Summer Internship Program

A REPORT
ON

BUSINESS PROCESS REENGINEERING

FOR IMPLEMENTING
WAREHOUSE MANAGEMENT SYSTEM

By
Manoj Banshilal Pachouri
05BS 1741
ICFAI Business School
Bangalore
 A REPORT

ON

BUSINESS PROCESS REENGINEERING

FOR IMPLEMENTING
WAREHOUSE MANAGEMENT SYSTEM

By
Manoj Banshilal Pachouri
ICFAI Business School
Bangalore

A report submitted in partial fulfillment of the requirements of

MBA program of
ICFAI Business School

Submitted To
Faculty guide Company Guide
Prof. Bharat Kantharia Mr. Sharad Jobanputra
ICFAI Business School Fairdeal Distribution Services Pvt. Ltd.
Ahmedabad Ahmedabad
Fairdeal Distribution Services Pvt. Ltd.
311, Shiromani,
Surendra Mangaldas Road,
Ahmedabad – 380 015
India
Phone: 00 91 79 55215456 (3 Lines)
Fax: 00 91 79 26753551
Email: [email protected]
Website: www.fairdeal.org

May 15, 2006

CERTIFICATE

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. Manoj Banshilal Pachouri has successfully completed the Project work,
assigned to him at Fairdeal Distribution Services Pvt. Ltd., as part of the requirement in the MBA
Curriculum of ICFAI Business School under my guidance and supervision.

He has worked on the project titled Business Process Reengineering for Implementing
Warehouse Management System during the period February 2006 – May 2006.

This project is done for partial fulfillment of the M.B.A. program from the aforesaid institute.

I wish him all the best in his future endeavors and career.

Yours truly,
FAIRDEAL DISTRIBUTION SERVICES PVT. LTD.,

Sharad Jobanputra
Managing Director

Manoj Banshilal Pachouri i ICFAI Business School

 DECLARATION

I declare that the project entitled “BUSINESS PROCESS

REENGINEERING FOR IMPLEMENTING WAREHOUSE
MANAGEMENT SYSTEM” conducted at Fairdeal Distribution
Services Pvt. Limited is a record of independent research work
carried out by me during the academic year 2005-06 under the able
guidance of my faculty guide Professor Bharat Kantharia of ICFAI
Business School, Ahmedabad, and my project guide Mr. Sharad
Jobanputra, promoter and Managing Director of Fairdeal Distribution
Services Pvt. Ltd. (www.fairdeal.org)

I also declare that this project is the result of my effort and has not
been submitted to any other University or Institution for the award of
any degree, or personal favor whatsoever. All the details and analysis
provided in the report hold true to the best of my knowledge.

Place: Ahmedabad Manoj Banshilal Pachouri

Date: 10th May 2006 ICFAI Business School

Manoj Banshilal Pachouri ii ICFAI Business School

 Acknowledgements

The satiation and euphoric that accompany the successful completion

of task, would be incomplete without the mention of the people who
made it possible.

After all, success is the epitome of hard work, severance, undeferred

missionary, zeal, steadfast determination and most of all encouraging
guidance. So, with immense gratitude, I acknowledge all those whose
guidance and encouragement served as a “beacon light” and crowned
my efforts with success.

I sincerely thank Mr. Sharad Jobanputra, honorable Promoter and

Managing Director of Fairdeal Distributors Pvt. Ltd. and my company
guide for giving me an opportunity to take up this project. I thank him
for being a constant source of inspiration, mentor and above all for his
encouragement. His 30 years of experience in Sales and Distribution
was itself a great source of knowledge and information for me. Despite
his demanding schedule, he bestowed every possible facility to me; so
as to carry on the project work without any encumbrance.

I would like to express my profound sense of gratitude to Professor

Bharat Kantharia - ICFAI Business School, Ahmedabad, and my
project guide for guiding me as well as providing me the support to
conduct this project. This IIM-A graduate with his more than 20 years
of work experience in ERP implementation and Business Process Re-
engineering has all the tools required to guide a student.

I would like to extend my warm salutations to Professor Ravi

Warrior, my Marketing faculty at Bangalore campus and Mr.
Rajkumar of Sequel Pvt. Ltd. for his guidance and encouragement in
getting this project.

With a deep sense of gratitude and indebtedness, I sincerely and

whole-heartedly thank my fellow colleagues and the staff team at
Fairdeal Distribution Services Pvt. Ltd. for giving me value suggestions
and advice throughout the execution of the project. This project would
not have been concluded successfully within time without their support
and help.

Manoj Banshilal Pachouri iii ICFAI Business School

I would be selfish if I do not mention names of Mr. Zankar; Mr.
Hemant & Mr. Aashish of Titan watches; Mr. Sunil Patel of Bharati
(Motoroala); Mr. Pravin of Amara Raja Batteries; Mr. Narendra of TVS
Motors; Mr. Vinod of Tata Tea; Mr. Saurabh of Voltas; and many other
who gave me their valuable time from their busy schedule to help me
in studying the business processes at Fairdeal Distribution Services
Pvt. Ltd.

I take this opportunity to thank all the library members of ICFAI

Business School, Ahmedabad, friends, and my seniors who provided
me with the study material on my project.

Last but not the least; I thank my parents, Late Shri Banshilal
Pachouri and Ms. Dhanvanti Devi, for bringing me up in a
successful environment and teaching me all the basic etiquettes and
ethics required for my growth in an organization.

Manoj Banshilal Pachouri

05BS 1741
ICFAI Business School

Manoj Banshilal Pachouri iv ICFAI Business School

 Me @ FAIRDEAL

I am among the few professionals who are

privileged to get their dream project. It was
always my dream to work on an ERP and BPR
project in my SIP and Fairdeal provided me this
opportunity.
Working with the Fairdeal I have been able to
understand some of the best logistics and
clearing & forwarding industry practices that
they follow. Around four month of my work
exposure gave me tremendous insights into the companies operations.

At the Fairdeal, I got the opportunity to understand the supply chain

and logistics operations of many industries namely, Automobile
industry, Horology industry, Foods and snacks industry, Electronic
home appliances industry, Telecommunications industry and Paint
Industry. Some of the companies I studied in these industries are
Titan, Tanishq, Voltas, TVS Motors, MRF paints, MICO Bosch, Bharati
Teletech, Motorola, Tata tea, Bell ceramics, McFills foods, BPL Sanyo,
Amara Raja Batteries etc.

My Interaction with Area Sales Managers (ASM), dealers, branch

managers (BM) and other top management of these companies
stretched my thinking nerves and gave me new perspective of looking
at corporate world’s real time situations. I also got opportunity to
spend some time with Mr. Pawas Agarwal; Tata tea regional manager
for west zone during my project.

In a very systematic manner training was offered to me. Planning

Scheduling and deadlines are a part of every working individual and
that’s exactly what was expected of me. Though the time was clearly
sketched out to me, I was given complete freedom with the style of
working.

Apart from external industry exposure, Fairdeal’s management and

staff was not less than a gurukul for me. Mr. Sharad Jobanputra’s
guidance with more than years of industry experience and his deep
knowledge of various fields was more than any business school
lecture. Fairdeal’s staff was also equally capable with industry
experience in range of two to ten years.

Manoj Banshilal Pachouri v ICFAI Business School

During entire internship period I was asked to report at the end of
every phase that I complete. These reports covered my basic
understanding of the issue and then methodology that used for the
analysis. This enhanced my knowledge to great extent and triggered in
me the curiosity to know more on the subject.

The prospectus of association with Fairdeal Distribution Services Pvt.

Ltd. is always near to my heart. This will steer me to make myself
competent enough and excel in whatever I do.

In short, it was a knowledge enhancing and curiosity quenching

experience that will linger in my heart.

Manoj Banshilal Pachouri vi ICFAI Business School

 Table of Contents

CERTIFICATE ................................................................................. i
DECLARATION ............................................................................ ii
Acknowledgements .................................................................... iii
Me @ FAIRDEAL.......................................................................... v
Table of Contents...................................................................... vii
List of Figures............................................................................. x
List of Tables............................................................................. xi
Acronyms and Abbreviations....................................................... xii
Abstract..................................................................................... 1
Executive Summary .................................................................... 3
INTRODUCTION ....................................................................... 6
Objectives of the Project ........................................................... 6
Scope of the project ................................................................. 7
Limitations of the Study............................................................ 8
Proposed Methodology.............................................................. 9
Detailed tasks to be performed ................................................ 11
Project Schedule.................................................................... 15
INDUSTRY ANALYSIS ............................................................. 16
Logistics Industry .................................................................. 16
Legal Issues in Logistics Industry........................................... 18
Third party logistics ............................................................. 19
Third Party Logistics Industry: SWOT Analysis ......................... 23
Fourth Party Logistics (4PL) Industry...................................... 24
In-plant Stores Outsourcing .................................................. 25
Vendor Owned Inventory Management ................................... 25
Warehousing....................................................................... 26
Material Handling ................................................................ 26
Reverse Logistics (Returns Management) ................................ 27
Clearing and Forwarding Agents ............................................ 29
ABOUT FAIRDEAL ................................................................... 30
Vision, Mission and Business Objectives .................................... 31
History ................................................................................. 32
Directors .............................................................................. 32
Independent Directors ............................................................ 33
Business Focus ...................................................................... 34
Product Range....................................................................... 34
Locations.............................................................................. 35
Distribution Network .............................................................. 36
Awards and Achievements ...................................................... 37

Manoj Banshilal Pachouri vii ICFAI Business School

 Client Companies................................................................... 37
Voltas ................................................................................ 37
Titan Industries ................................................................... 39
Tata Tea ............................................................................ 41
Amara Raja Batteries Limited (ARBL) ..................................... 43
TVS Motors......................................................................... 44
Motors Industry Company Limited (MICO)............................... 46
Bell ceramics ...................................................................... 48
Bharti Teletech.................................................................... 49
MRF Ltd ............................................................................. 51
PROCESS ANALYSIS ............................................................... 53
Processes and the Organization ............................................... 54
Sources of Data Collection .................................................... 54
Organization Structure of Fairdeal.......................................... 55
Remuneration claimed by CFA ............................................... 56
Company Wise Processes ........................................................ 57
ABC ANALYSIS ....................................................................... 81
Definition of ABC Analysis ....................................................... 82
Value Wise ABC Analysis......................................................... 83
Quantity Wise ABC Analysis..................................................... 87
Transactions Wise ABC Analysis ............................................... 91
AS-IS ANALYSIS .................................................................... 95
Definition of AS-IS Analysis..................................................... 96
Decide on an approach ........................................................... 99
Cycle Time, Wait Time measurements .................................... 100
Process Matrices [Key Performance Indicators (KPIs)]............... 103
Goods Receiving Process....................................................... 104
Storing Material Process ....................................................... 108
Cycle Count Process ............................................................. 112
Order Punching Process ........................................................ 115
Order Approval Process ........................................................ 118
Invoice/ Bill Printing/ Stock Transfer Process ........................... 121
Dispatching Process ............................................................. 123
Transportation Process ......................................................... 126
Handling Unsalable Material Process ....................................... 129
Handling Warranty Claims Process ......................................... 132
Stock Maintenance Process ................................................... 134
Initial Issues Emerged Out Of AS-IS Analysis........................... 138
Other Notes from Interviews ................................................. 140
TO-BE ANALYSIS .................................................................. 141
Preparation for Implementing Re-Designed Processes ............... 143
Assembling Warehouse Data ............................................... 143
Warehouse Layout ............................................................. 144

Manoj Banshilal Pachouri viii ICFAI Business School

 Specifying the Replenishment Sequence ............................... 146
Implementing Location Sequencing ...................................... 146
Generating Barcode Labels.................................................. 147
Import-Export Data To and From WMS ................................. 147
Synchronize Fairdeal WMS and Principal’s ERP Module ............ 148
To-Be Goods Receiving Process.............................................. 149
To-Be Storing Material Process .............................................. 152
To-Be Cycle Count Process .................................................... 154
To-Be Order Punching Process ............................................... 156
To-Be Order Approval Process ............................................... 157
To-Be Invoice/ Bill Printing/ Stock Transfer Process .................. 159
To-Be Dispatching Process .................................................... 161
To-Be Transportation Process ................................................ 163
To-Be Warranty Claims & Unsalable Material Process ................ 165
TO-BE Stock Maintenance Process.......................................... 166
SUGGESTIONS AND RECOMMENDATINS........................... 169
Characteristics of an Ideal WMS............................................. 170
Suggestions and Recommendations........................................ 174
Project Activity-Time Schedule.................................................. 182
APPENDICES ........................................................................ 185
APPENDIX A: Key staff involved in the project ......................... 185
APPENDIX B: Fairdeal’s Document Formats ............................. 186
APPENDIX C: Flowcharting Shapes ......................................... 193
REFERENCES ........................................................................ 194
Bibliography........................................................................ 194
Internet Sources.................................................................. 195
GLOSSARY ........................................................................... 196

Manoj Banshilal Pachouri ix ICFAI Business School

 List of Figures

Figure 1: The Implementation Process Model Project Plan ................. 9

Figure 2: Reverse Logistics Cycle ................................................ 28
Figure 3: Organization Structure of Fairdeal.................................. 55
Figure 4: Flowchart of Goods Receiving Process........................... 107
Figure 5: Flowchart of Storing Material Process ........................... 111
Figure 6: Flowchart of Cycle Count Process ................................. 114
Figure 7: Flowchart of Order Punching Process ............................ 117
Figure 8: Flowchart of Order Approval Process ............................ 120
Figure 9: Flowchart of Invoice/ Bill Printing/ Stock Transfer Process 122
Figure 10: Flowchart of Dispatching Process ............................... 125
Figure 11: Flowchart of Transportation Process ........................... 128
Figure 12: Flowchart of Handling Unsalable Material Process ......... 131
Figure 13: Flowchart of Handling Warranty Claims Process............ 133
Figure 14: Flowchart of Stock Maintenance Process...................... 137
Figure 15: Warehouse Layout ................................................... 144
Figure 16: Flowchart of TO-BE Goods Receiving Process ............... 151
Figure 17: Flowchart of TO-BE Storing Material Process ................ 153
Figure 18: Flowchart of TO-BE Cycle Count Process ..................... 155
Figure 19: Flowchart of TO-BE Order Approval Process ................. 158
Figure 20: Flowchart of TO-BE Invoice/ Stock Transfer Process...... 160
Figure 21: Flowchart of TO-BE Dispatching Process ...................... 162
Figure 22: Flowchart of TO-BE Transportation Process.................. 164
Figure 23: Flowchart of TO-BE Stock Maintenance Process ............ 168
Figure 24: Format of Gate Pass of Fairdeal ................................. 186
Figure 25: Format of Invoice .................................................... 187
Figure 26: Format of Advance Intimation of Warranty Return ........ 188
Figure 27: Format of Lorry Receipt (LR) of Fairdeal ...................... 189
Figure 28: Format of Lorry Receipt obtained by Fairdeal ............... 190
Figure 29: Format of Warranty Replacement Delivery Challan ....... 191
Figure 30: Format of Warranty Return Delivery Challan ................ 192
Figure 31: Flowcharting Shapes ................................................ 193

