LOGISTIC INFORMATION SYSTEM
Presented By : (TYBMS)
Shohaib Pathan (37)
Ashish Pharne (38)
Amit Poojary (39)
Diksha Rai (40)
The shift in the economy from the industrial era to the information age has profound implications for the management of the modern enterprise.
Supply Chain Management is a relatively new discipline within the firm and originally dealt with the transportation and storage of goods, an advanced supply chain program coordinates activities across management functions.
In addition to transportation and distribution, other areas influenced by logistics include customer service and quality management, inventory management, location, strategic planning, procurement, and logistics information systems.
The intent of this presentation is to introduce you to the important concepts of Logistics Information Systems.
Logistic Information System can be defined as “managing and controlling information handling processes optimally with respect to time (flow time and capacity), storage, distribution and presentation in such a way that it contributes to company results in concurrence with the costs of capturing (creation, searching, maintenance etc).”
Logistics is the field of study to focus on the design, control, and implementation of the efficient flow and storage of goods and services and other related information from the point of origin to the point of final consumption with an aim to satisfy the requirements of its existing and prospective customers.
The management of Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security.
If correctly information is available, it can be used for many strategic advantages. E.g.: The firm can effectively counter the strategies of its competitors, or the firm can evolve strategies for future growth on a realistic basis.
Today Customer themselves evaluate the type and extent to customer service offered by the firm. The customers are very conscious, whether the firm is responding correctly to the information regarding order status, availability of required product, delivery schedule, correct invoicing, etc.
Logistic managers have realized that correct and in time information flow can actually help to reduce both, the inventory levels as well as manual operations.
Timelessness
Accuracy
Availability
Interactive
Flexibility
Format
Increased accuracy in measuring inventory level reduces decision uncertainty.
Accuracy with regard to inventory can be defined as the degree to which the information generated through the report matches with that of the physical count.
Principle of accuracy is ensuring that there is no gap between information available and reality. E.g. Inventory levels as per LIS vs. Physical Stock Levels.
The addition or subtraction of information should be on a real time basis. For E.g. , the delays in customer order registration and order processing will give an incorrect picture of ‘orders on hand’.
Logistics information must be timely to provide quick management feedback.
The procurement actions initiated on the basis of an incorrect report will create material shortages in future, particularly for long delivery parts.
Updates on information for additions or deletion should be taken care of before the periodic reports are due for generation.
Cut-off dates for updates maybe fixed daily, weekly or monthly, depending on the periodicity of report generation.
Flexibility refers to information requirements in the formats needed by the internal users and the external customers of an organization
The LIS should be designed for such flexibility.
Internal users may require information in one particular format, while customers who places a very large order for a Greenfield project requires order status reports periodically in different formats to forward to his bankers, top management, government and so forth.
Logistic Information must be readily and constantly available.
For E.g. If the customer wants to know the status of his order, or the management wants information on current inventory levels to make a commitment to some large client of strategic importance, LIS should be designed to respond to such queries immediately, as these are based on operating-level information.
Operating-level data is frequently required to prepare status reports in different formats for various management levels in an organization.
Rapid availability is vital for responding to customer needs and improve management decisions.
The exceptional reports help managers to focus on the critical areas of deviations to take timely corrective actions.
In an organization, decisions are taken at various levels. The degree of critically, frequency and impact varies with the authority level making decisions. Obviously, the format in which the information is required differs with the authority making the decision.
Any deviation, especially in the case of large orders from strategic clients, should be highlighted to the concerned users.
If the safety or order levels of the inventory dangerously deviate from the norms, LIS should bring this to notice of the system users by way of generating an exceptional status report.
LIS should be designed to satisfy the information needs of system users in the format of their choice.
If the safety or order levels of the inventory dangerously deviate from the norms, LIS should bring this to notice of the system users by way of generating an exceptional status report.
Any deviation, especially in the case of large orders from strategic clients, should be highlighted to the concerned users.
The exceptional reports help managers to focus on the critical areas of deviations to take timely corrective actions.
