logistics xpress

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From the Editor’s Desk…

Dear Readers,

After the successful launch of Volume 2, Issue 4 of Logistics Xpress, we

present this volume packed with a lot of updated information to keep you

abreast of the current happenings in the Logistics & Supply Chain Sector. The beginning of this

year saw Indian GDP growing at around 8% and everybody was optimistic about the future. But

first, the Crisis in Middle East & now the Japanese tremors has shaken the whole world. On one

hand, the middle-east crisis calling for a change in the leadership is pointing towards a new

regime and on the other, the world is sure that Japan will rise again.

Japan has seen such an irremediable catastrophe but the way Japanese have handled the

present situation is surely commendable and we can certainly learn some traits from Japanese

such as calmness, sacrifice, dignity and self discipline. There was not a single visual of chest-

beating or wild grief after the disaster. Disciplined queues for water and groceries and the

sacrifice of fifty workers who stayed back to pump sea water in the N-reactors show the

attributes that make Japanese different from the rest of the world.

India is also one of the most vulnerable developing countries to suffer very often from

various natural disasters, namely drought, flood, cyclone, earth quake, landslide, forest fire, hail

storm, locust, volcanic eruption, etc, which strike causing a devastating impact on human life,

economy and environment. Though it is almost impossible to fully recuperate the damage caused

by the disasters, it is possible to mitigate the potential risks by developing early warning

strategies and designing proper post-rehabilitation and post-disaster reconstruction. Government

of India (GOI), in recognition of the importance of Disaster Management as a national priority,

enacted the Disaster Management Act (On 23 December 2005), which envisaged the creation of

the National Disaster Management Authority (NDMA), headed by the Prime Minister, and State

Disaster Management Authorities (SDMAs) headed by respective Chief Ministers, to spearhead

and implement a holistic and integrated approach to Disaster Management in India. This is high

time that we build a safer and disaster resilient India by developing a holistic, pro-active, multi-

disaster and technology-driven strategy for disaster management through collective efforts of all

Government Agencies and Non-Governmental Organizations. University of Petroleum and

Energy Studies has taken the right steps in this regard by opening a centre for Disaster

Management.

The impact of Japan’s recent earthquake and tsunami on global supply chains has been

dramatic with production across a whole range of sectors badly affected. But the way the

Japanese have displayed their aforementioned traits, we can be sure that they will bounce back.

Let us all join our hands to support Japan come out of this situation. This will be the true success

of Global Supply Chains.

About the Editor…

Dr. Neeraj Anand, born on 2nd

May 1968 in Bikaner, Rajasthan, a Ph.D. in

Management from Sardar Patel University, Vallabhvidya Nagar (Guj.) is a renowned

academician and an avid researcher. Presently, he is heading the department of Logistics &

Supply Chain Management, University of Petroleum & Energy Studies, Dehradun (UK). He

has around three years of industrial experience and nearly seventeen years of teaching

experience, developing MBA/ BBA participants in the area of Supply Chain Management,

Business Process Reengineering, Quantitative Techniques (QT), Marketing

Research/Research Methodology and Production (Purchase & Material) Management. He

has coordinated ESDP on “Courier and Cargo Unit” at UPES, Dehradun supported by IIE and

funded by MSME and conducted a MDP on “Applications of Supply Chain Management” in

Aug. 2009 at UPES, Dehradun. He is also the member of Core Committee for the MDP on

“Project Management” to be organized in May, 2011 at UPES, Dehradun. He is a Registered

Ph.D guide in management with University of Bikaner and Research guide for management

programme with IGNOU and KOU and ISO certified internal auditor for University of

Petroleum & Energy Studies, Dehradun (UK).

e-Logistics Xpress is published quarterly.

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Mukul Jain (Exec. Director, CONCOR)

Arun Sharma ( Div. Manager-Supply Chain

Operations, Apollo Tyres)

J.V.B Sastry (Sr. VP Logistics, ACC)

Pradeep Dubey (GM, SNOWMAN)

Vivek Tripathi (Manager-HR,Jindal Steel)

Prof. Janat Shah (IIM-B)

Kanakendu Chatterjee (Sr. Supply Chain

Consultant)

Yuvraj Sharma (Regional Director

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1 PERSPECTIVE

EMERGING CHALLENGES IN NEW AGE

SUPPLY CHAIN

- Arun Sharma, APOLLO Tyres

9 QUICK RESPONSE MANUFACTURING - A

COMPETITIVE STRATEGY

12 AN INTRODUCTION TO SAP &

MATERIAL REQUIREMENTS PLANNING

(MRP) IN THE LOGISTICS CHAIN

15 PURCHASING –“AN ART”

-Vineet Johari ,VP Purchase ,JAYPEE Cement

17 TRANSITION FROM LEAN

MANUFACTURING TO LEAN SUPPLY

CHAIN

-Saurabh Tiwari, UPES

31 GLOBAL MANUFACTURING &

GLOBAL LOGISTICS: INDIA’S FORTUNE

37 ACTIVITY BASED COSTING (ABC) -

AN INNOVATIVE COST

OPTIMIZATION TOOL FOR RETAIL

SECTOR -Dr. Sumeet Gupta, UPES

22 FORWARDING: A BALANCED

APPROACH

47 LINKAGES OF THE RETAIL SUPPLY

CHAIN

-Neha Grover, UPES

55 CAMPUS BUZZZ…

Logistics Xpress | i

DHL partners SIA

DHL Global Forwarding Singapore, the local freight

forwarding arm of DHL, has been awarded a prestigious business win

with Singapore Airlines (SIA). As the provider of choice for Singapore

Airlines, DHL will manage global transportation of all in-flight

amenities from Singapore Airlines – mainly through its distribution

hubs in China, Germany and Singapore – to all of its network

destinations and offices in the world. The contract covers both ocean

freight and air freight services. As part of the contract, DHL will also provide all inland transportation

services to Singapore Airlines’ China and Germany hubs through its Supply Chain unit.

Rail Cargo

Transport Corporation of India Limited (TCI) has started a rail

cargo express service from Bangalore to Guwahati. Under the service, TCI

Freight, the surface transport division of TCI will run a weekly cargo train

leaving every Sunday from Bangalore. For the new service, TCI has taken

a Cargo Express Train on lease for 3 years which can carry weight upto

468 tonnes. The average transit time for covering the distance will be

reduced by 4-6 days; from 10-12 days by road to 5 days by this rail

service. The service between Bangalore and Guwahati will cover various states like Karnataka, Tamil

Nadu, Kerala, Assam and other North Eastern States. The first and last mile delivery of the cargo will be

undertaken by a dedicated fleet through road by TCI.

Schiphol Accolade

Air France-KLM Cargo has received the Cargo

Award in the latest Schiphol Aviation Awards,

sponsored by Amsterdam Airport Schiphol. The airline

has been recognised for its ground-breaking initiatives

on behalf of Schiphol SmartGate Cargo, its integrated approach to goods inspection and its pioneering

role in the implementation of e-freight.

Logistics Xpress | ii

Toll acquires SAT

Toll Group, the Asian region’s leading provider of integrated logistics services, has announced

the acquisition of SAT Albatros (SAT) a Dubai based leading service provider in the sea-air segment.

―The acquisition of SAT will further cement Toll’s strategic position in the Middle East and in the Asia

to Europe trade lane‖, said Toll Group’s Managing Director, Paul Little AO.

―With a strong customer base and as the market leader in this service offering,

SAT will support our intention to further develop in this market. Building our

business with a niche Sea-Air provider gives us further scope to offer our

customers the opportunity to match speed to market with a cost-effective

service. For customers who want to transport goods quickly but keep costs

down, this integrated option can offer significant cost savings over pure air

freight.‖

Hefty volume growth

Cargoitalia – Italy’s all-cargo flag-carrier – has turned in another strong result for July-December

2010, concluding its first full year of operation on an upbeat note. From July-December 2010, the airline

operated scheduled services from Milan to

Hong Kong, Shanghai (introduced in

September 2010), Dubai, Sharjah, New York

and Chicago. During the six-month period,

Cargoitalia operated a total of 228 scheduled

and charter flights, up from 173 in the first

half of 2010 (32% increase). Block hours

operated rose 37% from 3,375 (Jan-June) to

4,626 (Jul-Dec). From July-December,

Cargoitalia carried 25,043,124 kilos of freight (up 34% on Jan-June), representing a continuing 89%

average load factor by volume and 72% average load factor by weight.

“Customer & Brand Loyalty” Award

Drive India Enterprise Solutions Ltd. (DIESL), logistics arm of the

TATA group, has won the Customer & Brand Loyalty award in the

―Logistics Sector – 3rd Party Logistics‖ at the 4th Loyalty Awards held in

Mumbai on 27th January 2011. The Loyalty Awards are presented by

Carlson Marketing (Global leader in marketing services and brand loyalty

programs) & Kamikaze B2B Media. According to a company release,

Logistics Xpress | iii

leading logistics firms like TCI Supply Chain Solutions, AFL Pvt. Ltd., Safexpress Pvt. Ltd., GATI Ltd.,

DHL Supply Chain, Schenker (I) Pvt. Ltd. and Agility were also in the fray for the award.

Siesta raises $10mn

Siesta Logistics Corporation Limited, a leading Integrated Logistics Service Provider and a part

of the diversified Siesta Group, has announced that it had raised $10 million in private equity from

Ashmore Alchemy India, a joint venture between Alchemy Partners LLP and Ashmore Investments

(UK). Siesta Logistics began its operation in 2007 and is India’s leading integrated Logistics Service

Provider with the capability to serve clients with a portfolio of customized solutions in the areas of

transportation, freight forwarding, port and cargo services, Odd Dimension Cargo, Freight Forwarding,

Customer House Agent, Warehouse Management Services, STPI and related services, 4PL and

Consulting services.

A professional, knowledge-rich enterprise, SLCL headquartered in

Bangalore, delivers customised solutions to create value and offer expertise-based

consultancy services across the supply chain requirements of its customers. It has a

wide network that sprawls over almost all major cities of India and is supported by

20 global agents. The company has a strong network of transport branches and nearly

10 freight and customs outlets supported by 20 nominated agents effectively covering Asia, Australia,

Hong Kong, Europe, South America and North America.

B2B marketing award

The ―Take control‖ campaign, which promotes TNT’s Express Import service, was awarded ―Best

international campaign‖ by B2B Marketing Magazine, a reference publication for the sector. TNT

Logistics Xpress | iv

received the award at the 2010 B2B Marketing Awards in London on 25 November. Contenders

included Vodafone, IBS and Colt. TNT’s Express division is one of the world’s leading express delivery

services providers. It delivers 4.4 million parcels, documents and pieces of freight a week to over 200

countries using its network of 2,409 depots, hubs and sorting centres. The division operates 26,310 road

vehicles, 48 aircraft and has the biggest door-to-door air and road express delivery infrastructure in

Europe.

World’s largest heavy lift vessel docks in Mumbai

With a lifting capacity of a total of 2,000 tonnes and speed of 20

knots, the world’s largest heavy lift vessel, MV (Motor Vessel)

―Svenja‖ visited Mumbai on 15th January on its maiden voyage.

The innovative vessel type was built in just six months by

German-based Sietas shipyard commissioned by SAL

Schiffahrtskontor Altes Land. SAL – a joint venture between two

ow ner families and the Japanese ―K‖ Line Group, ranks among

the leading international heavy lift shipping companies which

operates a fleet of 15 heavy lift ships and is been represented by Sai Maritime in India.

Allcargo Global eyes acquisitions in India, east Asia

Allcargo Global Logistics is scouting for acquisitions in the fast

growing markets of India and east Asia, after taking stakes in a

couple of Hong Kong-based logistics firms last year, as the Indian

firm looks for strategic fits to its container load and multi-modal

transport operations. Allcargo is a market leader in the less-than-

container-load (LCL) segment — shipments where cargo is

insufficient either in weight or quantity for standard containers.

TNT renews talks to buy stake in Gati’s express cargo business

Speculation about promoters of Gati Ltd, a leading domestic logistics and supply chain solutions firm,

selling stake to a foreign strategic buyer returned this week, even as the name of Dutch express

distribution giant TNT emerged as a potential frontrunner. The possibility of promoter shedding stake in

Gati has been a long-running rumour with the company, as usual, denying any such development.

Logistics Xpress | v

Railways may join Coal India, SCI joint venture

To find an end-to-end solution for the logistics woes on supply of

coal, two public sector navratna giants Coal India Ltd and Shipping

Corporation of India are in talks to rope in Indian Railways to their

joint venture. ―CIL and SCI had formed a joint venture in December

and now we are trying to extend this to Railways. We are in talks

with them and the initial response that we got is very good. ―Once

they join, we will be able o solve the logistics problems related to

coal.

India Aims to Invest $100 Billion in Ports, Shipping

India aims to invest 4.52 trillion rupees ($100 billion) by 2020 to build

new ports and develop its shipping industry in a bid to boost trade,

Shipping Minister G.K. Vasan said. The investment will likely more

than triple India’s annual port handling capacity to 3.2 billion tons,

Mr. Vasan said. That capacity will be higher than the estimated 2.5

billion tons annual cargo traffic by 2020, he said. The investment is

also likely to increase India’s share in the global shipbuilding industry

to 5% from 1% and raise Indian companies’ share in the global cargo

tonnage to at least 9% from 6%-7%, Mr. Vasan said.

FedEx to start direct flights between India and China

FedEx Corporation, the world’s second largest package delivery

company, has decided to start direct cargo flights between China and

India to tap the increasing bilateral trade between the two Asian

superpowers.

―We want to play an increasing role in the tremendous growth story in India and China. We now have

two major cities both in India (Delhi and Mumbai) and China (Shanghai and Guangzhou) which are

connected to each other,‖ Samuel Thomas, managing director, India operation, FedEx, said at a press

conference on Wednesday.

Logistics Xpress | vi

Container Corp may offload 51% in logistics parks

State-run logistics firm Container Corporation of India may hive off its

upcoming logistics parks and offload up to 51% equity in each of them

to a partner from among customers, landowners or logistics players, a

senior executive said.

―Somewhere if I feel the logistics parks would be better off as SPV or

JV with a customer or a strategic partner, then I may hive it off as a

separate company,‖ P Alli Rani, Director (Finance), told Reuters in an

interview on Tuesday.

