Erp-business Process Re-engineering For Implementing Warehouse Management System

Summer Internship Program

A REPORT ON BUSINESS PROCESS REENGINEERING FOR IMPLEMENTING WAREHOUSE MANAGEMENT SYSTEM

By Manoj Banshilal Pachouri 05BS 1741 ICFAI Business School Bangalore

A REPORT ON BUSINESS PROCESS REENGINEERING FOR IMPLEMENTING WAREHOUSE MANAGEMENT SYSTEM By Manoj Banshilal Pachouri ICFAI Business School Bangalore

A report submitted in partial fulfillment of the requirements of MBA program of ICFAI Business School Submitted To Faculty guide Prof. Bharat Kantharia ICFAI Business School Ahmedabad

Company Guide Mr. Sharad Jobanputra Fairdeal Distribution Services Pvt. Ltd. Ahmedabad

Fairdeal Distribution Services Pvt. Ltd. 311, Shiromani, Surendra Mangaldas Road, Ahmedabad – 380 015 India Phone: 00 91 79 55215456 (3 Lines) Fax: 00 91 79 26753551 Email: [email protected] Website: www.fairdeal.org May 15, 2006 CERTIFICATE TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. Manoj Banshilal Pachouri has successfully completed the Project work, assigned to him at Fairdeal Distribution Services Pvt. Ltd., as part of the requirement in the MBA Curriculum of ICFAI Business School under my guidance and supervision. He has worked on the project titled Business Process Reengineering for Implementing Warehouse Management System during the period February 2006 – May 2006. This project is done for partial fulfillment of the M.B.A. program from the aforesaid institute. I wish him all the best in his future endeavors and career. Yours truly, FAIRDEAL DISTRIBUTION SERVICES PVT. LTD.,

Sharad Jobanputra Managing Director

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DECLARATION I declare that the project entitled “BUSINESS PROCESS REENGINEERING FOR IMPLEMENTING WAREHOUSE MANAGEMENT SYSTEM” conducted at Fairdeal Distribution Services Pvt. Limited is a record of independent research work carried out by me during the academic year 2005-06 under the able guidance of my faculty guide Professor Bharat Kantharia of ICFAI Business School, Ahmedabad, and my project guide Mr. Sharad Jobanputra, promoter and Managing Director of Fairdeal Distribution Services Pvt. Ltd. (www.fairdeal.org) I also declare that this project is the result of my effort and has not been submitted to any other University or Institution for the award of any degree, or personal favor whatsoever. All the details and analysis provided in the report hold true to the best of my knowledge.

Place: Ahmedabad Date: 10th May 2006

Manoj Banshilal Pachouri

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Acknowledgements The satiation and euphoric that accompany the successful completion of task, would be incomplete without the mention of the people who made it possible. After all, success is the epitome of hard work, severance, undeferred missionary, zeal, steadfast determination and most of all encouraging guidance. So, with immense gratitude, I acknowledge all those whose guidance and encouragement served as a “beacon light” and crowned my efforts with success. I sincerely thank Mr. Sharad Jobanputra, honorable Promoter and Managing Director of Fairdeal Distributors Pvt. Ltd. and my company guide for giving me an opportunity to take up this project. I thank him for being a constant source of inspiration, mentor and above all for his encouragement. His 30 years of experience in Sales and Distribution was itself a great source of knowledge and information for me. Despite his demanding schedule, he bestowed every possible facility to me; so as to carry on the project work without any encumbrance. I would like to express my profound sense of gratitude to Professor Bharat Kantharia - ICFAI Business School, Ahmedabad, and my project guide for guiding me as well as providing me the support to conduct this project. This IIM-A graduate with his more than 20 years of work experience in ERP implementation and Business Process Reengineering has all the tools required to guide a student. I would like to extend my warm salutations to Professor Ravi Warrior, my Marketing faculty at Bangalore campus and Mr. Rajkumar of Sequel Pvt. Ltd. for his guidance and encouragement in getting this project. With a deep sense of gratitude and indebtedness, I sincerely and whole-heartedly thank my fellow colleagues and the staff team at Fairdeal Distribution Services Pvt. Ltd. for giving me value suggestions and advice throughout the execution of the project. This project would not have been concluded successfully within time without their support and help.

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I would be selfish if I do not mention names of Mr. Zankar; Mr. Hemant & Mr. Aashish of Titan watches; Mr. Sunil Patel of Bharati (Motoroala); Mr. Pravin of Amara Raja Batteries; Mr. Narendra of TVS Motors; Mr. Vinod of Tata Tea; Mr. Saurabh of Voltas; and many other who gave me their valuable time from their busy schedule to help me in studying the business processes at Fairdeal Distribution Services Pvt. Ltd. I take this opportunity to thank all the library members of ICFAI Business School, Ahmedabad, friends, and my seniors who provided me with the study material on my project. Last but not the least; I thank my parents, Late Shri Banshilal Pachouri and Ms. Dhanvanti Devi, for bringing me up in a successful environment and teaching me all the basic etiquettes and ethics required for my growth in an organization.

Manoj Banshilal Pachouri 05BS 1741 ICFAI Business School

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Me @ FAIRDEAL I am among the few professionals who are privileged to get their dream project. It was always my dream to work on an ERP and BPR project in my SIP and Fairdeal provided me this opportunity. Working with the Fairdeal I have been able to understand some of the best logistics and clearing & forwarding industry practices that they follow. Around four month of my work exposure gave me tremendous insights into the companies operations. At the Fairdeal, I got the opportunity to understand the supply chain and logistics operations of many industries namely, Automobile industry, Horology industry, Foods and snacks industry, Electronic home appliances industry, Telecommunications industry and Paint Industry. Some of the companies I studied in these industries are Titan, Tanishq, Voltas, TVS Motors, MRF paints, MICO Bosch, Bharati Teletech, Motorola, Tata tea, Bell ceramics, McFills foods, BPL Sanyo, Amara Raja Batteries etc. My Interaction with Area Sales Managers (ASM), dealers, branch managers (BM) and other top management of these companies stretched my thinking nerves and gave me new perspective of looking at corporate world’s real time situations. I also got opportunity to spend some time with Mr. Pawas Agarwal; Tata tea regional manager for west zone during my project. In a very systematic manner training was offered to me. Planning Scheduling and deadlines are a part of every working individual and that’s exactly what was expected of me. Though the time was clearly sketched out to me, I was given complete freedom with the style of working. Apart from external industry exposure, Fairdeal’s management and staff was not less than a gurukul for me. Mr. Sharad Jobanputra’s guidance with more than years of industry experience and his deep knowledge of various fields was more than any business school lecture. Fairdeal’s staff was also equally capable with industry experience in range of two to ten years.

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During entire internship period I was asked to report at the end of every phase that I complete. These reports covered my basic understanding of the issue and then methodology that used for the analysis. This enhanced my knowledge to great extent and triggered in me the curiosity to know more on the subject. The prospectus of association with Fairdeal Distribution Services Pvt. Ltd. is always near to my heart. This will steer me to make myself competent enough and excel in whatever I do. In short, it was a knowledge enhancing and curiosity quenching experience that will linger in my heart.

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Table of Contents CERTIFICATE ................................................................................. i DECLARATION ............................................................................ ii Acknowledgements .................................................................... iii Me @ FAIRDEAL.......................................................................... v Table of Contents...................................................................... vii List of Figures............................................................................. x List of Tables............................................................................. xi Acronyms and Abbreviations....................................................... xii Abstract..................................................................................... 1 Executive Summary .................................................................... 3 INTRODUCTION ....................................................................... 6 Objectives of the Project ........................................................... 6 Scope of the project ................................................................. 7 Limitations of the Study............................................................ 8 Proposed Methodology.............................................................. 9 Detailed tasks to be performed ................................................ 11 Project Schedule.................................................................... 15 INDUSTRY ANALYSIS ............................................................. 16 Logistics Industry .................................................................. 16 Legal Issues in Logistics Industry........................................... 18 Third party logistics ............................................................. 19 Third Party Logistics Industry: SWOT Analysis ......................... 23 Fourth Party Logistics (4PL) Industry...................................... 24 In-plant Stores Outsourcing .................................................. 25 Vendor Owned Inventory Management ................................... 25 Warehousing....................................................................... 26 Material Handling ................................................................ 26 Reverse Logistics (Returns Management) ................................ 27 Clearing and Forwarding Agents ............................................ 29 ABOUT FAIRDEAL ................................................................... 30 Vision, Mission and Business Objectives .................................... 31 History ................................................................................. 32 Directors .............................................................................. 32 Independent Directors ............................................................ 33 Business Focus ...................................................................... 34 Product Range....................................................................... 34 Locations.............................................................................. 35 Distribution Network .............................................................. 36 Awards and Achievements ...................................................... 37 Manoj Banshilal Pachouri

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Client Companies................................................................... 37 Voltas ................................................................................ 37 Titan Industries ................................................................... 39 Tata Tea ............................................................................ 41 Amara Raja Batteries Limited (ARBL) ..................................... 43 TVS Motors......................................................................... 44 Motors Industry Company Limited (MICO)............................... 46 Bell ceramics ...................................................................... 48 Bharti Teletech.................................................................... 49 MRF Ltd ............................................................................. 51 PROCESS ANALYSIS ............................................................... 53 Processes and the Organization ............................................... 54 Sources of Data Collection .................................................... 54 Organization Structure of Fairdeal.......................................... 55 Remuneration claimed by CFA ............................................... 56 Company Wise Processes ........................................................ 57 ABC ANALYSIS ....................................................................... 81 Definition of ABC Analysis ....................................................... 82 Value Wise ABC Analysis......................................................... 83 Quantity Wise ABC Analysis..................................................... 87 Transactions Wise ABC Analysis ............................................... 91 AS-IS ANALYSIS .................................................................... 95 Definition of AS-IS Analysis..................................................... 96 Decide on an approach ........................................................... 99 Cycle Time, Wait Time measurements .................................... 100 Process Matrices [Key Performance Indicators (KPIs)]............... 103 Goods Receiving Process....................................................... 104 Storing Material Process ....................................................... 108 Cycle Count Process ............................................................. 112 Order Punching Process ........................................................ 115 Order Approval Process ........................................................ 118 Invoice/ Bill Printing/ Stock Transfer Process ........................... 121 Dispatching Process ............................................................. 123 Transportation Process ......................................................... 126 Handling Unsalable Material Process ....................................... 129 Handling Warranty Claims Process ......................................... 132 Stock Maintenance Process ................................................... 134 Initial Issues Emerged Out Of AS-IS Analysis........................... 138 Other Notes from Interviews ................................................. 140 TO-BE ANALYSIS .................................................................. 141 Preparation for Implementing Re-Designed Processes ............... 143 Assembling Warehouse Data ............................................... 143 Warehouse Layout ............................................................. 144 Manoj Banshilal Pachouri

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Specifying the Replenishment Sequence ............................... Implementing Location Sequencing ...................................... Generating Barcode Labels.................................................. Import-Export Data To and From WMS ................................. Synchronize Fairdeal WMS and Principal’s ERP Module ............ To-Be Goods Receiving Process.............................................. To-Be Storing Material Process .............................................. To-Be Cycle Count Process .................................................... To-Be Order Punching Process ............................................... To-Be Order Approval Process ............................................... To-Be Invoice/ Bill Printing/ Stock Transfer Process .................. To-Be Dispatching Process .................................................... To-Be Transportation Process ................................................ To-Be Warranty Claims & Unsalable Material Process ................ TO-BE Stock Maintenance Process.......................................... SUGGESTIONS AND RECOMMENDATINS........................... Characteristics of an Ideal WMS............................................. Suggestions and Recommendations........................................ Project Activity-Time Schedule.................................................. APPENDICES ........................................................................ APPENDIX A: Key staff involved in the project ......................... APPENDIX B: Fairdeal’s Document Formats ............................. APPENDIX C: Flowcharting Shapes ......................................... REFERENCES ........................................................................ Bibliography........................................................................ Internet Sources.................................................................. GLOSSARY ...........................................................................

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146 146 147 147 148 149 152 154 156 157 159 161 163 165 166 169 170 174 182 185 185 186 193 194 194 195 196

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List of Figures Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure

1: The Implementation Process Model Project Plan ................. 9 2: Reverse Logistics Cycle ................................................ 28 3: Organization Structure of Fairdeal.................................. 55 4: Flowchart of Goods Receiving Process........................... 107 5: Flowchart of Storing Material Process ........................... 111 6: Flowchart of Cycle Count Process ................................. 114 7: Flowchart of Order Punching Process ............................ 117 8: Flowchart of Order Approval Process ............................ 120 9: Flowchart of Invoice/ Bill Printing/ Stock Transfer Process 122 10: Flowchart of Dispatching Process ............................... 125 11: Flowchart of Transportation Process ........................... 128 12: Flowchart of Handling Unsalable Material Process ......... 131 13: Flowchart of Handling Warranty Claims Process............ 133 14: Flowchart of Stock Maintenance Process...................... 137 15: Warehouse Layout ................................................... 144 16: Flowchart of TO-BE Goods Receiving Process ............... 151 17: Flowchart of TO-BE Storing Material Process ................ 153 18: Flowchart of TO-BE Cycle Count Process ..................... 155 19: Flowchart of TO-BE Order Approval Process ................. 158 20: Flowchart of TO-BE Invoice/ Stock Transfer Process...... 160 21: Flowchart of TO-BE Dispatching Process ...................... 162 22: Flowchart of TO-BE Transportation Process.................. 164 23: Flowchart of TO-BE Stock Maintenance Process ............ 168 24: Format of Gate Pass of Fairdeal ................................. 186 25: Format of Invoice .................................................... 187 26: Format of Advance Intimation of Warranty Return ........ 188 27: Format of Lorry Receipt (LR) of Fairdeal ...................... 189 28: Format of Lorry Receipt obtained by Fairdeal ............... 190 29: Format of Warranty Replacement Delivery Challan ....... 191 30: Format of Warranty Return Delivery Challan ................ 192 31: Flowcharting Shapes ................................................ 193

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List of Tables Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table Table

1: Project Schedule........................................................... 15 2: SWOT Analysis of 3PL Industry ....................................... 23 3: Product Range of Fairdeal .............................................. 34 4: Some examples of Titan watches .................................... 59 5: ABC Analysis - Value Wise ............................................. 86 6: ABC Analysis - Quantity Wise ......................................... 90 7: ABC Analysis - Transaction Wise ..................................... 94 8: Unloading times of Transport Vehicles ........................... 100 9: Loading & Unloading times in TVS (With four labors) ....... 101 10: Ideal Unloading times (with four labors)....................... 101 11: Fairdeal’s Unloading times.......................................... 102 12: Summary of Metrics .................................................. 103 13: Goods Receiving Process ............................................ 106 14: Storing Material Process............................................. 110 15: Cycle Count Process .................................................. 113 16: Order Punching Process ............................................. 116 17: Order Approval Process.............................................. 119 18: Invoice/ Bill Printing/ Stock Transfer Process ................ 121 19: Dispatching Process .................................................. 124 20: Transportation Process .............................................. 127 21: Handling Unsalable Material Process ............................ 130 22: Handling Warranty Claims Process............................... 132 23: Stock Maintenance Process......................................... 136 24: AS-IS Analysis -Important issues with priorities ............ 138 25: Example of Location Sequence Numbers ...................... 146 26: TO-BE Goods Receiving Process .................................. 150 27: TO-BE Storing Material Process ................................... 152 28: TO-BE Cycle Count Process ........................................ 154 29: TO-BE Order Approval Process .................................... 157 30: TO-BE Invoice/ Bill Printing/ Stock Transfer Process....... 159 31: TO-BE Dispatching Process ......................................... 161 32: TO-BE Transportation Process..................................... 163 33: TO-BE Stock Maintenance Process ............................... 167 34: Project Activity-Time Schedule.................................... 182 35: Gantt chart of Project Activity-time Schedule ................ 183 36: Organizational responsibility ....................................... 184 37: Key Staff Involved In the Project................................. 185

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Acronyms and Abbreviations BPR

: Business Process Engineering

ERP

: Enterprise Resource Planning

WMS

: Warehouse Management System

WIP

: Work In Progress

GRN

: Goods Received Note

STM

: Stock Transfer Memo

ASN

: Advance Shipment Notice

LR

: Lorry Receipt

FMCG

: Fast Moving Consumer Goods

SD module : Sales and Distribution Module DD

: Demand Draft of a Bank

E-ARIMS

: electronic – Amara Raja Inventory Management System

VAT

: Value Added Tax

AGVS

: Automated Guided Vehicle System

AIDC

: Automatic Identification Data Capture

APS

: Advanced Planning and Scheduling

ASRS

: Automated Storage & Retrieval System

CPFR

: Collaborative Planning, Forecasting & Replenishment

CTM

: Cycle Time Management

RSP

: Rolling Sales Plan

VOI

: Vendor Operated Inventory

SKU

: Stock Keepting Unit

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Abstract More and more organizations worldwide want to develop products for global markets. At the same time, they need to source material globally to be competitive. One of today's trends to solve this problem is outsourcing logistics or using third-party logistics (3PL) to manage complex distribution requirements. Organizations have developed strategic alliances with 3PL companies all over the world to manage their logistics operations network. These alliances are also known as logistics or supply chain outsourcing and contract logistics. This is also known as Clearing & Forwarding. This project titled “Business Process Reengineering for Implementing Warehouse Management System” aims at improving efficiency of business processes being used at Fairdeal Distribution Services Pvt. Ltd. by implementing an Enterprise Resource Planning (ERP) Warehouse Management System (WMS) Module. Project took off with studying all the processes being carried out at Fairdeal warehouse. After thorough discussions with Fairdeal’s management and on the basis of need analysis, total eighteen processes and sub-processes were short-listed for detailed study; out of which, ten processes were selected for AS-IS Analysis phase which included Goods receiving, Storing, Cycle Count, Order punching, Order Approval, Invoice [refer to format of Invoice in APPENDIX B] printing, Dispatching, Transportation, Handling unsalable material and Handling warranty claims. Result of AS-IS Analysis revealed activities in certain processes were not at par with industry standards and needed improvement. Some activities were acting as bottlenecks and needed restructuring. For example: It was found that serial numbers were being scanned at the time of dispatching the material which was delaying both dispatching time as well as order cycle time. In the next phase, TO-BE Analysis was taken up for eight processes which required re-engineering. These processes were benchmarked with best practices of warehousing and clearing & forwarding industry.

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Demonstrations of third party warehouse management systems (WMS) were attended to get best industry warehousing practices and interviews were organized to observe the expectations of the end user. Some of WMS softwares, I studied during this project are Intelliwms from IntelliTrack etc. Based on industry’s best practices and findings of AS-IS Analysis, A detailed process restructuring plan was made and recommendations were given to Fairdeal’s management. Some of the suggestions implemented by Fairdeal are as follows: •

Scan barcode numbers at the time of storing the material and not at the time of dispatching.

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Pre-plan the arrival of Goods-In-Transit and keep the space ready for arriving material.

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Pick slip will be generated at the time of invoice printing which would be helpful in locating material in the warehouse. This pick slip will include item codes, location codes and quantity.

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Fairdeal’s staff should develop cross-functional and cross-company knowledge of different softwares and packages. Each employee should have knowledge of at least two softwares. This would reduce errors in times of absentees and attritions.

It is estimated that these recommendations after being implemented will enhance operations of Fairdeal to a great extent. Efficiency of processes will increase, dependency on specific employee will decrease, cycle time of orders will decrease and space utilization will also increase.

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Executive Summary Hello, I am Manoj Banshilal Pachouri*. I did my S.I.P. with Fairdeal Distribution Services Pvt. Ltd. (www.fairdeal.org) from February 13th 2006 to May 20th 2006. I was assigned the task of doing Business Process Re-engineering which helped the company improve efficiency of its business processes. Findings and recommendations of this project were very useful during implementation of Warehouse Management System. Profile/ Key Result Area •

Understanding processes in logistics industry

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AS-IS Analysis to find out current processes being carried out

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Interacting with process users to understand their needs

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TO-BE Analysis to benchmark best processes in logistics industry

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Pointing out issues and suggesting recommendations

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Documenting every activity during project

Reporting: I reported to Mr. Sharad Jobanputra who is founding promoter and managing director of Fairdeal Distribution Services Pvt. Ltd. A copy of report was submitted to faculty guide Mr. Bharat Kantharia as well as top management of the company. Team Constitution: This project was solely undertaken by me under guidance of company guide Mr. Sharad Jobanputra and faculty guide Mr. Bharat Kantharia. All the employees and some customers of Fairdeal were indirectly (but very closely) involved. How did I apply my learning at IBS? During this project, my learning in classroom, especially classes of ITM and Operations Management, proved to be very useful. This project was so closely related to these two subjects that I had to implement most of my learning in Supply Chain Management, Cycle times, Enterprise Resource Planning etc.

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This resemblance between SIP project and my learning at IBS helped me completing this project without much hurdles and with in given time limit. Learning during SIP: This project proved to be my dream project as I learnt a lot of ERP and BPR fundamentals and concepts during this project. Though I had work experience of five years in field of software developing and marketing but this project exposed me to a new field of supply chain management and third party logistics to implement Information Technology in clearing and forwarding and warehouse management industry. I leant Microsoft Visio 2003 to draw flowcharts during AS-IS Analysis phase of this project. This project also developed my professional personality by teaching me team building, group dynamics, negotiation skills, business communication skills, time management and corporate ethics. Some of the Software packages and tools I used during the course of this project are: •

Microsoft Visio 2003 for drawing flowcharts

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Adobe Nero Express 6.0 for writing data on Compact Disk (CD)

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Adobe Photoshop 6.0 for editing images

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Adobe Acrobat 7.0 Professional for converting word document into PDF format

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Adobe Acrobat 5.0 for reading PDF documents

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HP Scanner for scanning documents

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Microsoft XP Paint for converting bitmap format to picture format

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Microsoft Notepad for writing notes

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Microsoft XP Word for documentation

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Microsoft XP Excel sheets for calculation and charts

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Microsoft XP Power point for making presentations

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Internet Explorer 6.0 for surfing internet

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WinZip 9.0 for archiving files

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I owe my deep respects and regards to Mr. Sharad Jobanputra (Company Guide) and Mr. Bharat Kantharia (Faculty Guide) who provided me wonderful ambience to learn through out this project. Preparation/ Achievements/ Recognition: I began preparing for the project even before writing my semester II exams (31st Jan 2006 – 04th Feb 2006), that helped a lot. I used to surf supply chain management and logistics websites to understand third party logistics, Clearing & Forwarding and Warehousing industry. I used to discuss intricacies of business processes and BPR with my faculties of Information Technology for Managers and Operations Management. My report was highly appreciated by Fairdeal’s management as well as my Company Guide Mr. Bharat Kantharia. Findings of this project will be used as an important document for developing Warehouse Management System (WMS) for Fairdeal Distribution Services Pvt. Ltd. and documentation of this project would be used to train and equip employees of Fairdeal with best industry practices.

* Manoj Banshilal Pachouri, age 25 years, is a student of class of 2007 at IBS Bangalore. Prior to his MBA he was working as a software developer in Ahmedabad at .NET platform (C#.NET, VB.NET). He wants to be known as an ERP and BPR consultant and is deeply inspired by Mr. Jayant Chawala of SAP Labs who is a famous name in ERP implementation world.

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INTRODUCTION Objectives of the Project Process Mapping • To find common processes across principal companies. • To find specific processes related to each company. For Example: Orders punched on internet; dispatch strictly on FIFO basis etc. Process Improvement • To compare current processes of Fairdeal Distribution Services Pvt. Ltd. with benchmarked processes.

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For Example: Automating FIFO (First-In-First-Out); Handling multiple MRP during price revision, Inspection stock etc. To suggest refinement or changes in the processes. T

Process Standardization • To standardize processes of Fairdeal Distribution Services Pvt. Ltd. by studying their activities. •

To prepare process flow charts and process performing ‘AS-IS’ Analysis and ‘TO-BE’ Analysis.

matrices

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Implement Warehouse Management System (WMS) Prepare a blueprint on how to incorporate the various processes into software, which then forms the base document for developing the WMS for Fairdeal Distribution Services Pvt. Ltd.

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Scope of the project The scope of this project extends to learning about latest developments and best practices in Supply Chain Management, Logistics, Sales & Distribution, Warehousing and Material Management practices. It will cover many industries like Automobiles, Watches, Paints, Home Appliances, and Telecommunication etc. •

Identifying, mapping, measuring, objectively analyzing and improving business processes and practices within enterprise and across enterprise boundaries with customers, suppliers and business partners.

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Findings of this project will be used as an important document for developing Warehouse Management System (WMS) for Fairdeal Distribution Services Pvt. Ltd.

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Documentation of this project would be used to train and equip employees of Fairdeal with best industry practices.

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All the work done during this project is for the internal purposes of Fairdeal Distribution Services Pvt. Ltd.

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As all the information is confidential and proprietary, the presentations and reports including process flow maps of company will not be available for public disclosure.

