Download - Lps Supply Chain Management
PROJECT REPORT
ON
“SUPPLY CHAIN MANAGEMENT”
CONDUCT AT
“LAKSHMI PRECISION SCREWS LIMITED”
SUBMITTED TO
THE MAHARISHI DAYANAND UNIVERSITY ROHTAK
FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD
OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION (2003-2005)
INSTITUTION GUIDE:- SUBMITTED BY:-
Mr. S.SAHOO SANDEEP SHOKEEN
INSTITUTE OF MANAGEMENT TECHNOLOGY
(Approved by AICTE , Govt of India& Affiliated by M.D.University, Rohtak.)
Tigaon Road, Near Sai Dham, Faridabad
Tel:0129-2370185,3096395,2226137
In the present global world of competition there is a race of existence
in which those who are having “Will” to come forward will succeed. Project
is a bridge between theoretical and practical working, with this “Will” I have
joined this project. I really wish to express my gratitude towards all those
people who have enormously helpful in the preparation of summer training
report on “Supply Chain Management”. I am especially grateful to my
friends & relative who have provided me a valuable courage to come out
with this project.
I wish to express my sincere gratitude to Mr. Mr. Deepak Jain
(EXECUTIVE MANAGER) for their invaluable support provided in having
the opportunity to complete my project.
I also express my sincere gratitude to Mr. V.K. JAIN (General Manager HR)
for their indispensable support.
My understanding of this subject has been affected most significantly to my
project guide Mr. S.Sahoo (H.O.D.) who provided me his expert advise,
inspiration & moral support inspite of his busy schedule and assignments. I
am ever grateful to his kindhearted approach & encouragement, which
helped me immensely in completion of this project work.
I am greatly indebted to Mr. Ravi Handa (Principal), for his kind hearted
and beloved approach. His timely guidance, supervision & encouragement
have helped me to get this golden opportunity.
I also pay my regards to Mr. Anup Sethi & Mrs. Manpreet Kaur who built
confidence in me and provides me a guideline to complete my project
reports.
I am also thankful to the M.D.University, Rohtak for providing this
opportunity to pursue M.B.A. course.
SANDEEP SHOKEEN
The student of M.B.A. are required to undergo a summer training at
some Business enterprises after completing first year, for a period of four to
six weeks. This is meant to give them exposure to the practical aspects of
the Business and the first hand information pertaining to the challenge
ahead of them when they became full fledged manners. I was fortunate that
one of the premier business houses in India, “Jain Group” provided me an
opportunity to undergo this “Summer Training” at “Lakshmi Precision
Screws limited” at Rohtak. The project assigned to me was “SUPPLY
CHAIN MANAGEMENT”.
This report is the culmination of six weeks of my work with the Marketing
Department of LAKSHMI PRECISION SCREWS LIMITED.
SR. NO. TITLE PAGE NO.
1. PREFACE
2. ACKNOWLEDGEMENT
3. COMPANY PROFILE
4. PRODUCTION PROCESS
5. OBJECTIVE
6. SCOPE OF THE STUDY
7. RESEARCH METHODOLOGY
8. INTRODUCTION TO SCM
9. SUPPLY CHAIN MANAGEMENT IN LPS
10. FINDINGS
11. LIMITATION
12. CONCLUSION
13. SUGGESTION
14. BIBLIOGRAPHY
15. APPENDIX
India can be said as one of the pioneer in the world of textiles. India’s superb
craftsmanship and excellence in textile designing have been known all over the world.
In spinning and weaving no other country boasts of such a hoary past. Trades in Indian
textiles have been known to exist from the earlier times.
In the early centuries of Christian era, Alexandrian Merchants carried over an extensive
trade in Indian textiles and spread the fashion for Indian modes in the east where Indian
Prints are known to have supplied the market for many local styles and modes. The
textiles industry in India occupies an eminent place in our national life.
COMPANY PROFILE
Company at a Glance
We take this opportunity to introduce ourselves as a joint venture between
M/s Lakashmi Precision Screws Ltd., Rohtak and Bossard AG,
Switzerland. Incorporated in November 97, this joint venture has been
christened as LPS BOSSARD PVT. LTD.
We became operational in 1998 with specialization in Industrial Assembly
Technology and within a short span we are now a 45 member family
serving to our customers all over India with a sales over Rs. 55 million with
a steady growth.
We have a range of more than 50,000 of fasteners in Stainless steel,
High tensile steel, MS, Brass, Copper, Aluminum, Titanium Alloy, Inconel
and Plastics. Our range includes standard items (as per DIN, ISO, JIS,
NFE, and other National & International Std.) and Multifunctional fasteners
like, Self drilling screw, Thread cutting, Thread Forming screws, EcoSyn,
EcoFix and many more. Apart from these we also develop and supply
items as per customer specifications.
We have joined hands with many world repute companies like
Panduit Corp. for distribution of Cable ties and Wiring Accessories, Recoil
Fasteners Australia for Thread Damage Repair Kits, Inserts and Insertion
Tools, Fairchild Fasteners for Tension Latches, ¼ Turn Fasteners, Push
Button Fasteners, to cater to the needs of customers for C items.
OUTLINE
1) Name of the Company : LAKSHMI PRECISION SCREWS
LTD.
2) Founded on : March 10, 1972
3) Head Office & Factory : 46/1, Mile Stone
Rohtak - 124 001
Haryana (India)
4) Chairman & Managing Director: Lalit Kumar Jain
5) Total Assets : 879 Mill. INR (March’ 2001)
($19 Million)
7) Annual Sales : 834 Mill. INR (March’ 2001)
($18 Million)
8) Employees
Productio Office QC R & D Others Total
n
372 90 48 60 54 624
55% 14% 8% 10% 9% 100%
9. Factory
(Unit : m x m)
SECTION PLANTS TOTAL
PLANT I PLANT II
w.e.f. 1972-73 1993-94
LAND 19,000 44,000 63,000
BUILDING 16,000 23,000 39,000
L.P.S. AT A GLANCE:
BOARD OF DIRECTORS
Chairman & Managing Director Sh. L K JAIN
Vice Chairman &
Managing Director Sh. D K Jain
Director – Purchase Sh. V K Jain
President Sh. M G Agarwal
General Manager (Marketing) Sh. H P Lakhera
General Manager (Sales) Sh. J Pandey
Manufacturing Sh. R K Routh /Sh.R P
Khanna /P Dhawan
Development/Engineering Sh. M T Parmar /Sh. J K
Sahoo
Production, Planning & Control Sh. R C Garg /Sh. R
Gururajan
Information Technology Sh. A K Jain /Sh. R K
Arora
Quality / Quality Management Services Sh. Sanjeev K Sharma
/Sh.V Velayutham
ICICI – Nominee Sh. Dharmendra Bhandari
Company Secretary &
DGM (Finance) Sh. H.P.S Chugh
Auditors N.G. Gupta & Co.
Chartered Accountants
Delhi.
