Interns Report Draft

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UNIVERSITY OF PETROLEUM & ENERGY STUDIES DEHRADUN Summer Internship Project Report Bringing Cost and Operation Efficiency in Current Business M.J. Logistics services Ltd. Mentor: Mr. Rahul Mathur (Operations head M.J. Logistics)

Transcript of Interns Report Draft

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UNIVERSITY OF PETROLEUM & ENERGY STUDIES

DEHRADUN

Summer Internship Project Report

Bringing Cost and Operation Efficiency in Current Business

M.J. Logistics services Ltd.

Mentor: Mr. Rahul Mathur

(Operations head M.J. Logistics)

Submitted by:

Abhijat Pandey

R600209002

M.B.A. (LSCM Sec-I)

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Contents

Acknowledgements 3

About 3PL 4

ITC operations 5

Operating procedure 7

SAP overview 12

Stacking norms 14

Space utilization 16

Observation at ITC 18

Recommendation 23

Mandoli 24

Overview of process of C&F agent

25

Observation and recommendation for Bosch

26

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Acknowledgement

These two months at M J Logistic Services Ltd have been a great learning experience. It has been one of the most enriching experiences for me to work along with the employees of one of the best managed 3PL organizations, I would like to express my heartfelt gratitude and immense respect to Mr. Anil Arora (M.D. M.J. logistics) who has given me full opportunity to learn the tendering operations executed here.

I emphatically express my profound thanks and heartfelt gratitude my mentor Mr. Rahul Mathur (Operations Head) for his valuable guidance, timely suggestions and constant encouragement during the entire course of my training.

I am also thankful to Mr. Kripal, Mr. Raju Tiwari (Key Account Manager ITC) for their support, guidance and providing the valuable information.

I would like to take this opportunity to extend my heartfelt gratitude to:

Ms. Manisha Mehani Abhijat Pandey(Manager Business development)

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About 3PL

Third party logistics (3PL) or contract logistics is thus the supply chain practice of outsourcing the various logistics functions of inbound freight, customs consolidation, ware housing, distribution, and outbound freight to the client's customers. The 3PL provider executes these logistics functions on behalf of the client company by using own assets resources. This provides the service user company to concentrate more on its core competences while at the same time operating in a leaner fashion without owning many assets, thereby reducing the overall operational costs. The resources and funds that would otherwise have been utilized for the performance of the logistics functions can be now redirected towards improving operational efficiency in other disciplines. India is not aloof as well, when we talk about the utilization of 3rd Party logistics by companies in India, it has been 55% when compared to the global index of 71%. This further testifies the increasing role and understanding of optimal business practices by the Indian firms. Moreover, the rapidly growing Indian Consumer Market and the increase in consumption expenditure has made the Indian customer sensitive towards the quality and speed of the service being provided, due to which the organizations are forced to go for “3rd Party Logistics” so that they can concentrate on their competencies i.e. production by outsourcing the critical processes of the Supply Chain to the experts thereby lowering their costs

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ITC operations

MJ Logistics is providing logistics services ITC. Hence serving as 3rd Party Logistics services provider to ITC ltd. MJ Logistics is responsible for transportation & Warehousing in distribution activity of ITC. MJ is serving in both primary transportation and secondary transportation of distribution of ITC.

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ITC (Indian Tobacco Corporation) is primarily involved in manufacturing of cigarettes; of late it has diverse into other business like confectionary, stationary personal care and ready to eat food items.

Like most of the organizations today ITC has also kept key business processes (product design, innovation, product quality and sales and marketing) in house and outsourced other process (manufacturing, warehousing, transportation etc.) to different firms.

M.J. logistics serves in distribution activity of ITC limited providing warehousing services in Delhi and operating a regional distribution centre at Hassangarh apart from providing transportation in primary and secondary movement.