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Limitations of the Study Third party logistics (3PL) is an emerging area in India and hence not much secondary data for Indian scenario is available for research purpose. •

There is no ideal format of warehousing practices as they keep changing from company to company and are dependent on certain other parameters like type of goods handled, frequency of transactions, mode of transport etc also.

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Employees at Fairdeal Distribution Services Pvt. Ltd. remain busy in their daily chores and hence it is difficult to get their time for understanding processes they are handling.

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Since this project involves interacting with labors and store keepers who are relatively less aware of research projects, it is time consuming to convince them to participate and cooperate in surveys and interviews of the project.

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Some processes are carried out, partially or fully, at different locations like unloading goods, marking labels and storing goods are performed simultaneously. Hence it is not practically possible to go through entire process in one go.

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Some activities like receiving goods and scanning material are dependent on external factors like goods can be received only when lorry comes to depot. These external factors might increase time to analyze processes.

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Proposed Methodology Figure 1: The Implementation Process Model Project Plan

This project will be carried out in four phases namely – AS-IS Analysis TO-BE Analysis Process Mapping and Findings and Recommendations

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These four phases will include Studying, Analyzing, Mapping, Redesigning and Implementing the various processes of Fairdeal Distribution Services Pvt. Ltd. Description of various phases is as follows – 1. Define the process and establish its boundaries, do initial data gathering (e.g. organograms, operational plans, existing process maps, performance measures), develop high-level problem hypotheses. 2. Document the "AS-IS" process, refine the problem hypotheses, establish Key Performance Indicators (KPIs), measure baseline KPIs, draw-up opportunity charts for benefits. 3. Design the "TO-BE" process, revise the process flows and define any additional interventions required, establish benefits targets, carry out gap analysis (skills, costs), do micro-organization design, define roles and responsibilities (RACI). 4. Run a pilot implementation where there are significant uncertainties about aspects of the new process or the organizational design, use this to adjust process flows, validate benefits, and develop implementation plans. 5. Implement. Put new organizational design in place, carry out training, establish performance measurements (KPIs, benefits tracking), set up Service Level Agreements (SLAs), and hand over to line management.

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Detailed tasks to be performed 1. • • • • 2. • • • • • 3. • • • • • 4. • • • •

What are organizations People Process Controls Structure Processes and Organizations The functional decomposition Relating processes and organizations Identifying who does the work Relating people to processes Assessing the impact of various types of automation Processes And Documents The document flow concept Document flow techniques Measuring document flows The process context of documents The document context of processes Processes and Locations The location model Identifying where the work is done Relating people to processes Assessing the impact of location change

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5. • • • • 6. • • • • • • • 7. • • • • 8.

Processes and Technology The technology model and architecture Relating processes and technology Relating technology to processes Assessing the impact of technology change Process Measurement Types of measures Matching the measures with flow types Measures and maps ‘AS IS’ and ‘TO BE’ measurement Measure cycle time, queue time, resource utilization Process quality and measures Measures and best practices Workflows Workflow concepts Workflow techniques Measuring workflows Building complex workflows Using the Time Lens

• Gathering cycle time, process time, and wait time • Identifying value-adding activities

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9. • • • • • •

The ‘AS IS’ Process Suite Identifying the core processes Identifying opportunities for improvement Identifying new process opportunities Defining key process requirements Organizing the ‘As Is’ document Preparing the ‘To Be’ input

10. Process maps and the level of detail • Macro level flow chart • Functional-activity level flow chart • Task and procedural level 11. The ‘TO BE’ Process Suite • • • • • •

Designing new processes Revising old processes The integration method and process Integrating multiple processes Vertical and horizontal integration Integrating across business partners

12. Migration and Transformation • • • • •

Identifying the process transformations Assessing the migration of enablers Identifying sensitivities Assessing alternatives Preparing the migration plan

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To complete above mentioned tasks other activities that will be performed will include ¾ Collecting the artifacts regarding the Logistic and Warehousing. ¾ Personal interviews with warehouse staff. ¾ Preparing a document which will capture all the processes of Logistics, Warehousing and Material Management. ¾ Integrating all the data collected and preparing a knowledge bank. ¾ Preparing process flowcharts and maps and finding out processes that need to be redesigned. ¾ Proposing recommendations based on the findings of the project.

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Project Schedule

Table 1: Project Schedule

Date

Description

16-02-06 Learning Processes and Organization 18-02-06 Introduction with warehouse and its staff 20-02-06 Learning Processes and Technology 21-02-06 Process Measurement 21-02-06 Understanding Workflows 28-02-06 Gathering cycle time, process time, and wait time 08-03-06 Complete process matrices 18-03-06 Complete “AS-IS” Analysis 25-03-06 Point out the processes which need improvement 02-04-06 Finish personal interviews with warehouse staff 04-04-06 Design new processes 10-04-06 Integrate multiple processes 21-04-06 Complete “To-Bo” Analysis 25-04-06 Identifying Process Gaps 10-05-06 Complete Industry Interaction to get best practices 15-05-06 Document all the findings of the project

Manoj Banshilal Pachouri

15

ICFAI Business School

INDUSTRY ANALYSIS Logistics Industry Logistics is a part of supply chain and is defined as "the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information right from the point of origin to the point of consumption (including inbound, out bound, internal and external movements) in order to satisfy customer's requirements. Logistics is also defined as time related positioning of resources. The whole concept of Logistics is based on 7 R's which are:• • • • • • •

Right Right Right Right Right Right Right

Place Time Quantity Quality Price Condition Customer

Logistics activities, as a part of Supply Chain Management comprises of the following: • • • • • • • • • •

Purchase and Supply Material Handling Production Planning Production Control Transportation Storage Distribution Product Management Installation and Servicing Strategic Management

Manoj Banshilal Pachouri

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ICFAI Business School

A well designed Logistics chain is expected to support the strategic objectives of: • • • • • •

Reduced Costs Shorter Lead Time Flexibility Enhanced Service Better Product Availability Better Product Reliability

The best configuration of the chain will vary from individual chain to chain and individual organization to organization. But, in all the case the architecture of the chain would include the following three elements - System, Technology, Relations. For example: In a manufacturing industry, Logistics plays a key role in Supply Chain Management as there is a strong inter-play of activities starting from raw materials till the finished goods. In all the activities there is a flow of goods whether it is raw materials or WIP or semifinished goods or finished goods. Logistics plays a significant role in the management of entire supply chain. The pre-requisite infrastructure required to provide logistics solutions are: •

Land and Building (Warehouse)

•

Trained Manpower

•

Material Handling Equipments

•

Hardware and Software

•

Transport Network

•

Vendors

•

Consultants

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ICFAI Business School

Legal Issues in Logistics Industry There are some legal issues involved with the operations of Supply Chain, Logistics, Warehousing and Clearing & Forwarding. Some of the legal issues involved are: •

Conforming and non-conforming areas: Warehouses and transport locations can not be set up in residential areas and are not permitted by law.

•

Excise Duty: This is the tax payable at the factory location on the value of products manufactured by the company. This tax varies on product to product basis.

•

Local Taxes: These taxes include local sales taxes, Octoroi taxes, road taxes etc.

•

Labor Acts: According to these acts, minimum wage has to be given to every labor under Wages Act. Also, minimum of 8.33 % of annual salary of worker has to be awarded as bonus.

•

Pollution Act: Logistics activities should environment which may harm social set up.

•

Industry Act: Being in distribution and transportation industry, every logistics provider will have to comply with distribution and transportation industry regulations.

•

Fire Act: Insurance claims and damages due to fire come under Fire act. Material can be insured against fire up to dealer’s point or up to CFA point.

•

Sanctions from appropriate bodies: There are many central and local bodies whose permission is required to carry out logistics operations. Transporter’s unions, Municipal Corporation are some of the examples.

Manoj Banshilal Pachouri

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not

pollute

the

ICFAI Business School

How is logistics different from transportation? Transportation is physical movement of goods (inbound and outbound) as well as picking up of products as per customers order and delivering it to the ultimate user whereas Logistics encompasses several activities related to supply chain management such as planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information, in which transportation is a major element in the entire chain.

Third party logistics Third party logistics is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the shippers whose business processes they support. Third Party Logistics (3PL) companies or Clearing & Forwarding Agents (C&FA) all over the world have become important channel in Supply Chain Management (SCM) and Sales & Distribution (SD) to manage logistics operations network. Level of outsourcing of in-plant logistics and third party logistics is mainly of following types: Levels of Outsourcing •

Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company.

•

Tactical Outsourcing: Outsourcing on a long term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility.

•

Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency.

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ICFAI Business School

Why Use Third Party Logistics? Main reason for outsourcing Logistics or Clearing & Forwarding operations to third parties is that it allows manufacturing company to concentrate on their core competencies. Some other reasons companies opt for Third Party Logistics are following: •

To Save Time: Outsourcing the Logistics function can free up resources to focus on core competencies.

•

Resource constraints: In-house logistics and supply chain management requires heavy investment in infrastructure, transportation, warehousing and IT resources which might not be possible for a medium sized or small sized company.

•

Because Someone Else Can do it Better: Even if you have resources available, another organization within the supply chain may be able to do it better, simply because its relative position in the supply chain, supply chain expertise and economies of scale.

•

Cost saving/ cost optimization: Economies of scale and supply chain and logistics expertise of dedicated third party logistics provider may reduce the cost of logistics.

•

To Share Responsibility: 3PL companies can share responsibility for managing global supply chains, keeping customers and stores properly stocked, and delivering the perfect order every time.

•

To Re-Engineer Distribution Networks: Logistics outsourcing can be a quick way to re-engineer distribution networks to meet global market demands and gain a competitive edge.

•

For more professional and scientific approach to logistical problems: Logistics outsourcing reduces problems arisen of truck accidents, Insurance claims, Octoroi claims, Sales tax filing, reverse logistics etc which can be handled by 3PL very efficiently.

•

Efficient management of inventory resulting in better utilization of working capital: finished goods can be transferred from one clearing & forwarding agent to other through stock transfer for better movement of goods and hence better inventory management.

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ICFAI Business School

3PL Is Growing THE Indian logistics industry is poised for a significant growth in the coming years as new companies, especially in the automotive, pharmaceutical, and manufacturing and FMCG sectors are increasingly opting to outsource their logistic requirements to specialized service providers. Industry analysts say that the key drivers for logistics outsourcing are the corporate trend of focus on core operations, competitive pressure, increasing global trade and MNCs investments in India. Third party logistics service providers in India are gearing up to meet the growth demand, incorporating value-addition in their services and customizing their supply chain management solutions. For example: Gati is planning to add new services in its portfolio, such as transportation of clinical samples for pathological labs and medical institutions and reverse logistics that involve movement of defective products from the dealers back to the factory. According to industry sources, by 2020, this industry is expected to represent almost 30 per cent of the global air cargo with an average annual growth rate of 10 per cent. Indeed, a recent study on the logistics market by Frost & Sullivan has estimated that the revenue of the logistics industry from the manufacturing sector alone was $13.46 billion in 2003, with the market likely to grow at a CAGR of 6.2 per cent during the next five years. Chemicals, metal, FMCG, cement and textiles were identified as the top five contributors to the revenues of the logistics industry. In fact, the trend in the industry is towards the third party logistics (3PL) concept — the market size for this category of service was estimated at $250 million in 2003. The market for 3PL services is likely to grow at a CAGR of 20.4 per cent during the next five years, with the growth being fuelled by the entry of MNCs and export focus of Indian companies. At present, the automotive, IT hardware and FMCG companies are the major users of 3PL services. In India the logistics costs are still higher than in the developed markets — it is estimated to be around 13 per cent of GDP, against 9 per cent of GDP in the US. The transportation cost accounts for nearly 40 per cent of the cost of production, with more than half the goods in India being moved by road. Manoj Banshilal Pachouri

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ICFAI Business School

One sector that is increasingly looking for outsourcing logistics is textiles, especially as it is facing the challenges of exacting delivery requirements and multiple export markets. Analysts say that with large retailers such as Wal-Mart and Target seriously evaluating new suppliers for textiles in India, this sector is bound to outsource logistics in the coming years. Also, the retail industry is expected to jump into the 3PL bandwagon, with such large retailers as Shoppers Stop and RPG expanding to smaller cities. Realizing the potential in the outsourced logistics market, 3PL service providers are expanding their basket of services as companies are now looking for more than just transportation of their products and raw materials. The logistics firms are also focusing on related services such as customer clearing and forwarding, inbound warehousing, labeling and packaging, fleet management, order picking and inventory management. Source: The Hindu Business Line

Achieving Strategic Outsourcing Unfortunately, only a few 3PL companies achieve strategic status with their customers. They do it by constantly innovating and maintaining operational integrity. Some use an open-book costing method to demonstrate their system's transparency.

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Third Party Logistics Industry: SWOT Analysis

Table 2: SWOT Analysis of 3PL Industry

STRENGTHS

WEAKNESSES

•

Quick way to re-engineer distribution networks

•

Lesser control over outsourced third party activities.

•

Enhanced distribution and transportation Service

•

Lack of proper set of skilled man power

•

Time Saving in servicing customer

•

Forged bills and claims by 3PL provider agency.

•

Flexibility in restructuring distribution networks and expansion plans

•

Difficult to switch 3PL provider agency.

•

Lesser co-ordination between branch offices and 3PL agency.

•

Economies of scale in distribution OPPORTUNITIES

•

Better utilization of working capital

•

Fast expansion of principal’s business without investing in infrastructure and transportation resources

THREATS •

Value Added Tax (VAT) might effect 3PL industry as distribution channels would be trimmed.

•

Poor transportation infrastructure of India might lower the profit margin

•

Cost optimization as a result of fast and efficient processes

•

•

Concentration on core competencies

E-Commerce is emerging as a primary threat to 3PL industry.

•

Threat of leakage of operational competencies to competitors.

Manoj Banshilal Pachouri

23

ICFAI Business School

Fourth Party Logistics (4PL) Industry Fourth party logistics provider is a supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution to the client. A standard 4PL supply chain solution involves four distinct steps: Step I: Reinvention At this level, the overall business strategy is aligned with supply chain strategy to reengineer the supply chain of the participants. Step II: Transformation Here the focus is on coordinating specific supply chain functions such as sales and operations planning, distribution management, procurement strategy, customer support and supply chain technology, with the aid of process and organizational changes, T&D, information technology, etc. as applicable. Step III: Implementation The implementation is done on the basis of recommendations made at the earlier two levels and the transition is put across to the 4PL delivery team, taking special care to consider the dimension of human resources and organizational change. Step IV: Execution A 4PL provider's scope of responsibility also includes operational responsibility for numerous supply chain functions, besides the traditional transportation management and warehousing operations logistics outsourcing.

Manoj Banshilal Pachouri

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ICFAI Business School

In-plant Stores Outsourcing The in-house/in-plant stores activity is managed by a 3rd party logistics provider (3PL), with clear & measurable objectives and targets. Some of the benefits of In-plant stores outsourcing are: •

Focused & dedicated approach to stores function by skilled & experienced warehouse personnel, leads to improved efficiency

•

Increased control on service levels and inventory accuracy, as it is directly linked to 3PL’s revenue

•

Specialized labor management model gives substantial cost reduction in terms of labor cost, along with tremendous flexibility and improved efficiency

•

Manufacturers can then focus and allocate their resources on specialized areas like production, Design & Development etc.

Vendor Owned Inventory Management With multiple supplier having different locations and lead times, it is becoming increasing costly for manufacturers to ensure timely inputs to production lines. VOI works on a pull based system, where the stock ownership to manufacturer happens only when it is required to be produced. Some of its benefits are: •

Reduced inventory holding cost, as the supplier holds the stock for the principal company

•

With the stock point in the vicinity of the manufacturer, timely feeding to the production line can be done

•

Your Supplier benefits by reducing his warehousing space, and avoid last minute urgent shipments

•

Replenishment model at the VOI warehouse helps supplier plan his production in a better way

Manoj Banshilal Pachouri

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ICFAI Business School

Warehousing A warehouse is a point in the logistics system where a firm stores or holds raw materials, semi-finished goods, or finished goods for varying periods of time. It creates time utility for raw materials, industrial goods and finished products. The proximity of market-oriented warehousing to the customer allows a firm to serve the customer with shorter lead times. This warehousing function continues to be increasingly important as companies and industries use customer services as a dynamic, value-adding competitive tool. There are as many as 700 organizations in India engaged in the business of clearing and forwarding. Material Handling Material Handling is the process of efficient short-distance movement of goods that usually takes place within the confines of a building such as a plant or a warehouse or between a building and a transportation agency. Material Handling has four dimensions: •

Movement

•

Time

•

Quantity

•

Space

Material Handling improves efficiency by making the logistics system respond quickly and effectively to plant and customer requirements. For efficient movement of goods into the warehouse, locating stock, accurately filling orders, and rapidly preparing orders for shipment to customers, materials handling is very important to outbound logistics. In inbound logistics terms, materials handling serves company plants in the same way. Firms need to integrate materials handling requirements not only for the company's departmental needs, but also for meeting their customers' needs.

Manoj Banshilal Pachouri

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ICFAI Business School

Reverse Logistics (Returns Management) Companies spend more time and money in fine-tuning their forward supply chains while ignoring their backward supply chains. However, in today's competitive business environment when there is both external and internal pressure, companies can no longer ignore reverse supply chains. Efficient reverse supply chains bring many benefits to the companies. However, reverse supply chains are different from forward supply chains and most of the existing forward supply chains are not designed to handle reverse supply chains. Though reuse of products and materials is a common phenomenon, companies have long ignored this part of the supply chain, known as reverse supply chain or backward supply chain. A common example of reverse supply chain is the soft drinks bottles pickup and delivery system, where soft drink bottles are returned and reused repeatedly The Council of Logistics Management defined reverse supply chain as "The process of planning, implementing and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal." As far as managing the returns are concerned companies re-use them, re-sell them, leave them to a third party or destroy them. But companies are more likely to benefit if they can also make use of the information that comes back with returned merchandise.

Manoj Banshilal Pachouri

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ICFAI Business School

Figure 2: Reverse Logistics Cycle

Reverse logistics also includes remanufacturing and refurbishing activities, processing returned merchandize due to damage, seasonal inventory, restock, salvage, recalls, excess inventory and recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.

Manoj Banshilal Pachouri

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ICFAI Business School

Clearing and Forwarding Agents "Clearing and forwarding agent" has been defined as "any person; who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations, in any manner to any other person and includes a consigning agent." Normally, there is a contract between the principal and the clearing and forwarding agent detailing the terms and conditions and also indicating the commission or remuneration to which the C&F agent is entitled. A clearing and Forwarding agent normally undertakes the following activities(a) Receiving the goods from the factories or premises of the principal or his agents; (b) Warehousing these goods; (c) Receiving dispatch orders from the principal; (d) Arranging dispatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal; (e) Maintaining records of the receipt and dispatch of goods and the stock available at the warehouse; (f) Preparing invoices on behalf of the principal. For their services rendered, the C&F agent receives commission or remuneration which usually consists of two components: o

o

Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled; A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is usually given as a percentage of the turnover.

The above two constitute the remuneration or commission paid to the C&F agent by the principal.

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ICFAI Business School

ABOUT FAIRDEAL Fairdeal Distribution Services Pvt. Ltd., a company incorporated and registered in 1975 under the Companies Act, 1956 and having its Registered Office at 431, Chetan Society, Bopal-Ghuma Road, Ahmedabad, Gujarat, 380058, Republic of India (hereinafter referred to as ‘Fairdeal’ which expression, unless repugnant to the context or meaning thereof, shall mean and include its successors and permitted assigns). Fairdeal has represented that it has the requisite knowledge, expertise, technical know-how, experience, resources, infrastructure and intellectual property for the management, maintenance and administration of all operations in Supply Chain Management Industry. It has a dominating presence as a ‘Clearing & Forwarding Agent’. Today, Fairdeal has invested heavily in infrastructure - warehouses and vehicles - to provide effective, efficient and reliable services. Keeping in mind the globalization of the industry and international trends, it was decided in March 2004 to widen the scope of service offering and move up in value chain. For this purpose Sequel Logistics Pvt. Ltd. was established. On 1st April, 2004, Titan Industries outsourced In-plant Logistics to both their plants, Hosur (Tamilnadu) and Dehradun (Uttaranchal) to Sequel Logistics. And today our client list includes Ashok Leyland, BPL Sanyo, Madura Garments, TVS Motor, and Precision Engineering Division of Titan Industries, in addition to Watch Division of Titan Industries. Fairdeal has a modern, well laid warehouse of over 50000 sq ft at Sharkhej in Ahmedabad, Gujarat. It is handling inbound logistics for diamond for Titan Industries from Surat. Currently, Fairdeal manages over 40,000 SKUs at 5 different locations. Material handled by the group is valued at over Rs. 3000 Crores and has employee strength of over 300 and also handles secondary movement for which have over 25 dedicated vehicles.

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Vision, Mission and Business Objectives Vision To constantly innovate, build and deliver superior supply chain solutions, to achieve highest level of efficiency, speed and profits Mission To be the most preferred Supply Chain Solution Provider in India, by offering innovative, comprehensive and customized solutions and services Business Objective • To build and offer World Class Supply Chain services in the areas of warehousing & distribution, inventory management, order management and related IT solutions •

To deliver high Operational Efficiency and superior Customer Service by: o Constantly upgrading and adhering to World Class Systems & Processes o Placing emphasis on being Information / Data driven o Emphasis on Technology (IT & Others) o Being Customer focused, Transparent & Ethical

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ICFAI Business School

History The first Group firm was established in 1975 and was carrying out business in office equipments. In 1978, the firm started FMCG distribution and was associated with The Tata Oil Mills Co. Ltd., Colgate-Palmolive etc. The firms were into retail distribution of 'Fast Moving Consumer Goods' for many years. Diversification came in 1987 by taking up 'Clearing & Forwarding Agency' of TITAN. Since then Fairdeal has grown to become a major 'Logistics Service Provider' in Gujarat and represents over twelve clients in the state of Gujarat. It also manages secondary freight for the clients.

Directors •

Sharad Jobanputra

He is a science graduate in microbiology and has 30 years of experience in various businesses and founder of Fairdeal Group. •

S Rajkumar

He is a mechanical engineer and has done MBA from IIM-C. He has worked in Supply Chain Department of Titan Industries and worked with Madura Garment as Supply Chain Manager. •

Zankar Jobanputra

He is a science graduate in mathematics and has 10 years experience in C&F business.

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ICFAI Business School

Independent Directors •

Ninu Khanna

He is a science graduate and an MBA from IIM-C. He has a very wide experience of working with Colgate-Palmolive, India & China, Procter & Gamble, India, Japan & Nigeria, Dabur and currently he is Managing Director of Bombay Dyeing. He will be CEO-FMCG Vertical, Reliance Retail from June 2006. •

G Raghuram

He is an electronics engineer from IIT, Madras, an MBA from IIMA and a doctorate from Kellogg School of Management. He teaches Operation Research in IIMA and has special interests in Supply Chain & Logistics. He has published several books and papers in national and international publications. He is also a visiting faculty to national and international business schools. •

Jamshed Daboo

He is a mechanical engineer and an MBA from XLRI, Jamshedpur. He has wide experience of working with Titan Industries and Tata Quality Management Services and currently he is COO – Business Hotels, Indian Hotels. These independent directors will give Fairdeal group outside view as Fairdeal grows in terms of geographical scope and physical scale.

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ICFAI Business School

Business Focus Fairdeal Distribution Services Pvt. Ltd. provides complete Supply Chain solutions to its clients. Some of its fields of operation are: • In-plant logistics •

Reverse logistics

•

Third Party Logistics

•

Manufacturing Logistics

•

Manufacturer to Consumer (M2C) Logistics

•

Warehousing

•

Clearing and Forwarding Agents

•

Transportation

Product Range Table 3: Product Range of Fairdeal Consumer products

Tea, Coffee, Vegetable Oils, Vanaspati, Breakfast Cereals, Processed Food Products.

Automotive Parts

Spark Plugs, Power Transmission Systems, Auto Bulbs, Auto Filters, Auto Electricals, Auto Batteries, Automobile Lubricants, Mobile Audio Systems, Industries Paints and other Coating Products.