Hence, for the large organizations especially, there is a real need of LIS, which highlights exceptional situation that are sometimes not noticed by executives who are too busy making decisions on the reports generated regularly.
Strategic Planning
Decision Analysis
•Strategic Alliance Formulation •Development & Refinement of Capabilities & Opportunities •Focused profit-based customer service analysis
•Vehicle routing & scheduling •Inventory levels & management •Network/facility location configuration •Vertical integration vs. third party/outsourcing
•Financial measurement: cost & asset management •Customer service management •Productivity measurement •Quality measurement
Management Control
•Order entry •Inventory assignment
•Shipping •Customer inquiry •Pricing & invoicing •Order selection
Transaction Systems
The order entry transaction initiates a second transaction as inventory is assigned to the order.
The most basic level, the transaction system initiates & records individual logistics activities. Transaction activities include order entry, inventory assignment, order selection, shipping, pricing, invoicing and customer inquiry
A third transaction is then initiated to direct the material handlers to select the order.
A fourth transaction directs the movement, loading and delivery of the order.
• Performance measurement is necessary to provide management feedback regarding service level and resource utilization. • The second level, management control, focuses on performance measurement and reporting.
• Common performance measures include financial, customer service, productivity and quality indicators. Specific performance measures include transportation and warehousing cost measure, inventory turnover (asset measure), case fill rate customer service measure, productivity measure & customer perception(quality measures). • Management control exception information is useful to identify potential customer or order problems. For e.g. Proactive LIS should be capable of predicting future inventory shortages on the basis of forecasted requirements and anticipated receipts.
• While some management control measures, such as costs, are very well defined, other measures are less specific. For e.g. Customer service can be measured internally (from the enterprise perspective) or externally (from the customers perspective).
Decision analysis must include database maintenance, modeling and analysis and reporting components for a wide range of potential alternatives. Unlike management control, decision analysis focuses on evaluating future tactical alternatives, and it needs to relatively unstructured and flexible to allow consideration of a wide range of options.
Typical analyses include vehicle routing and scheduling, inventory management, facility location, and cost-benefit analysis of operational trade offs and arrangements.
Since there are typically fewer decision analysis applications than transactions, decision analysis emphasis shifts more to effectiveness (identifying profitable versus unprofitable accounts) rather than efficiency (faster processing or increased transaction volume while utilizing fewer staff resources.)
The third level, decision analysis, focuses on decision applications to assist managers in identifying, evaluating, and comparing logistics strategic and tactical alternatives.
The final level, strategic planning, focuses on information support to develop and refine logistics strategy.
These decisions are often extensions of the decision analysis level but are typically more abstract, less structured, and long term in focus, strategic planning decisions include synergies made possible through strategic alliances, development and refinement of firm capabilities and market opportunities, as well as customer responsiveness to improved service.
LIS strategies planning level must incorporate lowerlevel data collection into a wide range of business planning and decision- making models that assist in evaluating the probabilities and payoffs of various strategies.
The sources of data for the external information system for the customer service are the customers themselves and information can be collected from them through the sales staff
The following information is desirable from various internal department for the external information system:
• • • • • Purchasing Production Marketing Finance and control Physical distribution
These departments maybe expected to provide guidance whenever requested or whenever found necessary. For e.g.: The production department may have an explanation why the customer complain product quality.
It is between the department of purchasing, production, marketing, finance, etc. on several important issues.
The internal information system covers data processing, data analysis and completion of control reports on the basis of which decision maybe made by managers in the organization
There is also an exchange of information between the physical distribution managers and such departments such as finance, marketing, production and purchasing.
The departments and the types of information received and supplied by the physical distribution departments are given below: • • • • Purchasing Production Marketing Finance
The need for safety stock would decline and there would be a direct reduction in labor costs. Also the post sale warranties and service programs would be enhanced.
RFID is supposed to be one of the most influential technologies to affect the retail industry of the future that will completely change the nature of business in the retail supply chain.