Bankers Canara Bank, Rohtak
HEAD OFFICE & FACTORY
46/1, MILE STONE, HISSAR ROAD,
ROHTAK-124 001, HARYANA (INDIA)
Tel.: +91-1262-48288/48289/49920/49921
Fax.: +91-1262-48297/49922
Email.: [email protected]; [email protected]
BANGALORE OFFICE
305 A, Mittal Tower, 3rd floor, M G Road
Bangalore - 560 001 (India)
Phone : +91-80-5588587
Fax : +91-80-5597232
Email.: [email protected]
MUMBAI OFFICE
153-A, Mittal Tower, Nariman Point
Bombay - 400 021 (India)
Phone : +91-22-2821918/2843864/2325061/2325062
Fax : +91-22-2834492
Email : [email protected]. in
CALCUTTA OFFICE
8, Canning Street,
3rd floor, Room No.303,
Calcutta-700 001.
Phone :+91-33-2210754
Fax : +91-33-4739087/ 2107269 / 2210754
Email: [email protected]
NEW DELHI OFFICE
146, New Cycle Market, Jhandewalan Extn.
New Delhi – 110 055 (India)
Phone : +91-11-3527642/3532135
Fax : +91-11-7532138
Email: [email protected]
LPS-RECOIL DIVISION
GH-13/889, Paschim Vihar, New Delhi
Phone :+91-11-5280213/ 5282179/ 5575463
Telefax: +91-11-5575463/ 5280213
E-mail: [email protected]
Aim
We aim at providing the latest in Fastening Technology and C parts
management to our customers in India.
In our main operational activity Fastening Technology, we are
headquartered in Rohtak, Haryana and have formed regional offices at
New Delhi, Banglore & Pune. In an effort to be closer to our customers we
also have offices in Ahmedabad, Chennai, Hyderabad, Kolkatta & Mumbai.
TO MAKE CONSUMERS DELIGHTED BY PROVIDING QUALITY
FASTENERS TO THEM AT THE MOST COMPETITIVE PRICES.WE
BELIEVE THAT THE QUALITY IS A LONG TERM INVESTMENT AND
ENSURES OPTIMUM PROFIT AND PRESTIGE IN THE MARKET .
****************
BE MARKET LEADERS IN OUR CORE BUSINESS
*****************
ACHIEVE AND SUSTAIN GLOBAL COMPETITIVENESS IN ALL OUR
BUSINESS
*********************
BE THE PREFERRED SUPPLIER BY PROVIDING OUR CUSTOMERS
PRODUCTS AND SERVICES THAT ALWAYS MEET OR EXCEED THEIR
REQUIREMENTS.
COMPANY ORGANISATION
Board of Directors
Chairman & Managing Director
Quality Management Corporate Strategy
Marketing R & D Planning
Production
QA General
D S D L C P P P P P F H EE A E A E R L L L U I R DV L V B N O A A A R N D PE E E O T D N N N C AL S L R R U N T T H NO O A A C I A CP P T L T N I II S E
M M O I G EE E R ON N Y NT T
A WORD ABOUT OUR PARENT COMPANIES
LPS Ltd.
Founded in March 1972, LPS is one of the leading manufacturers and
suppliers of high tensile fasteners such as Bolts, Screws, Nuts and similar
parts for Automobile and other Industrial Sectors and has acquired the
state of art technology. LPS is Accredited in Mechanical and Chemical
Testing since 1995 by A2LA (American Association for Laboratory
Accreditation, USA) and NABL (National Accreditation Board for Calibration
& Testing Laboratories) and is ISO certified since 1996. LPS also got QS
9000 in March 2000.
Bossard AG
Bossard a leading logistic-oriented group for fastening technology was
founded in 1831 in Zug, Switzerland and today is managed by the seventh
generation of the Bossard Family with roughly 1100 employees. Bossard is
the first company in this sector to get an ISO 9001/9002 & 14001
certification (since 1986). Bossard has its global presence with regional
business units in Europe, United States and Asia/Pacific and operations in
over 15 countries having a turnover of over US$ 350 million.
Vision
“We want to be the best and most successful Fastener House in
India”
Our Current business policy is in line with our principals based on an
overall medium-term entrepreneurial vision. We see ourselves as an
international logistic-oriented group for Fastening Technology and C parts
management. We have access to worldwide procurement and engineering
know-how.
Top priority in planning company development is given to
strengthening established activities and developing new markets. This
includes assuring an appropriate level of growth in order to remain
competitive as well as making targeted acquisitions. The latter, for example
might be projects in the C part management sector, which are also of
considerable interest to our fastening technology customers.
Furthermore, our vision includes clear views on flexibility as well as
transparency with regards to value added, both of which we consider as
important as our market targets.
Quality Policy
“We at LPS Bossard will provide reliable quality products
economically on time to the total customer satisfaction.”
In order to meet above policy we have clear objectives that “to
increase confidence of customer by providing quality products on
time” and “to reduce cost of customer product by providing technical
and logistics support”
“We are a leading OEM supplier offering global solutions for
local requirements.”
Guiding Principles for our activities
Customer Focus
We focus on the real needs of our customers. We understand their
problems and can solve them. That’s why we develop custom-tailored
products and services for every customer.
Value Added
Not all products and services add value – but they all lead to costs.
Key for the customer is the perceived value. That’s why we cannot be
inexpensive but, instead, offer the best value.
Quality
All our stakeholders can rest assured that we invariably deliver what
we promise. That’s why we can offer our customers security, convenience
and cost-effectiveness.
People
We rely on highly motivated employees, empower them to contribute
to the group’s success and let them participate in it. That’s why we are
having teams to coordinate the activities.
“Our employees are our greatest assets”.
Independence
We have always put our trust in creativity, innovation and
unconventional thinking.
The Yardstick for Activities
“Engineering and logistics lead to a cost saving of percent and more”
We have developed a three-fold approach to adding customer value.
This allows industrial enterprises it exploit rationalization potential in
fastening technology both within and outside their companies. Along the
entire procurement and value added chain whole cost pools can be turned
into a competitive advantage. Customer benefit is our yardstick.
Core Competencies
Main Service
We are at home in the market for fastening elements worldwide and
know how and where to manufacture and develop such elements.
Engineering
We are familiar with customer-specific problems in fastening
technology and know how to solve them.
Logistics
We are accustomed to customer-specific supply requirements and
have the necessary systems and solutions in place.
Communication
We are aware of the availability needs of our customers and know
how to develop and support inter-company procurement systems.
PRODUCT AND SERVICE PACKAGE
“Your Cost Saving potential lies with us”
Basic Product
As our basic product we offer a variety of fasteners to the diversified
needs of market. Providing reliable quality products on time is our main or
basic service. Functional products must be available in sufficient number
and at an acceptable price. To this end we maintains a worldwide
manufacturing, development and procurement network with several linked
warehouse locations.
Its product documentation, available in catalogue form, comprises
50,000 items. 97 percent are always available from stock.
Product Support
In fastening technology, there is more to fully exploiting the
rationalization potential than global product availability. That is why we offer
product support to help our customers manufacture a better product and to
lower production costs. This engineering service can improve the product
through identifying the most suitable materials, enhancing the quality of the
fastening or providing greater protection against corrosion or loosening.