Consumer Durables

Lighting, Audio, Video, Consumer Electronics, Telecommunication, Domestic Appliances, Industrial Electricals, Watches, Jewelry

Construction Material

Ceramic Tiles - Floor & Wall

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ICFAI Business School

Locations ™ ™ ™ ™ ™

Ahmedabad Bangalore Dehradun Hosur Surat

•

Clearing & Forwarding at Ahmedabad

•

Warehousing at Attibele o TVS Motor Company Limited

•

In-plant Logistics at Bommasandra o Titan Industries Limited-Precision Engineering Division

•

Supply Chain Management at Bangalore o Madura Garments

•

In-plant Logistics at Dehradun o Titan Industries Limited-Watch Division

•

In-plant Logistics at Hosur o Ashok Leyland Limited-Plant-2 o Titan Industries Limited-Watch Division

•

Clearing & Forwarding at Hosur o BPL Sanyo Limited

•

Inward Logistics at Surat o Titan Industries Limited-Jewellery Division

Manoj Banshilal Pachouri

35

ICFAI Business School

Distribution Network Fairdeal has a strong distribution network all over India. It has its own transport vehicles as well as it has business contract with other transport carriers also. Local orders are dispatched through company’s own vehicles and up-country orders are dispatched through its business partner carriers and courier services. Some of transporters and courier service providers carrying dispatching orders of Fairdeal are Gati, BlueDart, Unifreight, DTDC, Logisys India Limited, Indo Arya Central Transport Ltd., Transport Corporation of India, AS Transport, prasanna cargo, Shivraj Roadlines, Patel roadways, and Sai transport Agency. At present Fairdeal Distribution Services Pvt. Ltd. is handling logistics operations of various industries which include: • Automobiles Industry • Paint Industry • Watches Industry • Branded Jewellery Industry • Snacks & Food products Industry • Electronic home appliances industry • Telecommunications Industry • Tea Industry

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ICFAI Business School

Awards and Achievements • •

Awarded Model Warehouse status by Hindustan Lever Limited. Awarded Best Run Depot of the Country trophy and Best Customer Service - Lighting Trophy by Philips India Limited.

Client Companies Fairdeal Distribution Services Pvt. Ltd. is Clearing & Forwarding Agent for following companies whose brief corporate profile is given below: Voltas Established in 1954, Voltas is India's premier air conditioning and engineering services provider. It offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, climate control, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, pollution control and chemicals. The company's strengths lie in the design and manufacture of industrial equipment, the management and execution of airconditioning and public work projects, the procurement, installation and servicing of technology based systems, and in being a representative of global technology leaders. All these capabilities are ISO 9001-2000 certified. Voltas is: ¾ ¾ ¾ ¾ ¾ ¾ ¾

Leader in air conditioning projects. Largest projects exporter in Mechanical, Electrical and Public Health works. No. two brand in air conditioners. Most trusted name in mining and construction equipment. Leader in textile machinery. Premier Player in machine tools. Leader in forklift trucks.

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ICFAI Business School

Areas of business Operations Voltas' operations are organized specific clusters: air conditioning international operations business group and engineering products divisions has independent facilities servicing.

into four independent businessand refrigeration business group, group, unitary products business business group. Each of these for market coverage and customer

Manufacturing Voltas manufactures industrial air conditioning and refrigeration equipment, air conditioners, water coolers, freezers, commercial refrigerators, forklift trucks and large water supply pumps. These products bear the stamp of state-of-the-art automated manufacturing plants, resulting in consistently high quality and reduced costs. Voltas has partnered with international companies, viz., LG Electronics of Korea and Fedders International of USA, for 'manufacture only' alliances producing low-cost, high-quality refrigerators and room air conditioners. Location Voltas has its head office in Mumbai and zonal headquarters in Mumbai, Kolkata, New Delhi and Chennai. It has territorial offices in Ahmedabad, Bangalore, Chandigarh, Hyderabad, Jamshedpur, Lucknow, Pune and Kochi, while the overseas offices are located in Abu Dhabi (UAE), Hong Kong and Singapore. Voltas has factories at Thane (Maharashtra), the union territory of Dadra, and Sanathnagar (Andhra Pradesh). Sources:

http://www.tata.com/voltas/index.htm http://www.voltas.com/ http://www.tata.com/ voltas/media/index.htm

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ICFAI Business School

Titan Industries Titan Industries is India’s leading manufacturer of watches and jewellery and the world’s sixth largest manufacturer brand of watches. Established in 1984 as a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation, the company transformed the Indian watch market, offering quartz technology with international styling, manufactured at its state-of-the-art factory at Hosur, Tamilnadu. In 1995, the company diversified into jewellery under the brand Tanishq. Leveraging its understanding of different segments in the watch market, the company launched a second independent watch brand — Sonata — as a value brand to those seeking to buy functionally styled watches at affordable prices. It also entered the segment of premium fashion watches by acquiring a license for global brands such as Tommy Hilfiger. Titan has also diversified into fashion eyewear with its Fastrack Eye Gear sunglasses. Further, Titan leveraged its manufacturing competencies and branched into precision engineering products and machine building in 2003. Areas of business Titan manufactures over 7 million watches per annum and has a customer base of over 65 million. The company has manufacturing and assembly operations at Hosur, Dehradun and Himachal Pradesh. Its main products are: Watches: Titan manufactures two main brands viz. Titan for the premium segment and Sonata for the below-$25 category. The Titan brand architecture comprises several brands, each of which is a leader in its segment. Notable among them are: Titan Edge – the world’s slimmest watch; Nebula – in solid gold and precious stones; the Gold and Steel collection; Raga 9 to 5 – for the woman achiever; Flip – India’s first and only reversible watch with two movements and dial faces; and Fastrack in the sporty casual category.

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ICFAI Business School

Today, Titan has over 60 per cent of the domestic market share in the organized watch market. Its exclusive retail showroom chain – World of Titan – is amongst the largest in its category. Titan watches are sold through over 9,000 outlets in over 2,300 cities and internationally in over 30 countries including the UK, Spain, Greece and countries in the Middle East and Asia Pacific. Jewellery: Tanishq is India’s largest and fastest growing jewellery brand. Tanishq has 75 boutiques in 55 cities across the country with a premium range of gold jewellery studded with diamonds or colored gems and a wide range in 22kt pure gold. Platinum jewellery and designer silverware are also a part of the product range. Tanishq is one of India’s largest specialty retailers and is transforming the jewellery market in India. Precision engineering: The Company’s precision engineering division manufactures dashboard clocks as OEM to car manufacturers in Europe and America. It also supplies precision components to the avionics and the automotive industry. Achievements Titan Industries has been awarded the following: • • •

• •

The President of India’s Award for employing the disabled. Friends of BIL Award for employing the handicapped. The Titan Design team received 7 accreditations at the NID — Business World Awards, including the 'Young Design Entrepreneur of the Year'. Titan and Tanishq were adjudged 'Most Admired Brands' as well as 'Retailer of the Year' by Images Fashion Forum. Titan retained it ranking as the 'No 1 Brand' in the Brand Equity Survey, in the Consumer Durables category.

Sources:

http://www.tata.com/titan/index.htm http://www.indiainfoline.com/comp/titan/ http://www.titanworld.com/ http://www.tata.com/titan/media/index.htm

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ICFAI Business School

Tata Tea Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop valued-added tea, the Tata Tea Group of Companies, which includes Tata Tea and the UK-based Tetley Group, today represent the world's second largest global branded tea operation with product and brand presence in 40 countries. Among India's first multinational companies, the operations of Tata Tea and its subsidiaries focus on branded product offerings in tea but with a significant presence in plantation activity in India and Sri Lanka. The consolidated worldwide branded tea business of the Tata Tea Group contributes to around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from bulk tea, coffee, and investment income. The company has its headquarters in Kolkata, and 51 tea estates in the states of Assam, West Bengal, Tamilnadu and Kerala and one coffee estate in Tamilnadu. Products and brands The company has five major brands in the Indian market — Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini — catering to all major consumer segments for tea. Tata Tea's distribution network in the country with 38 C&F agents and 2,350 Stockists caters to over 1.7 million retail outlets (ORG Marg Retail Audit) in India. The company has a 100 per cent export-oriented unit (KOSHER & HACCP certified) manufacturing instant tea in Munnar, Kerala, which is the largest such facility outside the United States. The unit's product is made from a unique process, developed in-house, of extraction from tea leaves, giving it a distinctive liquoring and taste profile. Instant tea is used for light density 100 per cent teas, iced tea mixes and in the preparation of ready-to-drink (RTD) beverages. With an area of 26,500 hectares under tea cultivation, Tata Tea produces around 60 million kg of black tea annually. Overseas business The Tata Tea and Tetley portfolios of branded offerings sourced from the India based JV, caters specifically to the Australian, Middle East, West Asia, North Africa, Poland, Russia and Kazakhstan markets. This is independent of the manufacturing and supply operations of its Tetley and other subsidiary companies.

Manoj Banshilal Pachouri

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ICFAI Business School

Subsidiaries Tata Tea has subsidiaries in Great Britain, United States and India. The Tetley Group headquartered in Great Britain, is a leading international tea company selling over 60 Tetley branded products to over 40 countries world-wide. Tetley is the second largest tea bag brand in the world; it is the number one tea bag brand in Great Britain and Canada and has significant market shares in the United States, Australia, Poland and France. Tata Coffee with instant coffee manufacturing facilities, R&D capability and plantation assets of around 8000 hectares, producing over 9000 MT of coffee annually, is the largest coffee plantation company in Asia. Tata-Tetley is a Kochi-based EOU which services the branded business of specific Tetley and Tata Tea markets outside India. Tata Tea Inc in the United States processes and markets instant tea from its facility in Florida, based on sourcing of Instant Tea products out of Munnar, Kerala.

Sources:

http://www.tata.com/ tata_tea/index.htm http://www.tatatea.com/ http://www.tata.com/ tata_tea/media/index.htm

Manoj Banshilal Pachouri

42

ICFAI Business School

Amara Raja Batteries Limited (ARBL) Before it became one of the leading battery makers in India, Amara Raja was, like anything else, a little dream…a dream realized by Mr. Ramachandra N Galla, an NRI who incorporated the company in 1985 with a vision to transform the business. Amara Raja Batteries Limited (ARBL), an Amara Raja-Johnson Controls Company with 26% equity from Johnson Controls is the technology leader in the Indian storage battery industry and the leading player in standby VRLA batteries. In India ARBL supplies automotive batteries exclusively to Ford, General Motors, DaimlerChrysler; and preferentially to Hindustan Motors, Mahindra & Mahindra and Ashok Leyland. ARBL is also a preferred supplier to major telecom MNCs, DOT, Indian Railways, besides a host of companies in segments like UPS systems, power, oil & gas, etc. The ARBL scrip is actively traded on BSE, NSE and HSE. Amara Raja has joined hands in a strategic partnership with Johnson Controls, Inc., and is part of its global alliance. Amara Raja and Johnson Controls both share a commitment to excellence and innovation and work towards exceeding customer expectations.

Sources:

http://www.amararaja.com/

Manoj Banshilal Pachouri

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ICFAI Business School

TVS Motors TVS Group was established in 1911 by Shri. T. V. Sundaram Iyengar. As one of India’s largest industrial entities it epitomizes Trust, Value and Service. Today, there are over thirty companies in the TVS Group, employing more than 40,000 people worldwide and with a turnover in excess of USD 2.2 billion. With steady growth, expansion and diversification, TVS commands a strong presence in manufacturing of two-wheelers, auto components and computer peripherals. It also has vibrant businesses in the distribution of heavy commercial vehicles passenger cars, finance and insurance. TVS Motor Company Limited, the flagship company of the USD 2.2 billion TVS Group, is the third largest two-wheeler manufacturer in India and among the top ten in the world, with an annual turnover of over USD 650 million. The year 1980 is one to be remembered for the Indian two-wheeler industry, with the roll out of TVS 50, India's first two-seater moped that ushered in an era of affordable personal transportation. For the Indian Automobile sector, it was a breakthrough to be etched in history. TVS Motor Company is the first two-wheeler manufacturer in the world to be honored with the hallmark of Japanese Quality – The Deming Prize for Total Quality Management. Future Focus TVS Motor Company wants to be one among the top two 2-wheeler companies in India and one among the top five 2-wheeler companies in Asia. TVS foresees to have profitable operations overseas, especially in Asian markets, capitalizing on their expertise in the areas of manufacturing, technology and marketing. The Company aims to hone and sustain its cutting edge of technology by constant benchmarking against international leaders.

Manoj Banshilal Pachouri

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ICFAI Business School

Many firsts of TVS Motors ¾ India’s first two seater 50 cc Moped TVS 50, launched in August 1980. ¾ First Indian Company to motorcycles in Sept 1984.

introduce

100cc

¾ Launched India's first indigenous Scooterette variomatic scooters), TVS Scooty in June 1994.

Indo-Japanese (sub-100

cc

¾ Introduced India's first catalytic converter enabled motorcycle, the 110cc Shogun in Dec 1996. ¾ Launched India's first 5-speed motorcycle, the Shaolin in Oct 1997. ¾ Launched TVS Fiero, India’s first 150 cc, 4 stroke motorcycles in April 2000. ¾ Launched TVS Victor, 4-stroke 110 cc motorcycles, in August 2001, India’s first fully indigenously designed and manufactured motorcycle. ¾ Launched TVS Centra in January 2004, a world-class 4-stroke 100 cc motorcycle with the revolutionary VT-i Engines for bestin-class mileage. ¾ Launched TVS Star in Sept 2004, a 100 cc motorcycle which is ideal for rough terrain. ¾ Launched TVS Victor, 4-stroke 125 cc motorcycle, in February 2005.

Sources:

http://www.tvsmotors.com/

Manoj Banshilal Pachouri

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ICFAI Business School

Motors Industry Company Limited (MICO) MICO was incorporated in 1951 as a subsidiary of Rober Bosch, with its registered office at Madras, which was later shifted to Bangalore in 1953. In 1969, the Mysore Branch of the Central Bank of India Ltd, offered for sale 22000 shares of the Company to the public at a premium of Rs70 per share. MICO manufactures nozzles & nozzle holders, FIPs, hydraulic products and auto Electricals including spark plugs. The Company has continuously modernized and upgraded product range. In 1986 it began manufacture of mini spark plug (extension of its spark plugs range) for motor cycles, which was till then being imported. Manufacture of special purpose machines, machine tools accessories etc began in 1987. MICO embarked on manufacture of starter motors, alternators, hydraulic and pneumatic equipment etc in 1989-90. The company has since its 50th year embarked on a share buyback pursuant to its allowance by the Government. Parent company MICO is a 60.5% subsidiary of Robert Bosch, Germany. Robert Bosch, a global leader in the field of auto components, has presence in more than 130 countries. Robert Bosch’s other business interests include consumer goods, communication technology and capital goods. MICO has strong presence in the Indian automotive components business with a virtual monopoly in the Diesel Fuel Injection Equipment, Spark Plugs segments and also in the Electric Power Tools segment. Its other products include large number of automotive accessories as well as Special Purpose Machines, Electric Power Tools, Blaupunkt Car Audio Systems, Industrial Equipment, Auto-Electricals, Gear Pumps for tractor applications and Packaging Machines.

Manoj Banshilal Pachouri

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ICFAI Business School

MICO has adopted the Bosch guiding principle of BeQIK- Quality, innovation and keep customer satisfied. The company plans to continue innovating by designing and developing diesel fuel injection systems taking cognizance of fuel consumption, emission and greater safety of the end users. The BeQIK philosophy has helped the company in achieving world-class quality, innovation and continuous improvement to enhance customer satisfaction. The company has over 4000 sales and service outlets countrywide. In F12/01, MICO's net sales were at Rs 14.5 bn. Company's operating profit was at Rs2.5bn and net profit was Rs 817mn for F12/01. In Q1 2002, company’s total sales decreased by 8%, from Rs3.9 bn in Q1 2001 to Rs 3.6 bn. Other income increased by 23% from Rs71 mn in Q1 2001 to Rs87 mn. The operating profit declined by 20% from Rs 745 mn to Rs 594 mn in Q1 2002. Net profit declined to Rs 257 mn in Q1 2002 from Rs 269 mn in Q1 2001. Subsidiaries MICO has two 100% subsidiaries, Motor Industries Software Ltd and Motor Industries Trading Private Ltd. Plant locations MICO has 3 plants, one at Nashik for nozzles and nozzle holders, another at Bangalore for FIPs and hydraulic products and the third at Naganathapuram for auto Electricals including spark plugs. The Bangalore plant achieved international quality levels in Single Cylinder Pumps. The Nashik plant achieved new milestone in producing the 50 millionth nozzle holder assemblies. The company also has its own vocational training centers at Bangalore and Nashik imparting training in the state of the art technology to its workforce.

Sources:

http://www.micobosch.com/ http://www.micoweb.in.bosch.com/

Manoj Banshilal Pachouri

47

ICFAI Business School

Bell ceramics Bell Ceramics was established in 1985. It was established with the objective to manufacture world class ceramic glazed floor and wall tiles for domestic and international markets. It has two plants, strategically located near major Indian markets with production capacity of 30,000 sq. mt/ per day which manufacture floor tiles and wall tiles in wide range of products, sizes, patterns and shades. Both plants are ISO 9001-2000 & 14001 certified. Manufacturing at plants is according to COMITEE EUROPEAN DE NORMALISATION (CEN). The plant located at Dora (near Baroda) in Gujarat, Western India, has production capacity of 10,000 sq. mtrs per day, of Monoporossa Wall tiles & Floor tiles. The second plant located at Hoskote (Bangalore), Southern India, has an installed capacity of 20,000 sq. mtrs of floor tiles per day. The plant makes use of the world-renowned multi-line dry process technology, which is environment friendly and energy efficient, with Italian collaboration. Bell has tie ups with many international players for tiles manufacturing technology, research and development. It has wide spread distribution network, comprising depots, clearing & forwarding agents, dealers and retailers which are nationally connected through world class ERP software. Export Markets: Australia, Philippines, UAE, Bahrain, Saudi Arabia, Sultanate of Oman, Qatar, Kuwait, Singapore, Mauritius, New Zealand, Bangladesh, South Africa, Kenya and many more Awards and achievements: Felicitated by many awards including award from President of India for “Excellent Export Performance.”

Sources:

http://www.bellceramics.com/

Manoj Banshilal Pachouri

48

ICFAI Business School

Bharti Teletech Bharti Teletech - a Bharti enterprise, is India’s leading telephone instrument manufacturing company and one of the largest in the globe. Established in 1985, the company’s manufacturing operations are spread across ISO-9000 certified plants in Mapusa (Goa) and Ludhiana (Punjab) with an installed capacity of 6 mn telephone units annually upgradable to 10 mn units. An in-house Centre for Excellence with industrial and engineering design capability and equipped with facility for product reliability and life tests ensures a quality standard that compares with the best internationally. In 1985, Bharti Teletech entered into a technical collaboration with Siemens AG, the German technological giant and set up a plant in Ludhiana to manufacture telephones. Bharti Teletech produces a comprehensive basket of customer premise equipments, comprising of over 40 models spanning the basic, feature-rich and cordless telephone categories, under the Beetel brand. Beetel commands a market share of over 40% in the retail market, 95% in the PSP business and 60% in the tender market. The company has been in the forefront of growing the open retail market by providing feature-rich and world-class telephone products at affordable prices. Bharti Teletech currently exports to 30 countries in five continents, including the PTT markets. Bharti plans to double its exports in 05-06 over last year. Bharti Teletech has a tie-up with Atlinks (No.1 in home and office telephony worldwide) for marketing of GE telephones in India and neighboring countries as well as exports. Its list of credits also includes a contract with France telecom for supplies of our products for their worldwide requirement as well as supplies to Telefonica, Peru. The new initiatives of the company under the ‘Beetel’ brand include Broadband Products and Set Top Box – a hi-growth market in India. Both are focus areas for the company

Manoj Banshilal Pachouri

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ICFAI Business School

In 1991, Beetel manufactured phones for 'Sprint', the American telecom mammoth. Shortly after, in 1993-94, came ISO 9001-2000 accreditations for the manufacturing units - by this time two in numbers, at Gurgaon and Ludhiana. And in a short span of time, Beetel was already the market leader. Cornering a third of the Indian market, Beetel became 'India's Favorite Phone'. Success came on both fronts and fast. The first telephone instrument to get ISO accreditations, India's first EPBT phone, the first to cross the 10 million unit mark and thereafter 20 million mark, the only Indian telephone company to be present in 30 countries mapping 5 continents, one of the largest telephone manufacturers across the globe. A brand present in every second Indian home.

About Motorola Motorola is a Fortune 100 global communications leader that provides seamless mobility products and solutions across broadband, embedded systems and wireless networks. In your home, auto, workplace and all spaces in between, seamless mobility means you can reach the people, things and information you need, anywhere, anytime. Seamless mobility harnesses the power of technology convergence and enables smarter, faster, cost-effective and flexible communication. Motorola had sales of US $31.3 billion in 2004.

Sources:

http://www.motorola.com/ http://www.bharti.com/

Manoj Banshilal Pachouri

50

ICFAI Business School

MRF Ltd MRF manufactures automobile tyres, tubes, tread rubber and precured treads. Tyres are basically of two types - cross-ply and radial. In cross-ply tyres, nylon or rayon tyre cords are arranged diagonally across. In radial tyres, polyester, nylon, fiberglass or steel cords are arranged perpendicular to the circumference. Radial technology is an improvement over cross ply and radial tyres are priced at (of 25-30%) premium. They are long lasting and have lower incidence of flats. PAINT & SPECIALITY COATINGS MRF Paints is division of MRF which deals in paint and specialty coatings. MRF manufactures specialty coatings for wide range of applications. The revolutionary 100% polyurethane finishes are available in formulations for application to metal, wood, plastics, paper, vinyl, textiles, ceramics and glass. The coatings have been developed for color and gloss retention, strong adhesion and durability. They guard against abrasion, corrosion, chemicals, bad weather and ultra-violet radiation and are virtually maintenance free. Some of products from MRF Paints are: MRF Metalcoat: MRF Metalcoat is the ideal surface finish for any metal. It is used extensively in to paint machinery, bus bodies, grills, metal furniture, grills and outdoor metal structures. It is also extensively used in chemical plants. MRF Woodcoat: MRF Woodcoat is a lasting surface finish for application on any kind of wood, protecting it against the wearing effects of the weather, abrasion, moisture and domestic spills. MRF Glasscoat: MRF Glasscoat is glass coating transparent, opaque, metallic and frosted finishes. extensively in the packaging industry.

Manoj Banshilal Pachouri

51

that offers It is used

ICFAI Business School

MRF Vapocure: MRF Vapocure is used in surface coatings for wide range of applications of manufactured items such as metals, glass, plastics, wood, ceramics and paper. A catalyst in vapor form accelerates the curing of paints and coatings and eliminates the need for temperature baking of industrial paint finishes. MRF Brasscoat: This clear coating for brass items tarnishing, thereby reducing the labor of frequent polishing.

prevents

MRF Autocoat: MRF Autocoat is a 100% polyurethane car finish that adds beauty and life to your car. It offers high resistance to abrasion, corrosion, chemicals and ultraviolet radiation. Source: http://www.mrf.com/

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ICFAI Business School

PROCESS ANALYSIS Processes and Organization

Manoj Banshilal Pachouri

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ICFAI Business School

Processes and the Organization This phase kicked off with understanding the processes of organization. I started interacting with Fairdeal’s staff, managers and store keepers. It was important to understand the working culture and environment of the company to understand its processes better. Fairdeal, as a clearing & forwarding agent, handles more than twelve companies in various industries. Since different industries and different companies have their own rules and regulations of operations, it was a challenge to study the processes of these companies by framing them in a common frame. Sources of Data Collection Primary Data: Primary data (or fresh data) was collected by me from Fairdeal’s staff and manager through person interaction. I also used to observe processes and activities to collect data. To get a better insight of activities, I participated in Goods receiving, order taking, order punching, physical verification and many other processes myself. For instance, I collected storing material information by tracking Titan watches in Titan store which are stored code wise. I could punch data, accept orders, dispatch orders and scan barcode serial numbers of Motorola mobile sets in Bharti Teletech. Secondary Data: Secondary data (or published data) was collected from Company documents, Internet, Articles, Industry specific Journals, Business magazines, ICFAI Business School’s study materials and from other variety of sources. Data for ABC Analysis was collected from companies’ individual ERP Modules and Inbound & Outbound Registers.

Manoj Banshilal Pachouri

54

ICFAI Business School

Organization Structure of Fairdeal

Figure 3: Organization Structure of Fairdeal

Manoj Banshilal Pachouri

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ICFAI Business School

I started with basic questions like ‘why warehousing and third party logistics for that reason is important at all’? Some of reasons that came forward in subsequent discussions are given below. The reasons why a warehouse is required are: ¾ Have all the data in one place ¾ Easy storage ¾ Fast retrieval ¾ Simple to change information ¾ Security esp. with multiple users ¾ Recovery from failures Advantages of a warehouse: ¾ Reduces redundancy ¾ Reduces inconsistency ¾ Sharing of data becomes possible ¾ Enables security restrictions ¾ Allows data independent applications. Remuneration claimed by CFA There are three components of charges claimed by CFA: 1. Fixed charges E.g.: Hardware installation charges, Rent based on square feet of area (4.5 – 5 Rs per square feet) occupied by the company. 2. Variable charges E.g.: Labor charges, Stationary, freight, loading/ unloading 3. Remuneration as service provider a. b. c.

