4.3 INTRODUCTION OF LOGISTICS4.3.1 DefinitionLogistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. Logistics involve the integration of information, transportation, inventory, warehousing, material-handling.Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalize supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics). Inbound logistics is one of the primary processes and it concentrates on purchasing and arranging inbound movement of materials, parts and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses or retail stores and Outbound logistics is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user. The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.Logistics management is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

Objectives Study various operations carried out by the company regarding to logistics dept. Study in details production, spare parts (store) and warehouse logistics function of company. Analyze the inventory management needs of the company. Overall try to increase the labour, technology efficiency, 100% utilization of warehouse space. To analyze the data collected, to derive conclusion based on analysis. To study the various issues in receipts and delivery of vehicles at Warehouses.

2.3 ScopeLogistics involve the integration of transportation, inventory, warehousing, information, material handling and packaging of an organization. The operating responsibility of logistics is the geographical positioning of raw materials, work-in-process, and finished inventories where required at the lowest cost possible. The study is concentrated with above Logistics activities of the BOMBAY DYEING &MFG. CO. LTD2.4 Limitations- Fluctuation in demand of FG.- Outside transportation facility & transporter responsibility. Along with the advantages making use of Third Party Logistics Provider can cause some of the issues as well. If services are not managed nicely, they may cause great problems for the company reputation, and firm's position. According to the latest research it has been proven that communication problems between buyers and suppliers are a major cause of operation failures. Supplier failure can cause major interruption to the operations of company. The main business goals and objectives of one company should not be the same as the other company in the strategic alliance between companies. The outsourcing company that is using the Third Party Logistics Provider may end up losing some of the control over the operation.

CONCEPT OF LOGISTICSThe concept of logistics is fairly new in the business world. The theoretical developmentwas not used until 1966. Since then, many business practices have evolved and logisticscurrently costs between 10 and 25 percent of the total cost of an international purchase.There are two main phases that are important in the movement of materials: materialmanagement and physical distribution;

Materials management is the timely movement of raw materials, parts, andsupplies.

The physical distribution is the movement of the firm's finished products to thecustomers.Both phases involve every stage of the process including storage. The ultimate goal oflogistics is:"To coordinate all efforts of the company to maintain a cost effective flowof goods."Word,Logisticsis derived from French wordloger, which means art of war pertainingto movement and supply of armies.

A military concept

Fighting a war requires:a.Settingofanobjectiveb.Meticulous planning to achieve the objectivec.Troopsproperlydeployedd.Supply lineconsisting weaponry,food, medicalassistance, etc.maintained

Plan should be such that there is minimum loss to men & materialLike fighting a war in the battlefield, the marketing managers also need a suitablelogistics plan that is capable of satisfying the company objective of meetingprofitably the demand of targeted customers.Inbound logistics + Material Management + Physical Distribution=LogisticsNow we will discuss each and every term in this above summation

Inbound logisticscovers the movement of materials received fromsuppliers

Material managementdescribes the movements of material &components within a firm

Physical distributionrefers to movement of goods outward from the endof the assembly line to the costumer.

Supply- chain managementis somewhat larger than logistics and it linkslogistics more directly within the users total communication network &with the firm engineering staff. It includes manufacturer and suppliers butalso transporters, warehouses, retailers and customers themselves.

INTRODUCTIONPolyesterFrom Wikipedia, the free encyclopediaFor the 1981 motion picture, seePolyester (film).This articleneeds additional citations forverification.Please helpimprove this articlebyadding citations to reliable sources. Unsourced material may be challenged and removed.(March 2012)

SEMpicture of a bend in a high-surface areapolyesterfiberwith a seven-lobed cross section

Close-up of a polyester shirt

Stretching polyester fabricPolyesteris a category ofpolymersthat contain theesterfunctional groupin their main chain. As a specific material, it most commonly refers to a type calledpolyethylene terephthalate(PET). Polyesters include naturally occurring chemicals, such as in thecutinofplant cuticles, as well as synthetics throughstep-growth polymerizationsuch aspolybutyrate. Natural polyesters and a few synthetic ones are biodegradable, but most synthetic polyesters are not.Depending on the chemical structure, polyester can be athermoplasticorthermoset. There are alsopolyester resinscured by hardeners; however, the most common polyesters are thermoplastics.[1]Fabricswoven or knitted from polyester thread or yarn are used extensively in apparel and home furnishings, from shirts and pants to jackets and hats, bed sheets, blankets, upholstered furniture and computer mouse mats. Industrial polyester fibers, yarns and ropes are used in tyre reinforcements, fabrics for conveyor belts, safety belts, coated fabrics and plastic reinforcements with high-energy absorption. Polyester fiber is used as cushioning and insulating material in pillows, comforters and upholstery padding. Polyesters are also used to make bottles, films,tarpaulin, canoes,liquid crystal displays,holograms,filters,dielectricfilm forcapacitors,film insulationforwireandinsulating tapes. Polyesters are widely used as a finish on high-quality wood products such asguitars,pianosand vehicle/yacht interiors.Thixotropicproperties of spray-applicable polyesters make them ideal for use on open-grain timbers, as they can quickly fill wood grain, with a high-build film thickness per coat. Cured polyesters can be sanded and polished to a high-gloss, durable finish.While synthetic clothing in general is perceived by many as having a less natural feel compared to fabrics woven from natural fibers (such ascottonandwool)[citation needed], polyester fabrics can provide specific advantages over natural fabrics, such as improved wrinkle resistance, durability and high color retention. As a result, polyester fibers are sometimes spun together with natural fibers to produce a cloth with blended properties. Synthetic fibers also can create materials with superior water, wind and environmental resistance compared to plant-derived fibers, and are sometimes renamed so as to suggest their similarity or even superiority to natural fibers (for example, China silk, which is a term in the textiles industry for a 100% polyester fiber woven to resemble the sheet and durability of insect-derivedsilk).Liquid crystalline polyesters are among the first industrially usedliquid crystal polymers. They are used for their mechanical properties and heat-resistance. These traits are also important in their application as an abradable seal in jet engines[citation needed].Basics[edit]Polyester is a synthetic polymer made ofpurified terephthalic acid(PTA) or its dimethyl esterdimethyl terephthalate(DMT) andmonoethylene glycol(MEG). With 18% market share of all plastic materials produced, it ranges third afterpolyethylene(33.5%)[citation needed]andpolypropylene(19.5%).The main raw materials are described as follows: Purified terephthalic acid PTA CAS-No.: 100-21-0Synonym: 1,4 benzenedicarboxylic acid,Sum formula; C6H4(COOH)2, mol weight: 166.13 Dimethylterephthalate DMT CAS-No: 120-61-6Synonym: 1,4 benzenedicarboxylic acid dimethyl esterSum formula C6H4(COOCH3)2, mol weight: 194.19 Mono Ethylene Glycol MEG CAS No.: 107-21-1Synonym: 1,2 ethanediolSum formula: C2H6O2, mol weight: 62,07To make a polymer of highmolecular weighta catalyst is needed. The most common catalyst isantimony trioxide(or antimony tri acetate):Antimony trioxide ATO CAS-No.: 1309-64-4Molecular weight: 291.51 Sum formula: Sb2O3In 2008, about 10,000 tonnes Sb2O3were used to produce around 49 million tonnes polyethylene terephthalate.[citation needed]Polyester is described as follows:Polyethylene Terephthalate CAS-No.: 25038-59-9Synonym/abbreviations: polyester, PET, PES Sum Formula: H-[C10H8O4]-n=60120 OH, molelcular unit weight: 192.17There are several reasons for the importance of Polyester: The relatively easy accessible raw materials PTA or DMT and MEG The very well understood and described simple chemical process of polyester synthesis The low toxicity level of all raw materials and side products during polyester production and processing The possibility to produce PET in a closed loop at low emissions to the environment The outstanding mechanical and chemical properties of polyester The recyclability The wide variety of intermediate and final products made of polyester.In table 1 the estimated world polyester production is shown. Main applications aretextilepolyester, bottle polyester resin, film polyester mainly forpackagingand specialty polyesters for engineering plastics. According to this table, the world's total polyester production might exceed 50 million tons per annum before the year 2010.Table 1: World polyester production