In Delhi M.J. operates two warehouses for ITC:

1) Hameedpur : cigarettes, cigars, personal care products, confectionary, aggarbatti, dhoop, matches, biscuits, namak

2) Alipur : Stationary

Transportations for Delhi is provided by M.J. transportations and Truckers India

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Operating procedure for warehouse of ITC

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Trucks report at warehouse

Reporting time of the truck is noted in the truck in register

Truck are brought into the warehouse depending upon the labour availability and space for for storing the goods bought by truck

A gate pass is issued to the truck driver when the truck is allowed into the warehouse

Further the paper work is verified at the gate and the same is send to the supervisor on the warehouse floor eg: VAT paper, Lorry recipet

The trucks are inspected prior to being unloaded for damaged trapoulins and wether or not it is overloaded the inspection is also done after the truck is unloaded trucks are inspected for having trapoulins on floor or not if not then that is noted and reported to concerned transporter

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Truck unloaded in front of of guard and supervisor by no. of labours available. CFC’s inspected for damage and damadged CFC’s are kept aside in damaged area.

Guard notes down the no. of CFC’s unloaded from the truck and along with the no. damaged CFC’s and the same is send to supervisor who genrates the goods received note indicating the no. of goods brought in by truck, goods bought any deviation from the amount of goods as mentioned in the lorry recipet.

Truck leaves the warehouse premises after submitting the gatepass at the gate.

The truck should be unloaded within 24 hours of it’s reporting at warehouse otherwise the transporter is entitled to charge detention charges either from WPS or ITC

The GRN(goods received note) along with other documents are submitted to SAP operator after which the stock s are updated in the SAP

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In the storage area the goods are kept in honebee stacking pattern and they are stored as per the chronological order of batches even for the same SKU

Documents attached when goods are received

1) Gate pass 2) Unloading sheet3) Transporter bill4) Consignment note5) Invoice generated from the factory6) VAT/ Tax bill as applicable7) Transporter lorry receipt

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At the time of unloading the guard present there is required to note down the no. of CFC’s loaded which are at the end of process of loading are tallied against the pick sheet

Loading process

SAP overview of ITC (for warehouse operations)

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Trucks are placed by transporter as per availbility and the supervisor alog with guard oversee the loading procedure as per pick sheet

Products are stacked in the trucks as per the preference of dealers i.e. depending on value of product:

Cigarettes, PCP, matches, confectionary/RTE, aggarbatti, salts, Biscuits

If certain goods are not loaded in trucks then they are updated in the SAP system in the LIT section they are then dispatched either in another truck going in the same direction and having some space or for next day that particular product has the highest priority

Following day the dispatched stocks are matched as per the orders and left over stock and reports are mailed to ITC branch

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Sales order and loading process

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As soon as the shipment leaves from the factory the SAP system shows the consignment in the system it shows the expected time of arrival of the shipment at the warehouse, batch code of the product along with the no. of CFC’s shipped to the warehouse

After the unloading process is complete the shipment status is updated in the SAP system and goods received note is generated.

First the goods received are updated in the BRND section of SAP. If the goods received at warehouse are short as per the shipment order received then it is posted in the LIT section of SAP and if they are damaged then they are posted in the DDIT/ DDES section of the SAP

Monthly reports are generated and are mailed to branch having details of goods received, sold, in stock, damaged, near expiry and already expired.

TPVS generates order which are received at the warehouse in Hamidpur

Manual planning is done by SAP operator as to hpw miuch trucks are required for dispatching the orders. (The idea is to minimise the no. of trucks involved and also maximise the truck utilization that maximum dispatch should be done in FTL

Two kinds of indents are generated by the SAP K2 and K3 in former the shipment goes to other warehouses of ITC and in the latter the shipment goes to distributors of UTC products

Pick sheet is generated along with the invoice against the order received called D.O.(delivery order) the pick sheet is then used in loading of the trucks.

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REPK location: Not all the units received in the damaged CFC’s are inconsumable hence they are repacked in new CFC’s and send to distributor. Such stocks are moved again from DDIT to BRND

Indent vs. placement: This is post where the performance of transporter is measured. The no. of orders of trucks placed with transporters against the no. of trucks actually placed by the transporter

The stocks are moved out from the warehouse as per the FMFO model that is first manufacture first out model.