Fixed amount – Titan Volume or tonnage based Units per piece

Manoj Banshilal Pachouri

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ICFAI Business School

Company Wise Processes Fairdeal group is carrying out Supply Chain operations of more than twelve companies valued at Rs 3000 Crores. These operations consist of goods receiving, re-packing, re-labeling, storing, stock maintenance, order accepting on behalf of principal, cross-docking, dispatching, transporting, collecting cash, pay sales tax and Octoroi etc, handling warranty claims, handling goods returns and unsalable material, reverse logistics etc. Here is a brief overview of processes being carried out for each principal company handled by Fairdeal.

TITAN Watches Process Owner Website

Mr. Hemant http://trswamd/servlet/til.trs.watches.InvDocPrn/

Store Incharge

Mr. Aashish

Computer operations

Ms. Anal, Ms. Komal

Factory location

Ooty, Dehradun, and Hosur

Company Divisions

Tanishq jewellery, Sonata watches

Other Brands distributed

Tomy Hillfigure and Fastrack eyegear

Billing points

Ludhiyana, Goa, Noida, Delhi and Bangalore

Quantity handled

366,146

Value

660,350,996.00

Transactions

5,733

No of dealers

211 (Includes Tanishq, Sonata, Fastrack and Hillfigure)

Watches come from Ooty factory through courier services mainly Gati, BlueDart and Unifreight. Carton is checked for any physical damage and pilferage, weighted in the warehouse to check uniformity of cartons. If weight doesn’t match, carton can be opened in presence of courier boy itself.

Manoj Banshilal Pachouri

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ICFAI Business School

Carton contains packing slip containing number of pieces and codes. This packing slip is validated against Stock Transfer Memo in which number of pieces and price of each watch is given along with trade discount and sales tax. Coding system of watches: 999xx99x or, 9999xx99x or, 999999xx99x or, 99999999xx99x Where 9 stands for a digit and x stands for an alphabet First set of digits is either 3 digits or 4 digits and denotes case code followed by two alphabets (First alphabet for case type and second for strap type) and then two digit dial code. Last alphabet in titan watch might be K which shows that leather strap is brown. Alphabets may be: Y: Yellow (Gold Plated) N: Neutral G: Gold (18 caret) M: Metal

S: Steel P: Plastic L: Leather B: Bi-Metal (Gold Plated and Steel)

For example: 1233YM09K code of a particular watch means: 1233 is watch case code YM means watch is Yellow case (gold plated) and Metallic strap. 09 is code for dial type K means that the strap of the watch is brown. Note: For paired watches case code is 6 or 8 digit number. Order Taking: Orders are taken by Titan salespersons or directly placed at Shiromani office by dealers and then bill comes to warehouse for dispatching watches directly to dealers.

Manoj Banshilal Pachouri

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ICFAI Business School

Goods Receiving: Titan and sonata comes in 1800 models and variants. Table 4: Some examples of Titan watches Code

Price INR (As on 21st Feb 2006)

1348BM01

5995/-

1044YM01

6750/-

1184SL01

6895/-

19262926YM02

7500/-

Storing Goods: Watches are stored in the warehouse in numeric order of Case Codes. For example watches with codes 1044YM01 would be placed in racks before watches with codes 1348BM01 To maintain FIFO, stacking is used in which new watches are placed behind old watches. If new watches come in front, FIFO is violated.

Purchasing Cycle in Titan: Salesperson goes to dealer Dealer fills order form to purchase watches Salesperson gives order form at Shiromani office Bill is raised at Shiromani office and dispatching order along with bill sent to warehouse ¾ Material dispatched from warehouse directly to dealers ¾ ¾ ¾ ¾

Recommendations for Titan: •

• •

Billing is done at city office and dispatching is done at warehouse which increases cycle time and wait time. Billing and dispatching should be done at the same place. Barcode reader may be useful to track watches in warehouse Billing can also be done through barcodes

Manoj Banshilal Pachouri

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ICFAI Business School

Bharti Teletech Factory location (Billing points)

Ludhiyana, Goa, Noida, Delhi and Bangalore

Company website

http://www.bhartiteletech.com

Process owner

Mr. Vinod

Computer operator

Mr. Sunil Patel

Store keeper

Mr. Raman

SD Module

SDNet (Sales and Distribution Network) [http://www.beetel-india.com:9080/

Languages and software

.jsp, J2EE. Inet crystal clear for reporting

Brands

Beetel telephone instruments, Set Top Boxes

Other Brands distributed and sold

Motorola mobile sets

Quantity handled

146,888

Value

211,538,743.29

Transactions

1,611

No of dealers

9

Order taking: Dealer places order via phone/letter or punches it into SDNet. If order placed via phone, order has to be punched into SDNet manually by warehouse personnel’s. Purchasing order cycle for Bharti: Dealer Punches order or Sales person collects orders from dealers Order accepted by Carrying and forwarding agent (warehouse) Accepted order verified by regional sales officer at Mumbai Once approved, dispatch order placed on SDNet (dispatched order may be partial dispatch or short close in case there is less stock) ¾ Enter PIN and IMEI number (for Motorola only) through scanner Print invoice and IMEI details (for Motorola only) ¾ ¾ ¾ ¾

FIFO: It was found that no particular method is followed in Bharti Teletech to ascertain FIFO.

Manoj Banshilal Pachouri

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ICFAI Business School

Recommendations for Bharti Teletech: All Motorola cases have to be brought to SDNet terminal to scan their IMEI numbers. This consumes manpower as well as time in moving the cases. IMEI numbers can be scanned in Notepad in the beetel warehouse at the time of receiving mobile phone containers and then this text file can be sent to SDNet terminal for uploading IMEI numbers. Training to operators: No formal training is given to SDNet operators. They have learnt it by R&D and trail and error methods. For example: uploading IMEI number using text files was there from beginning but operator at Fairdeal learnt it by trail and error only after one year of his tenure. Multiple company handing: Employees should be encouraged to learn handling multiple (at least two) companies’ distribution channels like SAP of TATA Tea and SDNet of Bharti. This will ensure smooth operations even in case of absenteeism and job vacancies. Employees can be allotted to one company’s operations and one secondary companies working can be taught to him at the time of joining. New employees will learn better than those who have been working for a long time on single SD network. For example: if one employee is absent or quits his job, there should be another employee in Fairdeal who is at least 80% efficient, if not more, in handling absent employees work. Employees should be motivated, encouraged and trained to behave courteously with channel partners (Example Area Sales officer and Logistic peoples like truck drivers etc) as well as dealers and Stockists. It has been seen that some employees lack courtesy and communication skills.

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ICFAI Business School

Amara raja Batteries Factory location

Tirupati

Corporate office

Chennai

Company website

http://www.amararaja.com

Process owner

Mr. Vinod

Computer operator

Mr. Pravin

Store keeper

Mr. Shabbir

Brands

Amaron batteries

Stock transfer from

Bhiwandi, Indore, Bangalore, Delhi

Quantity handled

58,560

Value

112,960,900.98

Transactions

4,136

No of dealers

8

Jaipur,

Pune,

Ghaziabad,

Software used: 1. RKM (old), 2. Amara raja e-ARIMS (VB and crystal report, local software without internet support), 3. Amara raja E-application (http://localhost/bs/, uses ASP.net and web services) 4. BsApp Software; integrated with .NET application (E-application) 5. Warehouse terminal data is synchronized with company data via dial up virtual private network (VPN).

Manoj Banshilal Pachouri

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ICFAI Business School

Data Synchronization: ¾ Connect Internet connection ¾ Symantac Enterprise VPN client connects to company data for synchronization ¾ connect to VPN ¾ open BsApp ¾ press “synchronize data” button ¾ System uploads and downloads data to and from central server and number of records uploaded and downloaded is displayed. Transporters: Indo Arya Central Transport Ltd., TCI, AS Transport, prasanna cargo (from Pune), Shivraj Roadlines (from Pune), Patel roadways (from Bhiwandi), Sai transport (from Bhiwandi) Goods Receiving: Once batteries arrives the warehouse, transporters handover packing slips to store Incharge which contain serial number of batteries. Batteries are then physically checked for damage, type of battery, embossing, barcode and plastic wrapping before storing them in warehouse. IBD: Industrial Battery Division IBDs are used for Invertors and UPS systems. 4 Volt cells are used for Idea and Hutch towers. For dispatching IBDs, approval from Mumbai is required. After receiving material, upload receiving status on E-application and a mail is also sent to Chennai and Mumbai SCMs. Movement of batteries is based on serial numbers basically. Cycle Count: Book stock and physical stock is validated daily morning. Receiving Orders: Dealers place order at Premium House, Gandhigram branch office which is then forwarded to warehouse for dispatching via telephone. Invoice cum delivery challan is raised by branch office.

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ICFAI Business School

POP (Product of Promotions): Advertising material is also dispatched from warehouse against instructions from branch office. Hoardings, feature charts, T-shirts, caps, fly up stand etc. For FIFO: Batteries come in lots. Labels are stuck to batteries of one lot containing receiving date and quantity with serial numbers. Batteries of previous lots are dispatched first. This method resembles Kanban Japanese practice. Reporting: Weekly report is sent to branch office every Thursday. Weekly stock report has to be made code wise which is taken from reports generated in BsApp. These reports are generated dealer wise which are then added separately code wise and punched into Excel sheet. Reverse Logistics: Delivery challan or warranty replacement (3 copies – yellow, green and white warranty sheets) are prepared out of which two copies are sent to customer (one of which comes back with signature) and one copy remains with Fairdeal. Handling Warranty Claims: In case of warranty claim, service engineer checks battery at dealer’s place and if satisfied, sends battery for replacement to C&FA. Free placement: < 12 months Prorata replacement: > 12 Months but less than 38 Months (Price decided based on chart) Regular: > 48 Months Amara raja warranty claim cycle: Service engineer checks battery and advance intimation Service engineer validates document and battery Battery comes to warehouse with delivery challan Advance intimation received after battery and delivery challan is received ¾ New battery with delivery challan sent to dealer (if stock available) [In case of free replacement and prorate replacement] ¾ Sign on Invoice and delivery challan received from dealers. ¾ ¾ ¾ ¾

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ICFAI Business School

Handling Scrap Batteries: Scrap batteries (returned in free and prorata replacements) are stored in scrap warehouse. Serial number is noted, weight noted, permission taken from SCM and then handed over to Ganapati Metals, Indore who is All India contractor for purchasing battery scraps of Amara raja. DD is then sent to Head Office in the name of Amara Raja. Serial number is destroyed to avoid re-claims and a hole is made into battery. Notes: •

Battery must be charged every 40 days even in warehouse. Company has provided with a charger which can charge 32 batteries at one time.

•

OEM battery is of white color

•

Lead price is Rs 33/- per kg. (As in Feb 2006)

•

Total Transaction: 6789 batteries sold in Jan 06 (Including prorata)

Recommendations for Amara Raja: •

Cordless scanner might be useful for scanning barcodes of batteries and in stock transfers also.

•

Cordless scanner would eliminate physical checking of serial numbers and then punching them into terminal.

Manoj Banshilal Pachouri

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ICFAI Business School

McFills Foods Factory location

Sharkhej, Ahmedabad

Company website

http://www.mcfills.com

Process owner

Mr. Hemant Thakkar

Computer operator

Mr. Bharat

Store keeper

Mr. Bharat

Software used

DOS based FAS (financial Accounting system)

Products

Snacks, Wafers, Potato Chips

Quantity handled

67,764

Value

20,471,003.33

Transactions

1233

No of dealers

129

Indent form is filled in .xls format and attached to email to McFills Company. Material comes next day with Transporters LR (Lorry Receipt) and cash memo. Material comes from Ahmedabad factory in medium sized trucks. It is verified for pilferages and stored in warehouse. McFills are using 2500 sq ft of space in the warehouse (As in Feb 2006). Orders from dealers are obtained by phone (sales officer) or dealer in writing with DD. Orders are then punched into data entry module of FAS, bill is printed and material is dispatched by handing over material to transporter with printed bill. FIFO: stack card is labeled to boxes containing manufacturing date, batch number; price code etc. material with earlier manufacturing date is dispatched earlier. Stock transfer is not done in McFills division of Fairdeal till date. Non- salable product like air-leaked packs, damaged packs, expired packs etc are brought back to warehouse along with written approval of sales officer and party’s letter containing material details from dealers after getting approval from sales manager. This material is then sent back to McFills factory. Manoj Banshilal Pachouri

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Recommendations for McFills: •

Indent form preparing is responsibility of branch manager and not of CFA personnel. This activity can be annulled.

•

Quantity of unsalable material returned from dealers is very large compared to other companies. This is a bottleneck as a lot of time is consumed in maintaining non-moving and unsalable material.

•

Single person is handling computer operations as well as store for McFills. Though transaction volume is comparatively lower it is creating problems for customers as computer operator is not available when he is in store.

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Voltas Factory location Company website

Dadar, Hyderabad http://192.168.130.9/ private website for mails and communication with C & FA and dealers. It uses lotus notes.

Process owner

Mr. Saurabh Mashruwala

Computer operator

Mr. Saurabh Mashruwala

F & C (Finance & Control) Incharge

Ms Shreedevi srinivasan

Store keeper

Mr. Amrit

Software used

SAP R/3

Products

Spare parts

Refrigerator, defreezer (for ice-creams, milk etc), vesicular (Glassed door for storing cold drinks), window and split AC, water cooler (Mfg in Hyderabad) and mini magic water dispenser (made in china), cassette evaporating unit Mini magic (made in China)

Quantity handled

14,435

Value

177,385,730.66

Transactions

5,929

No of dealers

15

Mr. Dharmesh joshi, Logistics Incharge Voltas, Khanpur Branch Ahmedabad gives orders to Head office. Fairdeal comes to know only when goods come to warehouse. Targets are decided in MBRM (Monthly Business Review meeting of Voltas) held for area sales managers. Receiving Goods: When truck comes to warehouse, Address of Fairdeal is checked in documents, material is unloaded, Mr. Dharmesh is intimated, receipt is given to transporter and received details are punched into SAP module.

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SPT 1800 communication software (written in VB) is used for goods received and Barcode scanning. Cordless Barcode scanner is imported from Singapore. Operating cordless scanner: VDS -> goods received -> scan barcode from Voltas products Mr. Dharmesh is intimated again so that he can punch orders of dealers into SAP module. Schedule line Message tick is to be removed from SAP module only then outbound of material is permitted. Voltas SAP Module: VL 10 C: Sales orders Items (for Pending orders and current orders punched by dealers) [Only orders approved by F&C are displayed in this module, orders not approved by local F&C go into ‘Escalated orders’] VA 03: Display Sales Order (displays sales order party name wise with dispatch address and order number) This order number is noted down manually into long book. VL 01 N: Create outbound delivery with order reference number Shipping point: 259 (for Fairdeal) Order number: from VA 03 Module GR/ GI Slip: vehicle number Bill of land: Collecting mode e.g. transporter etc Goto -Æ Header -Æ Loading -Æ Number of packages Goto -Æ Header -Æ options Goto -Æ overview Post Goods Issue (PGI) -Æ outbound delivery number is generated in status bar which comes in VF 01 VF 01: Create billing document All outbound delivery numbers are displayed here. Select one number and click save button which will generate Invoice number. Manoj Banshilal Pachouri

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Inbound procedure: Transporter gives invoice to warehouse from which delivery number is putted in SAP module to get all details and all serial numbers. VF 31: To print Invoice Tick invoice lists and lists from [Inv no] to [Inv no]. To prints bills of specified invoice numbers. Orders manually noted down in long book from VL 10C i.e. sales order items with order number. Outbound Process: Invoice or bill is given to transporter who dispatches the material. After material is dispatched received receipt is collected back. /N MIGO/ GR: Goods received outbound delivery /N: for switching transactions Delivery note: Invoice ID Bill of landing: LR (Lorry receipt) number Header text: transporter name Tab panes in page: Material, Quantity, where, serial numbers Click check box named ‘Item OK’ and click post button. Message: Material document number 9999 posted is displayed To get time any order was approved: Follow the following procedure in SAP R/3 application to get the time when any order was approved. VA 03 -Æ Environment -Æ changes -Æ execute [click watch icon] -Æ choose

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Notes: •

0.6 ton window AC and 0.6 & 0.8 ton split ACs imported from china.

•

Amul, Vadilal, Pepsi, Gokul have agreement with VOLTAS to supply their sticker putted products.

•

Training for SAP module is given at Mumbai for 3 days.

•

Inwards from Hyderabad have to be done using scanner as SAP is not implemented there. Dadar material is not required to be scanned as delivery number can be used in SAP module to get all serial numbers.

Recommendations for Voltas: •

Voltas trucks have to wait for unloading material in absence of required number of labors. There should be preplanned arrangement of labors and storing space to avoid wait time.

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MICO Factory location

Nashik, Pune, Secundarabad, Chennai, Bangalore and Nepal

Company website

http://www.mico.com

Process owner

Mr. Hemant

Computer operator

Mr. Salim

Store Incharge

Mr. Rajesh

Store keeper

Mr. Pramod

Software used

IN4VANCFA - Rally for AS/ 400

Products Spare parts

Automobile spare parts, Engine oils, filters, Overhauling kits, Spark plugs, Batteries. Automobile spare parts

Quantity handled

4,918,625

Value

531,072,000.00

Transactions

31,926

No of dealers

7

•

Material comes through courier/ Transport

•

Material is stored at primary as well as secondary locations.

•

Padali branch office, Mr. Bhavasar is notified

•

MAN (Metropolitan Area Network) is being used to print pick slips by branch office at Fairdeal warehouse.

•

Pick slip is then validated against IN4VANCFA software module (Menu 1, Option 9)

•

DC (Delivery Challan) is then printed by warehouse people.

•

DC, LR, gate pass are made in triplet.

•

1 copy with Fairdeal, 1 copy with MICO branch office and 1 copy with transporter are maintained.

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FIFO: Colored codes with month number are labeled to bulk items. Loose material (less quantity) Recommendations for MICO: Rally for AS/ 400 Software used in MICO is very old and due to lack of proper maintenance speed of system is very slow. Computer operator has to wait for a long time after entering a command. It should be replaced with some advanced software like SAP R/3.

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TVS Motors Factory location

Hosur, Tamilnadu and Mysore

Company website

http://www.tvsmotor.co.in/

Process owner

Mr. Mitesh Shah

Computer operator

Mr. Narendra

Store keeper

Mr. Mohan

Software used

SAP R/3

Brands

TVS Victor, TVS Centra, TVS Apache, TVS Pep, TVS Star

Spare parts

TVS bikes spare parts

Quantity handled

46,668

Value

1,464,980,532.82

Transactions

2,057

No of dealers

34

Operations in TVS Motor are purely clearing & forwarding. Trucks come to warehouse from factory location. After verifying documents, trucks are unloaded. At the time of unloading, bikes are checked for Key, Battery, Rearview mirror, Tool box and other accessories. It is also checked for any physical damage or scratches. If scratches or damages are found, bikes are stored in scrap warehouse. After inspection bikes are stored brand wise and lorry number is noted down on the seats of bikes. Orders are taken by branch office and conveyed to computer operator of Fairdeal via telephone. Computer operator then validates it against SAP R/3 by entering order number. Store keeper then goes to warehouse and writes down serial numbers of ordered brands. These numbers are used to prepare bill. Due to scratches on barcode labels or lack of proper lights, there are problems in noting down serial numbers. Store keepers get confused between digits 8 & 3 and 0 & 8.

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FIFO: Manufacturing weak number is present on number plate of bikes with Engine numbers and frame numbers. At present bikes received first are dispatched first but this rule is not followed strictly. Some times there is error of Cross-Dispatching, i.e. bikes billed for one dealer are dispatched to other dealers. This error occurs due to labor picking wrong bikes or error in noting down serial numbers. Notes: •

5000 bikes dispatched per month all over Gujarat.

•

Physical stock sometimes does not tally with book value.

•

In case of cross-dispatching, Bill has to be made in Excel sheet.

Recommendations to TVS: •

TVS division has two computers, one for SAP R/3 operations and other for assistant works. These computers should be connected to each other through network connection. As of now, data has to be transferred using Floppy disks from one machine to another.

•

Transporters should be encouraged to intimate Fairdeal in advance about their arrival. This will help Fairdeal in arranging for bikes space and avoid parallel unloading.

•

Cordless barcode scanner can be used to scan serial numbers instead of doing it manually. This will reduce human errors as well as increase efficiency of receiving and dispatching also.

•

TVS should ask SAP R/3 to provide them with integrating software which can transfer data to and from cordless barcode scanner and SAP R/3 module.

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Bell Ceramics

Factory location

Dora near Bangalore

Baroda,

Hoskote

Company website

http//www.bellceramics.com/

Branch Manager

Mr. Ramesh Desai

near

[[email protected]] Process owner

Mr. Hemant Thakkar

Computer operator

Mr. Hemant Thakkar

Software used

MFG Pro

Products

wall and floor tiles

Quantity handled (Sq mts)

250,426.93

Value (INR)

47,127,843.96

Transactions

4,464

No of dealers

100

Bell ceramics has tiles in 200X300 mm, 300X300 mm, 397X397 mm and 400X400 mm categories. Wall tiles are manufactured at Dora and Hoskote plant manufactures floor tiles only. Tiles are checked for physical damages and If damages are up to Rs 4000/- or less, damage is claimed from transporter, else it is claimed from insurance company. Order is taken on phone by Fairdeal. At present, dealers have to keep pre-signed cheques with depot. If cheques of dealer are not present, no order will be made. If cheques are present, invoice is printed and material is dispatched with gate pass and LR copies. Data in MFG Pro software is uploaded by emailing Microsoft Excel (.xls) sheets.

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Notes: •

Tile Shades vary every batch. There is at least 2% to 3% variation in shade for every batch change.

Recommendations for Bell Ceramics: All orders in bell ceramics are placed either via telephone or written order is sent to depot. This increases Fairdeal’s work as orders have to be punched manually by Fairdeal staff. Further, this company does not have any branch office in Gujarat and Area Sales Manager Mr. Ramesh Desai works from Fairdeal premises itself. Fairdeal should negotiate with Bell management to provide them with better infrastructure to operate its activities better.

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IM Technologies Process Owner

Mr. Aashish

Store Incharge

Mr. Aashish

Factory location

Noida

Quantity handled

502,000

Value (INR)

10,072,500.00

Transactions

19

No of dealers

1

SIM cards come from Noida (imported from abroad) through courier. Carton is checked at time of receiving and stored at ground floor itself from where it is dispatched to Idea Cellular, Gandhinagar.

MRF Paints

Factory location

Chennai

Head Office

Mumbai

Branch Manager

Mr. Himanshu P. Maniyar

Process owner

Mr. Vinod

Computer operator

Mr. Tushar

Software used

MS Dos based InvMenu, IMS and Bill Printing

Products

Paint products and speciality coatings

Quantity handled

33,396.3

Value (INR)

8,368,599.93

Transactions

2,605

No of dealers

65

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Notes: RCB Menu: Software for taking payment from party SRCN: Expired material coming back to depot IBTA: Stock transfer (Inter depot) DSO: Direct Sales Order IMS: Inventory Management System Recommendations to MRF: •

MRF paint is using very primitive softwares and need immediate attention towards this field. Its softwares are almost obsolete and many of its modules are either out of date or not upgraded.

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Security at Fairdeal Distribution Services Pvt. Ltd Process Owner: Mr. Ram Prakash Singh Kushwah •

Material is loaded in presence of security guard, Godown keeper and truck driver and signed by all three also.

•

Gate pass is checked for quantity (short or excess both) and validated against physical goods at the time of dispatching at main gate.

•

Inward and outward registers are maintained company wise and day wise also.

•

Staffs register tracks In and Out time of employees.

•

Truck daily register records vehicle number, driver’s name, Party name (transporter or dealer’s name), loading or unloading, In time, Out time, security guard’s sign

•

At Main warehouse, Fairdeal has eight security guards.

These company wise processes study in this phase will make the basis for further research in next phases, ABC Analysis and AS-IS Analysis phases, of the project.

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ABC ANALYSIS Value Wise and Quantity Wise

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Definition of ABC Analysis ABC Analysis: ABC Analysis is an inventory management tool based on the tenets of Pareto Analysis. It categorizes inventory by its highest value and greatest volume. With this information, inventory managers can focus on increasing those inventory SKUs with the greatest potential positive return for the organization. In this analysis, items are classified into three categories which are as follows: Category A: This category consists of 10% of items by Units of Measure (UOM) i.e. quantity and 70% by value. This is most valuable category and most attention should be given to this category. Category B: This category consists of 20% of items by Units of Measure (UOM) and 20% by value. This category items are less profitable than category A items but more profitable than category C items. Category C: This category consists of 70% of items by Units of Measure (UOM) and 10% by value. This is least valuable category and least profitable as well. In this phase, operations of all client companies have to be categorized in A, B or C groups to get the information about which companies constitute the major part in Fairdeal’s turnover. ABC Analysis for client companies would be done value wise and quantity wise to get a better picture of companies’ operations as a company which constitutes major part in terms of value might be dealing in precious items like jewellery but it might not have large volume. Data Collection Data for all companies was collected either from their ERP applications or I had to search the data from reimbursement registers, inbound registers, outbound registers, invoices, freight claim registers etc. Some software packages, like Rally for AS/400 in MICO, did not have any modules for sales figures in which case help of management was taken to provide the relevant data.