An RFD chip is a small silicon chip that carries limited information and given out data using radio waves to identify individual items.
Thus it would enable easy inspection and immediate clearance of goods.
Readers capture the information and use it to further processing which gives an overall view of the tagged product.
Contemporary Logistics Information Technologies
Bar coding Electronic Data Interchange (EDI)
B2B, computer-tocomputer exchange of business data in a structured, machineprocess able format.
Most commonly used automatic identification technology
Consistency of this technology important factor in efficiency and effectiveness.
Bar coding and electronic scanning are identification technologies that facilitates logistics information collections and exchange.
It refers to the placement of computers readable codes on items, cartoon, containers and even railcars. A bar code is a series of paralleled black and white bars, both varying widths, whose sequence represents letters or numbers This sequence is code that scanner can translate important information such as product price, shipment origin product type, place, etc. A bar code states the language, the codes uses the print quality companies expect, the type of information format.
There are two standards including AIAG (automotive industry action group) and UPC (universal product code). Most of the customers are aware of UPC codes.
Background Developed for small item marking.
Strengths Data matrix (Data Code) •Readable with relatively low contrast. •Density for small numbers of characters.
Weakness •Limited error correction capacity •Proprietary code •Not laser readable •Only readable with expensive area scanner. •No error correction •Low density •Does not support full ASCII
Codablock 39/128 Developed in Europe •Straight forward decoding based on one dimensional symbology. •Public domain Code 1 Most recent matrix code •Best error correction capability of matrix codes. •Public domain •Limited industry exposure •Not laser readable •Only readable with expensive area scanner
Background
Developed for small item marketing
Strengths
Code 49
Weakness
•Readable with current laser •No error correction scanners •Low capacity •Public domain Code 16 K
Developed for small item marketing
•Readable with current laser •No error correction scanners •Low capacity •Public domain PDF 417
•Developed to represent large amounts of data in small physical areas. •Reduced reliance on EDI (knowledge travels with the label)
•Dramatically increased capacity. •Error correction capability •Reads information vertically and horizontally •Public domain
•Requires technological development to reduce scanning cost •Testing required for highly advanced application
?Electronic Data Interchange(EDI) is the electronic movement between or within organizations in a structured, computer retrievable data format that permits information to be transferred from a computer program, in one
location to a computer program in another location without rekeying.
?EDI includes the direct transmission of data between locations; transmissions using an intermediary such as communication network; and the exchange of computer tapes, disks, or other digital storage device.
Overall EDI offers a number of benefits to businesses and thanks to rapid evolution of the related technology is becoming more readily available to small businesses all the time.
Another common application of EDI involves the direct exchange of standard business transaction documentssuch as purchase orders, invoices, and bolls of lading- from one business to another via computer.
EDI is used for Electronic Funds Transfer (EFT) between financial institutions, which facilitates such common transactions as the direst deposit of payroll cheques by employers, the direct debit of consumer accounts to make mortgage or utility payments, and the electronic payment of federal taxes by the businesses.
Satellite Communication provides a fast and high-volume channel for information movement around the globe. The applications are:
Communication dishes on the top of vehicles allow communication between drivers and dispatchers
Provides up-to-date information regarding location and delivery and allows dispatches to redirect trucks is response to need or traffic congestion.
Used by retail chains to transmit quickly daily sales back to the headquarters that help in activating store replenishment and also to provide input to marketing regarding local sales pattern.
Technology Impacts on Supply Chain Disintermediation
(a) Simplified Supply Chain
(b) Supply Chain with Disintermediation
Mumbai flour mills provide high-quality bakery flours to commercial bakers as well as to the consumer market
.
Consistent demand and brand-loyalty, whereas consumers have minimal brandloyalty Demand is seasonal for the flours with the annual break occurring just before Diwali and slacking off dramatically during January and February
The production planning department of the company located at Akola, Maharashtra, has the responsibility for controlling the inventory levels at the plant warehouse at Nagpur as well as three distribution centers located at Nasik in Maharashtra, Bhopal in Madhya Pradesh and Hyderabad in Andhra Pradesh.