HISTORY OF PSF INDUSRIESEstablished in 1900, PSF Industries, Inc. has grown into one of the largest Custom Steel Plate Fabricators and Erectors of its kind.Our history starts around the time of the Alaskan Klondike Gold Rush. Our founding fathers realized potential opportunity when miners headed to Alaska. So they purchased Seattle Manufacturing. Seattle Manufacturing made stoves and ranges and the miners needed stoves for heat and to cook on. The stoves and ranges were marketed and sold through furniture stores. A strategic move for PSF Industries and the beginning of a long history of diversification and growth. The span of time between 1900 and 1917 is filled with purchases of businesses to add and enhance the original company. All important to the prosperity and growth of PSF Industries but none more so than participating in the war efforts. The war is a part of American history and the participation of the men and women during this time was invaluable. We, as a company, had a very small part but it was a defining part of our history and what ultimately sealed the direction we took towards more industrial type work and continued growth.World War IIn 1917 the United States entered World War I. Our founding fathers, in an effort to support the war, turned PSF's focus more into the industrial field. This enabled the company to perform steel fabrication, such as structural steel and plate work, up to one inch thick and allowed for the manufacture of lifeboats, life rafts and various parts including ventilation and duct equipment for ships.World War IIIn 1941 When World War II was declared PSF once again elevated its efforts to support the war. Business operations were divided into two plants, one for the ship building industry and the other for the aircraft industry. Plant No. 1 fabricated items from steel plate, alloys and exotic metals up to three inches thick, supplying intakes, smokestacks, cowls, hot water tanks and hatch covers, employing up to 300. Plant No. 2 fabricated aircraft parts from sheet metal for Boeing's B-17 and B-29 bombers in the form of fuselage sections, wings and bulk heads as well as other aircraft parts and employed 1,200 on three shifts. 80% of the employees during this time were women. Ladies from high school drop outs to Grandmothers learned riveting, welding, metal shearing, pipe-fitting, and print reading, these ladies were affectionately called "Rosie the Riveters". We are proud of our history and this is only a sampling of our past.TodayWe perform custom fabrication and erection of pressure vessels, heat exchangers, stacks, spheres, digester's, tanks, and economizers. We also erect Heat Recovery Steam Generators, Boilers and perform turn-a-rounds and shutdowns as well as maintenance work. We're still one of the oldest and largest custom steel plate fabricators and erectors of our kind!After 114 years we're still known for our ability to get things done, our experience and knowledge allow us to think outside the box and our willingness and 'can do' attitude have enabled us to continue to grow. May we be of Service?

1. INTRODUCTION OF COMPANY1.1 Profile of the companyName of the industry:BOMBAY DYEING & MANUFACTURING CO. LTD.Name of the owner: THE WADIA GROUP.Type of industry: PROCESSING INDUSTRY PSF Plant. Address: A-1, PATALGANGA INDUSTRIAL AREA, P.O. BOX NO.5 DIST-RAIGAD MAHARASTRA (410220)

Bombay Dyeing is the part of the Wadia group, which is more than 130 years old. Wadia group initially ventured into the area of ship building, and more than 355 ships were designed and built by the group. As the industrialization grew in the 19th century, so did the trading and new opportunities for the business. In the late 19th century Bombay was next only to New Orleans as the worlds largest cotton port. Nowrosjee Wadia sensed an opportunity in Indias mushrooming textile industry and on august 23,1879,Bombay dyeing was founded in a humble red brick shed with beginning of a small operation where cotton yarns spun in India was dip dyed in hand in three colors-turkey red, green and orange and laid out in the sun to dry. The company started with grey yarns in 1895 and soon after had surplus production, which it exported to china since then Bombay Dyeing has grown into one of the India's largest producer of textiles.

1.2 VisionThe HAPPYCUPCAKE will seek to become a well recognized and highly respected coffee shop that attracts highly...1.3 MissionTo enable and inspire every customer to enjoy the daily pleasure of HAPPY CUPCAKE by providing them a distinctive superior products and quality service every day.

LOGO OF BOMBAY DYEING-WEIGHING BALANCEThe logo states the following figures-One side - Money given by the customerOther side - Fabric baleOn the weighing balance the vessel which contains fabric bale is always heavier than the vessel containing money. The logo expresses to its customers that the quality of the fabric is always greater than the money placed on the other side.Bombay Dyeingat present is the largest exporter of sophisticated made-up items and also of products made of cotton and poly cotton. Bombay Dyeing has created a sizable market in the production of a wide range of fabrics and ready-mades. This includes both formal and casual wear. The consumer section of Bombay Dyeing comprise of bed linen, towels, furnishings, suiting and shirting fabrics, and cotton and polyester blended dresses and saris.

1.4 Patalganga unit

BDMC (Polyester division), Patalganga the new PSF plant is of around 452 crores. Total area of plant is 41 acres. Total no. of employees in 3 shifts is 464.The Patalganga unit of BDMCL has a maximum throughput capacity of 540 tonnes per day. The normal daily production however varies depending upon market requirements. It usually operates around 320 tonnes per day. At patalganga polyester plant, a final product called POLYESTER STAPLE FIBRE, abbreviated as PSF is produced.The process is comprised of one major reaction namely continuous polymerization PTA (purified terephthalic acid) and MEG are polymerized in three steps to produce the polymer. The polymer is then fed to spinning unit where it converts into spun fibre. From spinning unit, it is fed to fibre draw line, where it is drawn. 1) Polyester Plant is situated at Patalganga, 70 Km. away from Mumbai & 35 Km. from JNPT, Maharashtra.2) It maintains high standards of Safety, concern for Environment and Energy Conservation measures.3) It is certified against ISO 9001-2008, ISO 14001-2004, and OHSAS 18001-2007.4) It has received 5 Star Safety Statuses with Sword of Honor by British Safety Council. 5) It is the earliest signatory to Responsible Care initiative of the ICMA.

1.5 Products: PSF (Polyester Staple fibre) Polyester chipsFinished PSF:160varieties, 0.8-15 denier with various cut lengthMain four grades:CQ, II, OI ( Claimless quality, Second Grade, First Grade )

Organigram:

2. RESEARCH DESIGN2.1 Statement of studyThe title of the project is Logistics management at Bombay Dyeing and Mfg. Co. Ltd.Logistics has been performed since the beginning of civilization. Logistics involves the integration of various processes like transportation, inventory, warehousing, material handling, information and packaging. Implementing best practice of logistics has become one of the most exciting and challenging operational areas of business and public sector management. One of the several competencies required to create customer value is efficient logistics. Cost reduction in transportation plays a major role in the current competitive market. Logistics is becoming an important factor of gaining and sustaining competitive advantages. It has gained recognition in business organizations as one of the important business functions and a tool for developing competitiveness. The public distribution system in the country needs logistical support for delivering goods at the right place on time and at the lowest cost. This in turn benefits on saving the transportation cost and time, cost of inventory and warehousing. As far as the society is concerned, this will also lead to optimum utilization of scarce resources of fuel and reduced cost of transportation expenses.

2.5 Research methodology2.5.1 Data collection1. Primary dataThe researcher used qualitative research data collection method, in which the following specific methods are used. Observation Focus group Interaction with Key persons of various Departments.2. Secondary dataThe researcher used internal and external sources (methods) of data collection. Internal source is fully processed viz. company manuals External sources are published viz. books and journals, & electronic database viz. internet2.5.2 SamplingSurvey method is used for sampling.Interview with key personnel.

3. CONCEPTUAL FRAMEWORK3.1 Types of Inventory Finished goods Components WIP Raw materials Other 3.2 Types of Inventory Costs1) Ordering (purchasing) cost2) Inventory carrying (holding) costsa) Capital costsb) Inventory risk costsc) Storage space costsd) Inventory service costs3) Out of stock4) Other costsa) Capacity Costsb) Set-up Costsc) Insurance Costs1) Ordering cost:It is the cost of ordering the item and securing its supply. It includes- Expenses from raising the indent Purchase requisition by user department till the execution of order Receipt and inspection of material Quotation or tendering Requisitioning Order placing Transportation Receiving, inspecting and storing Quality control Clerical and staffCost of procurement and inbound logistics costs form a part of Ordering Cost. Ordering Cost is dependant and varies based on two factors - The cost of ordering excess and the Cost of ordering too less. Both these factors move in opposite directions to each other. Ordering excess quantity will result in carrying cost of inventory. Where as ordering less will result in increase of replenishment cost and ordering costs.These two above costs together are called Total Stocking Cost. If you plot the order quantity v/s the TSC, you will see the graph declining gradually until a certain point after which with every increase in quantity the TSC will proportionately show an increase. This functional analysis and cost implications form the basis of determining the Inventory Procurement decision by answering the two basic fundamental questions - How Much to Order and When to Order.How much to order is determined by arriving at the Economic Order Quantity or EOQ.Economic Order Quantity (EOQ) EOQ or Fixed Order Quantity system is the technique of ordering materials whenever stock reaches the reorder point. Economic order quality deals when the cost of procurement and handling of inventory are at optimum level and total cost is minimum. In this technique, the order quantity is larger than a single periods ne requirement so that ordering costs & holding costs balance out.