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Value Wise ABC Analysis Note: All values are in INR (Indian Rupees) MRF Data Value Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Total

534,114.41 725,556.48 613,363.11 614,082.04 707,640.88 791,279.70 978,227.84 777,799.40 734,249.01 730,710.29 628,394.07 533,182.70 8,368,599.93

TVS Motor Data TVS Motors Value (INR)

Total 1,464,980,532.82

BPL Techno Vision Data BPL Sanyo AUDIO

LANTERN

GAS TABLE

Product DVD 124A PICNIC SANGEETH A3 SPORTY RLF 650 RED RLF 750 BLUE RLT 210 D YELLOW 7100 P (SS) 7300 P (SS) TOTAL

Manoj Banshilal Pachouri

Value 575,127.00 69,141.00 91,498.00 35,098.78 217,350.00 10,489.00 2,262.00 16,632.00 0.00 1,017,597.78

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Titan Industries Data Titan Value (INR)

Sonata 118,264,653.00

271,727,719.00

Fastrack Sunglass 12,492,624.00

Tommy Hilfiger 9,076,780.00

TANISHQ

TOTAL

248,789,220.00

660,350,996.00

Gold Coins 27,073,365.00

Silver 259,000.00

Silver Coins 578,485.00

Platinum 241,800.00

Tanishq Jewellery Data

Value (INR)

Gold Plain 119,932,102.00

Value (INR)

Gold Studded 66,863,446.00

PLAIN JEWELLERY WITH STONES 29,003,056.00

Gold Plain UCP Jewellery 4,687,752.00

SOLITAIRE 150,214.00

TOTAL 248,789,220.00

Tata Tea Data Tata Tea Value (INR)

Total 32,850,286.31

Bell Ceramics Data Bell Ceramics Value (INR)

Total 47,127,843.96

McFills Data McFills Value (INR)

Total 20,471,003.33

IM Technology Data IM Technology Value (INR)

Total 10,072,500.00

Amara Raja Data Amara Raja Value (INR)

Total 112,960,900.98

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MICO Data MICO Value (INR)

Total 531,072,000.00

Bharti Teletech Data Bharti Teletech Value (INR)

Total 211,538,743.29

Voltas Data Voltas Value (INR)

Total 177,385,730.66

Annual sales for the financial year 2005-06 for Gujarat state were tabulated in descending order of their turnovers as follows: Companies in descending order of turnovers Company

Value (INR)

TVS Motor

1,464,980,532.82

Titan

660,350,996.00

MICO

531,072,000.00

Bharti

211,538,743.29

Voltas

177,385,730.66

Amara Raja

112,960,900.98

Bell

47,127,843.96

Tata Tea

32,850,286.31

McFills

20,471,003.33

IM Tech

10,072,500.00

MRF Paints

8,368,599.93

BPL Sanyo

1,017,597.78

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Table 5: ABC Analysis - Value Wise Company TVS Motor Titan MICO Bharti Voltas Amara Raja Bell Tata Tea McFills IM Tech MRF Paints BPL Sanyo TOTAL

Value (INR) 1,464,980,532.82 660,350,996.00 531,072,000.00 211,538,743.29 177,385,730.66 112,960,900.98 47,127,843.96 32,850,286.31 20,471,003.33 10,072,500.00 8,368,599.93 1,017,597.78 3,278,196,735.05

% of total value 44.69% 20.14% 16.20% 6.45% 5.41% 3.45% 1.44% 1.00% 0.62% 0.31% 0.26% 0.03% 100.00%

Cumulative % 44.69% 64.83% 81.03% 87.49% 92.90% 96.34% 97.78% 98.78% 99.41% 99.71% 99.97% 100.00%

Category A A B B C C C C C C C C

Total of all values was calculated which was used to calculate percentage of total value contributed by each company as follows: Percentage of total value

=

Turnover of company ---------------------------------Total turnover of companies

After this, cumulative percentage is calculated for companies sorted in descending order of values. These cumulative percentages are used to categorize companies in A, B and C categories using formula, If, Cumulative percentage < 70% => A Category Else if, Cumulative percentage > 70% but < 90% => B Category Else, C Category It is evident from table that contribution of TVS motor is largest with 44.69% and that of BPL Sanyo is least with 0.03%.

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Quantity Wise ABC Analysis MRF Data in Litres Qty 1

Qty 2

Qty 3

503.75

614

May-05

732

456.25

1513

Jun-05

611

506

1485

Jul-05

1183.75

318

1010.3

Aug-05

1735

343

935

Sep-05

1600

416

1531.5

Oct-05 Nov-05

847.8

1400.5

1218.5

1145.5

613.8

1167.8

Dec-05

875

747.5

1206.2

Jan-06

813.8

703

1367.4

Feb-06

737.7

589.5

1181.5

Mar-06

918.25

360

790.5

Apr-05

1218.5

33396.3

Total

TVS Motor Data TVS Motors Quantity

Total (bikes) 46668

BPL Techno Vision Data BPL Sanyo AUDIO

Product DVD 124A

Quantity (pcs) 189 60

PICNIC

110

SANGEETH A3

24

SPORTY LANTERN

GAS TABLE

RLF 650 RED

230

RLF 750 BLUE

10

RLT 210 D YELLOW

10

7100 P (SS)

11

7300 P (SS) TOTAL

0 644

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Titan Industries Data Titan Quantity (pcs)

Sonata 171,851

155,153

Fastrack Sunglass 11,058

Tommy Hilfiger 1,644

TANISHQ 26,440

TOTAL 366,146

Silver Coins 4,234

Platinum 17

Tanishq Jewellery Data

Quantity (pcs)

Gold Plain 10,790

Quantity (pcs)

Gold Studded 4,635

PLAIN JEWELLERY WITH STONES 1,016

Gold Coins 4,650

Gold Plain UCP Jewellery 995

Silver 84

SOLITAIRE 19

TOTAL 26,440

Tata Tea Data Tata Tea Quantity (Kg)

Total 277,340.55

Bell Ceramics Data Bell Ceramics Quantity (sq mts)

Total 250,426.93

McFills Data McFills Quantity (boxes)

Total 67,764

IM Technology Data IM Technology Quantity (pcs)

Total 502,000

Amara Raja Data Amara Raja Quantity (pcs)

Total

Manoj Banshilal Pachouri

58,560

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MICO Data MICO Quantity (pcs)

Total 4,918,625

Bharti Teletech Data Bharti Teletech Quantity (pcs)

Total 146,888

Voltas Data Voltas Quantity (pcs)

Total 14,435

Total quantities dispatched for the financial year 2005-06 for Gujarat state were tabulated in descending order of their quantities as follows: Companies in descending order of quantities Company

Quantity

MICO (pcs)

4,918,625

IM Tech (cards)

502,000

Titan (pcs)

366,146

Tata Tea (kg)

277,341

Bell (sq. mts)

250,427

Bharti (pcs)

146,888

McFills (boxes)

67,764

Amara Raja

58,560

TVS Motor (bikes)

46,668

MRF Paints (ltr)

33,396

Voltas (pcs)

14,435

BPL Sanyo (pcs)

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644

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Table 6: ABC Analysis - Quantity Wise Company MICO (pcs) IM Tech (cards) Titan (pcs) Tata Tea (kg) Bell (sq. mts) Bharti (pcs) McFills (boxes) Amara Raja TVS Motor (bikes) MRF Paints (ltr) Voltas (pcs) BPL Sanyo (pcs) TOTAL

Quantity 4,918,625 502,000 366,146 277,341 250,427 146,888 67,764 58,560 46,668 33,396 14,435 644 6,682,894

% of total Quantity 73.60% 7.51% 5.48% 4.15% 3.75% 2.20% 1.01% 0.88% 0.70% 0.50% 0.22% 0.01% 100.00%

Cumulative % 73.60% 81.11% 86.59% 90.74% 94.49% 96.69% 97.70% 98.58% 99.27% 99.77% 99.99% 100.00%

Category A B B B C C C C C C C C

Method for categorizing companies in A, B and C categories is same as that used in aforesaid value wise ABC Analysis. It is evident from table that contribution of MICO is largest with 73.6% and that of BPL Sanyo is least with 0.01%.

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Transactions Wise ABC Analysis MRF Data Transactions Apr-05

228

May-05

241

Jun-05

215

Jul-05

231

Aug-05

222

Sep-05

268

Oct-05

192

Nov-05

224

Dec-05

193

Jan-06

239

Feb-06

185

Mar-06

167 2605

Total

TVS Motor Data TVS Motors Transactions (No)

Total 2,057

BPL Techno Vision Data BPL Sanyo

Product

AUDIO

DVD 124A

Transactions 22 8

PICNIC

14

SANGEETH A3 LANTERN

GAS TABLE

SPORTY

3

RLF 650 RED

9

RLF 750 BLUE

1

RLT 210 D YELLOW

1

7100 P (SS)

1

7300 P (SS) TOTAL

0 59

Manoj Banshilal Pachouri

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ICFAI Business School

Titan Industries Data Titan

Sonata

Transactions

2,884

1,103

Fastrack Sunglass 357

Tommy Hilfiger

TANISHQ 1,183

TOTAL

206

9

Silver Coins 11

Platinum 13

5,733

Tanishq Jewellery Data Gold Plain Transactions

Transactions

335

Gold Studded 323

PLAIN JEWELLERY WITH STONES 199

Gold Coins

Silver 159

Gold Plain UCP Jewellery 128

SOLITAIRE TOTAL 6

1,183

Tata Tea Data Tata Tea Transactions (No)

Total 1,806

Bell Ceramics Data Bell Ceramics Transactions (No)

Total 4464

McFills Data McFills Transactions (No)

Total 67,764

IM Technology Data IM Technology Transactions (No)

Total 19

Amara Raja Data Amara Raja Transactions (No)

Total

Manoj Banshilal Pachouri

4,136

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MICO Data MICO Transactions (No)

Total 31,926

Bharti Teletech Data Bharti Teletech Transactions (No)

Total 1611

Voltas Data Voltas Transactions (No)

Total 5,929

Total transactions done by company to dispatch aforesaid quantity for the financial year 2005-06 for Gujarat state were tabulated in descending order of their transactions as follows: Companies in descending order of transactions Company

Transactions

MICO

31,926

Voltas

5,929

Titan

5,733

Bell

4,464

Amara Raja

4,136

MRF Paints

2,605

TVS Motor

2,057

Tata Tea

1,806

Bharti

1,611

McFills

1,233

BPL Sanyo

59

IM Tech

19

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ICFAI Business School

Table 7: ABC Analysis - Transaction Wise Company MICO Voltas Titan Bell Amara Raja MRF Paints TVS Motor Tata Tea Bharti McFills BPL Sanyo IM Tech TOTAL

No of Transactions 31,926 5,929 5,733 4,464 4,136 2,605 2,057 1,806 1,611 1,233 59 19 61,578

% of total Transactions 51.85% 9.63% 9.31% 7.25% 6.72% 4.23% 3.34% 2.93% 2.62% 2.00% 0.10% 0.03% 100.00%

Cumulative % 51.85% 61.47% 70.79% 78.03% 84.75% 88.98% 92.32% 95.25% 97.87% 99.87% 99.97% 100.00%

Category A A A B B B C C C C C C

Method for categorizing companies in A, B and C categories is same as that used in aforesaid value wise ABC Analysis. It is evident from table that contribution of MICO is largest with 51.85% and that of IM Technology is least with 0.03%.

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AS-IS ANALYSIS Process Matrices

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Definition of AS-IS Analysis As-Is Analysis phase of BPR is aimed specifically at identifying disconnects within existing business processes and their specified intent. Disconnects mean anything that prevents the process from achieving desired results (e.g., inconsistency between the functions of a process that cause failings of the existing process to achieve its intent) Steps taken to describe the AS-IS process also includes documentation of the sequence in which activities are performed. This phase of project report summarizes the notes, facts and findings of the current business processes at Fairdeal Distribution Services Pvt. Ltd. The material was collected, analyzed, and presented by me to Mr. Sharad Jobanputra (Company Guide) and Mr. Bharat Kantharia (Faculty Guide). This section is intended to serve as input to the process mapping, flowcharting and TO-BE Analysis section. My Mechanism: After understanding the workings and processes of Fairdeal during Organization and Processes phase, my next objective was to measure all the important processes. For this, all the relevant documents are gathered and all the processes and sub-processes studies in previous phase are listed out which are: 1. Verify goods against Goods In Transit 2. Receiving Goods 3. Give acknowledgement to transporter 4. Physical inspection of inbound material 5. Scan barcode serial numbers 6. Make shortage-claim or Damages-claim 7. Intimate shortage claim or damages claim to branch office 8. Unload inbound material 9. Segregate material in brands and shades 10. Arrange for bitumen sheets or pallets 11. Store material according to companies stacking norms 12. Update goods in transit and current stock modules 13. Update stock register Manoj Banshilal Pachouri

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14. Make stack cards 15. Place stack cards on goods 16. Re-pack material, if required 17. Re-labeling of goods 18. Stock Maintenance 19. Receive orders from customers 20. Receive stock transfer requests 21. Punch orders 22. Collect cheques from customers 23. Check availability of ordered goods 24. Check availability of customer’s checks with Fairdeal 25. Intimate customers about insufficient cash 26. Make pending orders 27. Short close orders in case of shortage of goods 28. Print invoice 29. Prepare Gate pass 30. Verify ordered quantity against invoice 31. Load material on vehicle 32. Dispatch goods 33. Check stock in warehouse after dispatching 34. Receive ‘goods received’ acknowledgement from customers 35. Pay Octoroi if applicable 36. Receive unsalable material 37. Receive warranty returns 38. Intimate principal about warranty claims 39. Intimate principal about scrap material 40. Generate weekly and monthly reports 41. Claim Octoroi claims from company 42. Claim transport charges from company

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All the processes and sub-processes mentioned here are not under control of Fairdeal. Some processes are initiated outside Fairdeal and some are partially or fully controlled by outside sources like dealers and branch offices. Out of these procedures and sub-procedures, eleven most vital procedures were shortlisted as main processes for further analysis and remaining out of 42 were classified as sub-processes of these main processes. The main processes are: 1.

Goods Receiving

2.

Storing Material

3.

Cycle Count

4.

Order Punching

5.

Order Approval

6.

Invoice/ Bill Printing/ Stock Transfer

7.

Dispatching

8.

Transportation

9.

Handling Unsalable Material

10. Handling Warranty Claims 11. Stock Maintenance These processes are general processes common to all companies handled by Fairdeal Distribution Services Pvt. Ltd. Those Processes which are specific to a particular company are indicated by company name in the parentheses. These processes were then again studied and process matrices were prepared for each process. Process Matrix contains activities that are undertaken in every process. All activities might not be followed in the process and some activities are alternate activities. All the process matrices are shown graphically also which are drawn using Microsoft Visio 2003. This phase also includes main issues with related priorities and excerpts from interview of warehouse labours, clerks, store keepers, security guards, process owners, managers, and directors of Fairdeal.

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Decide on an approach Analysis of every process and its activity steps will decide the future of the process, i.e. whether it will be redesigned or leaved as it. There are five possible courses of action: • Drop/abandon: This process is not necessary, or the benefit will never justify the cost. • Outsource: It would be a more effective use of resources to have a supplier carry out the process. Traditionally, this has been the choice for generic, infrastructure activities such as cleaning and catering. • Leave as is: The process is fine; the issues were elsewhere (e.g., no one follows the process, or training is needed). • Improve: The basic structure of the process is okay, but specific improvements are possible. • Redesign: The process should be fully redesigned.

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Cycle Time, Wait Time measurements To measure Wait time, Cycle time, Work time and other measures, In and out time of trucks were noted down. Following are the in and out times of some of the companies whose material come through transport vehicles. These times would be compared with industry’s ideal loading and unloading times to measure Cycle time, Wait time, and Working time of various processes. Note: These tables are drawn in Excel sheets and imported to word document after doing all calculations like Average, difference etc. Table 8: Unloading times of Transport Vehicles Beetel

Voltas

IN

OUT

13:30

14:30

IN

OUT

10:25

12:45

12:20

13:15

10:00

13:30

16:30

17:00

10:00

10:45

12:30

13:45

8:15

13:30

11:45

12:15

10:00

12:00

13:00

13:30

18:00

19:30

12:15

12:45 10:30

14:00

10:00

15:00

10:00

13:45

13:50

14:20

11:45

12:15

ARBL

Bell

18:30

19:10

10:45

12:15

17:00

18:15

11:10

15:20

15:00

16:45

11:45

12:15

16:15

17:00

15:15

16:45

11:15

13:00

16:30

17:45

17:15

18:45

10:25

12:45

13:45

16:45

21:15

22:00

10:45

12:15

12:45

13:45

14:15

15:30

13:00

14:00

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Table 9: Loading & Unloading times in TVS (With four labors) TVS Motors Loading (20 - 26 Bikes) IN

Unloading (50 - 56 Bikes)

OUT

IN

OUT

Loading Time (Hrs)

Unloading Time

10:15

13:00

10:35

12:05

2:45

1:30

14:24

16:15

12:10

13:05

1:51

0:55

15:15

17:00

13:10

15:10

1:45

2:00

12:00

13:10

15:30

17:15

1:10

1:45

13:30

14:15

7:50

8:50

0:45

1:00 1:45

14:20

16:30

10:30

12:15

2:10

16:45

18:15

15:45

15:00

1:30

1:15

18:20

19:30

15:30

18:00

1:10

2:30

18:30

19:45

10:00

11:10

1:15

1:10

18:45

19:00

11:20

12:55

0:15

1:35

12:30

14:00

11:30

12:45

1:30

1:15

18:00

20:00

12:50

14:15

2:00

1:25

18:45

20:00

14:45

16:00

1:15

1:15

13:45

14:45

16:00

17:45

1:00

1:45

16:35

18:00

16:30

18:00

1:25

1:30

17:45

18:30

10:45

12:00

0:45

1:15

18:30

19:45

11:30

13:30

1:15

2:00

14:40

16:50

10:00

11:00

2:10

1:00

16:35

18:05

10:30

11:40

1:30

1:10

18:00

19:10

18:10

19:20

1:10

1:10

18:20

19:25

10:00

11:00

1:05

1:00

13:30

0:15

2:20

Avg. Time

1:21

1:28

18:55

19:10

11:10

Table 10: Ideal Unloading times (with four labors) Industry

Ideal Unloading Times

Automobile (TVS)

1 hour

Food & Snacks (McFills)

30 Min

Batteries (Amara Raja)

2 hours (Due to security check for acids)

Home appliances (Voltas)

1 hours

Telecommunications (Bharti)

30 minutes

Tiles (Bell Ceramics)

2 hours

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Table 11: Fairdeal’s Unloading times Industry

Fairdeal’s Average Unloading Times

Automobile (TVS)

1.28 hours

Food & Snacks (McFills)

1.22 Min

Batteries (Amara Raja)

2.33 hours

Home appliances (Voltas)

1.13 hours

Telecommunications (Bharti)

41 minutes

Tiles (Bell Ceramics)

3.04 hours

It is clearly visible from above tables that Cycle time and Wait time of Fairdeal’s unloading activities are far more than ideal industry measures. Some of the reasons for deviations in these measures are as follows: 1. Lack of space to unload material 2. Lack of sufficient labours 3. Security checks at gate 4. Physical inspection of material 5. Delay in issuing material received acknowledgement Moving and Non-moving materials Average cycle time of processes can not be calculated because almost all companies have fast moving, slow moving and non-moving goods categories. Cycle times of individual products or brands only can be calculated which is out of scope of this project. I would calculate Cycle times of individual products if time permits after completion of this project.

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Process Matrices [Key Performance Indicators (KPIs)] Metrics, or key performance indicators (KPIs), give a feel for the dynamics of the process before diving into the assessment. Metrics provide useful guidance to focus efforts and requirements. Table 12: Summary of Metrics Summary of Metrics Executing Time

Waiting Time

Involvement

Efficiency

Cost

Cycle time

Idle

People

Attritions

Unloading costs

Work time

Transit

Departments

Rework

Loading costs

Time worked

Queue

Dealers

Training

Storing costs

Queue time

Setup

Stockists

Errors

Maintenance costs

Labor

Iterations

Re-packing costs

Locations

Delay

Octoroi charges

Languages

Complaints

VAT charges

Idle time

Branch Office

Damage costs

Transporters

Transportation costs

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Goods Receiving Process Goods Receiving process is initiated by either transporter or courier service provider when material is brought to Fairdeal warehouse. This process ends with accepting the material for storing it into warehouse. Some of the main activities in this process are: Verify goods against Goods in Transit Goods are checked to see that they comply with the specifications laid down in the order form. This is particularly important for goods which have been ordered for a specific purpose, like POP or promotional goods, rather than for general stock and also for goods which will be issued directly to users without being entered into normal stock records and which are received only occasionally (as in IM Technology case where goods are directly dispatched to Idea Cellular). Physical inspection of inbound material To enforce security at a warehouse, a duty officer mans a Gate Office. This Gate Officer is responsible for: •

Completing meticulous records about vehicles entering or leaving the warehouse area. This applies to both suppliers' and the warehouse's own vehicles. In the record is each vehicle's registration number, details of the delivery note, the name of the supplier and the times of arrival and departure.

•

Giving all drivers clear directions. Drivers employed by external suppliers are supervised all the time they are inside the warehouse security area.

•

Searching departing unauthorized load.

vehicles

to

ensure

they

contain

no

Give acknowledgement to transporter Acknowledgement of goods received is given to transporter either by signing on copy of LR or by issuing a separate document. Any damage or shortage has to be mentioned in the document. Scan barcode serial numbers A Bar code is a series of wide and narrow bands and spaces which represent numbers and letters. These bar codes, in machine-readable format, can be printed on package labels or cases. They can also be specially printed on labels by a dot matrix, ink-jet or full character impact printer.

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The codes are read by a light pen or a fixed-beam reader scanner. The readers are interpreted by a micro-processor decoder. Decoders are used to record and identify goods received and goods issued. They are linked to a computer which updates the inventory control data base, adjusting records of stock levels automatically. Make shortage-claim or Damages-claim If some items are found to be missing or damaged, the first thing done is to segregate the defective unit or packages. This is the responsibility of the Store Incharge to sign for the receipt of the consignment. Where packages are obviously damaged on the outside, the contents are checked carefully. The transporter's representative then countersigns the endorsement. The Depot Incharge may choose to send the goods back. Alternatively, he has been instructed to qualify his signature on the delivery note by writing a comment. Once the loss or damage has been verified, it is notified to the supplier straight away. He can then make a claim against the carrier, or other parties. Intimate shortage claim or damages claim to branch office If the full complement of items ordered is not received (shortage) or if goods arrive damaged, compensation has to be claimed from the insurance company according to company norms. Storage claim or damages claim are intimated to Area Sales Manager (ASM), Supply Chain Manager (SCM) and transporter. Unload inbound material After inspection of material is complete, material is scanned (if applicable as in Voltas) for barcode serial numbers and off-loaded from the lorry. Generally two to four labors are used to off-load material in Fairdeal. In TVS motors, Bikes are checked for battery, accessories, tool kit etc at the time of off-loading.

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Table 13: Goods Receiving Process Process 1 Goods Receiving Goods arrive from factory locations or other locations in case of StockActivities 1.1 Transfers. 1.2 Area branch office is notified about arrival of material. [Voltas] STM is received from transporter or courier person containing GRN and 1.3 outbound number. In case of courier service, Individual carton is weighed and verified 1.4.1 against printed weight on carton. [Titan watches] If weight of carton does not match with printed weight, Carton will be 1.4.2 opened before courier person. [Titan watches] Docket wise Cartons are opened and watches are checked with packing 1.4.3 slips which are inside the carton. [Titan watches] 1.5 Material unloaded from Lorry. Material is manually inspected for any physical damage and accessories 1.6 E.g. TVS bikes are checked for whether key and tool kit is with bike or not, rear view mirror and battery is attached with bike. In case of physical damage or short supply: • Supply Chain Manger is informed. 1.7 • Local ASO (Area Sales Officer) is informed. • Damage claim or Shortage claim is prepared. 1.8 Serial numbers are scanned using cordless barcode scanner. [Voltas] 1.9 Goods received acknowledgement given to logistics person. 1.10 Material is stored in warehouse. 1.11 Upload receiving status on applications like SAP R/3, SDNet, MFG Pro 1.12 Mail is sent to Supply Chain Managers. [Amara raja batteries] Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Godown Keeper 6 Persons Warehouse 22,277 pieces per day (300 working days) Material status from Goods in transit Module Invoice cum delivery challan, LR receipt Material received notified to branch office through mail Material received receipt given to transporter Monthly report generated Current Inventory Status Current stock in warehouse STM should match goods in transit

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Figure 4: Flowchart of Goods Receiving Process

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Storing Material Process This process is initiated by goods receiving process and ends with storing material into scrap warehouse or finished goods warehouse. Some of the main activities in this process are: Segregate material in brands and shades Packages or individual items are clearly marked with identification codes or descriptions, according to the stock control system prescribed by the principal company. They are also marked with any information about restriction of issue. Arrange for bitumen sheets or pallets Pallet loads are first checked to see that they are secure. All pallet loads are properly strapped, banded and fastened to the pallet according to the type of product. Store material according to companies stacking norms Tata tea bags and cartons are stacked in a honey comb pattern. Batteries in Amara Raja are stored on pallets according to batch to ensure FIFO. Bell ceramics tiles are stacked batch wise and shade wise. Update goods in transit and current stock modules After goods are received, Goods in transit module is updated and material in goods in transit module then shifts to current stock with CFA module. Update stock register Physical stock register is updated once material is received or dispatched from the warehouse. This ensures tracking of material on daily basis. Stock register is helpful at the time of order punching when it is verified for stock availability.