The lead time of replenishment from Nagpur to distribution centers is 7 days. Eighteen pallets can be made available by truck with a 3 days transit time.
Recently the company has experienced two major stocks out for its consumer-size 5Kg. sacks of refined quality white flour. One of these was due to problems in milling operations, the other occurred when marketing initiated a “buy one, get one free” coupon promotion.
Additionally, two other events have affected Distribution Center’s throughput: (1) implementation of direct factory supply for replenishing the five largest super market chains, and (2) a price increase making Mumbai flour more expensive than its national brand competitors such a Pillsbury or TATA Media. Of 1500 pallets in the Hyderabad distribution centre the Mumbai flour M<Ills shows only 3-9-6 pallets for open orders. This has led the company to use outside overflow storage, where there are another 480 pallets. Flour is easily damaged; hence, Mumbai flour Mills prefers to minimize handling. Over stocking at Distribution centers alone cost Rs.1.85/per pallet for outside storage to which must be added Rs.4.25per pallet extra handling and Rs.225per truckload for transportation.
Similar scenarios are being played out at the DCs as well. Mr. Mohan, the distribution manager is contemplating various approaches to solving the inventory problem. It is clear that the product must be in place at time a consumer is making a decision to buy the product, but the company cannot tolerate the overstocking situation and the stress that it is putting on facilities and cash flow Mr. Mohan’s first thought is “a better information system” which will provide timely and accurate information throughout the organization.
• To maximize the results of an environmental scan, the logistics manager needs to consult:
– Logistics area employees – Channel partners – Internal audit or external consultant – Other internal logistics initiatives • It is increasingly popular to dedicate a web site to hold information from the scan. • Relevant issues in the search for new technologies – The organization must have the financial resources needed to assure a smooth, full implementation, and the people willing to accept and use new technologies. – Firms must create opportunities for interaction and team efforts among logistics managers and those others most knowledgeable about information technologies.
doc_664657271.pptx
Presented By : (TYBMS)
Shohaib Pathan (37)
Ashish Pharne (38)
Amit Poojary (39)
Diksha Rai (40)
The shift in the economy from the industrial era to the information age has profound implications for the management of the modern enterprise.
Supply Chain Management is a relatively new discipline within the firm and originally dealt with the transportation and storage of goods, an advanced supply chain program coordinates activities across management functions.
In addition to transportation and distribution, other areas influenced by logistics include customer service and quality management, inventory management, location, strategic planning, procurement, and logistics information systems.
The intent of this presentation is to introduce you to the important concepts of Logistics Information Systems.
Logistic Information System can be defined as “managing and controlling information handling processes optimally with respect to time (flow time and capacity), storage, distribution and presentation in such a way that it contributes to company results in concurrence with the costs of capturing (creation, searching, maintenance etc).”
Logistics is the field of study to focus on the design, control, and implementation of the efficient flow and storage of goods and services and other related information from the point of origin to the point of final consumption with an aim to satisfy the requirements of its existing and prospective customers.
The management of Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security.
If correctly information is available, it can be used for many strategic advantages. E.g.: The firm can effectively counter the strategies of its competitors, or the firm can evolve strategies for future growth on a realistic basis.
Today Customer themselves evaluate the type and extent to customer service offered by the firm. The customers are very conscious, whether the firm is responding correctly to the information regarding order status, availability of required product, delivery schedule, correct invoicing, etc.
Logistic managers have realized that correct and in time information flow can actually help to reduce both, the inventory levels as well as manual operations.
Timelessness
Accuracy
Availability
Interactive
Flexibility
Format
Increased accuracy in measuring inventory level reduces decision uncertainty.
Accuracy with regard to inventory can be defined as the degree to which the information generated through the report matches with that of the physical count.
Principle of accuracy is ensuring that there is no gap between information available and reality. E.g. Inventory levels as per LIS vs. Physical Stock Levels.