Assumptions of EOQ Demand for the product is constant Lead time is constant Price per unit is constant Inventory carrying cost is based on average inventory Ordering costs are constant per order All demands for the product will be satisfied (no back orders)

TC=Total annual costD= DemandC=Cost per unitQ=Order quantityS= Cost of placing order/setup cost H =Annual holding and storage cost per unit of inventory 2) Inventory carrying (holding) costsIt includes- Warehousing or storage Handling Clerical and staff Insurance Interest Deterioration, shrinkage, evaporation and obsolescence Taxes Cost of capitala) Capital costs:Capital costs can include the interest on the money you invested in your inventory. Theres also opportunity cost, which isthe return you could reasonably expect if you invested in something other than inventory. Any company serious about knowing their carrying costs will use the weighted average cost of capital (WACC) to calculate the inventory capital charge. This is the opportunity cost for the companys average risk investment.

b) Inventory risk costs:Risk costs generally include obsolescence, damages, and pilferage. They are the largest component of non-capital costs.

c) Storage space costs:Storage space costs include warehouse or factory space, workers, and material handling equipment. These are variable costs, and they rise as inventory increases. It takes careful analyses to determine how much of these costs are actually driven by inventory levels.

d) Inventory service costs:Service costs include expenses such as insuring your inventory, or even taxes. They are calculated as a percentage of the average annual inventory value.Total inventory carrying costs are usually estimated at 25%. Heres how they add up: Capital cost 15% Non-capital costs: Risks costs 6% Storage space costs 2% Service costs 2%.3) Out of stockIt is the loss which occurs or which may occur due to non availability of material.It includes- Break down/delay in production Back ordering Lost sales Loss of service to customers, loss of goodwill, loss due to lagging behind the competitors, etc.

4) Other costs Capacity costsA fixed expense incurred by a company or organization in order to provide for or increase its ability to conduct business operations. Capacity costs generally do not vary with production levels and can be reduced or avoided only by shutting down business locations or outsourcing.Typical examples of capacity costs are items such as rent or lease payments, depreciation on equipment or machinery, property taxes, insurance and basic utilities such as heating. These types of expenses must be incurred in order to provide a functional office or business location where a company can conduct operations and are incurred regardless of how much (or how little) business is actually conducted.

Set-up costs:Apricelevel predeterminedas the point of entry into a specific security, stock,or currency. Once the setup price is broken the trader will enter the position determined by the setup. This could include shorting a stock because they think the price will drop or going long because they expect an upward movement.The setup pricecan be determined based on technical orfundamental factors as well as personal opinion on the part of the trader. Usually reaching the setup price is not enough to make a move. Generally traders wait for a significant break to confirm the trend will continue. For example, if youre looking for the price of a stock to go above Rs 25 before buying, the setup price is Rs 25. It might be better for the price to exceed Rs 25.05 instead of purchasing as soon as Rs 25 is reached.Timing will depend on volume, volatility and many other factors affecting price movements.

Insurance cost:Since many inventories require insurance it is necessary to include this cost in the cost of carrying inventory. Note that this is equally true whether outside insurance is carried or the inventories are self-insured.

3.3 Ways to lower down inventory costs:1) Base cycle stock on economics. For purchased products, getting a handle on your acquisition transaction costs will either reduce average inventory or allow for reducing purchasing and receiving labor. For manufactured products, if production equipment changeover costs are in a similar state, getting them in place will either reduce average inventory through shorter runs or allow for reducing changeover and receiving labor through longer runs.2) Control order transaction costs. In the office, use the computer to generate purchase orders (POs), electronic data interchange (EDI) for PO transmission, advance shipping notices (ASNs) to reduce expediting, and historical vendor performance to prioritize expediting to lower purchasing costs. In the manufacturing plant, preplanning; prestaging of needed parts or materials; use of special tools or equipment; changeover initiation prior to completion of the previous run; teamwork and work division; maintaining equipment temperatures; and minimizing quality assurance/quality control work all reduce cycle stock inventory. In the distribution center, statistics-based inspection and checking; barcode scanning for data entry; certifying key vendors to eliminate receiving functions; and stocking forward storage locations first and reserve locations second can all reduce purchase transaction costs and cycle stock accordingly.3) Lower inventory holding costs. Improve space utilization in the DC through narrow aisle handling equipment, mezzanines, layout modifications, or more appropriate storage modes.4) Base safety stock on customer service. Using the appropriate number of product classes, setting the dividing lines between each class in the best manner, updating safety stock levels dynamically, and basing the service levels for each class on the financial goals of the business all serve to reduce safety stock inventory or out-of-stock situations and increase revenue.5) Use routine demand forecasting. Using manually edited arithmetic forecasting models to reduce forecast error will reduce overstocking, backorders, and DC returns from stores, holding inventory levels closer to only what is required to support the desired customer service level.6) Forecast events. If one-time demand clutters the sales history, or if one-time demand events are part of the future, then they need to be taken into account in any forecasting, both in terms of editing them from history and in terms of incorporating future events into the routine demand forecast.7) Think postponement. For parent products from which multiple SKUs can be manufactured, only partially completing manufacturing, placing semi-finished product in inventory, and then completing manufacturing of the final SKUs to order reduces total inventory. In a similar manner, component products from which final SKUs may be assembled can be purchased to inventory and then the final SKUs assembled to order, providing that the time for assembly doesn't exceed the customer lead time.8) Rationalize SKUs. Removal of inappropriate product from the product line can be a controversy-ridden process, but it may reduce inventory significantly if handled in a constructive manner: Develop consensus on the objective of maximizing profit. Develop activity-based costs for each SKU and separate them into three groups:1. Those with selling prices that create positive gross margin2. Those with selling prices that cover their variable cost but do not completely cover their fixed cost 3. Those with selling prices that do not cover their variable cost. Quantify the sales volume correlations among SKUs, based on the analysis of both individual orders and aggregate order patterns by customer. Identify the combination of SKUs that maximizes profit on a fully absorbed basis.

9) Reduce lead times for product acquisition. For both manufactured and purchased product, any reduction in lead time, whether supplier lead time, transportation time, or receiving cycle time, provides a one-time, permanent reduction in cycle stock inventory proportional to the throughput level of the SKU and the degree of lead-time reduction. In a similar manner, reducing lead-time variability and increasing inbound unit, SKU, or order fill rates increases supply reliability and reduces safety stock inventory for a given customer service level.

10) Implement common supplier joint procurement for purchased products. Joint procurement of multiple SKUs from a common supplier serves to effectively reduce unit purchase transaction costs and thereby reduces cycle stock inventory as well as annual purchase transaction expenses. In a similar manner, joint procurement of multiple SKUs from different suppliers located in close physical proximity and consolidation of inbound less-than-truckload (LTL) volume to form full truckloads serves to reduce the incremental transportation cost portion of purchase transaction costs and reduce cycle stock inventory.11) Purchase minimums. Compare the total cost of ownership for purchased products as quoted prices with no minimums to reduced prices with minimums to determine if the reduced prices really provide savings.12) Implement SKU-specific purchase transaction costs. Purchase transaction costs aren't normally SKU-specific. But reflecting any extraordinarily low receiving costs associated with specific SKUs will serve to reduce inventory for them. The opposite, of course, is also true.13) Get demand plans from downstream. Hard information on upcoming needs from customers reduces demand variability, thus reducing the safety stock required for a given customer service level.14) Send demand plans upstream. Sharing demand forecasts with suppliers is more indirect, but in the long run it will serve to reduce the suppliers' finished goods inventory and associated costs and, with effective negotiation, perhaps yield lower prices.15) Don't stock it. Manufacturing or purchasing to order when the acquisition and customer lead time and order quantity relationships allow it is a very direct way to reduce inventory, providing that the acquisition capacity exceeds the potential short-term demand rate.16) Cross-dock customer shipments. With effective use of joint replenishment, the potential increases in inbound transportation costs associated with purchasing to order can be mitigated. Cross-docking customer shipments can facilitate purchasing to order even when the order quantity relationship would have otherwise dictated purchasing to inventory. In a similar manner, aggregating purchase requirements for multiple DCs into a single order and cross-docking to multiple DCs effectively reduces purchase transaction costs and reduces cycle stock inventory.17) Keep in stock, but not everywhere. In multiple-DC tier environments, stocking certain SKUs in fewer/upstream facilities as opposed to more/downstream facilities yields obvious benefits. Likewise, within a single tier of DCs, not every SKU deserves to be stocked in every DC.18) Extend payment terms. When negotiating long-term purchase agreements, getting the best payment terms at a given unit price is the most direct way to increase the portion of inventory funded by the vendor. 19) Take advantage of price/quantity breaks. Taking price/quantity breaks into account when purchasing for replenishment seems an obvious way to reduce the inventory investment, but its frequently overlooked. Often this is a result of not quantifying breaks at the time of sourcing or negotiation, not having an effortless way to take them into account, or a lack of understanding of the impact of purchasing larger quantities at reduced unit cost.20) Transfer instead of purchase. When inventory of an overstock SKU in one location needs to be purchased to replenish inventory in another location, transfers are a smart way to reduce inventory. Be careful that additional warehousing and transportation expenses aren't unnecessarily incurred, though, so that the reduction in holding cost does not exceed the cost to transfer.21) Consider liquidation. Although there will always be a short-term price to pay on the P&L and the balance sheet, when it is absolutely clear that the value to be gained through liquidationwhether through sale at reduced price, sale as distressed product, salvage, or charitable donationis greater than the most optimistic estimate of future gross margin from conventional product sales, then liquidation is the best decision.22) Try merge-in-transit. The concept of in-transit product mergingwhere, for example, two things are shipped from different locations and then married in transit so that they reach the customer as a single shipmentcan be seen as a technique for reducing inventory if the need for the customer to simultaneously receive multiple SKUs is a given. To some extent, merge-in-transit represents an extension of postponement beyond the distribution center walls.23) Use vendor-managed Inventory (VMI). With the appropriate incentives, allowing suppliers to assume the responsibility for replenishment of your inventory, because of their visibility into both their own inventory and production schedule and your demand data can almost always reduce your inventory. 24) Implement vendor stocking programs (VSP). Used primarily for maintenance inventories but applicable to all, VSPs require a supplier to commit to an extremely high service level for delivery of specific SKUs within a fixed time at a predefined markup. VSPs can reduce or eliminate inventories for slow-moving products. There are numerous ways to take better control of inventory and decrease its associated costs. The key to managing inventory successfully is to continuously measure your performance and look for new ways to improve.