DHL Enhances LCL Connectivity from India to South Africa

DHL, the world’s leading logistics company, today announced the launch of

a new direct Less than Container Load (LCL) service from Nhava Sheva,

Mumbai in India to Durban, South Africa. Operated by Danmar Lines,

DHL’s in-house carrier, the new service will facilitate trade between India

and South Africa and offer customers reliable, quick and cost-effective

services between the two ports.

Universal Optimizes Supply Chain With Four Soft Solutions

Four Soft (4S), a global leader offering software solutions for Logistics

and Transportation industry, today announced that it has entered into an

agreement with Universal Freight Management (India) Pvt. Ltd for the

implementation of its web centric freight management system (4S

eTrans) and India customs compliance solution (4SeCustoms) to be implemented across its multiple

locations. Universal Freight Management (UFM) is one of the leading global logistics solutions

providers. UFM’s fully-owned subsidies have IATA / FIATA and CHA licenses since 1989. With

partners located worldwide, UFM provides its customers with accessible processes and transparent

systems, providing experiences that make time-to-market pressures a thing of the past. It offers range of

services to its global customers like Air & Ocean Forwarding, Multi-Modal Transport, Customs

Brokerage, Logistics/Distribution, Warehousing, and Consultancy.

Logistics Xpress | vii

Agarwal Packers and Movers Ltd expand horizons with Franchise India

The Indian logistics business is currently valued at 90 billion USD and India

spends a total of 13 % of its GDP on logistics, it is estimated that in upcoming

years, the logistics industry will undergo major changes, offering a wide variety of

services to adhere to the growing demands. Being the pioneers in the home

relocation sector with over 800 company owned vehicle & 52 self owned offices

servicing 1264 locations pan India. Agarwal Packers and Movers Ltd is all set to

expand in the field of Logistics & Relocation through franchising. Apart from this,

being ISO 9001-2008 certified only enhances the brands reputation.

Tata plans umbrella logistics firm

The Rs.3.2 trillion Tata group, with 90 firms spread across businesses ranging from salt to software and

tea to telecom, plans to consolidate all its logistics arms into one unit, a move that would enable it to

service companies that are increasingly farming out functions such as transportation. ―The process has

started and it will take a while (to take shape),‖ one of the two senior officials

familiar with the development said. Both requested anonymity pending a formal

announcement.

Tata-NYK shipping JV plans to double its fleet by 2014

Tata NYK Shipping Pte Ltd, a 50:50 joint venture set up by Tata Steel Ltd and

Japan’s NYK Line Ltd, plans to more than double its fleet to 30 ships by 2014 to meet rising demand for

coal and iron ore in India, said two persons familiar with the development, including a company

executive. Tata Steel is the world’s sixth biggest crude steel maker and NYK Line is Japan’s second

largest dry bulk ship operator. ―In the next 3-4 years, Tata NYK has a plan to increase its fleet size to 30

vessels including 16 owned ships,‖ said the company executive.

Logistics Xpress | 1

Emerging Challenges in New-Age Supply Chain

Arun Sharma, Div. Manager-Supply Chain, Appolo Tyres

Changing Economic scenario in the

developing markets like India when gives

tremendous opportunity to leap through the

growth opportunities for supply chain function,

it puts forth new challenges and higher

benchmarking also to cope with the changing

trends. If the economy is growing at the fast

double digit annual rate, the supply chain in the

same environment has to grow much faster to

catch the rate and balance out itself. As

emerging markets open up, there is clear

strategic need for Supply Chain to be close to

these major opportunities and to face new

challenges.

The trend of urbanization creates a requirement

to rethink the manufacturing and distribution

Footprints for the big urban centers of demand.

A market of tens of millions of consumers

in a relatively concentrated area makes a strong

case for close proximity manufacturing

and flexible, smaller scale plants. The potential

benefits include cost efficiency, a shorter

logistics chain, and greater product freshness.

To make it simple just

take an example of an

FMCG product – If the

Ice cream market is

growing at the rate of

15% annual growth rate,

the supply chain of the

same product cannot have leeway to grow with

the same rate but to have much faster pace of

change, as higher working standards and

squeezing bottom line will not give equal level

playing field for Supply Chain to increase its

expenses by the same ratio.

The current trend of supply chain challenges

start from the planning stage which is the most

crucial part of supply chain, this needs high

level of process understandings and capability to

think out of the box. Ever increasing customer

demand invariably in all the products has put the

supply chain in the wrestling ring to fight with

Sumo size challenges of crippling infrastructure.

The question has become so big that the Supply

Chain Manager is finding it difficult to come

with the ever demanding terms of customers.

Also rapid urbanization of the rural markets and

changing lifestyle of the rural customers is

impelling the Supply Chain to design new

models which can have high level of

sustainability and scalability to cope with

volumetrically ever enlarging market size and to

handle vide varieties of rural demand .

The infrastructure issues to be overcome include

planning & construction of reliable roads

railways, ports and suitable warehousing to

support for example the food cold Chain. Even


the fast track approach to infrastructure

development seen in some markets will take

many years to ‗fix‘ the issues. Yet, in the face of

these multiple challenges, we are seeing the

emergence of new channels and a modern

approach to trade which is often distribution-led

& intermediary-driven. Complex logistics

models are being successfully developed using

non-standard vehicles and dynamic routes that

can cope with such issues as small order sizes

that require aggregation and rapid change in

physical conditions. The objective is always to

bring the market what it wants, in the form it

wants it and through convenient outlets (the

triple A-rated network) always at a sustainable

cost to serve.

Third party contract manufacturing is another

fast coming up business model which has

further raised the performance standards for

Supply Chain, big manufacturing units at one

corner of the country and supplying the material

from there to RDCs is gradually diminishing

from the scene and smaller sub-contract

manufacturers are taking place of these big

plants to reduce logistics and warehousing cost.

Unlike market scene of past years a major share

of FMCG business has been converted to

contract manufacturing, the Supply Chain model

for which is bit complicated due to large number

of manufacturing facilities and increasing point

to point transactions.

Transporter which is one of the most active part

of Supply Chain also has to come up to the

increasing demand of the market , the

transporter can no more afford to fall on the

mercy of driver and try to convince the supplier

and receiver for extending ETA of consignment

. He can rather empower himself by adopting

newer technologies like GPS, net tracking etc.

and he has to do it.

Green supply Chain is next field which has been

constantly kept at bay, use of cleaner and

greener fuel like CNG for local transportation

has got tremendous opportunities for Supply

Chain. Commercial vehicle conversion into

CNG within Delhi/NCR was seemingly

impossible few years back which is a green

reality now. Take a hypothetical situation where

if we can install CNG station every 70-100 KM

distance across main highways, the commercial

vehicles moving in the same route can be

refueled by CNG, thus reducing running cost by

great extent and will help to save foreign

currency and to earn carbon credits also. This

thought although looks raw and impractical at

first instance can become reality in coming


years and have enormous growth potential and

need of the hour.

Integration within Supplier ,Service Provider

and customer is also emerging as one of the the

big challenge now , closer interaction through

IT/ITES is dire of the hour ,the success lies in

the fact that how efficiently and effectively the

value chain can do it . Not only this, but the

constant innovation in process and adoption of

best practices and their successful

implementation are also challenging

opportunities which will decide success or

failure , needless to say that after every other

company is achieving the quality standards the

Supply Chain is the next battle field which will

be deciding factor for winners and losers .


Container Transportation

(Key Trends, Recent Developments, Future Outlook &

Expectations of the Users) Mukesh Oza, Group President and CEO-Samsara Group

The major container shipping lines

including APM-Maersk, Mediterranean

Shipping Co, CMA CGM Group, Evergreen

Line, Hapag-Lloyd & APL Container Shipping

Lines etc. are looking at BRIC countries,

especially India and willing to invest in Indian

Market in terms of allotting bigger container

vessel for Indian market or adding Indian Ports

as a port of Calls in their vessel network. Vessel

deployment will mainly be on Asia Europe and

Asia USA routes. On the India trades, the vessel

of 5000 – 8000 TEUS are expected to be

deployed (an 8500 TEU vessel of MSC

(Northern Jaguar) called at Mundra in October

last year).

But, the question is – Does Indian ports have the

capacity and capability to handle these container

carriers? Or will this be a case of opportunity

lost from India‘s perspective? The present

growth trend of Indian Trade suggests a steep

increase from 24, 42, 831 TEU in the year 2000

to 97, 58, 669 TEU by 2010 (As shown in Fig

1). Traffic share also grew from around 26% in

2005-06 to ~ 33% for 2009-10 in the case of

non-major ports whereas it shrunk from 71.3%

in 2008-09 to 66.4% in 2009-10 in case of

Major Ports.


This article discusses in details the

challenges & issues related to port / terminal

capacity, hinterland connectivity and overall

Logistics Infrastructure faced by users, whether

India has requisite infrastructure to handle

growing volumes in terms of infrastructure and

deep draught ports connectivity and

expectations of the shipping lines.

Present Pattern of Shipping Services in India

South Asia is served by both direct and feeder

services; the mix depends upon the country and,

in the case of India, region. Direct services

normally require:

1. Ports allowing vessels of at least 5000

TEU capacity

2. Adequate traffic: normally more than

half million containers/year

3. Add high port productivity.

Some ports in India like Nhava Sheva meet

these criteria and receive direct services. The

change in service provision is most marked at

Nhava Sheva; now <15 percent of containers are

shipped by feeder vessel (the main lines use

interlining for smaller markets, e.g. Africa and

South America). Most of the direct services

provide fast schedules rather than multi-port

runs though they are not as fast as the main

trunk route services. Chennai meets the three

criteria but is still primarily served by feeder

lines, only about 15 percent of containers are

moved by direct services, almost all to Asia.

This may be due to the preoccupation of the

main lines with China and the very low rates for

feeder services to Singapore. Direct services

will expand when the main lines need to look

actively for cargo again, either because of the

anticipated fleet capacity increase or a fall in

Chinese demand. Mundra receives some direct

calls but these are restricted.

Moreover, the challenges & issues faced by

shipping lines in reference to ports are port

congestions & berthing delays, Port Capacity to

handle, Poor Productivity, Accessibility to the

port, Lack of enough no of Berths and Poor

Draught.

Port & Infrastructure- Key Issues &

Challenges

Infrastructure Capacity Limitations: Despite

large-scale capacity expansion in recent times,

most major ports are operating at more than


90% of their capacity, which affects their

efficiency in terms of a higher dwell period and

turnaround time. The slow pace of infrastructure

development further compounds the problems.

Draft Issues: This is a perennial problem due to

excessive silting and appropriate dredging plan

not in place. The vessels operating from Far

East to Europe or Far East to US are unable to

add JNPT or Chennai as a port of call due to

draft limitations. This in turn leads to feedering

of Indian cargo to Dubai or Colombo thereby

them prospering at the cost of our ports.

Pilotage: Due to the shortage of pilots there are

delays caused in berthing/shifting.

Inadequate IT implementation: Operations

and resources at ports cannot function

efficiently in the absence of an enterprise

resource planning (ERP) system. Consequently,

some resources are extensively used, while

others remain idle and await the availability of

other resources.

Systems and procedures at ports are

complex: The process of filing documents, the

calculation of port charges, anomalies in the

classification of cargo and procedures for refund

are some of the issues that need to be addressed.

Furthermore, the overlapping roles of various

departments compel various stakeholders to file

documents with different departments of ports

and Customs as well as with other stakeholders.

Inadequate Cargo-Handling

Equipment/Machinery: The majority of cargo-

handling equipment at Indian ports was

commissioned a long time ago and has outlived

its designed life span. Cargo-handling

equipment/machinery are inadequate to fulfill

the requirements of modern vessels arriving at

Indian ports and handle growing traffic.

Moreover, the limited capacity of wharf cranes

and grabs hampers dry bulk cargo-handling

productivity. In addition, equipment at ports

across the country frequently breaks down.

Most ports follow reactive maintenance

procedures instead of preventive maintenance.

Long response times, the unavailability of

spares, dependence on proprietary parts and

cumbersome purchase procedures result in

substantial equipment downtime.

Poor Hinterland Connectivity: The

aggregation and evacuation of cargo at Indian

ports is inefficient due to poor hinterland

connectivity through rail, road, express

highways, coastal shipping and IWT. Lack of

expressway connectivity between ports and

industrial groups has made hinterland

transportation slow and inefficient. Congestion

on approach roads to ports or terminals delays

the arrival of export cargo and the evacuation of

import cargo. Distribution containers and

containerized cargo are highly concentrated,

with most containers for Delhi and North India

being routed through the JNPT Port. This route

is already one of the busiest domestic freight

arteries in the country. However, with new

container terminal developments in Gujarat as

well as dedicated rail connections to and from

the ports of Mundra & Pipapav, this situation is

changing gradually.

Inadequate Navigational Aids and Facilities:

Most ports in the country lack state-of-the-art

navigational aids for ships. Except Mumbai,

major ports are not equipped with the latest

VTMS, which are used for the regular berthing

or de-berthing of ships. While most ports

currently have an adequate number of marine

craft, e.g., tugs, launches and marine


crew/pilots, to handle vessel traffic, these may

not be able to meet increased vessel traffic

needs in future.

Poor Road Network within the Port: Roads

within most ports are narrow and are not

designed to handle the traffic and load they

currently handle. This results in traffic

congestion, which, in turn, leads to delays in the

feeding and evacuation of cargo, thereby

lowering the productivity of vessels. Indian

ports do not have route planning for the

optimization of existing road networks with

suitably located weighbridges.

Labor-Related Challenges: Indian ports suffer

due to frequent labor strikes, malpractices,

inefficiency and low labor productivity. Most

major ports are overstaffed with unskilled and

untrained labor. In addition, labor costs at ports

are as high as 40%–60% of total port

expenditure.

Some Suggestions for Port

Reforms/Improvements and Enhancing

Efficiency & Expectations

Privatization aspects will take place when

transferring to the landlord management model

through the sale of super-structural assets.

Another privatization aspect could be the

formation of joint-ventures with private sector

operators in the total transport chain to the

hinterland.