The addition or subtraction of information should be on a real time basis. For E.g. , the delays in customer order registration and order processing will give an incorrect picture of ‘orders on hand’.
Logistics information must be timely to provide quick management feedback.
The procurement actions initiated on the basis of an incorrect report will create material shortages in future, particularly for long delivery parts.
Updates on information for additions or deletion should be taken care of before the periodic reports are due for generation.
Cut-off dates for updates maybe fixed daily, weekly or monthly, depending on the periodicity of report generation.
Flexibility refers to information requirements in the formats needed by the internal users and the external customers of an organization
The LIS should be designed for such flexibility.
Internal users may require information in one particular format, while customers who places a very large order for a Greenfield project requires order status reports periodically in different formats to forward to his bankers, top management, government and so forth.
Logistic Information must be readily and constantly available.
For E.g. If the customer wants to know the status of his order, or the management wants information on current inventory levels to make a commitment to some large client of strategic importance, LIS should be designed to respond to such queries immediately, as these are based on operating-level information.
Operating-level data is frequently required to prepare status reports in different formats for various management levels in an organization.
Rapid availability is vital for responding to customer needs and improve management decisions.
The exceptional reports help managers to focus on the critical areas of deviations to take timely corrective actions.
In an organization, decisions are taken at various levels. The degree of critically, frequency and impact varies with the authority level making decisions. Obviously, the format in which the information is required differs with the authority making the decision.
Any deviation, especially in the case of large orders from strategic clients, should be highlighted to the concerned users.
If the safety or order levels of the inventory dangerously deviate from the norms, LIS should bring this to notice of the system users by way of generating an exceptional status report.
LIS should be designed to satisfy the information needs of system users in the format of their choice.
If the safety or order levels of the inventory dangerously deviate from the norms, LIS should bring this to notice of the system users by way of generating an exceptional status report.
Any deviation, especially in the case of large orders from strategic clients, should be highlighted to the concerned users.
The exceptional reports help managers to focus on the critical areas of deviations to take timely corrective actions.
Hence, for the large organizations especially, there is a real need of LIS, which highlights exceptional situation that are sometimes not noticed by executives who are too busy making decisions on the reports generated regularly.
Strategic Planning
Decision Analysis
•Strategic Alliance Formulation •Development & Refinement of Capabilities & Opportunities •Focused profit-based customer service analysis
•Vehicle routing & scheduling •Inventory levels & management •Network/facility location configuration •Vertical integration vs. third party/outsourcing
•Financial measurement: cost & asset management •Customer service management •Productivity measurement •Quality measurement
Management Control
•Order entry •Inventory assignment
•Shipping •Customer inquiry •Pricing & invoicing •Order selection
Transaction Systems
The order entry transaction initiates a second transaction as inventory is assigned to the order.
The most basic level, the transaction system initiates & records individual logistics activities. Transaction activities include order entry, inventory assignment, order selection, shipping, pricing, invoicing and customer inquiry
A third transaction is then initiated to direct the material handlers to select the order.
A fourth transaction directs the movement, loading and delivery of the order.
• Performance measurement is necessary to provide management feedback regarding service level and resource utilization. • The second level, management control, focuses on performance measurement and reporting.
• Common performance measures include financial, customer service, productivity and quality indicators. Specific performance measures include transportation and warehousing cost measure, inventory turnover (asset measure), case fill rate customer service measure, productivity measure & customer perception(quality measures). • Management control exception information is useful to identify potential customer or order problems. For e.g. Proactive LIS should be capable of predicting future inventory shortages on the basis of forecasted requirements and anticipated receipts.
• While some management control measures, such as costs, are very well defined, other measures are less specific. For e.g. Customer service can be measured internally (from the enterprise perspective) or externally (from the customers perspective).
Decision analysis must include database maintenance, modeling and analysis and reporting components for a wide range of potential alternatives. Unlike management control, decision analysis focuses on evaluating future tactical alternatives, and it needs to relatively unstructured and flexible to allow consideration of a wide range of options.