The inventory control at ITC is done mainly by the branch. The inventory levels are decided by the sales data. Per day average sales of ITC product are given by the ITC sales team and on the basis of that the warehouse is required to maintain inventory levels of 4 to 7 days depending upon the product e.g.: biscuits aggarbatti have 7 days of inventory i.e.

Sales of biscuits last month = 350 units per day

Then warehouse should have 7 days worth of inventory of biscuits at all time i.e.

350 X 7= 2450 units

Stacking norms of various products

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CategoriesStacking Heights

Normal Brick Stacking

Cigarettes 5 8

Matches 15 18

Agarbatti 6 8

Confectionary 6 8

Atta (30 Kg Bag) 7 9

Biscuits 6 8

Salt(25 Kg Bag) 10 12

RTE / Paste / Spices 6 8

Snacks / Bingo 7 8

Personal Care 7 8

M.J. does honeycomb stacking in brick stacking pattern for most of the products the main advantage of the honey comb stacking is that it allows the air to pass through the CFC’s when they are stored

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Honey comb stacking

Normal stacking

Space utilization

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Environment controlled facility for cigars at Hameedpur facility

Observations for ITC operations

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M.J. logistics is WSP and transport service provider for ITC and mostly the operations were of case in and case out type.

Manpower utilized at Hameedpur and Hassangarh

Hameedpur HassangarhShift incharge 1 1SAP operator 3 3Supervisor 11 28MIS operator 1 1Documentation 2 3Labor 11(day) 14(night) 100

Labor cost have increased in current financial year and the revised rates are

Labor cost of loading/unloading at hameedpur

Truck type Old rate New rateTATA 407 80 104TATA 709 100 130TATA909 135 17518 Feet 170 22132 Feet 275 35824 Feet 170 22128 Feet 170 221Auto(Vikram) 50 65

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Loading and unloading charges for salt are different and also the labor is not permanent and hired as and when required

Basic rate Mamul Total1 .50 1.5/bag

1) MJ is providing warehousing and transportation services separately to ITC and i.e. MJ warehousing and M.J. transportations are billed separately by ITC and are two independent service providers to ITC.

2) The infrastructure at the Hameedpur warehouse is poor; the floor was cemented and could not be used for using MHE’s and other mechanized equipments

.

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3) Vertical height advantage was not being taken at warehouse i.e. Hassangarh

and hameedpur either of the warehouse as there are no racks being used at present

4) Rarely are the trucks being detained at either of warehouse due to delay in unloading of trucks.

5) The unloading time of trucks were found to be dependent on the kind of goods that are being unloaded i.e. matches truck took maximum time of around 2.5 hrs on an average with 11 labors, for 24 feet truck of cigarettes truck took around 1.5 hrs no major deviations from these timings were noted from these timings (for hameedpur warehouse where unloading/loading is done manually) at Hassangarh warehouse the timing varied from 20 minute to 2.5 hours this was due to the fact that the no. labors allotted to the truck loading is not equal the labors were found

6) In the loading functions trucks took around 1 to 2 hours depending upon the variety of SKUs that are to be loaded in the truck

7) Mechanized equipments were there at hameedpur warehouse but were not used.

8) The handling of CFC’s was pretty rough during the time of loading at hameedpur warehouse.

9) Guards are supposed to note batch no., SKU code and weight and type of product which were received in lorry, bar code were not used for this purpose.

10) Loading of K3(sales) and K2 indents(distribution to other warehouse) is done at night as orders are received at warehouses only in the evening

11) Almost every component of distribution of ITC is fragmented i.e. WSP are paid separately, transporter are chosen separately and in some cases even the labor contractor and when they work together ITC doesn’t enjoy the synergy they would if total distribution is outsourced to a single party.