Commercialization: There should be

delegation of powers and responsibilities from

Ministry to ports. This is the option where most

benefits can be achieved. The shift to the

landlord port management model is the major

activity to be undertaken, whereby the Port

Trust will contract out non-core business, port

operations will be transferred to the private

sector and whereby the Port Trust will invest in

infrastructure instead of the BOT operator in

order to decrease costs for port users. BOT‘s

should be avoided when sufficient funds are

available.

Corporatization: It is a possible step after

commercialization, although less important.

Ennore is the only corporatized Major Port.

TAMP should be disbanded and as proposed by

the Shipping Ministry major ports — should be

free to decide their user charges based on

market conditions like non major ports to ensure

a ―level playing field‖. Dredging should be

outsourced to repute dredging companies to

ensure maximum draft available. Sufficient

pilots should be inducted to effect quicker

turnaround of vessels. Privatization of existing

facilities should be done. Development of new

berths, Improvement in port operations to

enhance productivity, Cranes and stackers to

have a planned maintenance program and

critical spares in stock so as to minimize down

time, efficient road/rail connectivity to the

hinterland from port to reduce transit time/costs


must be on the priority list. Empty containers

could be used to carry domestic cargo by

rail/road on ―cabotage‖ basis to offer suitable

concessions. Marketing of the port to the

hinterland for enhancing volumes is also

suggested.

Other Suggestions

The processes should be streamlined so as the

entire transportation process and relevant

documentation is quicker through channels.

Union Budget should provide various tax sops

& fiscal incentives to encourage fleet

acquisition, modernization & growth. Reduction

in tax will give a tremendous boost to cargo

handling traffic. The presence of large market &

a thriving economy makes it an important

destination from the trade & commerce point of

view. Efficiency & low cost are essential to

nurture the shipping industry. New

projects should be taken up to provide better

connectivity between our eastern & western

coasts without going to Sri Lanka. These

projects reduce the intra – port cost of cargo

movement between two coasts & promote

coastal shipping.

Expectations of Container Lines from Private

/ Public Rail Operators

1. The shipping lines expect the operators

to schedule reliability to ensure

minimum laden dwell time at origin and

Discharge ports, Faster access to India‘s

hinterland, through reducing the transit

time for moving cargo to and from

Inland Container Depots (ICD),

2. Synchronization of train schedules with

Vessel schedules to handle prioritized

cargo and also ensuring that the cargo is

not struck in the Gateway ports.

3. Faster clearance of containers from the

gateway ports thereby decongesting the

port.

4. Online / SMS tracking of train

movements, Volume driven Competitive

pricing, Operational flexibility to

overcome port congestions, Pan India

coverage through deployment of

additional rakes.

Expectations of Container Lines for Road

Development

1. Four lane road connectivity of ports with

all the national highways.

2. Deployment of proper facilities for faster

loading and unloading of cargos.

Expectations from All Constituents of the

Maritime and Logistics Fraternity

The constituents of the Shipping Biz, Maritime

trade and Logistics Industry i.e. The members

CSLA, FONSA, MANSA, FFFAI, BCHAA,

who are serving this trade lack a common voice

or a platform and there is a need to come under

one umbrella to raise issues of common

concern in order to march forward together.


Quick Response Manufacturing - A Competitive Strategy NAARAYEN K.A.S., MBA-LSCM (Sem. II, 2010-12)

Increasing competition has led many

manufacturers to reduce inventories and

workforce. Companies have started

concentrating on reduction of lead times by

elimination of wastes like expediting, excess

inventories and high overhead. Quick Response

Manufacturing (QRM) provides a time-tested

set of principles and tools to reduce lead time

thereby providing a strong foundation for long

term growth. QRM has reduced lead times and

costs significantly and has substantially

increased the market share.

JIT/Lean manufacturing is

believed to be the forefront of

manufacturing strategy. But

there are markets where JIT

fails to provide a competitive

solution. In those markets,

QRM can be a more effective

strategy. QRM is more effective for companies

making highly engineered products or large

variety of products with variable demand. QRM

shares similarities with Lean and Six Sigma by

emphasizing on the elimination of waste. But

the path towards elimination of wastes is

different in the case of QRM.

Lean focuses on implementation of 5S,

managing constraints, level loading and

KANBAN for elimination of waste whereas

QRM takes a more system-wide approach to

eliminate waste by examining the entire process

through the microscope of lead time. According

to JIT, if there is a change in demand then takt

time has to be redefined and tasks have to be re-

optimized which could result in possible

addition or deletion of machines which becomes

complicated and expensive which is not suitable

if the demand changes on a daily basis. But

QRM addresses this issue very well while still

managing short lead times.

QRM can be explained in two contexts, one

from the customers‘ perspective where QRM

means responding to those customers‘ needs by

rapidly designing and manufacturing products

customized to those needs. Other is from the

company‘s perspective where QRM focuses on

reducing the lead times for all tasks in a


company, resulting in improved quality, lower

cost and quick response. QRM has resulted in

reduction of lead times and product cost by 80-

95% and 15-30% respectively. It has enhanced

on-time delivery by 60% and reduced scrap and

rework by 80 %.

QRM uses a material control system called

POLCA (Paired-cell Overlapping Loops of

Cards with Authorization). In QRM, the

company creates separate cells for production of

similar parts and then processes an order by

differing cells based on the requirements.

POLCA cards, are used to communicate and

control the material movement between cells.

They are not specific to the product rather they

are assigned to a pair of cells.

Advantages of POLCA system:

1. It assures that each cell works on jobs

that are destined to downstream cells

which will be able to work on the jobs in

near future.

(This eliminates the buildup of

inventories in cells)

2. It allows a make-to-order environment

through flexible routings by using

needed cells and authorizing times.

Pre-requisites for Implementing QRM:

1. There must be a company-wide

understanding of the basics of QRM

.

2. The QRM program has to be

implemented in both shop floor and

office operations.

3. Obstacles to implementation should be

anticipated as much as possible.

4. Concrete steps for implementing QRM

should be identified at the start of the

initiative.

Thus QRM has to be an organizational strategy

led by top management. Firms should change

the traditional ways of operating for reducing

lead times which depends on total commitment

from top management. The results of QRM to

date are only the tip of the iceberg. The

application of QRM principles could make a

significant change in markets where JIT suffers

setbacks.

References:

1. Rajan Suri. Quick Response Manufacturing: A Competitive Strategy for the 21st Century.

Retrieved from

http://www.bu.edu/mfg/programs/outreach/etseminars/2002november/documents/SuriPaperQ

RM.pdf, Retrieved on March 26, 2011 from http://www.bu.edu

2. Trevor Turner. Quick Response Manufacturing: „When Kanban is Not the Solution‟.

Retrieved from

http://www.littoralis.info/iom/secure/assets/iom20060509.396733_4460d53df327.pdf,

Retrieved on March 26, 2011 from http://www.littoralis.info

http://www.bu.edu/mfg/programs/outreach/etseminars/2002november/documents/SuriPaperQRM.pdf

http://www.bu.edu/mfg/programs/outreach/etseminars/2002november/documents/SuriPaperQRM.pdf

http://www.bu.edu/

http://www.littoralis.info/iom/secure/assets/iom20060509.396733_4460d53df327.pdf

http://www.littoralis.info/


3. Ananth Krishnamurthy. Time Matters: The Quick Response Approach to Pharma

Manufacturing. Retrieved from http://www.iptonline.com/articles/public/CSMinc.pdf,

Retrieved on March 26,2011 from http://www.iptonline.com

http://www.iptonline.com/articles/public/CSMinc.pdf


An Introduction to SAP & Material Requirements

Planning (MRP) in the Logistics Chain

Pankaj Tiwari, MBA-LSCM (Sem. II, 2010-12)

An Introduction to SAP

SAP was founded in 1972 in Walldorf,

Germany. It stands for Systems, Applications

and Products in Data Processing. Over the

years, it has grown and evolved to become the

world premier provider of client/server business

solutions for which it is so well known today.

The SAP R/3 enterprise application suite for

open client/server systems has established a new

standard for providing business information

management solutions. The main advantage of

using SAP as company ERP system is that SAP

has a very high level of integration among its

individual applications which guarantee

consistency of data throughout the system and

the company itself. SAP is a table driven

customization software. It allows businesses to

make rapid changes in their business

requirements with a common set of

programs. User-exits are provided for business

to add in additional source code. Tools such as

screen variants are provided to let users set

fields attributes whether to hide, display and

make them mandatory fields. This is what

makes ERP system and SAP in particular so

flexible. The table driven customization are

driving the program functionality instead of

those old fashioned hard-coded

programs. Therefore, new and changed

business requirements can be quickly

implemented and tested in the system.

Material Requirements Planning in the

Logistics Chain

The main function of material requirements

planning is to

guarantee material availability,

that is, it is used to procure or

produce the requirement

quantities on time both for

internal purposes and for sales

and distribution. This process involves the

monitoring of stocks and, in particular, the

automatic creation of procurement

proposals for purchasing and production.

Process Flow

1. Order Processing Team Punches the

Customer Orders into the system (Pull

Based). In case of Push Based system,

the forecasted sales quantities are

punched into the system.

This results into the independent

requirement, that is, the requirement for

the finished goods or FGs. This result

triggers material requirements

planning.

2. In order to cover these requirements,

MRP calculates procurement

quantities and dates on which these

materials are to be shipped based upon

the lead times of products. MRP also

plans the corresponding

production/procurement elements.

These procurement elements are the

planned order (for internal production)


and Purchase Requisitions for external

procurement. Both of these elements are

internal planning elements that can be

changed, rescheduled or deleted at any

time based upon the discretion of the

commercial departments

(Marketing/Planning/Procurement).

3. The system explodes the BOM (Bill of

Material) and calculates the dependent

requirements, that is, the quantity of

components required to produce the

finished product or the assembly.

Planned orders are created at every

BOM level to cover requirements after

adjusting the Work-In-Process and the

Inventory of Finished Goods.

4. These Planned Orders are then converted

into Production orders for In-house

production and Purchase Orders for

external Procurement.

5. These Production orders contain their

own scheduling procedures and status

management. They are used for tracking

the progress of WIP throughout the shop

floors until the Finished Articles Store.

Cost accounting is also carried out via

the individual production order.

6. For external procurements, the Purchase

Procedure is triggered by MRP.

Purchase Orders/Schedules are created

automatically/manually based upon the

Purchase Requisitions (PRs) on the

chosen vendors, prices, and payment

terms and approximate leads times.

7. The quantities made available by

production or by external procurement

are placed in stock and are managed

by Inventory Management.

Various functions in the SAP System are

planned, controlled and coordinated centrally

for several areas. Thus after MRP is run; the

flow of information takes place as shown in the

following figure.


Flow of Information after running MRP vis-à-vis Actual Flow of Material

Confirmed Customer Requirements/Forecasted

Quantities

Independent requirements

For Finished Goods

Planned Orders for Internal Production

Purchase Requisition for External Procurement

BOM Exploded

Production Orders for Internal Production

Purchase Orders for External Procurement


Purchasing – “An Art”

Vineet Johri, VP-Purchase, Jaypee Cement

Purchase and Logistics are an integral

part of Supply Chain Management for any

organization. Purchase is process of buying

right thing at right price from right source. For

an effective purchase system it is important to

have a databank of pre-approved vendors. This

entails OEMs (Original Equipment

Manufacturers) who are the main suppliers

which in any process industry are almost pre-

defined. Thereafter, starts the process of

locating the vendors to the main suppliers,

preparation of manufacturing drawings of the

http://www.google.co.in/imghp?hl=en&tab=wi

engineering items etc.

This is an ongoing

process to continuously

strive to minimize the

input cost. The

equipment can be

categorized into

indigenous and import,

however the process of breakdown of equipment

into components is almost similar. The locating

of the sub-vendors and the identification of

engineering items becomes easier with the age

of the equipment. Till such time when the

equipments are under warranty, it is advisable to

be OEM dependent so that the warranty is not

jeopardized. Once the process is established, the

―purchase‖ procedure per se is rather simple –

floating of RFQ, vetting the orders, comparative

charts and finally the purchase orders. This

procedure once completed, logistics kicks in.

We have the main equipment, spares,

engineering items etc. Main equipments -

depending on whether indigenous or import,

need to be either shipped and transported in case

of import and surface transport in case of

indigenous. In both the cases, we need to have a

complete breakdown of the size,

weight/volumes, sea transport and inland

transport. For the spares and engineering items,

finalization of transport is again dependent on

the size, weight/volume. For every dispatch, a

contract is not necessary unless and until they

are ODC (Over Dimensional Consignment).

Transportation can be bulk, FTL or LTL to be

dealt with accordingly. Since the on-time

movement is as critical as the purchase itself,

http://www.google.co.in/imghp?hl=en&tab=wi


hiring of the major transporters is always

recommended which may seem apparently at

the higher cost but the cost is minimized on

account of time, ease of movement, co-

ordination in route.


Transition from Lean Manufacturing to Lean Supply

Chain Saurabh Tiwari, Lecturer, University of Petroleum & Energy Studies

Henry Ford in the early 1900 invented

the assembly line, so that to provide cheap &

quality cars for everyone. This motivated the

industrial innovators to constantly think & focus

on how to further improve & develop new &

variety of different manufacturing strategies.

This led to development or rather in other words

the inception of new manufacturing strategy

known as Lean manufacturing or Lean

production. Lean Manufacturing (LM) is a

manufacturing strategy that seeks to produce a

high level of throughput with a minimum of

inventory & producing without creating any

waste. Other says that Lean Manufacturing is

nothing but the Americanized version of Toyota

Production System (TPS). In the starting of

1990 a five year study on TPS by a team of

researchers of Massachusetts Institute of

Technology has coined the term Lean

Manufacturing. The result of five year study on

TPS has encouraged the team to rename &

reposition the TPS as Lean Manufacturing. But

this term got its importance in midst of 1990,

when James Womack wrote a book called "The

Machine That Changed the World". Womack's

book was a straightforward account

of the history of automobile

manufacturing combined with a study

of Japanese, American, and European

automotive assembly plants.

Toyota Production System

TPS is originally a Japanese methodology

known as the Toyota Production System

designed & developed by Saki chi Toyoda &

Taichii Ohno. The Toyota

Production System (TPS) is

an integrated socio-technical

system, developed by

Toyota that comprises its

management philosophy and

practices. The TPS

organizes manufacturing and logistics for the

automobile manufacturer, including interaction

with suppliers and customers.