Typical analyses include vehicle routing and scheduling, inventory management, facility location, and cost-benefit analysis of operational trade offs and arrangements.
Since there are typically fewer decision analysis applications than transactions, decision analysis emphasis shifts more to effectiveness (identifying profitable versus unprofitable accounts) rather than efficiency (faster processing or increased transaction volume while utilizing fewer staff resources.)
The third level, decision analysis, focuses on decision applications to assist managers in identifying, evaluating, and comparing logistics strategic and tactical alternatives.
The final level, strategic planning, focuses on information support to develop and refine logistics strategy.
These decisions are often extensions of the decision analysis level but are typically more abstract, less structured, and long term in focus, strategic planning decisions include synergies made possible through strategic alliances, development and refinement of firm capabilities and market opportunities, as well as customer responsiveness to improved service.
LIS strategies planning level must incorporate lowerlevel data collection into a wide range of business planning and decision- making models that assist in evaluating the probabilities and payoffs of various strategies.
The sources of data for the external information system for the customer service are the customers themselves and information can be collected from them through the sales staff
The following information is desirable from various internal department for the external information system:
• • • • • Purchasing Production Marketing Finance and control Physical distribution
These departments maybe expected to provide guidance whenever requested or whenever found necessary. For e.g.: The production department may have an explanation why the customer complain product quality.
It is between the department of purchasing, production, marketing, finance, etc. on several important issues.
The internal information system covers data processing, data analysis and completion of control reports on the basis of which decision maybe made by managers in the organization
There is also an exchange of information between the physical distribution managers and such departments such as finance, marketing, production and purchasing.
The departments and the types of information received and supplied by the physical distribution departments are given below: • • • • Purchasing Production Marketing Finance
The need for safety stock would decline and there would be a direct reduction in labor costs. Also the post sale warranties and service programs would be enhanced.
RFID is supposed to be one of the most influential technologies to affect the retail industry of the future that will completely change the nature of business in the retail supply chain.
An RFD chip is a small silicon chip that carries limited information and given out data using radio waves to identify individual items.
Thus it would enable easy inspection and immediate clearance of goods.
Readers capture the information and use it to further processing which gives an overall view of the tagged product.
Contemporary Logistics Information Technologies
Bar coding Electronic Data Interchange (EDI)
B2B, computer-tocomputer exchange of business data in a structured, machineprocess able format.
Most commonly used automatic identification technology
Consistency of this technology important factor in efficiency and effectiveness.
Bar coding and electronic scanning are identification technologies that facilitates logistics information collections and exchange.
It refers to the placement of computers readable codes on items, cartoon, containers and even railcars. A bar code is a series of paralleled black and white bars, both varying widths, whose sequence represents letters or numbers This sequence is code that scanner can translate important information such as product price, shipment origin product type, place, etc. A bar code states the language, the codes uses the print quality companies expect, the type of information format.
There are two standards including AIAG (automotive industry action group) and UPC (universal product code). Most of the customers are aware of UPC codes.
Background Developed for small item marking.
Strengths Data matrix (Data Code) •Readable with relatively low contrast. •Density for small numbers of characters.
Weakness •Limited error correction capacity •Proprietary code •Not laser readable •Only readable with expensive area scanner. •No error correction •Low density •Does not support full ASCII
Codablock 39/128 Developed in Europe •Straight forward decoding based on one dimensional symbology. •Public domain Code 1 Most recent matrix code •Best error correction capability of matrix codes. •Public domain •Limited industry exposure •Not laser readable •Only readable with expensive area scanner
Background
Developed for small item marketing
Strengths
Code 49
Weakness
•Readable with current laser •No error correction scanners •Low capacity •Public domain Code 16 K
Developed for small item marketing
•Readable with current laser •No error correction scanners •Low capacity •Public domain PDF 417
•Developed to represent large amounts of data in small physical areas. •Reduced reliance on EDI (knowledge travels with the label)
•Dramatically increased capacity. •Error correction capability •Reads information vertically and horizontally •Public domain
•Requires technological development to reduce scanning cost •Testing required for highly advanced application
?Electronic Data Interchange(EDI) is the electronic movement between or within organizations in a structured, computer retrievable data format that permits information to be transferred from a computer program, in one
location to a computer program in another location without rekeying.