Lower production costs can be achieved by reducing the number of
different parts through using multifunctional parts and through introducing
simpler assembly techniques.
The earlier our specialists are involved in the construction, the
greater their contribution will be.
Business Support
Our major third strength is business support. Our starting point here
is the high availability of our products and the assumption that C parts
accounts for 50 percent of the total procurement costs, but only for 5
percent of the value of the products.
We have developed, and repeatedly implemented, proven logistic
systems that can reduce costs for procurement, warehousing and
assembly by 30 percent or more. Such logistic systems have considerable
savings potential because only some 15 percent of the total in-place cost
are related to the actual fastening element. Numerous companies are not
yet using saving potential.
Currently we can offer our Two-Bin, Kanban Card, Kanban Barcode,
Edifact and Smart Bin systems.
Parts management
There is a clear trend worldwide towards procuring C parts from a
single source and towards overall C part management. The single source
competencies acquired through our three service levels make us an
experienced and reliable supplier of comprehensive C part management.
Strength
Globally the group has a specialization in handling the needs of many
industries like:
Air Conditioner Home Appliances Aero Space Wind Mill
Medical Equipment Instrumentation Energy Meter
Locomotive Automobile Electrical & Electronics
Accredited worldwide
Within the first year of our operations we have been certified as an
ISO 9002 certified by UL USA.
We have been rated as best suppliers by many of our customers and
this is the biggest certificate we have, and will always achieve.
“We deliver what we promise”
Major customers
Asea Brown Boveri Adtranz All BHEL All Bharat Electronics Ltd.
Amtrex Hitachi Enercon India Crompton Greaves
MICO Behr India ISRO VSSC
DRDL DLW TATA Dhananjay ltd.
Tecumesh Secure Meters GE BE Wipro GE
SIEMENS Alstom
“We believe in long lasting business relationship”
Commitment
“We sincerely hope that we can forge a mutually beneficial and
long-lasting relationship and that LPS Bossard can serve you as a
single source for your entire diverse fastener needs.”
PRODUCTION PROCESS
The Company undertakes the manufacturing of various fasteners these
fasteners can be divided into two categories.
1. INDUSTRIAL FASTNERS
- Hex Head
- Socket Items
2. AUTO FASTNERS
INDUSTRIAL FASTNERS
- Hex Head Screw (Full threaded)
- Hex-Head Bolt (Half threaded)
- Nut
SOCKET ITEMS
Socket head cap screw
Counter sunk
Socket sunk screw (SSS)
Button head screw
D-Head
All these are being manufactured under a standard series i.e
Metric series
BSW Standard
BSF Standard
UNC Standard
UNF Standard
DIN Standard
AUTO FASTNERS
WHB
Shaft Bolts
Flange Buttons
Wheel Nut
Ring Nut.
Before we go for the Production Process various pre production process
decisions are to be taken
Decision of raw material
Design
Preparation of Die
Die is sent to the Tool Room for Inspection
Send to Store Room
Issue of Raw Material by a PPC according to Size.
Setting of Raw Material
Selection of Piece required.
Repeated inspection
Production operator will issue an quality control slip according to ISO.
If O.K than goes for manufacturing.
Inspection of 1 hour by inspector
Again setting, if O.K.
PPC will be informed
Rolling
Quality Inspection
Finishing
Lab Inspection
Final Inspection
After final inspection, the raw material is send to the manufacturing place
and according to the order the production process goes on i.e which is
shown below:
MAIN MARKETS
INTERNATIONAL (COUNTRIES)
Australia
Germany
Holland
Hong Kong
Japan
Singapore
South Africa
South Korea
Sweden
Switzerland
United Kingdom
United States of America
GROWTH IN PRODUCTION & SALES
YEAR/SECTION
92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01
PRODUCTION, TONNES PER YEAR
3016 3556 4897 6529 6385 5753 5607 6656 6165
SALES, MILLIONS INR
309 404 552 735 696 684 706816 834
MAIN PRODUCTS
Division ProductsPrecision Cold Forming parts for Automobile
Engine Parts ( Con Rod, Cylinder Studs, Counter Weights, Cylinder Head, Rocker Arm, Engine Mounting, Main Bearing etc.)
Bolts & Nutsfor Automobiles
Chasis Parts (Wheel Bolts, Wheel Hub Bolts & Nuts, Axle Bolts/Pin, Flanged Bolts, Collar Bolt, Shock Absorber Mounting Pins etc.)
Washer Assemblies BoltsThe other critical & safety parts bolts
Construction parts (Friction Grip) Bolts & Nuts for Agriculture Industry
FASTENERS Bolts & Nuts for Industrial MachineryCold formed parts for Automobile (Piston Pins, Switch Body, Ball Joints, Gear Blanks, Rocket Shaft etc.)Pins for Hydraulics & PumpsBolt for Refrigeration CompressorFriction Grip Bolts & Nuts for Construction Industry
Socket Head Cap ScrewLow Head Socket BoltShoulder BoltButton HeadCSK
Standard Set ScrewsFasteners Hex Wrench Keys
Hex Head BoltDovel PinNutsFriction Grip BoltsTrack Shoe BoltsStainless Steel Hex HeadStainless Steel Socket Head Cap Screws
HISTORY
1994 Received Employment Generation Award from
Director of Industries, Haryana State.
1995 Accredited in Mechanical & Chemical Testing by A2LA, USA to
meet Fastener Quality Act of US.
1995 Accredited in Mechanical Measurement, Mechanical &
Chemical Testing by National Accreditation Board for
Calibration & Testing Laboratories (NABL). Government of
India.
1996 Certified to ISO-9002.
1998 Installed Bolt Maker (AF 2525) to add production capacity to
12200 MT.
- Self Certification status from TELCO.
- Technical Tie-up with Sunil Machinery Corporation,
Korea.
- Joint Venture with Bossard AG-Switzerland.
1999. Licenced Manufacturers of TORX Screw from Camcar Co. –
USA.
2000 QS 9000 Certification.
2001 ISO/TS-16949 Certification.
- ISO-14001 Certification.
2002 Implemented ERP–SAP R/3.
2002 Golden Peacock Award.
OUTLINE
1) Name of the Company : LAKSHMI PRECISION
SCREWS LTD.
2) Founded on : March 10, 1972
3) Head Office & Factory : 46/1, Mile Stone
Rohtak - 124 001
Haryana (India)
4) Chairman & Managing Director: Lalit Kumar Jain
5) Total Assets : 879 Mill. INR (March’ 2001)
($19 Million)
7) Annual Sales : 834 Mill. INR (March’ 2001)
($18 Million)
8) Employees
Productio
n
Office QC R & D Others Total
372 90 48 60 54 624
55% 14% 8% 10% 9% 100%
9. Factory
(Unit : m x m)
SECTION PLANTS TOTAL
PLANT I PLANT II
w.e.f. 1972-73 1993-94
LAND 19,000 44,000 63,000
BUILDING 16,000 23,000 39,000
Certificates
01. A2LA
02. NABL
03. ISO 9002
04. QS 9000
05. ISO / TS 16949
06. ISO14001
OBJECTIVES
There is always an objective exit behind any action or event, without
aims you can’t know for what you are striving.
