challenges to Logistics to enhance indian manufacturing

With the recent successful launch of Agni-5 missile with its range more than  5000 Km, India has joined the select club of nations like U.S. , China, France and  Russia ,however to be entitled to be called a  super power, India has to catch up with these  developed nations on many fronts . One such desired area is definitely manufacturing because China in order to become a real super power improved itself drastically in area of manufacturing so much so that with its sustained efforts, it became a global manufacturing hub.   

Manufacturing in India is still a mere 15 percent of the country’s GDP while it is 34 per cent for China and 40 per cent for Thailand .  Eleventh five year plan targeted growth in manufacturing at 10 to 11 percent but actual performance remained  only about 7.7 percent. Government of India (GOI) has as such rightly put lot of emphasis on manufacturing in its 12^th five year plan ( year 2012-2017)  by  targeting  a growth of 12 to 14 per cent. As per the 12^th national manufacturing plan, the 2.0 to 4.0 per cent differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25.0 per cent of GDP by  year 2025.

This shall help to provide a large portion of additional employment opportunities to  India’s increasing number of youth. While the services sector has been growing fast, it alone cannot absorb the 250 million additional income-seekers that are expected to join the workforce in the next 15 years. Unless manufacturing becomes an engine of growth, providing at least 100 million additional decent jobs, urban, rural gap will further widen and it will be difficult for India’s growth to be inclusive. Further India’s balance of trade can not be balanced any longer  just by increasing raw material exports and importing finished goods and the export basket must include much larger volume of manufactured goods.

 However to reach this ambitious target, a lot needs to be done in the direction of improving country’s infrastructure to produce quality products and be competitive globally. What is required as such by manufacturing companies is working on optimum cost and improvement in quality, efficiency and speed to response to customer’s needs in the global market place. In all these directions both inbound logistics and outbound logistics as shown in figure 1 below face unprecedented challenges and can make major contributions if tackled in a planned manner.

                                        Figure 1

 National manufacturing plan has identified following sectors as priority sectors for the 12^th five year plan.

1. Sectors that will create large employment

• Textiles and Garments

• Leather and Footwear

• Gems and Jewellery

• Food Processing Industries

• Handlooms and Handicrafts

2. Sectors that will deepen technology capabilities in Manufacturing

• Machine tools

• IT Hardware and Electronics

3. Sectors that will provide Strategic Security

• Telecommunication equipment

• Aerospace

• Shipping

• Defence Equipment

4. Manufacturing-Technology sectors for Energy Security

• Solar Energy

• Clean Coal Technologies

• Nuclear power generation

5. Capital equipment for India’s Infrastructure Growth

• Heavy electrical equipment

• Heavy transport, earth moving and mining equipment

6. Sectors where India has competitive advantage

• Automotive Sector

• Pharmaceuticals and Medical Equipment

7. MSME sector

—the base for the Manufacturing Sector—employment and

enterprise generation

Among the above sectors, Automotive sector, heavy electrical equipment, pharmaceutical and medical equipment, machine tools, telecommunication, Aerospace, shipping and defence equipment etc have quite a complex manufacturing and as such objectives like cost minimization to remain competitive, attainment of speed, efficiency, quality and responsiveness to customers are more challenging and equally is the contribution of inbound and outbound logistics extremely critical. While government of India is taking suitable steps in various directions like creating trained manpower, encouraging Industry Academia interfacing and improving logistics infrastructure in the direction of  Road, , shipping and Aviation with emphasis on public and private partnership, we shall  look more closely  into the challenges which are offered to manufacturing  and Logistics industry and to new and existing Logistics players. I must point out here that the challenges are also new opportunities to the new and existing players and  if they are able to embrace the challenges successfully , they have a big opportunity to reap the benefits as early birds giving them sustenance to become long term players. What one needs to remember is that in such an environment, manufacturing companies, logistics players, suppliers, dealers and Retailers have to strive through teamwork  to a  perfect supply chain order that is getting the right product to the right customer at the right time, in the right condition and at the right cost.

For manufacturing companies to succeed, handling inbound logistics by manufacturing companies is of paramount importance and quite critical. While there are enough outbound logistics players in the country handling transportation and warehousing of finished goods, there are only few inbound logistics players helping manufacturing companies and can be counted on fingers. It is a common knowledge that lack of one critical component during manufacturing can bring entire manufacturing activities to a screeching halt. As such ensuring faster availability of material and components at the right time for manufacturing   companies becomes an essential factor and as such manufacturing companies must choose their Logistics partner very carefully. I would like to call inbound logistics players as better half of manufacturing companies as such marriage must take place between the two for a long term relationship which would be mutually beneficial.

Globally such strong relationships have helped Companies like Toyota, Ford, Chrysler and many more with their 3 PL  partners like DHL, Ryder , Schneider Logistics , GEFCO and VASCOR ltd etc evolve cost optimizations in their inbound and outbound logistics  increasing  their profits and customers/dealers’ delight .  

Further consider the following facts.

·          Logistics in manufacturing  industry is the  most important function after product development   as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (product distribution).

·         On the inbound side, 3PL service providers ensure timely delivery of materials in the required quantities to meet daily production schedules and can play a major role  in the order processing of manufacturing companies.

·         On the outbound side, they play a significant role in satisfying  dealers as last mile activity by ensuring timely consignment delivery to dealers increasing responsiveness to Dealers providing them a safe  and reliable service. They also play value added logistics functions such as packing, labelling , quality checking and pre-inspection activities.

Now that the Manufacturing in  India has to grow rapidly , the time is just ripe for third party logistics providers to integrate their logistics operations both inbound and outbound into the supply chain of the  manufacturing companies to create a win-win situation for both the parties to maximise their ROI  through cost optimizations and improvement in service levels to their customers and dealers.

 Here one should keep in mind that technology can play a very crucial role in ensuring success and as such inbound and Outbound Logistics players who understand the importance of technology such as implementation of ERP, Information technology, RFID , automation etc and are ready to make investments in these areas stand a greater chance of success.

CHALLENGES TO LOGISTICS COMPANIES ( 3PL SERVICE PROVIDERS)

We shall now discuss more closely to see what are the challenges for the logistics companies ( 3PL service providers) to provide impetus to manufacturing.

1.       Technology resources

In the new environment, there is a challenge to 3PL service providers to sharpen their information system capability, Automation and ICT capabilities and their accessibility to technical knowhow through Tie-ups, foreign collaborations. They must widely embrace technology covering mobile solutions that enable surface and airfreight operators to communicate while shipments are in transit; route optimization and navigation software; and customer-facing solutions offering tracking and tracing capabilities. Technology should not be used by them merely for technology sake. They must create enterprise-wide visibility, control conformance to shipping instructions, and monitor carriers' performances in pickups and deliveries.

2. Customization and Flexibility

3PL providers should rise to the occasion to be flexible in accommodating emergency and contingency requirements of manufacturing companies. They should have their back-up plans in active mode including manpower, routes and network resources. They must continuously get involved in for continued process improvements that control costs and ensure ongoing efficiency.

The Mantra for manufacturing companies while outsourcing their inbound and outbound logistics to 3PL service provider should be:  focus on your core competence and reap the benefits of third party infrastructure by outsourcing to parties who have specialized expertise and experience in these areas. 

3. Challenge of increasing Resource strength in terms of  manpower and network resources.

3PL companies shall have to hone up their manpower resources in terms of their motivation level, skill set with professional development program. Remember that in a service segment in which Logistics providers operate, 4 Ps unlike in marketing mean people, people, people and people.

4. Industry knowledge and expertise

3PL service providers shall have to accept challenge of providing relevant experience with different type of products, technology integration, geographic area and their routes, and other specific needs. If the need be, they have to be receptive to enter into foreign collaborations.