Manoj Banshilal Pachouri x ICFAI Business School

 List of Tables

Table 1: Project Schedule........................................................... 15

Table 2: SWOT Analysis of 3PL Industry ....................................... 23
Table 3: Product Range of Fairdeal .............................................. 34
Table 4: Some examples of Titan watches .................................... 59
Table 5: ABC Analysis - Value Wise ............................................. 86
Table 6: ABC Analysis - Quantity Wise ......................................... 90
Table 7: ABC Analysis - Transaction Wise ..................................... 94
Table 8: Unloading times of Transport Vehicles ........................... 100
Table 9: Loading & Unloading times in TVS (With four labors) ....... 101
Table 10: Ideal Unloading times (with four labors)....................... 101
Table 11: Fairdeal’s Unloading times.......................................... 102
Table 12: Summary of Metrics .................................................. 103
Table 13: Goods Receiving Process ............................................ 106
Table 14: Storing Material Process............................................. 110
Table 15: Cycle Count Process .................................................. 113
Table 16: Order Punching Process ............................................. 116
Table 17: Order Approval Process.............................................. 119
Table 18: Invoice/ Bill Printing/ Stock Transfer Process ................ 121
Table 19: Dispatching Process .................................................. 124
Table 20: Transportation Process .............................................. 127
Table 21: Handling Unsalable Material Process ............................ 130
Table 22: Handling Warranty Claims Process............................... 132
Table 23: Stock Maintenance Process......................................... 136
Table 24: AS-IS Analysis -Important issues with priorities ............ 138
Table 25: Example of Location Sequence Numbers ...................... 146
Table 26: TO-BE Goods Receiving Process .................................. 150
Table 27: TO-BE Storing Material Process ................................... 152
Table 28: TO-BE Cycle Count Process ........................................ 154
Table 29: TO-BE Order Approval Process .................................... 157
Table 30: TO-BE Invoice/ Bill Printing/ Stock Transfer Process....... 159
Table 31: TO-BE Dispatching Process ......................................... 161
Table 32: TO-BE Transportation Process..................................... 163
Table 33: TO-BE Stock Maintenance Process ............................... 167
Table 34: Project Activity-Time Schedule.................................... 182
Table 35: Gantt chart of Project Activity-time Schedule ................ 183
Table 36: Organizational responsibility ....................................... 184
Table 37: Key Staff Involved In the Project................................. 185

Manoj Banshilal Pachouri xi ICFAI Business School

 Acronyms and Abbreviations

BPR : Business Process Engineering

ERP : Enterprise Resource Planning
WMS : Warehouse Management System
WIP : Work In Progress
GRN : Goods Received Note
STM : Stock Transfer Memo
ASN : Advance Shipment Notice
LR : Lorry Receipt
FMCG : Fast Moving Consumer Goods
SD module : Sales and Distribution Module
DD : Demand Draft of a Bank
E-ARIMS : electronic – Amara Raja Inventory Management System
VAT : Value Added Tax
AGVS : Automated Guided Vehicle System
AIDC : Automatic Identification Data Capture
APS : Advanced Planning and Scheduling
ASRS : Automated Storage & Retrieval System
CPFR : Collaborative Planning, Forecasting & Replenishment
CTM : Cycle Time Management
RSP : Rolling Sales Plan
VOI : Vendor Operated Inventory
SKU : Stock Keepting Unit

Manoj Banshilal Pachouri xii ICFAI Business School

 Abstract

More and more organizations worldwide want to develop products for

global markets. At the same time, they need to source material
globally to be competitive. One of today's trends to solve this problem
is outsourcing logistics or using third-party logistics (3PL) to manage
complex distribution requirements.

Organizations have developed strategic alliances with 3PL companies

all over the world to manage their logistics operations network. These
alliances are also known as logistics or supply chain outsourcing and
contract logistics. This is also known as Clearing & Forwarding.

This project titled “Business Process Reengineering for Implementing

Warehouse Management System” aims at improving efficiency of
business processes being used at Fairdeal Distribution Services Pvt.
Ltd. by implementing an Enterprise Resource Planning (ERP)
Warehouse Management System (WMS) Module.

Project took off with studying all the processes being carried out at
Fairdeal warehouse. After thorough discussions with Fairdeal’s
management and on the basis of need analysis, total eighteen
processes and sub-processes were short-listed for detailed study; out
of which, ten processes were selected for AS-IS Analysis phase which
included Goods receiving, Storing, Cycle Count, Order punching, Order
Approval, Invoice [refer to format of Invoice in APPENDIX B] printing,
Dispatching, Transportation, Handling unsalable material and Handling
warranty claims.

Result of AS-IS Analysis revealed activities in certain processes were

not at par with industry standards and needed improvement. Some
activities were acting as bottlenecks and needed restructuring.

For example: It was found that serial numbers were being scanned at
the time of dispatching the material which was delaying both
dispatching time as well as order cycle time.

In the next phase, TO-BE Analysis was taken up for eight processes
which required re-engineering. These processes were benchmarked
with best practices of warehousing and clearing & forwarding industry.

Manoj Banshilal Pachouri 1 ICFAI Business School

Demonstrations of third party warehouse management systems (WMS)
were attended to get best industry warehousing practices and
interviews were organized to observe the expectations of the end user.
Some of WMS softwares, I studied during this project are Intelliwms
from IntelliTrack etc.

Based on industry’s best practices and findings of AS-IS Analysis, A

detailed process restructuring plan was made and recommendations
were given to Fairdeal’s management. Some of the suggestions
implemented by Fairdeal are as follows:

• Scan barcode numbers at the time of storing the material and not
at the time of dispatching.

• Pre-plan the arrival of Goods-In-Transit and keep the space ready

for arriving material.

• Pick slip will be generated at the time of invoice printing which

would be helpful in locating material in the warehouse. This pick slip
will include item codes, location codes and quantity.

• Fairdeal’s staff should develop cross-functional and cross-company

knowledge of different softwares and packages. Each employee
should have knowledge of at least two softwares. This would reduce
errors in times of absentees and attritions.

It is estimated that these recommendations after being implemented

will enhance operations of Fairdeal to a great extent. Efficiency of
processes will increase, dependency on specific employee will
decrease, cycle time of orders will decrease and space utilization will
also increase.

Manoj Banshilal Pachouri 2 ICFAI Business School

 Executive Summary

Hello, I am Manoj Banshilal Pachouri*.

I did my S.I.P. with Fairdeal Distribution Services Pvt. Ltd.

(www.fairdeal.org) from February 13th 2006 to May 20th 2006.

I was assigned the task of doing Business Process Re-engineering

which helped the company improve efficiency of its business
processes. Findings and recommendations of this project were very
useful during implementation of Warehouse Management System.

Profile/ Key Result Area

• Understanding processes in logistics industry
• AS-IS Analysis to find out current processes being carried out
• Interacting with process users to understand their needs
• TO-BE Analysis to benchmark best processes in logistics industry
• Pointing out issues and suggesting recommendations
• Documenting every activity during project

Reporting: I reported to Mr. Sharad Jobanputra who is founding

promoter and managing director of Fairdeal Distribution Services Pvt.
Ltd. A copy of report was submitted to faculty guide Mr. Bharat
Kantharia as well as top management of the company.

Team Constitution: This project was solely undertaken by me under

guidance of company guide Mr. Sharad Jobanputra and faculty guide
Mr. Bharat Kantharia. All the employees and some customers of
Fairdeal were indirectly (but very closely) involved.

How did I apply my learning at IBS?

During this project, my learning in classroom, especially classes of ITM
and Operations Management, proved to be very useful. This project
was so closely related to these two subjects that I had to implement
most of my learning in Supply Chain Management, Cycle times,
Enterprise Resource Planning etc.

Manoj Banshilal Pachouri 3 ICFAI Business School

This resemblance between SIP project and my learning at IBS helped
me completing this project without much hurdles and with in given
time limit.

Learning during SIP: This project proved to be my dream project as

I learnt a lot of ERP and BPR fundamentals and concepts during this
project. Though I had work experience of five years in field of software
developing and marketing but this project exposed me to a new field
of supply chain management and third party logistics to implement
Information Technology in clearing and forwarding and warehouse
management industry.

I leant Microsoft Visio 2003 to draw flowcharts during AS-IS Analysis

phase of this project. This project also developed my professional
personality by teaching me team building, group dynamics, negotiation
skills, business communication skills, time management and corporate
ethics.

Some of the Software packages and tools I used during the course of
this project are:
• Microsoft Visio 2003 for drawing flowcharts
• Adobe Nero Express 6.0 for writing data on Compact Disk (CD)
• Adobe Photoshop 6.0 for editing images
• Adobe Acrobat 7.0 Professional for converting word document into
PDF format
• Adobe Acrobat 5.0 for reading PDF documents
• HP Scanner for scanning documents
• Microsoft XP Paint for converting bitmap format to picture format
• Microsoft Notepad for writing notes
• Microsoft XP Word for documentation
• Microsoft XP Excel sheets for calculation and charts
• Microsoft XP Power point for making presentations
• Internet Explorer 6.0 for surfing internet
• WinZip 9.0 for archiving files

Manoj Banshilal Pachouri 4 ICFAI Business School

I owe my deep respects and regards to Mr. Sharad Jobanputra
(Company Guide) and Mr. Bharat Kantharia (Faculty Guide) who
provided me wonderful ambience to learn through out this project.

Preparation/ Achievements/ Recognition: I began preparing for

the project even before writing my semester II exams (31st Jan 2006 –
04th Feb 2006), that helped a lot. I used to surf supply chain
management and logistics websites to understand third party logistics,
Clearing & Forwarding and Warehousing industry. I used to discuss
intricacies of business processes and BPR with my faculties of
Information Technology for Managers and Operations Management.

My report was highly appreciated by Fairdeal’s management as well as

my Company Guide Mr. Bharat Kantharia. Findings of this project will
be used as an important document for developing Warehouse
Management System (WMS) for Fairdeal Distribution Services Pvt. Ltd.
and documentation of this project would be used to train and equip
employees of Fairdeal with best industry practices.

* Manoj Banshilal Pachouri, age 25 years, is a student of class of 2007

at IBS Bangalore. Prior to his MBA he was working as a software
developer in Ahmedabad at .NET platform (C#.NET, VB.NET). He
wants to be known as an ERP and BPR consultant and is deeply
inspired by Mr. Jayant Chawala of SAP Labs who is a famous name in
ERP implementation world.

Manoj Banshilal Pachouri 5 ICFAI Business School

 INTRODUCTION

Objectives of the Project

Process Mapping
• To find common processes across principal companies.
• To find specific processes related to each company.
For Example: Orders punched on internet; dispatch strictly on FIFO
basis etc.

Process Improvement
• To compare current processes of Fairdeal Distribution Services Pvt.
Ltd. with benchmarked processes.
For Example: Automating FIFO (First-In-First-Out); Handling
multiple MRP during price revision, Inspection stock etc.
• To suggest refinement or changes in the processes.
T

Process Standardization
• To standardize processes of Fairdeal Distribution Services Pvt. Ltd.
by studying their activities.
• To prepare process flow charts and process matrices after
performing ‘AS-IS’ Analysis and ‘TO-BE’ Analysis.

Implement Warehouse Management System (WMS)

Prepare a blueprint on how to incorporate the various processes into
software, which then forms the base document for developing the
WMS for Fairdeal Distribution Services Pvt. Ltd.

Manoj Banshilal Pachouri 6 ICFAI Business School

Scope of the project

The scope of this project extends to learning about latest

developments and best practices in Supply Chain Management,
Logistics, Sales & Distribution, Warehousing and Material Management
practices. It will cover many industries like Automobiles, Watches,
Paints, Home Appliances, and Telecommunication etc.

• Identifying, mapping, measuring, objectively analyzing and

improving business processes and practices within enterprise and
across enterprise boundaries with customers, suppliers and
business partners.

• Findings of this project will be used as an important document for

developing Warehouse Management System (WMS) for Fairdeal
Distribution Services Pvt. Ltd.

• Documentation of this project would be used to train and equip

employees of Fairdeal with best industry practices.

• All the work done during this project is for the internal purposes of
Fairdeal Distribution Services Pvt. Ltd.

• As all the information is confidential and proprietary, the

presentations and reports including process flow maps of company
will not be available for public disclosure.

Manoj Banshilal Pachouri 7 ICFAI Business School

Limitations of the Study

Third party logistics (3PL) is an emerging area in India and hence not
much secondary data for Indian scenario is available for research
purpose.

• There is no ideal format of warehousing practices as they keep

changing from company to company and are dependent on certain
other parameters like type of goods handled, frequency of
transactions, mode of transport etc also.
• Employees at Fairdeal Distribution Services Pvt. Ltd. remain busy in
their daily chores and hence it is difficult to get their time for
understanding processes they are handling.

• Since this project involves interacting with labors and store keepers
who are relatively less aware of research projects, it is time
consuming to convince them to participate and cooperate in surveys
and interviews of the project.

• Some processes are carried out, partially or fully, at different

locations like unloading goods, marking labels and storing goods
are performed simultaneously. Hence it is not practically possible to
go through entire process in one go.

• Some activities like receiving goods and scanning material are

dependent on external factors like goods can be received only when
lorry comes to depot. These external factors might increase time to
analyze processes.

Manoj Banshilal Pachouri 8 ICFAI Business School

Proposed Methodology

Figure 1: The Implementation Process Model Project Plan

This project will be carried out in four phases namely –

AS-IS Analysis
TO-BE Analysis
Process Mapping and
Findings and Recommendations

Manoj Banshilal Pachouri 9 ICFAI Business School

These four phases will include Studying, Analyzing, Mapping,
Redesigning and Implementing the various processes of Fairdeal
Distribution Services Pvt. Ltd. Description of various phases is as
follows –
1. Define the process and establish its boundaries, do initial data
gathering (e.g. organograms, operational plans, existing process
maps, performance measures), develop high-level problem
hypotheses.

