To study and formulate strategy to improve the Logistics and Distribution System For Abhishek Yarn, Sanghera

By Nacchhater Singh, MBA-2009-11

Under The Guidance of:

Mr. Ashutosh Singh, Mr. Aniket Raj Aggarwal

Head SCM Head, Commercial & Logistics

Yarn Division Yarn Division

Abshihek Industries Ltd. Abshihek Industries Ltd.

University Business School, Chandigarh 27.06.2010

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Certificate of Approval

The following Summer Project Report titled "To study and formulate the strategy to improve the logistics and distribution system thereby increasing its overall efficiency" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Master in Business Administration for which it has been submitted.

It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted.

Summer Project Report Examination Committee for evaluation of Summer Project Report Name Signature 1. Faculty Examiner Dr. Deepak Kapoor, Dr. Monica Bedi 2. PG Summer Project Co-coordinator

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Certificate from Summer Project Guide rom Summer Project Guides

This is to certify that Mr. Nacchhater Singh, a student of the Master in Business Administration has worked under our guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer project, monograph, report or book.

Mr.Ashutosh Singh Head, Supply Chain Management

Yarn Division Abhishek Industries Ltd.

Sanghera, Barnala.

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Acknowledgment

I am thankful to my project guide Mr.Ashutosh Singh for providing me an opportunity to work on this project. I especially thank Mr.Aniket Raj Aggarwal for his constant support and encouragement without which this project would never have seen the light of completion.

My special thanks to Mr.Sanjeev Verma, Mr.Rajdeep Gill, Mr.Manoj kalia, Mr.Ranjeet , Mr.Lakhwinder Singh, Mr.Madhu Sudan, Mr.Gurpreet Singh who inspite of their preoccupations and busy schedule in the office left no stone unturned in enhancing my knowledge to achieve the desired target.

I extend my sincere gratitude to my faculty guide Dr.Deepak Kapoor and Dr.Monica Bedi for guiding and helping me at every stage of this project.

I am also grateful to all the people who directly or indirectly supported me during the course of the project and provided value addition to it through their constructive feedback. They all were a source of inspiration and have continuously motivated me to put my best efforts in the project.

Last but not the least my heartfelt thanks to my erudite teachers and my colleagues who have been the guiding light all through.

Nacchhater Singh Sandhu MBA-2011 UBS, Chandigarh

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Executive Summary

Abhishek Yarn, which is one of the divisions of Trident Group, is into manufacturing of grey

yarn. The project intended to study and formulate a strategy for Abhishek Industries Limited to

increase the efficiency of logistics and distribution system

Efficiency has been measured on following parameters:

1. Cost

2. Time

Project is broadly categorised into following categories:

1. Internal Logistics

2. Logistics for Abhishek Home textiles, Dhaula.

3. Logistics for other domestic customers except AHT.

Project started with the study of the complete logistics and distribution process. Data was

collected for the period Jan’10-May’10 (From the company’s ERP system) and analysis was

done for the various patterns that arose from that data and finding the bottlenecks and

inefficiencies in the system.

A pilot project was implemented to find the effect of size of vehicle on the efficiency of internal

logistics and finding the feasibility of implementing the same for complete Raw material

transfer. Next phase was to evaluate the various options available for the logistics for AHT,

Dhaula which is the major customer comprising around 36% of the sales. Various studies and

observations were done to optimise the utilization of vehicles and time.

Finally in last phase, vehicle and transport union utilization were analysed based on the data

collected. Recommendations were made for the various deficiencies and problems which can

happen in the future. Also Optimum marketing Order priority matrix was created based on the

cost incurred per kg of the dispatch. This includes the optimum order size for each destination

and then selecting the most optimum option for the transportation.

Finally the implementation plans were developed based on the priority and also on the basis of

process time lead. Basic parameters for implementation plan were:

1. Lead Time (Includes approval time etc)

2. Cost Incurred

3. Changes required.

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Table of Contents

Certificate from Summer Project Guide ...................................................................................................... 3

Acknowledgment .......................................................................................................................................... 4

List of Tables ................................................................................................................................................. 8

List of Figures ................................................................................................................................................ 8

1. Group Introduction ................................................................................................................................... 9

Home textiles ............................................................................................................................................ 9

Paper ....................................................................................................................................................... 10

Chemicals ................................................................................................................................................ 10

Yarn ......................................................................................................................................................... 10

Energy ..................................................................................................................................................... 10

2. ABHISHEK YARN ...................................................................................................................................... 13

Challenges and Threats ........................................................................................................................... 14

Clients...................................................................................................................................................... 15

Product Range ......................................................................................................................................... 15

3. Supply Chain Management ..................................................................................................................... 16

Elements of the Supply Chain ................................................................................................................. 16

Levels in Supply Chain Management ...................................................................................................... 17

Supply Chain Decisions ........................................................................................................................... 18

4. SCM Department Structure .................................................................................................................... 20

5. Supply Chain Management Process Charts ............................................................................................ 23

6. Objective: ................................................................................................................................................ 26

Types of Raw Material: ........................................................................................................................... 28

Mode of Transfer: ................................................................................................................................... 28

SWOT- Internal Logistic ........................................................................................................................... 29

Pilot Study: .............................................................................................................................................. 30

Other Recommendations: ....................................................................................................................... 32

8. Objective 2 .............................................................................................................................................. 33

AHT’s Share in the total dispatch ............................................................................................................ 33

Scheduling Contract ................................................................................................................................ 33

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Mode of transfer ..................................................................................................................................... 34

Cost Incurred ........................................................................................................................................... 34

Detailed Dispatch flow Chart .................................................................................................................. 34

SWOT- AHT .............................................................................................................................................. 35

Data Analysis ........................................................................................................................................... 36

Future Strategies ..................................................................................................................................... 37

Recommendations: ................................................................................................................................. 37

Evaluations Of each recommendation .................................................................................................... 38

9. Objective 3 .............................................................................................................................................. 45

SWOT- Domestic Dispatch ...................................................................................................................... 46

Region Wise Dispatch ............................................................................................................................. 47

Destination Wise Dispatch ...................................................................................................................... 47

Destination Wise transporter ................................................................................................................. 48

Transporter Wise Distribution ................................................................................................................ 48

Time Analysis .......................................................................................................................................... 49

Marketing Order Priority Matrix ............................................................................................................. 52

10.Implementation Plans ............................................................................................................................ 54

Short Term Implementation Plan: .......................................................................................................... 54

Long Term Implementation Plan: ........................................................................................................... 54

11. References ............................................................................................................................................ 56

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List of Tables

Table 1: List of major export customers ..................................................................................................... 15

Table 2: Product Range ............................................................................................................................... 15

Table 3: Raw Material Transfer Data (Source: Daily Manual Register) ...................................................... 30

Table 4: Time-Motion Study for Bales Transfer .......................................................................................... 31

Table 5: Dispatch Data to AHT, Dhaula. (Source: SAP, Jan’10-May’10) ...................................................... 36

Table 6: NPV Calculation for New Trolley ................................................................................................... 39

List of Figures

Figure 1: Levels in Supply Chain Management ........................................................................................... 17

Figure 2: SCM Department’s Top Ladder Hierarchy.................................................................................... 20

Figure 3: Commercial and Logistics’ Hierarchy ........................................................................................... 20

