Efficiency in Supply Chain and

Warehousing

Aditya Kumar Dubey (16)Siddharth Jain (30)Ashwani Kumar (45)

Prin. L. N. Welingkar Institute of Management Development & Research, Mumbai

Akanksha Kaushik (38)Madhu Kumar (46)Sushmita Shukla (70)Aaruti Toshniwal (80)

ACKNOWLEDGEMENT

Contents

Supply Chain Management

• Concept of SCM

• Factors which make SCM effective

• Traditional SCM v/s Advance in SCM

Warehousing

• Concept of warehousing

• Factors which make warehousing effective

• Traditional warehousing v/s Advance in warehousing

SCM & Warehousing: India v/s Globe

Supply Chain Management

SCM in retail is an end to end process in merchandise planning and movement, from planning the inventory (preparing the purchase order) to the point of reaching the merchandise to the customer.

Individual activities of the SCM process-i.e.- warehousing, distribution, transportation both for inbound and outbound movement of merchandise which were handled separately in the past are now carried out in logical sequence fallowing a specific time table i.e. Logistics.

Managing continuous supply of right products, at right time from different entities is the challenge of managing supply chain.

Information technology tools has helped retailers in greatly reducing cycle times and attaining efficiency.

Objectives of SCM

Rapid demand fulfillment

Shortening time to order

Provide flexible planning and control mechanism

Greater labor, space and equipment efficiency

Effective distribution and channel partnerships

Responsiveness and accountability to customers

Give customers what, when and how they

want, at the lowest cost

SCP and SCE in the supply chain

Factors which make

supply chain

management

effective

Organizational factors• Different organizational factors like organization structure, organizational

culture, training of employees. Some companies are working on JIT system in which raw material is provided at the time of production.

• Some others are working on the concept of mass customization, Dell computer corporation.

Distribution network optimisation• Optimising the distribution network--that is determining the best location for

each facility, setting the proper system configuration and selecting the right carriers--brings immediate cost advantages of 20 to 30 percent.

Mutual understanding• The trust between firms takes a key part in strategy formulation. It is a thing by

which the cost of SC can be reduced. Actually it is mutual confidence that describes that no party exploit the believes of other party.

Flow of information• To decrease the cost is the control purpose of supply chain inventory management. • Collaboration in inventory system can be difficult because the firms are separate

from each others. • Sharing information is important for making supply chain responsive.

Relationship and decision making • Increasing the satisfaction, decreasing conflicts and maximizing relational

behaviour are three outputs of long term coordination. The result of better decision making are that demand can be better forecasted.

Cross docking • Another supply-chain technique with proven payback potential is cross docking.

This is the practice of receiving and processing goods for reshipping in the shortest time possible and with minimum handling and no storage.

Tracking • Using the technology and software

to track the shipment from one end to another end safely

SCM Success Stories

Top reasons why more and more executives are turning to SCM to manage their extended enterprises

SCM Success Stories

Traditional SCM

v/s

Advances in SCM

Supply Chain Model - PUSH based strategy

Manufactures -> production of goods -> pushed through supply chain

Lack of proper feedback and information regarding any requirements or specifications.

Gaps between the supply and demand.

Traditional Supply Chain:• Improper planning leading non harmonization between channel partners

• Focused on individual performance without considering the

intermediaries

• Lack of long term growth plan and focus

• Supported by old legacy system with very low integration among various

parts

• Lack of Vision and Mission Statements

Traditional Supply Chain Model

New Supply Chain Models:

• Strong network across the whole supply chain leads to cost savings and higher

profitability

• Long term growth plan and strategy are aligned with the company vision and mission

• Strong connection between the suppliers and procurement managers

• Reduction of inventory waste through effective SCM process

• All the individual system are integrated with each other.

PULL distribution which is based on accurate customer demand and proper feedback methods

There is high scope to receive and feedback from customers and change the product type/design accordingly

Modern Supply Chain Model

E-commerce and Omni-channel distribution

Mobile and wearable technology

Robotics and automation

Sensors and the Internet of Things

Big Data

Sustainability

New Technologies Impacting Supply Chains and Big Data In the last two decades

Digital technologies have had a lasting impact on how supply chain activities are conducted

According to a recent study by Intermec, a leading supply chain solutions provider, the top 10 technologies that have the most impact on supply chain operations include:

1. Comprehensive connectivity – from 802.11 wireless LAN technologies, cellular networks, and Bluetooth

2. Voice and GPS communication integrated into rugged computers3. Speech recognition4. Digital imaging5. Portable printing6. 2D & other bar coding advances7. RFID (radio-frequency identification)8. RTLS (real-time locating system)9. Remote management10. Wireless and device security

Warehousing

Concept Need for storage arises both for raw materials and finished products

STORAGE involves proper management for preserving goods from the time of the production or purchase till actual use

When the storage is done on a large scale and in a specific manner it is called WAREHOUSING

Definition:A designated place where goods are stored to balance demand and supply uncertainty, to serve customers in much better way, to consolidate upstream flow and distribute downstream flow as per requirement, to do last mile value addition such as packaging, kitting etc and to reduce last mile distribution cost.