2. Document the "AS-IS" process, refine the problem hypotheses,

establish Key Performance Indicators (KPIs), measure baseline
KPIs, draw-up opportunity charts for benefits.

3. Design the "TO-BE" process, revise the process flows and define
any additional interventions required, establish benefits targets,
carry out gap analysis (skills, costs), do micro-organization
design, define roles and responsibilities (RACI).

4. Run a pilot implementation where there are significant

uncertainties about aspects of the new process or the
organizational design, use this to adjust process flows, validate
benefits, and develop implementation plans.

5. Implement. Put new organizational design in place, carry out

training, establish performance measurements (KPIs, benefits
tracking), set up Service Level Agreements (SLAs), and hand
over to line management.

Manoj Banshilal Pachouri 10 ICFAI Business School

Detailed tasks to be performed

1. What are organizations

• People
• Process
• Controls
• Structure

2. Processes and Organizations

• The functional decomposition

• Relating processes and organizations
• Identifying who does the work
• Relating people to processes
• Assessing the impact of various types of automation

3. Processes And Documents

• The document flow concept

• Document flow techniques
• Measuring document flows
• The process context of documents
• The document context of processes

4. Processes and Locations

• The location model

• Identifying where the work is done
• Relating people to processes
• Assessing the impact of location change

Manoj Banshilal Pachouri 11 ICFAI Business School

 5. Processes and Technology

• The technology model and architecture

• Relating processes and technology
• Relating technology to processes
• Assessing the impact of technology change

6. Process Measurement

• Types of measures
• Matching the measures with flow types
• Measures and maps
• ‘AS IS’ and ‘TO BE’ measurement
• Measure cycle time, queue time, resource utilization
• Process quality and measures
• Measures and best practices

7. Workflows

• Workflow concepts
• Workflow techniques
• Measuring workflows
• Building complex workflows

8. Using the Time Lens

• Gathering cycle time, process time, and wait time

• Identifying value-adding activities

Manoj Banshilal Pachouri 12 ICFAI Business School

 9. The ‘AS IS’ Process Suite

• Identifying the core processes

• Identifying opportunities for improvement
• Identifying new process opportunities
• Defining key process requirements
• Organizing the ‘As Is’ document
• Preparing the ‘To Be’ input

10. Process maps and the level of detail

• Macro level flow chart

• Functional-activity level flow chart
• Task and procedural level

11. The ‘TO BE’ Process Suite

• Designing new processes

• Revising old processes
• The integration method and process
• Integrating multiple processes
• Vertical and horizontal integration
• Integrating across business partners

12. Migration and Transformation

• Identifying the process transformations

• Assessing the migration of enablers
• Identifying sensitivities
• Assessing alternatives
• Preparing the migration plan

Manoj Banshilal Pachouri 13 ICFAI Business School

To complete above mentioned tasks other activities that will be
performed will include -
¾ Collecting the artifacts regarding the Logistic and Warehousing.
¾ Personal interviews with warehouse staff.
¾ Preparing a document which will capture all the processes of
Logistics, Warehousing and Material Management.
¾ Integrating all the data collected and preparing a knowledge bank.
¾ Preparing process flowcharts and maps and finding out processes
that need to be redesigned.
¾ Proposing recommendations based on the findings of the project.

Manoj Banshilal Pachouri 14 ICFAI Business School

Project Schedule

Table 1: Project Schedule

Date Description
16-02-06 Learning Processes and Organization
18-02-06 Introduction with warehouse and its staff
20-02-06 Learning Processes and Technology
21-02-06 Process Measurement
21-02-06 Understanding Workflows
28-02-06 Gathering cycle time, process time, and wait time
08-03-06 Complete process matrices
18-03-06 Complete “AS-IS” Analysis
25-03-06 Point out the processes which need improvement
02-04-06 Finish personal interviews with warehouse staff
04-04-06 Design new processes
10-04-06 Integrate multiple processes
21-04-06 Complete “To-Bo” Analysis
25-04-06 Identifying Process Gaps
10-05-06 Complete Industry Interaction to get best practices
15-05-06 Document all the findings of the project

Manoj Banshilal Pachouri 15 ICFAI Business School

 INDUSTRY ANALYSIS

Logistics Industry

Logistics is a part of supply chain and is defined as "the process of

planning, implementing and controlling the efficient, effective flow and
storage of raw materials, in-process inventory, finished goods, services
and related information right from the point of origin to the point of
consumption (including inbound, out bound, internal and external
movements) in order to satisfy customer's requirements.

Logistics is also defined as time related positioning of resources. The

whole concept of Logistics is based on 7 R's which are:-
• Right Place
• Right Time
• Right Quantity
• Right Quality
• Right Price
• Right Condition
• Right Customer

Logistics activities, as a part of Supply Chain Management comprises

of the following:
• Purchase and Supply
• Material Handling
• Production Planning
• Production Control
• Transportation
• Storage
• Distribution
• Product Management
• Installation and Servicing
• Strategic Management

Manoj Banshilal Pachouri 16 ICFAI Business School

A well designed Logistics chain is expected to support the strategic
objectives of:
• Reduced Costs
• Shorter Lead Time
• Flexibility
• Enhanced Service
• Better Product Availability
• Better Product Reliability

The best configuration of the chain will vary from individual chain to
chain and individual organization to organization. But, in all the case
the architecture of the chain would include the following three
elements - System, Technology, Relations.

For example: In a manufacturing industry, Logistics plays a key role in

Supply Chain Management as there is a strong inter-play of activities
starting from raw materials till the finished goods. In all the activities
there is a flow of goods whether it is raw materials or WIP or semi-
finished goods or finished goods. Logistics plays a significant role in
the management of entire supply chain.

The pre-requisite infrastructure required to provide logistics solutions

are:

• Land and Building (Warehouse)

• Trained Manpower
• Material Handling Equipments
• Hardware and Software
• Transport Network
• Vendors
• Consultants

Manoj Banshilal Pachouri 17 ICFAI Business School

Legal Issues in Logistics Industry

There are some legal issues involved with the operations of Supply
Chain, Logistics, Warehousing and Clearing & Forwarding. Some of the
legal issues involved are:
• Conforming and non-conforming areas: Warehouses and
transport locations can not be set up in residential areas and are
not permitted by law.
• Excise Duty: This is the tax payable at the factory location on
the value of products manufactured by the company. This tax
varies on product to product basis.
• Local Taxes: These taxes include local sales taxes, Octoroi taxes,
road taxes etc.
• Labor Acts: According to these acts, minimum wage has to be
given to every labor under Wages Act. Also, minimum of 8.33 %
of annual salary of worker has to be awarded as bonus.
• Pollution Act: Logistics activities should not pollute the
environment which may harm social set up.
• Industry Act: Being in distribution and transportation industry,
every logistics provider will have to comply with distribution and
transportation industry regulations.
• Fire Act: Insurance claims and damages due to fire come under
Fire act. Material can be insured against fire up to dealer’s point
or up to CFA point.
• Sanctions from appropriate bodies: There are many central and
local bodies whose permission is required to carry out logistics
operations. Transporter’s unions, Municipal Corporation are some
of the examples.

Manoj Banshilal Pachouri 18 ICFAI Business School

How is logistics different from transportation?
Transportation is physical movement of goods (inbound and outbound)
as well as picking up of products as per customers order and delivering
it to the ultimate user whereas Logistics encompasses several
activities related to supply chain management such as planning,
implementing and controlling the efficient, effective flow and storage
of raw materials, in-process inventory, finished goods, services and
related information, in which transportation is a major element in the
entire chain.

Third party logistics

Third party logistics is the activity of outsourcing activities related to

Logistics and Distribution. The 3PL industry includes Logistics Solution
Providers (LSPs) and the shippers whose business processes they
support.

Third Party Logistics (3PL) companies or Clearing & Forwarding Agents

(C&FA) all over the world have become important channel in Supply
Chain Management (SCM) and Sales & Distribution (SD) to manage
logistics operations network.

Level of outsourcing of in-plant logistics and third party logistics is

mainly of following types:

Levels of Outsourcing
• Transactional Outsourcing: Based on transactions, with no long
term contracts and no bonding between the 3PL and the
outsourcing company.
• Tactical Outsourcing: Outsourcing on a long term basis with
negotiated contacts and integrated IT systems to facilitate free
information flow and create supply chain visibility.
• Strategic Outsourcing: Based on long-term relationships with
successful outcomes, 3PL companies become partners in supply
chain management and establish transactional transparency.

Manoj Banshilal Pachouri 19 ICFAI Business School

Why Use Third Party Logistics?
Main reason for outsourcing Logistics or Clearing & Forwarding
operations to third parties is that it allows manufacturing company to
concentrate on their core competencies. Some other reasons
companies opt for Third Party Logistics are following:
• To Save Time: Outsourcing the Logistics function can free up
resources to focus on core competencies.
• Resource constraints: In-house logistics and supply chain
management requires heavy investment in infrastructure,
transportation, warehousing and IT resources which might not be
possible for a medium sized or small sized company.
• Because Someone Else Can do it Better: Even if you have
resources available, another organization within the supply chain
may be able to do it better, simply because its relative position in
the supply chain, supply chain expertise and economies of scale.
• Cost saving/ cost optimization: Economies of scale and supply
chain and logistics expertise of dedicated third party logistics
provider may reduce the cost of logistics.
• To Share Responsibility: 3PL companies can share responsibility
for managing global supply chains, keeping customers and stores
properly stocked, and delivering the perfect order every time.
• To Re-Engineer Distribution Networks: Logistics outsourcing
can be a quick way to re-engineer distribution networks to meet
global market demands and gain a competitive edge.
• For more professional and scientific approach to logistical
problems: Logistics outsourcing reduces problems arisen of truck
accidents, Insurance claims, Octoroi claims, Sales tax filing, reverse
logistics etc which can be handled by 3PL very efficiently.
• Efficient management of inventory resulting in better
utilization of working capital: finished goods can be transferred
from one clearing & forwarding agent to other through stock
transfer for better movement of goods and hence better inventory
management.

Manoj Banshilal Pachouri 20 ICFAI Business School

3PL Is Growing
THE Indian logistics industry is poised for a significant growth in the
coming years as new companies, especially in the automotive,
pharmaceutical, and manufacturing and FMCG sectors are increasingly
opting to outsource their logistic requirements to specialized service
providers.

Industry analysts say that the key drivers for logistics outsourcing are
the corporate trend of focus on core operations, competitive pressure,
increasing global trade and MNCs investments in India.
Third party logistics service providers in India are gearing up to meet
the growth demand, incorporating value-addition in their services and
customizing their supply chain management solutions.

For example: Gati is planning to add new services in its portfolio, such
as transportation of clinical samples for pathological labs and medical
institutions and reverse logistics that involve movement of defective
products from the dealers back to the factory.

According to industry sources, by 2020, this industry is expected to

represent almost 30 per cent of the global air cargo with an average
annual growth rate of 10 per cent.

Indeed, a recent study on the logistics market by Frost & Sullivan has
estimated that the revenue of the logistics industry from the
manufacturing sector alone was $13.46 billion in 2003, with the
market likely to grow at a CAGR of 6.2 per cent during the next five
years. Chemicals, metal, FMCG, cement and textiles were identified as
the top five contributors to the revenues of the logistics industry.

In fact, the trend in the industry is towards the third party logistics
(3PL) concept — the market size for this category of service was
estimated at $250 million in 2003. The market for 3PL services is likely
to grow at a CAGR of 20.4 per cent during the next five years, with the
growth being fuelled by the entry of MNCs and export focus of Indian
companies. At present, the automotive, IT hardware and FMCG
companies are the major users of 3PL services.

In India the logistics costs are still higher than in the developed
markets — it is estimated to be around 13 per cent of GDP, against 9
per cent of GDP in the US. The transportation cost accounts for nearly
40 per cent of the cost of production, with more than half the goods in
India being moved by road.

Manoj Banshilal Pachouri 21 ICFAI Business School

One sector that is increasingly looking for outsourcing logistics is
textiles, especially as it is facing the challenges of exacting delivery
requirements and multiple export markets.
Analysts say that with large retailers such as Wal-Mart and Target
seriously evaluating new suppliers for textiles in India, this sector is
bound to outsource logistics in the coming years. Also, the retail
industry is expected to jump into the 3PL bandwagon, with such large
retailers as Shoppers Stop and RPG expanding to smaller cities.

Realizing the potential in the outsourced logistics market, 3PL service

providers are expanding their basket of services as companies are now
looking for more than just transportation of their products and raw
materials. The logistics firms are also focusing on related services such
as customer clearing and forwarding, inbound warehousing, labeling
and packaging, fleet management, order picking and inventory
management.

Source: The Hindu Business Line

Achieving Strategic Outsourcing

Unfortunately, only a few 3PL companies achieve strategic status with
their customers. They do it by constantly innovating and maintaining
operational integrity. Some use an open-book costing method to
demonstrate their system's transparency.

Manoj Banshilal Pachouri 22 ICFAI Business School

Third Party Logistics Industry: SWOT Analysis

Table 2: SWOT Analysis of 3PL Industry

STRENGTHS WEAKNESSES
• Quick way to re-engineer • Lesser control over outsourced
distribution networks third party activities.
• Enhanced distribution and • Lack of proper set of skilled
transportation Service man power
• Time Saving in servicing • Forged bills and claims by 3PL
customer provider agency.
• Flexibility in restructuring • Difficult to switch 3PL provider
distribution networks and agency.
expansion plans • Lesser co-ordination between
• Economies of scale in branch offices and 3PL agency.
distribution

OPPORTUNITIES THREATS
• Better utilization of working • Value Added Tax (VAT) might
capital effect 3PL industry as
distribution channels would be
• Fast expansion of principal’s
trimmed.
business without investing in
infrastructure and • Poor transportation
transportation resources infrastructure of India might
• Cost optimization as a result lower the profit margin
of fast and efficient processes • E-Commerce is emerging as a
primary threat to 3PL industry.
• Concentration on core
competencies • Threat of leakage of
operational competencies to
competitors.

Manoj Banshilal Pachouri 23 ICFAI Business School

Fourth Party Logistics (4PL) Industry

Fourth party logistics provider is a supply chain integrator that

assembles and manages the resources, capabilities, and technology of
its own organization with those of complementary service providers to
deliver a comprehensive supply chain solution to the client.
A standard 4PL supply chain solution involves four distinct steps:

Step I: Reinvention
At this level, the overall business strategy is aligned with supply chain
strategy to reengineer the supply chain of the participants.

Step II: Transformation

Here the focus is on coordinating specific supply chain functions such
as sales and operations planning, distribution management,
procurement strategy, customer support and supply chain technology,
with the aid of process and organizational changes, T&D, information
technology, etc. as applicable.

