CASE STUDY- 1

Gattu Welding Electrodes- Restructuring Warehousing

Network
By Group -3
Abdul Khaliq (19MBE002)
Ammar Rizvi (19MBE008)
Fatima Zaidi (19MBE018)
Puspita Chatterjee (19MBE048)

Introduction

 GWE was incorporated in 1987 in collaboration with a Swedish MNC

 By 2001, it employs more than 1000 employees with a turnover of INR 150 million.
 The organisation operates four manufacturing plants with world class R&D support.
 GWE is the second largest player in welding industry in India – 27% market share

Product Range

 Standard Consumables
 Special Consumables
 Reclamation Consumables
 GWE Welding Equipment
 Medical Gas Equipment
 Cutting Systems

Manufacturing Facilities

 Kolkata : 2 Facilities
o General-purpose electrodes and reclamation electrodes
o Welding equipments
 Nagpur : MIG (Metal Insert Gas) welding consumables
 Chennai : Welding Consumables
 Market Segments

 Lower Segment : Consumes less than Rs. 25,000 worth material per annum
 Middle Segment : Consumes Rs. 25,000 – Rs. 2,00,000
 Upper Segment : Consumes more than Rs. 2,00,000

Qn – 1 The leading player (No.1) in the welding trade industry is maintaining inventory levels of
22/25 days. How, according to you should GWE go about to achieve that level?

Answer_

GWE Factories (4)

GWE Factories (4)

Warehouses (83)

Dealers(350) Dealers(160)

Dealers(350)

Customers(15000)
Customers(10000)

Old System New System

For reduction in the inventory level GWE must apply the following suggections:

 The inventory depends upon the demand in the region – This is one of the most important and first
initiative they must take , GWE must maintain their inventory according to the demand in the
particular region. It will save the lot of cost like cost of extra maintenance of the inventory as well as
the cost of over production. They should use some forecasting on the basis of the sales of previous
years and then decide the current year sale accordingly.
 GWE must reduce the replenishment lead time – Here nothing in the hand of GWE if we see by
the prospective of customer, there is no direct link between customer and GWE. Instead of
contacting company here customer has to reach its dealer first. So first of all company must work
for reduction of the replenishment lead time which will be beneficial for them and the material will
reach to the customer on the right time without any delay.
 They must revise Order Cycles and Order Quantities : GWE must revise the order cycle and order
quantities of the dealers and that should be strictly according to the forecasting of the sales in that
particular region. It will save the extra cost and will add the benefit to the company.
 The primary transportation needs to be outsourced : In the current scenario GWE is using their
own primary transportation for the movement, whereas the secondary transportation from dealer to
customer is outsourced . For primary transportation they must use the outsourced vehicles so that
there should not be any delay.
 Number of dealers should be reduced- For better reach it is advisable to reduce the dealers and use
the more rubust network of delares with the integrated online modes.
 They can also increase the speed of their operations
 Replenish based on market demand

Qn – 2 Does GWE need to further reorganize its marketing distribution system to overcome its
current problems?

Ans:-

Yes GWE should restructure their marketing distribution system.

 They should conduct surveys to understand the market demand before sending the stock to
the dealer it will save the cost of warehousing and by the help of this survey company will
save the cost of overproduction.
 They must shift to e-commerce platform to do direct selling also. This will not incur much
cost and also give them a new platform to sell and by the help of this GWE will establish a
connection to the customers directly.
 GWE must have their own forecast from a field survey agent to know the proper demand in
the market and it will help the company in the various ways.

Qn – 3 Do you recommend a change in the marketing set-up reporting structure? If yes, how?