The objective of my study is to carry an indepth study of Supply
Chain Management in Lakshmi Precision Screws Ltd and it also determine
that all these amenities are actually put in practice in the organization. Thus
this study cover’s the following area :-
To understand implementation of Supply Chain Management in LPS.
To identify the Problem Areas of SCM.
To suggest the changes to be made in SCM for further improvement.
To what extend the employees and the mgt. Together workout the
problems.
To understand the views of previous people regarding SCM.
To identify what new schemes has come up with for the betterment of
SCM.
SCOPE OF THE STUDY
Along with the objective, the scope of study is also to be considered
upon. Which makes the study more meaningful and relevant. Since my
study is related to the supply chain mgt. In LPS, therefore my scope is
limited to the Supply Chain only.
Since Supply Chain means a network of facilities and distribution
options that performs the functions of procurement of materials,
transformation of there finished products to customers.
As we know that Supply Chain is a major part of the company
therefore LPS has made every effort to encourage and motivate its
employees to perform better in their respective field. For this purpose it has
implemented various schemes, which eventually reduced the inventory
cost, removal of Bar-Code system and mgt. Is put in an hierarchical order.
LIMITATIONS
For the purpose of preparation of this project report, prestigious Jain group
is identified where highly qualified engineers, managers and talented
workmen are engaged.
While preparing this report I had to face certain problems:
1. Due to the busy schedule, the employers were not ready to give
much more time to my project.
2. Non availability of the library facility is the main problem faced by me.
3. Most of the information collected was biased.
4. In order to get relevant information from my guide I had to spend
several are in front of his office.
5. It becomes hard to collect data due to lack of information source i.e.
library, Internet etc.
No survey was carried out.
SEARCHING METHODOLOGY
In preparation of my project report the primary source as well as the
secondary source did the major portion of my data collection.
Primary Source
Discuss with the marketing department officers about the supply chain
management.
Discuss with the HR Manager.
Discuss with the employees in the production department.
Secondary Source
In preparing the report some relevant books and authors views also
considered.
Some data are collected from various magazine and newspapers.
34th Annual Report 2002-2003 of LPS was also considered.
FINDINGS
The findings of my study is :
1. This inventory conditions at LPS – Bossard were found to be at very
high level. This was an alarming level and when worked upon, it
really gave a substantial results.
2. Company has to strengthen already existing Supplier base.
3. Arrival of Bar-Code system, which inspite of investment of Rs. 10 lacs
was not working to the expectations.
4. Company carries a large amount of inventory which can be very
disastrous.
5. Industry avg. of inventory turns is between 120-130 whereas LPS
inventory turns ratio was found to be between 4 to 6 which is
drastically low.
6. Inventory conditions at LPS are really critical need an immediate
concern.
7. Inventory carrying cost is high in the company.
8. Strategies adopted to improve inventory statistics are not fully
implemented.
9. Another drawback of Supply Chain Management is that the process
is carried out for those items which contributed most to 80% to total
sales whereas the other were given less attention.
10. The Management does not work in hierarchical position.
11. A big backlog of items is lying unlabelled.
12. Mode of packing is not clear at the receipt point and this causes
doubling of packing activities.
13. Performance of the Sales Team is not satisfactory.
14. There is many more finding of the study but I restricted my finding of
the study to these only.
SUGGESTIONS AND RECOMMENDATIONS
Suggestions and Recommendations is an important part of my Study
without it my study would be incomplete. It is suggested that the Company
should look into the following aspects for further improvement in their
Supply Chain Management.
To Strengthen the already existing supplier base.
To Remove the Bar-Code systems which despite an investment of Rs.
10 lac was not working to the expectations of the company.
Carrying large amount of inventory can be very disastrous for Company.
Inventory Carrying cost should be maintained.
To Determine the appropriate forecasting technique.
Sales team need to change their working style and update the data
regularly.
Mode of packing is not clear at the receipt point and this causes
doubling of packing activities.
Ordering cost and carrying cost should be minimise.
LPS basic Supply Chain Model does not lies on a particular platform. It
depends upon both
- Direct Sales to Customers
- Sale through dealers.
Inventory turns at LPS remain between 4 to 6.
Lack of proper Supply Chain has stopped LPS for substantial results.
CONCLUSION
It is a great pleasure that I could undergo a practical training in a reputed
company where as per the modern management all types of procedures
are adopted & monitored. The Company as created an excellent
atmosphere to work with and is offering handsome salary and other
allowances to its employees.
The significant point, which has come to my notice, is that the
workers are given adequate motivation and encouragements to have
higher productivity in the organizations and there is not much difference
between non-executive and executive. All of them are in one family called
LPS family and play a vital role to achieve the decided aim set out by the
organizations. In view of this the performance of the organizations during
the past years was an upward trend and many inventions then by
engineers are imparted by the Industrial
organizations/Telecommunication/space-organizations. There is an
excellent Research and development and design department.
It is clearly stated that if an employees happy then more productivity
can be attained. If loss of man-days are saved it will be better for the
country. Of Course, I can with my little association with LPS can say that
LPS is a model to other organizations in many ways:-
The top-level management use to monitor all the activities is periodically
and suggest further improvement in SCM.
Retaining the manpower
Communication from top to bottom & bottom to top.
A Supply Chain is a network of facilities and distribution options that
performs the functions of procurement of materials, transformation of these
materials into intermediate and finished products, and the distribution of
these finished products to customers. Supply chain exist in both service
and manufacturing organizations, although the complexity of the chain may
vary greatly from industry to industry and firm to firm.
Thus this shows that SCM is the heart of the company hence it
should be operated carefully under the following decisions
SUPPLY CHAIN DECISIONS
LOCATION DECESIONS
PRODUCT DECISIONS
INVENTORY DECISIONS
TRANSPORATION DECISIONS
Thus supply chain management plays an important part in the
success of the company.
Supply Chain Management
A supply chain is a network of facilities and distribution options that
performs the functions of procurement of materials, transformation of these
materials into intermediate and finished products, and the distribution of
these finished products to customers. Supply chains exist in both service
and manufacturing organizations, although the complexity of the chain may
very greatly from industry to industry and firm to firm.
Below is an example of a very simple supply chain for a single product,
where raw material is procured form vendors, transformed into finished
goods in a single step, and then transported to distribution centers, and
ultimately, customers. Realistic supply chains have multiple and products
with shared components, facilities and capacities. The flow of materials is
not always along an arbores cent network, various modes of transpiration
may be considered, and the bill of materials for the end items may be both
deep and large.
Traditionally, marketing, distribution, planning, manufacturing, and the
purchasing organizations along the supply chain operated independently.
These organizations have their own objectives and these are often
conflicting. Marketing’s objective of high customer service and maximum
sales in dollars conflict with manufacturing and distribution goals. Many
manufacturing operations are designed to maximize throughout and lower
costs with little consideration for the impact on inventory levels and
distribution capabilities. Purchasing contracts are often negotiated with very
little information beyond historical buying patterns. The result of these
factors is that there is not a single, integrated plan for the organization –
there were as many plans as businesses. Clearly, there is a need for a
mechanism through which these different functions can be integrated
together. Supply chain management is a strategy through which such an
integration can be achieved.