Step III: Implementation

The implementation is done on the basis of recommendations made at
the earlier two levels and the transition is put across to the 4PL
delivery team, taking special care to consider the dimension of human
resources and organizational change.

Step IV: Execution

A 4PL provider's scope of responsibility also includes operational
responsibility for numerous supply chain functions, besides the
traditional transportation management and warehousing operations
logistics outsourcing.

Manoj Banshilal Pachouri 24 ICFAI Business School

In-plant Stores Outsourcing

The in-house/in-plant stores activity is managed by a 3rd party

logistics provider (3PL), with clear & measurable objectives and
targets. Some of the benefits of In-plant stores outsourcing are:

• Focused & dedicated approach to stores function by skilled &

experienced warehouse personnel, leads to improved efficiency
• Increased control on service levels and inventory accuracy, as it is
directly linked to 3PL’s revenue

• Specialized labor management model gives substantial cost

reduction in terms of labor cost, along with tremendous flexibility
and improved efficiency

• Manufacturers can then focus and allocate their resources on

specialized areas like production, Design & Development etc.

Vendor Owned Inventory Management

With multiple supplier having different locations and lead times, it is

becoming increasing costly for manufacturers to ensure timely inputs
to production lines. VOI works on a pull based system, where the stock
ownership to manufacturer happens only when it is required to be
produced. Some of its benefits are:
• Reduced inventory holding cost, as the supplier holds the stock for
the principal company
• With the stock point in the vicinity of the manufacturer, timely
feeding to the production line can be done

• Your Supplier benefits by reducing his warehousing space, and

avoid last minute urgent shipments

• Replenishment model at the VOI warehouse helps supplier plan his

production in a better way

Manoj Banshilal Pachouri 25 ICFAI Business School

Warehousing

A warehouse is a point in the logistics system where a firm stores or

holds raw materials, semi-finished goods, or finished goods for varying
periods of time. It creates time utility for raw materials, industrial
goods and finished products. The proximity of market-oriented
warehousing to the customer allows a firm to serve the customer with
shorter lead times. This warehousing function continues to be
increasingly important as companies and industries use customer
services as a dynamic, value-adding competitive tool.

There are as many as 700 organizations in India engaged in the

business of clearing and forwarding.

Material Handling

Material Handling is the process of efficient short-distance movement

of goods that usually takes place within the confines of a building such
as a plant or a warehouse or between a building and a transportation
agency. Material Handling has four dimensions:

• Movement
• Time
• Quantity
• Space
Material Handling improves efficiency by making the logistics system
respond quickly and effectively to plant and customer requirements.
For efficient movement of goods into the warehouse, locating stock,
accurately filling orders, and rapidly preparing orders for shipment to
customers, materials handling is very important to outbound logistics.
In inbound logistics terms, materials handling serves company plants
in the same way. Firms need to integrate materials handling
requirements not only for the company's departmental needs, but also
for meeting their customers' needs.

Manoj Banshilal Pachouri 26 ICFAI Business School

Reverse Logistics (Returns Management)

Companies spend more time and money in fine-tuning their forward

supply chains while ignoring their backward supply chains. However, in
today's competitive business environment when there is both external
and internal pressure, companies can no longer ignore reverse supply
chains. Efficient reverse supply chains bring many benefits to the
companies. However, reverse supply chains are different from forward
supply chains and most of the existing forward supply chains are not
designed to handle reverse supply chains.

Though reuse of products and materials is a common phenomenon,

companies have long ignored this part of the supply chain, known as
reverse supply chain or backward supply chain. A common example of
reverse supply chain is the soft drinks bottles pickup and delivery
system, where soft drink bottles are returned and reused repeatedly

The Council of Logistics Management defined reverse supply chain as

"The process of planning, implementing and controlling the efficient,
cost effective flow of raw materials, in-process inventory, finished
goods and related information from the point of consumption to the
point of origin for the purpose of recapturing value or proper disposal."

As far as managing the returns are concerned companies re-use them,

re-sell them, leave them to a third party or destroy them. But
companies are more likely to benefit if they can also make use of the
information that comes back with returned merchandise.

Manoj Banshilal Pachouri 27 ICFAI Business School

Figure 2: Reverse Logistics Cycle

Reverse logistics also includes remanufacturing and refurbishing

activities, processing returned merchandize due to damage, seasonal
inventory, restock, salvage, recalls, excess inventory and recycling
programs, hazardous material programs, obsolete equipment
disposition, and asset recovery.

Manoj Banshilal Pachouri 28 ICFAI Business School

Clearing and Forwarding Agents

"Clearing and forwarding agent" has been defined as "any person; who
is engaged in providing any service, either directly or indirectly,
connected with clearing and forwarding operations, in any manner to
any other person and includes a consigning agent."

Normally, there is a contract between the principal and the clearing

and forwarding agent detailing the terms and conditions and also
indicating the commission or remuneration to which the C&F agent is
entitled. A clearing and Forwarding agent normally undertakes the
following activities-

(a) Receiving the goods from the factories or premises of the principal
or his agents;
(b) Warehousing these goods;
(c) Receiving dispatch orders from the principal;
(d) Arranging dispatch of goods as per the directions of the principal
by engaging transport on his own or through the authorized
transporters of the principal;
(e) Maintaining records of the receipt and dispatch of goods and the
stock available at the warehouse;
(f) Preparing invoices on behalf of the principal.

For their services rendered, the C&F agent receives commission or

remuneration which usually consists of two components:
o Minimum commission on a flat rate or turnover basis depending
on the packages/consignments handled;
o A variable commission based on performance which is computed
on the performance indicators agreed upon between the agent
and the principal. This is usually given as a percentage of the
turnover.
The above two constitute the remuneration or commission paid to the
C&F agent by the principal.

Manoj Banshilal Pachouri 29 ICFAI Business School

 ABOUT FAIRDEAL

Fairdeal Distribution Services Pvt. Ltd., a company incorporated and

registered in 1975 under the Companies Act, 1956 and having its
Registered Office at 431, Chetan Society, Bopal-Ghuma Road,
Ahmedabad, Gujarat, 380058, Republic of India (hereinafter referred
to as ‘Fairdeal’ which expression, unless repugnant to the context or
meaning thereof, shall mean and include its successors and permitted
assigns).

Fairdeal has represented that it has the requisite knowledge,

expertise, technical know-how, experience, resources, infrastructure
and intellectual property for the management, maintenance and
administration of all operations in Supply Chain Management Industry.

It has a dominating presence as a ‘Clearing & Forwarding Agent’.

Today, Fairdeal has invested heavily in infrastructure - warehouses
and vehicles - to provide effective, efficient and reliable services.

Keeping in mind the globalization of the industry and international

trends, it was decided in March 2004 to widen the scope of service
offering and move up in value chain. For this purpose Sequel Logistics
Pvt. Ltd. was established. On 1st April, 2004, Titan Industries
outsourced In-plant Logistics to both their plants, Hosur (Tamilnadu)
and Dehradun (Uttaranchal) to Sequel Logistics. And today our client
list includes Ashok Leyland, BPL Sanyo, Madura Garments, TVS Motor,
and Precision Engineering Division of Titan Industries, in addition to
Watch Division of Titan Industries.

Fairdeal has a modern, well laid warehouse of over 50000 sq ft at

Sharkhej in Ahmedabad, Gujarat. It is handling inbound logistics for
diamond for Titan Industries from Surat.

Currently, Fairdeal manages over 40,000 SKUs at 5 different locations.

Material handled by the group is valued at over Rs. 3000 Crores and
has employee strength of over 300 and also handles secondary
movement for which have over 25 dedicated vehicles.

Manoj Banshilal Pachouri 30 ICFAI Business School

Vision, Mission and Business Objectives

Vision
To constantly innovate, build and deliver superior supply chain
solutions, to achieve highest level of efficiency, speed and profits

Mission
To be the most preferred Supply Chain Solution Provider in India, by
offering innovative, comprehensive and customized solutions and
services

Business Objective
• To build and offer World Class Supply Chain services in the areas of
warehousing & distribution, inventory management, order
management and related IT solutions

• To deliver high Operational Efficiency and superior Customer

Service by:
o Constantly upgrading and adhering to World Class Systems
& Processes
o Placing emphasis on being Information / Data driven
o Emphasis on Technology (IT & Others)
o Being Customer focused, Transparent & Ethical

Manoj Banshilal Pachouri 31 ICFAI Business School

History

The first Group firm was established in 1975 and was carrying out
business in office equipments. In 1978, the firm started FMCG
distribution and was associated with The Tata Oil Mills Co. Ltd.,
Colgate-Palmolive etc.

The firms were into retail distribution of 'Fast Moving Consumer Goods'
for many years. Diversification came in 1987 by taking up 'Clearing &
Forwarding Agency' of TITAN. Since then Fairdeal has grown to
become a major 'Logistics Service Provider' in Gujarat and represents
over twelve clients in the state of Gujarat. It also manages secondary
freight for the clients.

Directors

• Sharad Jobanputra
He is a science graduate in microbiology and has 30 years of
experience in various businesses and founder of Fairdeal Group.

• S Rajkumar
He is a mechanical engineer and has done MBA from IIM-C. He has
worked in Supply Chain Department of Titan Industries and worked
with Madura Garment as Supply Chain Manager.

• Zankar Jobanputra
He is a science graduate in mathematics and has 10 years experience
in C&F business.

Manoj Banshilal Pachouri 32 ICFAI Business School

Independent Directors

• Ninu Khanna
He is a science graduate and an MBA from IIM-C. He has a very wide
experience of working with Colgate-Palmolive, India & China, Procter &
Gamble, India, Japan & Nigeria, Dabur and currently he is Managing
Director of Bombay Dyeing. He will be CEO-FMCG Vertical, Reliance
Retail from June 2006.

• G Raghuram
He is an electronics engineer from IIT, Madras, an MBA from IIMA and
a doctorate from Kellogg School of Management. He teaches Operation
Research in IIMA and has special interests in Supply Chain & Logistics.
He has published several books and papers in national and
international publications. He is also a visiting faculty to national and
international business schools.

• Jamshed Daboo
He is a mechanical engineer and an MBA from XLRI, Jamshedpur. He
has wide experience of working with Titan Industries and Tata Quality
Management Services and currently he is COO – Business Hotels,
Indian Hotels.

These independent directors will give Fairdeal group outside view as

Fairdeal grows in terms of geographical scope and physical scale.

Manoj Banshilal Pachouri 33 ICFAI Business School

Business Focus

Fairdeal Distribution Services Pvt. Ltd. provides complete Supply Chain

solutions to its clients. Some of its fields of operation are:
• In-plant logistics
• Reverse logistics
• Third Party Logistics
• Manufacturing Logistics
• Manufacturer to Consumer (M2C) Logistics
• Warehousing
• Clearing and Forwarding Agents
• Transportation

Product Range

Table 3: Product Range of Fairdeal

Consumer products Tea, Coffee, Vegetable Oils, Vanaspati, Breakfast

Cereals, Processed Food Products.
Automotive Parts Spark Plugs, Power Transmission Systems, Auto
Bulbs, Auto Filters, Auto Electricals, Auto Batteries,
Automobile Lubricants, Mobile Audio Systems,
Industries Paints and other Coating Products.
Consumer Durables Lighting, Audio, Video, Consumer Electronics,
Telecommunication, Domestic Appliances, Industrial
Electricals, Watches, Jewelry
Construction Material Ceramic Tiles - Floor & Wall

Manoj Banshilal Pachouri 34 ICFAI Business School

Locations

™ Ahmedabad
™ Bangalore
™ Dehradun
™ Hosur
™ Surat

• Clearing & Forwarding at Ahmedabad

• Warehousing at Attibele
o TVS Motor Company Limited
• In-plant Logistics at Bommasandra
o Titan Industries Limited-Precision Engineering Division
• Supply Chain Management at Bangalore
o Madura Garments
• In-plant Logistics at Dehradun
o Titan Industries Limited-Watch Division
• In-plant Logistics at Hosur
o Ashok Leyland Limited-Plant-2
o Titan Industries Limited-Watch Division
• Clearing & Forwarding at Hosur
o BPL Sanyo Limited
• Inward Logistics at Surat
o Titan Industries Limited-Jewellery Division

Manoj Banshilal Pachouri 35 ICFAI Business School

Distribution Network

Fairdeal has a strong distribution

network all over India. It has its
own transport vehicles as well as it
has business contract with other
transport carriers also.

Local orders are dispatched

through company’s own vehicles
and up-country orders are
dispatched through its business
partner carriers and courier
services. Some of transporters and courier service providers carrying
dispatching orders of Fairdeal are Gati, BlueDart, Unifreight, DTDC,
Logisys India Limited, Indo Arya Central Transport Ltd., Transport
Corporation of India, AS Transport, prasanna cargo, Shivraj Roadlines,
Patel roadways, and Sai transport Agency.

At present Fairdeal Distribution Services Pvt. Ltd. is handling logistics

operations of various industries which include:
• Automobiles Industry
• Paint Industry
• Watches Industry
• Branded Jewellery Industry
• Snacks & Food products Industry
• Electronic home appliances industry
• Telecommunications Industry
• Tea Industry

Manoj Banshilal Pachouri 36 ICFAI Business School

Awards and Achievements

• Awarded Model Warehouse status by Hindustan Lever Limited.

• Awarded Best Run Depot of the Country trophy and Best Customer
Service - Lighting Trophy by Philips India Limited.

Client Companies

Fairdeal Distribution Services Pvt. Ltd. is Clearing & Forwarding Agent

for following companies whose brief corporate profile is given below:

Voltas

Established in 1954, Voltas is India's premier air conditioning and

engineering services provider. It offers engineering solutions for a wide
spectrum of industries in areas such as heating, ventilation and air
conditioning, refrigeration, climate control, textile machinery, machine
tools, mining and construction, materials handling, water
management, building management systems, pollution control and
chemicals.

The company's strengths lie in the design and manufacture of

industrial equipment, the management and execution of air-
conditioning and public work projects, the procurement, installation
and servicing of technology based systems, and in being a
representative of global technology leaders.

All these capabilities are ISO 9001-2000 certified.

Voltas is:
¾ Leader in air conditioning projects.
¾ Largest projects exporter in Mechanical, Electrical and Public
Health works.
¾ No. two brand in air conditioners.
¾ Most trusted name in mining and construction equipment.
¾ Leader in textile machinery.
¾ Premier Player in machine tools.
¾ Leader in forklift trucks.