Figure 4: Raw Material Stores Hierarchy..................................................................................................... 21

Figure 5: Spares Stores Hierarchy ............................................................................................................... 21

Figure 6: Waste Dispatch Section Hierarchy ............................................................................................... 22

Figure 7: Purchase section Hierarchy .......................................................................................................... 22

Figure 8: Purchase Process .......................................................................................................................... 23

Figure 9: Store Process ................................................................................................................................ 23

Figure 10: Waste Dispatch Process ............................................................................................................. 24

Figure 11: Finish Good Dispatch Process .................................................................................................... 25

Figure 12: Raw Material Flow Chart. ........................................................................................................... 27

Figure 13: Segment Wise Dispatch Distribution (Source: SAP, Jan’10- May’ 10) ........................................ 33

Figure 14: Dispatch Flow Chart .................................................................................................................. 34

Figure 15: Graphical Representation of Table 5 .......................................................................................... 36

Figure 16: Layout of closed truck considered for negotiation. Size: 32’ x 8’ x 8.5’ ..................................... 38

Figure 17: Unloading Ramp Condition at AHT 2.......................................................................................... 44

Figure 18: Category Wise Dispatch Distribution ......................................................................................... 45

Figure 19: Region Wise Dispatch ................................................................................................................. 47

Figure 20: Destination Wise Dispatch Distribution ..................................................................................... 47

Figure 21: Destination Wise Transporter Used ........................................................................................... 48

Figure 22: Transporter Wise Distribution .................................................................................................... 48

Figure 23: Time Analysis for Domestic Dispatch (Source SAP, Jan’10-May’10) .......................................... 49

Figure 24: Marketing Order Priority Matrix. ............................................................................................... 53

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1. Group Introduction

The Trident group is a dynamic and continuously growing group of companies creating a buoyant economic climate focussed on generating economic prosperity for the stakeholders, while growing harmoniously with the community and environment. Levering business from an expanding product portfolio, Abhishek Industries Limited, the flagship company of the group is one of the largest towel manufacturers in the world, one of the world’s largest agro based paper manufacturer and one of the largest yarn producers in India. Strong business ethics, excellence in business, creating a productive work environment, continuous improvement through sound corporate governance and dynamic employee engagement have been at the foundation for the continuous success of the Group.

Making way in Punjab as an agro-based manufacturer in 1990, the Group has diversified and expanded multifold giving way to business based on sustainable growth. Under the dynamic leadership of Mr. Rajinder Gupta, the CEO and MD of the Group, Trident continues to grow embracing new challenges, expanding boundaries and creating new opportunities.

With business spanning across 54 countries, Trident today is Rs. 25 billion enterprise with the employee headcount more than 10,000, and providing indirect employment to 20,000 people. Implementing sound Corporate Governance as the basic management principle, Trident is a pioneer at it. It is the recipient of ICSI National Award for Excellence in Corporate Governance, 2006. Abhishek Industries Limited has been awarded the prestigious 'International Supplier of the Year' for 2001, 2003, 2005 and 2006 by Wal-Mart, USA and 'Supplier of the Year Award' for 2006 by JCPenney Corporation. Achieving a CAGR of more than 30%, it is one of the fastest growing Groups of companies of India.

Trident Group is currently into 5 businesses namely Home Textiles, Paper, Yarn, Chemicals and Energy.

Home textiles Trident offers a wide variety of the best quality towels in attractive designs and colours. Exported across 54 countries world-wide, it is one of the largest terry towel manufacturers in the world. They have accomplished this position in a short span of a decade. Commissioned in 1998, the ultra-modern terry towel unit was started to vertically integrate the existing cotton spinning facilities. Now the units have reached the capacity of 40000 MT / Annum of Towel production and 6825 MT / Annum of Cotton Yarn Processing. Their clients include some of the leading retail chains in US and Europe and many other countries across the globe. Trident towels are available in many countries at all retail segments like Departmental stores, Mass merchants, Specialty stores, Club stores and Premium brand stores.

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Paper Growth in harmony with nature and environment has always been the guiding philosophy at Trident. Stemming from this philosophy is the expanding paper business. The paper at the Paper Division is produced in eco-friendly manner making use of wheat straw and agro-residue as prime raw material. Having been commissioned in 1992, the production capacity of the unit has increased to 400 TPD. Further expansions of more than 100,000 TPA, have recently been made for addition of special grade products. The unit produces both writing and printing grades of paper for various segments. Their customers include Renowned Publishing House, Children's Books Publishers, Press Houses, Educational Institutes, Computer Stationery Manufacturers, Business Stationery Manufacturers, Government bodies and Corporate Houses.

Chemicals The Sulphuric acid plant was set up in 1985 with initial production capacity of 33000 TPA, which was increased to 100,000 TPA in 1997. Today, the company has become the leading Sulphuric acid manufacturer. Further, the company is planning to set up a Glass Make Plant for manufacturing LR and AR grades of Sulphuric acid by importing technology from Germany. Battery Grade Sulphuric acid is the premium quality product. Commercial Grade is also manufactured keeping in view the larger market share.

Leading battery manufacturers and other high-end consumers comprise the clientele for these products.

Yarn Trident manufactures the finest quality yarn catering to both domestic and international markets. Manufacturing a wide variety of quality yarn, they have accomplished a significant presence in America, Europe, Africa, and the Far & Middle East within a decade of commencement of yarn operations. Besides catering to the domestic and international markets, a part of the yarn produced is also used for captive consumption by Terry Towel Division of Trident.

Energy At Trident, keeping in view the increasing requirements of the continuously expanding operations, captive power is generated to meet the demands of the industry. The power generated internally aids in uninterrupted supply of power for the production processes, ensuring enhanced efficiency, round-the-clock production, and cost savings.

The main outputs are steam and power that meet the requirements for operations of production plants.

Trident Group is also expanding its business into Sugar, Construction and Consultancy domains.

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Major Customers

Yarn Terry towel Paper Division

Arvind Mills Wal-Mart Thompson Press

Elegant Overseas JC Penney Gopsons Printing

Kapoor Industries Target Aggarwal Accurate printers

Bamboo Tex, Turkey Ikea Sahara

Chemitax, Belgium K-Mart Tata Mc Graw

IMM SPA, Italy Create & Barrel Repro India

Primark Oxford University Press

Linen N Thing Navneet Publications

Bath and Beyond NCERT

Shoppers Stop IGNOU

Spencer’s Bureau of Text Books

Big Bazaar Sahitya Bhawan

Sahara Sundaram Multi Pap Ltd.