5. Challenge of enhancing operational strengths

3PL service providers must serve multiple product markets where compliance, safety, and cargo security are required. If one logistics provider can meet the needs of a diverse base of customers, each with its own challenges and industry requirements, then the chances of a successful partnership with manufacturing companies greatly increases.  In a present globalized scenario he has to have capability to handle inbound and outbound multi-modal logistics involving domestic and foreign vendors. His access and proximity to sea port and airports and material handling capabilities, his fleet strength are important considerations.  He must be able to tackle expedited deliveries. Whether he can run Milk runs to help optimize transportation and production? Manufacturers and Logistics provider both can operate efficiently by increasing the frequency of runs to multiple suppliers, which reduces the lot size of each move, allowing the transporter to fill trucks.

6. Commitment to tight delivery schedules and safety of  products

Stock-out is a dreaded word for manufacturers and dealers and it can only be avoided by commitment of 3PL partner to time schedules for end to end delivery, safety and reliability. "To be more efficient 3PL providers must enhance the velocity to inbound parts and smaller shipments picked up and delivered more frequently to keep inventory low. Logistics is a key foundation of the complex manufacturing systems as such if 3PL Partner does not move material efficiently and in small lots then manufacturers might lose many of the benefits in their lean production systems requirement.

CHALLENGES FOR MANUFACTURING COMPANIES

There are challenges equally for manufacturing companies in terms of coordination with their third party logistics providers both for inbound and outbound logistics, material management, purchase and dispatch departments. Manufacturing companies shall have to create a dedicated SCM (Supply Chain Management). Many manufacturing companies still handle different parts of supply chain in silos through different departments like outbound logistics being handled by marketing, production planning under manufacturing and material and inbound logistics by sourcing department losing the larger picture of being customer centric and ultimately customer requirements are not met. And when the customer suffers causing loss of business, blame game starts where marketing department would blame production and production blaming in turn sourcing department. This must end and manufacturing companies should start a fresh by bringing all departments like planning, logistics, material under single department of SCM which shall be fully accountable for meeting the customer’s requirements.

Further I am enumerating some more challenges for the manufacturing companies which are as under

·         Change the culture of ‘push sales’ to ‘pull based production and supply system’ where suppliers would have to supply only what is required, whenever required , based on actual consumption meaning thereby frequent supplies of small quantities each time

·         Change the culture in different departments in manufacturing from ‘my department’ to ‘our customer’ approach

·         Change management involving changes in MOPs (measures of performance), Performance management system, Planning process, Execution process, ERP,MIS and communication system, etc.

·         Focus on supply chain management system and integration of all relevant departments under one banner as explained above and IT enabled end to end supply chain planning

·         On line visibility of the stocks through IT connectivity to reduce inventory costs

·         Implementation of KANBAN for pull based procurement

·         E-Tracking of transportation vehicles

·         Introduction of lean manufacturing environment with a total quality management approach throughout the Production

• With increased globalization and increased competition and demand uncertainty , challenge of making their supply chains more nimble, responsive,

            reliable and cost-efficient for taking advantage of windows of opportunities.

• SCM department to ensure that there were no stock outs irrespective of the changes in demand Vs forecast.
• Introduce supply chain visibility with permissible access to your suppliers and customers building a long term relationship of trusts and partnership. Complex manufacturers face a variety of challenges made difficult by the complexity of their products and manufacturing processes. Best in class complex manufacturers have to create a collaborative environment to integrate functionality to produce quality, speed and agility. The end result provides visibility from initial engineering design through manufacturing , to quality control and customer service leading to more profitable business and grater customer satisfaction.

Last but not the least, it is the Innovation by manufacturing companies through their research and development teams which shall matter most creating new cost effective and quality products. A major difference between manufacturing in India and China is the Chinese love for continuous Innovation in almost every low and high end product which has made them manufacturing darling of developed countries. Indians too have to create an environment where innovations are suitably rewarded by Government and private companies and research in universities should  not limited merely to awarding PHDs and writing research papers in journals. Any research which has no monetary value for benefit of the society and which industry can not make use of it or purchase is basically garbage for all practical purposes.  In this direction, Industry-Academia interfacing must be encouraged with flow of knowledge both ways to be really effective and fruitful to bring out new and innovative products to give much sought after impetus to manufacturing in India.

Written By

Prof. Akhil Chandra

Consultant, Logistics and Supply Chain Management

09810223277

Akhilchandra06@gmail.com

Create Pie chart of your life

                               Pie Chart of your Life

I have heard lot of people in late fifties often complaining that they worked so hard for their career to reach the top rungs but still they were not happy with their overall achievements in life. Why because they missed on many other things in life like family, health, relationships and a good family life. I know   many workaholics who regretted later as their wife deserted them because they attached more importance to chasing their professional career and pursuit of money while not giving sufficient time to their family. Well, life is a sum total of such needs like money, mental and physical health, knowledge, family life, friendship, morality, self actualization and spirituality. Due to law of equilibrium prevalent in nature, sum total of these needs for a human being still remains same which one can call as ‘Whole Life’.

One can visualize it by drawing a circular pie chart divided into sectors illustrating these needs in proportion to what you have allocated actually or you want to allocate. Wonderful thing about this ‘Whole Life’ is that these requirements are dependent on each other and if you try to increase proportion of one requirement by your actions, it shall have immediate repercussion on other needs. For example if somebody tries to chase too much money in life, he may lose on other fronts like family life, friendship or health proportionately so that sum total in the pie chart still remains the same. That means that everything what one does in life has a cost attached to it and if you try to gain in one, you may have to pay in terms of losses on other fronts. It is like saying that in life there is no free lunch. Wise thing is to create a balance in life and keep proportions of these requirements within limits.  It is like eating balanced diet which comprises of various ingredients and varieties of foods in form of cereals, vegetables, fruits and other intakes rich with protein and vitamins so as to keep you health intact.

At different age and stages of life, proportions of such needs what one seeks from life may vary. Like in early stage of life say when you are   in your twenties, you could allocate more proportion to   money and  professional career which are important to satisfy one’s basic needs like food, shelter etc as per the hierarchy of needs defined by famous sociologist Maslow. In thirties and forties, you have to devote more time to your family life giving it the requisite proportion in the pie chart of your life. Like vise when you are in your fifties, sixties and onwards, you might like to allocate higher proportion to spirituality, self actualization  and to your health.  In Hindu mythology, to keep these proportions in-tact, life was divided in four stages called ‘ Brahma charya Ashram , Grahastha Ashram, Vaan Prastah Ashram and Sanyas ashram’ In Brahmacharya Ashram, one could allocate more proportion of one’s time and activities to knowledge ,morality and health, in Grahastha ashram allocating a higher proportion to seeking money, family life , friendship while in Vaan prastha ashram and Sanyas Ashram, priority was given to health, self actualization and spirituality.

By drawing a pie chart of your life in above manner, one can keep a control of your life so as to not regret later. This shall also help to keep oneself happy and satisfied because some of the material benefits which may look gains in a short term approach may actually be a loss to you in terms of your mental health, relationships and family life. This happens in property disputes among brothers. For apparent material gains actually they have lost on relationships, family life and may be on health too because this may not give them mental peace causing illness or diseases affecting their physical health.

So the Mantra of achieving a good and meaningful life is to keep a proper proportion of your needs in your Pie Chart choosing your activities through right conduct without compromising your moral values which shall surely result in your mission of life well accomplished.

Writer

Akhil Chandra

Management of Finished vehicle yards by 3PL Providers. by Prof. Akhil Chandra

Management of Finished vehicle yards by 3PL Providers.

