govind report

8/2/2019 Govind Report

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CHAPTER-1

1.1 IntroductionLogistics

Logistics can be defined in simple words as the process of providing the

right resources in right quantity at the right place at the right time for efficient and

effective performance of goal oriented activity. It is a part of the supply chain

process that plans, implements and controls the efficient, effective forward and

reverses flow and storage of goods, services and related information between the

point of origin and the point of consumption in order to meet customer

requirements. Logistics is not restricted within the boundaries of transporting, it

also involves simplifying the processes and in the process adding value and get ridof non-value ones. It can also be called as a channel of the supply chain which

adds the value of time and place utility.

Logistics services, information systems and resources form the three basic

components of logistics system and these are closely interconnected. Almost all

activities of logistics services are bi-directional. Information systems include

modelling and management of decision making, and more important issues are

tracking and tracing. It provides essential data and consultation in each step of the

interaction among logistics services and the target stations. Infrastructure comprises

human resources, financial resources, packaging materials, warehouses, transportation

and communications.

Logistics has become a challenging and an important activity because it serves

as an integrating or boundary spanning function. It links suppliers with customers and

it integrates functional entities across a company. With the ever-growing competition

in todays market place it becomes necessary for a firm to use its resources to focus on

strategic opportunities. This includes several internal factors like management style,

culture, human resources, facilities and several external factors like technology,

globalization and competition. This is where the concept of logistics plays a major role,

i.e. it helps to leverage certain advantages the firm has in the marketplace.


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1.2 Forms of Logistics Operations

a) Reverse Logistics

Reverse Logistics is also known as Product Recall. It may be defined as a

process of moving goods from their place of use, back to their place of manufacture for

re-processing, refilling, repair, and recycling or waste disposal.The concept of reverse

logistics has been applied in promoting customer service and resources recycling.

Concerning quality control, the defective components and finished products will be

returned to their producers through reverse logistics systems. Nowadays, reverse

logistics has been developed rapidly for increasing industries competitiveness,promoting customer service level, and recycling the reusable material. Meanwhile, the

demand of reverse logistics brings out a new market for the third-party logistics

industries.

The main reasons for reverse logistics can be as follows

1. Rigid quality standards- it is critical in case of contaminated products, which

can cause environmental hazard.

2. Rigid laws prohibiting unscientific disposal of items

3. Rigid laws making recycling mandatory

4. Transit damagee.g. leaking containers containing hazardous material.

5. Product expiration.

6. Erroneous order processing by supplier

7. Exchange of new product for the old ones.

8. Return for repair or refill.

b) Inbound Logistics

All the activities related to the material movement till the dispatch of

the products out of the factory gate are called as inbound logistics activities.

The creation of value in the products depends upon availability of inputs on

time. Making available these inputs on time at minimum cost is the essence of

Inbound Logistics. Activities of a procurement performance cycle come under


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the scope of Inbound Logistics. They are transportation during procurement

operation, storage, handling and overall management of inventory of inputs.

Process of Inbound Logistics

c) Outbound Logistics

All the activities in which the value added goods are to be made

available in the market for customers are called as outbound logistics activities.

The overall success of the firm depends upon the supply of products to the

customer on time. Supplying the products of firm at marketplace at minimum

cost is the essence of Outbound Logistics. Activities of distribution

performance cycle come under the scope of Outbound Logistics. They are order

management, transportation, warehousing, packaging, handling etc.

SourcingOrder

placement

& expediting

Vendor(Supplier)

TransportationReceiving


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Process of Outbound Logistics

d) Third-Party Logistics (3PL)

In order to keep the costs of inbound and outbound logistics activities under

control, an outside agency appointed to perform these logistics functions is called

Third Party Logistics. It is a provider of outsourced logistics services which may

encompass anything that involves management of the way resources is moved to the

areas where they are required. It may be either a single service such as transportation

or warehouse storage or it can be a system-wide bundle of services capable of

managing the entire supply chain.

e) Forth-Party Logistics (4PL)

Forth Party Logistics is a complete outsourcing of manufacturing and logistics

functions including selection of Third Party service provider.

The concept of Fourth-Party Logistics (4PL) provider was first defined as an

integrator that assembles the resources, capabilities and technology of its own organization

and other organizations to design, build, and run comprehensive supply chain solutions.

Whereas a third party logistics (3PL) service provider targets a function, a 4PL targets

management of the entire process. Some have described a 4PL as a general contractor who

manages other 3PLs, truckers, forwarders, custom house agents, and others, essentially

taking responsibility of a complete process for the customer


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1.3 Modes of Transportation

a) Maritime Logistics

Maritime industry plays an important role in international freight. It can

provide a cheap and high carrying capacity conveyance for consumers. Low capital

cost and operating cost are the main characteristics of water transport. Heavy and bulk

goods of large quantities are transported by this mode. There are some disadvantages

associated with water transport which includes the non availability of harbour, need of

more time as compared to other modes of transport. It also requires a secondary mode

of transport to deliver to the ultimate customer

b) Air Freight Logistics

Air freight logistics is necessary for many industries and services to complete

their supply chain and functions. It provides the delivery with speed, lower risk of

damage, security, flexibility, accessibility and good frequency for regular destinations,

yet the disadvantage is high delivery fee. But the fixed costs are lower than rail or road

or pipeline. It also brings distant markets closer. The full potential of peak seasonal

demand can be exploited using this type of transport. It also makes the test marketing

process easy as the products can be shipped directly from the factory. High operating

cost and the need for secondary transport are the main disadvantages.

c) Land Logistics

Land logistics is a very important link in logistics activities. It extends the

delivery services for air and maritime transport from airports and seaports. The most

positive characteristic of land logistics is the high accessibility level in land areas. The

main transport modes of land logistics are railway transport, road freight transport and

pipeline transport.


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a) Railways

It is comparatively the fastest mode of transport and also the inexpensive one.

This is mainly suitable for transporting large quantities and provides door deliveries for

industries. But rail transport is an unreliable mode of transport especially for high

value goods and directly usable consumer goods. It lack flexibility of high-speed

delivery and require modal combination along with roadways. Rail network needs a

high capital investment due to right of way, switching yards, and terminals.

b) Roadways

It is a speedy mode of transport and delivers the goods directly to the consignee

very fast. High flexibility is the peculiarity of this mode of transport. It is the ultimate

mode as the consignment reaches the doorsteps of the customer. It has low capital cost

as compared to railways.

The operating cost is high to fuel requirement and higher labour requirement

and the occasional fuel shortages leads to delay in delivery. Also the strikes of carriers,

limited availability of trucks and restrictive permits for licenses are the main

disadvantages.

c) Pipeline

Pipeline mode of transportation facilitates the movement of liquids like oils;

crude petroleum products and water etc. In India more than 5,000 km of pipeline exists

for crude and petroleum products. Slurries, gases, vapours and solids in powder formare also transported in pipelines. These are a reliable mode of transport in which

pilferage and loss of product is not possible. The energy consumption and the space

occupation are minimal for the pipes. It can be operated all time except when it is shut

down for maintenance. It has higher fixed cost but lower operating cost and since the

pipelines are fixed the accessibility of product is limited on the route.