Manoj Banshilal Pachouri 37 ICFAI Business School

Areas of business

Operations
Voltas' operations are organized into four independent business-
specific clusters: air conditioning and refrigeration business group,
international operations business group, unitary products business
group and engineering products business group. Each of these
divisions has independent facilities for market coverage and customer
servicing.

Manufacturing
Voltas manufactures industrial air conditioning and refrigeration
equipment, air conditioners, water coolers, freezers, commercial
refrigerators, forklift trucks and large water supply pumps. These
products bear the stamp of state-of-the-art automated manufacturing
plants, resulting in consistently high quality and reduced costs.

Voltas has partnered with international companies, viz., LG Electronics

of Korea and Fedders International of USA, for 'manufacture only'
alliances producing low-cost, high-quality refrigerators and room air
conditioners.

Location
Voltas has its head office in Mumbai and zonal headquarters in
Mumbai, Kolkata, New Delhi and Chennai. It has territorial offices in
Ahmedabad, Bangalore, Chandigarh, Hyderabad, Jamshedpur,
Lucknow, Pune and Kochi, while the overseas offices are located in Abu
Dhabi (UAE), Hong Kong and Singapore. Voltas has factories at Thane
(Maharashtra), the union territory of Dadra, and Sanathnagar (Andhra
Pradesh).

Sources: http://www.tata.com/voltas/index.htm
http://www.voltas.com/
http://www.tata.com/ voltas/media/index.htm

Manoj Banshilal Pachouri 38 ICFAI Business School

Titan Industries

Titan Industries is India’s leading

manufacturer of watches and jewellery
and the world’s sixth largest manufacturer
brand of watches. Established in 1984 as a
joint venture between the Tata Group and
the Tamilnadu Industrial Development
Corporation, the company transformed the
Indian watch market, offering quartz
technology with international styling,
manufactured at its state-of-the-art
factory at Hosur, Tamilnadu. In 1995, the
company diversified into jewellery under
the brand Tanishq.

Leveraging its understanding of different segments in the watch

market, the company launched a second independent watch brand —
Sonata — as a value brand to those seeking to buy functionally styled
watches at affordable prices. It also entered the segment of premium
fashion watches by acquiring a license for global brands such as
Tommy Hilfiger. Titan has also diversified into fashion eyewear with its
Fastrack Eye Gear sunglasses. Further, Titan leveraged its
manufacturing competencies and branched into precision engineering
products and machine building in 2003.

Areas of business
Titan manufactures over 7 million watches per annum and has a
customer base of over 65 million. The company has manufacturing and
assembly operations at Hosur, Dehradun and Himachal Pradesh. Its
main products are:

Watches: Titan manufactures two main brands viz. Titan for the
premium segment and Sonata for the below-$25 category. The Titan
brand architecture comprises several brands, each of which is a leader
in its segment. Notable among them are: Titan Edge – the world’s
slimmest watch; Nebula – in solid gold and precious stones; the Gold
and Steel collection; Raga 9 to 5 – for the woman achiever; Flip –
India’s first and only reversible watch with two movements and dial
faces; and Fastrack in the sporty casual category.

Manoj Banshilal Pachouri 39 ICFAI Business School

Today, Titan has over 60 per cent of the domestic market share in the
organized watch market. Its exclusive retail showroom chain – World
of Titan – is amongst the largest in its category. Titan watches are sold
through over 9,000 outlets in over 2,300 cities and internationally in
over 30 countries including the UK, Spain, Greece and countries in the
Middle East and Asia Pacific.

Jewellery: Tanishq is India’s largest and fastest growing jewellery

brand. Tanishq has 75 boutiques in 55 cities across the country with a
premium range of gold jewellery studded with diamonds or colored
gems and a wide range in 22kt pure gold. Platinum jewellery and
designer silverware are also a part of the product range. Tanishq is
one of India’s largest specialty retailers and is transforming the
jewellery market in India.

Precision engineering: The Company’s precision engineering division

manufactures dashboard clocks as OEM to car manufacturers in
Europe and America. It also supplies precision components to the
avionics and the automotive industry.

Achievements
Titan Industries has been awarded the following:

• The President of India’s Award for employing the disabled.

• Friends of BIL Award for employing the handicapped.
• The Titan Design team received 7 accreditations at the NID —
Business World Awards, including the 'Young Design
Entrepreneur of the Year'.
• Titan and Tanishq were adjudged 'Most Admired Brands' as well
as 'Retailer of the Year' by Images Fashion Forum.
• Titan retained it ranking as the 'No 1 Brand' in the Brand Equity
Survey, in the Consumer Durables category.

Sources: http://www.tata.com/titan/index.htm
http://www.indiainfoline.com/comp/titan/
http://www.titanworld.com/
http://www.tata.com/titan/media/index.htm

Manoj Banshilal Pachouri 40 ICFAI Business School

Tata Tea

Set up in 1964 as a joint venture with UK-based James Finlay and

Company to develop valued-added tea, the Tata Tea Group of
Companies, which includes Tata Tea and the UK-based Tetley Group,
today represent the world's second largest global branded tea
operation with product and brand presence in 40 countries. Among
India's first multinational companies, the operations of Tata Tea and
its subsidiaries focus on branded product offerings in tea but with a
significant presence in plantation activity in India and Sri Lanka.

The consolidated worldwide branded tea business of the Tata Tea

Group contributes to around 86 per cent of its consolidated turnover
with the remaining 14 per cent coming from bulk tea, coffee, and
investment income. The company has its headquarters in Kolkata, and
51 tea estates in the states of Assam, West Bengal, Tamilnadu and
Kerala and one coffee estate in Tamilnadu.

Products and brands

The company has five major brands in the Indian market — Tata Tea,
Tetley, Kanan Devan, Chakra Gold and Gemini — catering to all major
consumer segments for tea. Tata Tea's distribution network in the
country with 38 C&F agents and 2,350 Stockists caters to over 1.7
million retail outlets (ORG Marg Retail Audit) in India.

The company has a 100 per cent export-oriented unit (KOSHER &
HACCP certified) manufacturing instant tea in Munnar, Kerala, which is
the largest such facility outside the United States. The unit's product is
made from a unique process, developed in-house, of extraction from
tea leaves, giving it a distinctive liquoring and taste profile. Instant tea
is used for light density 100 per cent teas, iced tea mixes and in the
preparation of ready-to-drink (RTD) beverages.

With an area of 26,500 hectares under tea cultivation, Tata Tea

produces around 60 million kg of black tea annually.

Overseas business
The Tata Tea and Tetley portfolios of branded offerings sourced from
the India based JV, caters specifically to the Australian, Middle East,
West Asia, North Africa, Poland, Russia and Kazakhstan markets. This
is independent of the manufacturing and supply operations of its
Tetley and other subsidiary companies.

Manoj Banshilal Pachouri 41 ICFAI Business School

Subsidiaries
Tata Tea has subsidiaries in Great Britain, United States and India.

The Tetley Group headquartered in Great Britain, is a leading

international tea company selling over 60 Tetley branded products to
over 40 countries world-wide. Tetley is the second largest tea bag
brand in the world; it is the number one tea bag brand in Great Britain
and Canada and has significant market shares in the United States,
Australia, Poland and France.

Tata Coffee with instant coffee manufacturing facilities, R&D

capability and plantation assets of around 8000 hectares, producing
over 9000 MT of coffee annually, is the largest coffee plantation
company in Asia.

Tata-Tetley is a Kochi-based EOU which services the branded

business of specific Tetley and Tata Tea markets outside India.

Tata Tea Inc in the United States processes and markets instant tea
from its facility in Florida, based on sourcing of Instant Tea products
out of Munnar, Kerala.

Sources: http://www.tata.com/ tata_tea/index.htm

http://www.tatatea.com/
http://www.tata.com/ tata_tea/media/index.htm

Manoj Banshilal Pachouri 42 ICFAI Business School

Amara Raja Batteries Limited (ARBL)

Before it became one of the

leading battery makers in
India, Amara Raja was, like
anything else, a little dream…a
dream realized by Mr.
Ramachandra N Galla, an NRI
who incorporated the company
in 1985 with a vision to
transform the business.

Amara Raja Batteries Limited (ARBL), an Amara Raja-Johnson Controls

Company with 26% equity from Johnson Controls is the technology
leader in the Indian storage battery industry and the leading player in
standby VRLA batteries. In India ARBL supplies automotive batteries
exclusively to Ford, General Motors, DaimlerChrysler; and
preferentially to Hindustan Motors, Mahindra & Mahindra and Ashok
Leyland. ARBL is also a preferred supplier to major telecom MNCs,
DOT, Indian Railways, besides a host of companies in segments like
UPS systems, power, oil & gas, etc. The ARBL scrip is actively traded
on BSE, NSE and HSE.

Amara Raja has joined hands in a strategic partnership with Johnson

Controls, Inc., and is part of its global alliance. Amara Raja and
Johnson Controls both share a commitment to excellence and
innovation and work towards exceeding customer expectations.

Sources: http://www.amararaja.com/

Manoj Banshilal Pachouri 43 ICFAI Business School

TVS Motors

TVS Group was established in 1911 by Shri. T. V. Sundaram Iyengar.

As one of India’s largest industrial entities it epitomizes Trust, Value
and Service.

Today, there are over thirty companies in the TVS Group, employing
more than 40,000 people worldwide and with a turnover in excess of
USD 2.2 billion.

With steady growth, expansion and diversification, TVS commands a

strong presence in manufacturing of two-wheelers, auto components
and computer peripherals. It also has vibrant businesses in the
distribution of heavy commercial vehicles passenger cars, finance and
insurance.

TVS Motor Company Limited, the flagship company of the USD 2.2
billion TVS Group, is the third largest two-wheeler manufacturer in
India and among the top ten in the world, with an annual turnover of
over USD 650 million.

The year 1980 is one to be remembered for the Indian two-wheeler

industry, with the roll out of TVS 50, India's first two-seater moped
that ushered in an era of affordable personal transportation.

For the Indian Automobile sector, it was a breakthrough to be etched

in history.

TVS Motor Company is the first two-wheeler manufacturer in the world

to be honored with the hallmark of Japanese Quality – The Deming
Prize for Total Quality Management.

Future Focus
TVS Motor Company wants to be one among the top two 2-wheeler
companies in India and one among the top five 2-wheeler companies
in Asia.

TVS foresees to have profitable operations overseas, especially in

Asian markets, capitalizing on their expertise in the areas of
manufacturing, technology and marketing. The Company aims to hone
and sustain its cutting edge of technology by constant benchmarking
against international leaders.

Manoj Banshilal Pachouri 44 ICFAI Business School

Many firsts of TVS Motors
¾ India’s first two seater 50 cc Moped TVS 50, launched in August
1980.
¾ First Indian Company to introduce 100cc Indo-Japanese
motorcycles in Sept 1984.
¾ Launched India's first indigenous Scooterette (sub-100 cc
variomatic scooters), TVS Scooty in June 1994.
¾ Introduced India's first catalytic converter enabled motorcycle,
the 110cc Shogun in Dec 1996.
¾ Launched India's first 5-speed motorcycle, the Shaolin in Oct
1997.
¾ Launched TVS Fiero, India’s first 150 cc, 4 stroke motorcycles in
April 2000.
¾ Launched TVS Victor, 4-stroke 110 cc motorcycles, in August
2001, India’s first fully indigenously designed and manufactured
motorcycle.
¾ Launched TVS Centra in January 2004, a world-class 4-stroke
100 cc motorcycle with the revolutionary VT-i Engines for best-
in-class mileage.
¾ Launched TVS Star in Sept 2004, a 100 cc motorcycle which is
ideal for rough terrain.
¾ Launched TVS Victor, 4-stroke 125 cc motorcycle, in February
2005.

Sources: http://www.tvsmotors.com/

Manoj Banshilal Pachouri 45 ICFAI Business School

Motors Industry Company Limited (MICO)

MICO was incorporated

in 1951 as a subsidiary
of Rober Bosch, with its
registered office at
Madras, which was later
shifted to Bangalore in
1953. In 1969, the
Mysore Branch of the
Central Bank of India
Ltd, offered for sale
22000 shares of the
Company to the public at
a premium of Rs70 per
share.

MICO manufactures nozzles & nozzle holders, FIPs, hydraulic products

and auto Electricals including spark plugs. The Company has
continuously modernized and upgraded product range. In 1986 it
began manufacture of mini spark plug (extension of its spark plugs
range) for motor cycles, which was till then being imported.
Manufacture of special purpose machines, machine tools accessories
etc began in 1987. MICO embarked on manufacture of starter motors,
alternators, hydraulic and pneumatic equipment etc in 1989-90. The
company has since its 50th year embarked on a share buyback
pursuant to its allowance by the Government.

Parent company
MICO is a 60.5% subsidiary of Robert Bosch, Germany. Robert Bosch,
a global leader in the field of auto components, has presence in more
than 130 countries. Robert Bosch’s other business interests include
consumer goods, communication technology and capital goods.

MICO has strong presence in the Indian automotive components

business with a virtual monopoly in the Diesel Fuel Injection
Equipment, Spark Plugs segments and also in the Electric Power Tools
segment. Its other products include large number of automotive
accessories as well as Special Purpose Machines, Electric Power Tools,
Blaupunkt Car Audio Systems, Industrial Equipment, Auto-Electricals,
Gear Pumps for tractor applications and Packaging Machines.

Manoj Banshilal Pachouri 46 ICFAI Business School

MICO has adopted the Bosch guiding principle of BeQIK- Quality,
innovation and keep customer satisfied. The company plans to
continue innovating by designing and developing diesel fuel injection
systems taking cognizance of fuel consumption, emission and greater
safety of the end users. The BeQIK philosophy has helped the
company in achieving world-class quality, innovation and continuous
improvement to enhance customer satisfaction. The company has over
4000 sales and service outlets countrywide.

In F12/01, MICO's net sales were at Rs 14.5 bn. Company's operating

profit was at Rs2.5bn and net profit was Rs 817mn for F12/01. In Q1
2002, company’s total sales decreased by 8%, from Rs3.9 bn in Q1
2001 to Rs 3.6 bn. Other income increased by 23% from Rs71 mn in
Q1 2001 to Rs87 mn. The operating profit declined by 20% from Rs
745 mn to Rs 594 mn in Q1 2002. Net profit declined to Rs 257 mn in
Q1 2002 from Rs 269 mn in Q1 2001.

Subsidiaries
MICO has two 100% subsidiaries, Motor Industries Software Ltd and
Motor Industries Trading Private Ltd.