 Finished  vehicle yards in India are growing rapidly  in their capacity  ranging from 10000 cars to 30000 cars and beyond as car maker Companies like Maruti Suzuki, Hundai and Tata Motors and many others  are planning to set up huge Finished vehicle yards country-vide covering  the states like Tamilnadu, Maharashtra , Gujarat and Haryana. This advance planning is in line with the Sales Forecast for the financial year ending 31^st March,2012 expanding to 3 million light vehicles being manufactured in India and  further  by 2015 to have almost doubled to just shy of 6million units  , with an increase to 8million  units by 2019 and 10million units  by 2024.Growing appetite of Indian consumer for light vehicles was also  evident with the successful Auto Expo 2012 currently staged in New Delhi with almost every Auto manufacturer wooing the Indian customer with the new launches of cars each eager to have their market  share in the growing Indian pie of finished vehicles.

The huge expansions in vehicle yards are however associated with new challenges for the third party Logistics providers and shippers due to associated complex sets of problems which can be solved only by introduction of suitable technology ranging from information and communication technology and process control and Automation.

In this article, we shall look into how 3PL providers/shippers in Automotive segment could solve the complex problems of managing huge vehicle yards with  mammoth size comparable to several football fields.

In order to keep their bottom line intact and growing, 3PL Service Providers have to keep three things in mind to manage their finished vehicle yard efficiently viz visibility in their inventory of finished vehicles , optimization of space utilization in the vehicle yard and integration with their customers ( dealers and vehicle manufacturers). Easier said than done, this requires to take first a holistic view of major pain areas in a large vehicle yard managed manually and then solve them through technology available.

a) Time waiting inside the yard is unknown.

b) Vehicle Location in the yard is unknown to the yard manager who is responsible to quickly unload the vehicles and the time waiting of the Trailer causes delays.

c) No visibility in loading and unloading and the departure time at the distribution centre.

d) Checkout delays, errors and wrong trailers.

This leads to a very lengthy process to solve other associated real time and pressing requirements in the yard which are as under.

• What labour do I need?

• Which cars are blocked?

• How much capacity do I have?

• Where in the yard is damage occurring?

• Which cars are to be loaded to train and which to truck?

• How did we do last month, and can we do better?

• And more.....

Visualization armed with yard monitor through information and communication technology can give better insight…. better understanding.

Efficient equipment yard inventory management requires the ability to automatically track how much inventory is on hand, where and to whom it is being delivered, how long it has been outstanding, and how often it is used. Existing manual equipment inventory management methods can sometimes work, but as the volume of equipment or activity increases, the need for automation is paramount to running an efficient and profitable operation.

How is it really done?

1.      Vehicles are tagged with RFID tags. With the help of these tags, vehicles will be tracked automatically as they move in and out of the yard.

2. RFID readers are installed at key entry and exit points and at locations within the yard. These readers provide instant visibility to what is leaving and entering the yard. As well as its location.

3. RFID badge tags are provided on the drivers. This allows to track driver’s movement and to ensure the correct association of driver with the associated vehicle. Further whether for security reasons or to ensure proper delivery and accountability, tracking authorized repair crews to the correct vehicle and equipment contents on the vehicle is essential for effective utility yard management aided by such Badge tags.

4.      Such RFID sensors and readers are connected to a Wi-Fi local area network connecting them to a warehouse management system (WMS) server.

5. Yard monitor placed in the central control room provides for vehicle yard management provides real time inventory visibility, vehicle locations within the yard and control of outgoing and incoming vehicles at the gate.

By integrating with WMS systems following benefits are derived.

1. Reduced yard operations costs and increased productivity due to a high level of automation.
2. Easy traceability of vehicles within the yard by way of real-time tracking through a visual interface. Vehicles such tagged with RFID tags will be tracked automatically as they move in and out of the yard. RFID readers located at key entry and exit points and at locations within the yard provide instant visibility to inventory leaving and entering the yard, as well as its location. In addition, RFID tags have on-board memory so you can store a complete history of the asset (e.g. life, usage rate, etc.) directly on the tag.
3. Real time visibility of the yard and vehicles. RFID tags automate the receipt of vehicles in the yard and reduce the manual intervention. Whether due to peak periods or as part of a bulk delivery, equipment often get missed at check-out. Manual equipment check-in/check-out procedures are prone to errors and delays. Equipment is sometimes “lost” in the field due to not knowing where or who it was delivered to. An automated gate check solution can significantly increase accuracy and prevent loss of equipment.
4. Customized MIS report generation for better analysis and planning.
5. Ranking of vehicles in order to reduce rework costs.
6. Recommendation of a suitable parking location for each vehicle on the basis of the available slots and the parking settings defined.
7. Visual damage tracking mechanism in order to enable yard jockeys to effectively communicate the location of damage to workshop Mechanics.
8. WMS has an activity management module that identifies the activities that need to be performed on each vehicle, and schedules a time for the performance of the activity. This streamlines the workshop process and ensures timely dispatch of the vehicle from the yard.
9. Yard view management software integrated with WMS graphically can display for example say rectangles to represent trailers and their locations, color-coding them to indicate their status - empty or loaded, waiting to be loaded or unloaded, or in the process of being loaded or unloaded

By integrating the above local area network with the customers through internet, complete visibility is provided to the customers and manufacturers with warning alarms and alerts sent through E-Mail. 

Summary

RFID managed yard management systems are already in vogue in developed countries. Such web based yard managed systems provide real time location system capabilities to manage the trailers and vehicles in the ever growing complex and large yard environment and complete visibility of the inventory to shippers and third party logistics service providers. It is imperative and a must that Indian shippers and 3PL providers  also embrace such technological solutions without delay to remain competitive in the present cut throat competition in Automotive domain due to fresh arrivals of Automotive multinationals in the country.

Written by

Prof. Akhil Chandra

Consultant – Logistics and Supply Chain management

choosing your automotive logistics provider, An Article by Professor Akhil Chandra

Automotive manufacturers and  choice of their  better half, 3PL  service Providers 

Manufacturing in Automotive sector in India is growing rapidly and the time is just ripe for third party logistics providers to integrate their logistics operations both inbound and outbound into the supply chain of the automotive manufacturing companies to create a win-win situation for both the parties to maximise their ROI  through cost optimizations and improvement in service levels to their customers and dealers. Consolidations of strengths in the Logistics arena in India are now already taking place   which is evident with the recently announced joint venture of 3 PL Logistics service provider Mercurio Pallia with foreign French Logistics multinational logistics firm GEFCO.

Manufacturers in India are faced now with the new opportunity to outsource their Transporation and warehousing operations end to end to the new emerging strong third party logistics providers .My advice to Indian Automotive Manufacturers is that Third Party LSPs ( Logistics Service Providers )  can play a very vital role in running your Inbound and Outbound Logistics Operations and can  prove to be your life line. Call them your partner or your Better Half ,  choose them judiciously to make it a long lasting and fruitful partnership.   Globally such strong relationships have helped Companies like Toyota, Ford, Chrysler and many more with their 3 PL  partners like DHL, Ryder , Schneider Logistics , GEFCO and VASCOR ltd etc evolve cost optimizations in their inbound and outbound logistics  increasing  their profits and customers/dealers’ delight .   

The stage for tying the knot for Automotive manufacturers with 3PL service providers  is already set in India as Currently, around 30 multinational automobile majors have a presence in India, including international luxury automobile manufacturers such as Bentley, Porsche, Ferrari, Aston Martin, and Harley Davidson. Time is now ripe for Automotive manufacturers to outsource both of the functions of transportation and warehousing to their 3PL service providers including setting up  cross-dock, stockyards or Logistics optimization centres coupled with value added services and a seamless integrated logistics network with end to end logistics solutions.  Due to global cut throat competition, Automotive  manufacturers in India must look to larger scenario of Supply Chain by introducing  third party Logistics service providers in their value chain instead of merely outsourcing transport function.