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Make stack cards Stack cards are prepared to ensure proper maintenance and delivery of material. They are also used tat the time of safety measures and cycle count. Stack card contains name of product, name of brand, number of quantity, batch number, manufactured date etc. Stack cards can be substituted by barcode labels for better efficiency. Place stack cards on goods After stack cards are prepared, they are placed on goods as follows: •

If material is stored in racks, stack card is pasted on rack.

•

If material is stored on pallets, stack card is putted on it.

•

If material is putted on bitumen sheets, stack card is placed in box.

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Table 14: Storing Material Process 2 2.1.1 2.1.2

Process Activities

2.2.1 2.2.2 2.2.3 2.2.4 2.3.1 2.3.2 2.4 2.5 2.6 2.7 2.8 2.9 2.10

Godown Incharge 4 Persons Warehouse 22,277 pieces per day (300 working days)

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Storing Material Separate locations are allotted for product of different companies. Same company goods are stored product wise. Yellow lines are marked on the floor of warehouse and material has to be stored within those lines only. Bitumen set or pallets are used to store material as par the policy of company. Stacking is done according to stacking norms of company. (e.g.: nine items per stack). Stacking always is honey comb. [Tata Tea] Titan products are stored code wise. Newer Titan products are stacked behind older one to ensure FIFO. Tiles in Bell Ceramics are stored batch wise as shades change every batch. Lorry number is noted down on seats of TVS bikes and stored brand wise. Engine number and frame number are also noted down. Material is checked for damage. If it is damaged material is stored separately in scrap warehouse. Stack cards are placed on lots containing manufacturing date, batch number, and received date to ensure FIFO. FMCG products are stored to ascertain FEFO. [McFills] Batteries are charged every 40 days. [Amara raja] Physical stock is verified against book value on daily basis.

Invoice cum delivery challan Soft copy of stock sent to branch office [Amara raja batteries] Physical stock register updated Monthly report generated Order receiving modules Location of scrap and finished goods must be different

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Figure 5: Flowchart of Storing Material Process

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Cycle Count Process This process is carried out regularly at fixed intervals. Time interval varies from company to company ranging from one day to fifteen days. For instance, cycle count in TVS Motor and Amara Raja is done on daily basis while in Titan there is no scheduled time for it. Store keeper counts the physical stock as per the following rules: •

If material is staked on bitumen sheets, count the number of cartons or cases of base and multiply it by number of cartons or cases above it. Then multiply this number with number of pieces per carton or case to get the total quantity.

•

If material is stocked on pallets, count the number of pallets and multiply the number of items per pallet to get the quantity.

•

If material is stored in cartons, count the number of cartons and multiply the number of items per carton to get the quantity.

•

If material is loose, count all materials.

•

Very small accessories like screws are measured by weight.

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Table 15: Cycle Count Process 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7

Process Activities

3.8 Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Cycle Count Bikes in TVS Motor are counted brand wise and variant wise daily. FMCG goods in McFills are counted packs wise and carton wise weekly. Amara Raja batteries are counted pallet wise or item wise daily. Bell ceramic tiles are counted on fortnightly basis. Voltas home appliances are counted item wise weekly. Accessory items are counted piece wise or weight wise Titan watches are not counted physically. IM Technology SIM card pieces are not counted as they are crossdocked the same day. Godown keeper 10 Persons Warehouse Company specific ( varies from daily to fortnightly) Book value register ASM notified Update physical value register for date and quantity Differences report Physical stock and Book value stock reports generated daily Storing Material, Stock Maintenance Physical stock must be exactly equal to book value

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Figure 6: Flowchart of Cycle Count Process

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Order Punching Process Order punching process is initiated either by dealer or branch office, which includes Stock Transfer requests also, when written or telephonic order is placed with Fairdeal. This process ends with computer operator accepting or rejecting the order. Some of the main activities in this process are: Receive stock transfer requests Stock transfer request process is initiated either by local ASM or ASM of requesting depot to transfer material from one depot to other. This process is not controlled by Fairdeal other wise procedures of this process are similar to goods receiving process. Collect cheques from customers This process is in use in Bharti Teletech, McFills, Bell Ceramics and Tata tea where cheques are collected from dealers on behalf of principal companies. These cheques are then submitted in the account of the respective principal company. Check availability of ordered goods When a customer places an order, it is ensured that the ordered quantity is available in warehouse. To do so, physical stock register is checked and verified against book value. Check availability of customer’s checks with Fairdeal Some principal companies like Tata tea, McFills and Bell ceramics require customers to keep advance cheques with Fairdeal. When customer places an order, it is ascertained before punching the order that the cheques of respective customers are present with Fairdeal. Intimate customers about insufficient cash It is initialed when sufficient cash is not present in customer’s account or customer’s advance cheques are not present with the depot. Computer may alert insufficient cash message if customer has placed order of value greater than his credit limit.

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Table 16: Order Punching Process Process

4

Activities

4.1.1 4.1.2 4.2

4.3

4.4 4.5 4.6 Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations

Order Punching Orders are taken by sales officer along with DD or in writing by sending DD to Fairdeal. Dealers can also place orders in E-Applications namely; SAP R/3 and SDNet; or via phone. Check whether signed blank cheques of concerned dealer are available with Fairdeal or not. If not, inform the concerned dealer. [Tata Tea, Bell Ceramics and McFills] If company is using SAP R/3, Stock is checked for availability in warehouse/ depot even before punching the order as SAP R/3 does not allow order punching (though pending order can be made) if stock is not present. [Voltas, Tata Tea] If order placed via phone it has to be punched into SDNet manually by warehouse personnel. [Bharti] DD is submitted in Bank and deposit receipt obtained. DD details punched into order received form. Computer Operator 4 persons Shiromani office and warehouse 60 orders per day (300 working days) Order details in e-application Demand Draft or Cheques from dealer Order number generated Pending orders report SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register • Order entry not done if signed blank cheques of dealers are not with Fairdeal. [Tata Tea, Bell Ceramics, McFills Foods]

Controls

• If stock is not present, order can not be punched into SAP R/3 Module. Though pending orders can be made. [Voltas]

NOTE: Orders are punched into Titan, Bell, Amara Raja, MRF Paints,

TVS Motor, Tata Tea, Bharti and McFills

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Figure 7: Flowchart of Order Punching Process

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Order Approval Process Order approval process is initiated either by computer operator after an order is placed with Fairdeal. This process ends with generating invoice number. Some of the main activities in this process are: Make pending orders If ordered material is not present in the warehouse, this order will remain pending till the ordered material with ample quantity is received in warehouse from factory location or through stock transfer. Short close orders in case of shortage of goods If ample quantity of ordered material is not present in the warehouse, computer operator modifies the order and changes the number of quantities ordered from modify order module.

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Table 17: Order Approval Process 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10

Process Activities

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Order Approval Stock is checked for availability in warehouse/ depot. If stock is present order is approved. Order is sent for verification by regional sales officer Once approved, dispatch order is generated on SDNet. [Bharti] If stock is not present, order can be partial dispatched or short closed. Notification sent to dealer. Check physical stock for threshold stock. If stock is below threshold value, place order at company head office. Update book stock value Stock is checked for availability in warehouse/ depot. Computer operator 8 persons Shiromani office and Admin office at warehouse 73 orders per day (300 working days) Order details from ERP module Demand Draft or Cheque from dealer Dispatching order Invoice SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register DD details are must for order approving. [Bharti Teletech]

NOTE: Orders are approved in Titan, Bell, Amara Raja, MRF Paints, TVS Motor, Tata Tea, Bharti and McFills Ltd.

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Figure 8: Flowchart of Order Approval Process

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Invoice/ Bill Printing/ Stock Transfer Process This process is initiated at the time of dispatching and ends with printing invoice or stock transfer memo in case of stock transfer. Invoice is printed in triplet either on company provided pre-printed stationery or on blank papers. Table 18: Invoice/ Bill Printing/ Stock Transfer Process Process

6

Activities

6.1 6.2 6.3 6.4 6.5 6.6 6.7

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Invoice/ Bill Printing/ Stock Transfer If SAP R/3 or any other ERP package is being used invoice is printed directly from ‘Print Invoice’ menu by entering order number. If SAP R/3 or any other ERP package is not being used, bill is printed manually. Invoice contains product specifications along with product value. Stock transfer document is printed from ‘Stock Transfer’ menu Stock transfer decision is taken by regional sales manager. Stock transfer order is then forwarded to nearest C &FA depending on availability of stock. No sales tax or VAT is applicable on stock transfers as ownership of material does not change. Computer Operator 8 Persons Shiromani office and Admin office at warehouse 205 invoices per day (300 working days) Invoice number e-application Dispatching order Invoice Printout SDNet, SAP R/3, raja e-ARIMS Order Punching, Physical Stock Register Material movement out of warehouse

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Figure 9: Flowchart of Invoice/ Bill Printing/ Stock Transfer Process

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Dispatching Process Pick slip is generated and sent to warehouse for picking material. Every dispatch order and is signed by process manager. When an order is received in warehouse, it is checked for the correct signature. Gate pass is then prepared and material is loaded on vehicle or handed over to courier person. Some of the main activities in this process are: Verify ordered quantity against invoice Issues are only made against orders which have been properly authorized. Sample signatures and initials of all authorized signatories must are made available to warehouse staff so that they can verify orders. Load material on vehicle At this stage, ordered items are picked from pallets, bitumen sheets, shelves or racks and assembled in the goods-out area. Here they are packed, marked and loaded onto trucks for delivery or handed direct to waiting customers. Check stock in warehouse after dispatching It is initiated by store Incharge at the time of loading material. If material, being dispatched, is found to be below a threshold value, store Incharge intimates process manager who in turn will notify ASM and SCM. This material will be indented to factory location for replenishment.

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Table 19: Dispatching Process 7 7.1 7.2 7.3 7.4 7.5 7.6 7.7

Process Activities

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Dispatching Take material from warehouse on the basis of FIFO or FEFO. Bring material from secondary location to primary location. Tiles are dispatched according to batch. Material is Loaded on vehicle. Gate pass is made to allow goods outside warehouse. LR, gate pass and two copies of invoice are given to transporter. Transport vehicle is checked for gate pass and physical goods. Depot Incharge 15 persons warehouse 22,200 pieces per day (300 working days) Dispatching details in e-application Material specification from computer operator Dispatching number Acknowledgement SDNet, SAP R/3, Financial Accounting System (FAS) Storing Material, Physical Stock Register No order can be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person.

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Figure 10: Flowchart of Dispatching Process

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Transportation Process This process is extension of dispatching process and is carried out after material is loaded on the vehicle. Fairdeal provides transportation to local orders where as outsourced carriers and courier service providers provide transportation to upcountry orders. Some of the main activities in this process are: Prepare Gate pass Gate pass [refer to format of gate pass in APPENDIX B] is prepared after material is loaded into lorry or handed over to courier person in the presence of security Incharge, store keeper and transporter. Purpose of this document is to keep track of the outbound material leaving the warehouse. Pay Octoroi, if applicable Octoroi is payable in select cities decided by state governments. It ranges from 4% to 5% of invoice value depending on the type of the product and city in which Octoroi is payable. Fairdeal pays Octoroi on behalf of its principal which it claims later. Receive ‘goods received’ acknowledgement from customers When material is supplied to a customer, received acknowledgement from customer delivery. This document is given back to remains with transporter which is used reimbursement.

transporter takes goods as a proof of correct Fairdeal and one copy at the time of freight

Claim Octoroi claims from company As mentioned in Pay Octoroi sub process, Fairdeal pays Octoroi on behalf of its principal which it claims later. Octoroi is paid on the material which is transported through its own vehicles or contracted vehicles. There is no obligation to pay Octoroi when customers take the delivery at warehouse premises since ownership changes at warehouse in this case.

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Table 20: Transportation Process Process

8

Activities

8.1.1 8.1.2 8.2 8.3 8.4 8.5 8.6

Transportation Incharge 10 persons warehouse 22,200 pieces per day (300 working days)

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Transportation Local orders are dispatched through Fairdeal’s own vehicles or dealers collect their order from warehouse directly. Up-country orders are dispatched through transport or courier services. Octoroi is paid in metropolitan cities. Material is unloaded at dealer’s place. Dealer returns back one signed copy of invoice as acknowledgement of goods received. Acknowledgement copy of invoice given back to Fairdeal. Octoroi charges are claimed from concerned company.

Gate pass from store Incharge Goods Received Acknowledgement Freight reimbursement report Current stock, goods in transit Storing Material No order can be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person.

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Figure 11: Flowchart of Transportation Process

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Handling Unsalable Material Process Material is classified into Non-moving, Slow-moving and unsalable material categories. Dealers or Stockists initiate this process when material becomes unsalable because of expiry of date, obsoleteness, change in technology, introduction of new brands, damage or any other reason. Some of the main activities in this process are: Intimate principal about scrap material Fairdeal works closely with its principal companies so that there is a constant information exchange about stock requirements and stock levels. Scrap items are kept separate from new items in scrap warehouse. For instance, if TVS motor decides to discontinue a vehicle, its spares will become obsolete. Similarly, when scrap material piles up above its threshold limit, company is notified about its removal. Claim scrap transport charges from company Fairdeal has its own dedicated vehicles to deliver local orders to customers. When scrap material dispatched to principal company through its own vehicles or contracted vehicles, Fairdeal pays freight charges on behalf of principal company which it claims from them later. Transport claims includes loading and off-loading charges which vary product to product accordingly.

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Table 21: Handling Unsalable Material Process 9 9.1 9.2

Process Activities

9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11

Store Incharge 12 persons warehouse 150 Cartons per month

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Handling Unsalable/ Non Moving/ Slow Moving Material Dealer claims material as Unsalable. Sales officer inspects material. If material is found unsalable, sales officer recommends it to area sales manager. Area sales manager approves material as Unsalable. Material is brought back to Fairdeal warehouse along with written approval of sales officer and dealer’s letter containing material details. Unsalable material is stored in scrap warehouse at different location. After enough stock piles up, notification is sent to company Company approves removal of unsalable material Transporter is sent to collect the material Total quantity is verified against book value Material is loaded on vehicle and sent to company locations.

Specification of unsalable material sent by dealer to Fairdeal DD details and scrap details mailed to SCM. Specification of unsalable material sent by Fairdeal to Company Monthly scrap material report Financial Accounting System (FAS) Physical Stock Register Scrap can be sold to company contracted scrap dealer only.

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Figure 12: Flowchart of Handling Unsalable Material Process

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Handling Warranty Claims Process This process is only partially controlled by Fairdeal as most of the activities are handled either by dealer or by branch offices. Customers initiate this process when material they purchased have any prepurchase defects or is damaged under warranty period. Table 22: Handling Warranty Claims Process 10 10.1 10.2 10.3 10.4

Process Activities

10.5 10.6 10.7 10.8 10.9 10.11 10.12 10.13 10.14 10.15 10.16 Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Handling Warranty Claims Customer claims product replacement under warranty from dealer. Dealer notifies service engineer about warranty claim. Service engineer inspects product. If satisfied, service engineer approves warranty claim. Product comes to Fairdeal warehouse with product specification and warranty letter signed by service engineer. New product is dispatched to dealer to replace defected one. Company is notified about warranty claim. Defected product is stored in scrap warehouse. After enough stock piles up, notification is sent to company Company approves removal of defected stock. Stock is sent to company if it can be repaired or serviced. If material is unrepairable it is considered as scrap Serial numbers of scrap material are destroyed to avoid re-claims. Scrap material sold to company’s scrap dealer DD of scrap material sent to company Head Office. Store Incharge 4 persons warehouse 100 pieces per month Warranty claim details in SD module Warranty claim letter Electronic notification to company Invoice of replaced product Monthly Free replacement report Amara raja E-application (http://localhost/bs/) Scrap Stock Register Service Engineer must approve warranty claim

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Figure 13: Flowchart of Handling Warranty Claims Process

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Stock Maintenance Process Fairdeal is responsible for maintaining principal company’s stock in good marketable condition failing to which, Fairdeal will have to pay for the damages occurred to the stock. Stock is maintained by doing physical inspection, by ensuring safety measures and by providing value added services like re-labeling, repacking, reporting etc. Some of the main activities in this process are: Physical Inspection Fast moving goods are relatively less inspected as they are mostly fresh. Slow-moving and Non-moving goods have to be inspected properly. Depot Incharge inspects material on fortnightly basis by checking stack cards of material. Some products need special periodic attention like batteries in Amara Raja have to be checked for any leakages as they contain acids. Others may need more specific care. For instance, TVS motorbikes which are stored on roof remain in direct sunlight for a long time. Physical inspection is also done to ensure that all packages in stock are kept in good condition. Any that has been damaged or have been opened for checking are promptly repacked and sealed. Regular checks are done for spillage and waste. Any rubbish or waste paper is a fire risk and is removed. Protection of material McFills products being consumable products are protected against moisture, rodents and other hazardous products. Moisture is regulated in warehouse by building stacks which are hollow inside so that air can circulate and by turning products over periodically. Furthermore, warehouse is disinfested at regular intervals. Rodent preventive measures are also taken to avoid damage to warehouse stock, particularly food products like McFills foods and snacks and sunfill oil from Coca Cola. Fire extinguishers are serviced but their schedule is not fixed. Brass fire nozzles and foam mixer fittings are also cleaned.

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Re-pack material, if required If packing or carton of material is found damaged or material is required to repack for distribution, company provided tape and seal are applied to it. Re-labeling of goods This is value added service provided by Fairdeal to its principal companies. Re-labeling is done when a new promotional scheme is launched or a new labeling is required due to price change or seasonal scheme has to be given. In this process, Fairdeal provides with the labors who will stick new labels provided by company to the material. Fairdeal claims the labeling charges as value added services later with reimbursements. Generate Reports Weekly and monthly reports are generated for the purpose of controlling, tracking, inspecting and reimbursement. Freight claims, Octoroi claims, value added services claims and Clearing & Forwarding Agent reimbursements are charged on the basis of these reports. Apart from these, these reports are also used to track inventory and movement of goods.

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Table 23: Stock Maintenance Process Process

11

Activities

11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9

Responsibility People Involved Location Frequency Input Output Reports

Dataflow Documents Dataflow Documents Statutory MIS

Existing Integrations Controls

Protecting Material Slow-moving and Non-moving goods are inspected by checking its stack cards or batch number and manufactured date Bikes are inspected for scratches and damages. FMCG goods are protected against moisture, rodents, contamination, micro organisms. Batteries are charged every 40 days in warehouse. Moisture content is controlled depending on products Fire extinguishers maintained for emergency situations Re-pack material packing or cases, if pilferaged during storing Re-label packs or glue stickers to packs for promotional schemes under value added services Generate reports for the purpose of controlling, tracking, inspecting and reimbursement of stock maintenance Depot Incharge 2 Person Warehouse No strict schedule followed Check last date from Maintenance register No of pieces destroyed notified to ASM Update maintenance register Maintenance reimbursement report when asked by management Storing Material, Cycle count Rodents, expiry dates, theft

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Figure 14: Flowchart of Stock Maintenance Process

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Initial Issues Emerged Out Of AS-IS Analysis Table 24: AS-IS Analysis -Important issues with priorities Issues/Observations

Priority (High/ Medium/Low)

In Titan watches division Carton is checked for any physical damage and pilferage, weighted in the warehouse to check uniformity of cartons. If weight doesn’t match, carton can be opened in presence of courier boy itself.

High

In Titan watches division Carton contains packing slip containing number of pieces and codes. This packing slip is validated against stock transfer memo in which number of pieces and price of each watch is given along with trade discount and sales tax.

High

To maintain FIFO, stacking is used in which new watches are placed behind old watches. If new watches come in front, FIFO is violated.

Medium

Enter PIN and IMEI number (for Motorola only) using barcode scanner.

High

To scan PIN and IMEI number, Motorola cartons have to be brought upstairs near computer attached barcode scanner. This consumes labour hours, staff time, increases waiting time and hence cycle time. This process can be simplified if cordless barcode scanner is used.

High

Lack of group dynamics among employees. Common tasks might be handled more efficiently by coordinating among each other.

Low

Battery must be charged every 40 days even in warehouse. Company has provided with a charger which can charge 32 batteries at one time.

Medium

In Amara Raja batteries, Warehouse terminal data is synchronized with company data via dial up virtual private network (VPN).

High

Serial number is destroyed from batteries to avoid re-claims and a hole is made into battery.

High

In McFills Foods, Indent form is filled in Microsoft Excel (.xls) format and attached to email to Company. They are still using very primitive softwares.

Medium

In Voltas, Inwards from Hyderabad have to be done using scanner as SAP R/3 is still not implemented there. Dadra material is not required to be scanned as delivery number can be used in SAP R/3 module to get all serial numbers.

Low

No clear plan to manage the involvement of other participants in the processes who will be impacted.

Medium

Current technology does not provide basic/fundamental warehouse stock information required by management.

High

Employees should be encouraged to learn multiple (at least two) companies’ operations like SAP R/3 of Tata Tea and SDNet of Bharti Teletech. This will ensure smooth operations of Fairdeal even in case of absenteeism or job vacancies.

High

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Issues/Observations

Priority (High/ Medium/Low)

Some employees need HR training to motivate them and to develop their business communication skills, listening skills.

Medium

Gate pass is mandatory for taking goods outside warehouse.

High

Attrition of employees is hindering smooth operations

High

Principal companies co-operation to implement barcode readers

Medium

Salary structure of employees

Medium

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Other Notes from Interviews These are excerpts from interviews with senior and middle level managers in the organization: •

Many companies are using very primitive application software packages which should be upgraded to better ones. For example: MRF Paints and McFills Foods Pvt. Ltd. are using very primitive software packages which should be upgraded to better ones to increase efficiency and speed of transactions.

•

Computer operators complain about the lack of meaningful management information system like slow speed internet services. There are issues of transferring large business data through internet because of slow speed of internet connections. These connections should be upgraded to broadband connections to improve speed and quality of information sharing.

•

There should be a separate person whose duty would be: ¾ To inspect physical location of material, ¾ To check method of stacking material, ¾ To take physical stock, ¾ To inspect for inverted cases, pallet or bitumen sheets etc, ¾ To inspect whether material is stored according to FIFO norms. This person’s duty would be to take care of material of all companies and not specific to a particular company as being followed at present.

Data gathered during this phase would make basis for research in next phase, TO-BE Analysis.

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TO-BE ANALYSIS

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Definition of TO-BE Analysis The goal of To-Be Analysis design is to produce one or more alternatives to the current situation, which satisfy goals of the enterprise as stated in the business case analysis and which satisfy the change-requirements. AS-IS Analysis phase of this project highlighted the processes which needed either modification or re-engineering. This phase was aimed at detailed documentation of activities being carried out in each and every process. TO-BE phase aims at benchmarking processes being carried out against best industry practices. To achieve this, processes were studied from various Warehouse Management Systems. Some of the processes were benchmarked against other companies’ processes. For instance, dispatching process was benchmarked against Hindustan Lever Limited (HLL)’s dispatching process. Furthermore, I discussed all the processes with process owners and process users of every company handled by Fairdeal. They provided me with many suggestions and their usefulness about how efficiency of Fairdeal can be improved. I also discussed the issues with Mr. Zankar Jobanputra and Mr. Sharad Jobanputra about benchmarking processes. Initially, it was planned to take demos of some four or five warehouse management systems to get best practices from them. It was also planned to visit some other warehouses nearby so as to study their processes. But due to lack of time during year-end operations in March and implementation of VAT in Gujarat from April 2006 afterwards, this plan could not materialize. To compensate this, I download 300 mb WinZip version of IntelliTrack’s Intelliwms and studied it thoroughly after installing it. This demo version gave me a lot of inputs about Kitting, Waves, Cubing and many other warehousing concepts.