Plant locations
MICO has 3 plants, one at Nashik for nozzles and nozzle holders,
another at Bangalore for FIPs and hydraulic products and the third at
Naganathapuram for auto Electricals including spark plugs. The
Bangalore plant achieved international quality levels in Single Cylinder
Pumps. The Nashik plant achieved new milestone in producing the 50
millionth nozzle holder assemblies. The company also has its own
vocational training centers at Bangalore and Nashik imparting training
in the state of the art technology to its workforce.

Sources: http://www.micobosch.com/
http://www.micoweb.in.bosch.com/

Manoj Banshilal Pachouri 47 ICFAI Business School

Bell ceramics

Bell Ceramics was established in 1985. It was established with the

objective to manufacture world class ceramic glazed floor and wall tiles
for domestic and international markets.

It has two plants, strategically located near major Indian markets with
production capacity of 30,000 sq. mt/ per day which manufacture floor
tiles and wall tiles in wide range of products, sizes, patterns and
shades. Both plants are ISO 9001-2000 & 14001 certified.
Manufacturing at plants is according to COMITEE EUROPEAN DE
NORMALISATION (CEN).

The plant located at Dora (near Baroda) in Gujarat, Western India, has
production capacity of 10,000 sq. mtrs per day, of Monoporossa Wall
tiles & Floor tiles.

The second plant located at Hoskote (Bangalore), Southern India, has

an installed capacity of 20,000 sq. mtrs of floor tiles per day.

The plant makes use of the world-renowned multi-line dry process

technology, which is environment friendly and energy efficient, with
Italian collaboration.

Bell has tie ups with many international players for tiles manufacturing
technology, research and development.

It has wide spread distribution network, comprising depots, clearing &

forwarding agents, dealers and retailers which are nationally
connected through world class ERP software.

Export Markets: Australia, Philippines, UAE, Bahrain, Saudi Arabia,

Sultanate of Oman, Qatar, Kuwait, Singapore, Mauritius, New Zealand,
Bangladesh, South Africa, Kenya and many more

Awards and achievements: Felicitated by many awards including

award from President of India for “Excellent Export Performance.”

Sources: http://www.bellceramics.com/

Manoj Banshilal Pachouri 48 ICFAI Business School

Bharti Teletech

Bharti Teletech - a Bharti enterprise, is

India’s leading telephone instrument
manufacturing company and one of the
largest in the globe. Established in
1985, the company’s manufacturing
operations are spread across ISO-9000
certified plants in Mapusa (Goa) and
Ludhiana (Punjab) with an installed
capacity of 6 mn telephone units
annually upgradable to 10 mn units. An
in-house Centre for Excellence with
industrial and engineering design capability and equipped with facility
for product reliability and life tests ensures a quality standard that
compares with the best internationally.

In 1985, Bharti Teletech entered into a technical collaboration with

Siemens AG, the German technological giant and set up a plant in
Ludhiana to manufacture telephones.

Bharti Teletech produces a comprehensive basket of customer premise

equipments, comprising of over 40 models spanning the basic,
feature-rich and cordless telephone categories, under the Beetel
brand. Beetel commands a market share of over 40% in the retail
market, 95% in the PSP business and 60% in the tender market. The
company has been in the forefront of growing the open retail market
by providing feature-rich and world-class telephone products at
affordable prices. Bharti Teletech currently exports to 30 countries in
five continents, including the PTT markets. Bharti plans to double its
exports in 05-06 over last year.

Bharti Teletech has a tie-up with Atlinks (No.1 in home and office
telephony worldwide) for marketing of GE telephones in India and
neighboring countries as well as exports. Its list of credits also includes
a contract with France telecom for supplies of our products for their
worldwide requirement as well as supplies to Telefonica, Peru.

The new initiatives of the company under the ‘Beetel’ brand include
Broadband Products and Set Top Box – a hi-growth market in India.
Both are focus areas for the company

Manoj Banshilal Pachouri 49 ICFAI Business School

In 1991, Beetel manufactured phones for 'Sprint', the American
telecom mammoth. Shortly after, in 1993-94, came ISO 9001-2000
accreditations for the manufacturing units - by this time two in
numbers, at Gurgaon and Ludhiana. And in a short span of time,
Beetel was already the market leader. Cornering a third of the Indian
market, Beetel became 'India's Favorite Phone'.

Success came on both fronts and fast. The first telephone instrument
to get ISO accreditations, India's first EPBT phone, the first to cross
the 10 million unit mark and thereafter 20 million mark, the only
Indian telephone company to be present in 30 countries mapping 5
continents, one of the largest telephone manufacturers across the
globe. A brand present in every second Indian home.

About Motorola
Motorola is a Fortune 100 global communications leader that provides
seamless mobility products and solutions across broadband, embedded
systems and wireless networks. In your home, auto, workplace and all
spaces in between, seamless mobility means you can reach the
people, things and information you need, anywhere, anytime.
Seamless mobility harnesses the power of technology convergence and
enables smarter, faster, cost-effective and flexible communication.
Motorola had sales of US $31.3 billion in 2004.

Sources: http://www.motorola.com/
http://www.bharti.com/

Manoj Banshilal Pachouri 50 ICFAI Business School

MRF Ltd

MRF manufactures automobile tyres, tubes, tread rubber and pre-

cured treads.
Tyres are basically of two types - cross-ply and radial. In cross-ply
tyres, nylon or rayon tyre cords are arranged diagonally across. In
radial tyres, polyester, nylon, fiberglass or steel cords are arranged
perpendicular to the circumference. Radial technology is an
improvement over cross ply and radial tyres are priced at (of 25-30%)
premium. They are long lasting and have lower incidence of flats.

PAINT & SPECIALITY COATINGS

MRF Paints is division of MRF which deals in paint and specialty
coatings.

MRF manufactures specialty coatings for wide range of applications.

The revolutionary 100% polyurethane finishes are available in
formulations for application to metal, wood, plastics, paper, vinyl,
textiles, ceramics and glass. The coatings have been developed for
color and gloss retention, strong adhesion and durability. They guard
against abrasion, corrosion, chemicals, bad weather and ultra-violet
radiation and are virtually maintenance free.

Some of products from MRF Paints are:

MRF Metalcoat: MRF Metalcoat is the ideal surface finish for any
metal. It is used extensively in to paint machinery, bus bodies, grills,
metal furniture, grills and outdoor metal structures. It is also
extensively used in chemical plants.

MRF Woodcoat: MRF Woodcoat is a lasting surface finish for

application on any kind of wood, protecting it against the wearing
effects of the weather, abrasion, moisture and domestic spills.

MRF Glasscoat: MRF Glasscoat is glass coating that offers

transparent, opaque, metallic and frosted finishes. It is used
extensively in the packaging industry.

Manoj Banshilal Pachouri 51 ICFAI Business School

MRF Vapocure: MRF Vapocure is used in surface coatings for wide
range of applications of manufactured items such as metals, glass,
plastics, wood, ceramics and paper. A catalyst in vapor form
accelerates the curing of paints and coatings and eliminates the need
for temperature baking of industrial paint finishes.

MRF Brasscoat: This clear coating for brass items prevents

tarnishing, thereby reducing the labor of frequent polishing.

MRF Autocoat: MRF Autocoat is a 100% polyurethane car finish that

adds beauty and life to your car. It offers high resistance to abrasion,
corrosion, chemicals and ultraviolet radiation.

Source: http://www.mrf.com/

Manoj Banshilal Pachouri 52 ICFAI Business School

 PROCESS ANALYSIS

Processes and Organization

Manoj Banshilal Pachouri 53 ICFAI Business School

Processes and the Organization

This phase kicked off with understanding the processes of

organization. I started interacting with Fairdeal’s staff, managers and
store keepers. It was important to understand the working culture and
environment of the company to understand its processes better.

Fairdeal, as a clearing & forwarding agent, handles more than twelve

companies in various industries. Since different industries and different
companies have their own rules and regulations of operations, it was a
challenge to study the processes of these companies by framing them
in a common frame.

Sources of Data Collection

Primary Data: Primary data (or fresh data) was collected by me from
Fairdeal’s staff and manager through person interaction. I also used to
observe processes and activities to collect data. To get a better insight
of activities, I participated in Goods receiving, order taking, order
punching, physical verification and many other processes myself.

For instance, I collected storing material information by tracking Titan

watches in Titan store which are stored code wise. I could punch data,
accept orders, dispatch orders and scan barcode serial numbers of
Motorola mobile sets in Bharti Teletech.

Secondary Data: Secondary data (or published data) was collected

from Company documents, Internet, Articles, Industry specific
Journals, Business magazines, ICFAI Business School’s study materials
and from other variety of sources. Data for ABC Analysis was collected
from companies’ individual ERP Modules and Inbound & Outbound
Registers.

Manoj Banshilal Pachouri 54 ICFAI Business School

Organization Structure of Fairdeal

Figure 3: Organization Structure of Fairdeal

Manoj Banshilal Pachouri 55 ICFAI Business School

I started with basic questions like ‘why warehousing and third party
logistics for that reason is important at all’? Some of reasons that
came forward in subsequent discussions are given below.

The reasons why a warehouse is required are:

¾ Have all the data in one place
¾ Easy storage
¾ Fast retrieval
¾ Simple to change information
¾ Security esp. with multiple users
¾ Recovery from failures

Advantages of a warehouse:
¾ Reduces redundancy
¾ Reduces inconsistency
¾ Sharing of data becomes possible
¾ Enables security restrictions
¾ Allows data independent applications.

Remuneration claimed by CFA

There are three components of charges claimed by CFA:

1. Fixed charges
E.g.: Hardware installation charges, Rent based on square feet of
area (4.5 – 5 Rs per square feet) occupied by the company.
2. Variable charges
E.g.: Labor charges, Stationary, freight, loading/ unloading
3. Remuneration as service provider
a. Fixed amount – Titan
b. Volume or tonnage based
c. Units per piece

Manoj Banshilal Pachouri 56 ICFAI Business School

Company Wise Processes

Fairdeal group is carrying out Supply Chain operations of more than

twelve companies valued at Rs 3000 Crores. These operations consist
of goods receiving, re-packing, re-labeling, storing, stock
maintenance, order accepting on behalf of principal, cross-docking,
dispatching, transporting, collecting cash, pay sales tax and Octoroi
etc, handling warranty claims, handling goods returns and unsalable
material, reverse logistics etc.

Here is a brief overview of processes being carried out for each

principal company handled by Fairdeal.

TITAN Watches
Process Owner Mr. Hemant

Website http://trswamd/servlet/til.trs.watches.InvDocPrn/

Store Incharge Mr. Aashish

Computer operations Ms. Anal, Ms. Komal

Factory location Ooty, Dehradun, and Hosur

Company Divisions Tanishq jewellery, Sonata watches

Other Brands distributed Tomy Hillfigure and Fastrack eyegear

Billing points Ludhiyana, Goa, Noida, Delhi and Bangalore

Quantity handled 366,146

Value 660,350,996.00

Transactions 5,733

No of dealers 211 (Includes Tanishq, Sonata, Fastrack and

Hillfigure)

Watches come from Ooty factory through courier services mainly Gati,
BlueDart and Unifreight. Carton is checked for any physical damage
and pilferage, weighted in the warehouse to check uniformity of
cartons. If weight doesn’t match, carton can be opened in presence of
courier boy itself.

Manoj Banshilal Pachouri 57 ICFAI Business School

Carton contains packing slip containing number of pieces and codes.
This packing slip is validated against Stock Transfer Memo in which
number of pieces and price of each watch is given along with trade
discount and sales tax.

Coding system of watches:

999xx99x or,
9999xx99x or,
999999xx99x or,
99999999xx99x
Where 9 stands for a digit and
x stands for an alphabet

First set of digits is either 3

digits or 4 digits and denotes
case code followed by two
alphabets (First alphabet for
case type and second for strap type) and then two digit dial code.

Last alphabet in titan watch might be K which shows that leather strap
is brown.

Alphabets may be:

Y: Yellow (Gold Plated) S: Steel
N: Neutral P: Plastic
G: Gold (18 caret) L: Leather
M: Metal B: Bi-Metal (Gold Plated and Steel)

For example:
1233YM09K code of a particular watch means:
1233 is watch case code
YM means watch is Yellow case (gold plated) and Metallic strap.
09 is code for dial type
K means that the strap of the watch is brown.

Note: For paired watches case code is 6 or 8 digit number.

Order Taking:
Orders are taken by Titan salespersons or directly placed at Shiromani
office by dealers and then bill comes to warehouse for dispatching
watches directly to dealers.

Manoj Banshilal Pachouri 58 ICFAI Business School

Goods Receiving:
Titan and sonata comes in 1800 models and variants.

Table 4: Some examples of Titan watches

Code Price INR (As on 21st Feb 2006)

1348BM01 5995/-
1044YM01 6750/-
1184SL01 6895/-
19262926YM02 7500/-

Storing Goods:
Watches are stored in the warehouse in numeric order of Case Codes.
For example watches with codes 1044YM01 would be placed in racks
before watches with codes 1348BM01
To maintain FIFO, stacking is used in which new watches are placed
behind old watches. If new watches come in front, FIFO is violated.

Purchasing Cycle in Titan:

¾ Salesperson goes to dealer

¾ Dealer fills order form to purchase watches
¾ Salesperson gives order form at Shiromani office
¾ Bill is raised at Shiromani office and dispatching order along with
bill sent to warehouse
¾ Material dispatched from warehouse directly to dealers

Recommendations for Titan:

• Billing is done at city office and dispatching is done at warehouse
which increases cycle time and wait time. Billing and dispatching
should be done at the same place.
• Barcode reader may be useful to track watches in warehouse
• Billing can also be done through barcodes

Manoj Banshilal Pachouri 59 ICFAI Business School

Bharti Teletech

Factory location (Billing points) Ludhiyana, Goa, Noida, Delhi and Bangalore

Company website http://www.bhartiteletech.com

Process owner Mr. Vinod

Computer operator Mr. Sunil Patel

Store keeper Mr. Raman

SD Module SDNet (Sales and Distribution Network)

[http://www.beetel-india.com:9080/
Languages and software .jsp, J2EE. Inet crystal clear for reporting

Brands Beetel telephone instruments, Set Top Boxes

Other Brands distributed and sold Motorola mobile sets

Quantity handled 146,888

Value 211,538,743.29

Transactions 1,611

No of dealers 9

Order taking:
Dealer places order via phone/letter or punches it into SDNet. If order
placed via phone, order has to be punched into SDNet manually by
warehouse personnel’s.