The main objectives of the TPS are to design

out overburden (Muri) and inconsistency

(Mura), and to eliminate waste (Muda). The

most significant effects on process value

delivery are achieved by designing a process

capable of delivering the required results

smoothly; by designing out "Mura"

(inconsistency). It is also crucial to ensure that

the process is as flexible as necessary without

stress or "Muri" (overburden) since this

generates "Muda" (waste). So Fig. 1 clearly

depicts that how Muri, Mura & Muda are

linked to one another & creates wastes

The tactical improvements of waste reduction or

the elimination of Muda are very valuable. TPS

http://www.strategosinc.com/book_reviews.htm

http://www.strategosinc.com/book_reviews.htm

http://www.wisegeek.com/what-is-methodology.htm

http://en.wikipedia.org/wiki/Muri_(Japanese_term)

http://en.wikipedia.org/wiki/Mura_(Japanese_term)

http://en.wikipedia.org/wiki/Muda_(Japanese_term)


is based on five core principles that, if

consistently applied could improve production

quality and most importantly reduce or

eliminate Muda (waste). They are

1. Muda: A Japanese word referring to

anything that is wasteful & doesn‘t add

value

2. Process Focus: Managers works cross-

organizationally to develop & sustain

robust business processes

3. Genchi Genbutsu: A Japanese phrase

that refers to collecting facts and data

at the actual site of the work or

problem

4. Kaizen: A Japanese word for

continuous & incremental process

improvement

5. Mutual Respect: Toyota values a strong

relationship between management,

employees and business partners.

Based on these core ideas they have identified

seven kinds of Muda (wastes). These are

1. Over-production

2. Motion (of operator or machine)

3. Waiting (of operator or machine)

4. Conveyance

5. Processing itself

6. Inventory (raw material)

7. Correction (reworks and scraps)

The elimination of waste has come to dominate

the thinking of many when they look at the

effects of the TPS because it is the most familiar

of the three to implement. In the TPS many

initiatives are triggered by inconsistency or

overburden reduction which drives out waste

without specific focus on its reduction.

Lean Manufacturing

Lean manufacturing or lean production, which

is often known simply as "Lean", is a

production practice that considers the

expenditure of resources for any goal other than

the creation of value for the end customer to be

wasteful, and thus a target for elimination. The

various definitions given by professional bodies

about lean

Lean Enterprise Institute (LSI) defined ―Lean

as a set of tools & techniques for selecting the

right technique or method to improve what

needs improving‖

APICS defined lean as ―A philosophy of

production that emphasizes the minimization of

the amount of all resources used in the various

activities of the enterprises‖


Lean Thinking by Womack defined it as ―A

system where a company can achieve reduced

costs, coupled with continuous improvement

and customer satisfaction which used a

standardized five step approach‖

It is an overall methodology that seeks to

minimize the resources required for production

by eliminating waste (non-value added

activities) that inflate costs, lead times and

inventory requirements, and emphasizing the

use of preventive maintenance, quality

improvement programs, pull systems. Others

defined it as an operational strategy oriented

toward achieving the shortest possible cycle

time by eliminating waste. The technique often

decreases the time between a customer order

and shipment, and it is designed to radically

improve profitability, customer satisfaction,

throughput time, and employee morale.

The benefits generally are lower costs, higher

quality, and shorter lead times. The term "lean

manufacturing" is coined to represent half the

human effort in the company, half the

manufacturing space, half the investment in

tools, and half the engineering hours to develop

a new product in half the time. The

characteristics of lean processes are:

Single-piece production

Repetitive order characteristics

Just-In-Time materials/pull scheduling

Short cycle times

Quick changeover

Continuous flow work cells

Collocated machines, equipment, tools

and people

Compressed space

Multi-skilled employees

Flexible workforce

Empowered employees

High first-pass yields with major

reductions in defects

Lean Manufacturing incorporates the use of

Heijunka, level sequential flow, Takt time, the

heartbeat or pace of the production system,

continuous flow manufacturing, cellular

manufacturing, and pull production scheduling

techniques such as Kanban.

The biggest problem with Lean

manufacturing/Lean production is that it focus

only on manufacturing process, but not on the

entire supply chain

Comparison Between Lean Production & Supply Chain Management

Lean Production/Manufacturing Supply Chain Management

Focus to reduce waste and

non-value-add activities

Goal is reduced lead times/cost

through various methods

Traditional focus and success

primarily with optimizing shop floor

Focus to optimize across supply

chain partners

Uses a set of structured tools

Applies Lean tools as well as

leverages other tools

(Six Sigma, TQM, TOC, etc.)

Emphasis on no inventory through

―continuous flow‖

Emphasis on minimizing inventory

through various techniques


Supply Chain Management

Supply chain management is much broader, in

that it ―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.‖ These activities take place

within most businesses; logistics is focused on

these activities within a single firm. A supply

chain consists of the same processes, but views

these processes over multiple firms. The former

is internally focused; the latter externally

focused. As noted in the table below, there are

several areas of overlap between the two areas.

For Lean to be truly effective and to take

cost/waste out of processes, it must focus not

only on the manufacturing process, but

on the entire supply chain. Optimizing

the components of a single process does

not necessarily mean that the entire

supply chain will be optimized; many

firms have a tendency to focus on the

areas over which they can exercise

direct control. Doing it right by

examining and improving end-to-end

processes can have an advantage.

Lean Supply Chain

Lean SCM is a supply chain operational

and strategic management philosophy

that utilizes modern technologies to

effect the continuous regeneration of

supplier and service partner networks. A lean

supply chain network is empowered to execute

superlative, unique customer-winning value at

the lowest cost through the collaborative, real-

time synchronization of product/service transfer,

demand priorities, vital marketplace information

and logistics delivery capabilities. Lean supply

chain is defined as ―A set of organizations

directly linked by upstream and downstream

flows of products, services, finances and

information that collaboratively work to reduce

cost and waste by efficiently and effectively

pulling what is needed to meet the needs of the

individual customer.‖

Rapidly changing pattern of customer

requirements, product portfolios, marketplace

demographics and geographies are in constant

evolution and are impacting the way business is

conducted. Companies need methods, tools and

trading partner relationships that allow them to

be more flexible and adapt more quickly to

these changes. In part, the need for flexibility

has led many traditional manufacturers to shed


their plants and rely on domestic and

international contract manufacturers, or to move

production to low-cost countries, causing a

longer and more complex supply chain.

Organizations today tend to be ―horizontally

integrated,‖ with internal locations performing

only the ―core‖ function and all other needs

outsourced. The remaining company facilities

are typically occupied in a manner that reduces

the impact on working capital and provides the

flexibility to shift geographically as the

marketplace changes.

The six attributes of the Lean supply chain

Building and maintaining a Lean supply chain

revolve around six key attributes. Mastering the

six attributes will lead to a Lean—and

effective—supply chain. They are:

Success Path for Implementing Lean

The only success path for implementing supply

chain is:

There must be a proper promotion in the

company so that a better understanding

of the value of lean within the supply

chain can be explained to everyone

Lean education and training must be

expanded outside of the traditional

manufacturing area

Management and practitioners must step

up efforts to improve collaboration and

partnership throughout the supply chain

There must be a set of metrics and

benchmarks for validating the benefits of

Lean

All firms involved must monitor and

report on performance

Conclusion

Managing the Lean supply chain is not easy.

Much like Lean manufacturing, it is not a

destination that one can reach, but is rather a

journey to embark upon. It is a journey of

awareness, introspection and improvement. The

only question is how & when the journey

begins. Firms can achieve significant

improvements by & implementing &working on

the lean attributes. This journey is based on

facts and not just faith.


Forwarding: A Balanced Approach Aanchal Sharma & Shekhar Kaushik, MBA-LSCM (Sem. II, 2010-12)

The idea of collaborative planning

processes is to directly connect the resources

and exchange relevant data in order to create a

common and mutually agreed upon plan. The

collaboration process itself assumes reaching

goals that cannot be achieved acting singly. In

each collaboration process not only overall

coalition profit should improve but first of all a

preservation of interests for each single partner,

contained in profit sharing model, should be

maintained. Freight forwards are those logistics

solution providers (LSP) who take care of end to

end freight operations from booking, freight

operations and documentation to final billing of

end customers. The solution is multimodal and

caters all modes of shipments including sea, air

and land shipments.

In the present scenario, freight forwarding

sector is experiencing an intense competitive

market globally and in order to sustain

themselves and incur profits and revenues, they

have opted for sophisticated ERP packages.

This enables them to integrate their activities

such as Shipment Processing, Shipment

Tracking, Supply Chain Management, Customer

Relationship Management, and Business

Process Management. Basically, such packages

secure lower cost of ownership and quick return

on investment.

There is a well defined process that a logistics

solution provider should consider. Eventually,

these are the stepping stones which ultimately

lead them to profit maximization and revenue

generation. They are as follows:-

1. Revenue generation through new

businesses: Winning new business and

meeting the needs of the prospects should be

the number one priority in the business.

Customers are

looking beyond

cutting bill of

lading or

arranging for

freight and

towards value added services that can

provide greater visibility, on-time delivery.

The forwarders offer a software solution for

improving efficiency and productivity of the

shipper. Benefits are associated with it are:

improved revenues, strong ROI, tighter link

between the company and its customers.

Forwards are working on value addition by

offering such services in order to drive

higher revenues and maximization of profit.

2. Gain strategic advantage by enhancing

operational efficiency- Despite all the

advancements in technology, most

companies continue to rely on manpower to

re-enter information to process a shipment.

Further, most forwarding solutions do not

allow for the application to be easily

modified meeting customer‘s specific

requirements. A modern solution should

have the ability to easily configure and

modify the User Interface. This point has a

critical importance for two main reasons.

One, the major reason is to have the

flexibility to modify the solution to meet the

specific requirements. Second, a solution

that allows to accommodate new business,

new prospects, as well as adapt the solution


to the new challenges that the future holds.

A forwarder should make sure that they

have a solution that will empower them to

change the user interface and work flow to

meet new demands.

3. Leveraging information for maximizing

productivity and minimizing delays- The

information required to process a forwarding

shipment is manually entered. Despite all

the advancements, companies continue to

rely on manpower to re-enter information to

process a shipment. An optimum solution

will maximize the connectivity to one‘s

trading partners, carriers, agents and the

brokers. The solution will allow companies

to reduce error rates and the information can

be passed down to the next step in the

process which will save

time automatically by not

having re-key information.

This will increase the

efficiency of the operation.

Above figure shows the

process of how the

forwarders have

significantly increased

their productivity with

connectivity with the

ocean carriers. Through

strong EDI or file transfer

mechanisms the company

connects to its customers

and also its partners.

Uploading POs, bookings

and SLIs can assist in the

process of preparing the required documents

for one‘s shipper. Gathering data

electronically will help reduce errors and

also save time

4. Integration of services and systems

globally- In the past, globalization was part

of the strategy for only big players but now

small forwarders have reached out across the

globe and opened international offices. It is

most advantageous to have a single

operating environment for all locations

which will avoid duplicate data entry and

will provide data integrity. Basically, in a

global operation it is advisable and

advantageous to have a single

operating environment for all

locations. This allows doing a full

end to end shipment using one

global shipment ID and allowing the data to

pass along without any hassle.

5. Providing value added tools to the

customers- Offering expansion in tools


would help the company to be

seen as a leader and major

service-provider. Customers

basically look for easy-to use

visibility tools that provide

tracking and tracing. Other tools

are purchase order management,

online booking, quotations and

access to shipment data through a

flexible reporting tool. Even more

importantly would be automated

alerts when service level

agreements or major milestones

are not achieved. This allows a

customer to manage their

shipments by exception while

providing them with greater efficiencies.

These tools help in retaining customers or

leverage new business.

6. Improve the trade compliance

capabilities- In an Aberdeen Report

published in March 2008, on ―Global Trade

Compliance Priorities in 2008‖, cited that:

94% of Best in Class Companies are

currently in the process of improving

their trade compliance capabilities.

99% of Best in Class Companies are

continuously monitoring key trade

compliance trends and new regulations

under discussion

For many forwarders Trade Compliance is a

priority and one that is taken very seriously.

Continuous education for their employees

and enforcement within their company is

something that most forwarders adhere to.

Having said this, forwarders should take this

strength and turn it into service offerings

that can fill the void for their customers.

Leverage it in marketing and sales materials

with campaigns that will lead to new

revenue opportunities within the company.

7. Quality customer service helps retain &

leverage new business- A key component

to the automated solution is to have strong

customer service tools that allow

augmenting what their staff can do. Tools

like service level agreements, automated

alerts (both internally and externally),

extensive database search options, ad-hoc

reporting and even real time dashboards

provide ways to improve the quality of

customer service. Ultimately quality

customer service can help them retain your

customers and leverage this reputation to

secure new business. The best in class tool is

one that allows the forwarder to predefine

the service levels for their customers.

8. Strong financial analysis- The most

ignored items is strong financial analysis

and reports that allow it to sustain on the top

of forwarding specific analysis. Some of the

reports that are critical to this business

include:

Agent Splits

Agent reconciliation

Consolidation profit reports


Lane analysis

Additionally a strong system will have the

tools to make sure it can automatically set

up the business rules for items like agent

splits, methods for cost allocations on

consolidations and rules for billing

algorithms. In these economic times, billing

correctly and staying on top of every penny

is paramount to your profitability.

Conclusion: Forwarders should keep in mind to

increase their operational efficiency so as to

further maximize their profits and revenues.

Inculcating new tools and service offerings are

one way to cultivate new revenues. Thorough

research of the action items should be done and

determine what is important for the business, the

findings should be compared with the existing

list. This will enable them to know the gaps and

further lead them to the items they should be

looking for in the solution. So, in the

conclusion, basically they should consider that

option or the solution which will deliver a

strong and quick return on investment.

References:

1. Retrieved on 27/3/2011 from Marta Anna Krajewska & Herbert Kopfer*Chair of Logistics,

Dept. of Economics, University of Bremen, Germany, Wilhelm-Herbst-Strasse 5, 28359

Bremen{makr,kopfer}@logistik.uni-bremen.de

2. Retrieved on 27/3/2011from [Bretzke(1999)] Bretzke W., Industrie versus Handelslogistik,

Logistik Management 2(1), p. 81-96

3. Retrieved on 27/3/2011from http://www.kewill.com


In accordance with international

practice, all cargo goods imported into the

country or exported out of the country by sea,

air, land or rail routes are governed by the

provisions of the Customs Act, 1962 and other

laws of the country related to entry/ exit from

the country. Customs ensures that the import

and export of goods are in compliance with the

Customs Act and other laws in force.

