in good
condition (clean and dry)
Warehouse is clean and
tidy
Sufficient bays for loading
and unloading goods
Adequate space for
parking the goods vehicles
Comprehensive signage
for delivery drivers
Sufficient natural lighting
is available
Sufficient space between
racks ends and external
walls

Inbound operations

Items No Poor Good Excellent N/A Comments

Scheduling of vehicle
arrivals
Vehicle booking in system
Notification of goods to be
received
Is the docking area clear of
stored materials and
obstruction?
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 Sufficient stocks of empty
pallets available
Sufficient space for empty
pallet storage
Sufficient space for layout
goods for checking
Product quantity and
conditions check
Is the goods received
sorted?
Sufficient handling
equipment provided
Recording of unloading
time
Quarantine area for non-
compliance
All non-conforming stock
dealt with quickly
Are returned items dealt
with immediately

Number of purchase orders per day :

Number of vehicles arrived per day :
Total number of cartons per day :

Put away and storage

Items No Poor Good Excellent N/A Comments

System directed put away

Management directed put
away
ABC analysis used for
product location
Location IDs are marked
clearly
Are items stored in the
correct location
Stock picking method used
Is space usage monitored
and actions taken to

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minimize wasted or excess
space
Racking condition is
checked regularly
Are high value goods
stored securely
Perpetual inventory
counting takes place
Stock counting accuracy is
measured
Errors are investigated
thoroughly

Picking

Items No Poor Good Excellent N/A Comments

Pick locations are
replenished efficiently
Replenishment takes place
during picking
Sufficient stock held in
each location for each shift
Fast moving items are in
the most accessible
location
The pick list provides an
efficient pick path
Heavier items are picked
first
Sufficient equipments
available for picking
Pick accuracy is measured
and monitored
Sufficient number of
employees

Despatch

Items No Poor Good Excellent N/A Comments

Departure times are
planned

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Sufficient space to layout
dispatches
Products are in the correct
packing without any
tampering
Products are packd to
minimize transport costs
Empty pallets are moved
to assigned locations.
Sufficient number of
employees
No of picking lists per day

No of cartons for dispatch

Unit of delivering?

Systems and
Equipments
Items No Poor Good Excellent N/A Comments
Is there a warehouse
management system in
place?
Is the system adequate for
the current operations?
Proper documentation
carried out for inbound
and outbound operations
Are there enough PDTs
for storekeepers
Regular checking and
maintenance of
equipment’s are carried
out?
Are tools and packing
materias are stored in their
designated areas?

79