Purchasing order cycle for Bharti:

¾ Dealer Punches order or Sales person collects orders from dealers
¾ Order accepted by Carrying and forwarding agent (warehouse)
¾ Accepted order verified by regional sales officer at Mumbai
¾ Once approved, dispatch order placed on SDNet (dispatched order
may be partial dispatch or short close in case there is less stock)
¾ Enter PIN and IMEI number (for Motorola only) through scanner
Print invoice and IMEI details (for Motorola only)

FIFO: It was found that no particular method is followed in Bharti

Teletech to ascertain FIFO.

Manoj Banshilal Pachouri 60 ICFAI Business School

Recommendations for Bharti Teletech:
All Motorola cases have to be brought to SDNet terminal to scan their
IMEI numbers. This consumes manpower as well as time in moving the
cases. IMEI numbers can be scanned in Notepad in the beetel
warehouse at the time of receiving mobile phone containers and then
this text file can be sent to SDNet terminal for uploading IMEI
numbers.

Training to operators: No formal training is given to SDNet operators.

They have learnt it by R&D and trail and error methods.

For example: uploading IMEI number using text files was there from
beginning but operator at Fairdeal learnt it by trail and error only after
one year of his tenure.

Multiple company handing: Employees should be encouraged to learn

handling multiple (at least two) companies’ distribution channels like
SAP of TATA Tea and SDNet of Bharti. This will ensure smooth
operations even in case of absenteeism and job vacancies. Employees
can be allotted to one company’s operations and one secondary
companies working can be taught to him at the time of joining. New
employees will learn better than those who have been working for a
long time on single SD network.

For example: if one employee is absent or quits his job, there should
be another employee in Fairdeal who is at least 80% efficient, if not
more, in handling absent employees work.

Employees should be motivated, encouraged and trained to behave

courteously with channel partners (Example Area Sales officer and
Logistic peoples like truck drivers etc) as well as dealers and Stockists.
It has been seen that some employees lack courtesy and
communication skills.

Manoj Banshilal Pachouri 61 ICFAI Business School

Amara raja Batteries

Factory location Tirupati

Corporate office Chennai

Company website http://www.amararaja.com

Process owner Mr. Vinod

Computer operator Mr. Pravin

Store keeper Mr. Shabbir

Brands Amaron batteries

Stock transfer from Bhiwandi, Indore, Jaipur, Pune, Ghaziabad,

Bangalore, Delhi
Quantity handled 58,560
Value 112,960,900.98
Transactions 4,136
No of dealers 8

Software used:
1. RKM (old),
2. Amara raja e-ARIMS (VB and crystal report, local software without
internet support),
3. Amara raja E-application (http://localhost/bs/, uses ASP.net and
web services)
4. BsApp Software; integrated with .NET application (E-application)
5. Warehouse terminal data is synchronized with company data via
dial up virtual private network (VPN).

Manoj Banshilal Pachouri 62 ICFAI Business School

Data Synchronization:
¾ Connect Internet connection
¾ Symantac Enterprise VPN client
connects to company data for
synchronization
¾ connect to VPN
¾ open BsApp
¾ press “synchronize data” button
¾ System uploads and downloads
data to and from central server and number of records uploaded
and downloaded is displayed.

Transporters: Indo Arya Central Transport Ltd., TCI, AS Transport,

prasanna cargo (from Pune), Shivraj Roadlines (from Pune), Patel
roadways (from Bhiwandi), Sai transport (from Bhiwandi)

Goods Receiving:
Once batteries arrives the warehouse, transporters handover packing
slips to store Incharge which contain serial number of batteries.
Batteries are then physically checked for damage, type of battery,
embossing, barcode and plastic wrapping before storing them in
warehouse.

IBD: Industrial Battery Division

IBDs are used for Invertors and UPS systems. 4 Volt cells are used for
Idea and Hutch towers.
For dispatching IBDs, approval from Mumbai is required.

After receiving material, upload receiving status on E-application and a

mail is also sent to Chennai and Mumbai SCMs. Movement of batteries
is based on serial numbers basically.

Cycle Count: Book stock and physical stock is validated daily

morning.

Receiving Orders: Dealers place order at Premium House,

Gandhigram branch office which is then forwarded to warehouse for
dispatching via telephone. Invoice cum delivery challan is raised by
branch office.

Manoj Banshilal Pachouri 63 ICFAI Business School

POP (Product of Promotions): Advertising material is also
dispatched from warehouse against instructions from branch office.
Hoardings, feature charts, T-shirts, caps, fly up stand etc.

For FIFO: Batteries come in lots. Labels are stuck to batteries of one
lot containing receiving date and quantity with serial numbers.
Batteries of previous lots are dispatched first. This method resembles
Kanban Japanese practice.

Reporting:
Weekly report is sent to branch office every Thursday. Weekly stock
report has to be made code wise which is taken from reports
generated in BsApp. These reports are generated dealer wise which
are then added separately code wise and punched into Excel sheet.

Reverse Logistics:
Delivery challan or warranty replacement (3 copies – yellow, green
and white warranty sheets) are prepared out of which two copies are
sent to customer (one of which comes back with signature) and one
copy remains with Fairdeal.

Handling Warranty Claims:

In case of warranty claim, service engineer checks battery at dealer’s
place and if satisfied, sends battery for replacement to C&FA.

Free placement: < 12 months

Prorata replacement: > 12 Months but less than 38 Months (Price
decided based on chart)
Regular: > 48 Months

Amara raja warranty claim cycle:

¾ Service engineer checks battery and advance intimation
¾ Service engineer validates document and battery
¾ Battery comes to warehouse with delivery challan
¾ Advance intimation received after battery and delivery challan is
received
¾ New battery with delivery challan sent to dealer (if stock available)
[In case of free replacement and prorate replacement]
¾ Sign on Invoice and delivery challan received from dealers.

Manoj Banshilal Pachouri 64 ICFAI Business School

Handling Scrap Batteries:
Scrap batteries (returned in free and prorata replacements) are stored
in scrap warehouse.

Serial number is noted, weight noted, permission taken from SCM and
then handed over to Ganapati Metals, Indore who is All India
contractor for purchasing battery scraps of Amara raja. DD is then
sent to Head Office in the name of Amara Raja.

Serial number is destroyed to avoid re-claims and a hole is made into

battery.

Notes:
• Battery must be charged every 40 days even in warehouse.
Company has provided with a charger which can charge 32
batteries at one time.
• OEM battery is of white color
• Lead price is Rs 33/- per kg. (As in Feb 2006)
• Total Transaction: 6789 batteries sold in Jan 06 (Including prorata)

Recommendations for Amara Raja:

• Cordless scanner might be useful for scanning barcodes of batteries
and in stock transfers also.
• Cordless scanner would eliminate physical checking of serial
numbers and then punching them into terminal.

Manoj Banshilal Pachouri 65 ICFAI Business School

McFills Foods

Factory location Sharkhej, Ahmedabad

Company website http://www.mcfills.com

Process owner Mr. Hemant Thakkar

Computer operator Mr. Bharat

Store keeper Mr. Bharat

Software used DOS based FAS (financial Accounting system)

Products Snacks, Wafers, Potato Chips

Quantity handled 67,764

Value 20,471,003.33

Transactions 1233

No of dealers 129

Indent form is filled in .xls format and attached to email to McFills

Company. Material comes next day with Transporters LR (Lorry
Receipt) and cash memo.

Material comes from Ahmedabad factory in medium sized trucks. It is

verified for pilferages and stored in warehouse. McFills are using 2500
sq ft of space in the warehouse (As in Feb 2006).

Orders from dealers are obtained by phone (sales officer) or dealer in

writing with DD. Orders are then punched into data entry module of
FAS, bill is printed and material is dispatched by handing over material
to transporter with printed bill.

FIFO: stack card is labeled to boxes containing manufacturing date,

batch number; price code etc. material with earlier manufacturing date
is dispatched earlier.

Stock transfer is not done in McFills division of Fairdeal till date.

Non- salable product like air-leaked packs, damaged packs, expired

packs etc are brought back to warehouse along with written approval
of sales officer and party’s letter containing material details from
dealers after getting approval from sales manager. This material is
then sent back to McFills factory.

Manoj Banshilal Pachouri 66 ICFAI Business School

Recommendations for McFills:
• Indent form preparing is responsibility of
branch manager and not of CFA personnel.
This activity can be annulled.
• Quantity of unsalable material returned
from dealers is very large compared to
other companies. This is a bottleneck as a
lot of time is consumed in maintaining
non-moving and unsalable material.
• Single person is handling computer operations as well as store for
McFills. Though transaction volume is comparatively lower it is
creating problems for customers as computer operator is not
available when he is in store.

Manoj Banshilal Pachouri 67 ICFAI Business School

Voltas

Factory location Dadar, Hyderabad

Company website http://192.168.130.9/ private website for mails and

communication with C & FA and dealers. It uses lotus
notes.

Process owner Mr. Saurabh Mashruwala

Computer operator Mr. Saurabh Mashruwala

F & C (Finance & Control) Ms Shreedevi srinivasan

Incharge

Store keeper Mr. Amrit

Software used SAP R/3

Products Refrigerator, defreezer (for ice-creams, milk etc),

vesicular (Glassed door for storing cold drinks), window
and split AC, water cooler (Mfg in Hyderabad) and mini
magic water dispenser (made in china), cassette
evaporating unit

Spare parts Mini magic (made in China)

Quantity handled 14,435

Value 177,385,730.66
Transactions 5,929
No of dealers 15

Mr. Dharmesh joshi, Logistics Incharge Voltas, Khanpur Branch

Ahmedabad gives orders to Head office. Fairdeal comes to know only
when goods come to warehouse.

Targets are decided in MBRM (Monthly Business Review meeting of

Voltas) held for area sales managers.

Receiving Goods:
When truck comes to warehouse, Address of Fairdeal is checked in
documents, material is unloaded, Mr. Dharmesh is intimated, receipt is
given to transporter and received details are punched into SAP
module.

Manoj Banshilal Pachouri 68 ICFAI Business School

SPT 1800 communication software (written in VB) is used for goods
received and Barcode scanning. Cordless Barcode scanner is imported
from Singapore.

Operating cordless scanner:

VDS -> goods received -> scan barcode from Voltas products

Mr. Dharmesh is intimated again so that he can punch orders of

dealers into SAP module.

Schedule line Message tick is to be removed from SAP module only

then outbound of material is permitted.

Voltas SAP Module:

VL 10 C: Sales orders Items (for Pending orders and current orders
punched by dealers)
[Only orders approved by F&C are displayed in this module, orders not
approved by local F&C go into ‘Escalated orders’]

VA 03: Display Sales Order (displays sales order party name wise with
dispatch address and order number)
This order number is noted down manually into long book.

VL 01 N: Create outbound delivery with order reference number

Shipping point: 259 (for Fairdeal)

Order number: from VA 03 Module
GR/ GI Slip: vehicle number
Bill of land: Collecting mode e.g. transporter etc

Goto -Æ Header -Æ Loading -Æ Number of packages

Goto -Æ Header -Æ options
Goto -Æ overview

Post Goods Issue (PGI) -Æ outbound delivery number is generated in

status bar which comes in VF 01

VF 01: Create billing document

All outbound delivery numbers are displayed here.
Select one number and click save button which will generate Invoice
number.

Manoj Banshilal Pachouri 69 ICFAI Business School

Inbound procedure: Transporter gives invoice to warehouse from
which delivery number is putted in SAP module to get all details and
all serial numbers.

VF 31: To print Invoice

Tick invoice lists and lists from [Inv no] to [Inv no].
To prints bills of specified invoice numbers.

Orders manually noted down in long book from VL 10C i.e. sales order
items with order number.

Outbound Process:
Invoice or bill is given to transporter who dispatches the material.
After material is dispatched received receipt is collected back.

/N MIGO/ GR: Goods received outbound delivery

/N: for switching transactions

Delivery note: Invoice ID

Bill of landing: LR (Lorry receipt) number
Header text: transporter name
Tab panes in page: Material, Quantity, where, serial numbers
Click check box named ‘Item OK’ and click post button.
Message: Material document number 9999 posted is displayed

To get time any order was approved:

Follow the following procedure in SAP R/3 application to get the time
when any order was approved.

VA 03 -Æ Environment -Æ changes -Æ execute [click watch icon] -Æ

choose

Manoj Banshilal Pachouri 70 ICFAI Business School

Notes:
• 0.6 ton window AC and 0.6 & 0.8 ton split ACs imported from china.
• Amul, Vadilal, Pepsi, Gokul have agreement with VOLTAS to supply
their sticker putted products.
• Training for SAP module is given at Mumbai for 3 days.
• Inwards from Hyderabad have to be done using scanner as SAP is
not implemented there. Dadar material is not required to be
scanned as delivery number can be used in SAP module to get all
serial numbers.

Recommendations for Voltas:

• Voltas trucks have to wait for unloading material in absence of
required number of labors. There should be preplanned
arrangement of labors and storing space to avoid wait time.

Manoj Banshilal Pachouri 71 ICFAI Business School

MICO

Factory location Nashik, Pune, Secundarabad, Chennai, Bangalore and Nepal

Company website http://www.mico.com

Process owner Mr. Hemant

Computer operator Mr. Salim

Store Incharge Mr. Rajesh

Store keeper Mr. Pramod

Software used IN4VANCFA - Rally for AS/ 400

Products Automobile spare parts, Engine oils, filters, Overhauling kits,

Spark plugs, Batteries.

Spare parts Automobile spare parts

Quantity handled 4,918,625

Value 531,072,000.00
Transactions 31,926
No of dealers 7

• Material comes through courier/

Transport
• Material is stored at primary as
well as secondary locations.
• Padali branch office, Mr. Bhavasar
is notified
• MAN (Metropolitan Area Network)
is being used to print pick slips by
branch office at Fairdeal
warehouse.
• Pick slip is then validated against IN4VANCFA software module
(Menu 1, Option 9)
• DC (Delivery Challan) is then printed by warehouse people.
• DC, LR, gate pass are made in triplet.
• 1 copy with Fairdeal, 1 copy with MICO branch office and 1 copy
with transporter are maintained.

Manoj Banshilal Pachouri 72 ICFAI Business School

FIFO: Colored codes with month number are labeled to bulk items.
Loose material (less quantity)

Recommendations for MICO:

Rally for AS/ 400 Software used in MICO is very old and due to lack of
proper maintenance speed of system is very slow. Computer operator
has to wait for a long time after entering a command. It should be
replaced with some advanced software like SAP R/3.