Ebony Indian Railways

Westside

Oberoi Hotel

Taj Hotel

ITC Shereton

Marriot

Hyatt Group

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Awards and Recognitions

Year Awards

2010 Texprocil Gold Trophy for highest exports in Terry Towel.

2009 Best Supplier Quality Award (South Asia)

2008 Award for Best HR strategies

2007 JC Penney Supplier of the Year Award

2007 Padma Shri Award

2006 Safety Award

2006 Wal*Mart International Supplier of the Year

2006 National Award for Excellence in Corporate Governance

2006 CITI Birla Award for Quality Management

2005 Wal*Mart International Supplier of the Year

2005 Excellence in Corporate Governance

2005 ICAI Awards for Excellence in Financial Reporting

2005 ICWAI National Award for Good Performance

2005 Distinguished Entrepreneurship Award

2005 Udyog Ratna Award

2005 Outstanding Export Performance for 2004-05

2005 Merit Award at Kaizen Summit

2004 Excellence in Corporate Governance

2004 E&Y – India Inc Icons of the Year

2004 Tata Crucible Business Quiz, CII Quality Circle

2003 Wal*Mart International Supplier of the Year

2001 Wal*Mart International Supplier of the Year

1999 Energy Conservation Award

1990 AI Second Best Performed SSP Unit Award

1989 FAI Best Performed SSP Unit Award

1989 Udyog Patra Award

1988 FAI Runner up Award

1985 Yuva Shakti Puraskar

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2. ABHISHEK YARN

The Company is one of the largest yarn spinners of India with spinning capacity of 1,25,952 spindles at single location. The Company has total spinning capacity of 1,76,352 spindles and also has 1920 rotors.

The year under review has witnessed special focus on value added products as recognized to be the major drivers of growth. To this effect, the division has undertaken modernization and expansion of capacity leading to increase in turnover.

Optimization of resources, lean manufacturing and energy saving techniques have been the cornerstones of the year improving productivities and other operational parameters.

The Company is perpetually engaged in the process of making efforts to be globally relevant in a competitive scenario and therefore is expanding the spinning capacity by 1,00,800 spindles at Budni in Madhya Pradesh. The first phase of this expansion consisting of 50,400 spindles has already been completed. The expanded capacity would concentrate on manufacturing special yarns like compact, elli-twist, core-spun and special cottons like supima, organic and giza. This would foster expansion of product base with count range extending to Ne 60. The Company has adapted the latest technology, encourages better customer relationships and religiously organizes yarn dealers’ meets to the effect.

Facilities:

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Strengths and Opportunities

Technology:

The division has adopted state of art technology and is abreast of all the current advancements in the field due to its attempts of accumulating technological updates.

Projected growth of textile industry:

Considering the immense growth potential of Industry, companies like us who have implemented process and technology of global standards can live on substantial hopes of success.

Access to raw materials:

The major raw material, cotton is sourced locally following the Company’s principle of establishing integrated synergies in raw material sourcing, manufacturing facilities and markets, therefore helping in lean manufacturing.

Geographical diversification:

The Company is setting up textile facility at Madhya Pradesh for fine counts which would enhance the division’s product basket and hence increase customer base.

Challenges and Threats

Increased competition:

The increase in capacity in the yarn spinning industry in recent time and globalization momentum have led to manifold increase in competition internationally as well as domestic.

Cotton sourcing:

Government intervention in fixing Minimum Support Price (MSP) has badly impacted international competitiveness of industry and likely to have the impact in the future as well.

Capital Expenditure

The Company is setting up 1,00,800 spindles at Budni, Madhya Pradesh which involves a total capital outlay of Rs 3,737 million. This project is being implemented in phased manner. The first phase of expansion consisting of 50,400 spindles has been completed in April 2009 and the second phase has been completed in the third quarter of financial year 2009-10.

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Clients

The major segments Abhishek Yarn serves to are:

1. Knitting 2. Weaving 3. Denim 4. Fine count shirting and sheeting

Yarn is exported to the following countries:

Bangladesh Nepal

Belgium Slovakia Chile Korea Egypt Philippines Israel Singapore Italy Spain Latvia Sri-lanka Lithuania Switzerland

Table 1: List of major export customers

Product Range

Organic Cotton Yarn Corn/Cotton Yarn

Compact Yarn Soya Fibre Yarn

Slub Yarn Contamination Control Hosiery Yarn Bamboo/Cotton Blended Yarn

Core Spun Lycra Yarn

Cotton/PC Blended Yarn Imported Mixing Yarn Bamboo/Cotton Open end Yarn ZERO Twist Yarn Open end Slub Modal/Cotton Blended Yarn

Table 2: Product Range

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3. Supply Chain Management

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Elements of the Supply Chain

A simple supply chain is made up of several elements that are linked by the movement of products along it. The supply chain starts and ends with the customer.

1. Customer: The customer starts the chain of events when they decide to purchase a product that has been offered for sale by a company. The customer contacts the sales department of the company, which enters the sales order for a specific quantity to be delivered on a specific date. If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility.

2. Planning: The requirement triggered by the customer’s sales order will be combined with other orders. The planning department will create a production plan to produce the products to fulfill the customer’s orders. To manufacture the products the company will then have to purchase the raw materials needed.

3. Purchasing: The purchasing department receives a list of raw materials and services required by the production department to complete the customer’s orders. The purchasing department sends purchase orders to selected suppliers to deliver the necessary raw materials to the manufacturing site on the required date.

4. Inventory: The raw materials are received from the suppliers, checked for quality and accuracy and moved into the warehouse. The supplier will then send an invoice to the company for the items they delivered. The raw materials are stored until they are required by the production department.

5. Production: Based on a production plan, the raw materials are moved inventory to the production area. The finished products ordered by the customer are manufactured using the raw materials purchased from suppliers. After the items have been completed and tested, they are stored back in the warehouse prior to delivery to the customer.

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6. Logistics/Transportation: When the finished product arrives in the warehouse, the shipping department determines the most efficient method to ship the products so that they are delivered on or before the date specified by the customer. When the goods are received by the customer, the company will send an invoice for the delivered products.

Levels in Supply Chain Management To ensure that the supply chain is operating as efficient as possible and generating the highest

level of customer satisfaction at the lowest cost, companies have adopted Supply Chain

Management processes and associated technology. Supply Chain Management has three levels

of activities that different parts of the company will focus on: strategic; tactical; and

operational.

Figure 1: Levels in Supply Chain Management

1. Strategic: At this level, company management will be looking to high level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets.

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2. Tactical: Tactical decisions focus on adopting measures that will produce cost benefits such as using industry best practices, developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effect transportation and developing warehouse strategies to reduce the cost of storing inventory.

3. Operational: Decisions at this level are made each day in businesses that affect how the products move along the supply chain. Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse

Supply Chain Decisions

There are four major decision areas in supply chain management:

1. Location Decisions. 2. Production Decisions. 3. Inventory Decisions. 4. Transportation (distribution) Decisions.

Location Decisions

The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level.

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Production Decisions

The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

Inventory Decisions

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

Transportation Decisions

The mode choice aspect of these decisions is the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm's transport strategy

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4. SCM Department Structure

1. Top Ladder

Figure 2: SCM Department’s Top Ladder Hierarchy

2. Commercial and Logistic

Figure 3: Commercial and Logistics’ Hierarchy

Ashutosh Singh

Head SCM

Aniket Raj Aggarwal

Commercial & Logistics

Ranjeet Kumar

RM Stores

Anil Kumar

Waste Dispatch

Rajdeep Gill

Purchase (Spares)

Manoj Kalia

Purchase (Packing)