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1.4 Objectives of Logistics

Marketing logistics involve planning, delivering, and controlling the flow of

physical goods to a market as well as the material and information necessary formeeting the needs or demands of the customer and also these demands must be met at

a profit that increases revenue for the organization.

The General objectives of the marketing logistics can be summarized as:

As logistics cost forms a major portion of the total cost of organization,

installation of most appropriate logistics practices helps in the reduction of cost.

Capital reduction is also another major objective of marketing logistics. Customer

service level is always an output of proper logistics system. So as the logistics practices

become more and more ideal, the service provided to the customer goes on increasing.

Other than the general objectives there are certain specific objectives to ensure

the flow of supply of finished products to the customers. The entire process of

manufacturing of a company depends on the demand or the requirement of the

customer, so the right product should be manufactures and distributed to the customers.

The product given should be in right quantities because quantities less than the

required amount make the customers unsatisfied. The product should be transported to

the customers place where ever he is. The time between the order and the delivery

should also be minimum. The product should be charged an optimum price and also

these should be transported to the customers in the right condition without any damage.

However, there are some definite objectives to be achieved through a proper logistics

system. These can be described as follows:

1. Improving customer service:

As we know, the marketing concept assumes that the sure way to maximize

profits in the long run is through maximizing the customer satisfaction. As such, an

important objective of all marketing efforts, including the physical distribution

activities, is to improve the customer service.


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2. Rapid Response:

Rapid response is concerned with a firm's ability to satisfy customer service

requirements in a timely manner. Information technology has increased the capability

to postpone logistical operations to the latest possible time and then accomplish rapid

delivery of required inventory. The result is elimination of excessive inventories

traditionally stocked in anticipation of customer requirements.

3. Reduce total distribution costs:

Another most commonly stated objective is to minimize the cost of physical

distribution of the products. As explained earlier, the cost of physical distribution

consists of various elements such as transportation, warehousing and inventory

maintenance, and any reduction in the cost of one element may result in an increase in

the cost of the other elements. Thus, the objective of the firm should be to reduce the

total cost of distribution and not just the cost incurred on any one element.

4. Generating additional sales:

Another important objective of the physical distribution/logistics system in a

firm is to generate additional sales. A firm can attract additional customers by offeringbetter services at lowest prices.

5. Creating time and place utilities:

The logistical system also aims at creating time and place utilities to the

products. Unless the products are physically moved from the place of their origin to the

place where they are required for consumption, they do not serve any purpose to the

users. Similarly, the products have to be made available at the time they are needed for

consumption.

6. Price stabilization:

Logistics also aim at achieving stabilization in the prices of the products. It can

be achieved by regulating the flow of the products to the market through a judicious

use of available transport facilities and compatible warehouse operations.


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7. Quality improvement:

The long-term objective of the logistical system is to seek continuous quality

improvement. Total quality management (TQM) has become a major commitment

throughout all facets of industry. Overall commitment to TQM is one of the major

forces contributing to the logistical renaissance.

8. Life-Cycle support:

A good logistical system helps to support the life cycle. Few items are sold

without some guarantee that the product will perform as advertised over a specified

period. In some situation, the normal value-added inventory flow toward customers

must be reversed. Product recall is a critical competency resulting from increasingly

rigid quality standards, product expiration dating and responsibility for hazardous

consequences.

9. Movement consolidation:

As the logistical system aims at cost reduction through integration,

consolidation, one of the most significant logistical costs is transportation.Transportation cost is directly related to the type of product, size of shipment, and

distance. Many Logistical systems that feature premium service depend on high-speed,

small-shipment transportation.


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1.5 Logistics System Elements

The elements of the logistics system can be as follows:

1. Order processing

2. Warehousing

3. Inventory control

4. Transportation

5. Information monitoring

6. Facilities

1. Order processing:

The starting point of physical distribution activities is the processing of

customers orders. In order to provide quicker customer service, the orders received

from customers should be processed within the least possible time. Order processing

includes receiving the order, recording the order, filling the order, and assembling all

such orders for transportation, etc. the company and the customers benefit when these

steps are carried out quickly and accurately. The error committed at this stage at times

can prove to be very costly. For example, if a wrong product or the same product with

different specifications is supplied to the customer, it may lead to cancellation of the

original order (apart from loss in the credibility of the firm). Similarly, if the order is

not executed within a reasonable time, it may lead to serious consequences. High speed

data processing techniques are now available which allow for rapid processing of theorders.

2. Warehousing:

Warehousing refers to the storing and assorting products in order to create time

utility. The basic purpose of the warehousing activity is to arrange placement of goods,

provide storage facility to store them, consolidate them with other similar products,

divide them into smaller quantities and build up assortment of products. Generally,

larger the number of warehouses a firm has the lesser would be the time taken in

serving customers at different locations, but greater would be the cost of warehousing.


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Thus, the firm has to strike a balance between the cost of warehousing and the level of

customer service.

4. Inventory Control and Management:

Linked to warehousing decisions are the inventory decisions which hold the

key to success of physical distribution especially where the inventory costs may be as

high 15 as 30-40 per cent (e.g., steel and automobiles). No wonder, therefore, that the

new concept of Just-in-Time-Inventory decision is increasingly becoming popular with

a number of companies.

The decision regarding level of inventory involves estimate of demand for the

product. A correct estimate of the demand helps to hold proper inventory level and

control the inventory costs. This is not only helps the firm in terms of the cost of

inventory and supply to customers in time but also to maintain production at a

consistent level. The major factors determining the inventory levels are: The firms

policy regarding the customer service level, Degree of accuracy of the sales forecasts,

Responsiveness of the distribution system i.e., ability of the system to transmit

inventory needs to the factory and get the products in the market. The cost inventory

consists of holding cost (such as cost of warehousing, tied up capital and obsolescence)

and replenishment cost (including the manufacturing cost).

4. Transportation:

Transportation seeks to move goods from points of production and sale to

points of consumption in the quantities required at times needed and at a reasonable

cost. The transportation system adds time and place utilities to the goods handled and

thus, increase their economic value. To achieve these goals, transportation facilities

must be adequate, regular, dependable and equitable in terms of costs and benefits of

the facilities and service provided.

5. Information monitoring:

The physical distribution managers continuously need up-to-date information

about inventory, transportation and warehousing. For example, in respect on inventory,

information about present stock position at each location, future commitment and

replenishment capabilities are constantly required. Similarly, before choosing a 16


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carrier, information about the availability of various modes of transport, their costs,

services and suitability for a particular product is needed. About warehousing,

information with respect to space utilization, work schedules, unit load performance,

etc., is required.