To regulate and to exercise effective control

over import and export activities, goods are

allowed for import/export at notified places

under section 7 of the Customs Act, 1962.

Custodians are appointed under section 45 of

the Customs Act, 1962 for safe storage of goods

till they are cleared for home consumption or

warehoused.

Clearance of goods involves classification,

assessment, examination and payment of

Customs duty on imported cargo on the basis of

Bill of Entry presented by the importer or his

authorized agent.

The Central Board of Excise and Customs

(CBEC) has prescribed the

procedures through

notifications, rules,

regulations and circulars

which are implemented by

field formations.

Procedure of Clearance of Goods at Ports

The Shipping lines/steamer Agents/carriers/

Consol Operators file the Import General

Manifest (IGM) in accordance with Section 30

of the Customs Act, 1962. After filing the IGM

and on arrival of the goods, Custom House

Agent/Importer files Bill of Entry (cargo

declaration) in terms of Section 46 of Customs

Act, 1962. The first stage for processing a Bill

of Entry is noting/registration of Bill of Entry

(B/E). The B/E is then forwarded to the

concerned Appraising group in the Custom

House dealing with the commodity sought to be

cleared. The assessing officer in the appraising

group assesses the duty liability, taking due note

of any exemption or benefits claimed by the

importer. After completing the examination of

I think I need a CUSTOM HOUSE AGENT

Rohit Bhargava, MBA-LSCM (Sem II, 2010-12)


the goods, the shed Appraiser/Superintendent would give order for ―Out of Charge‖.

However, in rare cases, if some discrepancy is

found between the declaration and the result of

examination of cargo, the Assistant

Commissioner/Deputy Commissioner (AC/DC)

revises the assessment on the basis of

examination report, After issuance of Out of

Charge order on the B/E, the importer presents

the same to the Custodian who in turn issues the

Gate Pass after verification of correctness of

Bill of Lading and number of packages. The

importer/CHA presents importer‘s copy of the

B/E and the Custodian Gate Pass to the Customs

Officer at the gate while taking the goods out of

the Customs area.

As regards exports, Shipping Bills are required

to be filed along with other documents such as

invoice, Application for Removal (ARE),

packing list etc.

The Assessing Officer in the export department

checks the value of the goods, classification,

rate of duty and others with regards to different

provisions and the Foreign Trade Policy and

related documents.

After the Shipping Bill is passed by export

department, the exporter presents the goods to

the Shed Appraiser (Export) for examination.

After the examination, officer gives a ―Let

Export‖ order, after which exporter may load

the goods into vessel/aircraft under supervision

of Customs Officer.

Issue Of Custom House Agent License

It has been brought to the notice of the Board by

certain field formations that they are facing


difficulties in issuance of Custom House Agents

(CHA) License for eligible persons and in

implementation of the Custom House Agents

Licensing Regulations (CHALR), 2004. These

issues were examined by the Board in

consultation with customs field formations and

in the Board meeting. Further, a meeting was

also held with the Chief Commissioners of

Customs having jurisdiction over major Custom

Houses. Accordingly the following decisions

have been taken on the issues listed below:-

1. Minimum number of CHAs required in a

Customs station

The CHALR, 2004 do not provide for any

restrictions on the number of CHA‘s. Board

is of the view that, ideally, no restriction

should be placed on the number of CHAs

operating in the Custom Houses and the

market forces should govern the number of

proficient and qualified persons required to

carry out the job of CHA commensurate

with the volume of import / export cargo.

2. Employment of person by a CHA

In the present scheme of CHALR, 2004

under regulation 19(1), the Custom

House Agent may employ any person who

shall have a minimum educational

qualification of 10+2 School

education. However, appointment of such

person shall be made only after obtaining

approval of the Deputy Commissioner /

Assistant Commissioner (DC/AC)

designated by the Commissioner

of Customs, who shall take into

consideration the antecedents and character

of the person as provided in regulation 19(2)

of CHALR, 2004. In this regard, Board has

decided that the DC/AC concerned, may

ensure that individuals involved in any

fraudulent activity (i.e., individuals

suspended or blacklisted or denied

permission to work in any section of

the Custom House) shall not be allowed to

be employed by a CHA for transacting

business with Customs. CHALR, 2004 do

not provide for any restriction on the

number of persons a CHA can employ.

However, under the regulation 19(3), any

person employed by CHA is required to

appear through an examination conducted

by DC/AC designated or a Committee of

officers to ascertain the adequacy of the

knowledge of such persons about the

provisions of the Customs Act, 1962 before

they are granted ‗G‘ Card. Those persons

who have not qualified in

the examination but who are still in

employment with CHA are being given

‗H‘ card for assisting the CHA in his

work. However, the Commissioner

of Customs in a Custom House / Station

shall undertake an annual review of such ‗H‘

Cardholders. The examination under

Regulation 19(3) shall also be conducted by

Commissioner ate of Customs on annual

basis.

3. Suspension or revocation against CHAs

operating on „C‟ form intimation basis

In case CHAs, are found to have violated

any provision of the CHALR, 2004 at any

customs station, it is clarified that the

suspension action against CHA‘s operations

may be taken by the Commissioner

of Customs at the station who issued the


CHA license and such action would either

be limited to a particular customs station

where a violation has been noticed or action

against the CHA in general, applicable at all

customs stations where the CHA operates,

depending upon the gravity and seriousness

of the violation. Where the CHA license is

suspended, all ‗G‘ and ‗H‘ cards issued in

respect of that license would become non-

operational.

Further, it is also clarified that

the Commissioner of Customs at a customs

station who had authorized a CHA to operate on

‗C‘ form intimation, should inform the details of

violations to the Commissioner of Customs at

the customs station from where the CHA license

was issued for such CHA, so that necessary

action for suspension or revocation of CHA

license, could be initiated by him. This would

avoid duplication and ensure uniformity in

adjudication of a case against a CHA in

suspension or revocation proceedings by the

Customs field formations. However,

the Commissioner of Customs, who had

authorized a CHA to operate on ‗C‘ form

intimation at a customs station, may take action

in deserving cases under regulation 21 of

CHALR, 2004 for prohibiting the working of

such defaulting CHA in any section of

the Custom House/Customs Station.

Service tax valuation issues pertaining to

Customs House Agents Service

Customs House Agent‘s (CHA) Services are

taxable since 15th June 1997. As per the

definition (section 65 (105) (h) of the Finance

Act, 1994) the ‗taxable service‘ means any

service provided or to be provided to any

person, by a custom house agent in relation to

the entry or departure of conveyance or the

import or the export of goods and the term

‗service provider‘ shall be construed

accordingly. Further, as per definition appearing

under section 65(35) of the aforesaid Act, a

‗custom house agent‘ means a person licensed,

temporarily or otherwise, under the regulations

made under sub-section (2) of section 146 of the

Customs Act, 1962. The Custom House Agents


Licensing Regulations, 2004, made under the

said section, prescribe the procedure for grant of

license by the customs department. They

(regulation no. 13) also place obligations on

such license holders during their interface with

customs department pertaining to customs

formalities for conveyance or imported or

export goods.

While the principal job of a CHA is to get the

import or export consignments cleared through

customs, they, being the ‗persons on the spot‘,

also at times arrange services for packing,

unpacking, loading, unloading, bringing or

removing the goods to or from the customs area,

vessels or aircrafts for their customers (i.e.

importers or exporters). These services are

provided by different agencies such as Port

Trust, Steamer Agents, Cargo Handlers,

Warehouse-keepers, Packers, and Goods

Transport Agents. Normally the CHAs initially

pay the service charges to these agencies and

later recover these charges from the customer

along with their own charges CHAs. Similar

arrangement can occur for payment of statutory

levies like Custom Duties, Port charges, Cesses

etc. liveable on the said goods.

References:

1. Retrieved on March 27, 2011 from http://www.forum4finance.com/2010/04/11/issue-of-custom-

house-agent-license/

2. Retrieved on March 27, 2011 from http://www.trpscheme.com/trp/St_Docs/ST-Circular-

No.119.pdf

3. Retrieved on March 27, 2011 from http://infrastructure.gov.in/pdf/IMG_main.pdf

4. Retrieved on March 27, 2011 from http://www.pan-marine.net/images/custom-clearance.jpg

5. Retrieved on March 27, 2011 from

http://www.giantlogistics.com/images/images/scaled/CEU_BWind9.jpg.

6. Retrieved on March 27, 2011 from http://www.jrilogistics.com/images/custom_agent.GIF.

http://www.forum4finance.com/2010/04/11/issue-of-custom-house-agent-license/

http://www.forum4finance.com/2010/04/11/issue-of-custom-house-agent-license/

http://www.trpscheme.com/trp/St_Docs/ST-Circular-No.119.pdf

http://www.trpscheme.com/trp/St_Docs/ST-Circular-No.119.pdf

http://infrastructure.gov.in/pdf/IMG_main.pdf

http://www.pan-marine.net/images/custom-clearance.jpg

http://www.giantlogistics.com/images/images/scaled/CEU_BWind9.jpg

http://www.jrilogistics.com/images/custom_agent.GIF


Global Manufacturing & Global Logistics: India‟s Fortune

Deepak S., MBA-LSCM (Sem II, 2010-12)

Companies have woken up at the right

time to the fact that only on operating beyond a

single country; their businesses would tend to be

more and more relevant on the global stage. A

fundamental economic shift in manufacturing

towards emerging countries away from

developed countries has been witnessed for the

past couple of years which will tend to continue

in the same trend. A recent report on ―Trends in

Global Manufacturing, Goods Movement and

Consumption, and Their Effect on the Growth

of United States Ports and Distribution‖

published by NAOIP estimates India and China

to account for nearly 25-40% of the total world

demand for goods and service while looking

ahead for the year 2025.

Apart from the repeatedly voiced factors like the

availability of labour and material resources for

the manufacturing industry, other factors like

management, research and development, sales

and marketing and business

support services are also

looked for by the global

companies in order to make

a global and local presence

as well. All these factors

have led to the concept of

―Global Manufacturing‖.

Manufacturing of products or materials for

global consumers is conceptual idea of Global

Manufacturing. When it comes to serving global

customers, there also arises a need for global

logistics. When it comes to real-time operations,

it doesn‘t look as simple in operations as

described above. A clear visibility of the

movement of the products throughout the entire

pipeline has to be catered in global logistics. By

2015, India is expected to be a successful

manufacturing hub which can be complemented

by the facts that there have been huge amount of

foreign direct investments being made in

manufacturing economy.

India‘s economy, which was primarily service

focused, is developing its exports to a larger

extent gaining more momentum every year.

Though service sector has helped India to

achieve a faster economic success,

manufacturing sector is believed to add

sustainability factor to the economy. A report by

Deloitte says India ranking second in

manufacturing competence globally followed by

US and Korea. India has been believed to stay

ahead of US in manufacturing competence due

to the reason that its domestic investments is

encouraging than that in US complemented with


the growing Asian market as well. China has

managed to top the rankings with full 10 points

whereas India has managed to get 8.15 points as

competitive index which is expected to increase

to 9.01 points in the next 5 years.

World‘s largest airlines have started to hail from

Asia and Latin America reflecting the shift in

global economy by the manufacturing industry.

IATA has released a report for the year 2010 on

the net profits of the airlines globally. It is said

that, out of a total US$15.1 billion of net profits,

Asian carriers have contributed US$7.7 billion

while North American airlines have earned

US$5.1 billion. These figures indicate how

Asian countries like China, India and Korea are

progressing in the global aviation economy.

Aircraft manufacturing companies like Airbus

and Boeing have started to procure

manufactured aircraft parts from Indian

suppliers which are bringing in lots of fortune

into the Indian economy. The role of Indian

manufacturers playing as International suppliers

extends to automobile industries as well.

Recently VE Commercial Vehicles Ltd. (A 50-

50% JV of The Volvo Group and Eicher

Trucks) has started to manufacture engines both

for domestic and international market as well.

These developments have led to increase in

exports from India. This is achieved due to the

availability of R&D facilities, resource

capabilities and developing logistics

infrastructure in India.

Airbus claims to have 70% of new aircraft

orders from Indian Aviation industry and hence

having Indian manufacturers as suppliers would

benefit for future benefits while providing

customers with maintenance service. This has

led to the introduction of MRO industry in

India. IATA has valuated MRO industry at

US$50 billion which is expected to grow more

than 7% per annum through 2013. Boeing has

already started to establish an MRO facility in

Nagpur to cater to the future needs of their

customers. Boeing estimates that India would

require aircraft worth US$100 billion till 2029.

Recent global business developments have

encouraged various companies to reap the

benefits out of India‘s manufacturing

competence. More present and future demands

from India‘s manufacturing sector have led to

the development of many Global Manufacturing

hubs causing more movement of goods. More

movement of goods means more logistical

operations in terms of imports and exports

which in turn has created a great need for highly

sophisticated Global Logistics hubs at various

locations close to the manufacturing hubs.

A couple of logistics hubs in places like

Oragadam, Hubli, Vallarpadam etc. which are

developing its infrastructure to handle global

logistics are supporting global manufacturing in

India. Cargo handling capabilities have been

increased in certain metro airports and also have

been planned for future Greenfield projects as

well. Non-metro airports are also being focused

in developing its cargo handling abilities so as


to have an efficient logistics network throughout

the country. 100% FDI being allowed in India is

an encouraging factor in global logistics which

brings the presence in the presence of all global

players as well.

India‘s nearness in becoming a successful

Global Manufacturing and Global Logistics hub

mainly depends various buildings blocks like an

encouraging business climate, improved

infrastructure and value-enhancing mindset on

manufacturing. Though it‘s easy to be said than

done, India has always bounced back strongly

on various occasion despite having dealt with

severe constraints in the past. In conclusion,

India will be able to taste the fortunes out of

global manufacturing and global logistics on

being able to develop and sustain cost-efficient

resource capabilities.