Sanjeev Verma

Spare Stores

Aniket Raj Aggarwal

Executive, Commercial & Loistics

Gurpreet

PPC & Excise

P.K. Prakashan

Export Billing & Excise

Lakhwinder Singh

Billing/Dispatch

Madhu

Logistics

Pawan Kumar

Logistics

Jagsir, Sukhjeet

Ravinder & Ranjodh

Loading Supervisor

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3. Raw Material Stores

Figure 4: Raw Material Stores Hierarchy

4. Spares Stores

Figure 5: Spares Stores Hierarchy

Ranjeet Kumar

Raw Material Store

Avtar Singh

Raw Material Godown

Jai Prakash

Unit 3Balbir Singh

Unit 2

KaramJit Singh

Unit 1

Prem

Reliever

Chamkaur Singh

Unit 4

Sanjeev Verma

Spares and consumable store

Inderjeet Singh

Unit 1 & 2

Gurjant Singh

Unit 3 & 4

Dev Narayan

Operative

Gurpreet Singh

Operative

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5. Waste Dispatch

Figure 6: Waste Dispatch Section Hierarchy

6. Purchase

Figure 7: Purchase section Hierarchy

Anil Kumar

Waste Dispatch

Shambu Nath

Waste Dispatch

jaswinder Singh

Waste Dispatch

Manoj

Waste Dispatch

Ashutosh Singh

Rajdeep Gill

Spare and Consumable Purchase

Pritpal Singh

Manoj Kalia

Packing Material Purchase

Gurpiar Singh

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5. Supply Chain Management Process Charts

1. Purchase Process

Purhcase has been done under two heads:

1. Machines, Spares & Consumables. 2. Packing material.

Basic process for the procurement of both is same as mentioned below:

Figure 8: Purchase Process

2. Store’s Process

Store an AY, Sanghera has been divided into two basic parts:

1. Raw Material Stores 2. Spares and Consumable stores.

Raw material stores process has been discussed in detail in the later part of the project report.

Spares and Consumable differs from the RM stores at the point of issuing the material only. In RM stores, material has been issued against the lot no. Whereas in Spares and consumable stores, material has been issued against the item number.

Basic material flow followed in the stores is as follows:

Figure 9: Store Process

Purchase

Requisition

Unit Head's

Approval

Request for Quotation

Comparative Statement for RFQ.

Purchase

Order

Purchase orderGIN to MIN

(As in RM Stores)

Stocking and

Tagging

Issuance against Item No.

Excise Deptt.

(Vat Claim)

MIRO

(Payment)

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3. Logistics and Distribution

Logistics and distribution basically comprised of two elements:

1. Waste Logistic 2. Finish Good Logistic

Waste Dispatch

Various types of waste have been produced during the various stages of production line. Some of these wastes have been consumed internally whereas some has been sold to other customer who uses this waste in their processes.

Basic Waste Dispatch Process has been shown below:

Figure 10: Waste Dispatch Process

Generation

• Daily Waste Production Report

• Marketing requirement

Logistics• Dispatch Plan

Commercial

• Dispatch (Logistics)

• Billing/Invoice

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4. Finish Good Dispatch

Finish good, once produced, came to finish good godown after the packing. These FG has been dispatched to various customers as per the dispatch plan from the Marketing.

Basic Finish goods Dispatch process is as below:

Figure 11: Finish Good Dispatch Process

Plan

• Production Stock

• Tentative dispatch plan

Order

• Order for vehicle

• Detailed Dispatch Plan

Loading

• Vehicle Gate-In

• Weighment, Loading, 2nd Weigment

Commercial

• Billing

• Vehicle Gate Out

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6. Objective: To study and formulate the strategy to improve the efficiency of Logistics and Distribution System.

Sub-Objectives

1. To study and formulating the strategy for improving the efficiency of Internal Logistic.

2. To study and formulating the strategy for improving the efficiency of AHT Logistic.

3. To study and formulating the strategy for improving the efficiency Domestic Logistics other than AHT.

Methodology

Internal Logistics:

1. Complete study of the Raw Material flow has been carried out. 2. Pilot project was implemented to see the effects of improvement on the total diesel consumption per year. 3. Data for the bales transfer and diesel consumed was gathered for the last 3 months. 4. Analysis was being carried out for: Increased/Decreased bale transfer per litre, Increase/Decrease diesel consumption per bale and finally total diesel saving per year 5. Time-Motion Study was carried out for calculating the man-hr. saving per year.

External Logistics:

1. Complete study of the Finish good flow has been carried out. 2. Data was gathered for the total dispatch done for the last 5 months (Jan’10-May’10) 3. Analysis was done to find the pattern and major areas of concern. 4. All areas of concern was observed for some time and finally recommendations has been finalised.

Limitations:

1. Complete analysis has been done on secondary data only. 2. Data for the Raw Material shifting was stored in daily entry register only. 3. Reasons for the events happened were not available anywhere so analysis for the same has been done on the basis of observations or interview with the people working on the process.

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7. Objective 1

Internal Logistic: Raw Material Transfer from RM stores to Production Line.

As shown in below mentioned process flow, Raw material (RM), bought by ATCL, has been stored in the godown according to the lot number assigned to it. Daily RM has been issued from the various lots according to the requirement of the R&D, as given in the issue slip against the particular lot number. RM has been issued from the various lots to make the product more homogeneous, which happened during the mixing stage in the production line.

Basic Process for Raw Material Store is as follows:

Figure 12: Raw Material Flow Chart.

Cotton Vehicle

At Gate

Weighing

(TAT

Start)

Gate Inward

(GIN)

Unloading

& Counting

Lot No.

Assigned

Material

Inward (SAP)

Material Issue

Against Slip no.

Physical RM

transfer

RM requisition

slip (From R&D)

)

R&D approval

)

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Types of Raw Material:

Basically two types of raw material have been transferred as described as follows:

1. Cotton: This is the basic element of the yarn produced in any unit. Various types of cotton have been transferred like Shankar 6, MCU 5, Geza, Organic cotton etc.

2. Comber Noil: This is basically the waste cotton with short fibre length generally produced from the Comber process. Comber Noil has been produced in the Unit I, Unit II and Unit IV and has been used in the Open End Yarn in the Unit III. Generally, daily production of comber noil is 120-125 bales of 85-90 kg each.

Mode of Transfer: Raw material has been generally transferred with the help of tractor and open trolley.

Generally, trolley can transfer 18 bales per round.

Loading on the trolley has been done manually.

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SWOT- Internal Logistic

Strength:

1. Excellent RM management system with Independent Lot no. for every lot, Segregated Storage as per lot no., different godown for each unit etc. 2. Good Issuing Process. 3. Physical vs System inventory management system. 4. Trained managers and manpower with excellent knowledge of inventory handling and Management.

Weakness:

1. Poor godown conditions. 2. Roads in very bad condition leading to high RM transfer cost. 3. Exposure of RM to the external conditions like rain, dust, sunrays etc leads to wastage. 4. Stacking system not so good. 5. Lack of infrastructure like availability of PC which leads to manual data storage etc. 6. Transferring system not so efficient and good.

Opportunities

1. RM inventory level going to increase in the coming years due to company’s target of 15000cr by 2015 with 15% PAT. 2. Material handling and storage system have to be modernize to reduce the transfer as well as carrying cost thereby increasing the gross profit. 3. Closed godown has to built with in close proximity to each unit.

Threats

1. Tough working conditions as manpower has to work in open areas. 2. If not done, handling inventory in the future will become a threat.

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Pilot Study:

Study was done by increasing the size of trolley. Bigger trolley was able to transfer 30 bales as compared to the 18 bales per round by existing trolley.