In order to receive all the information stated above, an efficient management

information system would be of immense use in controlling costs, improving services

and determining the overall effectiveness of distribution. Of course, it is difficult to

correctly assess the cost of physical distribution operations. But if correct information

is available it can be analyzed systematically and a great deal of saving can be ensured.

6. Facilities:

The Facilities logistics element is composed of a variety of planning activities,

all of which are directed toward ensuring that all required permanent or semi

permanent operating and support facilities (for instance, training, field and depot

maintenance, storage, operational, and testing) are available concurrently with system

fielding. Planning must be comprehensive and include the need for new construction as

well as modifications to existing facilities. Facility construction can take from 5 to 7

years from concept formulation to user occupancy. It also includes studies to define

and establish impacts on life cycle cost, funding requirements, facility locations and

improvements, space requirements, environmental impacts, duration or frequency of

use, safety and health standards requirements, and security restrictions. Also included

are any utility requirements, for both fixed and mobile facilities, with emphasis on

limiting requirements of scarce or unique resources.


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1.6 FUTURE PROSPECTS OF LOGISTICS

Facing the worldwide competition, the improvement of logistics system should

be advanced by both private companies and government. It has been found that three

revolutions in business that have substantial impacts on the purchasing and supply

strategies of the manufacturing sectors. These three revolutions are: (1) the

globalisation of trade; (2) the coming of the information era; (3) more demanding

consumers and continuously changing consumer preferences. The main characteristics

of future logistics development are:

Government role:To keep competitiveness of industries, the government hasto lead the way to assist the logistics industries. However it involves largeinvestments and some problems relating laws and national policies. Without

the lead and support of government, achieving the plan is difficult.

Growth of international goods transport: The up-growth of internationalfreight transport is contributed by several factors. Firstly, the blossoming of E-

commerce pushes ahead the international business activities. Secondly, the

change of production strategy needs international cooperation, e.g. importing

the semi-finished products from countries with cheaper human resources to

those with higher technology to assemble the final goods. Thirdly, the pressure

of globalised market, such as World Trade Organization (WTO), pushes local

industries to promote themselves to reach an international standard and face

the worldwide competition.

Improvement of services: Providing a good customer service becomes anecessary requirement of business operation with the intense competition of

global market. The quality of services is the main factor to affect consuming

behaviour among the enterprises with high similarity. The service systems

involve several developed techniques now, such as Efficient Consumer

Response (ECR) and Quick Response (QR). In the near future, more new

techniques would be applied in providing better services for customers.


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Revolution of logistics operation: IT techniques and its products bringefficiency and fluency to the logistics systems. Radio Frequency ID (RFID) is

one of these techniques. The main difference between the bar-code system and

RFID is that RFID does not need the action of scanning the barcode on goods.

RFID could save manual operation time dramatically. RFID systems could

sense the amount of goods input in the tags automatically and immediately

when the costumers push their trolley through the exit.

Shorter product life cycle:With the current trend, the merchandise design ischanging day by day, and therefore, the product life cycle is shorter and

shorter, especially in computer science. To confront the impacts, logistics

system must improve its efficiency and reliability of goods delivery. Otherwise

an inappropriate logistics system would hinder the competitiveness of new

products and the business profits.

Improvement of logistics facilities: The advancement and development oflogistics are based on several techniques and complete theories. High-tech

facilities and systems, e.g. IT systems could bring more possibilities and

advantages to logistics. For example, the improvement of related facilities, e.g.

Forklift Trucks, is necessary for transport efficiency. In the future, factory

automation is the main target for the whole supply-chain procedures. It could

help to improve efficiency and also reduce the operation costs.

Channel cooperation between companies:In order to save the logistics costs,a key concept is to maximize the usage of available transport capacity.Integrating the logistics demands between numerous departments helps

achieve this purpose. In practice, a conglomerate could develop its own

logistics service for the branches. For some medium size companies, they

could co-operate transport channels with others.


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Specialized logistics delivery:One of the notable trends of logistics industriesis specialized delivery service. For instance, delivering fresh food from the

place of origin needs low-temperature containers. Computer chips, gases and

petroleum need particular conveyances to carry. These demands are rising since

the products became more and more delicate.

Logistics centres: The development of logistics centres is good for industrypromotion and the development of national economic system. Logistics centres

could successfully shorten the distance between production and marketing

vertically and also integrate various industries horizontally, and thus decrease

the costs. Governments can propose special areas for storehouses and logistics

to reduce land acquisition. The future logistics will co-operate e-commerce, the

Internet and the newly door-to-door service to create new business prospects.

Freight transport:The alliance between middle-small size delivery companiesis an important trend in the future. The strategy could help to expand service

areas and increase service quality, and meanwhile raise the loads of single trips

to reduce delivery costs.


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1.7 Transportation and Logistics

Transport system is the most important economic activity among the

components of business logistics systems. Around one third to two thirds of the

expenses of enterprises logistics costs are spent on transportation. According to the

investigation of National Council of Physical Distribution Management (NCPDM) in

1982, the cost of transportation, on average, accounted for 6.5% of market revenue and

44% of logistics costs.

Transport system makes goods and products movable and provides timely and

regional efficacy to promote value-added under the least cost principle. Transport

affects the results of logistics activities and, of course, it influences production and

sale. In the logistics system, transportation cost could be regarded as a restriction of the

objective market.

Transportation

29%

Management

11%

Ordering6%

Inventory

17%

Warehousing

17%

Packaging

12%

Movement

8%


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1.8 Logistics Cost

Logistics cost is a combination of a number of elements. To plan an efficient

logistics structure it is necessary to be aware of the interaction between the different

distribution costs and how they vary with respect to the different depot alternatives

(number, size, type and location). We can see how the individual distribution and logistics

cost elements can build up the total logistics cost.

Storage Cost: Storage cost will increase as the number of depots will increase

because there will be a need for more stock coverage, more storage space, more

management etc.

Delivery cost: This will concern with the secondary transportation cost i.e. cost

of delivery from the depot to the consumer. The greater the number of depots,

the lesser is the secondary mileage and the delivery cost.

Trunking Cost: This is the primary transport cost in the supply of products in

bulk to the depots from the central finished good warehouses or production

points. As the number of depots increases this cost will also increases.

Inventory Cost: The main elements of inventory holding costs are:

Capital Cost: The cost of physical stock. This is the financing charge,

which is the current cost of capital to a company.

Service Cost: That is stock management and insurance cost

Risk Cost: This is incurred as a result of pilferage, deterioration of

stock, damage and stock obsolescence.

System Cost: These costs represent a variety of information or

communication requirements ranging from the order processing to load

assembly lists.


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1.9 Distribution, Logistics & Supply Chain Management

The three concepts of distribution, logistics and SCM are interrelated.