Further consider the following facts.

·          Logistics in Automotive industry is the  most important function after product development   as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (vehicles distribution).

·         On the inbound side, 3PL service providers ensure timely delivery of materials in the required quantities to meet daily production schedules and can play a major role  in your order processing.

·         On the outbound side, they play a significant role in satisfying Automobile dealers as last mile activity by ensuring timely consignment delivery to automobile dealers increasing responsiveness to Dealers providing them a safe  and reliable service. They also play value added logistics functions such as packing, labelling , quality checking and pre-inspection activities.

 Having established now the need to outsource your transportation and warehousing functions let us see what could be the criteria to  choose  3PL partners who are  reliable, secured and affordable.

1.      Scalability

Choose a partner for your scalable operations. You should study their capabilities for technology up-gradations and their expansions plans for both inbound and outbound Logistics. A thumb rule is to at least consider a 5 year ahead scenario.

2. Customization and Flexibility

3PL providers should be flexible in accommodating your emergency and contingency requirements. Study their back-up plans including manpower, routes and network resources. Look at their customer reference list where they have customized their operations for large Automotive Corporate. Find out whether he can continuously get involved in for continued process improvements that control costs and ensure ongoing efficiency. See how much you can leverage resources of a 3PL saving your investments and improve your service level. The Mantra in outsourcing is :  focus on your core competence and reap the benefits of third party infrastructure by outsourcing to parties who have specialized expertise and experience in these areas.  

3. Resource strength in terms of his manpower and network resources.

Study the strength and weakness of your 3PL partner ranging from his network strength, his manpower resources in terms of their motivation level. Look into 3PL’S   personnel    and their professional development programs. Remember that in a service segment in which Logistics providers operate, 4 Ps unlike in marketing mean people, people, people and people.

As such 3PL’s manpower’ skill set is important consideration .Find out how much spent is on training of their by 3PL provider and compare them with the industry standard.   

4. Industry knowledge and expertise

Find a company that has relevant experience with your type of product, technology integration, geographic area and their routes, and other specific needs.

5. Commitment to tight delivery schedules and safety of your products

Stock-out is a dreaded word for manufacturers and dealers and it can only be avoided by commitment of 3PL partner to time schedules for end to end delivery, safety and reliability. "To be more efficient find out how much velocity your 3PL partner can provide to inbound parts and smaller shipments picked up and delivered more frequently to keep inventory low. Logistics is a key foundation of the automotive our production system as such if your 3PL Partner does not move material efficiently and in small lots then automotive manufacturers might lose many of the benefits their lean  production systems requirement.

6. Technology resources

This should cover his information system capability, Automation and ICT capabilities and his accessibility to technical knowhow through Tie-ups, foreign collaborations. Find out whether he has widely embraced technology  covering  mobile solutions that enable surface and airfreight operators to communicate while shipments are in transit; route optimization and navigation software; and customer-facing solutions offering tracking and tracing capabilities, have become commonplace. Technology should not be used merely for technology sake. Find out how much he has been able to create enterprise-wide visibility, control conformance to shipping instructions, and monitor carriers' performances in pickups and deliveries.

7. His operational strengths

Choose a partner that can serve multiple product markets where compliance, safety, and cargo security are required. If one logistics provider can meet the needs of a diverse base of customers, each with its own challenges and industry requirements, then the chances of a successful partnership greatly increase. Ask about certifications that are aligned with your supply chain and industry-mandated protocols. In a present globalized scenario see his capability to handle inbound and outbound multi-modal logistics involving domestic and foreign vendors. His access and proximity to sea port and airports and material handling capabilities, his fleet strength are important considerations.  Find out whether he can tackle expedited deliveries. Whether he can run Milk runs to help optimize transportation and production? Manufacturers and Logistics provider both can operate efficiently by increasing the frequency of runs to multiple suppliers, which reduces the lot size of each move, allowing the transporter to fill trucks.

8. Your chemistry with him

See whether he is able to work together to resolve the mutually defined goals and objectives. Would he remain true to your company’s identity, expectations, and needs? Chemistry is important to build up a long term and sustained relationship

Summary

Ensuring a smooth flow in the supply chain is the primary challenge faced by Automobile manufacturing companies.. In addition, Indian automobile companies need to ensure safety of their goods in transit and at the warehouse, as well as deal with the inability of majority of the LSPs to provide end-to-end solutions (either in transportation, warehousing, or integrated activity).With the emergence of strong and qualified third party logistics providers in India supported by foreign and tested knowhow, it is imperative for Automotive Logistics provider to derive maximum benefits by outsourcing their inbound and outbound logistics operations to serve their end customers and dealers better with improvement in efficiency, quality and responsiveness through innovative technology and knowledge source of logistics service providers.

Written By

Professor Akhil Chandra, Institute of Logistics and Aviation and

Consultant Logistics and Supply Chain Management

9810223277 ( M) , 011-29210562, akhilchandra06@gmail.com

Article on E-Commerce Logistics by Prof. Akhil Chandra

E-Commerce, a new business  opportunity to Indian Logistics Service providers

World over, blue chip logistics companies like DHL, DB Schenker , United Parcel service and many others have embraced E-Commerce in a big way changing themselves from a ‘brick and Mortar company’ to ‘Click and Mortar company’ providing new efficiencies to their management of their complex supply chains.
Could India be left far behind? Answer is big No ! India has now an internet user base of over 10 million users over 865 million mobile phone users and though the penetration of E-Commerce is low compared to markets like US, UK, Japan and China but is growing at a much faster rate with large number of new entrants and a burgeoning and upwardly mobile  middle class with large disposable income. Timing is now just right to cash in this new E-business opportunity for third party  Indian logistics providers and jump into  the bandwagon and with increasing broadband internet ( growth at 20 per cent) and 3 G penetration aided with WI-MAX connectivity offered to business entreprises , floodgates are wide open now for becoming last mile carrier to both type of Businesse viz B to B and B to C.   They have to integrate their business with E-Retailers with seamless information flow between Retailers, themselves and manufacturers after developing their ICT  capability. Let us look now look to other key drivers to this new E-Business opportunity  which are:

·                    Availability of much wider product range to what is available at brick and mortar retailers

·                    Busy lifestyles, urban traffic congestion and lack of time for offline shopping

·                    Lower prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs

·                    Unlimited reach of the customers both nationally and internationally through internet portals

·                    India has world’s fouth largest internet users

·         India has close to 10 million online shoppers and is growing at an estimated 30%  CAGR vis-à-vis a global growth rate of 8-10%. Electronics and Apparel are the biggest categories in terms of sales.

·         Direct Imports constitute a large component of online sales. Demand for international consumer products is growing much faster than in-country supply from authorized distributors.

What shall be the new challenges to LSPs for this new E-Business opportunity?

        Electronic Commerce demands an agile, high velocity and granular approach to Logistics .

A manufacturer or online merchant must be able to customize an individual order; ship it directly to the buyer anywhere in the world; track the whereabouts of the item at any given time along the supply chain, handle customer inquiries, handle product returns (reverse logistics) all at very high speed  and at a fraction of the cost of traditional shipping and fulfillment.