Feb March April May

Avg. RM Transfer

PB11H1175 247.0 183.2 154.0 449.4

PB19D2748 0.0 0.0 0.0 269.4

PB19B2503 0.0 0.0 0.0 289.0

Feb March April May

Total RM Transfer

PB11H1175 6668.0 5129.0 1232.0 13481.0

PB19D2748 0.0 0.0 0.0 6736.0

PB19B2503 0.0 0.0 0.0 7224.0

Feb March April May

Total Fuel Consumed

PB11H1175 --- --- --- 130.0

PB19D2748 --- --- --- 65.0

PB19B2503 --- --- --- 60.0

Feb March April May

Avg. Fuel Consumption

PB11H1175 --- --- --- 4.3

PB19D2748 --- --- --- 2.6

PB19B2503 --- --- --- 2.4

Feb March April May

Avg. RM Transfer

Per lt.

PB11H1175 --- --- --- 103.7

PB19D2748 --- --- --- 103.6

PB19B2503 --- --- --- 120.4

Table 3: Raw Material Transfer Data (Source: Daily Manual Register)

Analysis:

As clearly visible from the table, number of bales transferred per litre of diesel has been increase to 120.4 bales from 103.6 bales i.e. almost 17 more bales per litre can be transferred.

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Saving:

Two types of saving were observed:

1. Diesel Saving:

Although with the bigger trolley, total diesel consumption per round also increased but specific fuel consumption i.e. diesel consumed per bale decreases which helps in decreasing the overall total diesel consumption.

1. No. Of bales increased per litre of diesel: 17 bales per litre 2. Total diesel saved per bale: 0.014 lt. 3. Total Diesel saved per year: 0.014 x 365 x 120 or 614 litre or Rs. 30660 per year. (Assuming Diesel @Rs.50 per litre and 120 bales transferred to Unit III as per Mr. Shambu, Waste stores)

2. Man-Hr saving

Again as was the case with diesel consumption, Total man-hr per round increases but man-hr required to transfer per bale decrease which leads to man-hr saving as calculated below:

Avg. round required:

Current: 270/18 or 15 round Improved: 289/30 or 10 round

Avg. manpower required per round: (Man-hour @ Rs25 per hr.)

30 bales 18 Bales

Loading time per Bale (in min.) 0.47 14.00 8.40

Transit time (in min.) 14.00 16.00 16.00

Unloading Time (in min.) 0.27 7.00 4.80

Transit time (in min.) 13.00 13.00 13.00

50.00 42.20

Time Required per bale 1.67 2.34

Yearly time required hrs. 1216.67 1711.44

Table 4: Time-Motion Study for Bales Transfer

Yearly Man-hr. Saved: 495 hrs.

Total saving: Rs.18500 (In tangible terms)

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Other Benefits:

1. Greater level of motivation as well as satisfaction level.

2. Extra man-hr. can be utilized for other purposes

Other Recommendations:

1. Roads leading to godowns should be properly maintained to avoid any damage to the

transportation system.

2. Godowns conditions must be improved as lot of wastage happens due to increase in the

dust levels, change in moisture content level etc.

3. Shelf stacking system can be used to avoid the load of top bales on the bales at the

bottom.

4. All the bales should be covered properly to avoid the contamination due to rain, dust

etc.

5. Better mode of transportation should be implemented.

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8. Objective 2 AHT Logistic: Finish Goods Transfer from AY, Sanghera to Abhishek Home Textile (AHT), Dhaula.

AHT’s Share in the total dispatch AHT comprised of major share in the dispatch of finish goods as shown in the figure.

Figure 13: Segment Wise Dispatch Distribution (Source: SAP, Jan’10- May’ 10)

AHT constitute approximately 37% of the total dispatch happened in the last 5 months.

Scheduling Contract Yarn has been dispatched from all four units, in Sanghera, to AHT Dhaula against the scheduling contract. Scheduling contract is agreement to supply a particular amount of quantity of yarn during the particular time period. Dispatch plan either weekly or daily been given to marketing by the purchase department of AHT, Dhaula. PO has been raised against that dispatch plan and budget is being linked to that PO and finally physical transfer of finish goods happen.

36.88

41.04

22.09

Category Wise Distribution

AHT

Domestic

Export

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Mode of transfer Physical finish goods have been transferred with the help of closed trolley and closed body trucks. Finish goods has been packed in pallet and stretched film packing with the following specification:

1. Pallet packing with 240 cones and 12 layers of cones. 2. Generally one pallet weigh around 604.8 kg (Net Weight) and 648 kg (Gross weight) 3. However, it varies for open end and double yarn.

One trolley as well as truck generally has carrying capacity of 6-6.5 ton and carries 10 pallets per round.

Cost Incurred Cost incurred per round is as follows:

1. Closed trolley: Rs.750 per round. 2. Closed Body Truck: Rs.1100 per round.

(Source: Annual Contract, ABIL with transporters)

Detailed Dispatch flow Chart

Figure 14: Dispatch Flow Chart

Vehicle

Call

35 | P a g e

SWOT- AHT

Strength

1. Group companies which lead to better negotiation level for improvements. 2. Smaller lead time. 3. Lower packing and transportation cost. 4. Almost constant level of dispatch thereby helps in smooth planning. 5. Easy availability of vehicles even possibility of JIT.

Weakness

1. Non availability of computer systems in FG stores leads to time consumed in checking stocks somewhere and also non-availability of data in soft format for analysis.

2. High Waiting time at AY as well as AHT gate. 3. Unclear roles and responsibilities definition at AY, Sanghera. 4. Pallet packing crashes during the transportation. 5. Unsafe Unloading practices at AHT, Dhaula. 6. Infrastructure problem at AHT Dhaula like availability of hand trolley for unloading.

Unloading rap etc. 7. Wrong entry of reporting time which leads to wrong data available for analysis.

Opportunities

1. With increase in the business at AHT, demand for yarn will be increasing in the coming

2. years.

3. New trolleys can be added to the kitty thereby decreasing the transportation cost.

4. Negotiation can be done at better level which can lead to increased overall group’s profit.

5. Decreasing the turnaround time can increase the no. of rounds per trolley per day thereby reducing the transportation cost.

Threats

1. Transporter may not be interested in adding more trolleys due to high initial investment.

2. Negotiation on various issues, if not done properly can lead to bitter relationship within the group company which should be avoided as long as possible.

3. Involvement of both sides needed to resolve the issues.

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Data Analysis Following data was gathered from the SAP and analysis was done.

Vehicle Type

Total Net Weight (in Kg)

Total Round

FG Transfer per round (tonn)

FG Transfer per day (tonn)

% of total

Other 1315480.00 203.00 6.48 10.12 22.94

T1 926480.00 148.00 6.26 7.13 16.16

T2 905510.00 144.00 6.29 6.97 15.79

T3 878490.00 139.00 6.32 6.76 15.32

T4 837330.00 136.00 6.16 6.44 14.60

T5 870900.00 141.00 6.18 6.70 15.19

Grand Total

5734190.00 911.00 6.29 44.11 100.00

Table 5: Dispatch Data to AHT, Dhaula. (Source: SAP, Jan’10-May’10)

T1, T2, T3, T4 & T5 represent the trolleys whereas others represent the all other vehicle except trolleys

Figure 15: Graphical Representation of Table 5

0.002.004.006.008.00

10.0012.0014.0016.0018.0020.0022.0024.00

Other T1 T2 T3 T4 T5

FG Transfer per round FG transfer as % of total FG transfer per day

37 | P a g e

Interpretation:

1. Following conclusions can be drawn from the above data: 2. Dispatch per round is almost constant for all the vehicles i.e. 6-6.5 ton per round. 3. Daily dispatch is around 45 ton, which is close to the actually observation. 4. Number of rounds by trolleys per day is around 5-6 per day. 5. Almost two more rounds of trolley are required to save around Rs.700 per day.