4. ANALYSIS OF DATA4.1 PRODUCTION LINE OVERVIEW4.1.1 Raw materials: PTA (purified Terephthalic Acid) MEG (Mono Ethylene Glycol)PTA (purified Terephthalic Acid):The PTA used is in solid powder form and is packed in bags to carry over places and is mainly imported from South Korea and gulf countries.It is stored in large tanks of the capacity of 1500 metric tonnes each. The PTA used is very slippery in nature and hence should be handled very carefully, so as to avoid any hazards.MEG (Mono Ethylene Glycol):The MEG used is in the liquid form and is stored in a liquid tanker of capacity 2000 tonnes to carry over places and is imported from gulf countries. It is mainly a sort of liquid alcohol. STORAGE TANK (MEG) PTA PACKING4.1.2 Additives: TiO2- Titanium Dioxide PC catalyst DEG- Di Ethylene Glycol

4.1.3 Process flow chart:

4.1.4 Polyester staple fiber unit:PSF CAN BE SUBDIVIDED IN THREE DIFFERENT UNITS: A) CONTINUOUS POLYMERIZATIONB) SPINNING AND C) FIBRELINE

A) Continuous polymerization unit:The raw material used in this process is Terephthalic acid (TPA) & Ethylene glycol (EG).The raw material is brought to the slurry tank of 18 ton capacity & mixed in hot chamber & the complete agitation takes place.1 unit (1molecule) of TPA + Ester 1 unit (2molecule) of Ethylene Glycol (1unit)The mixture from the slurry tank is then passed to the preheater chamber where the liquid heating of about 260 to 270C is given. At around 270C ethylene glycol changes its state from liquid to vapour.EG & TPA of (4 to 6 units) 1 molecule forms oligomer.The oligomer is made to rest in the residence tank where the unreacted oligomer makes its complete reaction. During this many additives is added in liquid form.Additives used are: TiO2 powder, Antimony trioxide, DEG (Di-Ethylene glycol), SMEG (supplementary mono ethylene glycol). The purpose of using additives is: DEG is used to give uniform colour to polymer. TiO2 gives white colour to polymer. Antimony is used to increase the rate of reaction. After esterification, UFPP (up flow pre polymerization) takes place. UFPP pre heater has 16 plates (tray) where the mass & heat transfer takes place. Viscosity & density increases because of release of vapour of water & EG. The mixture is passed to the finisher chamber which is maintained at 280C where the complete formation of polymer takes place by long chain reaction.(140 molecules makes 1 unit of polymer).

B) PSF Spinning unitMolten polymer, in form of thick viscous liquid is pumped to melt spinning machines. These machines may be single sided or double sided and can have 36/48/64 positions. At each position, polymer is pumped by a metering pump which discharges an accurate quantity of polymer per revolution (to control the denier of fibre) through a pack which has sand or stainless steel particles as filter media and a spinnerets which could be circular or rectangular and will have specific no. of holes depending on the technology used and the final denier being produced.Polymer comes out of each hole of spinnerets and is instantly solidified by the flow of cool dry air. This process is called as quenching. The filaments from each position are collected in form of a ribbon, passed through a roller which rotates in the bath of spin finish and then mixed with ribbons of other positions to form a rope called tow and is collected in cans (rectangular shaped drums) at can traverse area.C) PSF Fibreline unit Undrawn tows from several cans are collected in form of sheet and passed thru a trough of hot water to raise the temperature of polymer to 70 deg. c Which is a glass transition temperature of this polymer so that the polymer can be drawn. The polymer, then in next two zones, is drawn approx. three times. After the drawing is complete, each filament has required denier and all its sub microscopic chains are aligned parallel to the fibre axis, thereby improving the crystallinity of fibre structure and imparting certain strength. Next step is to set the strength by annealing the filaments by passing them under tension on several steam heated cylinders at temperatures 180-220 deg. c. Also the filaments may be shrunk on first zone of annealer by overfeeding and imparting higher strength by stretching 2% or so on the final zone of annealer. Next the filaments are quenched in a water bath and spin finish is applied by kiss roll technique or by a bank of hollow cone sprays mounted on both sides of the tow. Undrawn tows from several cans are collected in form of sheet and passed thru a trough of hot water to raise the temperature of polymer to 70 deg. c Which is a glass transition temperature of this polymer so that the polymer can be drawn. The polymer, then in next two zones, is drawn approx. three times. After the drawing is complete, each filament has required denier and all its sub microscopic chains are aligned parallel to the fibre axis, thereby improving the crystallinity of fibre structure and imparting certain strength. The cutter is a reel having slots at intervals equal to cut length desired. Each slot has a sharp stainless steel or tungsten carbide blade placed in it. The tow is wound on a cutter reel, at one side of it is a presser wheel which presses the tow on to the blades and the tow is cut. The cut fibre falls down by gravity in the baler box for baling. Balers have a pre weighing arrangement which enables the baler to produce all bales of a pre determined weight. The bales are then transferred to the warehouse for further dispatch to the spinning mills.4.1.5 Raw materials stock control:Once MEG is delivered, then it stores in MEG storage tank. This stock continues for 3 days, according to this the order pattern is fixed. The PTA is purchased or ordered as per requirement, it mostly imported from South Korea.

4.2 STORE AND WAREHOUSE4.2.1 Responsibility and authorityMANAGER-MATERIALS:Responsibility:a) Ensure that the functions of store and warehouse including dispatch activities are carried out smoothly.b) Meet all the statutory requirement to carry out above operations.c) Oversee the administration and safety of the stores and warehouse department.d) Utilize resources available with the department to the optimum level.e) Co-ordinate and correspond with all the other departments and statutory authorities.f) Ensuring safety of plant and equipment and man power.g) Purchase responsibilities are covered in purchase procedure manual.Authority:a) Signing of RGP/NRGPb) Signing of material rejection memo/ delivery challan.c) Prepares/signs amendments to procedures, checklists, formats of quality manual prior to the approval by manager-Materials.d) Purchase authorities are covered in purchase procedure manual.Dy. MANAGER MATERIALSResponsibility:a) Exercise inventory control of stock items.b) Oversee the day-to-day transactions.c) Ensure that there is adequate co-ordination with other departments.d) Take all steps necessary to ensure safety, security and housekeeping.e) Generate/send periodical reports to all concerned.f) Co-ordinate with internal auditors, statutory auditors.Authority:a) Signing of RGO/NRGP and material rejection memo/delivery challan.b) Issuing of materials against authorized/correct MIV.c) Exercise authorities of DGM Materials & Logistics during his absence.Sr. EXECUTIVE-MATERIALS / EXECUTIVE-MATERIALSResponsibility:a) Oversee the day-to-day stores activity.b) Ensure that there is adequate co-ordination with other departments.c) Scrap disposal.d) Ensuring safety of plant.Authority:a) Signing of RGO/NRGP and material rejection memo/delivery challan.b) Issuing of materials against authorized/correct MIV.c) Receipt and issue of materials.MATERIALS ASSISTANTResponsibility:a) Receive the challan from the transporter / head office and enter the details in control register.b) Arrange to unload the goods from the trailer/truck and store in the receiving bay as designed and acknowledge.c) Verification of goods and the quantity as per challan to inform short receipt / excess and arrange for inspection.d) Prepare GR based on challan and inspection remarks and distribute to concerned.e) Keep all records, duly filed.f) Collect the goods from transporters godown and transfer to plant.g) Arrange for housekeeping in their respective area.h) Ensure that all details are entered in computerized system and reports are taken as per report requirement.i) Accept the material returned to store and take into stock.j) Ensure that materials are properly preserved.