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Preparation for Implementing Re-Designed Processes Before designing TO-BE processes, Warehouse must be capable enough to implement them. For this, proper preparations should be done like creating warehouse layout, implementing barcode scanning, sequencing the replenishment and picking processes etc. since a Warehouse operates within a dynamic environment in which material moves from receiving to storage to shipping. In order for the warehouse to operate efficiently, material storage and warehouse layout should be planned based upon how the goods and materials are received, stored, picked, and shipped. Assembling Warehouse Data To assemble warehouse data, following areas of warehouse operation should be reviewed: •

Storage Locations

All of the storage locations within the warehouse should be clearly defined, including the boundaries that separate them. Also determine whether these locations accommodate all the item types, shapes and sizes that are required. This may include zones, aisles, rows, and storage areas in a controlled environment for storing hazardous, valuable, or temperature controlled materials. •

Items

Define the items the warehouse handles. These items can be defined in SKUs (Stock Keepting Units). •

Available Space (to support the Cubing feature)

Calculate the space available for item storage to support the cubing feature. •

Material Flow in the Warehouse

After the usable warehouse space and item size have been determined, identify the process by which material is moved through the warehouse (i.e., material flow).

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Warehouse Layout Figure 15: Warehouse Layout

Warehouse should be divided into in to different sites like Receiving site, Dispatching site, Scrap site etc. Each site should be coded accordingly. For instance receiving site can be coded as REC 01, REC 02 etc, Bulk storing site can be coded as A-01, A-02 etc, and Dispatching site can be coded as D-01, D-02 etc to locate it easily. Further, yellow lines can be marked on the floor to specify storing space. Locations are then added to each site. Locations reside within a ‘Site’ and are added to a site at the Locations form in WMS. When locations are created for a site, the warehouse space is divided into specific sites. The following information is required to add a location, and must be entered in the Locations form in WMS:

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• • • •

• •

Site: the warehouse/facility where this location resides. Location Identifier: a unique system identifier that you create for this location, entered in the Location cell. Description: a description of the location (i.e., forward pick, staging, receiving, picking, storage). Cube Size: The cubic size of a location represents the storage space available in that location, it may be an exact number, or a close estimate, depending on storage requirements and WMS objectives. For example, a location with a cubic size of one hundred can hold one hundred items with a cubic size of one or it can hold two items with a cubic size of fifty. Pick sequence: assign the location travel sequence when picking items (picking process) in this cell Put away sequence: assign the location travel sequence for putting away items (receiving process) in this cell.

NOTES: ¾ When location sequencing is implemented, the sequence number directs the user, with an RF portable, to a predefined location when picking and/ or putting away order items. (WMS sorts line items into the sequence defined and presents the line item in sequential order.) This reduces the travel time when putting away and picking orders. ¾ Before establishing a location sequencing for picking orders, putting away orders, and replenishing stock, it is a good idea to identify the process by which material is moved through warehouse (i.e., material flow), in order to determine the most efficient travel sequences. A good starting point would be the movement of the top twenty percent of inventory.

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Specifying the Replenishment Sequence When a forward pick (or prime) location is restocked, it is possible to use a replenishment sequence to guide in the put away process. The replenishment sequence is an inventory move based on the pick sequence of the bulk storage location. When replenishing a forward pick location, an item location may be specified. If replenishment is implemented: •

WMS sorts items requiring restock in a sequence based on locations where the bulk stock resides and the pick sequence assigned to that location.

•

WMS guides the picker to the lowest picking sequence location for the first item requiring restock.

Implementing Location Sequencing To implement location sequencing, a pick and/or put away sequence number is assigned to a location. (The lower the location sequence number, the higher it’s priority as a pick or put away location.) Often, a location with the lowest primary pick sequence number will have the highest put away sequence number. The table below highlights a typical location number sequence. Table 25: Example of Location Sequence Numbers Location

Description

Pick Sequence

Put Away Sequence

FP-001

Forward Pick

1

8

FP-002

Forward Pick

1

8

REC

Receiving

0

0

SHP1

Staging

0

0

01-A-01

Bulk Storage

9

1

01-A-02

Bulk Storage

8

2

Locations REC and SHP1 have a pick and put away sequence number of zero, which is outside the sequence number range; hence these locations are excluded from location sequencing.

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Generating Barcode Labels WMS should be able to generate barcode labels for material stored in the warehouse. Barcode printing should be integrated with company specific ERP modules so that material specifications can be directly imported from these modules. Other facilities that are required for barcode generation are as follows: • • • • •

Label Printing Setting Label Characteristics Creating Sequential Number Label Creating Custom Data Label Adding a Customized Label Format

Import-Export Data To and From WMS The Import-Export Utility allows for the importing of data into WMS and exporting of data from WMS through the following interfaces: Data Interfaces

Description

Host Picking

Communicates picking order activity back to a host system.

Host Receiving

Communicates receiving order activity back to a host system.

Inventory Export

Exports specified inventory data to a specified text file.

Inventory Import

Imports inventory data from a specified text file into the WMS database.

Item Export

Exports specified item data to a specified text file.

Item Import

Imports item data from a specified text file into the WMS database.

Location Export

Exports specified location data to a specified text file.

Location Import

Imports location data from a specified text file into the WMS database.

Picking Export

Exports specified picking data to a specified text file.

Picking Import

Imports picking data from a specified text file into the WMS database.

Receiving Export

Exports specified receiving data to a specified text file.

Receiving Import

Imports receiving data from a specified text file into the WMS database.

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Synchronize Fairdeal WMS and Principal’s ERP Module To ensure smooth and errorless flow of data from principal company’s ERP module to Fairdeal’s WMS and vice-versa, some integrating software should be used with the help of principal company. Trying to insert data manually in either of ERP module or WMS will increase chances of erroneous entries which would defeat the purpose of automating Fairdeal’s operations. Once both the software packages are integrated, Import-Export interfaces could be used for transferring data to and from one system to another. Though convincing every principal company to provide with integrating software package is not an easy task and it will take a fairly good amount of time before this concept comes to reality; but it is also certain that if data of WMS and ERP module can be synchronized, operations of Fairdeal will become very easy to execute and maintain.

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To-Be Goods Receiving Process Goods receiving process should be redesigned in such a manner that it takes shortest possible time. It is because this process is not totally internal to Fairdeal and Transporter, Branch office, Head office, dealers and other staff members are also involved in it. Fairdeal should get softcopy of Stock Transfer Memo (STM) or transfer cum delivery challan, whichever is applicable. This will save time spent in uploading barcode serial numbers in Voltas, TVS Motors and Bharti Teletech. Moreover, advance intimation will allow Fairdeal staff to prepare for the coming consignment. In case material is warranty claim or goods return under unsalable material, proper documents with quantity and service engineer’s sign should accompany the material. Once material comes to warehouse, Vehicle details will be noted down along with the company’s name for which material has come. Gate keeper will check the material and intimate Godown keeper and process owner who will verify documents given by transporter. Material will then be checked for any physical damages and weight of cases will be taken if any possibility of pilferage is seen. At this stage, barcode serial numbers should be scanned to verify that the correct material is received. This will save time at the time of dispatching and hence efficiency of dispatching process will increase.

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Table 26: TO-BE Goods Receiving Process Process ID Objective Function Input Output

1 Goods Receiving Receive Goods at Warehouse Clearing and Forwarding Dataflow Soft copy of Stock Transfer Memo (STM) Documents Invoice cum delivery challan, LR receipt, Goods Return Note Dataflow Update Goods-in-Transit module of ERP Documents Acknowledgement to transporter Reports Stock receipt report, Inventory report

Process Steps

Activities

1.1 1.2 1.3 1.4 1.5 1.6.1

1.6.2

1.6.3 1.7 1.8 1.9 1.10 Process Owner Integration Points of Concern Wish List Additional Notes

Plan labor and space required for material. If space or labor is not sufficient, make arrangements for coming material. Goods arrive from factory locations or other locations in case of StockTransfers and Goods Returns. Lorry or Courier vehicle entry made in Gate Register at main gate. Documents received from transporter or courier person containing material specification. Material unloaded from vehicle. In case of Titan, Individual carton is weighed and verified against printed weight on carton. In case of mismatch, carton will be opened in presence of courier person. Material manually inspected for any physical damage and accessories E.g. TVS bikes are checked for key, tool kit, rear view mirror and battery. In case of physical damage or short supply: • Supply Chain Manger is informed. • Local ASO (Area Sales Officer) is informed. • Damage claim or Shortage claim is prepared. Transporter copy of STM acknowledged. Material stored in warehouse. Upload Goods-In-Transit module Synchronize data of ERP module and Fairdeal WMS

Main Godown Keeper WMS, Goods Storing, Inventory stock Can Fairdeal convince its clients to provide with integrating software? SAP and WMS data synchronized with each other. Damages report, shortage report if material found damaged or short respectively

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Figure 16: Flowchart of TO-BE Goods Receiving Process

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To-Be Storing Material Process After material is received in warehouse, it is sorted accordingly. Material received under warranty claims and goods returns is stored in scrap warehouse where as fresh material received from factory locations or through stock transfer is stored in finished goods warehouse. Table 27: TO-BE Storing Material Process Process ID

2

Objective

Store goods in warehouse Warehousing Dataflow Material specification imported from SAP module. Documents Copy of STM with material serial numbers and specifications Dataflow Barcode labels

Function Input Output

Storing Material

Documents

Physical stock register updated

Reports

Current stock report, Inventory report

Process Steps

Activities

2.1 2.2

Process Owner Integration Points of Concern Wish List Additional Notes

Decide the site of material i.e. scrap site or finished goods site Sort the material product wise as applicable Check material for packing and physical damage. If it needs repacking 2.3 or taping, apply taping and other fixes. 2.4 Update goods specifications in WMS inventory module 2.5 Scan serial numbers of finished goods and transfer them to WMS. Generate barcode labels for goods lot wise, pallet wise, product wise 2.6 or batch wise, as required 2.7 Stick barcode labels to goods or locations, as applicable Store goods at their allotted locations according to company specified 2.8 regulations. E.g. Batteries, home appliances and tiles are stored on pallets where as watches are stored in racks Depot Incharge ERP module, Goods receiving, Inventory stock Care to be taken while sticking barcode labels so that mismatch does not occur RFID could be used to locate and quantify the stock Additional physical stock register can be maintained for use of physical verification

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Figure 17: Flowchart of TO-BE Storing Material Process

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To-Be Cycle Count Process Material should be regularly inspected for matching physical stock against book value and to find any probable harm to sensitive goods like food products. Frequency of different types of checking can differ accordingly. For instance, physical stock might be taken on twice a week basis, where as checking for micro-organism level in foods storing location can be done monthly or quarterly. Table 28: TO-BE Cycle Count Process Process ID Objective Function Input

Output

3

Cycle Count

Finding any discrepancy in physical stock against book value Stock keeping Dataflow Cycle count alert displayed to depot Incharge on set day Documents

Printout of current stock from WMS

Dataflow

Inspection date updated in WMS

Documents

Physical stock register updated

Reports

Differences report

Process Steps

Activities

3.1

Sites inspected for moisture level, rodents, temperature, infestation and security issues.

3.2

FMCG goods checked for air-leaks, damages, expired dates.

3.3

Titan Carton checked for any physical damage and pilferage, weighted in the warehouse to check uniformity of cartons. Batteries physically checked for damage, type of battery, embossing, barcode and plastic wrapping.

3.4

Process Owner Integration Points of Concern Wish List Additional Notes

3.5

Battery must be charged every 40 days in warehouse.

3.7

Bikes inspected for scratches, damages and Engine number slips.

Store keeper Current Inventory stock It is practically not possible to take physical stock of small products like watches and spare parts frequently RFID could be used to verify physical stock smoothly Specialists may be hired for checking micro-organism level in food products location

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Figure 18: Flowchart of TO-BE Cycle Count Process

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To-Be Order Punching Process Detailed study of supply chain and logistics industry revealed that order punching process does not lie within operations of Clearing & Forwarding agent. This process lies either with dealer/ distributor or Branch office of the principal company. In India, Clearing & Forwarding agents have to bear the burden of order taking / order punching process because of lack of proper IT infrastructure and insufficient IT skills of dealers. Most of the companies in India do not have centralized internet based order placing systems, nor do dealers have sufficient IT competency and investment options to place orders online. Apart form these reasons; broadband connections in India are just coming up and most of the internet connections used are dial up connections which does not provide enough speed to perform online transactions. In light of reasons mentioned above, dealers place their orders either on phone or in writing, which are then punched into ERP modules by Clearing & Forwarding agents. Hence ideally, this process should not be there in Clearing & Forwarding Agent’s operations.

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To-Be Order Approval Process Order approval process is executed according to rules and regulations of principal company. Some companies’ order approval process resides with branch office of the company itself, whereas others have delegated it to Fairdeal. Even in the case of companies whose order approval processes are undertaken by Fairdeal, this process is only partially controlled by Fairdeal. Table 29: TO-BE Order Approval Process Process ID Objective Function Input

Output

5

Order Approval

Approving orders placed by dealers Order verification and dispatching Dataflow Order punched by dealer Documents

Cheque or Demand draft for order placed

Dataflow

Order approved or rejected, Invoice number generated

Documents Reports

Monthly sales report, Cash report, Current stock report

Process Steps

Activities

5.1

5.7

Stock is checked for availability in warehouse/ depot If stock is present in required quantity, order is accepted and approved else order can be partial dispatched or short closed. If company is Bharti Teletech, order is sent for verification by regional sales officer. Once approved, Pick slip is generated from approved order Pick slip sent to store Incharge Check inventory stock for threshold value If stock is below threshold value, place order at company head office.

5.8

Synchronize order approval data on WMS and ERP modules

5.2 5.3 5.4 5.5 5.6

Process Owner Integration Points of Concern Wish List Additional Notes

Computer Operator Pending orders, Dispatching, Credit limits of dealers, Current stock available All dealers might not be capable of placing orders online ASM might ask to approve orders to fulfill his targets All order placing should be automated without any paper work Credit cards be used to replace Demand drafts and Cheques If material is not present in warehouse, order should not be accepted by ERP package when dealers place it.

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Figure 19: Flowchart of TO-BE Order Approval Process

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To-Be Invoice/ Bill Printing/ Stock Transfer Process Invoice is printed at the time of dispatching fresh material or replacing warranty claims. It is printed in triplet for the purpose of Octoroi taxes, VAT and sales tax payments. Stock transfer decision is taken by regional sales manager. Also, stock transfer document is similar to invoice except that it is addressed to another Clearing & Forwarding agent. Table 30: TO-BE Invoice/ Bill Printing/ Stock Transfer Process Process ID Objective Function Input

Output

6

Invoice/ Bill Printing/ Stock Transfer

Issue a document as a proof of change of ownership Invoice / Bill/ Stock transfer memo printing for handing it over to transporter Dataflow Invoice number generated during order approval Documents

Material ready to be issued acknowledgement form store keeper

Dataflow

Order completed notification

Documents

Invoice/ Stock transfer memo printout

Reports

Total transactions report

Process Steps

Process Owner Integration Points of Concern Wish List Additional Notes

Activities

6.1

Invoice printed directly from ‘Print Invoice’ menu of ERP package by entering invoice number.

6.2

Print stock transfer memo from ‘Stock Transfer’ menu

6.3

Hand over the printed document to transporter

Computer Operator Dispatching, Pending orders Invoice will not generate if barcode serial numbers or other data is wrongly punched Companies replace their legacy IT systems with modern ERP packages If material is not present in warehouse, order should not be accepted by ERP package when dealers place it.

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Figure 20: Flowchart of TO-BE Invoice/ Stock Transfer Process

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To-Be Dispatching Process As mentioned in AS-IS Analysis phase, Local orders are dispatched through Fairdeal’s own vehicles and Octoroi charges are also bore by Fairdeal. Upcountry orders are dispatched via contracted transporters and these transporters pay Octoroi charges which they claim monthly at the time of freight reimbursement. Table 31: TO-BE Dispatching Process Process ID Objective Function Input

Output

7

Dispatching

Transfer ordered quantity from warehouse to dealer’s place Picking material from warehouse and load it on transporter vehicle Dataflow Dispatching details in e-application Documents

Pick slip

Dataflow

Notification sent to dealer and branch office

Documents

Gate pass and LR

Reports

Monthly current inventory report

Process Steps

Activities

7.1

Pick slip comes to Store keeper

7.3

Material picked from locations based on predefined picking sequence or kit. Material loaded on vehicle in presence of store keeper, security personnel and driver of vehicle.

7.4

Gate pass made to allow goods outside warehouse.

7.5

LR, gate pass and two copies of invoice given to transporter.

7.6

If order is local, Octoroi amount given to transporter to be paid at toll tax point.

7.7

Transport vehicle checked for physical goods at main gate

7.2

Check dispatched material after picking. If sufficient quantity is not present at primary location, bring material from secondary location to primary location. Depot Incharge Current stock, Labor Incharge, Security checking at main gate No order should be dispatched without proper documents like Invoice, Delivery challan, Gate pass signed by authorized person as breech in security check can prove fatal for operations of Fairdeal. RFID could be used to locate and pick ordered material easily Copy of signatures of all authorized persons should reside with security team at main gate to verify gate pass signatures. 7.8

Process Owner Integration Points of Concern Wish List Additional Notes

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Figure 21: Flowchart of TO-BE Dispatching Process

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To-Be Transportation Process As mentioned in AS-IS Analysis phase, Local orders are dispatched through Fairdeal’s own vehicles and Octoroi charges are also bore by Fairdeal. Upcountry orders are dispatched via contracted transporters and these transporters pay Octoroi charges which they claim monthly at the time of freight reimbursement. Table 32: TO-BE Transportation Process Process ID Objective Function Input

Output

8

Transportation

Transport ordered quantity to dealer’s place Transporting Dataflow Documents

Gate pass from store Incharge

Dataflow

Mail to dealer about goods in transit

Documents

Goods Received Acknowledgement from Dealer

Reports

Monthly freight reimbursement reports

Process Steps

Activities

8.1 8.2 8.3 8.4 8.5 8.6 8.7

Process Owner Integration Points of Concern

If order is local, use Fairdeal’s own vehicles else use outsourced carrier. Loaded vehicle leaves warehouse after security check Octoroi paid in metropolitan cities, if applicable Material off-loaded at dealer’s place Dealer returns back one signed copy of invoice as acknowledgement of goods received Acknowledgement copy of invoice given back to Fairdeal. Octoroi charges and freight charges claimed from concerned company

Transportation Incharge Labor Incharge, Security checking at main gate No lorry should leave warehouse without proper security checks.

Wish List Additional Notes

Fairdeal’s own vehicle are provided additional amount for fuel and maintenance while contracted vehicles charge freight charges on monthly basis

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Figure 22: Flowchart of TO-BE Transportation Process

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To-Be Warranty Claims & Unsalable Material Process Handling Unsalable Material process and Handling Warranty Claims process which were explained in detail in AS-IS Analysis phase are not controlled by Fairdeal. These processes are handled on behalf of principal companies, and hence, are controlled by them. Both the processes are initiated by dealers or customers and Fairdeal comes to know about it only when material comes to warehouse as goods returned. Hence, TO-BE processes for these two aforesaid processes are not inside purview of this study. Though; if time permits, I would work on these processes after my main study is complete.

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TO-BE Stock Maintenance Process Many measures can be taken to maintain stock at Fairdeal in a better way than maintenance measures in practice at present. Depot Incharge should inspect material on fortnightly basis by checking barcode labels of material to determine slow-moving material and unsalable material. McFills food bags must be kept at a certain relative humidity and temperature; adding to it, TVS motorbikes must not remain in direct sunlight for a long time as their seats may rip apart. To preserve the quality of stored goods, the moisture content should be controlled. If the level of moisture is allowed to exceed the stated safety limit for storing a product, there is a risk of damage by microorganisms. Moisture can be regulated in warehouse by proper ventilation so that air can circulate and by turning over product bags periodically depending on product needs. Furthermore, warehouse must be disinfested on monthly basis. Rodent preventive measures could be taken on quarterly basis. Details of packing and re-labeling should be conveyed by the warehouse Incharge about type of packaging required and the dimensions needed for both individual packages and outer container. Furthermore, unambiguous instructions must be given to packing team about how the packages should be marked. This process is important as many a delay has been caused because the name and location of the receiver had not been marked clearly or correctly.

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Table 33: TO-BE Stock Maintenance Process Process ID Objective Function Input Output

11 Stock Maintenance To maintain stock safety Inventory Management Dataflow Reminder alerted by WMS on set day Documents Check last date from Maintenance register Dataflow No of pieces destroyed, measures taken notified to Depot Incharge Documents Update maintenance register Reports Monthly maintenance reimbursement report

Process Steps

Activities

11.1 11.2

Process Owner Integration Points of Concern

Proper shading for items stored outside or on roof. Bikes are inspected for scratches and damages. FMCG goods are protected against moisture, rodents, 11.3 contamination, micro organisms. 11.4 Batteries are charged every 40 days in warehouse. 11.5 Moisture content is controlled depending on products 11.6 Fire extinguishers maintained for emergency situations 11.7 Re-pack material packing or cases, if pilferaged during storing Re-label packs or glue stickers to packs for promotional schemes 11.8 under value added services Generate reports for the purpose of controlling, tracking, inspecting 11.9 and reimbursement of stock maintenance Depot Incharge Current Stock module No lorry should leave warehouse without proper security checks.

Wish List Additional Notes

Fairdeal’s own vehicle are provided additional amount for fuel and maintenance while contracted vehicles charge freight charges on monthly basis

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Figure 23: Flowchart of TO-BE Stock Maintenance Process

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SUGGESTIONS AND RECOMMENDATINS

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Characteristics of an Ideal WMS As ultimate objective of this project is to analyze, document and report to management the merits and demerits of implementing warehouse management system in Fairdeal, it would be relevant here to discuss characteristics of an ideal WMS. A modern WMS should have powerful computational tools, reliable information management, performance integrity, operational flexibility and strong back up and safety measures to avoid any misuse and loss of data. To attain the aforesaid capabilities it should have: Multinational Support WMS should satisfy the most demanding international requirements. Multi-currency support with main local currencies, euro & dollar support, support for value-added taxes, combined with an extensive array of international management features, from consolidation routines to automatic generation of inter-company transactions, to manage a global enterprise while complying with a wide variety of national accounting standards worldwide is also required. Multi-branch support WMS should support remote multi-branch operations and help sharing information between the Head Office and the institution’s branches. Replication is simply the process of sharing data between databases in different locations. WMS should replicate data, like the customers and financial information, to make the data available to all the institution locations or entities. In other words, it means that information is all accurate and up-to-date in every location. LAN or WAN networks can be used to provide multi-branch support. Fairdeal can use this option as has operations in Ahmedabad, Bangalore, Dehradun, Hosur and Surat. Also, it is planning to have pan India presence and is expanding. Fully Integrated WMS should be totally linked to all financial modules. Therefore, management of receivables from clients and payments to suppliers on pre-defined due dates will be easier with Accounts Receivable and Accounts Payable modules. Manoj Banshilal Pachouri

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Third Party Catalog Third party accounts (Customers, Shippers, Salesmen/Collectors, Forwarders and Shipping Agencies) should be created as contacts in the address book. This option eliminates redundant data entry and reduces errors. It simplifies the management of enterprise-wide information by using one central database. Depending on the business relation with the organization, a contact should be identified as a supplier, a vendor or both at the same time. Information should be consolidated in the same place and made available to all modules, where required. Third Party Information Third parties should be classified by categories. This feature is important for segregation in order to provide exceptional reporting flexibility. Contact name, main business, contact information, full address including the default dealing currency help in answering the information needs and improving the vital relationship with the third party’s organization. Credit Limits & Payment Terms A well planned WMS should provide a flexible definition of the credit conditions, like the credit limit or payment terms, to accommodate with a diverse customer and vendor base. The client credit limit should be controlled when preparing a sales order or a direct invoice. Debit limit and terms of payments are defined per supplier. They provide an important feature to streamline cash flow process and help saving money. Bill of Lading A quality WMS should have features to allow an easy creation and printing of the Bill of Lading. This direct entry facilitates the management and tracking per container and per client of single and consolidated shipments. The system should also be flexible to create a Clearing file from each Bill and should allow the addition of the related expenses to each file and to generate invoices for the rendered Forwarding/Clearing services. Manoj Banshilal Pachouri

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User Defined Cost Elements In Clearing and Forwarding, the cost elements can be classified into items that can be invoiced (i.e. insurance, freight etc.) and others that cannot (i.e. customs, duties etc.). The user can create an unlimited number of user-defined cost elements. When posted to the Financial Systems, items that cannot be invoiced and are billed at cost, should not affect the Expenses and Revenues Ledgers, and thus should not influence the turnover of the company. Invoicing The system should allow the option to print two separate invoices, one for the expenses that cannot be invoiced and the other for the ones to invoice, is also available. Once all Forwarding and Clearing expenses are processed and invoiced, the Client File could be closed. If additional expenses need to be added to a closed file, the file could be re-opened or an amendment file should be created. Cost/profitability reports should also be generated later on for any file (i.e. parent or child) or for a parent file and all its amendments. Security WMS should ensure that the right to use all crucial business processes is secure. Effective tools must be provided to manage security and provide users with a secure access to Clearing & Forwarding. Security groups can be created to restrict access to specific functions. Groups can be assigned different authority levels that filter the rights of each user belonging to a group. Data Backup There should be proper data backup functionalities in any good Warehouse Management System to ensure unstopped and smooth operations during unexpected system failures due to earth quakes, fire, water or any unforeseen natural calamity. Backed up data should not be stored at the same premise where WMS is installed because there is danger of loss of both WMS data and backed up data at the time of damage to this premise.