?EDI includes the direct transmission of data between locations; transmissions using an intermediary such as communication network; and the exchange of computer tapes, disks, or other digital storage device.
Overall EDI offers a number of benefits to businesses and thanks to rapid evolution of the related technology is becoming more readily available to small businesses all the time.
Another common application of EDI involves the direct exchange of standard business transaction documentssuch as purchase orders, invoices, and bolls of lading- from one business to another via computer.
EDI is used for Electronic Funds Transfer (EFT) between financial institutions, which facilitates such common transactions as the direst deposit of payroll cheques by employers, the direct debit of consumer accounts to make mortgage or utility payments, and the electronic payment of federal taxes by the businesses.
Satellite Communication provides a fast and high-volume channel for information movement around the globe. The applications are:
Communication dishes on the top of vehicles allow communication between drivers and dispatchers
Provides up-to-date information regarding location and delivery and allows dispatches to redirect trucks is response to need or traffic congestion.
Used by retail chains to transmit quickly daily sales back to the headquarters that help in activating store replenishment and also to provide input to marketing regarding local sales pattern.
Technology Impacts on Supply Chain Disintermediation
(a) Simplified Supply Chain
(b) Supply Chain with Disintermediation
Mumbai flour mills provide high-quality bakery flours to commercial bakers as well as to the consumer market
.
Consistent demand and brand-loyalty, whereas consumers have minimal brandloyalty Demand is seasonal for the flours with the annual break occurring just before Diwali and slacking off dramatically during January and February
The production planning department of the company located at Akola, Maharashtra, has the responsibility for controlling the inventory levels at the plant warehouse at Nagpur as well as three distribution centers located at Nasik in Maharashtra, Bhopal in Madhya Pradesh and Hyderabad in Andhra Pradesh.
The lead time of replenishment from Nagpur to distribution centers is 7 days. Eighteen pallets can be made available by truck with a 3 days transit time.
Recently the company has experienced two major stocks out for its consumer-size 5Kg. sacks of refined quality white flour. One of these was due to problems in milling operations, the other occurred when marketing initiated a “buy one, get one free” coupon promotion.
Additionally, two other events have affected Distribution Center’s throughput: (1) implementation of direct factory supply for replenishing the five largest super market chains, and (2) a price increase making Mumbai flour more expensive than its national brand competitors such a Pillsbury or TATA Media. Of 1500 pallets in the Hyderabad distribution centre the Mumbai flour M<Ills shows only 3-9-6 pallets for open orders. This has led the company to use outside overflow storage, where there are another 480 pallets. Flour is easily damaged; hence, Mumbai flour Mills prefers to minimize handling. Over stocking at Distribution centers alone cost Rs.1.85/per pallet for outside storage to which must be added Rs.4.25per pallet extra handling and Rs.225per truckload for transportation.
Similar scenarios are being played out at the DCs as well. Mr. Mohan, the distribution manager is contemplating various approaches to solving the inventory problem. It is clear that the product must be in place at time a consumer is making a decision to buy the product, but the company cannot tolerate the overstocking situation and the stress that it is putting on facilities and cash flow Mr. Mohan’s first thought is “a better information system” which will provide timely and accurate information throughout the organization.
• To maximize the results of an environmental scan, the logistics manager needs to consult:
– Logistics area employees – Channel partners – Internal audit or external consultant – Other internal logistics initiatives • It is increasingly popular to dedicate a web site to hold information from the scan. • Relevant issues in the search for new technologies – The organization must have the financial resources needed to assure a smooth, full implementation, and the people willing to accept and use new technologies. – Firms must create opportunities for interaction and team efforts among logistics managers and those others most knowledgeable about information technologies.
doc_664657271.pptx