Larger number of small parcels or packages due to a larger number of buyers making direct orders and a larger number of sellers than in traditional trade;

Origins and destinations of shipments are more widely dispersed, given that more buyers place direct orders with producers and distributors and more sellers access buyers globally

Accountability for shipments extends through the entire supply chain, compared with traditional logistics in which accountability is limited to single links of the supply chain

Customers have high expectations about quality of services and demand fast delivery of shipments;

Higher incidence of cargoes returned to the supplier than in traditional trade;

Greater demand for and availability of information covering transactions over entire supply chain, thus allowing on-line shipment tracking and other supply chain management functions;

Substantial increase in the volume of small shipments, leading to growth of demand for warehousing transport and other logistics infrastructure that can handle larger volumes of small shipments;

Qualified e-logistics providers must depend on integrated IT systems and complex

software to manage the dynamic flow of products. The quality of information must be much better than that of traditional outsourcers, so that companies can have visibility into their supply chains. Better information also reduces inventory throughout the supply chain, enabling companies to react quickly to market changes.

When delivering to private persons instead of companies, the demand for fast and accurate deliveries will increase. This is because one or more of the physical nodes will disappear when the goods can be transported directly from the producing company to the end customer. Direct home deliveries will request shorter lead times, and more complex distribution systems will be necessary to make this possible.

Conclusion:

E-Commerce opportunities can no longer be ignored by Indian 3 PL players. Country has now offered robust internet connectivity with high reach in the country and with new technologies like Wi-MAX and 3G future of E-Commerce is bright and early birds in logistics industry can reap the benefits offered. E-Commerce has been embraced by practically most of big international players and with multi-branding which is soon to be allowed to foreign Retailers like Wal-Mart, Tesco and Carrefour etc by Government of India , application of E-Commerce shall rise offering a clear cut opportunity base to Indian logistics service providers. Onus is on them to accept the change and thrive with the E-Buiness opportunities. logistics industry has to face the challenges and opportunities created by e-commerce, both from within the industry and from external players. The industry has always been pressed to cut costs and squeeze margins, and the future will be even more formidable as competition forces most companies to continue the streamlining of their business.

warehousing for DUMMIES, Unit 1 by Prof. Akhil Chandra

•                                                        WAREHOSUSING FOR DUMMIES
  1.1  Preview/warm up
  Warehousing is an integral part of Logistics so as to increase responsiveness to customers in the marketplace for business organizations. The subject is gaining importance as multinationals like Wal-Mart, Carrefour and Metro etc shall be allowed mutibranding retailing in a big way. In fact cabinet of Government of India  has already cleared 49 per cent of FDI( foreign direct investment) for foreign multinationals in area of multibranding Retailing. Such multinationals shall open cold chain and state of art warehouses for perishable goods and shall require huge skilled manpower in areas of Warehousing .
  Warehousing not only reduces transportation costs but also are used to avoid stock-outs in the retail stores and are vital in manufacturing industry to keep assembly line of production up and running. This chapter introduces you to exciting world of warehousing which in future shall help to improve logistics infrastructure in the country. Read this chapter carefully which talks about purpose and activities involved in warehousing,  benefits of warehousing, warehouse organization structure and gives as insight into warehousing day to day operations.
  1.2  Learning objectives
  ·         To understand the basic functioning of warehousing to support manufacturing and retail sector
  ·         To understand what are the various activities which are involved in small and large warehouses
  ·         To understand the various economic and service benefits of  Warehousing
  ·         To understand the organization chart of a warehouse with functions and duties of all the important staff
  
  
  
  
  1.3 Warehousing Introduction
  Purpose of warehousing is to store material safely and in order. You would have noticed how in kitchen, housewives need some storage space  for cooking material  like flour (Atta) ,Daal, vegetables , Ghee , spices etc.  etc. Some Space is also needed to store utensils, cooking gas cylinder and so on. For perishable items like vegetables, meat, milk etc they require refrigerator to keep them cold so that such eatables could be used for longer time. As per the usage and requirement, housewives have their own methods to access them and to keep them in order. They keep most accessible items at arms length and items which are not often used like only during festivals are kept in shelves which are  are at a larger distance and require more time to access.
  Industries also require likewise space to store various material involving chemicals, raw material, stationery , electrical items, tools and tackles, lubricants and oils etc etc. In fact variety of items vary depending on type of industry  and kinds of items which warehouses have to store are very large and as such require a careful planning so as to keep them safely and in order. Industrial items
  Let us see now how a warehouse looks like . This  is given below in figure 1
  
  
  
  
                                                                         Figure 1
  You would see in the picture above that materials in packed form are kept in shelves and enough space has been provided for easy movements for persons who have to pick the material from the shelves either manually or moving fork-lifts. A careful layout of warehouse is planned so that stored items are identified and issued with minimum efforts and minimum time. The items stored are known as ‘Inventory’. Note down this word carefully as this shall be used often in further teaching topics like inventory control.
  A warehouse is as such a commercial building storage of goods. Warehouses are used by manufacturers, wholesalers, exporters and importers and transporters. They are usually large plain buildings in industrial areas of cities and towns.  Sometimes warehouses are designed for the loading and unloading of goods directly from airports, seaports and Railways. They often have cranes, forklifts for moving goods, which are usually placed on pallets loaded into pallet racks. Let us see now how cranes, forklifts and pallets look like as these are new terminologies which you must know as student of warehousing.
  
  
                      
  Fork Lift and the Driver                                                        Pallet
                                                
    Crane
  
  
  Check your progress Exercise A
  1.      What is the purpose of a warehouse?
  
  
  
  
  2.      Tick, who are the users of a warehouse?
  a)      Manufacturers b) Importers and exporters c) Transporters d) Wholesalers
  
  
  3.      What is the purpose of a forklift

  
  

  
  
  
  
  4.      What is inventory in a Warehouse?
  
  
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  5.      What are the varieties of material which are stored in a warehouse
  
  
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  1.4 Activities in a warehouse/store
  Let us see first see how a warehouse layout looks like to understand the activities in a warehouse which happen day in day out.
  .
  The above is a layout of a warehouse used in manufacturing industry. In a manufacturing industry, you require raw materials which are ordered and procured and stored in the warehouse. They are issued once again to the shop floor for manufacturing on the assembly line where finally finished good after quality checks etc are packed and the shipped to wholesalers, dealers etc based on the orders received from them.
  In the above layout, observe the arrows carefully and you shall find out that there is an in-coming section of the warehousing where the material is received. Subsequently material is sorted and either stored or sent to manufacturing unit used as work in progress section.. There is an outgoing section where the packed material is shipped on the truck based on the orders received from the wholesalers and dealer’s .There is business office section which keeps all the records of material incoming, outgoing and material stored in addition to housekeeping functions to control manpower requiring attendance records etc. additionally. Warehousing is a manpower intensive area and lot of manpower is required involving order pickers, staff for store management, material management, finance management, IT management etc.
  
  
                                                                  Warehouse in action
  In the above picture what you see is that order pickers after lifting the material from the shelves are moving within the warehouse with the material on their forklift. This is a day in day out job in warehouses to keep dispatching the packed material after sorting them from the shelves built in the storage area.
  Now based on the above inputs given to you, we can now summarize the activities in a warehouse in following category heads.
  1. Requisitioning of materials.
  2. Material inspection
  3. Warehousing operations.
  1.4.1 Requisitioning of materials
  We shall now describe each of these activities in detail. You will appreciate now that in warehousing materials are continuously picked by order pickers but the items picked must be replaced otherwise a ‘stock out ‘situation shall arise. ‘Stock out’ basically means that material to be fetched is not available on the shelves which is considered a bad situation in the warehouse. As such it is vital that activity of replacement of material picked from the shelves must happen regularly. This requires requisitioning of the material. In domestic house also housewife keeps regularly procuring the raw material like Atta, Daal and vegetables otherwise the family members will starve because of lack of cooked food. Because if housewife does not requisition these items, her cooking activity in the kitchen shall come to a standstill.. One can say that cooking activity is similar to manufacturing activity in the industry. Only thing is her customers are her family members who order and consume her cooked food.
  So now we can elaborate this activity of requisitioning of materials into following further activities.
  ·         Replenishment ( replacement of material in the shelves after order picker has picked the material from there) of stock items
  ·         Requisitioning of new/out of stock items.
  ·         Processing and approval of purchase requisition( purchase requisition is a form which is filled by the user as a request to procure and purchase the material)
  ·         Amendment/cancellation of purchase requisition
  ·         Updating status, follow up and control of purchase requisitions
  