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Reports A well integrated WMS should provide the required flexibility to produce effective reports and enable the users to export all report data to an external file, utilizing most of the standard supported data types, like ASCII, Rtf or Excel. Furthermore, the system should be able to generate the following, inclusive but not exhaustive, periodic analysis reports: •

Tracking of expenses by date, for a specific client and a specific shipment,

•

List of invoices filtered by date, customer, invoice status, collector and currency

•

Statistics of containers detailed by commodity

•

Statistics of containers

•

Expected cargo

•

List of client shipments per vessel

•

List of customs per client, per file

•

Total sales by salesman

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Suggestions and Recommendations Detailed study of operations of Fairdeal during Process Analysis, ABC Analysis, ASIS Analysis and TO-BE Analysis revealed that though procedures being used at Fairdeal are more mature compared to other Clearing & Forwarding agents operating in Gujarat, there are many issues that should be taken care of to improve its efficiency. Some of the issues which need management attention are discussed below with possible suggestions and recommendations.

Salary Structure of Employees Presently, salary structure of employees is fixed salary structure in which employees are paid a fixed amount per month. Salaries are decided based on designation and years of work experience of employee. It will be important to notice here that since Fairdeal has to deal with less educated employees who are just matriculate or preuniversity pass-outs, it is difficult to implement all HR practices for them. Also it is not possible to give increments in salary regularly to them because in such case Cost to Company (CTC) of Employee will increase marginal productivity of Labor (MPL) which will be against interests of Fairdeal. Recommendations: Salary structure should be modified to variable salary structure in which one component should be fixed and other should be kept variable as incentives and bonuses. Clearly measurable targets should be defined and communicated to employees which would be basis for deciding incentives and bonuses of individual employee. These targets can be defined in such a way that neither they are too impractical to achieve nor they are too easy to achieve because if target are too easy, every employee will meet them and there will be no utility of setting variable salary, and if targets are too difficult to achieve they will not motivate employees to work hard and objective of variable salary to motivate employees will be lost. Current Status: This issue has already been taken up by management and it is planned to implement variable salaries from year 2006.

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Location of barcode scanning in Bharti Teletech All Motorola cases have to be brought to SDNet terminal upstairs from Godown to scan their IMEI numbers. This consumes manpower as well as time in carrying the cases from one place to other. Recommendations: IMEI numbers can be scanned in Notepad in the Motorola warehouse at the time of receiving mobile phone containers and then this text file can be sent to SDNet terminal for uploading IMEI numbers. Current Status: This suggestion has been partially accepted as scanning in beta testing phase has been done in Godown itself but scanning at time of receiving is still to be implemented. Training to Computer Operators No formal training is given to SDNet operators in Bharti Teletech. They have learnt it by R&D and trail and error methods. For example: uploading IMEI number using text files was there from beginning but operator at Fairdeal learnt it by trail and error only after one year of his tenure. Recommendation: Formal training sessions should be arranged by experienced trainers arranged either by Bharti Teletech or Fairdeal. These sessions should be off-the job type as well as on-the job type. Current Status: Pending

Multi-company operations Fairdeal’s employees are specialized in one company operations only. Since there is only one computer operator and one Godown keeper in most of the companies, smooth operations of Fairdeal are disturbed when computer operator of Godown keeper is at leave. Operations in such situations are handled either by process owner or by Mr. Zankar Jobanputra, COO of Fairdeal. Recently in April 2006, this issue was highlighted in Bharti Teletech when its computer operator Mr. Sunil Patel resigned from the job. The operations which were handled by him alone could not be handled by

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process owner, COO, Sales officer of Bharti Teletech and even Mr. Sharad Jobanputra had to scan serial numbers himself. Investing COO time or process owner’s time in such activities is not advisable for development of a company. Recommendations: Employees should be encouraged to learn handling multiple (at least two) companies’ distribution channels like SAP R/3 of TATA Tea and SDNet of Bharti. This will ensure smooth operations even in case of absenteeism and job vacancies. Employees can be allotted to one company’s operations and one secondary companies working can be taught to him at the time of joining. New employees will learn better than those who have been working for a long time on single SD network. For example: if one employee is absent or quits his job, there should be another employee in Fairdeal who is at least 80% efficient, if not more, in handling absent employee’s work. Also, Employees should be motivated, encouraged and trained to behave courteously with channel partners (e.g. Area Sales officer and Logistic peoples like truck drivers etc) as well as dealers and Stockists. It has been seen that some employees lack courtesy and communication skills. Current Status: Initiatives have been taken to impart multi-operational skills in employees. Noting down serial numbers of bikes in TVS Motor When serial numbers and frame numbers of TVS bikes are noted down manually, there are human errors in noting down numbers because of confusion in 0 & 8, 3 & 8 which look similar when printed by dot matrix printer. This also happens because of scratches on barcode labels or insufficient lighting. Recommendation: Cordless barcode scanner can be used to scan serial numbers instead of doing it manually. This will reduce human errors as well as increase efficiency of receiving and dispatching also. TVS should ask SAP R/3 to provide them with integrating software which can transfer data to and from cordless barcode scanner and SAP R/3 module. Current Status: This issue has been communicated to TVS head office at Hosur and barcode scanners are soon to be implemented.

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Damages in TVS Motor at time of Loading In TVS Motor, there are instances of damages to bikes at the time of loading. It is noted that sometimes bikes are loaded on transport vehicles by riding them. During one such loading, a bike fell off the loading track and there was severe damage to both labor and bike. Though these damages were sometimes claimed from outsourced labor contractor, measures should be taken to avoid these types of human errors. Recommendation: To ensure proper loading of vehicles, Company regulations of vehicle loading must be strictly followed according to which bikes are loaded by dragging them from handle. Current Status: Waiting for management’s approval Bring down TVS bikes from roof Stairway is used when bikes are required to bring down from roof or when it is required to take them to store on roof. It is to be noted that this stairway, in TVS Godown, is constructed at right angle. Also it does not have any protection grill which adds fuel to fire and bikes may fall anytime at time of taking them downstairs or upstairs. Recommendation: A new straight stairway should be constructed which should be properly grilled to avoid any accident. Further, a lift can be used to substitute stairway. Current Status: Waiting for management’s approval Shading of TVS Godown Roof TVS Godown roof does not have any shading and vehicles are lying in direct sunlight even in scorching heat of Ahmedabad summers. Direct heat in summer damage seats of bikes and shining of paint fades away. To prevent these damages, bikes are brought downstairs when space is available. It is a time consuming process and costs Fairdeal in form of money and labor hours. Recommendation: This Roof should have tin or cement shading which will ensure time saving in taking vehicle down and bikes will be secure against heat and water during rainy season. Current Status: Waiting for management’s approval

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Interconnectivity of computers in TVS Motor TVS division has two computers, one for SAP R/3 operations and other for assistant works. As of now, data has to be transferred using Floppy disks from one machine to another. Recommendation: These computers should be connected to each other through network connection. Current Status: Both computers have been connected through LAN. Preparation for space for goods in transit in TVS Motor Many a times, Lorries have to wait for a long time to unload bikes as there is no space in warehouse to store them. Bikes are only unloaded when some bikes are dispatched to dealers and space is created. Though, it does not have any adverse effect on Fairdeal’s operations, it consumes transporter’s time and resources. Suggestion: Transporters should be encouraged to intimate Fairdeal in advance about their arrival. This will help Fairdeal in arranging for bikes space and avoid parallel unloading. Although, Fairdeal can get arriving consignment from goods in transit module of SAP R/3, it is not possible to get the exact date and time of arrival. Hence if transporters can intimate 24 hours before arriving warehouse, it will be beneficial for both transporter and Fairdeal. Current Status: Status quo Lack of group dynamics There is no group dynamics and feeling of team work among employees working for different companies. My personal interview with warehouse staff and computer operators revealed that juniors are not getting co-operation form seniors. Seniors are afraid of sharing information with juniors because they are afraid of loosing referent power over juniors. Suggestions: Information sharing should be encouraged in Fairdeal. Current Status: Matter forwarded to management

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Goods Receiving in Titan When material is received in Titan, boxes are weighted and verified against printed weights on boxes. If weights are found normal, these boxes are then opened and watches are verified for number of pieces per code. This is a time consuming process as sometimes more than 10,000 pieces are received in a single transaction. Adding to it, chances of human errors are also there in taking down incorrect code. Recommendation: Box must not be opened and barcode scanner should be used to scan barcode labels which are printed on box itself. These barcode labels will get the number of watches code wise. Moreover, these scanned barcodes could be used at time of billing because presently computer operator has to punch all material codes manually at time of billing. Note: This is already being practiced in Bharti Teletech for Motorola mobiles. Current Status: Discussions in progress with management Goods Returns in McFills There are more sales returns in McFills compared to any other company. This material consumes time in segregating material, storing and maintaining it. This is a bottleneck as a lot of time is consumed in maintaining non-moving and unsalable material. Also, Single person is handling computer operations as well as store for McFills. Though transaction volume is comparatively lower it is creating problems for customers as computer operator is not available when he is in store. Suggestions: Sales returns and unsalable material should be sent back to company as soon as possible. Current Status: Status quo

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Obsolete softwares in McFills and MRF Paints McFills and MRF Paints are using very primitive software which has erroneous entries. It is not in position to implement VAT through its software. Apart from that, McFills data cannot be audited from software as most of the quantities are showing negative stock. Though type of software to be used is decided by principal company’s management but since Fairdeal is paying for computer operators, cost of any erroneous transaction is bore by Fairdeal. Recommendations: Fairdeal should communicate this issue with its principal companies. Current Status: Status quo Speed of Internet Connections Bell Ceramics, MICO, McFills and MRF paints are using dial up connections for information sharing. Their online portals use utilities which require high speed broadband connection. There is severe problem in sending attachments to company administration also as uploading speed of internet is slow. For example: when file attachments of more than 2 mb are to be sent to McFills head office, there is problem of uploading these files. At such times, computer operator has to wait for off-time when internet connection speed is relatively more. Suggestions: Fairdeal should ask these companies to implement broad band connections. Current Status: Discussions going on with principal companies Material Indentation in McFills Material is indented by Mr. Bharat in McFills which is responsibility of Area Sales Manager and not of CFA personnel. Suggestions: This activity can be annulled. Current Status: Status quo

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Unloading in Voltas and TVS Motors Voltas and TVS Motor trucks have to wait for unloading material in absence of required number of labors. Since, Voltas and TVS Motor products require more than one labor for a single item, a minimum number of labors are required to unload the truck, failing to which material can not be unloaded. Recommendations: There should be preplanned arrangement of labors and storing space to avoid wait time. Current Status: Mater forwarded to labor Incharge Implementing Warehouse Management System (WMS) Most of the operations of Fairdeal are executed manually which consume a lot of time and money. Paper work is major mode of communication with dealers and principal companies which is again a time consuming and costlier process. Moreover, processes of all principal companies are handled separately and there is no link between them because of which employees know operations of one company only. Reports of reimbursements for value added services like re-labeling, re-packing; freight charges; Octoroi claims; Warehouse rents; labor charges etc are prepared into Microsoft Excel sheets and printed. This process can be annulled if WMS can be implemented as most of the reports can be generated from it directly. Recommendations: WMS should be implemented as soon as possible as it will automate most of the processes. It will reduce paper costs and processing times as well. All divisions will be integrated and it will be possible to use data of one division in another. In long run, this WMS can be extended to other locations of Fairdeal like Surat, Hosur, Dehradun and Bangalore also. Current Status: Management has taken up this issue with utmost priority and negotiations are in progress with WMS vendors. Demo of WMS have been seen and WMS that fulfills company requirements would be implemented in 2006.

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Project Activity-Time Schedule

Table 34: Project Activity-Time Schedule Activity Code

Activity Description

01

Study org. structure and processes

02

Understanding process workflows

03

Code of Immediate Predecessor

Activity Start Date

Activity End Date

Deliverable work product

Person Responsible

13-02-06

25-02-06

Project Proposal

Manoj Pachouri

01

20-02-06

27-03-06

Workflow notes

Manoj Pachouri

Draw process matrices

02

21-03-06

28-03-06

Matrix charts

Manoj Pachouri

04

“AS-IS” Analysis

01

26-02-06

03-04-06

Interim Report

Manoj Pachouri

05

Personal interviews of warehouse staff

01

08-03-06

10-04-06

Interview Document

Manoj Pachouri

06

Complete “TOBE” Analysis

04

03-04-06

02-05-06

Flowchart & Matrix

Manoj Pachouri

07

Identifying Process Gaps

04

12-04-06

06-05-06

Process Report

Manoj Pachouri

08

Document findings of the project

01

27-02-06

07-05-06

Final Report

Manoj Pachouri

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Table 35: Gantt chart of Project Activity-time Schedule

Activity Code

Week number 1

2

3

4

5

6

7

8

9

10

11

12

13

01

02

03

04

05

06

07

08

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14

Table 36: Organizational responsibility Activity Description

Fairdeal

ICFAI

Study organization structure and processes

Provided relevant documents

None

Understanding process workflows

Provided Basic Facility like Internet, Library, transportation

Provided Guidelines

Draw process matrices

Provided Suggestion

Provided Microsoft Visio 2003

Complete “AS-IS” Analysis

Provided Relevant Data

Provided AS-IS Analysis formats

Personal interviews of warehouse staff

Provided Employee Time

None

Complete “TO-BE” Analysis

Provided Inputs about benchmarked processes

Provided TO-BE Analysis formats

Identifying Process Gaps

None

None

Document findings of the project

Provided printing facility

None

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APPENDICES APPENDIX A: Key staff involved in the project Table 37: Key Staff Involved In the Project Contact

Designation

Mr. Zankar

Chief Operating Officer (COO)

Mr. Vinod

Process Owner

Mr. Hemant Thakkar

Process Owner

Mr. Saurabh

Process Owner

Mr. Mitesh Shah

Process Owner

Mr. Vinod

Chief Accountant

Ms. Anal

Computer Operator

Ms. Komal

Computer Operator

Mr. Bharat

Computer Operator & Store Incharge

Mr. Praveen

Computer Operator

Mr. Sunil Patel

Computer Operator

Mr. Narendra

Computer Operator

Mr. Tushar

Computer Operator

Mr. Devadutt

Computer Operator

Mr. R. P. Singh

Security Incharge

Mr. Shabbir

Store Incharge

Mr. Raman

Store Incharge

Mr. Mohan

Store keeper

Mr. Santosh

Security Guard

Ms. Stuti

Receptionist

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APPENDIX B: Fairdeal’s Document Formats

Figure 24: Format of Gate Pass of Fairdeal

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Figure 25: Format of Invoice

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Figure 26: Format of Advance Intimation of Warranty Return

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Figure 27: Format of Lorry Receipt (LR) of Fairdeal

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Figure 28: Format of Lorry Receipt obtained by Fairdeal

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Figure 29: Format of Warranty Replacement Delivery Challan

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Figure 30: Format of Warranty Return Delivery Challan

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APPENDIX C: Flowcharting Shapes Figure 31: Flowcharting Shapes

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REFERENCES Bibliography 1. iimcal_paper.pdf: A Survey of the Third-Party Logistics (3PL) Service Providers in India by Subrata Mitra ([email protected]) 2. Fairdeal Distribution Services Pvt. Ltd. documents and manuals 3. ICFAI Business School SAP R/3 study material 4. SAP R/3 - Sales and Distribution by Tata McGraw Hills publication 5. SAP R/3 – Material Management by Tata McGraw Hills publication 6. White paper DELIVERING RESULTS: EVOLVING BPR FROM ART TO 7. ENGINEERING by Richard J. Mayer, Ph.D.; Associate Professor of Department of Industrial Engineering Texas A&M University. 8. White paper Business Process Analysis [1] by Bob Glushko ([email protected]) 9. User manuals & catalogs of IntelliTrack Warehouse Management System software. 10. 3PL is Growing - The Hindu Business Line, Monday, Mar 01, 2004

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Internet Sources 1.

http://www.web.uct.ac.za/

2.

http://www.fairdeal.org

3.

http://www.fairdealdistribution.com

4.

http://www.informationweek.com

5.

http://www.localegovnp.org.uk/webfiles/national/projects/Ryogen

6.

http://www.mrf.com/

7.

http://www.voltas.com/

8.

http://www.tata.com/voltas/index.htm

9.

http://www.tata.com/titan/index.htm

10. http://www.titanworld.com 11. http://www.tatatea.com 12. http://www.beetel-india.com:9080/ 13. http://localhost/bs/ 14. http://web.uct.ac.za/ 15. http://en.wikipedia.org/wiki/Warehouse_management_system/ 16. http://www.intelliTrack.net/ 17. http://www.bestwms.com/ 18. http://www.about.com/ 19. http://www.logisticsfocus.com/ 20. http://www.pasa.doh.gov.uk/pharma/docs/sup_chain/03_Phase% 202%20Report%201pasav2.1.pdf 21. http://www.logisticsfocus.com 22. http://www.softwaredesign.com.lb

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GLOSSARY ABC Analysis: ABC Analysis is an inventory management tool based on the tenets of Pareto Analysis. It categorizes inventory by its highest value and greatest volume. With this information, inventory managers can focus on increasing those inventory SKUs with the greatest potential positive return for the organization. Activity Based Costing: An accounting method that enables a business to better understand how and where it makes a profit. As-Is Analysis: As-Is Analysis phase of BPR is aimed specifically at identifying disconnects within existing business processes and their specified intent. By disconnects, we mean anything that prevents the process from achieving desired results (e.g., inconsistency between the functions of a process that cause failings of the existing process to achieve its intent.) The steps taken to describe the AS-IS process also includes a documentation of the sequence in which activities are performed. Barcode Scanner: An instrument used to decode information coded in parallel bars format and labeled to products. Bar Code Labels: Labels that use bar code symbols to capture inventory information. These labels can be created within the WMS application or a separate bar code application. Bill: It is a printed document like Invoice which contains product specification along with its value. Only difference between invoice and bill is that while bill is raised in case of cash purchase, invoice is raised in case of credit purchase Business process: A business process is simply the series of steps or activities needed to convert some ‘input’ into the required ‘output’. Business Process Reengineering: It is a methodology for either significant improvement to a business process, or for radical change in, or complete replacement of, such a process.

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Central Warehousing Corporation (CWC): CWC is under the Ministry of Food and Civil Supplies. It is complemented by 16 State Warehousing Corporations (SWC). Together, the CWC and the SWC have a monopoly in overseeing a network of 1,515 warehouses which are spread all over the country. Challan: Challan is a printed document containing description of products sold or transferred. It is generally raised when goods are sold on credit or when instant money transfer is not involved. Computerized Truck Routing: method of using computers to generate truck routes based on stop locations, delivery appointments and backhauls. Courier agency: It is a commercial concern engaged in the door-todoor transportation of time-sensitive documents, goods or articles utilizing the service of a person, either directly or indirectly, to carry or accompany such documents, good or articles. Cycle Count: It is regularly scheduled inventory count that cycle through inventory. Cross Docking: Cross docking enables an operator to place newly received inventory directly into a staging area, as opposed to putting the item into a storage location. Cycle time: It is the total elapsed time, end to end, from the time the cycle starts or is triggered until the cycle completes with all results accomplished. It is sometimes called calendar time, or wall-clock time for shorter cycles, because it is the time that would pass on the calendar or clock on the wall during the cycle. Enterprise Resource Planning (ERP): ERP Facilitates company wide information system covering all functional areas and performs core corporate activities and increases customer service augmenting corporate image. It attempts to maximize productivity through restructuring and reorganizing the different divisions and departments in the organization FEFO: Abbreviation of First Expiry First Out. It is a stacking practice in warehousing non-durable products which aims at ensuring that material that is expiring first is dispatched first.

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FIFO: Abbreviation of First In First Out. It is a stacking practice in warehousing which aims at ensuring that material that is stored first is dispatched first. Idle time: During idle time, the process is just waiting, perhaps because the work is not on a critical path, or because it has not been routed expeditiously, or just because the process is designed that way. Invoice: Invoice is a printed document containing description of products sold along with their value. It is raised after challan and contains value of product also. Kitting: A ‘kit’ represents a preset group of items, of varying quantities. When the kitting process is used in the warehouse management system, predetermined items that are part of a kit are picked from inventory when the kit item number is selected as part of a pick order. Non Moving Material: Non moving material is that material which is not being demanded by dealers for various reasons including product becoming obsolete or out-of-date, product expired etc. These materials occupy a significant amount of space in the warehouse. Octoroi: It is a tax levied by Municipal Corporations of Metropolitan cities on goods purchased or used inside Municipal Corporation region. Pallet: Pallets provide an alternate storage area for inventory. Because they are portable, if pallets are used, it is possible to move large amounts of inventory at once. Additionally, pallets improve inventory tracking and control efficiency when moving large amounts of material (same or unlike items) around the warehouse. Queue time: It is the time an item is lined up before a critical or bottleneck resource. The work item is ready to go on, but is waiting for the resources for the next step to get to it. In a manufacturing environment, partially finished goods will stack up before a bottleneck machine during queue time.

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Radio Frequency Identification: Known as RFID in short, it is a relatively new technology which uses chips embedded in products in conjunction with transmitters located across a logistics chain to determine the exact location of merchandise anywhere in the world. When an item having RFID tag passes through electromagnetic zone of RFID, an antenna captures the information from this tag and passes this information to central computer. Setup time: It is the time required for a resource to switch from one type of task to another. This is also most obvious in a manufacturing situation—the operator might need to mount a different bit on a milling machine before beginning work on a new lot of a different product type. Slow Moving Material: slow moving material is that material which is in less demand in the market and inventory stock in warehouse is more than budged stock. Staging Area: Area in the warehouse from which goods are shipped. Stock-Transfer: This is inter - distributor or inter – depot transfer of material in case of shortage of stock at one location to supply material to customers at time. Stock Transfer Memo: This document is used in transferring material from one location to another when change of ownership is not involved. Invoice is used in transferring material when change of ownership is involved. Supply Chain: supply chain may be defined as ‘Flow of materials through procurement, manufacture, distribution, sales and disposal’. Supply Chain Management: Supply Chain Management may be defined as "the integrated management of all linkages and value added activities from the supplier's supplier to the customer's customer in such a way that enhanced customer value is achieved at lower costs. Supply Chain Management is interplay of all the functions and integrates marketing, planning, distribution and purchases with the entire manufacturing process.

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SWOT Analysis: It is an analysis tool that forces decision makers to look their strengths, weaknesses, opportunities and threats associated with their business environments. Time worked: Time worked counts the actual work hours of work expended on the process. Sometimes more than one person (or other resource) is working on the process at a time: this measure would be the total hours paid for if workers are the resource being measured. If only one person at a time works on the process, work time and time worked are the same. To-Be Analysis: The goal of To-Be Analysis design is to produce one or more alternatives to the current situation, which satisfy goals of the enterprise as stated in the business case analysis and which satisfy the change-requirements. Transit Time: It is the time spent in transit between steps. Strictly speaking, when the work is being moved, that is a step in itself, but no other value is being added other than transport. Unit of Measure: A unit of measure (UOM) allows measuring the amount of an item in a structured and distinct unit. Units of measure define a base unit of measurement such as each, and then higher increments of the base unit such as carton, bundle, and case. Unsalable Material: This term unsalable material is widely used in FMCG goods and non durable goods. It consists of air-leaked packets, damaged packets, expired packets etc. Vendor Managed Inventory: The practice of retailers making suppliers responsible for determining order size and timing usually based on receipt of retail POS and inventory data. Its goal is to increase retail inventory turns and reduce stock outs. WIP: Work In Progress. This term is used in manufacturing industry where raw material is in under the process of converting to the finished goods but is not yet completed. Warehousing: It is the part of materials management concerned with the storage of the kind and quantity of goods that consumers and users require.

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Workflow: Workflow integrates the entire organization with flexible assignment of tasks and responsibilities to locations, positions, jobs, groups, or individuals. It integrates every employee in the 'value chain' by providing a versatile inbox (universal inbox) at his or her workplace, which can be configured individually. Work time: It is the time the process is actually being worked on. Most processes have at least some time during which processes are waiting and not being worked on; if all this non-productive time could be eliminated, cycle time and work time would be the same.

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