The reporting structure is highly decentralized,we don’t want to change the reporting structure of the
company.
 The Dealers should be encouraged to buy on an online platform so as to use Business
Intelligence tools to analyze and predict the actual demand ,It will help the dealers to increase
the sales in a proper manner.
 Apart from that, the reporting structure is very well structured here we don’t need any kind of
change . As in the reporting structure we can see that there are the logistics managers which
are taking care of their areas.
 CASE STUDY- 2
Phantom Glass Limited- Logistics Management

Introduction

 Phantom glass ltd. Is one of the leading glass manufacturing companies in India
having an installed capacity of 32 millions CSQM(600 tones per day) of float glass .
 Float glass is a sheet of glass made by floating molten glass on a bed of molten metal.
 Modern windows are made from float glass.
 And their plant is located in western India at a prime location.
 This company is also manufacturing a variety of international quality glass
 They have a collaboration with world class manufacturer.
 They provide world class quality of product and price are less as compare to his
competitor.
 Even in the prevailing recessionary trends is the market the company registered an
increase of 9.3 percent in sales.
 Market share is 20 percent.
 In total production,35 percent is of premium quality glass used in the automobile
sector.
 And 65 percent goes into other applications.

Q– 1 To Bring down the inventory carrying cost, which include the carrying cost for
packaging material, would you suggest the storage of glass sheets in an unpacked
condition and packaging only at the time of dispatch? Discuss the new system in the
light of the problems they may face.

As stated in the case study the PGM earns maximum from customized glasses. But that also
leads to consignment transfer and storing issues. The packaging cost for the domestic
consignment is 8 per cent (due to the large number of odd sizes) of the product cost, while it
is 5 per cent of the product cost for the export consignment.

So it is suggested to store the glass sheet in an unpacked condition and packaging only at the
time of dispatch. The glass sheet is made for safety glass for automobile and shop fronts so it
will be strong enough to be stored with the usage of crate. They can be packaged during the
dispatch time and save the efforts in loading and unloading the crates. The congested storage
arrangement also causes breakage rather as material handling gets complicated. Avoiding the
crate system can also reduce breakage and loss of material as well.

As the space required for the packed glass sheet is approx 30% more than the unpacked
material. The carrying cost of glass from the manufacturing unit to the warehouse can also be
reduced. As the data shows the company can face some legal problem as they store 250
CSQM of material per sq meter of warehouse floor space. While the international standard for
easy and safe material storage and movement is 175 CSQM per sq meter of the warehouse
floor space

Q-2 What measures would you suggest to Phantom to reduce the inventory level?

To reduce the inventory level at Phantom glass JIT or Make to order would be a wise choice.
They should manufacture all the odd sizes on the order basis called Make to Order. The
company is facing the problem in maintaining the inventory of odd sizes and it is give that at
any point of time the company is holding 60% of total value of odd sizes. The company
cannot stop manufacturing the odd sizes as the 50% of the total sale of the company is of odd
sizes

Q 3. In light of the storage density they are presently having, is this a case for additional
warehousing space? Justify.

Yes this is indeed a case for additional spacing as lack of space is causing breakage,
congested storage and labor wastage.The give numbers depict that the inventory turnover
ratio is 3.8 million CSQM. The total sale of the year is 25.9 million CSQM So, inventory
turnover ratio = total sales /avg. Inventory Hence, avg. Inventory = total sales / inventory
turnover ratio = 25.9 / 3.8 = 6.8 million CSQM According to the data given the ending
inventory holding of the year is 7.3 million CSQM .
The additional space is required to store 0.5 million CSQM of material

Q 4. How will you organize the logistics activity at Phantom for improvement in the
productivity, effectiveness and efficiency of the logistics department?
 Instead of single warehouse they should open regional storage facilities which will
help them in moving the sheets easily and will solve the problem of storage space.
 There should also be a proper management between the logistics department and the
CSD.
 Should use JIT for the sheets which are in odd sizes.
Should stop producing glass for some times so that the inventory can be used and use
automatic entries instead of manual inventory management that is a tiring and time-
consuming task.
 Opt flat organization structure and the information as easily available to every single
department.
 The coordination between the logistics department and the Customer Service
Department (CSD) should be very close and CSD should also have the knowledge of
the production schedules. So there is no delay in the issue of dispatch schedule to the
logistics department.
 If due to the lack of information there is a delay in confirmed dispatch schedules to
logistics by customer service department this will lead to part loading of the truck ,
longer waiting of truck (thus attracting the penalty) , delay in loading and improper
utilization of contract labour that are paid on a daily basis.
 Logistics Department should also receive the daily production schedule and prepare
the stock location plans.