Distribution is a component of logistics management, and logistics management is acomponent of supply chain management.

Distribution is outbound logistics, from the end of the production line to the

end user. It includes activities associated with the movement of material, usually

finished goods or service parts, from the manufacturer to the customer. These activities

encompass the functions of transportation, warehousing, inventory control, material

handling, order administration, site and location analysis, industrial packaging, data

processing, and the communications network necessary for effective management.

Distribution includes all activities related to physical distribution as well as the return

of goods to the manufacturer. In many cases, this movement is made through one or

more levels of field warehouses.

Logistics management activities typically include inbound and outbound

transportation management, fleet management, warehousing, materials handling, order

fulfilment, logistics network design, inventory management, supply and demand

planning, and management of third-party logistics services providers.

Supply chain management encompasses the planning and management of all

activities involved in sourcing and procurement, conversion, and all logistics

management activities. Importantly, it also includes coordination and collaboration

with channel partners, which can be suppliers, intermediaries, third-party service

providers, and customers. In essence, supply chain management integrates supply and

demand management within and across companies.

1.9.1 Distribution

It is one of the four aspects of marketing. A distributor is the middleman

between the manufacturer and retailer. After a product is manufactured it is typically

shipped (and usually sold) to a distributor. The distributor then sells the product to

retailers or customers. The other three parts of the marketing mix are product

management, pricing, and promotion. Traditionally, distribution has been seen as

dealing with logistics: how to get the product or service to the customer.


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1.9.2 The distribution channel

Frequently there may be a chain of intermediaries; each passing the product

down the chain to the next organization, before it finally reaches the consumer or end-

user. This process is known as the 'distribution chain' or the 'channel.' Each of the

elements in these chains will have their own specific needs, which the producer must

take into account, along with those of the all-important end-user.

1.9.3 Channels

Distribution channels may not be restricted to physical products alone. They

may be just as important for moving a service from producer to consumer in certain

sectors, since both direct and indirect channels may be used. Hotels, for example, may

sell their services (typically rooms) directly or through travel agents, tour operators,

airlines, tourist boards, centralized reservation systems, etc. There have also been some

innovations in the distribution of services. For example, there has been an increase in

franchising and in rental services - the latter offering anything from televisions through

tools. There has also been some evidence of service integration, with services linking

together, particularly in the travel and tourism sectors. For example, links now exist

between airlines, hotels and car rental services. In addition, there has been a significant

increase in retail outlets for the service sector. Outlets such as estate agencies and

building society offices are crowding out traditional grocers from major shopping

areas.

1.9.4 Channel members

Distribution channels can thus have a number of levels. Kotler defined the

simplest level that of direct contact with no intermediaries involved, as the 'zero-level'

channel.

The next level, the 'one-level' channel, features just one intermediary; in

consumer goods a retailer, for industrial goods a distributor, says. In small markets

(such as small countries) it is practical to reach the whole market using just one- and

zero-level channels. In large markets (such as larger countries) a second level, a

wholesaler for example, is now mainly used to extend distribution to the large number

of small, neighbourhood retailers.


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1.10 Statement of Problem

Study about the logistics system of Crompton Greaves Ltd fans division. Thefocus of the study is to understand the existing logistics practices undertaken by the

company and how much efficient is the current system in delivering the finished goods

to its customers.

1.11 Literature Review

Gimenez Cristina, Eva Ventura, 2009, Logistics-Production, Logistics-Marketing

and External Integration: their impact on Performance, a journal which explainsthe need for leading companies to implement Supply Chain Management (SCM) to

improve performance and gain a competitive advantage SCM involves integration, co-

ordination and collaboration across organisations and throughout the supply chain. It

means that SCM requires internal (intraorganisational) and external (inter

organisational) integration. This paper examines the Logistics-Production and

Logistics-Marketing interfaces and their relation with the external integration process.

The study also investigates the causal impact of these internal and external

relationships on the companys logistical service performance.

Yung Yu Tseng, Wen Long Yue, Michael A P Taylor, University of South Australia.

The role of Transportation in Logistics Chain The operation of transportation

determines the efficiency of moving products. The progress in techniques and

management principles improves the moving load, delivery speed, service quality,

operation costs, the usage of facilities and energy saving. Transportation takes a crucial

part in the manipulation of logistic. Reviewing the current condition, a strong system

needs a clear frame of logistics and a proper transport implements and techniques to

link the producing procedures. The objective of the paper is to define the role of

transportation in logistics for the reference of further improvement. The research was

undertaken to assist logistics managers, researchers and transportation planners to

define and comprehend the basic views of logistics and its various applications and the

relationships between logistics and transportation.


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Ronald H Ballou, 2006, Logistics, Supply Chain and Transport Management,.This journal is concerned with the vital subject of business logistics and supply chain

management, an area that can be essential to a firms competitive strategy and revenue

generation. This management area has been described by many names, including

physical distribution, materials management, transportation management, logistics, and

supply chain management. Relevant business activities may include one or more of the

following areas: transportation, inventory, order processing, purchasing, warehousing,

materials handling, packaging, customer service standards, and production. The journal

aims to present ideas, principles and techniques that are fundamental to good business

logistics practice. It concentrates on important activities of management such as

planning, organizing, and controlling, and also on a triangle of interrelated

transportation, inventory, and location strategies, which are at the heart of good

logistics planning and decision making.


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1.12 Significance of the study

The project is significant as it analyses the current system of logistics carried

out by the company to fulfil the supply requirements of various regions of the country

and tries to find the reasons for reduced efficiency in the system. It further suggests

necessary improvements in the current techniques so that the efficiency can be

increased which will be beneficial to the company as well as its customers.

1.13 Scope of Study

The study was conducted at the Fans Division of Crompton Greaves Ltd,

Bethora Industrial Estate, Goa. It was done for a period of two months from October17

thto December 17

thof 2011.

1.15 Objectives of Study

Primary objective

To study the process of dispatches of finished goods from the

manufacturing plant and the distribution to the branches present all

over the country To identify any scope of improvement in the logistics and to suggest

necessary steps to increase the efficiency of the system.

Secondary objective

To study the logistics system in Goa marketing circle and to identify

the problems faced by the dealers of the company.


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1.16 Research Methodology

1.16.1 Nature of Research:

In this study the nature of research is descriptive. Descriptive study is a fact-

finding investigation with adequate interpretation. It is the simplest type of research.

The work tries to analyse the Stock Sale Requirements of the company and find the

stock keeping units with the largest demand in each regions of the company and the

service factor of each branches of the company. It also analyses the distribution

network of the company in Goa and the problem faced by the authorised dealers of

Goa.