Future Strategies With the company’s vision of 15000 cr. By 2015 with 15% PAT, Total turnover of the AHT will also be increases thereby increasing the requirement of yarn over the years. Thus finding the cost effective solutions has become the need of the hour.

Thus in long term approach, this small changes can make a huge difference to the efficiency of supply chain thereby leading to company’s high overall.

Recommendations: Add one more layer of cones to the existing pallet.

Adding 1 more trolleys to the kitty.

Getting bigger truck at lower cost.

Decreasing Turn Around Time (TAT) at AY, Sanghera as well as at AHT, Dhaula.

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Evaluations Of each recommendation

Option 1

Getting bigger truck at lower cost.

Negotiation has been done with some transporter to supply bigger truck with double capacity as that of smaller truck but at higher overall cost of Rs.1800 per round.

Although total cost per round will be more but cost per kg of yarn will be much less.

Figure 16: Layout of closed truck considered for negotiation. Size: 32’ x 8’ x 8.5’

Benefit:

1. Material will be sent with much safety as compared to current scenario. 2. Cost saving of around Rs.400 per day or Rs.146000 per year is possible.

Constraints:

Negotiation has to be done with truck operator union to either provide trucks at Rs.1800 or to go out of contract to hire truck from other transporters.

Option 2

Adding one more layer of cone:

Additional layer of cone can be added at the top of the pallet which means 13 layers instead of 12 layers thereby increasing the total number of cones to 260 cones from 240 cones per pallet.

Benefits:

1. It can increase the FG transportation by 5/6th pallet per round which means around 5 more pallets per day (Assuming 6 rounds per day)

2. It will save the packing cost for every 13th pallet. 3. Transportation cost saving will be Rs.175 per day or Rs.63875 per year. 4. Packing cost saving will be around Rs300 per 13 pallets or Rs.54228 per year.

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Constraints:

1. Negotiation has to be done with AHT, Dhaula as they were very reluctant to adding any additional layer.

2. Packing machines’ capacity to pack at that height has to be confirmed. 3. This addition is possible in case of cones only as cheese doesn’t properly got locked in

the other cheese which is not the case in cone winding.

Option 3

Adding one more trolley

One more trolley can be added to the kitty thereby transporting total dispatch to AHT, Dhaula thru’ trolley only.

Benefits

Cost Saving is the main benefit in this case as calculated below:

Total Initial investment: Rs.150000 (For new trolley)

Annual maintenance charges: Rs.10000

Assuming trolley life: 10 years

NPV (Discounted @10%): Rs.577373

Year 0 1 2 3 4 5 6 7 8 9 10

Inflow 0 127750 127750 127750 127750 127750 127750 127750 127750 127750 127750

Outflow 150000 10000 10000 10000 10000 10000 10000 10000 10000 10000

Net Flow -150000 117750 117750 117750 117750 117750 117750 117750 117750 117750 127750

Table 6: NPV Calculation for New Trolley

Constraints:

Due to high initial investment and longer payback period, transporter is not ready to invest in trolleys.

40 | P a g e

Option 4

Decreasing the Turn Around Time (TAT)

1. Other option is to increase the number of rounds per trolley 2. This can be achieved by decreasing the total turnaround time of each round.

Decreasing TAT at AY, Sanghera

TAT consists of following times:

Time between:-

1. Check-in and 1st weigh: - 00:15:10 hr.

2. 1st and 2nd weigh. : - 01:05:27 hr.

3. 2nd weigh and billing. : - 00:27:54 hr.

4. Billing and check-out. : - 00:30:38 hr.

(Data Source: SAP, Jan’10-May’10)

Scope of Improvements

Scope of decreasing time is between:

1. 2nd weighment and Billing. 2. Billing and check-out.

Reasons for delay

Main reason observed for the time lag between above mentioned times are:

1. Unavailability of Test Report: Test report is generally sent after asking for the same which delay the vehicle at the gate.

2. Distinguished Roles and Responsibility definition: Administration has all the roles after the billing whereas SCM is accountable for the delay happened after the billing.

3. Unavailability of authorised signatory: Authorised signatory is not available and without the signatures vehicle can’t move out of company’s premises.

41 | P a g e

Recommendations:

1. Dispatch plan has to be sent to the concerned deptt. in advance. 2. All test reports of the material has to ready before the loading completes. 3. Check can be implemented at packing stage only. Material should be shifted to FG

Godown only after the availability of test report. 4. TAT Demurrage should be responsibility of Administration department after billing. 5. A person should be always available at gate for signing the invoices as authorized

signatory.

Decreasing TAT at AHT, Dhaula.

TAT can be reduced at AHT, Dhaula by working on the following:-

1. Waiting time at main gate. 2. Waiting time at unloading ramp. 3. Condition of unloading ramp.

42 | P a g e

Study 1

Waiting time at main gate, AHT Dhaula

Observations:

Reporting time was not properly entered into the system which leads to wrong analysis of the waiting time at Gate. Generally, reporting time was being put when all the documents got cleared and Vehicle can move inside. In practise, it should be the time at which vehicle reports at the gate.

Reasons for the delay

1. PO not Raised: PO for that particular order has not been raised which in practise, they

raise after seeing the billing due to the variability in the weight of yarn. 2. Wrong PO raised: PO raised but with wrong quantity which means PO needs to be

updated but it usually took long time. 3. Budget not Linked: This is the main area of concern. Budget, most of the time, remained

pending for the approval which takes time and caused the delay at the main gate.

Recommendation

1. PO has to be raised as soon as the duplicate copy of the invoice generates at the AHT,

Dhaula counter. After the billing, vehicle took around 45-50 min. to reach AHT’s main gate. This provides the enough time for doing all the PO realated activities.

2. Budget has to be approved before placing the order and if approved, it has to be kept separately and should not be consumed for any other purchase

3. Still if Consumed, then budget has to approved as the first work in the morning.

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Study 2

Waiting Time at Unloading ramp.

Unloading is also one of the main time consuming activity at AHT, Dhaula. Thus it need to studied carefully, observed and then recommendations should be made.

Reasons for Delay at Unloading ramp:

1. Waiting problem at gate got multiplied when all the trolleys got clearance at the same time and proceed for the unloading.

2. Last trolley has to wait for 3 hr, considering 30min unloading time, as all trolleys has to be unloaded.

3. Hand Trolley, used to unload pallets, are usually being borrowed from other department which cause the delay in the unloading process

4. Already vehicles are standing at the unloading ramp.

Recommendations:

1. Priority should be given to the trolleys from AY, Sanghera.

2. All the hand trolleys should be in working conditions, which is not the scenario as per the sources.

3. Solving gate’s problem can solve this problem automatically.

44 | P a g e

Study 3

Condition of Unloading ramp

Infrastructure is very important in the smooth functioning of any process. Same way, loading ramp should be in good condition to unload the pallets easily and safely.