References:

1. Jha, L. K. India ranked second in global manufacturing competence. Retrieved from

http://www.livemint.com/2010/07/10155510/India-ranked-second-in-global.html, Retrieved

on March 25, 2011 from http://www.livemint.com

2. MRO - Ready for Transformation. Retrieved from http://www.iata.org/pressroom/airlines-

international/february-2011/Pages/mro.aspx, Retrieved on March 25, 2011 from

http://www.iata.org

3. Spencer, C. D. and Schellenberg, S. Trends in Global Manufacturing, Goods Movement and

Consumption, and Their Effect on the Growth of United States Ports and Distribution.

Retrieved from http://www.naiop.org/foundation/2010reports/trends_globalmanufacture.pdf,

Retrieved on March 25, 2011 from http://www.naiop.org

4. VECV newsletter. Retrieved from

http://www.eicherworld.com/mediar/photo/img/pic232.PDF, Retrieved on March 25, 2011

from http://www.eicherworld.com


Distribution Requirement Planning Ninad Sawant, MBA-LSCM (Sem II, 2010-12)

Have you ever thought what happens to

a product once it‘s manufactured? Do you think

it‘s as simple as picking the finished product

and carrying it to the customer‘s doorstep? Well

it‘s not that simple in the industry. To

understand this we need to understand who is a

Distributor. The APICS Dictionary describes a

distributor as "A business that does not

manufacture its own products but purchases and

resells these products. Such a business usually

maintains a finished goods inventory."

Now let us try to understand what Distribution

Requirement Planning is.

Distribution Requirement Planning (DRP) is

defined as a systematic process for determining

which goods, in what quantity, at which

location, and when are required in meeting

anticipated demand. This inventory related

information is then entered into a manufacturing

requirements planning system as gross

requirements for estimating input flows and

production schedules.

DRP mainly takes into consideration three

factors:

1. What quantity? - Is it only the forecast

quantity for given item. If so, when

market is buoyant and requires more

stocks how are we going to tackle the

situation.

2. When (Time Period) are we going to

dispatch the quantity? On Monthly basis,

Weekly basis or daily basis?

3. Which locations are we going to

dispatch the quantity? This requires clear

understanding of

"Distribution Network

Design" of the

organization.

DRP Requirements:

Information Requirements:

1. Base Level Usage Forecast - Forecast

data should be at SKU / Item level for

Product axis and any level below

warehouse or DC for customer. Product

axis is SKU / Item level as the Company

raise invoice at SKU / Item level to

customer, whereas ―Distribution

Network Design‖ of that company

decides the customer axis level.

2. Distribution Network Design -

Distribution Network Design may

change from company to company of

similar Industry. For example HP and

Dell company manufacturing computer

machines belong to computer hardware

industry but their distribution network

design differ as per under mentioned

diagram.

Source: Retrieved from http://4.bp.blogspot.com

http://www.businessdictionary.com/definition/inventory.html

http://www.investorwords.com/10870/related.html

http://www.businessdictionary.com/definition/information.html

http://www.businessdictionary.com/definition/manufacturing.html

http://www.businessdictionary.com/definition/requirements.html

http://www.businessdictionary.com/definition/planning.html

http://www.businessdictionary.com/definition/system.html

http://www.businessdictionary.com/definition/gross.html

http://www.businessdictionary.com/definition/estimating.html

http://www.businessdictionary.com/definition/input.html

http://www.businessdictionary.com/definition/flow.html

http://www.businessdictionary.com/definition/schedule.html

http://4.bp.blogspot.com/

http://4.bp.blogspot.com/_2mOtf320OcM/Sl_BXipspjI/AAAAAAAAAD0/l5RLwMV5Ut4/s1600-h/T1.jpg


3. Inventory Status - Inventory

availability status at various distribution

centre level. This includes Transit stocks

(i.e. stocks already dispatched from

factory but not reached DC)

4. Ordering data - Time phasing or

schedule flow, the factory should deliver

the materials to each DC. For example

factory can be asked to dispatch an item

to DC at destination 1(say Kolkata) on

weekly basis whereas to another DC at

destination 2 (say Mumbai) on

fortnightly basis due to lower demand in

that region.

DRP Process Requirements:

1. Net Requirement (NR) computation -

Forecast at SKU / DC level is used in the

DRP process. However some Inventory

referred as ―opening stock‖ are already

available at DC. There could be materials

lying ―In transit‖ i.e., materials which has

already been dispatched from factory and

are yet to reach DC. These inventory i.e.,

opening and in transit stocks has to be

adjusted or netted against the forecasted

volume to arrive at net stock requirement

at each SKU / DC.

Since demand is volatile in nature, the

company may prefer to keep buffer stock

referred as ―Safety Stock‖ to meet

unexpected demand fluctuation. Safety

Stock criteria will differ for each item as

per nature of product and each DC due to

demand nature. For example Hyundai Car

Company will keep different safety stock

Norms for Santro and Accent Model due

to categorization. Similarly the company

keeps different safety stock norms for

Santro between DC at Northern and

Southern Region due to different demand

pattern in different region.

Net Requirement is computed based on

Forecast Volume + Safety Stock –

opening physical stock – In transit

stock.

2. Time Phasing Requirement: Time

Phasing means when the company wants

to move the products from manufacturing

plant to DC. This could be monthly,

fortnightly, weekly basis. As per above

example if the Hyundai plant decided to

send 8000 units of Santro car so as to

reach Delhi DC by 3rd of August to meet

August Sales. Delhi DC has to keep huge

warehouse to accommodate all 8000 units

and require more manpower to maintain

the Santro cars at their end. However, if

the company decide to send 45% of NR

i.e., 3600 units on 3rd, 35% of NR i.e.,

2800 units on 13th and 20% of NR i.e.,

1600 units on 23rd August to Delhi DC.

This enables the DC to keep minimal

stocks at hand with optimum storage space

and manpower by providing the good

service level to the customers. For FMCG

company like GlaxoSmithKline, the time

phasing for Horlicks product could be

once in 3 days. Time Phasing differs for

each Product and DC.

Time Phasing depends on ―Distribution

Network Design‖. For example if

manufacturing plant is located at

Singapore and Central Distribution is

located at Mumbai, the lead time i.e.,

shipping the product from Singapore to

Mumbai is three months then the time

phasing could vary according to demand


for the product. Let us assume perfumes

manufacture at French has got CDC at

Mumbai and their lead time is three

months. In this case the CDC may plan to

get three months consolidated stocks once

in three months to avoid stock out

situation.

3. Planned order Release - In the earlier

time phase we have given exact quantity

and schedule date of stocks to be received

at DC. However we need to communicate

when the dispatch to be effected from

plant so that the materials reach DC on

scheduled date. In order to calculate the

Planned order Release, we need to know

the Lead time from Plant to various DCs.

For example Hyundai plant is located at

Chennai and Lead time from Chennai

plant to DC at Delhi is 7 days. The

planned order release date should be 7

days less of schedule date and also to

ensure that that day is working day.

References:

1. Retrieved from http://logisticssupplychainforum.blogspot.com/2009/07/demand-planning-drp-

distribution.html

http://logisticssupplychainforum.blogspot.com/2009/07/demand-planning-drp-distribution.html

http://logisticssupplychainforum.blogspot.com/2009/07/demand-planning-drp-distribution.html


Activity Based Costing (ABC) - An Innovative Cost

Optimization Tool for Retail Sector Dr. Sumeet Gupta, Asstt. Lecturer, University of Petroleum & Energy Studies

Management principles have

undergone drastic changes over the last century

& will continue to change. Organization in all

sectors are extending dimension of management

to horizontal along with vertical and to process

orientation along with functional orientation.

Activity Based Costing is one of the extending

dimensions. It accurately estimates the true cost

of products, services, processes, customer

segments, distribution channels by assigning

cost to activities with the help of Cost Drivers. It

improve the organizations work processes and

activities efficiently and effectively. ABC

provides the fruitful information to the

management as value analysis, cost drivers etc.

Activity Based Costing (ABC): A Step ahead

to Traditional Costing: Traditional costing

provides little information beyond material and

direct labour to assist management in decision

making. Incorrect prediction of cost will go

away which distorts the cost reduction analysis.

Traditional costing system has tracked only the

purchase price i.e. cost of ordering, receiving,

inspecting and other expenditure. But in present

scenario the dimension has changed. Now

company has

1. Heterogeneous products

2. High overhead costs

3. Diversified distribution channel

4. Intense competition

5. Research & Development.

6. High Level Customer Service

7. Brand Consciousness

In these situations to

survive the company; it is

the need to access the

cost incurred activity

wise so that grey area can

be identified and taken

care of. Activity based

costing is a methodology which assign costs to

the activities involves in the manufacturing and

supplying of products & services.

Peter B.B Turney said about Activity Based

Costing as:

“It is a method of measuring the cost of

performance of activities and other objects.

Assigns cost to activities based on their use of

resources and assign cost to cost objects based

on their use of activities. ABC recognizes the

casual relationship of cost drivers to

activities”.

In ABC the basic part is identifying the

activities both support and primary activities.

The main stages in Activity Based Costing are:

Step 1: Identifying the functional area of

organization

Step 2: Identifying the activities relative to

these areas in the organization.

Step 3: Allocate the cost to various activities in

these areas.

Step 4: Preparing the statement of cost activity

wise

Step 5: Identifying the cost drivers in each

activity under functional areas.

Step 6: Determining the activity cost driver rate

(total cost of the activity/ activity driver)


Step 7: The last phase is to absorb the

overheads based on this activity cost driver rate.

It is being known that direct costs are easy to

handle and assign but indirect cost are difficult

to allocate and handle. ABC rectify problem of

inaccuracy in handling and allocation as well as

apportionment. ABC is a systematic approach to

deal with the functional areas and the activities

involved in these areas. The basic objectives of

ABC costing are:

1. Quality product and service with ABC

2. Optimize cost in tune with price resistance

in market.

3. Cost Price Leadership

4. Identification of Non Value Added

Activities both at horizontal and vertical

level.

5. Identify the local point of improvement

and cost reduction.

6. Building a Customer- Supplier Network

7. Providing more accurate Cost information

for Products/Services.

8. Improve Product Costing

ABC is used as an addition to the value of the

organization by using it as an informational

basis of managing and improving the business/

Activity Flow Map in ABC

Source: “Implementing Activity Based Management in daily operations”. J A Miller P. 236. . John

Wiley & Sons Inc. and “Technical Briefing on Activity Based Management: An Overview”; the

Chartered Institute of Management Accountants, London, April 2001

Resources

Activities Performance Measures Cost Driver

Cost Objects

Activity

Analysis

Cost Driver

Analysis

Performance

Analysis


The activity flow map depicts that identifying

activities is most important parameter. The cost

drivers and resources relates to the activities are

identified. Activities are concerned with cost

objects which may be a product or service. Thus

it is used as a performance measurement tool by

performing Activities Analysis, Cost Driver

Analysis and Performance Analysis.

Implementation of Activity Based Costing

(ABC) in Retail Sector:

Retail sector is based on customer supplier

network called as Supply Chain. Retail Sector is

getting momentum by growing as leaps and

bounds. Retail Sector particularly in Food &

Grocery, Clothing & Textiles, and Consumer

Durables, Jewellery & Watches, Home Décor

and Furnishing, Beauty Care and others is a

major chunk of the market. Retail Sector

movement from local mom and pops shops i.e.

Kiryana Wala to Hyper Market, Super Market,

Departmental Store, Exclusive Outlet, Discount

Stores, Cash-n-Carry, and Pick-n-Pay makes it

versatile. The major challenges which the retail

sector is facing are:-

1. Competition

2. Technology Advancement

3. Mall Revolution

4. Private Label Brands

5. Collaboration with manufacturers

6. Managing Sourcing

7. Innovative Retail Formats

8. Cost Competition

In view of these challenges, it is imperative to

consider the following Functional Areas in the

Retail Sector for identifying the activities:

1. Logistic Management

2. Effective branding and labelling

3. Material Management

4. Stares management

5. Production scheduling and management

6. Quality control management

7. Repair and maintenance

8. Research and development

9. Administration

10. Personnel management

11. Accounts

12. Secretariat

13. Public relations

14. Finance and fund raising

15. Marketing Management

16. Sales Management

17. Import

18. Export

19. Distribution management

Big Retail Giants like Reliance Fresh,

Spencer‘s, Subhiksha, Pantaloon Retail (India)

Pvt Ltd., Vishal Mega Mart, MORE, Shopper‘s

Shop, Hyper City, Easy Day are following the

directional path of activity Based Costing(

ABC)as a tool to reduce their cost by identifying

Functional areas and their Activities as well as

Cost Drivers related to them. CEO of Pantaloon

Retail (India) Pvt. Ltd. Mr. Kishore Biyani has

made a tremendous growth in FMCG segment

by emphasizing the Activity Based Costing

(ABC) concept.

The strategic move adopted by the Retail Sector

is as:


ABC Strategy: Retail Sector

Cost Price Leadership

Competitive Advantage

Active Based Costing

Functional Areas

Activities

Cost Drivers

Value Delivery

Building Brand

Image

Customer Expectation

Manage Product

Portfolio

Manage Business

Process


A close outlook of the various retail outlets has been conducted and activities in various functional areas

are identified which are explained below:

Functional Areas Activities Involved Cost Drivers

Receiving of indent Number of Indents

Material

Management

Follow up delivery Number of Indents

Inspections of materials Number of Indents

Store

Management

Physical custody of materials No of times custody took

Inspection and verification No of times inspected

Production Recording of material

consumption for each batch of

consumption.

No Cost Driver Required

Quality Control Testing the F. Goods as per

standard

No of batches produced

Research and

Development

Innovative ideas for new

product times

Time spent for development

Administration Canteen No of people took meals

Watch and Ward No of security involved

Personnel Training No of employees

Regular Increment No of employees

Accounts

(Finance)

Sales Accounting Number of people

Wages Accounting Number of people engaged

Salary Accounting Number of staff

Bill passing for miscellaneous Value of purchase

Public Relation Issue of Corporate Brochure Time Spent

Advertisement in trade journal Time Spent

Finance Preparation of TB & B/S

monthly

Time Spent

Issue of Cheques for purchase Time Spent


Marketing

Management

Advertising work for increase

share of market

%age of Increased sales

Analysis of feedback from sales Time

Preparation of Invoice Time

Sales Reviewing of orders No of orders

Distribution Taking Custody of finished

goods

No of times of custody

Hiring the services of transport

for dispatch of goods

Weight of Goods

Utility Keeping the records for

purchase, power etc.