There are two approaches to research namely quantitative approach and

qualitative approach. In the quantitative approach, the research is based on measurable

quantities. In the qualitative approach, the research is based on subjective assessment

of attitudes, opinions, and behaviours. Research in such situation is a function of

researchers insight and impressions. Such an approach to researches generates results

in non quantitative form. In this study, a quantitative research is done as qualitative

research is not suitable for the situation, nature and objective of the project.

The research design deals with the sources of data collection and total plan of

research. The sources of data collection are usually classified as primary sources and

secondary sources.

Primary Sources:

Survey method: The effectiveness of the distribution network was

analysed using a questionnaire which was given to the authorised

dealers of the company in the state of Goa.

Discussion Method: Discussions were an important source of

information for the study. The problems existing and the requirements

needed were discussed with the Marketing manager and Head of the

logistics department.


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Telephonic Interview: The information regarding the problems faced

by the branches of the company was collected from the respective

branch managers through telephonic interviews.

Secondary Data Sources:

Stock Sales Requirement data for the past 3 years.

Data of the stocks of finished goods.

Internet Website.

Limitations The research was limited within the Bethora plant of the company.

The study of distribution network was restricted to the branches of thecompany.


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CHAPTER-2

2.1 Origin and Growth Of Fan Industry

The origin of the fan industry was found to be during the 1880s after the

invention of electric fans. As a result of industrialization domestic electric fans made

of brass blades were manufactured and sold in America. By the year 1920, the

industries were able to produce steel in different shapes and thus brass was replaced by

steel. In the 1950s, fans were manufactured in colours that were bright and eye

catching. In the 1960s there was a great decrease in the production of fans due to the

invention and growth of air conditioning. But again in 1998the industry boosted up

due to the invention of so called High volume low speed (HVLS) ceiling fans.Due to

the skyrocketing costs of energy, HVLS commercial ceiling fans are used today to

supplement HVAC systems in industrial and commercial settings, including

warehouses, manufacturing facilities and malls, as HVLS fans help lower heating and

cooling costs.

During the 2000s, fan aesthetics have become a concern to fan buyers. The fan

has become a part of everyday life in the Far East and the Asian countries. The basic

design of electric air fans have not changed significantly since their beginning in 1890

to the present.Electric fans have been largely replaced by air conditioners in offices,

but still they are a common household appliance.

2.2 Types Of Fans

Fans can be generally classified on the basis of the direction of flow of air as

follows:

1. Axial Fans- The axial fans also called the axial flow fans in which the blades

are designed in such a way that the air is forced to move parallel to the shaft of


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the fan about which the blades rotates. They includes table fans, ceiling fans,

various types of fans used in automobiles and various electronic products.

2. Centrifugal Fans (radial) -Centrifugal fans blow air at right angles to the intake

of the fan, and spin the air outwards to the outlet by using centrifugal force.

They are mainly used for industrial purposes and are noisier than that of axial

fans.

3. Cross flow Fans (tangential) - In this type of fans the main flow of air occurs

across the impellor present in the fan and thus passes through the blades twice.

Due to its shape, quite operation and high pressure coefficient these are widely

used in the HVAC industry.


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2.3 Indian Fan Industry

The tropical type of climate existing in the Indian subcontinent has made fans a

part of life of the Indian people. Even after the development of air conditioners the

average Indian people were more comfortable with fans. A typical Indian house

without a fan simply cannot be imagined. In todays changing environment, the fans

have become an inevitable appliance for a comfortable living other than a symbol of

luxury. Over the years it has changed from the hand held fans to the modern remote

controlled multicolour designer fans fitted with exotic lights.

The Indian fan Industry is very huge sector in which the unorganised

sector accounts for about 55% and the rest 45% is the organised sector. Low

technology manufacturing processes, quality norms, lower overheads and tax evasion

methods are the major reasons for the growth of this unorganised sector by ensuring

significant price differences. The local/unorganised brands are quite appealing to a

large section of the price-conscious Indian consumers, for their lower price points. The

Indian fan industry is a well established sector with a growing rate of 10% every year.

The industry produces around 30 million units of fan every year. The market size in

value terms of the fans category is quite large at around Rs.1500 Crores and it is the

largest selling item in the brown goods category. Some of the major features of the

Indian fan market are as follows:

Unorganised sector accounts for more than 50 %

The second hand market for fans is very big

Huge production of fake products and trademark violations

Technology included is very less

Very low product differentiation between the competing brands

No major international companies have entered the market after liberalisation

Rural market constitutes major part of the sales

The major segments present in the fan market of India are

a) Ceiling fans- They form the major share of market with around 65%


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b) Table, Pedestal and Wall fans (TPW)They have a share of 20%

c) Exhaust and fresh air fans- 10%

d) Industrial fans- 5%

India has large number of manufacturing plants located across the country andproducing world class fans. In fact the export of fans from India has doubled in the last

few years and is a testimony to the quality and development of the Indian fan Industry.

The distribution of fans in India is also well developed with over 1, 00,000 selling

points for fans, across the country covering almost all important towns and cities. The

fan industry has taken significant steps to ensure consumer satisfaction and

leading brands not only provide good quality but also back this up with good after sales

service

The organised sector is dominated by national brands that have built their brand

image over a period of time, through sustained advertising and a good dealer network.

The organised fan market of India is dominated by Crompton Greaves, Usha, Orient

and Khaitan. These established companies are facing a great competition from the local

players whose main tool is the price of their products while the organised players

defend their position in the market using their brand equity. During the 1990s the

whole market was in the hands of four players like Usha, Crompton Greaves and

Khaitan. But local and regional players hit the markets with low priced fans which

grabbed the market share from the established and organised players. All these players

have well established manufacturing plants all over India which helps these companies

to reap the benefits of the economies of scale.


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2.4 Company Profile

Crompton Greaves ltd is the largest private sector enterprise in India who are

the pioneers in management and application of electrical energy. Crompton Greaves

Ltd is an Avantha Group company which is one of India's leading business

conglomerates. CG was established in 1937 in India; and, since then the Company has

been a pioneer and has retained its leadership position in the management and

application of electrical energy. It is mainly engaged in the designing, manufacturing

and marketing of high technology electrical products and services related to power

generation, transmission and distribution. The company as a whole is divided into three

divisions or business groups:

1. Power systems- Transformers, Switch gears and Engineering products.

2. Industrial systems- Motors, Alternators and Rail Transportation.

3. Consumer products- Fans, Appliances, Pumps and Lightings

As a consequence of globalisation the company acquired the foreign players

like Pauwels, Ganz, Microsol, Sonomatra, MSE and PTS and thus at present CG has

manufacturing basesin Belgium, Canada, Hungary, Indonesia, Ireland, France, UK and

US, in addition to more than twenty manufacturing locations in India, employing more

than 8000 employees worldwide with diverse nationalities and cultures. The company

has 22 manufacturing facilities all over India and by the acquisition of various foreign

players the company is emerging into a global supplier for high quality electrical

equipments.