Conditions at AHT-2:

Figure 17: Unloading Ramp Condition at AHT 2

Problems at AHT-2 Unloading ramp

1. Base of the trolley is almost a feet above the base of loading ramp. A steel plate, with wooden baton under its bottom, has been used to unload the pallets.

2. This practice makes it very unsafe for the unloading manpower. 3. This is the main hindrance to the addition of one more layer of cone at the top of the

pallet.

Recommendation

1. Reporting time should be entered correctly so that correct data should be available for the analysis.

2. Reason for the delay should be entered into the SAP in the remark column to reach the root cause.

3. Hydraulic unloading ramp should be installed to make the unloading process more smooth, easy and safe.

45 | P a g e

9. Objective 3

Domestic Logistic other than AHT: Dispatch to domestic customers other than AHT, Dhaula.

Figure 18: Category Wise Dispatch Distribution

As shown in the above figure, domestic dispatch constitutes the highest share amongst the all other. Around 41% of the total dispatch has been done to domestic customers, other than AHT, Dhaula.

Major Transporter

Main transporters used are:

1. Truck Operator Union, Barnala 2. J.S. Transport 3. BLR Transport 4. GOEL Transport 5. TATA 407 owner welfare society.

All the transporters signed a legal contract with ABIL for the services, they are supposed to provide. The legal contract contains the freight to be charged for different destinations, Lead time for each destinations, lead time for providing the vehicle, penalty to be charged under different circumstances etc.

36.88

41.04

22.09

Category Wise Distribution

AHT

Domestic

Export

46 | P a g e

SWOT- Domestic Dispatch

Strength:

1. Well streamlined process. 2. Contract with various Transports. 3. Well structured logistics and distribution team having excellent knowledge and

management skills. 4. Finish goods storage facilities are well managed. 5. Excellent coordination within the loading team at various units to provide timely help

like manpower requirement etc.

Weakness:

1. Contracts lead to monopoly of some transports. 2. Lack of coordination between marketing and production thereby leads to unavailability

of FG for loading or availability in wrong packing. 3. Dissatisfaction amongst the loading manpower. 4. Difference of roles and responsibilities. 5. High time lag between 2nd weighment and gate out.

Opportunities

1. Other transporter’s share should be increases to decrease the exploitation during the emergency timing.

2. Roles and responsibilities should be logically defined to make the working person responsible for the things happened.

3. With increase in the company’s turnover, more options will be needed to cater this segment which insists for having relation with different transporters.

4. TAT can be reduced which results in improved efficiency of the whole system.

Threats

1. Any issue with TOU can lead to problem in availability of vehicle for certain places. 2. Leading dissatisfaction can affect the whole process which is due to small-small issues

like variable pay etc.

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Region Wise Dispatch

Figure 19: Region Wise Dispatch

Major chunk of the dispatch went to north and west region. These constitute around 99.5% of the total dispatch.

Destination Wise Dispatch

Figure 20: Destination Wise Dispatch Distribution

As shown in the chart, major dispatch receiving destinations are:

Ahmedabad, Delhi, Faridabad, Fatehpur, Ludhiana, Panipat, Yavatmal

1.23

66.89

31.87

Region wise distribution

East

North

West

19.22

0.30

1.38

1.23

2.97

4.516.12

6.35

1.072.480.432.30

37.82

1.21

0.110.38

0.180.11

3.72

0.64

0.11 0.312.30 4.77

Destination Wise DistributionAHMEDABADAMRITSARANJARBANGAONBHILWARADELHIFARIDABADFATEHPURGHAZIABADGURGAONICHALKRANJILALRULUDHIANAMACHIWARAMUMBAIMURADNAGARNAGPURNEEMRANAPANIPATSAHARANPUR

48 | P a g e

Destination Wise transporter

Figure 21: Destination Wise Transporter Used

1. As clear from the chart, Truck Operator Union has monopoly for Ahmedabad logistics. 2. This can be a problem in the future so alternate source of transport has to be developed for

the same.

Transporter Wise Distribution

Figure 22: Transporter Wise Distribution

Truck Operator Union and J.S. Tranport have the around 91% share (combined) of the complete dispatch.

Share of GOEL and BLR transport has to be increased to avoid the exploitation of company, in case of any emergency.

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

AH

MED

AB

AD

AM

RIT

SAR

AN

JAR

BA

NG

AO

N

BH

ILW

AR

A

DEL

HI

FAR

IDA

BA

D

FATE

HP

UR

GH

AZI

AB

AD

GU

RG

AO

N

ICH

ALK

RA

NJI

LALR

U

LUD

HIA

NA

MA

CH

IWA

RA

MU

MB

AI

MU

RA

DN

AG

AR

NA

GP

UR

NEE

MR

AN

A

PA

NIP

AT

SAH

AR

AN

PU

R

SILV

ASA

SIR

PU

R

TAR

AP

UR

YAV

ATM

AL

BLR

GOEL

JS

TATA 407

TOU

4.301.99

37.31

2.76

53.63

Transporter wise LogisticsBLR LOGISTIKS (I) LTD

GOEL ROADWAYS

J.S. TRANSPORT CO.

Tata 407 Owners Welfare Society (ReTRUCK OPERATOR UNION

Area Of

Concern

49 | P a g e

Time Analysis

Time analysis is being done on the data available for the domestic data. Following conclusion can be drawn from the chart shown below:

1. Time after the billing is very high and happened very frequently as median is almost equals to average time lag at that point. 2. Loading time is also very high but this includes loading at various units, putting tarp on it, waiting at weighing scale etc.

Mainly focus was on Non-Value added activities like waiting time after Billing, waiting time before 1st weigh etc.

Figure 23: Time Analysis for Domestic Dispatch (Source SAP, Jan’10-May’10)

Recommendations to Decrease the TAT

1. Marketing should coordinate with production before giving the dispatch plan. 2. All the delivery orders should be available with dispatch plan. 3. TAT Demurrage should be responsibility of Administration department after billing. 4. A person should be always available at gate for signing the invoices as authorized

signatory.

Area of Concern

00

:17

:01

02

:18

:52

00

:24

:41

00

:29

:30

02

:23

:58

06

:11

:11

04

:10

:31

06

:25

:51

00

:02

:35

00

:14

:19

00

:00

:26

00

:00

:20

00

:14

:52

02

:12

:56

00

:15

:42

00

:24

:35

00:00:00

01:12:00

02:24:00

03:36:00

04:48:00

06:00:00

07:12:00

Check in & 1st weigh diff.

1st and 2nd weigh diff.

2nd weigh and billing diff.

Billing and check out time diff.

Average

Maximum

Minimum

Median

50 | P a g e

Area 1

Unavailability of 8 ton LP Trucks: LP trucks are very difficult to hire due to below mentioned reasons.

Reason:

Due to obligation for Insurance that truck should not be older than 12 years. Most of the people buy bigger trolla due to high profit margin in it. This leads to dearth of LP Truck in the market.

Recommendation:

1. 20’ container should be used instead of LP truck for the following destinations:- Ambernath, Anjar, Daman, Ichalkranzi, Khapoli, Malegaon, Mumbai, Silvasa, Tarapur, and vapi. For these destinations, freight per kg is less as compared to LP truck.