Authority:a) To issue material against authorized/correct reservation.b) To receive the materials and give acknowledgment.c) To open and close stores during the beginning and ending of office hours.OPERATOR-FORKLIFTResponsibility:a) Make sure that the vehicle is in good running conditions with fuel and other requisite things.b) Shifting the loaded pallets of chemicals/oil/packing material from stores to C.P. area and Baler area, Shifting of empty pallets, drum from various locations to stores area.c) Load, unload, shift, the items as requisitioned by stores personnelAuthority:To drive the forklift/crane.4.2.2 PurchasingA) Definitionsa) Re-order pointThis is the level at which the order has to be placed.b) Fixed lot sizeThis is the quantity to be ordered whenever re-order level is reached.c) Stock itemsThese are to be held always in stock as per re-order level determined earlier as they are required regularly.d) Non stock itemsThese are requisitioned and stored exclusively on specific indent of the user department.B) Description1) Stock item:The list of stock item with re-order point and fixed lot size is available in the computer system. The ROP and FLS is changed need based.2) Cancellation/modification to PR is done directly by final authority as per system.3) In case the vender requests to return the sample after inspection/testing it is returned to vender on as is basis.4) Samples are sent by vender for approval, by users. These samples are handed over to user and the approval/comments are sent to purchase department through stores.5) Contract services for carrying out following jobs are arranged by raising contract:a) Erection/dismantling of monsoon protection shed.b) Transportation of material to and from plant. C) Purchasing flow chart

CHECKING OF RECEIPTSOPENING OF PACKAGESCHECKING OF CHALLANSRECEIPT OF MATERIALGR GANERATIONTAGGING OF MATERIALSINSPECTION OF ITEMMATERIAL REJECTION BINNINGINFORMATION TO SUPPLIERINFORMATION TO PURCHASEAUTHORISATION OF RGP/DC/GPRETURING OF Mtl TO SUPPLIERRETURING OF Mtl TO SUPPLIERREPLACEMENT ACTION BY SUPPLIERREJECTIONACCEPTEDAARECEIPT FLOW CHART4.2.3 Codification All the stock items/non stock items are codification plan.Codification plan:a) First three digit indicates main group.b) Fourth, fifth, sixth, seventh, and eight digit indicates items individual code number, size wise, alphabetically, range wise etc. in ascending order.c) Valuation category:CCZER indicates items with zero value.CCSIMP indicates imported.CCSLOC indicates Indigenous.d) The specification of each and every item is held in the computer system.

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Main groupitems individual serial no.e) Any new item requires codification; the details of item with are received from user. They are codified entered in system.4.2.4 Issuea) Material issues are carried out through authorized reservation in SAP system by users. The checklist of all issues transactions are taken at next day morning.b) In case system is off/not working due to any other reason, material issue is done through hardcopy of reservation and is subsequently fed into system on getting computerized reservation.c) The reservation as appearing in the system is checked for code, material description, cost Centre, quantity indented, authorization and that all columns are filled with.d) During silent hours shift engineer issues material to users on behalf of store personal through hardcopy of reservation. On next working day this reservation is regularized in computer system by concerned department personal and copy is destroyed.

4.2.5 Returnsa) Materials are returned by the user through an authorized receipt reservation, in computer system mentioning the code number, description, quantity, cost centre, reason for returning.b) As far as possible, the items are returned in the same conditions as it was during the time of issue so that it can be taken into stock.c) All the material are duly identified by a tag and kept at assigned location.4.2.6 Stock verificationStock verification refers to the process of physically checking the quantities of different items of material available in stock in a store or warehouse and tallying these physically available quantities with the quantities shown in stores stock records.Stock verification is done not only for spare parts, but for all types of material that may be stocked.a) Periodic assessment of stock:Stocks in stores are assessed on a periodic basis to detect deterioration and to verify quantity. During assessment, if damage or deteriotion is apparent, such items will be assessed by appropriate internal functions and a follow-up action is taken.b) Inventory summary ledger is printed for specific group or sub-group. During perpetual audit physical stock is verified and if deviation is noticed is marked on inventory summery ledger. In addition following activities are also done: Proper tagging and making on items, Preservation, Ensuring correct location, Damage /leakage.c) Details of deviation are entered in computer system by concerned material assistant.d) List of items with deviation is taken by assistant officer. These items are checked for location description whenever required help from user is obtained to locate item. Item found during this process are deleted from system.e) Stock verification and perpetual audit status is reported in monthly MIS.

4.2.7 Inventory controla) The inventory control exercise is limited to the stock items only.b) The stock of item when comes down below the predetermined reorder level, the material requisition is raised to replenish the stock.c) The stock of chemicals/catalyst used in main plant/utility and items used in packout era reviewed in the beginning of the week and action is taken as needed.d) The non-moving items are listed and stock reviewed within the department and again with user department to monitor the movement once in year.4.2.8 Analysis of dataFollowing data is collected on regular basis:a) Stock of bale covers, pet straps- Weekly.b) No. of complaints about store services- Monthly.

4.3 LOGISTICS4.3.1 DefinitionLogistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. Logistics involve the integration of information, transportation, inventory, warehousing, material-handling.Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalize supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies.In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics). Inbound logistics is one of the primary processes and it concentrates on purchasing and arranging inbound movement of materials, parts and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses or retail stores and Outbound logistics is the process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user. The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.

ORGANOGRAM OF LOGISTICS

GM - Material & Logistics

Dy. Manager Logistics

Sr. Executive Logistics (1)Asst. Manager Logistics (1)Asst. Executive Logistics (1)

Logistic Assistant (3)

THIRD PARTY LOGISTIC TEAM OF 69 HEADS

4.3.2 Responsibility and authoritySr. MANAGER-LOGISTICSResponsibility / Accountability:a)Implementation and maintenance of Quality System in Logistics department and review its effectiveness.b)Improvement projects to realise objectives of business and Quality plans in Logistics department c)Identification of training needs of staff of Logistics department and arranging through Training Department for the same. Motivate people for active participation in the continual improvement activity. d)Establishing and administration on effective Cost Control in Logistics departmente)Overview despatch logistics of finished goods and coordination of PTA Receiptsf)Contract Management of all outsourcing directly handled by the department.g)Adhere to Safety and Occupational Health related requirements of the Company.h)Submit monthly MIS report to CEO through Divisional Manager. i)Make budget properly as required and exercise control over the department budget as approved j)Monitor resources requirement and replenish as necessary.k)Appraise Divisional Manager of Department performance.2.2.Authority:Subject to Authorisation by CEO:a)Adjudicate grievances disputes / claims of contractors, directly handled by Logistics department b)Commercial Authority as detailed in Apex document No APD 044 and / or as modified by CEO on need basis.c)All authorities of Asst. Manager Logistics.d)Signing in Transporters / Logistics bill.

Dy. MANAGER- LOGISTICSResponsibility / Accountability:a)Implementation and maintenance of Quality System in Logistics department and review its effectiveness.b)Improvement projects to realise objectives of business and Quality plans in Logistics department c)Identification of training needs of staff of Logistics department and arranging through Training Department for the same. Motivate people for active participation in the continual improvement activity. d)Establishing and administration on effective Cost Control in Logistics departmente)Overview despatch logistics of finished goods and coordination of PTA Receiptsf)Contract Management of all outsourcing directly handled by the department.g)Adhere to Safety and Occupational Health related requirements of the Company.h)Submit monthly MIS report to CEO through Divisional Manager. i)Make budget properly as required and exercise control over the department budget as approved j)Monitor resources requirement and replenish as necessary.k)Appraise Divisional Manager of Department performance.l)Monitoring Export consignment. 3.2.Authority:Subject to Authorisation by CEO:a)Adjudicate grievances disputes / claims of contractors, directly handled by Logistics department b)Commercial Authority as detailed in Apex document No APD 044 and / or as modified by CEO on need basis.c)All authorities of Asst. Manager Logistics.d)Signing in Transporters / Logistics bill.