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2.5 Crompton Greaves Ltd- Fan Division

Crompton Greaves fan business truly speaking is the companys flagship business, in a sense that fan is the Top of the mind recall product which people

immediately associate with the name Crompton Greaves Ltd.

The experience and expertise gleaned over for more than half a century, today

the fan division is in the business of manufacturing and marketing a complete range of

fans and appliances. It is not only a brand leader in India but also has a significant

global presence in terms of marketing network and consumers, spanning 65 countries

and 5 continents which includes countries like USA, Italy, South Africa, Ghana, Fiji,

Singapore, Bahrain, UAE, Sri Lanka, UK, France, Oman, Sudan etc.

An undisputed leader in the fan business, its leadership itself is distinguished in

terms of:

The widest and deepest sales and service network in India.

An ever growing and wide range of products to meet every conceivable

requirement. An undisputed price leadership.

Its strong ability to conceive, design and develop the best in class.

Leveraging the above strengths, the division has launched a series of

product upgrades and is entering in new segments today- presently with

more than 150 models of fans.

The company is having three fan manufacturing plants in India. Two of the

units located at Bethora and Kundaim in the state of Goa, and one at Baddi in the state

of Himachal Pradesh.

Crompton Greaves Ltd was always able to defend its market position by their

creative developments. Some of the achievements of the company are as follows:


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In 1985, CGL was the first company to introduce an under light ceiling fan.

In 1985, CGL introduced the four blade deco fans.

In 1989, CGL became the first company to manufacture a million units under a

single roof in India.

In 1992, CGL introduced the mini pedestal fans.

First company to produce fans that suits all pockets in all varieties.

First company to introduce 12 inch wall fan in high speed.

The only fan manufacturer in India awarded with Super brand.

Today the Bethora fan division of Crompton Greaves Ltd works with lean

inventory rationalized manpower automated environment and above all clean factories

and is awarded with the prestigious Quality Management Certificate as per ISO

9001:200 standards

2.5.1 Recent Developments

Along with the traditional emphasis on quality, the new thrust is on achieving

eye-grabbing, contemporary, decorative concepts. This entails increased use of

composite materials. The net result is the fan that not only accentuates the unusual but

also makes a bold fashion statement. For the young and upwardly mobile, it is more

than a practical gadget. The usage of vibrant dual tone metallic colours and the deft,

sinewy cuts of its blade design have elevated the old pankah to the level of a

decoration for homes.

2.5.2 Customers

Crompton Greaves has a large customer base, consisting of Indian Railways,

Utility companies, Government and local bodies and large companies in public as well

as private sectors. Thus it honestly tries to address the customer needs from all

segments of the society from households to complex industrial sectors through its

comprehensive range of products and services. Crompton Greaves fans cater to many

diverse application group and consumers and it is the most preferred supplier of

Government of India.


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2.5.3 Company Markets

The company markets its products through four Regional Marketing

Headquarters in the Northern Region, Eastern Region, Western Region, and Southern

Region.

Each regional headquarters looks after the marketing and sales of the products of all

the business groups. Hence marketing and sales operates as a matrix structure through

an interface of both the division and the region. While the division is the profit centre,

the region is the cost centre. There are however a few businesses which manage their

marketing and sales operations directly from the divisions and are not dependent on the

regional marketing headquarters.

The four regions operate in the applicable states and are also supported by

branches which are as follows:

Northern Region: Delhi, Ghaziabad, Faridabad, Lucknow, Jaipur, Jalandhar.

Eastern Region: Kolkata, Guwahati, Patna, Ranchi, Cuttak.

Western Region: Bhivandi, Kanjur, Pune, Ahmedabad, Indore, Nagpur, Raipur, Goa.

Southern Region: Chennai, Madurai, Banglore, Secunderabad, Cochin.

2.5.4 International Markets

Having achieved leadership in most of the product categories it is involved in

International business to power its growth volumes.

Over the years, Crompton Greaves fans have been exported to over 60

countries worldwide including the developed countries such as USA, UK, European

Union, Australia and New Zealand. The company has received international

certifications for most of its product groups in an ongoing effort to enhance

acceptability to its products. The companys advantage of low production cost and high


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engineering quality makes its products an attractive choice and the company is

increasingly considered as an ideal source of wide range of products.

2.6 SWOT Analysis

Strength

Market leader with 25% of market share( top manufacturer of fans in India)

Pioneer in the introduction of fans.

Very good brand image in the market.

It is present in the list of 134 Super brands

It has a very huge dealers network

Very strong financial background

Strong logistics system with more than 20 branches and marketing offices all

over India

Weakness

Promotion is not done aggressively as compared to the competitors.

Retailers are less compared to its competitors.

Opportunities

Opening a new huge retail segments.

Tapping a large percentage of unorganised sector

Rural penetration

Threats

Competitors are very modern and lean in promotion and other activities.

Aggressive marketing is done by the competitors.

Threats from unorganised sector.

Growth of air condition industry.


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2.7 The current Distribution and Logistics system

The Crompton Greaves Ltd fans division in Bethora industrial estate of Goa is

the largest producer of ceiling fans with a production capacity of 9000 fans a day. The

company is having 21 branches which are situated in the four regions of the country.

These branches also have the sales offices of the company and all these forms the

distribution network of Crompton Greaves Ltd. Each region of the company is having

regional manager and the branches are controlled by engineers in charge and operating

persons who are responsible for finding the requirements of fans from the dealers and

distributors of that respective region. The entire requirement of fans from the dealers

and distributors of that region are collected and sent to the company.

The company then prioritise the requirements on various factors and produces

the products accordingly. The finished goods produced are transported to the

respective company branches through a well developed logistics system. The products

reaching the branches are stored in the ware houses available and are taken to the

distributors and dealers so that they reach the customers at last.


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2.7.1 Problem faced by the Logistics department

Chart 1: All India SSR and Dispatch, 2009-10

Chart 2: All India SSR and Dispatch, 20010-11


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It is evident from these graphs that there exist a huge gap between the

requirement of each branch and the finished goods dispatched to the respective

branches. The data showed that for the last two years, the dispatched amount were not

equal to the requirements. Even in the months of October, November and December

where the demand is less, it was not able to equalise the demand and the dispatched

amount.


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2.8 Product Profile

Crompton Greaves was an initiator of the Electric fan revolution that has swept

the Indian sub continent. The fan divisions 70 years of experience has transformed the

concept of fan from a need, to an object of grandeur.

The entire range of fans can be broadly classified into domestic and industrial

fans.

2.8.1 Domestic Fans

The various types of Domestic fans are

Ceiling fans- They include power and performance with safety and

durability and provide both decorative as well as economy models. The

various types of ceiling fans are

Sub economy fans

Standard fans

Decorative fans

Premium fans

Luxury Under light fans

Table, Pedestal and Wall mounting fans- Table fans are easily

portable and carry the air everywhere. Pedestal fans provide unique

mobility and independence in every nook and corner of the house. Wall

mounting fans are ideal substitutes where there is no provision for table

fans and pedestal fans.