Value of purchased utility

Maintenance Time

Keeping the records for

purchase, power, etc.

Areas/ Hrs. or both

MD/CEO

Secretariat

Holding of meeting with

employees

Time Spent

Secretarial Dealing with consultants for

problem arising in day to day

events

Time Spent

EDP Programming No of people

Accounts (Cost

management &

Insurance

Coverage)

Wages Allocation Man hours Involved

Store Allocation Man hours Involved

Source: Saha, A. (AICWA) “Implementation of Activity Based Costing “, The Management

Accountant, January 1999.


Conclusion

Activity based costing is a managerial costing

tool that traces the resources cost to activities

and assign cost based up on the cost drivers. In

the Retail Sector by identifying various

activities and their cost drivers in functional

areas; expected benefit can be made greater than

the expected costs.

It would help In Joint Problem Solving,

Information Sharing, Diversified Customer

Supplier Network and Cost Price Leadership. It

also helps in improve decision making at both

operating and strategic levels. So the

implementation of ABC is management

philosophy adopted by the Retail Sector. It

would make it more profitable and cost

competitive.

References:

1. Barfield, JT, Raiborn and MA Dalton, 1991, cost Accounting, St. Paul, West Publishing

Company.

2. Maciariello, JA and CJ Kirby, 1994, Management Control Systems, Englewood Clifffs.

3. Saha, A. (AICWA) “Implementation of Activity Based Costing “, The Management Accountant,

January 1999.

4. “Implementing Activity Based Management in daily operations”. J A Miller P. 236. . John

Wiley & Sons Inc. and “Technical Briefing on Activity Based Management: An Overview”;

The Chartered Institute of Management Accountants, London, April 2001

5. Miller, John A, 1996, Implementing Activity-Based Management in Daily Operations, New

York, John Wiley & Sons.

6. Anthony R.N. and Reece J.S., Management Accounting Principles, 6th ed., Homewood, Illinois,

Richard D. Irwin, 1995.

7. Hansen & Mowen, Management Accounting, Thomson Learning, Bombay.

8. Anthony Robert and Hawkins David, Accounting: Text & Cases, McGraw Hill, 1999

9. Jain, S.P and Narang, K.L., Advanced Cost Accounting, Kalyani Publishers, Ludhiana

10. Bhattacharya, Costing for Management, Vikas Publishing House, New Delhi

11. Kalpan, Robert S. and Atkurson, Anthony A, Advanced Management Accounting, PHI, N.Delhi.

12. Horngreen, Charles T., Foster, George and Srikant M., Datar, Cost Accounting: A Managerial

Emphasis, PHI, N.Delhi.

13. Hansen, Cost Management, Thomson Learning, Bombay.

14. Shank, Cases in Cost Management, Thomson Learning, Bombay.

15. Smith, M, 1998, “Innovation and Great ABMT trade-off, Management Accounting (Jan.), 24-

26.

16. Turney, PBB, 1995, “The Activity-Based Management Cross Model”, Reading and Issues in

Cost Management, ed, Reeves MR Waren, Gorham & Lamont and South- Western College

Publishing.

17. “Activity Based Costing: its development -a case Study” S.P. Mukherjee, The Management

Accountant, January 1999.


Cold Chain Storage-Indian Perspective

R.M. Kannapan, MBA-LSCM (Sem II, 2010-12)

India being an agricultural country, its

economic status mostly depends on the food

commodities. These food materials which are

produced in a large scale are not preserved

properly. Although production of fruits and

vegetables is very high, there is a post

harvesting loss of around 30% fruits and

vegetables. This occurs because of harsh

weather conditions. To overcome this problem,

the food materials should be preserved for a

very long time by keeping them in a cool place

which protects the food from bacteria and other

micro-organisms. But India is having very less

number of cold storage facilities. Major

problems associated with the unavailability of

cold storage facility and steps taken to increase

the use of Cold Storage for preserving the food

items are discussed below.

What is Cold Storage?

The storage of perishables at low temperatures,

usually above freezing, by the use of

refrigeration is done to

increase the storage life. In

general, the lower the

temperature, the longer the

storage life. If temperatures

are maintained below the

freezing point of the product

stored, it is called freezer

storage. Most fruits and many other products,

however, are damaged by freezing and cannot

be kept in freezer storage. A cold-storage plant

is a large insulated building, with its attendant

refrigeration equipment, for storage of

commodities at low temperatures. Facilities are

often included for quick-freezing fruits,

vegetables, meats, and a variety of precooked

foods and bakery products for the consumer

convenience market.

Present Condition of Cold Storage in India

As per the official release from the agricultural

minister, there was a loss of food commodities

worth Rs.53, 000 Crore during the last financial

year because of the scarcity of cold

storage systems. One of the main reasons

behind this is improper way of preserving

the food materials in the state owned

warehouses. Different food items require

different storage temperature such as

meat requires very low temperature and

vegetables require a slightly high

temperature. Because of the ignorance of

the warehouse operators, food products

are stored in temperatures different than

the actually required temperatures. This

shows that the available cold storages are


not used in a useful manner because of unskilled

labours.

Uttar Pradesh accounts for the maximum of

1,579 cold storage warehouses, West Bengal is

at the second place with 531 cold storages

followed by Maharashtra (460) and Punjab

(420). Some of the major players in providing

Cold Solutions are Ingersoll Rand, Rinac,

Walco, Frick India, Carrier, Bluestar, Lamilux

and Dupont. The supply chain industry covers

diverse segments of food commodities like

dairy, seafood, fruits and vegetables, frozen

food, meat and poultry and the upcoming frozen

food and organic food industry.

Steps Undertaken by the Government to

augment Cold Storage

The Indian government has started taking

necessary steps in order to augment the use of

cold storage systems. It has provided the cold

chain storage as an Infrastructure

Status in Budget 2011-12 and has planned to

rent or lease more warehouses, encourage

private entrepreneurs by providing loan and give

free guidance to such entrepreneurs. The

government also has decided to invest Rs.2000

Crore to increase cold storage systems and they

have given full exemption of excise duty for AC

equipment and refrigeration panels for cold

chain infrastructure & conveyer belts. In order

to operate the cold storage system in a proper

way, the government is on its way to training

the manpower. Hope the process will be

effective and food loss will be minimized.

Various Technologies Used for Cold Storage

In India, a successful technology in preservation

would be the one that augments a solution for

the massive wastage of food in the country.

Some of the latest technologies for the cold

chain industry include post-harvest technologies

for pre-cooling, process technologies for

controlled ripening, high relative humidity cold

stores for fruits and vegetables, blast freezing

and individual quick freezing for fruits and

vegetables among others.

Use of modern warehouse management system

which provides organized and systematic

storage of various kinds of goods, is the most

sought after technology. Besides, there are

temperature data loggers & RFID (Radio-

Frequency Identification) tags that help monitor

the temperature history of the truck, warehouse,

etc., along with the temperature history of the

product being shipped. RFID is a promising

technology that can provide numerous benefits

in temperature monitoring and performance of

perishable supply chains. Another technological

advancement is the palette cold storage facility

which has different temperature controlled

segments, enabling the customers to select the


right temperature for specific product

requirements. The facility is equipped with

advanced sensing technology, which offers an

advanced technical back-up including an

exclusive aspect with any variation in

temperature.

The following table shows the temperature

requirements for various food commodities and

the periods for which these commodities can be

stored without any significant loss:

References:-

1. Indian Report of Daily news and analysis.(n.d.). Poor storage facilities leading to food

wastage: Sharad Pawar Retrieved from http://www.dnaindia.com/india/report_poor-storage-

facilities-leading-to-food-wastage-sharad-pawar_1380606.

2. Crop Storage of India.(n.d.). Retrieved from Indiangov.in website

http://india.gov.in/citizen/agriculture/crop_storage.php.

3. Cold Storage of fruits and vegetables (Practical Action brief).(n.d). Retrieved from

http://www.appropedia.org/Cold_storage_of_fruits_and_vegetables_(Practical_Action_Brief).

Commodity Temperature

°C

Relative

humidity %

Maximum storage

time recommended

(ASHRAE handbook

1982)

Storage time in

cold stores for

vegetables in

tropical

countries

Apple 0-4 90-95 2-6m -

Beetroot 0 95-99 - -

Cabbage 0 95-99 5-6m 2m

Carrots 0 98-99 5-9m 2m

Cauliflower 0 95 2-4w 1w

Cucumber 13-Oct 90-95

Eggplant 10-Aug 90-95

Lettuce 1 95-99

Leeks 0 95 1-3m 1m

Oranges 0-4 85-90 3-4m

Pears 0 90-95 2-5m

Pumpkin 13-Oct 70-75

Spinach 0 95 1-2w 1w

Tomatoes 13-21 85-90

http://www.dnaindia.com/india/report_poor-storage-facilities-leading-to-food-wastage-sharad-pawar_1380606

http://www.dnaindia.com/india/report_poor-storage-facilities-leading-to-food-wastage-sharad-pawar_1380606

http://india.gov.in/citizen/agriculture/crop_storage.php

http://www.appropedia.org/Cold_storage_of_fruits_and_vegetables_(Practical_Action_Brief)


Linkages of the Retail Supply Chain Neha Grover, Doctoral Research Fellow, University of Petroleum & Energy Studies

“The time has come to link ecology to economic and human development”- Edward O. Wilson

A look at India‘s retail sector tells the

story of how things have changed in the Indian

economy. India has witnessed a frenetic pace of

retail development in the recent times and today,

retail sector is one of the largest sources of

employment. Goldman Sachs has estimated that

the Indian Economic Growth could actually

exceed that of China by 2015. According to the

8th Annual Global Retail Development Index

(GRDI) of AT Kearney, Indian retail industry is

the most promising and emerging market for

investment. The contribution of retail to Gross

Domestic Product (GDP) has increased from

12% in 2009 to 22% in 2010 which undoubtedly

makes India, one of the fastest growing

economies of the world and gives immense

opportunities to the entrepreneurs, investors and

researchers interested in the global economy.

This pace of high growth is expected to continue

due to huge

investments via

entry of organized

players and

multinationals. It is

estimated to grow

from US $ 336

billion to US $ 590

billion in 2011 and

US $ 833 billion

by 2013 (source:

A. T. Kearney).

These economic

changes have

resulted in hectic

activity in the retail sector

and a lot more is on the

anvil.

An increased

sophistication is observed

in the shopping pattern of

customers, which has

resulted to the emergence of big retail chains in

most metros and towns. On one hand some

group of visionary are working constantly to

improve upon the urban shopping experience

and on the other hand some companies are

trying to infuse innovative retail experience into

the rural set up. Thus the development of mega

malls in India is adding new dimensions to the

booming retail sector which offers a significant

development in retail landscape not only in the

metros but also in the smaller cities. ITC went

one step ahead to revolutionize rural retail by


developing ‗Choupal Sagar‘; a rural mall, for

rural India.

The major focus area in the retail sector is the

supply chain management. It has been observed

in western countries, that the retail sector has a

highly developed system of supply chain.

However developments in supply chain in

Indian retail sector has been quite slow and

today the supply chain has become a strategic

necessity that delivers a competitive edge for

retailers. No longer, the

concern is about cost

control, companies are

viewing the supply

chain as a key element

of their business

strategy. The areas that

need attention for the

growth of the Indian

retail sector include

duty and tax structures,

infrastructure, rising

land prices and

effective trend

forecasting. Despite

growing production of

vegetables and fruits,

there availability is

inadequate due to bottlenecks in retailing

capacity. An estimated 40% of the fruit and

vegetable production in India goes waste due to

lack of storage, cold chain and transport

infrastructure.

To address these issues, 15 mega food parks is

planned to come up in 2011-12. Entry of foreign

retailers such as Wal-Mart, Carrefour and Tesco

will help tame surging food prices and ensure

farmers get better prices for their produce as

they will be able to remove inefficiencies in the

supply chain and procure directly from farmers.

The union budget 2011-12 has proposed for

exemption of excise duty on cold storage

infrastructure which might impact the sector

positively. The cold storage chains will be

granted infrastructure and capital investments in

them will be treated as infrastructure

investments so that the retailers will get better

cold chain equipment at lower costs, thus

reducing the pressure on the supply chain.

Thus the rapidly changing consumer

preferences, volatile inflationary conditions,

quick time to market at reduced cost calls for a

smart, efficient, seamless and agile supply chain

network to manage the ever-changing needs of

the customers. Having mastered the art of

managing supply chain complexities of the

country‘s biggest retail giant Future Group,

Future Supply Chains has dramatically changed

the way people perceive supply chain today.

Over the years, it has set an inspirational


benchmark in the Indian logistics industry with

its efficient and techno-savvy supply chain

management. Samson Samuel, CIO & Head –

SCM, Future Supply Chains, says, ―The core of

retail is to ensure that the right product reaches

the right place at the right time, which is

enabled by an efficient supply chain. Thus, a

retailer‘s entire top and bottom-line are

dependent on the availability of the products at

the shelf.

Essentially, supply chain has become a

differentiator in retail and is important for

customer retention.‖ He further adds, ―The

supply chain is unique, especially in the Indian

context, as the country is a multicultural

heterogeneous group where the consumer tastes

change every few kilometer. This means that

retailer‘s offering to customers is region-

specific, leading to multiple stock-keeping units

(SKUs). The high real estate rentals for retail

leave no scope for retail stores to have any

back-end store stocking of inventory. The

combination of these factors leads to a unique

Indian consumption supply chain – one that

includes handling very large number of SKUs in

pieces as opposed to fewer SKUs managed in

the form of pallets by most large retailers

worldwide. Over the years, we have learnt ways

to manage these complexities and have designed

and executed supply chain solutions that are

uniquely Indian.‖

The learning continues for all the

retailers with always rising complexity in the

supply chain. ―Such prosperity as we have

known it up to the present is the consequence of

rapidly spending the planet‘s irreplaceable

capital‖. – Aldous Huxley


Material Handling Equipment (MHE) & Principles Krishna Shanker Pandey, MBA-LSCM (Sem II, 2010-12)

Material Handling Equipments (MHE)

is mechanical devices for handling of supplies

with greater ease and economy. It is the

equipment which relates to storage, movements,

protection and control of materials, products and

goods all through the procedure of

manufacturing, distribution, disposal and

consumption.