Asst. MANAGER/ SR EXECUTIVE LOGISTICSResponsibility / Accountability:a)Receive Sales order from Marketing / Regional Sales Offices duly approved by VP / CEOb)Minimise the turnaround time of transportation.c)Ensure that the truck supplied by the transporters are in good condition.d)Ensure that the transporters is supplying the trucks with all relevant papers including TREM card.e)Generate report for MIS. f)Support to Sr. Manager for evaluation of transporters.g)Timely release of agencys billsh)Ensure smooth operation of PTA handling and raw material documentation.i)Monitoring Export consignment. j)Ensure that the functions of Factory Warehouse, Buffer Zone and Offsite W / H including despatch activities are carried out smoothly & safely. Meet all the statutory requirements to carry out above operations4.2.Authoritya)Signing of Purchase Requisition.b)Signing of RGP, MIVs, MRVs and GRNs.c)Signing of Material Rejection / Shortage / Excess Advice, Delivery Challan cum Gate Pass. d)Prepares / Signs amendments to Procedures, Checklists, formats of Quality Manual prior to the approval by Sr. Manager Logistics.e)Identify the training needs for the department and organise training as appropriate in consultation with Training Department.f)Generate reports for MIS with appropriate authority.g)Implementing and maintaining the Quality Policy and Quality System.h)Transfer activities (Truck Movement).i)In the absence of Sr. Manager Logistics or Asst. Manager - Logistics, take over the responsibilities with appropriate authority.j)Check the transporters / Logistics bill and sign in absence of Sr. Manager Logistics / Sr. Executive.k)All authorities of Sr. Executive and Asst. Executive Logistics.

ASST. EXECUTIVE - LOGISTICS5.1.Responsibility / Accountability:a)Oversee the administration and safety of the Warehouse. d)Utilise resources available with the department to the optimum level.e)Co-ordinate and correspond with all the other departments including QC and Statutory Authorities. f)Identify the training needs for the department and organise training as appropriate in consultation with Training Department.g)Implementing and maintaining the Quality Policy and Quality System.h)Ensuring safety of warehouse, material handling equipment and manpower.5.2.Authoritya)Signing of Material Requisition.b)Signing of RGP, MIVs, MRVs and GRNs.c)Signing of Material Rejection / Shortage / Excess Advice, Delivery Challan cum Gate Pass. d)Prepares / Signs amendments to Procedures, Checklists, formats of Quality Manual prior to the approval by Sr. Manager Logistics.e)Identify the training needs for the department and organise. Training as appropriate in consultation with Training Department.f)Generate reports for MIS in absence of Asst. Manager.g)In the absence of Sr. Executive / Asst. Manager, take over all the responsibilities with appropriate authority.

LOGISTICS ASSISTANTResponsibility / Accountability:a)Prepare daily dispatch report and stock report.b) Take note of sales orders from SAP and check availability of material. c) Register truck entry and give SO number to transporter representative on LR for truck gate in.d)On getting the LC & Export DO from the Marketing, Create contract, Export Sales Order & STO. (Except Nepal)d) To note down details of container no, Excise & shipping line seal no, Truck no, reporting time etc in register, Ensure after container loading, packing list is forwarded to Accounts Department. For Nepal Export check LR for correctness.e) Co-ordinate for dispatches with regional offices.f) Keep track of PTA and MEG receipts. Give PTA sample to Quality control and co-ordinate with PTA handling unit for unloading of trucks/ containers.g) Unloading of imported PTA containers.h) To ensure PSF waste bagging is done timely to keep waste area free.i) Loading of PSF, CHIPS and waste with safe operation.j) Prepare returnable gate passes for logistic activity.6.2.Authoritya) To instruct shop floor people for smooth operation of logistic department.4.3.3 Recourse managementa) Financial resources:To meet the expenses for the entire financial year, an annual budget is prepared considering the previous years actual expenditure, current years continuity of similar expenditure and the scale of current year activity / plans. The annual budget copy is submitted to DGM-materials & logistics for compilation and eventual authorization as per procedure laid out in Apex manual.b) Capital budget approval: Whenever the need arises for additional equipment, tool, material handling equipment, for warehouse, a request letter highlighting details of the item required, specification, quantity, justification for the item requisitioned is made to the Sr. Manager-Materials & Logistics. After reviewing, GM-Materials & Logistics takes the approval from VP. Works contract/ plan change approval:When the resource requirement is for plant change/ service oriented, requisition is raised for works contract. It is sent to GM-Materials & Logistics /VP (commercial). On receipt of approval, the work is issued by the engineering services department on specific party for executing the work.

c) Manpower resources: Any additional manpower requirement arising out of necessity/ vacancies is informed to Personnel & Administration (P&A) department by Dy. Manager Logistics through GM-Materials & Logistics/ VP. Temporary contract labour as and when required to cope with the extra workload is mobilized by putting up a requisition to the Chief Operating Officer (PSF) justifying requirement. Once his approval is received, the letter is forwarded to Personnel & Administration-Department for arranging the manpower required.4.3.4 Storage and preservation The entire layout of buffer zone, warehouse is laid out and identified. Storage of all products is done as per the location provided. The storage of products is planned in such a way that safety of items and personnel during handling is ensured. Normally the bales are stacked in tier of maximum 6 layers. Storage area are examined periodically so that deterioration, if any are detected promptly at the early stage and dealt with suitably. The packed PSF is delivered to the customer as per detailed. In case of any emergent situation when product is kept outside the covered area of ware house, it is properly secured, kept over tarpaulin and covered with polythene sheets.4.3.5 Stock verification Periodic assessment of stock:Stocks in warehouses are assessed on a periodic basis to detect deterioration and also to verify quantity. During assessment, if damage or deterioration is apparent, such product will be assessed by appropriate internal functions and a follow-up action is taken. The disposition of items will be based on such assessment. This stock verification is done once in a month. Perpetual audit:Logistic Assistant/ Sr. Executive checks the actual stock in comparison with book stock and any deviation noticed are rectified and repot Asst. /Dy. Manager-Logistics.4.3.6 Receipt and storage of packed PSF bales After the production is declared by production department and the quality is checked and declared by QC lab. The Logistics Assistant physically checks this and arranges for shifting the QC lab cleared bales from baler area with the help of Forklift operator to in-plant warehouse. For shifting to offsite warehouse dedicated trucks are used. Shifting from baler area is 24*7 continuous jobs to create space to accommodate fresh production of bales. The bales are normally weighting 400 kgs and from one line same merge no is produced but these may be of different degrees e.g OI,II, CQ. From SAP, location of the same merge no. and grade, if previously produced, is identified. Specific area for particular Denier no. is designated. If space is not available, in that designated area, then the available vacant rows are identified and this row no. is allotted for the bales. If full row is not available for keeping the new merge no production, then rearrangement of bales is done to get a clear row and shifting of material is done accordingly. Bales are loaded from buffer area into flat bottom trucks and transit transport is done to the identified warehouse location. This movement is done on the strength of Excise invoice on payment of duty. Similarly loading and in-transit operation is done in 1st and 2nd shift only. Operation in 3rd shift is done only in exceptional condition. Morning shift Logistics Asst. takes over 2nd shift production from PSF production department, identify location from SAP, enter row no. in SAP and then start transporting to identify warehouse. If direct loading from buffer area is required then after taking over production from production department and entering into SAP, dispatch is done. One forklift in each shift operates for shifting from buffer zone to loading into trucks. One Logistics Asst. in each shift takes charge in buffer zone. When plant will run at full capacity, then two forklifts will be required for shifting and loading into trucks. Both the loading bays will be used for transit operation all the time. Warehouse assistant receives bales in flat bottom trucks. Bales are first unloaded and kept for inspection. The driver handovers the list of bales that was received from buffer zone Logistic-Asst. to the warehouse Logistics Asst. warehouse Asst. inspect the bales, confirm the allocation available and put the bales in designed row.4.3.7 Dispatch Sales order by Marketing to Logistics based on product code, customer code, shipping point and weight. Entry into system by Logistics. Transporter report at gate with LR copies and sales order number. 3 copies of loading advice is given to transporter by offsite weighbridge/ gate. The trucks are surveyed for availability of tarpaulin on the floor and the dryness of the tarpaulin. Logistics generate picks list from the system. Based on pre dispatch list bales are shifted by forklift operator to loading point. Logistics checks the bales as per pree list & give clearance to load. Entry of bale no. in done into system as per material loaded in truck, all three loading advice will be filled up with details of bales one loading advice will be kept at warehouse. Care is taken that bales are handled properly without any physical damage. In case they are damaged/ torn, it is replaced. Stock register will get updated from system. Dispatch details are entered in daily report register kept at warehouse. Checklist is filled by concerned Logistics Asst.4.3.8 Dispatch proceduresA) Dispatch procedure Logistic Domestic1. Mrkt. to punch Contract, Sales orders for dispatches.2. Mrkt. to arrange trucks for dispatches.3. Logistic to sign LR to allow truck inside for loading by checking SO, material availability, prorate if any given.4. Security Dept. makes Gate Entry of truck as per LR given.5. Accounts Weighing Bridge make weighment & give loading slip to truck driver.6. Logistic checker/supervisor/SAP operator received loading slip & LR from driver.7. SAP operator check LR, loading slip in totality, e.g. customer name, order qty., etc. if all is compiling, prints material list & handed over to logistic supervisor/checker.8. Checker traces material from given material list.9. Forklift operator load material in truck under the control of supervisor/checker.10. Supervisor hand over list of loaded material to SAP operator.11. SAP operator generate excise invoice & handover document such as excise invoice copy, LR copy, packing list etc. to driver.12. Weighing Bridge make weighment of loaded truck.13. Securities Dept. finally release truck by checking correction for net wt. as per SAP & weighing slip.B) Dispatch procedure Logistics Export1. Mrkt. to mail export DO2. Logistics to generate contract in SAP.3. After GM & JMD approval logistic to generate SO & PO in SAP.4. Commercial Dept./ Mrkt. to arrange containers for dispatches.5. Logistic to mail PO to Security Dept. for allowing containers for export loading.6. Security Dept. makes Gate Entry of containers as per PO mailed by logistic & LR given by transporter.7. Accounts Weighing Bridge make weighment & give loading slip to truck driver.6. SAP operator received loading slip & LR from driver.8. SAP operator check LR, loading slip in totality. e.g. customer name, order qty., etc. if all is compiling, prints material list & handed over to logistic supervisor/checker.9. Checker traces material from given material list.10. Forklift operator load material in container under the control of supervisor/checker.11. Supervisor hand over list of loaded material to SAP operator.12. SAP operator generate billing document, packing list & mail it to Accounts Dept. for further processing.13. Accounts Dept. to generate excise invoice, ARE Form, commercial invoice, packing list etc.14. Accounts to get clearance from excise.15. Excise to punch excise seal, shipping line seal (account Dept). 16. Account to handover document to container driver.17. Weighing Bridge make weighment of loaded container.18. Security Dept. finally releases containers by checking correction for net wt. as per SAP & weighing slip.C) Dispatch procedure Logistics NEPAL Export1. Mrkt. to mail Nepal export DO.2. Accounts Dept. to generate contract, SO in SAP.4. Customer/ Mrkt. to arrange vehicle for dispatches.5. Logistics to mail SO to Security Dept. for allowing trucks for Nepal export loading.6. Security Dept. makes Gate Entry of trucks as per SO mailed by logistics & LR details given by transporter.7. Accounts Weighing Bridge make weighment & give loading slip to truck driver.8. SAP operator received loading slip.9. SAP operator checks Gate entry, SO, loading slip in totality. e.g. customer name, order qty., etc. if all is compiling, prints material list & handed over to logistic supervisor/checker.10. Checker traces material from given material list.11. Forklift operator load material in truck under the control of supervisor/checker.12. Supervisor hand over list of loaded material to SAP operator.13. SAP operator generate billing document, packing list & mail it to Accounts Dept. for further processing.14. Accounts Dept. to generate excise invoice, Nepal invoice, ARE Form, commercial invoice, packing list etc.15. Accounts to get clearance from excise.16. Excise to punch led seal. 17. Account to handover document to transporter.18. Transporter to prepare LR.19. Logistics to check correctness of LR prepared by transporter.20. Weighing Bridge make weighment of loaded truck.21. Security Dept. finally releases truck by checking correction for net wt. as per SAP & weighing slip.

