Attempt all the problems.
problem1) describe some information technology based approaches which are well suited for the enhancement of supply chain management.
problem2) describe the role of safety inventory in supply chain? Describe how a reduction in lead time could help a supply chain reduce safety inventory without hurting product availability. Demonstrate the same mathematically
problem3) describe the different metrics which are used to measure Supply Chain Performance.
problem4) Describe the various criteria which are used to select and evaluate a vendor.
Case study on warehouse efficiency
Personal Care Limited (PCL) is large and premier FMCG company In India with turnover of about Rs 2000 crore. It has 85 productions plants spread over whole country, producing about 1200 products ranging from personal care to household goods.
Company has four of its own mother warehouses situated in four zones of north, south, east and west which receive products from almost all the plants on regular and consignment basis in containers by road. These warehouses are responsible for taking care of stocks, order placement for next arrivals, loading and unloading, protective storage, stock recording, apart from order processing and trans-shipment of goods to C&F agents of respective zones, who number around 150 per warehouse.
After receiving goods from different plants, these are first entered into the computer for inventory recording purposes. Suitable storage location spaces are then assigned after taking into consideration the quantity to be stored, the physical dimensions characteristics of items, frequency of flow and availability of space that is quite variable and flexible. For storage of goods, flexible raking system is used so that the size of a rack’s space can be changed as per the size of the product’s package. Furthermore, racking is back-to-back in pallet blocks which are 5 storeyed and in one block; there are about 400 back-to-back racks.
In certain areas, for selected heavy weight and bulky items, 50 selectors drive forklift trucks and in remaining areas, as many as 350 selectors pick the goods manually and use hand trolley. Selectors are normally less educated but highly experienced, and have well-defined areas of selection.
With this existing system, there have been a lot of practical problems, such as under-utilization of space; traffic congestion in aisles between the racks as one selector, blocks another’s progress while he is picking items from a location, wrong assortment, difficult to track goods, difficult to fill one single order as it contains a variety of items, etc. Also, a trucker is required to collect items from various places of warehouse complex to make up the order. Often, they have to wait for a full load. Then, the driver has to collect challan and other required papers. Usually, this entire process takes seven to ten days, subject to ready availability of goods in the stock. In the case of stock-out items, it might go anywhere in between 15 to 30 days. That is why, replenishment cycle time for nearby C&F agents is about 15 days and for others, it comes around 3 weeks. Due to a gradual increase in the quantum of competition and increasing customer expectations, along with increasing awareness about the overwhelming contribution of L&SCM in cost reduction and service improvement, the top management of PCL have appointed highly qualified and experienced professionals at al four warehouses with the following objective:
• To improve efficiency of the warehouses;
• To reduce replenishment cycle time by 25 per cent;
• To reduce total logistical costs by 10 per cent;
• To have transparency in dispatch of premium products.
Mr. A.K. Sinha, who joined north zone warehouse as chief warehouse manager, has had a very successful career of 25 years. He wants to redefine the whole operating system.
problem1) How must Mr. Sinha approach this problem?
problem2) Develop the strategy to overcome the problem and fulfil redefined objectives of the firm?
problem3) What changes will be recommended for implementation of the new strategy?
problem4) Suggest measures for evaluation of performance of the warehouses.