  
  1.4.2Material Inspection
  Do you know why material inspection is required? You would have noticed that even housewives carry out the inspection of procured grocery of weekly/monthly purchases and if it is of low quality, they return it or shall never purchase from such vendors and can even blacklist them. This is what happens in the industry also. If incoming material procured is not as per specifications and in line with the desired one while ordering, the end product after manufacturing shall also be of bad quality. In case of most of factory products, quality depends a lot on quality of raw materials which are used in manufacturing the end product.
  Let us now take an example of a sweet seller. If the sweet seller is not careful about the quality of his basic raw material of sweets like Maida, Khoa, sugar or ghee etc , the end products like Jalebi or Burfi shall be of bad quality. So unless and until his supplier is either a trusted one, he must carry out incoming inspection of the ordered material  carrying out a sample check otherwise his customers shall reject his sweets resulting in losses or he may have to even close his shop. There is also a constant fear with the sweet seller that if the quality is low, his customers may switch over to his competitor in his close neighborhood.
  So now material inspection is clear, we can enumerate the activities involved in material inspection as under.
  ·         Handling of control samples
  ·         Recording of additional/new specifications
  ·         Receipt and inspection of material
  ·         Reporting and handling of discrepancies (defective or broken during the transportation)
  
  
  
  
  1.4.3 Warehousing operations
  After requisitioning of material and material inspection of incoming material, warehouse is ready to carry out its daily operations. In daily operations, the activities involved are issue of material to the shop floor in the manufacturing warehouse. After issue of the material, order pickers fetch the material from the shelves of the storage space either manually or through movable fork lifts. If  it is a retail warehouse say for garments located let us say in the vicinity of Dehradun ,  then it involves picking the garments from the shelves, moving them to an area where they could be repacked to service the orders received from various Malls located in Dehradun city. Sometimes price tags are also put in the warehouses and then  they are dispatched from the outgoing section of the warehouse after loading them in trucks/ containers.
  Lately there is lot of use of information technology in providing flexibility in operations of warehouses. IT Software like warehouse management system , Robotics and automation in terms of automated forklifts, hand held I-Pods , RFID (Radio Frequency identification )  technology etc  have lot of applications in warehouse operations and we shall discuss these topics later on in detail.
  Check your progress Exercise B
  1.      What are the three important activities which take place in a Warehouse?
  
  
  
  
  2.      What is the role of an order picker?
  
  
  
  

  3.     What is the purpose of inspection?

  
  
  4.What is a “stock-out” situation.?
  
  
  
  
  
  
  
  
  1.5 Benefits of warehousing
  Warehouses are built basically to give storage support to manufacturing and Retailing. The built up inventory of l items in a manufacturing unit supports the requirement of material required on the shop-floor to assemble or build finished product. In Retail sector, build up inventory in warehouse helps to avoid stock out on the retail shelves. Stock out is not a desirable feature because if customer faces stock out situation after visiting the mall/store, he will switch over to another competitor. Thus build up inventory to a certain extent helps in serving the customers in Retail sector quickly and to avoid lost sale. Likevise in a manufacturing sector, stock out condition can bring the assembly line to a screeching halt resulting in loss of manpower, time and other resources which were used to build up the assembly line. To give you an example if a sweet seller while preparing sweets faces a stock out situation say for sugar, he will loose lot of money and time and he can not provide the end product to his customers. As such he must build up some inventory for his raw materials like Maida, Ghee , sugar, milk etc.
  In industry, let us see first what are the steps involved in manufacturing a product and then taking it to the customer. Suppose you are an entrepreneur and you have to manufacture personal computer. After arranging funds, land and manpower etc what you need as a first step is procurement of raw material like monitor, keyboard, mouse and other electronic components and assemble them on the shop floor in your manufacturing unit. After assembly of these PCs , they are tested and after passing through quality checks are packed and are made ready to be dispatched for selling them to end customers. PCs are transported in trucks, rail, and ship or by air depending on local or global market. However for selling on a large scale one requires the services of  stockists, wholesalers and dealers who have a better knowledge of  market in their territories and have developed good relationship with their customers as they remain always directly in touch with the customers. And that is their advantage. The stockists and ,wholesalers require Godowns or warehouses to stock the goods to be sold so that they can service their customers better. Apart from servicing the customers in an efficient manner, warehouses are also used to save transportation costs. The benefits can be divided in following two categories
  1.5.1 Economic benefits
  1.5.2 Service benefits.
  We shall now discuss each of these benefits as below.
  1.5.1 Economic Benefits.
  There are actually four methods to save transportation costs resulting into economic benefits.
  1. Consolidation
  2. Break-bulk and cross Dock
  3. Processing /postponement
  4. Stockpiling
  
  
  1.      Consolidation
  
  
  This is nothing but shipment consolidation. Here the idea is to first collect all the material transported by manufacturing plant A, manufacturing plant B and manufacturing plant C in an intermediate warehouse which are destined to same customer. The place is chosen somewhere in between so that the overall transportation costs get reduced. One has to see also what is overall cost of introducing a warehouse including fixed and variable cost and make a judgment whether it makes sense to introduce a warehouse in between rather than transporting materials from individual plant A,B,C directly to the same customer. Refer the consolidation warehouse below in the figure1 where material from plant A, B and c has been consolidated and sent overall to the same customer.
                                   Figure 1
  
  
  
  
  In order to provide effective consolidation, each manufacturing plant must use the warehouse as a forward stock location or as a sorting and assembly facility. The primary benefit of consolidation is that it combines the logistical flow of several small shipments to a specific market area. Consolidation warehousing may be used by a single firm or number of firms may join together and use a for-hire consolidation service. Through the use of such program, each individual manufacturer or shipper can enjoy lower distribution cost that could be realized on a direct shipment basis individually.
  Break bulk and cross dock
  Here material for several nearby customers say A,B and C received from a manufacturing unit  is separated for each customer  and repacked  and transported once again .Please refer the figure 2
                                     Figure 2
  
  
  Here the breakbulk warehouse or terminal sorts or splits individual orders and arranges for local delivery
  Because the long distance transportation movement is a large shipment, transport costs are lower and there is less difficulty in tracking.
  A cross dock facility is similar except that it involves multiple manufacturers.  Retail chains make extensive use of cross dock operation to replenish fast moving store inventory. Retailers bring the material in bulk nearby to a city and then as per the requirements they repack and transport in smaller packets and send them to various malls/stores located in the city at different locations.
  
  
  
  
  
  
  
  
  Processing /Postponement
  Warehouses can also be used to postpone or delay production by performing processing and light manufacturing activity. A warehouse with packaging or labeling capability allows postponement of final production until actual demand is known.
  
  
  Stockpiling
  Some of the products like agricultural products are harvested in a particular season and there can be a stockpiling due to bumper crop. In such a case it requires huge space in warehouses. Seasonal storage is here essential in such businesses. Stockpiling thus provides an inventory buffer which allows production efficiencies within the constraints imposed by material sources and the customer.
  