4.3.9 Process flow chart of dispach activity A) Buffer zone to Customer

4.3.10 Returns Products are returned by the customer through duly paying documents under cover of letter citing reason for return. A returned product is shifted to assigned location.

RETURN OF MATERIAL4.3.11 Transportation Region wise transporters are assigned contractually by Marketing Department. As per sales order, the concerned transporter is contacted, addressing shipping point, quantity and delivery date. Number of trucks to report with date and time will be confirmed. Intimation though mail & telephone will be given. Follow up will be done with the transporter. Vehicles will reach plant for loading along with L.R copies & sales order no.Transportation companies1) M/S Surat Goods Transport Pvt. Ltd2) M/S Sudhir Roadways Corporation3) M/S West Coast Logistics4) M/S Balaji Road Carriers5) M/S Bal Roadlines4.3.12 Handling of PSF wastes PSF waste is considered as finished product for all commercial dealing & sales contract is finalized by Marketing Department. Detailed instruction about DOs and DONTs while handling/ loading are explained to customer by Logistics Department. The waste material is duly segregated by user at source and is dumped in designated area.a) The waste material is decontaminated from the process material by user Dept. before it is shifted to the designated area.b) The contractor his personnel and also concerned personnel from BDMC are trained in handling and transportation of wastes. The material safety data sheet for the PSF waste and handled by Logistics personnel. As per sales order PSF waste loaded in customer truck with the help of forklift, weighment done & Invoice generated.

4.4 INVENTORY CONTROL OF FINISHED GOODS (BALES)4.4.1 Introduction The term inventory means the value or amount of materials or resource on hand. It includes raw material, work-in-process, finished goods & stores & spares. Inventory Control is the process by which inventory is measured and regulated according to predetermined norms such as economic lot size for order or production, safety stock, minimum level, maximum level, order level etc. Inventory control pertains primarily to the administration of established policies, systems & procedures in order to reduce the inventory cost.4.4.2 Objectives of Inventory Control To meet unforeseen future demand due to variation in forecast figures and actual figures. To average out demand fluctuations due to seasonal or cyclic variations. To meet the customer requirement timely, effectively, efficiently, smoothly and satisfactorily. To smoothen the production process. To facilitate intermittent production of several products on the same facility. To gain economy of production or purchase in lots. To reduce loss due to changes in prices of inventory items. To meet the time lag for transportation of goods. To meet the technological constraints of production/process. To balance various costs of inventory such as order cost or set up cost and inventory carrying cost. To minimize losses due to deterioration, obsolescence, damage, pilferage etc. To balance the stock out cost/opportunity cost due to loss of sales against the costs of inventory. To stabilize employment and improve lab our relations by inventory of human resources and machine efforts.4.4.3 Benefits of Inventory Control Ensures an adequate supply of materials. Minimizes inventory costs. Facilitates purchasing economies. Eliminates duplication in ordering. Better utilization of available stocks. Provides a check against the loss of materials. Facilitates cost accounting activities. Enables management in cost comparison. Locates & disposes inactive & obsolete store items. Consistent & reliable basis for financial statements.4.4.4 Factors Affecting Inventory Control Type of product Type of manufacture Volume of production Finances Availability of material

4.4.5 Technique of inventory control analysis:A) ABC AnalysisWhat is ABC Analysis?ABC analysis is a type of analysis of material dividing in three groups called A-group items, B-Group items and C-group items For the purpose of exercising control over materials. Manufacturing concerns find it useful to divide materials into three categories. An analysis of the annual consumption of materials of any organisation would indicate that a handful to top high value items (less than 10 per cent of the total number) will account for a substantial portion of about 70 per cent of total consumption value.Remember: 10% of total number of items carries 70% of value. - "A" group items. Similarly, a large number bottom items (over 70 per cent of the total number of items) account for only about 10 percent of the consumption value.Remember: 70% of total number of items accounts for only about 10% of consumption value - "C"-group items. Between these two extremes will fall those items the percentage number of which is more or less equal to their consumption value.Remember: 20% of total number of items account for only about 20% consumption value - "B" group items. Items in the top category are treated as "A" items, items in the bottom category are called as "C" category items and the items that lie between the top and the bottom are called "B" category items. Such an analysis of materials is known as ABC analysis or Proportional parts value analysis.Classification of items into A, B and C categories:The logic behind this kind of analysis is that the management should study each item of stock in terms of its usage, lead time, technical or other problems and its relative money value in the total investment in inventories. Critical items i.e., high value items deserve very close attention and low value items need to be devoted minimum expense and effort in the task of controlling inventories. The Material Manager by concentrating on "A" class items is able to control inventories and show visible results in a short span of time. By controlling "A" items and doing a proper inventory analysis, obsolete stocks are automatically pinpointed.The following steps will explain to you the classification of items into A, B and C categories. 1. Find out the unit cost and and the usage of each material over a given period.2. Multiply the unit cost by the estimated annual usage to obtain the net value.3. List out all the items and arrange them in the descending value. (Annual Value)4. Accumulate value and add up number of items and calculate percentage on total inventory in value and in number. 5. Draw a curve of percentage items and percentage value. 6. Mark off from the curve the rational limits of A, B and C categories.B) FSN AnalysisBy doing FSN analysis materials can be classified based on their movement from inventory for a specified period. Items are classified based on consumption and average stay in the inventory. Higher the stay of item in the inventory, the slower would be the movement of the material. F Fast Moving S- Slow Moving N- Non movingSometimes the terms FNS is also being used, where F Fast Moving N- Normal Moving S- Slow MovingThere following steps in doing the FSN analysis: Calculation of average stay and the consumption rate of the material in warehouse. FSN Classification of materials based on average stay in the inventory. FSN Classification of the material based on consumption rate. Finally classifying based on above FSN analysis.