2. Marketing should try to get order near to capacity of trolla or Club the orders in the same city or on the same route and state

Area 2

Monopoly of Truck Operator Union for Ahmadabad.

Reason

ABIL is in contract with Truck operator union that ABIL can request vehicle from other transporter, only if it is not available with union.

Recommendation:

Alternate sources like BLR or GOEL transport has to be used for the same route thereby eliminating the TOU’s monopoly and hence the future troubles.

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Area 3

Synchronization problem:

Lack of synchronization between marketing and production like either material not ready or material in wrong packing.

Reason:

1. DO raised against WIP. 2. DO raised for the right material but material available in wrong packing.

Recommendations:

1. Coordination amongst the marketing and production should be very impeccable regarding the availability of FG at a point of time.

2. DO should be raised against the finished goods only 3. DO should be raised with proper packing specification.

Area 4

Manpower:

Manpower allocation is the main difficulty due to absenteeism and attrition.

52 | P a g e

Marketing Order Priority Matrix

Study was carried out on the contract done with various Transporter and analysis done for the cost per kg for the various destinations and various quantities.

Following matrix came out as a result and it should be worked in coordination with SCM and Marketing. For eg. For Ahmedabad, order should be of quantity of trolla and that trolla should be hired from BLR only and so on.

Priority

I II III

Destination Vehicle Transport Vehicle Transport Vehicle Transport AHMEDABAD Trolla BLR LP Any Trolla,

20' Any

AMBERNATH 40' BLR, Goel 20' BLR, Goel LP Any AMRITSAR LP Any Trolla Any -- -- ANJAR 20', 40' BLR, Goel LP Any Trolla Any BANGALORE Trolla Any -- -- -- -- BANSWARA LP Any Trolla Any -- -- BATHINDA LP Any Trolla Any -- -- BHILWARA LP Any Trolla Any -- -- BURHANPUR (MAH.) LP Any Trolla Any -- --

CALCUTTA LP Any Trolla Any -- -- CHANDIGARH LP Any Trolla Any -- -- COIMBATORE Trolla Any -- -- -- -- DAMAN 40', 20' BLR LP Any Trolla BLR DELHI LP Any Trolla Any -- -- DERA BASSI LP Any Trolla Any -- -- DHAULA LP Any Trolla Any -- -- FARIDABAD LP Any Trolla Any -- -- FATEHPUR VIA KANPUR LP Any Trolla Any -- --

GAJROULA LP Any Trolla Any -- -- GHAZIABAD LP Any Trolla Any -- --

GILLPIND LP Any Trolla Any -- -- GURGAON LP Any Trolla Any -- -- HINGANGHAT (MAH.) LP Any Trolla Any -- -- HOSUR Trolla Any -- -- -- -- ICHALKRANJI 20', LP BLR, Any Trolla Any 40' Any INDORE LP Any Trolla Any -- -- JAIPUR LP Any Trolla Any -- -- JAMMU LP Any Trolla Any -- -- KANPUR LP Any Trolla Any -- -- KARAD LP Any Trolla Any -- --

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KHAPOLI 40', 20' BLR LP Any Trolla Any KHUSHKHERA LP Any Trolla Any -- -- KISHANGARH LP Any Trolla Any -- -- LALRU LP Any Trolla Any -- -- LUDHIANA LP Any Trolla Any -- -- MACHIWARA LP Any Trolla Any -- -- MALEGAON 20' BLR LP Any Trolla Any MANDIDEEP LP Any Trolla Any -- -- MUMBAI 40', 20' BLR LP Any Trolla Any MURADNAGAR Trolla Any LP Any -- -- MURADNAGAR VIA DELHI Trolla Any LP Any -- --

MYSORE LP Any Trolla Any -- -- NAGPUR LP Any Trolla Any -- -- NALAGARH LP Any Trolla Any -- --

NANGANGUD(KARNKT) Trolla Any -- -- -- -- NEEMRANA Trolla Any LP Any -- -- NOIDA Trolla Any LP Any -- -- PANIPAT Trolla Any LP Any -- -- SAHARANPUR(UP) Trolla Any LP Any -- -- SILVASA 40', 20' Goel, BLR LP Any Trolla Any TARAPUR 40', 20' Goel, BLR LP Any Trolla Any TIRPUR LP Any Trolla Any -- --

VAPI 40', 20' BLR LP Any Trolla Any YAVATMAL LP Any Trolla Any -- -- BUNGAON Trolla Any -- -- -- -- DURAHA Trolla Any LP Any -- -- KHEKRA Trolla Any LP Any -- -- KHEKRA (VIA DELHI) Trolla Any LP Any -- -- SHANEWAL Trolla Any LP Any -- -- SIRPUR Trolla Any -- -- -- -- HYDERABAD Trolla Any -- -- -- --

Figure 24: Marketing Order Priority Matrix.

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10.Implementation Plans

Implementation is the future process which should be based on the recommendations and should be planned in two parts:-

1. Short Term Solution Implementation. 2. Long Term Solution Implementation.

Short Term Implementation Plan:

Focus should be on implementing the solutions which can be done easily and also without major changes and high CAPEX. So main area of focus over here should be:

1. Implementation of recommendation for test reports. It includes putting check on availability of test report at packing stage only.

2. Defining roles and Responsibilities: Single department should have the role and responsibility after the billing, which is not the case as per current scenario.

3. Negotiation should be done with AHT, Dhaula to improve the PO as well as Budget approval process.

4. All the hand trolleys at AHT Unloading ramp should be serviced so that there should not be any time lag between the arrival and unloading of the finish goods.

5. Priority should be given to AY trolleys to improve the overall efficiency. 6. No dispatch order against the WIP should be accepted and check should be made at DO

raising step only.

Long Term Implementation Plan:

Long term solutions are difficult to implement due to approval process required for CAPEX approval and requires major changes. Initially all the recommendations have to be discussed at top level and then correspondingly solutions have to implement.

1. Pilot project should be implemented for the complete cotton transfer. 2. For AHT, Based on the future goals of the company at Sanghera Plant, decision has to be

taken regarding the hiring new trolley, bigger trucks etc. 3. At AHT, Unloading Ramp should be improved which will help in addition of the one

more layer of the cones at the top and also will increase the safety. 4. More hand trolleys should be available so that unloading time should be decreased and

hence decreasing the TAT at AHT, Dhaula. 5. For other Domestic customers, Share of other transporter should be increased by

negotiating them for the complete range.

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6. Marketing should try to implement the Marketing Order Priority matrix and SCM should request vehicle from the transporter as mentioned in the Table (Marketing Order Priority Table) to decrease the transportation cost.

7. Last but not the least, manpower’s satisfaction level should be increased by making the all processes clear to them regarding the wages, variable pay etc. and also paying them at proper time and with proper quantity.

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11. References

Journal/Magazines

Kotler, P., Keller, K.L., Koshy, A. & Jha, M., 2009. Marketing Management. London: Pearson Education.

B Mahadevan, 2002, Operation Management: Pearson Education

Everette E. Adam Jr., Ronald J. Ebert, 2009. Production and Operations Management: PHI Learning Private Limited, New Delhi.

Import data & competitive Analysis

http://lcm.csa.iisc.ernet.in

http://www.cio.com

http://logistics.about.com

http://en.wikipedia.org

http://www.iitd.ac.in

http://rockfordconsulting.com

http://www.aquamcg.com