Supply chain management is typically viewed to lie between fully vertically
integrated firms, where the entire material flow is owned by a single firm,
and those where each channel member operates independently. Therefore
coordination between the various players in the chain is key in its effective
management. Cooper and Ellram (1993) compare supply chain
management to a well balanced and well practiced relay team. Such a
team is more competitive when each player knows how to be positioned for
the hand-off. The relationships are the strongest between players who
directly pass the baton, but the entire team needs to make a coordinated
effort to win the race.
Supply Chain Decisions
We classify the decisions for supply chain management into two broad
categories – strategic and operational. As the term implies, strategic
decisions are made typically over a longer time horizon. These are closely
linked to the corporate strategy (they sometimes {/it are} the corporate
strategy), and guide supply chain policies from a design perspective. On
the other hand, operational decisions are short term, and focus on activities
over a day-to-day basis. The effort in these type of decisions is to
effectively and efficiently manage the product flow in the “strategically”
planned supply chain.
There are four major decision areas in supply chain management: 1)
location, 2) production, 3) inventory, and 4) transportation (distribution), and
there are both strategic and operational elements in each of these decision
areas.
Location Decisions
The geographic placement of production facilities, stocking points, and
sourcing points is the natural first step in creating a supply chain. The
location of facilities involves a commitment of resources to a long-term
plan. Once the size, number, and location of these are determined, so are
the possible paths by which the product flows through to the final customer.
These decisions are of great significance to a firm since they represent the
basic strategy for accessing customer markets, and will have a
considerable impact or revenue, cost, and level of service. These decisions
should be determined by an optimization routine that considers production
costs, taxes, duties and duty drawback, tariffs, local content, distribution
costs, production limitations, etc. (See Arntzen, Brown, Harrison and
Trafton (1995) for a thorough discussion of these aspects.) Although
location decisions are primarily strategic, they also have implications on an
operational level.
Production Decisions
The strategic decisions include what products to produce, and which plants
to produce them in, allocation of suppliers to plants, plants to DC’s, and
DC’s to customer markets. As before, these decisions have a big impact on
the revenues, costs and customer service levels of the firm. These
decisions assume the existence of the facilities, but determine the exact
path(s) through which a product flows to and from these facilities. Another
critical issue is the capacity of the manufacturing facilities - and this largely
depends the degree of vertical integration within the firm. Operational
decisions focus on detailed production scheduling. These decisions include
the construction of the master production schedules, scheduling production
on machines, and equipment maintenance. Other considerations include
workload balancing, and quality control measures at a production facility.
Inventory Decisions
These refer to means by which inventories are managed. Inventories exist
at every stage of the supply chain as either raw materials, semi-finished or
finished goods. They can also be in-process between locations. Their
primary purpose to buffer against any uncertainty that might exist in the
supply chain. Since holding of inventories can cost anywhere between 20
to 40 percent of their value, their efficient management is critical in supply
chain operations. It is strategic in the sense that top management sets
goals. However, most researchers have approached the management of
inventory from an operational perspective. These include deployment
strategies (push versus pull), control policies – the determination of the
optimal levels of order quantities and reorder points, and setting safety
stock levels, at each stocking location. These levels are critical, since they
are primary determinants of customer service levels.
Transportation Decisions
The mode choice aspect of these decisions are the more strategic ones.
These are closely linked to the inventory decisions, since the best choice of
mode is often found by trading-off the cost of using the particular mode of
transport with the indirect cost of inventory associated with that mode.
While air shipments may be fast, reliable, and warrant lesser safety stocks,
they are expensive. Meanwhile shipping by sea or rail may be much
cheaper, but they necessitate holding relatively large amounts of inventory
to buffer against the inherent uncertainly associated with them. Therefore
customer service levels, and geographic location play vital roles in such
decisions. Since transportation is more than 30 percent of the logistics
costs, operating efficiently makes good economic sense. Shipment sizes
(consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of
equipment are key in effective management of the firm’s transport strategy.
Importance of SCM:
There is a close connection between the design and management of
supply chain flows (product, information and cash) and the success of a
supply chain. Dell computer is an example of a firm that has successfully
used good supply chain practices to support its competitive strategy. In
contrast Quaker Oats is an example in which the inability to design and
manage flows appropriately in supply chain management led to failure of its
acquisition of Snapple.
Dell was established in 1984. By 1988, it had grown into a $12 billion
company. Since 1993, Dell has experienced earnings growth of more than
65% per year. Its earning growth is anticipated to be more than 30% per
year over next five years. Dell’s stock price has also grown significantly
since 1993. Dell has attributed a significant part of its success to the way it
manages flows-product, information and cash-within its supply chain.
Dell’s basic supply chain model is direct sales to customers. As distributors
and retailers are bypassed, the Dell supply chain has only three stages-
customers, manufactures and suppliers as shown below.
Supplier Customer
Supplier Manufacturer Customer
Supplier Customer
Because Dell is in direct contract with it’s customers, it has been able to
finally segment them and analyze the needs and profitability of each
segment. Close contact with its customers and an understanding of its
customers needs allow Dell to develop better forecasts. To further improve
the match between supply and demand, Dell makes an active efforts to
steer customers in real time, on the phone or via the Internet, toward PC
configurations that can be built given the components available.
On the operational side, inventory turns is a key performance measure that
Dell watches very closely. Each computer chip carriers a date code to
indicate how old a computer part is. Dell carries only 10 days’ worth of
inventory; in contrast the companies, selling through retailers, have been
carrying in the vicinity of 80-100 days. If Intel introduces a new chip, the low
level of inventory allows Dell to go the market with a PC with a chip faster
than the competition. If prices suddenly drop, as they did in early part of
1998, Dell has fewer inventories that lose value relative to its competitors.
For some products, such as monitors manufactured by Sony, Dell
maintains no inventory. The transport company simply picks up the
appropriate no. of computers from Dell’s Austin plant and monitors from
Sony’s factory in Mexico, matches them by customer order, and delivers
them to customers. The procedure allows Dell to save time and money
associated with extra handling of monitors.
The success of Dell’s supply chain is facilitated by sophisticated
information exchange. Dell provides real time data to suppliers on the
current state of demand. Suppliers are able to access their components’
inventory levels at factory along with daily production requirements. Dell
has created customized web pages so that it’s major suppliers can view
demand forecasts and other customer – sensitive information, thus helping
suppliers to get a better idea of customer demand and better match their
production schedules to that of dell. The company has production
concentrated in five manufacturing centers: Austin, Texas; Brazil; China;
Ireland and Malaysia. Because demand at each location is relatively large
and stable, suppliers are able to replenish component inventories regularly,
allowing Dell to maintain low level of component inventories. In some
cases, Dell carries only hours of component inventory at its factory.