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TATA 407TATA 709TATA 90918Feet32FeetAuto24Feet28FeetTotal

Billing of M.J. logistics for the month of February of unloading for K3 indents

18 FEET 17004%

18 FEET 23404%

18 FEET 17004%

32 FEET 30006%32 FEET 3000

6%18 FEET 1700

4%18 FEET 1700

4%18 FEET 2340

4%18 FEET 2100

4%18 FEET 1700

4%

18 FEET 17004%18 FEET 1700

4%

18 FEET TOTAL50%

Chart Title

Billing of unloading charges at hameedpur for K2 indents

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TATA 4076%

TATA 70913%

TATA 9099%

18Feet72%

Chart Title

May 2010 billing for K2 indents

TATA 40715%

TATA 70936%

TATA 90935%

18Feet4%

32Feet0%

Auto10%

Chart Title

May 2010 billing of K3 indents

12) It can be inferred from the above data that most indents that mostly transported in smaller lorries

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Recommendations 1) Vertical height was not used for storage of stocks in the warehouse if racks

are employed then probably the warehouse at Alipur could be eliminated from the supply chain of ITC limited as it is only presently being used for stationary division of ITC and it’s indents could be handled from Hameedpur, also if same is done for Hassangarh then M.J. would have extra space which could be used for special value added services for major retail giants ( like reliance, more or big bazaar)

2) The infrastructure of Hameedpur needs upgrade (mainly floor and truck platforms) for better handling operations and racks and other mechanized equipments this is expected to bring down the truck turnaround time.

3) ITC should use bar code to keep an update of inventory this is expected to increase the efficiency of operations and also provide ITC with greater visibility of inventory.

4) ITC should work closely with its 3PL partner to enjoy greater synergy in its distribution which will allow it to have better control of inventory, and enjoy operation efficiency through technique like vehicle routing or scheduled delivery.

5) ITC should go for product wise scheduled delivery to its dealers as the no. of local distributors many to have each distribute being allotted single day.

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Mandoli

M.J. carries its C&F operations from Mandoli warehouse in East Delhi area. The clients whom M.J. serves from are Mandoli are Colgate Palmolive, RFCL, Kirloskar brothers and Phillips.

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Overview of process by C&F agent

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Verification of st ocks by C&F agent

Receiving of order by warehouse agent

Dispatch of order to dealer in market

Reporting of tr ucks at warehouse

Verification of documents by security

Recipt of goods by C&F agent

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Observations for Bosch

1) The main concern for Bosch warehouse was space i.e. there is not enough space for smooth functioning of daily operations, receiving and dispatch are done through same area which often leads to problems in repackaging of dispatch orders

2) Due to space constraint the product of Bosch are not stacked properly and warehouse layout and product binning is difficult owing to this.

3) There are two warehouses in vicinity of each other in mandolin area one is centralized warehouse and other is warehouse of C&F agent foe Delhi region.

4) There is a huge problem of excess billing by the company and due to this large amount of goods which are supposedly sold/ordered by customers are back logged in warehouse of mandolin which posse’s additional potential risk of stock damage in the warehouse.

5) Most of the operation is case in case out but consolidation is also done in high value SKU but since the receiving and dispatch area is same hence there is many confusion while doing consolidation of orders

6) Stock audit is carried out every month and whenever it is done the supervisor read the whole part no. and then they check for the material in the inventory.

7) Mostly CNG Vikram is used for the transportation purpose of stocks to dealers as most of the distributors are situated in kashmeere gate area of Delhi and lorry’s cannot go in that area.

8) Space problem has risen mainly due to Bosch’s increasing the no. of SKU but no corresponding increase in warehouse space by Bosch.

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Recommendation1) There are presently two warehouses in the vicinity of each other, instead of

this there should be only one warehouse which has enough space and all facilities to handle the operations of Bosch

2) M.J. should extend pay per use plan to Mandoli region so as to discourage the use of excess billing.

3) Presently to utilize space more efficiently they should use racks

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