C) HML AnalysisH-M-L analysis is similar to ABC analysis except the difference that instead of Annual Inventory Turnover, cost per unit criterion is used.The items under this analysis are classified based on their unit prices. They are categorized in three groups, which are as follows:H- High price itemsM- Medium price itemsL- Low price itemsObjectives of HML analysis: Determine the frequency of stock verification. To keep control over the consumption at the department level. To evolve buying policy, to control purchase. To delegate the authority to different buyer.D) XYZ AnalysisIn this inventory categorizes into three bands with each band having a different management control associated. Although different criteria may be applied to each category the typical method of scoring an inventory item is that of annual stock value of said item (qty in stock X cost of item) with the result then ranked and then scored (X, Y or Z).Bandings may be specific to the industry but typically follow a 70%, 90%, 100% banding in that X class items represent 70% of the stock value (although they may account for 20% number wise), Y class items fall between 70% and 90% of the annual stock value with C class the remaining. In practical terms the complex high cost materials typically fall into the X class items.These controls are typically:X class items which are critically important and require close monitoring and tight control while this may account for large value these will typically comprise a small percentage of the overall inventory count. Y class is of lower criticality requiring standard controls and periodic reviews of usage. Z class require the least controls, are sometimes issues as free stock or forward holding.

E) VED AnalysisV- VitalE- EssentialD- DesirableThis classification is applicable only for spare parts.It based on the price, availability etc.For V items, a reasonable large volume of stocks might be necessary, while for D items, no Stocks are, perhaps, required be kept.For V items of A classification a close control should be kept on stock levels, but if it is a C items, than large quantities might be stored.Therefore a V item has to be stocked more and D Items has to be less stocked.4.4.6 Inventory control analysis technique used:FNS analysis technique is used for inventory control. In this past data are extraplorated as per trend (demand) seen in the history. The company BOMBAY DYEING is manufactures PSF (polyester staple fibre) which is used for producing spun yarns (blends), so the demand of PSF is totally depend on downstream industries which are in spun yarn making business.According to the customer requirement company produce PSF of required denier and cutlengths. The company produces 0.8 to 15 denier PSF fibre. But the demand for all material is not same.According to past record:F - FAST MOVING MATERIALS - 0.8D, 1.0D, 1.2D, 1.4D, 2DN NORMAL MOVING MATERIALS-4D, 6D, 7DS SLOW MOVING MATERIALS-ALL OTHERSSometimes demand varies according to season like, some months before of winter the demand of high denier and black fibre is more because normally people wears dark colour cloths in winter season. Specialized fiber made for export.

5. SYSTEM AND COST ORIENTATIONSoftware is used for logistics automation which helps the supply chain industry in automating the work flow as well as management of the system. There are very few generalized software available in the new market in the said topology. This is because there is no rule to generalize the system as well as work flow even though the practice is more or less the same. Most of the commercial companies do use one or the other custom solution.But there are various software that are being used within the departments of logistics. Few departments in Logistics are namely, Container department, Warehouse, Etc.All departments are interlinked with SAP.5.1 SAP (SYSTEM APPICATIONS PRODUCT)As a product will not give profit unless we properly implement and effectively execute.Through SAP, an integrated system will help us in faster and effective decision making which results in cost cutting & profit improvement.5.2 Benefitsa) Based on actual & updated data, actual margin is available online on real time basis to help analyze & correct product wise/ order wise profitability.b) Helps to enable timely cost and process corrections to achieved budgeted margin.c) Availability of online stocks is lead to reduction in inventory & control on lead times. Also better control on ageing of stocks. This helps in better working capital management & reduction of costs.d) Helping in better planning & provide alerts to avoid losses due to stocks out.e) Order booking & billing is online enabling On Time In Full (OTIF) measure.f) Manual data collection is avoided eliminating use of data entry operations.

5.3 RequirementsPRODUCTION:a) Capacity planning based on most profitable product mixb) Monitoring of grey stocksc) Lot wise production tracking for delivery & elimination of overruns.d) Control on rejects, waste & reprocess.SALES & DISTRIBUTIONa) Demand forecasting.b) Contract tracking from order to delivery.c) Contract/ product wise profitability.d) Credit control.e) Quick costing to quotation.MATERIAL MANAGEMENTa) Review of quotation for better price negotiation.b) Procurement planning based on sales & production plan.c) Stock level monitoring.d) Purchase data base for analysis of purchasing efficiency & vendor performance.QUALITY ASSURANCEa) Ensuring QA as per company standards of all inputs & finished goods.b) In process checks for timely corrections.c) Quality data base for review & correction of recurring problems.5.4 Pre-requisites for implementationCommercial closure with SAP and finalization of implementation partners1 monthProcurement/ upgradation of hardware2 monthsImplementation plan12 months

5.5 SAP BUDGETONE TIME COSTRS IN LACS1SAP License75

2Implementation charges125

3Servers100

4Data center, back up & disaster recovery125

5V SAT15

6Additional PCs /Printers20

7Administration & others10

8Contingency10

Total490

RECURRING COST PER ANNUMRS IN LACS1AMC-SAP License @ 17%13

2Hardware7

3Data center3

4Connectivity7

Total30

6. OBSERVATIONS AND FINDINGSThe space utilization is good. Total 160 types of product handling and storing is a challenging work but company employees are expert in managing this entire thing. And the control on the responsible manpower i.e. contractor, transporters is outstanding. Logistics Dept. is using Optimum Transportation Policies which are beneficial for company, and has good maintained relations with transporters. Problems Tracing of bales. Mistakes in sending material or bale by checker. First In First Out sometimes not possible. Proper allocation of materials.

7. RECOMMENDATION1) Implementation of barcode/RFID techniqueUse of barcodes and radio-frequency identification(RFID) tags to provide automatic identification of bales (inventory objects). RFID reduces chances of Out of Stocks; helps in tracing the location of specific type of material. For recording an inventory transaction, the system uses a barcode scanner or RFID reader to automatically identify the inventory object, and then collects additional information from the operators via fixed terminals (workstations), or mobile computers.(Real-time inventory control systems may use wireless, mobile terminals to record inventory transactions at the moment they occur. A wireless LAN transmits the transaction information to a central database.)2) Use proper demand forecasting tools to avoid unnecessary stock.

8. CONCLSIONThe Logistics Dept. is one of the key Dept. of the Bombay Dyeing and Mfg. Co. Ltd. It has deep forward and backward linkages with the rest of the Dept. and has a strong multiplier effect resulting in smooth operation of the company. In todays world cost management and cost reduction has become a priority for most businesses. Most companies are compelled to explore and exploit all possible cost reduction and productivity enhancement techniques. Knowing where and how to save money is what we are all about! In the present study, it has been established that if the company implement scientific, technological tools for their Logistic Management, then it ultimately boosts the manpower work efficiency, due to this company profit will be increased.

9. REFERENCES- FOR EXPERT OPINIONMr. B. KarVice PresidentPOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. A. M. KanitkarGM (Logistics & material)POLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. Hemant PowaleDy. ManagerPOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. S. M. MokalAsst. ExecutivePOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. P. S. RawatAsst. ManagerPOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. Sajith MCSr. ExecutivePOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD, MAHARASTRA

Mr. M. M. PathradkarAsst Manager - HRPOLYSTER DIVISIONBOMBAY DYEING & MANUFACTURING CO. LTDPATALGANGA, RAIGAD MAHARASTRA

10. BIBLIOGRAPHYBOOKSPitman publishing Ltd, Second edition 1979, A guide to stock control, A BattersbyPrentice hall of India, Fifth edition 1990, Inventory control (theory & practice), Martin K. Stirr & David W. MillerWheeler publishing, Second edition 1988, Purchasing & Inventory control, K. S. MenonTata McGraw-Hill publishing, T M H edition 1978, Cost reduction from A to Z, Higgins & StidgerINTERNEThttp://www.bombaydyeing.com/http://www.managementstudyguide.com/operational-challenges-in-inventory-management.htmhttp://smallbusiness.chron.com/internal-external-factors-affect-inventory-management-13392.htmlhttp://www.imsconsulting.ca/?r=26http://multichannelmerchant.com/opsandfulfillment/advisor/lower_inventory/http://thesupplychainlab.wordpress.com/2008/10/21/10-ways-to-reduce-inventory-cost/http://www.investopedia.comhttp://iamsam.hubpages.com/hub/ABC-Analysis-Technique-of-Inventory-Controlhttp://www.managementparadise.com/forums/elements-logistics-logs/200330-hml-analysis-xyz-analysis.htmlhttp://www.materialsmanagement.info/inventory/xyz-analysis-of-inventory.htmhttp://know scm blogspot.in/2008/04/how-to-do-fsn-analysis.html

ANNEXURE