Dell’s low level of inventory also helps ensure that defects are not
introduced into a large quantity of product. When a new product is
launched, supplier engineers are stationed right at the plant. If a customer
calls in with a problem, production is stopped and design flaws are fixed in
real time. As there is no finished product in inventory, the amount of
defective merchandise produced is minimized.
Dell also out sources service and support to third-party providers. To
ensure a high quality of service, dell coordinated the delivery of the parts
the customer requires with the arrival of the service person. Once again, a
coordinated flow of information and material minimizes the cost necessary
to provide a high level of service.
Dell also manages its cash flows very effectively. By tracking and
managing receivables and payables very closely, it is able to collect cash
from its customers, on average five days before it has to pay its suppliers.
Clearly, Dell’s supply chain design and appropriate management of
product, information and cash flows play a key role in the company’s
success. This approach has positioned Dell very well within PC industry;
the competitive battlefield is now focused on service delivery and supply
chain efficiency.
Quaker Oats, with its acquisition of Snapple, provides an example in which
failure to design and manage supply chain flows led to financial failure.
Quaker owns Gatorade, the top selling brand in the sports drink segment in
USA. In December 1994, Quaker purchased Snapple at a cost of $1.7
billion. Snapple sold all natural drinks. At the time, Gatorade was very
strong in south and the southwest of the United States, while Snapple was
strong in the northeast and on the west coast.
Quaker announced that it hoped to exploit synergies between two
distribution systems to gain efficiencies, but the company was unable to
remedy several problems that prevented it from achieving these synergies.
Gatorade was manufactured in plants owned by Quaker, while Snapple sol
primarily through restaurants and independent retailers. Over two years
following its acquisition of Snapple, Quaker Oats was unable to gain much
synergy between the two neither and may have hurt both. Just 28 months
later, Quaker sold Snapple to Triarc Companies for $300 million, about
20% of the purchase price. The inability to achieve synergies between the
two supply chains was a significant reason for the failure of Snapple at
Quaker.
SCM AT LPS – BOSSARD
To implement SCM at LPS-Bossard thoroughly, would require a great deal
of time, investment and other resources, which would be too much to finish
in the given training period of 18 weeks. So, therefore few areas were
required to be identified where SCM strategies can easily by worked upon
and can really allow company to benefit out of it. After a detailed look into
company’s working processes and understanding the critically of each part
of it, the following three areas were identified where, if worked sincerely,
substantial results could be achieved. These three areas are :
Inventory:
The inventory conditions at LPS-Bossard were found to be at a very high
level. In today’s world no supplier carries such a high inventory. When the
industry average for inventory turns is around 125, Inventory turns at LPS-
Bossard remain between 4 to 6. This was an alarming level and when
worked upon, it really gave substantial results.
Supplier Base:
Since management at the company aims to serve the customers, who are
highly quality conscious and are ready to pay a little extra too, the supplier
base of the company automatically gains a lot importance in the whole
supply chain. So, the first step to be taken was to strengthen the already
existing supplier base. LPS-Bossard, right now has a strong supplier base
of around 265 suppliers, of which about 75 are foreign suppliers.
Operational Efficiency:
To improve the operational efficiency of the entire chain would have
been impossible to achieve in such a short duration, so Bar Code system at
LPS-Bossard was chosen for the same, which despite an investment of Rs.
10 lakhs was not working to the expectations of the company. Rather than
making all the processes easier for the company, it was rather making
them more cumbersome and difficult to implement.
Here all the activities carried out in all the three areas are discussed in
detail.
Inventory:
As it is quite popularly known and established, that carrying large amount
of inventory can be very disastrous for a supplier, it becomes important to
know that what are different types of inventory, what are different costs
associated with them and how to reduce these costs while maintaining
minimum possible inventory. Here below we discuss each and every
aspect related to inventory in detail:
Role of Inventory
In this section we discuss the role inventory plays in the supply chain and
how managers use inventory to rive supply chain performance.
Role in supply chain:
Inventory exists in supply chain because of a mismatch between
supply and demand. This mismatch is intentional at a steel manufacturer,
where it is economical to manufacture in large lots that are of then stored or
future sales. This mismatch is also intentional at a retail store, where
inventory is held in anticipation of future demands that can be satisfied by
having the product ready and available when the customer wants it.
Another significant role inventory plays is it reduce cost by exploiting any
economics of scale that may exist during both production and distribution.
Inventory is spread throughout the supply chain from raw materials to work
in process to finished goods that suppliers, manufacturers, distributors, and
retailers hold. Inventory is a major source of cost in a supply chain, and it
has a huge impact on responsiveness. If we think of the responsiveness
spectrum as shown below, the location and quantity can move the supply
chain from one end of the spectrum to the other. For example, a clothing
supply chain with high inventory levels has a high level of responsiveness,
since a customer can walk into store and walk out with the shirt he or she
was looking for. In contrast, a clothing supply chain with little inventory
would be very unresponsive. A customer wanting a shirt would have to
order it and wait several weeks or even months for it to be manufactured,
depending on how little inventory existed in supply chain.
Inventory also has a significant impact on the material flow time in a supply
chain. Material Flow Time is the time that elapses between the point at
which material enters the supply chain to the point at which it exists.
Another important area where inventory has a significant impact is
throughput, the rate at which sales to end consumer occurs. If inventory is
represented by I, flow time by T, and throughput by R, the three can be
related using Little’s law as follows:
Responsiveness Spectrum
ResponsiveZone of Strategy
Response
Efficient
Certain Implied UncertainUncertain
For example, if the flow time of an auto assembly process is 10 hours and
the throughput is 60 units an hours. Little’s law tells us that the inventory is
60X10 = 600 units. If we were able to reduce inventory to 300 units while
holding throughput constant, we would reduce our flow time to five hours
(300/60). Note that in this relationship, inventory and throughput must be in
the same units.
The logical conclusion here is that inventory and flow time are synonymous
in a supply chain. Because reduced flow time can be a significant
advantage in a supply chain, managers should use actions that lower the
amount of inventory needed without increasing cost or reducing
responsiveness.
Role in the competitive strategy:
Inventory plays a significant role in supply chain’s ability to support firm’s
competitive strategy. If a firm’s competitive strategy requires a very high
level of responsiveness by locating large amount of inventory close to
customer. Conversely, a company can also use inventory to make itself ore
efficient by reducing inventory through centralized stocking. The latter
strategy would support a competitive strategy of being a low cot producer.
The trade-off implicit in the inventory driver is between the responsiveness
that results from more inventory and the efficiency that results from less
inventory.
Components of inventory decisions:
We now identify major inventory-related decisions that supply chain
managers must make to create more responsive and more efficient supply
chain effectively.
Cycle Inventory
Cycle Inventory is the average amount of inventory used to satisfy demand
between receipt of supplier shipments. The size of the cycle inventory is a
result of the production or purchase of material in large lots. Companies
produce or purchase in large lots to exploit economies of scale in
production, transportation, or purchasing process. With the increase in lot
size, however, also comes an increase in carrying costs. As an example of
a cycle inventory decisions, consider an on-line book retailer. This retailer’s
sales average around 10 truckloads of books a month. The cycle inventory
decisions the retailer must take involve how much to order for
replenishment and how often to place these orders. The e-retailer could
order 10 trucks once each month or it could order one truck in every three
days. The basic trade-off supply chain managers face is the cost of holding
larger lots of inventory (when cycle inventory is high) versus the cost of
ordering product frequently (when cycle inventory is low).