Types of warehouses

• Private Warehouse

• Public Warehouse

• Government Warehouse

• Co-operative Warehouse

• Bonded Warehouses

• Distribution Centres or Warehouse

• Cold Storage Warehouse

• Field Warehouse

• Agricultural Warehouse

Warehouse goals

• Maximize effective use of space

• Maximize effective use of equipment

• Maximize effective use of labour

• Maximize accessibility of all items

• Maximize protection of all items

• Maximize effective use of information

• Maximize the protection of company’s assets

• Minimize goods handling

• Minimize the company operating cost

Warehouse Functions

• Unloading

• Receiving and checking inbound goods

• Internal product movement

• Storing

• Order picking

• Stock Rotation

• Packing

• Loading and shipping

• Cycle counting

• Replenishment

• Handling Returns

• Maintenance and loss Prevention

Factors which make

Warehousing

effective

An efficient warehouse is critical for:

• Customer satisfaction because it helps ensure quick, accurate shipments

• Lifeblood of every business offering products to customers

• Growing customer demand

• For companies to stay competitive

Warehouse personnel are adopting order fulfillment technologies, re-organization techniques, and picking optimization methods to create efficient operations to answer the growing demands of customers.

Maximize and optimize all available space• Rather than expand the footprint of your warehouse, consider better use of vertical

space

• Adding taller storage units

• Various types of shelving for different materials

• Standardized bins to help keep shelves neat and orderly.

Lean Inventory

• Lean inventory for warehouse is just as important as it is in manufacturing

• The basic premise of lean is only what you need, and nothing more

• Possibly reduce or eliminate safety stocks, and try to get suppliers to deliver smaller quantities more frequently

Adopt enabling technology• A warehouse management system (WMS) or an ERP system with a strong WMS

module

• Automated pick lists that can be sent to mobile readers and devices

• Barcode or radio frequency identification (RFID)

• Research conducted at the University of Arkansas shows that using RFID increased inventory accuracy by 27 per cent in just 13 weeks

Organize workstations• Organizing workstations improves

productivity because workers do not have to search for tools or equipment

• Use the “5S” method SortSet in order ShineStandardizeSustain

Keep clutter at bay, reduce errors, and improve safety and organization

Optimize labor efficiency • Analyze material usage patterns

• Store high-volume items together near the front of the warehouse to eliminate travel

time.

• Store items that are frequently sold together near one another

• Streamline operations if you try to keep the items you pick most often in the most

accessible locations to eliminate picking delays

Streamline the Order Fulfillment Process• Streamline the much neglected order fulfillment process

• Warehouse staff will waste time when they are running everywhere to fulfill orders

• People going to the first aisle to pick up an item, going to the end of the warehouse

for another product, and then returning to the first aisle to pick up a different item to

complete the same order

• The right warehouse software can allow you to batch requested orders in a more

organized method

Reduce the Amount of Shipping Containers

• Select two to three standard sizes for shipping containers

• Then select several custom sizes for merchandise that are in irregular shapes

• It will cut down on order fulfillment and waste

• You will also be able to manage and budget your freight costs more efficiently

Select Effective Storage Options

• Select the best fit storage options based on the various products

• Warehouse staff can have a faster time fulfilling orders for in-demand products

when the items are in arm's reach

• Storing merchandise at waist level allows the staff to "grab and go" when filling

multiple orders

• Weight of the item will also dictate where it is placed, as heavier products will

need to be put on lower shelves or on pallets

Create a warehouse within a warehouse

• Grouping together the 20 percent of your SKUs that complete 80 percent of your orders

• Cuts travel time for pickers

Focus on Continuous Process Improvement

• Keep an eye on continuous process improvement• Don’t just focus on short-term goals; set objectives and accountability for

improvement, review their progress, and start over – time and time again

Traditional Warehousing v/s

Advances in Warehousing

Traditional WarehousingTHE SIMPLE RULE IN TRADITIONAL SUPPLY CHAINS WAS TO STORE “MAXIMUM POSSIBLE

QUANTITY OF EVERY PRODUCT, EVERYWHERE, EVERY TIME”

• A traditional warehouse is a typical stock carrying unit of the supply chain

• As far as distribution is concerned this is a place where the manufactured and ready-

to-sell products are stored

• This gave birth to the warehouses which were used for stockpiling inventory and

inventory would be shipped out months after it arrived in the warehouse

• Items are shipped to fulfill orders from customers (end customers or intermediaries).