Material-handling equipments can be used to

reduce labour-intensive material-handling

operations. It is utilized to increase output,

control cost and maximize the productivity.

Lifting equipment includes any equipment used

at work for lifting or lowering loads, including

attachments used for anchoring, fixing or

supporting it. These cover a wide range of

equipment including, cranes, fork-lift trucks,

lifts, hoists, mobile elevating work platforms,

and vehicle inspection platform hoists. MHE

can be classified into the following five major

categories-

1. Transport Equipment: Equipment used

to move material from one location to

another (e.g., between

workplaces, between a

loading dock and a

storage area, etc.). The

major subcategories of

transport equipment

are conveyors, cranes,

and industrial trucks. Material can also be

transported manually using no equipment.

2. Positioning Equipment: Equipment used

to handle material at a single location so


that it is in the correct position for

subsequent handling, machining, transport,

or storage. Unlike transport equipment,

positioning equipment is usually used for

handling at a single workplace. Material

can also be positioned manually using no

equipment.

3. Unit Load Formation Equipment:

Equipment used to restrict materials so

that they maintain their integrity when

handled a single load during transport and

for storage. If materials are self-restraining

(e.g., a single part or interlocking parts),

then they can be formed into a unit load

with no equipment.

4. Storage Equipment: Equipment used for

holding or buffering materials over a

period of time. Some storage equipment

may include the transport of materials

(e.g., the S/R machines of an AS/RS, or

storage carousels). If materials are block

stacked directly on the floor, then no

storage equipment is required.


5. Identification and Control Equipment:

Equipment used to collect and

communicate the information that is used

to coordinate the flow of materials within

a facility and between a facility and its

suppliers and customers. The identification

of materials and associated control can be

performed manually with no specialized

equipment.

Material handling is the movement of materials

to, through and from productive processes in

receiving, storage, packaging and shipping

areas. There are seventeen Material Handling

Principles which are explained below:

1. Least handling is best handling. The

greatest economy in moving materials is

secured by keeping handling to a

minimum.

2. Standardization of methods and

equipment results in the reduction of

costs of operation. Maintenance, repair,

storage and issue procedures can be

simplified.

3. Material Handling Equipment (MHE)

must be selected for a multiple number

of applications. Flexibility is the key.

4. Specialized equipment should be kept to

a minimum. Normally, first cost, cost of

operations and maintenance costs are

greater for special equipment than for

standard equipment.

5. Volume dictates the method of handling

materials. The number of pieces to be

moved determines the method of

handling.

6. The most essential phase of any program

is planning. Material handling is no

different. Factors requiring advanced

planning include protection against

weather and breakage, legal and physical

restrictions in reference to

transportation, the possibility of using

unitized loads, the standardization of

equipment and methods, the

combination of material handling


methods and the consideration of safety

hazards.

7. The length and number of moves of

material should be kept to a minimum.

Movement paths should be studies for

the possibility of reducing

"backtracking" and length of moves,

resulting in better utilization of

equipment and personnel.

8. Equipment capacities should never be

exceeded. Overloading causes excessive

wear of equipment and creates accident

potential.

9. All materials handling activities should

be analyzed for improvement

possibilities by elimination, combination

or simplification. Combination of

operations may result in the

simplification and reduction of the

number of times material must be

handled.

10. The selection of Material Handling

Equipment (MHE) is based on the

economies of operation. Greater

payloads for each handling operation

will result in less handling cost per

piece.

11. The "physical state" of materials is a

factor in determining MHE. The three

physical states of material - solid, liquid

and gas - determine the method of

containment (pack). This, in turn,

influences the selection of MHE.

12. The shortest distance between two given

points is a straight line - utilize a straight

line flow of materials whenever possible.

The time to move materials can be

reduced by using a straight line flow.

13. Materials should move continuously

along any production line. Choppy or

broken flow causes confusion and delay.

Most shipping and receiving operations

should operate on the principle of

continuous flow.

14. All materials handling operations should

follow a defined method. The

standardization of the method will

provide a basis for determining handling

requirements.


15. Short, irregular moves lend themselves

to manual materials handling. When

moves are short, irregular and load

capacity of people is not exceeded, it

may be more economical to use

manpower.

16. Whenever practicable materials should

be prepositioned for the handling

operations. Prepositioning places

containers in position to facilitate

picking up and/or moving and materials

so they do not obstruct other materials.

17. Whenever practicable, materials should

be moved in a horizontal plane or with

the aid of gravity. The ideal lifting

position is at the waist. The nearer to the

waist that a container or part can be

picked up and disposed, the greater will

be the efficiency.

Refrences:

18. Retrieved on March 27, 2011 from

http://www.globalsecurity.org/military/systems/ground/mhe.htm

19. Retrieved on March 27, 2011 from http://www.tpub.com/content/logistics/39/

20. Retrieved on March 27, 2011 from http://www.ise.ncsu.edu/kay/mhetax/PosEq/index.htm

21. Retrieved on March 27, 2011 from http://asilogi.blogspot.com/2008/01/definition-and-

functions.html

http://www.globalsecurity.org/military/systems/ground/mhe.htm

http://www.tpub.com/content/logistics/39/

http://www.ise.ncsu.edu/kay/mhetax/PosEq/index.htm

http://asilogi.blogspot.com/2008/01/definition-and-functions.html

http://asilogi.blogspot.com/2008/01/definition-and-functions.html


EVENTS

Minerva

The inter batch Quantitative Technique (QT)-Quest organized by Society of Operations

Management (SOM), UPES Chapter during November 22-December 3, 2010. The quiz was

intended to check the analytical and quantitative aptitude of the students.

Entrepreneurship And Skill Development Program (ESDP)

An Entrepreneurship and Skill Development Program (ESDP)

was conducted by the university from 3rd

Jan, 2011 to 2nd

February, 2011. This program introduced participants to

entrepreneurship in very different way and broke the myth that

entrepreneurship is something that only some special persons

embark upon. This program was purely activity and

demonstration based, and it resulted in experimental process of

recognizing opportunities, creating values and leverage resources.

Wild Art

The event ―Wild art‖ held on March 2, 2011 organized by

LOGISTIKAS society, under the guidance of Dr. Neeraj Anand

, H.O.D of MBA (Logistics & Supply Chain Management) and

head of LOGISTIKAS, was an endeavor for generating creative

thinking and out-of the box ideas. It was about choosing a

subject and representing it on paper, creatively and impact fully

by using unconventional materials. The participants were given

a choice of waste materials such as newspapers, rags, peanut

shells and dead leaves, and were required to think of new and

different materials & use them to effectively and creatively

depict an idea or topic, which was to be chosen by them. Topics

were required to fall under one of the four broad categories:

Globalization, Go Green, Logistics and Transforming World

(Infrastructure). The ideas which came out of the event were truly innovative and interesting.

We had 10 teams participating, each team having maximum of 3 members. The participants were

evaluated on parameters such as Choice of topic, Innovativeness and types of materials used,

usage of material and attractiveness of the design. The three best entries were rewarded.


Session On Impact Of Union Budget-2011-12 On Various

Sectors By V.D Gupta, Financial Advisor, ONGC

On 1st March-2011, a session on impact of Union Budget-2011-

12 on various industry sectors was conducted in the presence of

Mr.V. D. Gupta, Financial Advisor, ONGC. This was an exercise

of its kind conducted for the first time by University since its

inception and was highly successful. This session provided an

insight into the Budget and how it affects various industry sectors like Logistics & Supply Chain,

Power, Oil & Gas and Infrastructure.

GUEST LECTURES

LECTURES OF EXPERTS (GUEST LECTURES) Sl. No Date Details Guest

1 29-Nov-10 Guest Lecture Mr Kumar Biswas , CEO-Great Offshore

2 29-Nov-10 to 30-Nov-2010 Guest Lecture Mr T.S Marwah , Consultant

3 24-Nov-10 Guest Lecture Capt. Bhattacharya, Consultant

4 29-Nov-10 Guest Lecture Mr Arun Sharma, Div Manager Apollo Tyres

5 21-Jan-11 to 22-Jan-11 Guest Lecture Mr Arun Sharma, Div Manager Apollo Tyres

6 10-Feb-11 Guest Lecture Capt. Bhattacharya, Consultant

ACHIEVERS OF THIS SESSION

1. Pankaj Tiwari (MBA LSCM 2010-2012, Semester-I) secured 1st Rank in College of

Management and Economics Studies, UPES in End Term Exams, December-2010.

2. Naarayen K.A.S (MBA LSCM 2010-2012) won IIIrd position in the event MINERVA

conducted by the inter batch Quantitative Technique (QT)-Quest organized by Society of

Operations Management (SOM).


3. Poornima, Venus & Aditya and Krishna Shanker Pandey (MBA LSCM 2010-2012) participated

in UURJA-2010, the Annual Fest of UPES.

4. Following students of MBA LSCM (2010-2012) participated in Entrepreneurship and Skills

Development Program (ESDP-2011):-

a. Sarang Rajvanshi ( Co-Ordinator)

b. Shekhar Kaushik (Associate)

c. Aanchal Sharma (Associate)

d. Nitin Tripathi

5. Following students coordinated, INCEPTION-Business Idea and Business Plan Competition-

2010 conducted by the ENERGY Incubation Centre,UPES:-

a. Shekhar Kaushik

b. Sarang Rajvanshi

c. Nitin Tripathi

6. List of winners for Wild Art ( an event organized by LOGISTIKAS Society:-

a. 1st – Ms. Nikita, Ms. Harchaman & Ms.Tanvi (Integ. APE + MBA O & G)

b. 2nd

– Mr. Sohail (B Tech – Mechatronics)

c. 3rd

– Ms. Shruti Mehta & Mr. Nirmal /Ms. Sukriti & Ms. Abhishree (Tie) (B-tech)


1. ―We have learned that if we provide people with an occasion & an excuse to shop, they will

come‖ are the Golden words of whom?

2. What is the Title of Auto Biography of JRD TATA?

3. The End of Economic Man is the famous book written by whom?

4. Name of the Family Store owned by Kumar Mangalam Birla?

5. Kingfisher Red is the former name of which Airlines?

6. What is name of the series of mobile showrooms set by Reliance Communications?

7. Which Leadership Guru coined the term Transformational Leadership?

8. Citi bank co-brands for which oil company?

9. Who is the Present Chairman of SEBI?

10. Name the business leader who has donated 1540cr equity to his entire personal share in the

company to his foundation. Hats off.


1. How will you measure height of building when you are at the top of the building? And if you

have stone with you.

2. At a party, everyone shook hands with everybody else. There were 66 handshakes. How many

people were at the party?

3. You have to measure exactly 4 liters of water, but you only have a 3-liter bottle and a 5-liter

bottle. How do you do it?

4. Can u make 120 with 5 zeros?

5. There are three people A, B, C. Liars are of same type and Truth speaking people are of same

type. Find out who is speaking truth and who is speaking false from the following statements:

a) A says: B is a liar.

b) B says: A and C are of same type.

6. In the middle of a round pool lies a beautiful water-lily. The water-lily doubles in size every day.

After exactly 20 days the complete pool will be covered by the lily. After how many days will

half of the pool be covered by the water-lily?

7. In a race u drove 1st lap with 40kmph and in the second lap at what speed u must drive so that ur

average speed must be 80kmph.

8. You have to draw 3 concentric circles with a line passing thru their center without lifting hand.

9. A rectangular paper is there. At a corner a rectangular size paper is taken from it. Now you have

to cut the remaining paper into two equal halves.

10. Value of (x-a)(x-b)…...(x-z)?


BIZ QUIZ

1. Kishore Biyani (The Chairman of Future Group)

2. Beyond the Last Blue Mountain

3. Peter F Drucker

4. More

5. Air Deccan (that was taken over by Vijay Malya Group)

6. Web World

7. James Macgregor Burns

8. HP (Hindustan Petroleum)

9. U K Sinha

10. GM RAO of GMR


QUANT QUIZ

Ans: Drop the stone and find the time taken for the stone to reach the ground. find height using the

formula

s = a + gt ( s = height, a= initial velocity=0, g=9.8m/s, t = time taken

Ans: With two people, there is one handshake. With three people, there are three handshakes. With

four people, there are six handshakes. In general, with n+1 people, the number of handshakes is

the sum of the first n consecutive numbers: 1+2+3+...+n. Since this sum is n(n+1)/2, we need to

solve the equation n(n+1)/2 = 66. This is the quadratic equation n^2 +n-132 = 0. Solving for n,

we obtain 11 as the answer and deduce that there were 12 people at the party.

Ans: Fill the 3-litre bottle and pour it into the empty 5-litre bottle. Fill the 3-litre bottle again, and

pour enough to fill 5-litre bottle. This leaves exactly 1 litre in the 3-litre bottle. Empty the 5-litre

bottle; pour the remaining 1 litre from the 3-litre bottle into the 5-litre bottle. Fill the 3-litre bottle

and pour it into the 5-litre bottle. The 5-litre bottle now has exactly 4 litres.

Ans: Factorial (factorial (0) + factorial (0) +factorial (0) + factorial (0) + factorial (0)) = 120

Ans: Let‘s assume A is speaking truth. It means B is a liar then it means A and C are not of same

type.

Ans: 19 days. Since the water-lily doubles its size every day and the complete pool is covered after

20 days, half of the pool will be covered one day before that, so 19 days.

Ans: It‘s impossible! if u drove the first lap in 40 kmph, it‘s impossible that the average speed of

both the laps is 80kmph...

For eg. Consider one lap distance = 80km.

Time req. to cover 1 lap = 80km/40kmph = 2 hrs.

If the avg. speed is 80kmph, then the total time would have taken = 160kms/80kmph = 2 hrs.

Same is the case with any other distance u consider. So the avg to be 80kmph is impossible

Ans: Start the line complete one circle move inside circles along the line and then draw second circle.

Like wise rest.

Ans: You must fold the part that has complete paper and select half of it and then fold the part that cut

and selects half of it and then cut along the folding. (I DONT UNDERSTAND THIS ONE!!)

Ans: 0 as there. For X-X term.

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