Domestic Exhaust fans- These are present in both exhaust and fresh airmodes and are available in economy and premium types.

Star rated fans- These are the fans that are have been rated 5 stars

because of its low energy usage. These are energy efficient fans which

are Bureau of Energy Efficiency (BEE) star rated.


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2.8.2 Industrial and Other Fans

Industrial Fans- These are powerful and tested fans that suit the

industrial environment. These products deliver round the clock, in

highly demanding environment resulting in improved productivity &

lowering of temperature & pollutants.

Special Purpose Fans- These includes cabin fans and personal fans that

have been created to cater the niche market segment.

Cooler products


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CHAPTER-3

Analysis and Interpretation

The analysis has been conducted on the SSR for the years 2009-10, 2010-11,

and first two quarters of 2011-12. The analysis was mainly focused on finding out thestock keeping units in each region and branch of the company which are having the

lowest service factor. Also each region of the company and the branches with the

average service factor has also been identified and analysed.

3.1 Stock keeping units (SKU) with the lowest service factor

Table 1: Northern region SKU

SKU ( Decreasing Order of demand) Average Service factor (%)

AURA PRM 1200 PEL-WOR 60.6

AURA1200SSTDLX-WOR 28.2

D`AIRNEW1200IVY-WOR 32.3

AURAPRM1200CPR-WOR 31.8

AURAPRM1200PWT-WOR 43.2

AERO1200BRN-WOR 37.6

AURA1200NEWWHT-WOR 32.5

HBPLUS1200WHT-WOR 42.4

The northern region of the company is one of the lowest serviced regions. The

service factors for the SKUs in these regions are low as compared to other regions. It

has been found that the demand of the branches of Northern region varies for the

SKUs. Different models of the products are demanded by the branches at different

times. This continuous variation in demand is the reason for the low service factor

obtained for these SKUs.


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Table 2: Eastern Region SKU


HS1400BRN-WOR 59.7

AURAPRM1200PEL-WOR 35.7

AURAPRM1200OPG-WOR 38.2

HSDCPRM1200PEL-WOR 27.3

HSDCPRM1200AGD-WOR 29.9

ZPR1200OPW-WOR 35.9

These SKUs are having very low service factors in the Eastern Region and the

reason for this low service factor is due to the low demand for SKUs in these branches.These low demand SKUs are given less priority than the high demand SKUs and thus

the service factor is low.

Table 3: Western Region SKU


HSDCR1200PEL-WOR 37.6

AURAPRM1200PWT-WOR 38.4

OLGA1200WHT-WOR 46.1

AURA1200BRNDLX-WOR 57.8

AURA PRM 1200 PEL-WOR 78.5

HSDCPRM1200PWT-WOR48.3

In the western region the SKUs are given an average service factor. The

demand for these SKUs is more than that of Northern and Eastern regions, so the

service obtained is also more.


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Table 4: Southern Region SKU


HSDCPRM1200AGD-WOR 48.2

HS1400BRN-WOR 59.6

HSDCR1200PEL-WOR 50.3

HB 1200 WHT WOR 78.9

D`AIRNEW1200IVY-WOR 57.5

AURAPRM1200PEL-WOR 62.3

The southern region is the largest market of the plant and thus the demand

made by the branches of Southern region is very huge. The service factor provided is

also very high as compared to other regions. The main reason behind the high service

factor is due to the stability in demand for SKUs of the branches.


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3.2 Regions and the service factors

Table 5: Northern Region Service factor

NR

branches

Delhi Ghaziabad Faridabad Lucknow Jaipur Jalandhar

Average

service

factor (%)

59.6 45.2 50.8 47.6 64.2 48.5

Chart 3

Among the six branches of the Northern Region, Jaipur has the highest service

factor. The lowest service factor is with Ghaziabad, which gets the lowest serviceamong the entire branches of the company.

As a whole the branches of the northern region is obtained very low service as

they are mainly small branches and the demand varies continuously.


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Table 6: Eastern Region Service factors

ER

branches

Kolkata Guwahati Patna Ranchi Cuttack

Average

service

factor (%)

76.5 60.1 65.5 61.1 63.2

Chart 4

The eastern region branches are obtained a considerable higher service as

compared to the northern region. Even though these branches are the farthest from the

plant, the logistics department of the company give more importance to these branches

by giving priorities to these branches.

Kolkata obtains the highest service factor, while Guwahati gets the least service.


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Table 7: Western Region Service factor

WR

branches

Bhivandi Kanjur Pune Indore Ahmadabad Nagpur Raipur Goa

Average

service

factor (%)

57.3 68.3 78.6 70.1 73.8 75.1 62.3 99.6

Chart 5

The western region is having the largest number of branches which is very

close to the manufacturing plant. This region includes Goa which obtains the largest

service among all branches since the plant is situated there. Bhivandi is the branch with

the lowest service.


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Table 8: Southern Region Service factor

SR

Branches

Chennai Madurai Bangalore Secunderabad Cochin

Average service

factor (%)

78.7 76.2 72.7 79.5 80.6

Chart 6

Southern region is the largest market of the plant with 5 large branches. Allthese branches are obtaining a comparatively high serve factor as compare to the other

branches of the company.

The region includes Cochin with the highest service and Bangalore is obtained

the lowest service.


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Table showing the most sold fan in the shop

Name of the

manufacturingcompany

CG Bajaj Usha Hawells Orient

Opinions 8 2 0 1 1

Percentage 67 17 0 8 8

Chart showing the most sold fan in the shop

Interpretation

Among the dealers 67% of them were selling CG fans the most, 17% were selling

Bajaj fans and 8% of them were selling Hawells and another 8% sells Orient fans the

most.


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Table showing the average number of fans sold in a week

Average No of

CG fans sold0-2 2-5 5-8 8-10 More than

10

Opinions 0 2 5 4 1


Chart showing the average number of fans sold in a week

Interpretation

Among the dealers, 42% of them sell 5-8 CG fans a week, 33% of them sells 8-10 CG

fans a week, 17% of them sells 2-5 fans a week and 8% of them sells more than 10

fans a week.


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Table showing the frequency of sending the stock

Time of sending the

stockWeekly Twice a week Thrice a week

Opinion 2 7 3

Percentage 17 58 25

Interpretation

Among the dealers, 58% of them send their requirements to the company twice a week,

25% of them send the requirements thrice a week and 17% of them send the

requirement weekly.


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Table showing the time required to get the stock from the company

Time to get the

stock 1 week 10 days 15 days

More than 15

days

Opinion 7 3 2 0

Percentage 58 25 17 0

Chart showing the time required to get the stock from the company

Interpretation

Among the dealers, 58% of the get the stock within one week, 25% of them get the

stock within 10 days after the requirement is sent, 17% of them within 15days after the

requirement has sent.