  
  Having discussed economic benefits as above now let me explain service benefits. What I mean from service benefits is benefits arising to customer in order to render him better services. Let me tell you that service to customers is very essential as business servives because of the business and they actually are very purpose of the business.
  1.5.2 Service benefits.
  Five basic benefits are achieved through warehousing viz spot stock,assortment,mixing,product support and market presence .I shall discuss each of them now as below
  Spot stock
  Here the inventory in warehouses  is created adjacent to key customers  just prior to a maximum period of seasonal sales like during Diwali or christmas. Suppliers of agricultural products to farmers often use spot stocking to position their products closer to a service sensitive market during the growing season .
  Assortment
  An assortment warehouse – which may be utilized by a manufacturer,wholesaler or retailer stocks products combinations for example catering to  athletes one can have wide variety of sport shoes,sport wears and apparels in their warehouses. As a second example the wholesaler would create a specific team uniform including shirts, pants and shoes. Assortment warehouses improve service by reducing the number of suppliers that a customer must deal with. The combined assortments also allow larger shipment quantities which in turn reduce transportation costs. The distribution assortment warehouse usually has a broad product line, is limited to few strategic locations and is functional year round.
  
  
  Mixing
  In a mixing situation, truck loads of products are shipped from manufacturing plants to warehouses . Each large shipment enjoys the lowest transportation rate.Upon arrival at the mixing warehouse , factory shipments are unloaded and the desired combination of each product for each customer or market is selected. This would be more clear from the figure 3.
    
                                                         
  
  
                                                                            Figure 3
  
  
  
  
  In the figure above, a product D is mixed at the intermediate warehouse for select customers like W and X .
  
  
  
  
  
  
  Production support
  Production support warehousing provides a steady support of components and materials to assembly plants.the most economical total cost solution may be the operation of a production support warehouse to supply or feed processed materials, components and sub-assemblies into the assembly plant in an economic and timely manner. Please refer the figure 4 where subassembly and raw materials from supplier A, B and c is stocked n a manufacturing warehouse so that there is a regular and un-interrupted supply to the  assebbly plant.
  
  
                                                                      Figure 4
  
  
  Market presence
  Local warehouses located near the markets can be more responsive to the customer needs thereby helping marketing to customers. Marketing managers find such warehouses as a major advantage of local warehouses. Such warehouses are able to deliver the finished products with quicker delivery period as compared to warehouses which are located at larger distances. A local warehouse can enhance can enhance market share and increase profitability.
  
  
  Check your progress Exercise C
  1. What are the four methods of transportation resulting into four economic benefits.?
  
  
  
  

  2.      Name the  five service benefits resulting to customers.

  
  

  
  
  
  
  1.6 Warehouse Organization
  Dear students, by this time you would have realized that there are numerous activities happening in a warehouse and in order to ensure that these activities happen smoothly day in day out, one requires an organization structure which is suitable to carry on various activities productively and  efficiently.
  Traditionally in a manufacturing organization, there is a position of Store manager or warehouse manager .Warehouse manager is now a more popular designation lately than classical Store Manager.In medium and small sized organizations, the Store Division is normally under the control of the Works Manager.Store Head  works at par with production headr , IT/ MIS  head or finance head as shown below
                                                               
                                                                        
  
  
                                                                                 WORKS MANAGER
  
  
  
  
  
  
  
  
  Admin Head         Finanace  head           Production Head             Purchase head      Store Head         IT Head
  
  
  
  
                                  Organization structure of a small manufacturing organization
  
  
  
  
  
  
  
  
  
  
  
  
  In larger organizations, store head reports to Material Head together with Purchase Head as shown below
                                                                                  General Manager
  
  
  
  
  
  
  Production     finance             Material Manager          Marketing    Human Resource and Admin     Planning
  
  
                  
  
  
                                  Purchase                          Store/warehouse Manager
                                 Manager
  
  
                                                          Organization Chart of  a large organization
  Organization structure of a Store Division
  The important functions which are carried out in Store are as under.
  Stores Manager
  IT Manager
  Maintenance engineer
  Warehouse officer
  Inspection Officer
  Inventory controller
  Store keepers (can be more than one)
  Warehouse Operations manager
  Supervisor, stock Records section
  Depending on the complexity, manpower may vary however below is a general organization structure of a warehouse  organization
   
  
  
                                                Store/Warehouse Manager                                                        
  
  
  
  
  
  
  
  
   inventory controller                            Warehouse operation                     store officer                 IT Manager
                                                                                Manager                               -Inspection officer
                                                                                                                               -Store keepers
  -Material clerk                                                                                                  -Labour
  -Data entry operator                   -maintenance Engineer
                                                          -  Order Pickers and other operational staff                                            
                                                          - Transport and dispatch section
                                                          - Labour
                                                          -Fork lift operators
  
  
  You would have seen that based on the activities discussed above, the organization structure has evolved. This structure is true for one warehouse. In the above  structure, delegation of authorities have been clearly defined and Store/warehouse manager is overall in-charge of operational, financial ,IT and administrative section.
  
  
  
  
  
  
  
  
  
  
  1.7 Functions and duties of Store/warehouse staff
  We shall now discuss the functions and duties of each category of following staff.
  ·         Stores Manager
  ·         IT Manager
  ·         Maintenance engineer
  ·         Warehouse officer
  ·         Inspection Officer
  ·         Inventory controller
  ·         Store keepers (can be more than one)
  ·         Warehouse Operations manager
  
  
  Functions and duties of Store Manager
  Basic Functions
  Store Manager is overall boss of the warehouse who ensures safe and efficient receipt, storage and issue of all materials and equipment stored in the warehouse and other related areas. He ensures keeping up to date stock levels of materials, equipment and consumables. He is responsible for smooth operation of warehousing activity. As he is in close touch with the market through the purchase orders received, his inputs are considered to be valuable for Sales Forecasting .
  Duties
  ·         His responsibility is to manage and supervise the activities  of personnel assigned to store/warehouse division.
  ·         Planning and coordination for ensuring safe and correct receipt, storage and issue of all materials and equipment from the warehouse
  ·         Preparing detailed procedures for issuing and receiving stock, loading , unloading and storing of material
  ·         Overseeing processing of physical inventories documentation without any discrepancies
  ·         Coordinates the material documentation and stock data, ensuring  that materials and their movements are accurately entered into file, replenishment and stock data is maintained and updated and all stock data reports are regularly issued and processed.
  ·         Maintains strict material control, including reviewing of purchase orders and determining validity of requests according to job requirements prior to releasing material and ensuring that all surplus material are returned to the warehouse.
  ·         Recommends quantities and types of surplus materials and equipments to be sold and and processes the relevant documentation.
  ·         Coordinates the reports and recommendations to the management regarding material control system and procedures, stock levels and forecasts of a need as a result of historical data comparisons and coordination with other divisional heads.
  ·         Training subordinates and ensuring good housekeeping and observance of safety rules.
  ·         Assisting in commissioning technology up gradation projects
  Function and duties of IT manager
  Function
  Function of an IT manager is to continue upgrade IT ,telecommunication and automation technology upgraded and keep the local area and wide area network up ,all the software and hardware upgraded and well maintained, ensuring security against virus or hacking,and solving day to day problems of warehousing personnel especially in inventory control area and operational area.
  Duties
  
  
  ·         Ensuring upkeep of local area networks comprising of computers, printers, scanners, handheld I-pods
  ·         Ensuring good maintenance of hardware and software
  ·         Coordinating and introducing IT related projects for flexible and faster operations of warehousing activities.
  