Safety Inventory
Safety inventory is held just in case demand exceeds expectation; it is held
to counter uncertainty. If the world were perfectly predictable, only cycle
inventory would be needed. However, because demand is uncertain and
may exceed expectations, companies hold safety inventory to satisfy an
unexpectedly high demand.
Seasonal Inventory
Seasonal Inventory is inventory that is built up to counter predictable
variability in demand. Companies using seasonal inventory will build up
inventory in periods of low demands for sale in periods of high demand
when they will not have capacity to produce all that is demanded.
Therefore, the basic trade-off supply chain managers face in determining
how much seasonal inventory to built is the cost of carrying additional
seasonal inventory versus cost of having a more flexible production rate.
Overall Trade-off: Responsiveness Vs. Efficiency
The fundamental trade-off problem that managers face, when making
inventory decisions, is between responsiveness and efficiency. Increasing
Inventory will generally make the supply chain more responsive to the
customer. However this choice comes at a cost, as the added inventory
decreases efficiency. Therefore, a supply chain manager can use inventory
as one of the drivers for reaching the level of responsiveness and efficiency
that the competitive strategy targets.
Inventory at LPS-Bossard:
Now that it has been established that inventory plays a critical role in any
supply chain, let us take a look at inventory statistics at LPS-Bossard.
Inventory turns: Inventory turns is defined as ratio of total cost of goods
sold to the cost of goods being carried at any point of time. Mathematically,
Inventory Turn = annualized cost of goods sold
Cost of goods at any point of time
To day the industry average of inventory turns is between 120-130.
The best companies in the world are able to maintain this high level of
turns. At LPS-Bossard, the inventory turns ratio was found to be between
4-6. As compared to industry standards, this ratio was drastically low.
This directly means that inventory levels at LPS-Bossard were very
high, which directly leads to very high inventory carrying costs. This also
resulted in large amount of dead inventory, which was about 40% of total
inventory.
Age matrix of inventory:
The matrix below shows the age of inventory at LPS-Bossard. This means
that this matrix shows that what amount (value) in terms of %age is lying
from how many days. Due to confidentially restraints, the exact values are
not given here.
Age Matrix
Warehouse
Value
Days90
Days180
Days270
Days360
Days450
Days540
Days>540
who1 30.32
1.36 1.70 0.48 2.61 2.36 3.40 18.41
01A 6.90 3.34 1.32 0.64 0.62 0.13 0.43 0.4201B 7.88 1.39 0.40 3.47 0.97 0.67 0.86 0.1201C 10.2
46.01 2.31 0.73 0.19 0.19 0.10 0.72
01D 37.33
14.30
2.31 8.45 2.72 2.09 0.27 1.53
01G 7.34 2.49 3.08 0.33 0.03 0.10 0.13 1.18Total Values
100.00
28.89
16.77 14.09 7.14 5.53 5.19 22.38
As is clear from the table itself, the inventory conditions at LPS-Bossard are
really critical and need an immediate concern.
Dispatch Matrix of Inventory: The matrix below shows the dispatch plan of
inventory lying with various warehouses, in terms of percentage. It shows that
what percentage of inventory will be dispatched in how many days, or in other
words, for how long we will bear inventory carrying cost for different constituents
of inventory.
Warehouses
Total value
Lost supply
0-30 days 30-60 days
60-90 days
who1 29.43 - - - -who1A 7.00 3.86 0.19 0.15 0.10who1B 8.01 3.17 0.66 0.01 0.00who1C 10.45 0.68 1.70 4.62 0.58who1D 37.67 3.85 6.71 1.80 15.90who1G 7.45 0.64 6.71 1.80 0.15Total values
100.00 12.20 13.66 7.00 16.73
Warehouses
90-120 days 120-150 days
>150 days Quantity Unallocated
Who1 - - - 29.43who1A - - - 2.70who1B 0.17 0.08 0.21 3.71who1C 0.13 0.50 0.18 2.06who1D 0.73 0.94 0.54 7.18who1G 0.03 0.07 - 1.73Total values 1.07 1.60 0.94 46.80
This table shows that around 27% of inventory at LPS-Bossard will be
carried for more than 2 months. Also, 12% of inventory which should have
been dispatched previously, but could not be dispatched for reason or the
other. Around 47% of inventory is such against which there are no orders
and have no prospects for future sales either. The total inventory at
warehouse WH01, which makes around 30% of total inventory, is dead
inventory. WH01 at LPS-Bossard is maintained for this purpose only. In an
efficient supply chain, such a warehouse should not exist, but in case of
LPS-Bossard, it rather carries a big chunk of whole inventory. This is one
major reason, which apart from adding costs, also lowers inventory turns at
LPS-Bossard.
Strategies adopted to improve inventory statistics:
In order to improve inventory turns, to bring down carrying cost and other
associated costs & to reduce obsolescence, various strategies were
identified, designed and implemented. Here below, these strategies are
discussed in detail.
Demand Forecasts:
Forecasts of future demand are essential to a supply chain
manager’s decision making and planning process. Forecasting and the
accompanying managerial decisions are extremely difficult when either
supply of raw material or demand of finished good is highly variable.
The following basic, six-step approach to forecasting helps an organization
perform effective forecasting.
1. Understand the objective of forecasting
2. Integrate demand planning and forecasting
3. Identify major factors that influence the demand forecast
4. Understand and identify customer segments
5. Determine the appropriate forecasting technique
6. Establish performance and errors measure for the forecast
As the time was less and no other data other historical sales data was
available, for this activity, the Time Series Forecasting methods were
used. These methods use historical demand to make forecasts. They are
based on the assumption that past demand history is a good indicator of
future demand. These methods are most appropriate when environmental
situation is stable and the basic demand pattern does not vary significantly
from one year to another.
Because LPS-Bossard offers a range of over 75,000 special and
standard products, carrying out the process for all of them would
have been too cumbersome. Therefore, the process was carried out
for those items, which contributed most to 80% of total sales in
standard category. Then purchases were planned for these items, so
that ordering cost and carrying cost together result into minimum
possible cost.
Cost
Total Cost
Holding Cost
Order Cost
Material Cost
Re-order Levels:
The company has divided all it’s customers into K, A, B, C and D
types depending upon the volume of business they provide to the
company. Most of these customers are consistent with the volume
and products, they order every year.
All the sales teams were asked to ask their K and top 5 A customers
to give their future demands, for at least one year, and the probability that
they can change their demand. All sales teams discussed the same with
their target customers in detail. Now the demands for these individual
customers were known.
Knowing these future projections, along with the probability of these
demands getting converted into business, the re-order levels were defined
keeping in compliance with the diagram above, due to which purchases
could be planned for integrated demand of all customers.
This process was carried out to prevent overbuying of material, plan
purchases efficiently and well in time to avoid any delays in delivery, which
can sometimes lead to cancellation of orders.