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Table showing the fulfilment of requirements in a single load

Requirement

meeting in

single loadNever Rarely Sometimes Mostly Always

Opinion 0 5 3 2 2


Chart showing the fulfilment of requirements in a single load

Interpretation

Among the dealers, 41% of them able to meet the requirements rarely, 25% of them

meet the requirements sometimes, 17% of them mostly meet the requirements and

another 17% of them always meet the requirements in a single load.


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Table showing the number of loads required to meet the requirements completely

No of loads

required1-2 2-3 3-4 More than 4

Opinion 3 6 3 0


Chart showing the number of loads required to meet the requirements completely

Interpretation

Among the dealers, 50% of them meet the requirements in 2-3 loads, 25% of them

needs 3-4 loads to meet the requirements and the rest 25% of them needs 1-2 loads.


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Table showing the type of carrier used for transportation

Type of Carrier Cargo Part load FTL Container

Opinion 5 6 1 0


Chart showing the type of carrier used for transportation

Interpretation

Among the dealers, 50% of them get the stock in part load carriers, 42% of them get

the stock in cargo carriers and the rest 8% get the stock in containers.


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Table showing the problems due to unavailability

Problems due

tounavailability

Never Rarely Sometimes Mostly Always

Opinion 0 2 5 5 0


Chart showing the problems due to unavailability

Interpretation

Among the dealers, 42% of them mostly find problems in meeting the demands of the

customers, another 42% of them sometimes find the problem, and the remaining 16%

of them rarely find the problem in meeting the demands of the customers.


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Table showing the loosing of customers due to unavailability

Losing customers due to

unavailability

Yes No

Opinion 8 4

Percentage 67 33

Chart showing the loosing of customers due to unavailability

Interpretation

Among the dealers, 67% of them are losing the customers due to unavailability of

products in the first load itself and the rest 33% are not losing any customers.


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Table showing the presence of damage of products due to transportation

Presence of

damage

Very

frequently

Frequently Occasionally Never

Opinion 0 0 2 10


Chart showing the presence of damage of products due to transportation

Interpretation

Among the dealers, 83% of them never found any damage in the products due to

transportation and the rest 17% of them occasionally finds damage in the final good

due to transportation.


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Table showing the rate of current logistics system

Current

logistics &

distribution

system

Very poor Poor Fair Good Very

good

Opinion 0 6 5 1 0


Chart showing the rate of current logistics system

Interpretation

Among the dealers, 50% of them have the opinion that the current logistics system is

poor, 42% of them say the system is fair and the rest 8% are in the opinion that the

system is good.


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Table showing the need for improvement in the current system

Need for

improvement

Strongly

agree

Agree Moderate Disagree Strongly

disagree

Opinion 2 6 4 0 0


Chart showing the need for improvement in the current system

Interpretation

Among the dealers, 50% of them agree to the need for an improvement in the system,

33% of them moderately agree to a need for improvement and the rest 17% of them

strongly agree to the need for an improvement in the current logistics system.


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CHAPTER-4

Findings and Suggestions

4.1 Findings

The analysis of the data in the form of Stock sale requirement (SSR) of the last

three years results in the following findings:

The main reason behind the problem faced by the logistics department of the

firm is due to the huge variety of models produced by the company.

The continuous change in demand for type of SKU is the cause for the gap

between the requirement and the dispatched amount.

The low service factor for the SKUs in the northern and eastern regions is dueto the very small and continuous variation in demand for these SKUs.

The eastern branches are the farthest from the company and so priority is given

to meet these branch requirements.

The largest market of the company is the southern region having a huge and

constant demand, and thus the service provided is also high compared to other

regions.


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4.2 Suggestions

The major suggestions that can be given are as follows:

The SKUs that are having more demand but with lower service factor in each

region should be given more importance.

The current system of distribution can be replaced by a milk run model of

distribution, combining the small branches together and meeting their

requirements from a warehouse common to these branches.

The small branches of northern region having very low service factor should be

also given priority.

The distribution and production processes should be combined in such a way

that, the demand for the farthest branches should be produced first.

The demand pattern of the branches for the SKUs must be identified and

analysed so that the gap can be reduced to a great extend.


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Conclusion

From the study, the researcher was able to understand about the different

aspects of outbound logistics and the various activities involved in the logistics

department. The study also helped the researcher in understanding the various factors

which affects the smooth flow of finished goods through the distribution network.

Outbound logistics is one of the major parts of the manufacturing industry integrating

the demand of the customers and the production process. The service factor for SKUs

is one of the major challenges faced by the logistics department. By understanding the

demand pattern and prioritising the SKUs the service factor can be improved to a great

extend.


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Bibliography

http://www.avanthagroup.com

http://www.bestlogisticsguide.com

http://www.businessdictionary.com

Jr. Glaskowsky; Nicholas A, Business Logistics

Ballou; Ronald H, Business Logistics Management

F. Wood; Donald F, Contemporary Logistics
http://www.avanthagroup.com/http://www.avanthagroup.com/http://www.bestlogisticsguide.com/http://www.bestlogisticsguide.com/http://www.businessdictionary.com/http://www.businessdictionary.com/http://www.businessdictionary.com/http://www.bestlogisticsguide.com/http://www.avanthagroup.com/


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Appendix

Questionnaire for Fan Dealers of Crompton Greaves Ltd

Name of the Dealer: Date:

Address :

City :

State :

Telephone :

1) Which is the largest selling fan in your shop?

a) Bajaj b) CG c) Usha d) Hawells e) Orient

2) What is the average number of CG fans sold in a week?

a) 2-5 b) 5-8 c) 8-10 d) More than 10

3) How often is the requirement sent to the company?

a) Weekly b) Twice a week c) Thrice a week

4) How much time it takes to get the stock from the company?

a) 1 week b) 10 days c)15 days d) More than 15 days

5) Is the complete requirement met by the company in a single load

a) Never b) Rarely c) Sometimes d) Mostly e) Always

6) How many loads are needed to meet the requirements completely

a)

1-2 b) 2-3 c) 3-4 d) More than 4

7) How are the products transported to the shop from the company

a) Cargo b) Taurus c) FTL d) Container

8) Do you have any problem in meeting the demands of the customer

a) Never b) Rarely c) Sometimes d) Mostly e) Always

9) Are you losing customers due to unavailability of products?


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a) Yes b) No

10)Presence of any damage in the products due to transportation?

a) Very frequently b) Frequently c) Occasionally d) Never

11)How do you rate the logistics and distribution system of the company?

a) Very poor b) Poor c) Fair d) Good e) Very good

12)Opinion about improvement in the current logistics and distribution system

a) Strongly agree b) Agree c) Moderate d) Disagree e) Strongly

disagree

govind report

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