  
  Function and Duties of maintenance Engineer
  Functions
  Maintenance engineer has to keep electrical and mechanical systems running including DG Gen set, air-conditioning for cold chain warehouses, upkeep of Uninterrupted power supply, electrical light system, maintenance of forklifts etc.
  Duties
  ·         To coordinate with IT manager to keep electrical and automation systems up and running in coordination with IT manager
  ·         To do preventive and routine maintenance of electrical and mechanical systems
  
  
  Functions and duties of Warehouse Officer
  Functions
  Supervise the activities of personnel assigned to warehouse and inspection section
  Duties
  Receiving , storing and issuing
  Coordinate the safe and efficient movement, storage and issue of all materials and equipments
  Ensuring suitable storage conditions/environment like air-conditioning and humidity control for each class of material as per guidelines from manufacturer
  Ensuring safety and security and housekeeping of all storage locations and materials
  Examining items received through return notes and repair requisitions for further actions
  Arranging identification of all non moving/obsolete/expired/damaged items
  Inspection
  ·         Planning, supervising and coordinating the off loading and storage of major deliveries
  ·         To coordinate closely with inspection personnel for inspection of the consignment
  ·         Coordinating with inventory control and engineers for inspection of complex incoming material
  ·         Supervising routine inventory activity as an administrative function
  
  
  Reviewing guidelines, systems and procedures
  ·         Reviews and recommends procedures for loading, unloading,storing,issuing and control of materials, minimizing losses from deterioration,obsolescence and maintain high standard of safety and security
  
  
  Function and Duties of Inspection officer
  Duties
  ·         To supervise the activities of inspection controllers
  ·         To receive, inspect and ensure proper packing and dispatch of items/equipment for outside repair
  ·         To inspect high value and critical materials in coordination with requisitioning user
  
  
  Function and Duties of Inventory Controller
  ·         To ensure timely replenishment of items
  ·         To monitor movement of vital items
  ·         To ensure complete and correct specifications in all requisition
  ·         To minimize inventory so as to reduce inventory carrying costs
  
  
  Duties
  Replenishment of items
  Accurate and timely replenishment of stored items
  Analysis of requisitions based on commodities or groups/subgroups
  Analysis of forecasted requirements based on feedback from users
  Reviewing non moving and nil stock items for taking corrective action
  Arranging updating descriptions, specifications, working quantities based on the feedback from inspectors or users
  Specifications
  Describes and forms specifications
  Catalog and Manuals
  Maintains and updates list of equipment, catalogs and manuals for assigned area of work
  Coordination
  Coordinates with personnel in warehousing , purchasing, customs and traffic and plant operations for providing clarifications
  Function and Duties of Store Keeper
  Function
  Supervises and participates in the receiving, checking , tagging, binning, storage, physical movement and good housekeeping of assigned storage locations
  Ensures proper operation and maintenance of all assigned material handling equipment
  Reviews, plans and recommends efficient allocation of storage space
  Ensures timely movement of materials from inspection area to bins and bins to delivery points as per procedures
  Duties
  Receiving, checking and storing
  Supervises and participates in receiving,checking,tagging,binning,physical movementand housekeeping of assigned storage location, implementation of procedures and control
  Ensures proper operation and maintenance od all assigned material handling equipment
  Reviews,plans and recommends efficient allocation of storage space
  Ensures timely movement of materials from inspection area to bins and bins to delivery points as per procedure
  Safety, security and housekeeping
  Responsible for safety and security of assigned stores and all material
  Responsible for good housekeeping and protecting materials and facilities from dust, moisture, heat  and other factors which may cause deterioration
  Segregating expired items and recommending their disposal
  Inventory audit
  Supervises the stores Assistants/assistant storekeepers assigned for his area
  Coordinates and assists in inventory audit
  
  
  Function and Duties of warehouse operation Manager
  Function and duties
  Large warehouses have this vital function of warehouse operation manager so as to ensure smooth operation of the warehouse. He is responsible to remove any bottleneck in the work flow of a warehouse. His area of operation starts right from incoming material section, store replenishment and sorting by order pickers and forklift operators and dispatch section to ensure that there are no queues and material movement is smooth throughout the warehouse area. He has to take immediate decisions to clear the  various areas and avoid breakdowns and blockages in material inflow and outflow.
  
  
  Check your progress Exercise D
  1.      Name the important functions which are carried out in store division.
  
  
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  2.      To whom does Store/warehouse manager report in a manufacturing organization?
  
  
  
  
  
  
  
  
  
  
  1.8  Summary
  
  
  A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, wholesalers, exporters and importers and transporters. It  is an integral part of Logistics so as to increase responsiveness to customers in the marketplace for business organizations. The activities in Warehousing include
  ·                    Receiving
  ·                    Inspection/ Acceptance
  ·                    Proper Storage
  ·                    Order preparation and order picking
  ·                    Dispatching/ Delivery/Loading on the trucks
  ·                    Inventory management
  There are two kind of benefits of warehousing viz economic and service benefits.
  The economic benefits result due to savings in transportation costs viz
  1. Consolidation
  2. Break-bulk and cross Dock
  3.Processing /postponement
  4. Stockpiling
  The service benefits are benefits arising to end customer in the marketplace and comprise of majorly five benefits viz spot stock, assortment, mixing, product support and market presence.
  To run a warehouse , one requires a proper organization structure in a warehouse The important functionaries in a warehouse are store manager, IT Manager, Maintenance engineer, Warehouse officer, Inspection Officer, Inventory controller, Store keepers (can be more than one),Warehouse Operations manager.
  1.9           Bibloigraphy
  Reference book—Warehousing Management & Inventory control-Saxena
  Logistics Management – By Donald . J. Bowersox,David. J.Closs         
     1.100 Exercise A. Answer 1: Purpose of a warehouse is  to store material safely and in order
     Answer 2: Tick all four options and all are correct.
     Answer 3 : Purpose of a forklift is to fetch the material from the shelves of the warehouse and    to transport it to Dispatch section. They are also used to bring the material from incoming department to store department and put it in shelves by order pickers.
  Answer 4. Inventory in a warehouse is all the material kept in the storage warehouse.
  Answer 5.The material stored in a warehouse consist of chemicals, raw material, stationery , electrical items, tools and tackles, lubricants and oils etc etc.
  1.101 Exercise B. Answer 1 .The three important activities are 1. Requisitioning of materials 2.  Material inspection 3.  Warehousing operations
  Answer 2: The role of an order picker is to sort the material from the shelves of warehouse and transport it to dispatch section. They also bring incoming material in the warehouse to put it in shelves of the storage area of warehouse.
  Answer 3: Purpose of material inspection in the warehouse is to ensure quality of the incoming material and avoid defective and broken items during transit
  Answer 4 :“stock out” situation means non-availability of the material when order picker reaches to fetch the material from the shelves.
  1.102 Exercise C
  Answer 1:  4 methods of saving costs of transportation are1. Consolidation 2.  Break-bulk and cross Dock 3.Processing/postponement 4. Stockpiling
  Answer 2: 5 ways of service through warehousing are spot stock, assortment, mixing, product support and market presence.
  
  
  1.103 Exercise D Answer1. The important functionaries in a store department are Stores Manager
  IT Manager, Maintenance engineer, Warehouse officer, Inspection Officer, Inventory controller, Store keepers (can be more than one), Warehouse Operations manager, Supervisor, stock Records section
  Answer 2 : Store manager in a manufacturing organization reports to To material manager
  1.10  Terminal Questions
  1.      There are five basic service benefits achieved through warehousing: Viz: Spot stock, Assortment, mixing , production support , market presence. Explain each of them.
  2.                  Explain the economic benefits of Warehousing with diagrams in terms of A) Consolidation  B) Break Bulk AND Cross Dock C) Processing /Postponement D) Stockpiling
  3.       Explain the function and duties of the following officials in warehousing.
  A)    Store manager b) Inventory controller c) Inspection officer d) Supervisor stock record section
  4.      What are the three different activities in a warehouse? Explain each of them in detail.
  5.      Explain the importance of warehousing to a transporter, manufacturer and a wholesaler?