+/- 30 days window:
A +/- 30 days window was established at the receipt area of
warehouse. This means that people at warehouse were strictly
instructed to not to receive any material on any particular day, whose
dispatch date does not lie with in the rage of +/- 30 days from that day.
This step was taken as many suppliers who would produce before
schedules given to them, would want inventory to reach at warehouse of
LPS-Bossard as soon as possible. This was resulting in adding to our
carrying costs. Also, due to not being used for long, material used to get
deteriorated in quality, which increased rejection rates.
This activity is being carried out strictly at warehouse now and in
future, it is planned that this window will be narrowed gradually,
ultimately reaching to a limit of +/- 5 days.
Purchase Order Proposal:
Purchase order proposal is actually a software, which helps or
facilitates a purchaser to plan his purchases and raise purchase orders.
This is a module, which is a part of ERP system SCALA, being used at
LPS-Bossard.
Whenever any sales team will enter any order in to the system, it will
automatically calculated quantity remaining in the warehouse for the items
demanded in that particular order, the quantities required to be purchased
along with the schedule of purchase depending upon supplier lead times
and minimum order quantities, which are available in SCALA database.
This highly efficient system was lying unused as the purchase deptt. found
it unfriendly while using. Also they could not see value addition in using this
software.
The processes of this module of the ERP software were studied and
observed and the weaknesses identified. Then with the help of IT and
Purchase deptt., these weaknesses were removed and the system made
ready to work.
Due to shortage of time and requirement of repeated testing and
experimentation, this activity has not been completed and is still in
the process.
Clearance of free stock:
All the items against which there were no orders and were lying in
warehouse for more than one month, were identified. These items were
termed as Free Stock or Dead Inventory. At LPS-Bossard, this makes
around 30% of total inventory.
The customers for whom these items were bought were identified,
and an offer was made to them to buy these items at discounted
price. For all the items that could not be sold this way are on their way
to dealer market, where they can be sold for heavy discounts,
liquidating a big part of non-performing assets for LPs-Bossard.
Operational Efficiency (Bar Code System):
Merely buying an IT solution and implementing it, without actually
knowing its powers, requirements and advantages, does not really help
much. Ignorance in this case may not be a bliss, but it can certainly can
be a pain.
LPS-Bossard installed a bar code system around 10 months ago to
make operations at warehouse more efficient, cost saving, error free and
fast. For this, a Bar Code system was bought from Bar Code India. This
system, due to improper installation and lack of communication, turned out
to be a painful activity for people in warehouse. Rather than making system
more efficient and fast, it rather degraded the whole system. This system
was to make the receipt and dispatch activities simpler, which could not
happen.
The following were the problems identified along with their solutions
suggested. Number of these have already been solved and rest others are
in process. The scope of my study was only to identify problems and
suggest solutions as implementing the suggested solutions need
managerial involvement.
All the problems are listed below along with the suggested solutions and
latest status of each.
Problems Encountered Suggested Solutions
1. Customer ID is not provided by sales The responsibility lies on
in customer master, which is required for sales team. They are required allocation
of items available. to update the customer master
2. Customers like GE medical and Enercon Problem has been resolved
have different or multiple Ids for same by Mr. Ashwani and Mr. Anup, product,
when they need it for different as Mr. Anup provided space for lines.
that by making changes in the
programe.
3. Label space is not sufficient for adding The changes are required to be all the
information there. made in label design, to
accommodate all information
within same space.
4. IR no. is required in case of DRDL, Mr. Anup is required to make
which is not available in WHMS right now changes in the software for the
bar code system.
5. Time taken by present printers is about The printer needs to be replaced.
8-9 seconds per label; whereas old method The process for that has already
can print 100 labels/60 sec. This is highly been initiated.
time consuming.
6. labels printing is very sensitive and A place free of dust and other causes
errors. This prevents handheld particles needs to be deployed device fro
reading the labels and the for printing activities.
consequent processes are interrupted.
7. ERP system SCALA takes only IT deptt. is required to make predefined
location of any item and if due changes in software of Bar Code to shortage, the item
is placed elsewhere, system.
the location is not updated in SCALA and
people in picking and quality are not able to
locate this location.
8. Sales team will send picking even when Sales teams need to change their
materials are not available. working style and update the
data regularly.
9. A file needs to be received at handheld Picking list is too long, which device for
scanning at the time of receipt is received at handheld, because and dispatched. The
time taken to receive data is not updated properly.
this file is long and even the server is off Sales team needs to work
most of the time. properly.
10. Mode of packing is not clear at the Sales team need to update data. receipt
point and this causes doubling of
packing activities.
11. Correct location of picking is not Changes to be made in software
12. Sales team is not updating Invoice Sales Team is required to update
information in WHMS. This creates a data.
problem with picking list. Sales team needs
to be instructed for taking care of it.
13. A big backlog of items is lying Labelling to be done at dispatch,
unlabelled. as required.
14. The quantity required for any order Some big changes need to be does not
match with the quantity available made in software. Mr. Hamir for that product. This
brings in problems in Bar Code has been asked to take proper allocation of
quantities in case of care of the same.
shortage and collection of quantities.
15. Handheld connectivity with server IT deptt. will check all the
connections.
Supplier Development:
Backward integration supply chain is as crucial to its operations as
much is forward integration. For a company, to grow, having a strong
customer base cannot be achieved until and unless their demands are not
met. To meet their demands, company needs to produce better quality and
more quantity, which in turn needs raw material. For raw material, any
organization has to depend upon its suppliers.
So, for any organization to proper, it should have a very strong supplier
base along with other things. This requirement becomes even more critical,
when a company is a distribution company and not a manufacturer,
because, in former case, the organization would have atleast some control
over the production processes, but in latter case, it has no such control.
The following steps were identified and followed to strengthen the already
existing supplier base.
i) Asked Peterway, purchase manager, Bossard-Switzerland. For
quotations for certain items, which were consolidated demands
for entire Bossard group
-
- little success from Pooja fasteners, Faridabad
-
ii) Resourcing for items that constituted 80% of total sales in
standards category. (Frequency – 6 month)
- identified alternate potential suppliers
- very good prices from Ashwin industries, can give about 40%
reduction for his particular items, asked him for samples.
- enquiries from rest of the suppliers in process
iii) Alternate sourcing for items bought from ZUG and France.
1. A Handbook of Supply Chain Optimization: An approach to SCOR
model
By: Rosenbaum
2. Supply Chain Management: Strategy, Planning and Operation
By: Peter Meindi and Sunil Chopra
3. Research Methodology
By: C.R. Kothari
4. Internet Sites: www.scm.com
www.scmonline.com
QUESTIONNAIRE
1.Name Of Supplier.
2.Age Of Supplier.
3.Qualification Of Supplier.
4.In which product you deal.
5.With Which company you Deala. L.P.Sb.Micronc. Suryad.A.K
6.Which company is product prefer.
7.Are you satisfies from service of company.
8.Are you satisfies from company’s terms &
condition.
9.Is discount given to you is Ok.
10.Any suggestions.