These warehouses are also called as distribution centers

• Costs associated with a traditional warehouse include inventory carrying costs in

addition to the facility costs and the transportation costs

Advancements in WarehousingTHE NEW SUPPLY CHAIN RULE IS TO HAVE “THE REQUIRED QUANTITY OF THE RIGHT

PRODUCT IN THE RIGHT PLACE AT THE RIGHT TIME”

• Entrance and domination of ERP vendors: SAP, ORACLE,SSA made significant inroad by

self developing advanced warehousing modules

• Increased Protocols for Product Recalls and Warehouse Employee Safety

• More Acceptance of Third-Party Logistic Solutions

• Mobility Devices for More Accurate Order and Shipping Fulfillment: Operators are using

barcode scanners, RFID readers and other types of handheld devices to better

streamline the shipping and inventory process.

• Unique Warehouse Management Systems for

Multichannel Solutions

• Automation Improvements for Enhanced

Operational Processes

• Use of robots

Ways How Warehousing Adds Value

Storage Accumulation• The use of a warehouse to stockpile and to handle overflow. The warehouse

serves as a buffer to balance supply and demand for long-term storage

Postponement• The use of a warehouse as a final step deferment or postponement until a

customer places an order for a specific quantity

Order Consolidation• The use of the distribution center to gather product which is to be shipped to a

final destination

Cross docking• The process requiring a truck to pull up to a

warehouse dock and transfer stock directly from the back of one truck into the back of another for deployment to different distribution centers or retail stores

Flow-through• The use of the warehouse, in order to support a manufacturing or distribution

operation, as an inventory staging process which relies exclusively on forward picking locations and fills them with only enough inventory for the immediate future (from one day to one week)

Order Assembly• The use of a distribution center to fulfill unpredictable order patterns, to

accommodate a broad SKU mix and ship same-day orders, as well as to use cross docks whenever possible.

Product Mixing• The use of a distribution center to combine items in the entire product line for a

single manufacturer from product-oriented manufacturing facilities in different geographic locations

SCM & WAREHOUSING

INDIA v/s GLOBE

Demand side

• Varied tastes and consumer preferences and purchasing habits

Supply Side

• Poor infrastructure• Complex taxing regulations• Lack of technology adoption

Challenges Faced By Indian Logistics

Supply Chain Management Worldwide• Worldwide the supply chain management happens real

time:-– Real-time route planning and optimization– Real-time package/shipment tracking– Real-time delivery personal tracking and managing– Real-time ETA calculation– Real-time alerts, notification with Geo– Fencing and Geo-coding

• 40% of today’s organizations are not currently pursuing increased mechanization to streamline supply chain processes: this percentage will shrink to 17% by 2018

• Inventory and warehouse management is increasing in value and relevance. The number of warehouses in the U.S. has risen 6.8% over the last five years

• The average inventory accuracy threshold for retail operations is only 63%

• 44% of US shoppers combine online and in-person shopping activities (“Omni-channel shopping”) across 15 product and service categories.

• Amazon Drone Delivery

PRIMARY FOCUS

Quality Cost ServiceSECONDARY FOCUS

Delivery Speed Volume Flexibility Innovation

• Focus on development of vendors in geographical proximity.

• Implementation and utilization of ICT : Routing and scheduling software are increasingly being used.

• Transportation and logistics services are generally outsourced to third parties.

MANUFACTURING FIRMS: High collaboration partnership with vendors

SERVICE FIRMS: Focus on Express Delivery and Logistics Solutions

FMCG and PERISHABLES SECTOR: Link distributors through Internet and Intranet based systems. E.g. HUL through RSNet, Marico through MINet, Dabur through DaburNet

5 out of 6Firms use ERP software

Supply Chain Management in India

Warehousing Globally

Type Of Warehouse

Region Of Growth Of Warehousing

Global refrigerated warehousing and storage is

growing fastest due to “RISE IN CONSUMPTION OF PROCESSED FOOD”

GROWING DEMAND OF PROCESSED AND FROZEN FOOD PRODUCTS in China and India is driving the need for state-of-art

cold storage facilities, thus driving market growth in APAC.

GLOBAL VENDOR

• Market leaders capitalize on the potential demand for energy-efficient warehouses.

• Introduce highly innovative inventory tracking methods and value added services such as repackaging and quality control testing over the next few years.

• SIZE OF THE INDIAN WAREHOUSING INDUSTRY (across commodities and modes) :INR560 billion excluding inventory carrying costs.

• Warehousing accounts for ~5% of the Indian logistics market (excluding inventory carrying costs, which amount to another ~30%).

Key Players In India

55%

14%

15%

16%

KEY SEGMENTS

Industrial or Retail Warehousing

CFS/ICD

Agri Warehousing

Cold Stores

27%

31%18%

24%

KEY DEMAND CENTRES

Delhi MumbaiBangalore Others

Warehousing in India