Manoj Banshilal Pachouri 73 ICFAI Business School

TVS Motors

Factory location Hosur, Tamilnadu and Mysore

Company website http://www.tvsmotor.co.in/

Process owner Mr. Mitesh Shah

Computer operator Mr. Narendra

Store keeper Mr. Mohan

Software used SAP R/3

Brands TVS Victor, TVS Centra, TVS Apache, TVS Pep, TVS Star

Spare parts TVS bikes spare parts

Quantity handled 46,668

Value 1,464,980,532.82

Transactions 2,057

No of dealers 34

Operations in TVS Motor are purely clearing & forwarding. Trucks come
to warehouse from factory location. After verifying documents, trucks
are unloaded.
At the time of unloading, bikes are checked for Key, Battery, Rear-
view mirror, Tool box and other accessories. It is also checked for any
physical damage or scratches. If scratches or damages are found,
bikes are stored in scrap warehouse.

After inspection bikes are stored brand wise and lorry number is noted
down on the seats of bikes.
Orders are taken by branch office and conveyed to computer operator
of Fairdeal via telephone. Computer operator then validates it against
SAP R/3 by entering order number.

Store keeper then goes to warehouse and writes down serial numbers
of ordered brands. These numbers are used to prepare bill.
Due to scratches on barcode labels or lack of proper lights, there are
problems in noting down serial numbers. Store keepers get confused
between digits 8 & 3 and 0 & 8.

Manoj Banshilal Pachouri 74 ICFAI Business School

FIFO: Manufacturing weak number is present on number plate of
bikes with Engine numbers and frame numbers. At present bikes
received first are dispatched first but this rule is not followed strictly.

Some times there is error of Cross-Dispatching, i.e. bikes billed for one
dealer are dispatched to other dealers. This error occurs due to labor
picking wrong bikes or error in noting down serial numbers.

Notes:
• 5000 bikes dispatched per month all over Gujarat.
• Physical stock sometimes does not tally with book value.
• In case of cross-dispatching, Bill has to be made in Excel sheet.

Recommendations to TVS:
• TVS division has two computers, one for SAP R/3 operations and
other for assistant works. These computers should be connected to
each other through network connection. As of now, data has to be
transferred using Floppy disks from one machine to another.
• Transporters should be encouraged to intimate Fairdeal in advance
about their arrival. This will help Fairdeal in arranging for bikes
space and avoid parallel unloading.
• Cordless barcode scanner can be used to scan serial numbers
instead of doing it manually. This will reduce human errors as well
as increase efficiency of receiving and dispatching also.
• TVS should ask SAP R/3 to provide them with integrating software
which can transfer data to and from cordless barcode scanner and
SAP R/3 module.

Manoj Banshilal Pachouri 75 ICFAI Business School

Bell Ceramics

Factory location Dora near Baroda, Hoskote near

Bangalore

Company website http//www.bellceramics.com/

Branch Manager Mr. Ramesh Desai

[[email protected]]

Process owner Mr. Hemant Thakkar

Computer operator Mr. Hemant Thakkar

Software used MFG Pro

Products wall and floor tiles

Quantity handled (Sq mts) 250,426.93

Value (INR) 47,127,843.96

Transactions 4,464

No of dealers 100

Bell ceramics has tiles in 200X300 mm,

300X300 mm, 397X397 mm and 400X400
mm categories. Wall tiles are
manufactured at Dora and Hoskote plant
manufactures floor tiles only.
Tiles are checked for physical damages and If damages are up to Rs
4000/- or less, damage is claimed from transporter, else it is claimed
from insurance company.
Order is taken on phone by Fairdeal. At present, dealers have to keep
pre-signed cheques with depot. If cheques of dealer are not present,
no order will be made.

If cheques are present, invoice is printed and material is dispatched

with gate pass and LR copies.

Data in MFG Pro software is uploaded by emailing Microsoft Excel (.xls)

sheets.

Manoj Banshilal Pachouri 76 ICFAI Business School

Notes:
• Tile Shades vary every batch. There is at least 2% to 3% variation
in shade for every batch change.

Recommendations for Bell Ceramics:

All orders in bell ceramics are placed either via telephone or written
order is sent to depot. This increases Fairdeal’s work as orders have to
be punched manually by Fairdeal staff. Further, this company does not
have any branch office in Gujarat and Area Sales Manager Mr. Ramesh
Desai works from Fairdeal premises itself. Fairdeal should negotiate
with Bell management to provide them with better infrastructure to
operate its activities better.

Manoj Banshilal Pachouri 77 ICFAI Business School

IM Technologies

Process Owner Mr. Aashish

Store Incharge Mr. Aashish

Factory location Noida

Quantity handled 502,000

Value (INR) 10,072,500.00

Transactions 19

No of dealers 1

SIM cards come from Noida (imported from abroad) through courier.
Carton is checked at time of receiving and stored at ground floor itself
from where it is dispatched to Idea Cellular, Gandhinagar.

MRF Paints

Factory location Chennai

Head Office Mumbai

Branch Manager Mr. Himanshu P. Maniyar

Process owner Mr. Vinod

Computer operator Mr. Tushar

Software used MS Dos based InvMenu, IMS and Bill Printing

Products Paint products and speciality coatings

Quantity handled 33,396.3

Value (INR) 8,368,599.93

Transactions 2,605

No of dealers 65

Manoj Banshilal Pachouri 78 ICFAI Business School

Notes:
RCB Menu: Software for taking payment from party
SRCN: Expired material coming back to depot
IBTA: Stock transfer (Inter depot)
DSO: Direct Sales Order
IMS: Inventory Management System

Recommendations to MRF:
• MRF paint is using very primitive softwares and need immediate
attention towards this field. Its softwares are almost obsolete and
many of its modules are either out of date or not upgraded.

Manoj Banshilal Pachouri 79 ICFAI Business School

Security at Fairdeal Distribution Services Pvt. Ltd

Process Owner: Mr. Ram Prakash Singh Kushwah

• Material is loaded in presence of security guard, Godown keeper

and truck driver and signed by all three also.
• Gate pass is checked for quantity (short or excess both) and
validated against physical goods at the time of dispatching at main
gate.
• Inward and outward registers are maintained company wise and
day wise also.
• Staffs register tracks In and Out time of employees.
• Truck daily register records vehicle number, driver’s name, Party
name (transporter or dealer’s name), loading or unloading, In time,
Out time, security guard’s sign
• At Main warehouse, Fairdeal has eight security guards.

These company wise processes study in this phase will make the basis
for further research in next phases, ABC Analysis and AS-IS Analysis
phases, of the project.

Manoj Banshilal Pachouri 80 ICFAI Business School

 ABC ANALYSIS

Value Wise and Quantity Wise

Manoj Banshilal Pachouri 81 ICFAI Business School

Definition of ABC Analysis

ABC Analysis: ABC Analysis is an inventory management tool based

on the tenets of Pareto Analysis. It categorizes inventory by its highest
value and greatest volume. With this information, inventory managers
can focus on increasing those inventory SKUs with the greatest
potential positive return for the organization.

In this analysis, items are classified into three categories which are as
follows:

Category A: This category consists of 10% of items by Units of

Measure (UOM) i.e. quantity and 70% by value. This is most valuable
category and most attention should be given to this category.

Category B: This category consists of 20% of items by Units of

Measure (UOM) and 20% by value. This category items are less
profitable than category A items but more profitable than category C
items.

Category C: This category consists of 70% of items by Units of

Measure (UOM) and 10% by value. This is least valuable category and
least profitable as well.

In this phase, operations of all client companies have to be categorized

in A, B or C groups to get the information about which companies
constitute the major part in Fairdeal’s turnover. ABC Analysis for client
companies would be done value wise and quantity wise to get a better
picture of companies’ operations as a company which constitutes
major part in terms of value might be dealing in precious items like
jewellery but it might not have large volume.

Data Collection
Data for all companies was collected either from their ERP applications
or I had to search the data from reimbursement registers, inbound
registers, outbound registers, invoices, freight claim registers etc.
Some software packages, like Rally for AS/400 in MICO, did not have
any modules for sales figures in which case help of management was
taken to provide the relevant data.

Manoj Banshilal Pachouri 82 ICFAI Business School

Value Wise ABC Analysis

Note: All values are in INR (Indian Rupees)

MRF Data
Value
Apr-05 534,114.41
May-05 725,556.48
Jun-05 613,363.11
Jul-05 614,082.04
Aug-05 707,640.88
Sep-05 791,279.70
Oct-05 978,227.84
Nov-05 777,799.40
Dec-05 734,249.01
Jan-06 730,710.29
Feb-06 628,394.07
Mar-06 533,182.70
Total 8,368,599.93

TVS Motor Data

TVS Motors Total
Value (INR) 1,464,980,532.82

BPL Techno Vision Data

BPL Sanyo Product Value
AUDIO DVD 124A 575,127.00
PICNIC 69,141.00
SANGEETH A3 91,498.00
SPORTY 35,098.78
LANTERN RLF 650 RED 217,350.00
RLF 750 BLUE 10,489.00
RLT 210 D YELLOW 2,262.00
GAS TABLE 7100 P (SS) 16,632.00
7300 P (SS) 0.00
TOTAL 1,017,597.78

Manoj Banshilal Pachouri 83 ICFAI Business School

 Titan Industries Data
Fastrack Tommy
Titan Sonata Sunglass Hilfiger TANISHQ TOTAL
Value (INR) 271,727,719.00 118,264,653.00 12,492,624.00 9,076,780.00 248,789,220.00 660,350,996.00

Tanishq Jewellery Data

Gold Plain Gold Studded Gold Coins Silver Silver Coins Platinum
Value (INR) 119,932,102.00 66,863,446.00 27,073,365.00 259,000.00 578,485.00 241,800.00

PLAIN Gold Plain -

JEWELLERY UCP SOLITAIRE
WITH STONES Jewellery TOTAL
Value (INR) 29,003,056.00 4,687,752.00 150,214.00 248,789,220.00

Tata Tea Data

Tata Tea Total
Value (INR) 32,850,286.31

Bell Ceramics Data

Bell Ceramics Total
Value (INR) 47,127,843.96

McFills Data
McFills Total
Value (INR) 20,471,003.33

IM Technology Data
IM Technology Total
Value (INR) 10,072,500.00

Amara Raja Data

Amara Raja Total
Value (INR) 112,960,900.98

Manoj Banshilal Pachouri 84 ICFAI Business School

MICO Data
MICO Total
Value (INR) 531,072,000.00

Bharti Teletech Data

Bharti Teletech Total
Value (INR) 211,538,743.29

Voltas Data
Voltas Total
Value (INR) 177,385,730.66

Annual sales for the financial year 2005-06 for Gujarat state were
tabulated in descending order of their turnovers as follows:

Companies in descending order of turnovers

Company Value (INR)
TVS Motor 1,464,980,532.82

Titan 660,350,996.00
MICO 531,072,000.00
Bharti 211,538,743.29
Voltas 177,385,730.66
Amara Raja 112,960,900.98
Bell 47,127,843.96

Tata Tea 32,850,286.31

McFills 20,471,003.33
IM Tech 10,072,500.00

MRF Paints 8,368,599.93

BPL Sanyo 1,017,597.78

Manoj Banshilal Pachouri 85 ICFAI Business School

Table 5: ABC Analysis - Value Wise
Company Value (INR) % of total value Cumulative % Category
TVS Motor 1,464,980,532.82 44.69% 44.69% A
Titan 660,350,996.00 20.14% 64.83% A
MICO 531,072,000.00 16.20% 81.03% B
Bharti 211,538,743.29 6.45% 87.49% B
Voltas 177,385,730.66 5.41% 92.90% C
Amara Raja 112,960,900.98 3.45% 96.34% C
Bell 47,127,843.96 1.44% 97.78% C
Tata Tea 32,850,286.31 1.00% 98.78% C
McFills 20,471,003.33 0.62% 99.41% C
IM Tech 10,072,500.00 0.31% 99.71% C
MRF Paints 8,368,599.93 0.26% 99.97% C
BPL Sanyo 1,017,597.78 0.03% 100.00% C
TOTAL 3,278,196,735.05 100.00%

Total of all values was calculated which was used to calculate

percentage of total value contributed by each company as follows:

Percentage of total value = Turnover of company

----------------------------------
Total turnover of companies

After this, cumulative percentage is calculated for companies sorted in

descending order of values. These cumulative percentages are used to
categorize companies in A, B and C categories using formula,

If, Cumulative percentage < 70% => A Category

Else if, Cumulative percentage > 70% but < 90% => B Category
Else, C Category

It is evident from table that contribution of TVS motor is largest with

44.69% and that of BPL Sanyo is least with 0.03%.

Manoj Banshilal Pachouri 86 ICFAI Business School

Quantity Wise ABC Analysis

MRF Data in Litres

Qty 1 Qty 2 Qty 3
Apr-05 503.75 614 1218.5
May-05 732 456.25 1513
Jun-05 611 506 1485
Jul-05 1183.75 318 1010.3
Aug-05 1735 343 935
Sep-05 1600 416 1531.5
Oct-05 847.8 1400.5 1218.5
Nov-05 1145.5 613.8 1167.8
Dec-05 875 747.5 1206.2
Jan-06 813.8 703 1367.4
Feb-06 737.7 589.5 1181.5
Mar-06 918.25 360 790.5
Total 33396.3

TVS Motor Data

TVS Motors Total (bikes)
Quantity 46668

BPL Techno Vision Data

BPL Sanyo Product Quantity (pcs)
AUDIO DVD 124A 189
PICNIC 60
SANGEETH A3 110
SPORTY 24
LANTERN RLF 650 RED 230
RLF 750 BLUE 10
RLT 210 D YELLOW 10
GAS TABLE 7100 P (SS) 11
7300 P (SS) 0
TOTAL 644

Manoj Banshilal Pachouri 87 ICFAI Business School

 Titan Industries Data
Fastrack Tommy
Titan Sonata Sunglass Hilfiger TANISHQ TOTAL
Quantity (pcs) 155,153 171,851 11,058 1,644 26,440 366,146

Tanishq Jewellery Data

Gold Plain Gold Studded Gold Coins Silver Silver Coins Platinum
Quantity (pcs) 10,790 4,635 4,650 84 4,234 17

PLAIN
JEWELLERY Gold Plain - SOLITAIRE
WITH STONES UCP Jewellery TOTAL
Quantity (pcs) 1,016 995 19 26,440

Tata Tea Data

Tata Tea Total
Quantity (Kg) 277,340.55

Bell Ceramics Data

Bell Ceramics Total
Quantity (sq mts) 250,426.93

McFills Data
McFills Total
Quantity (boxes) 67,764

IM Technology Data
IM Technology Total
Quantity (pcs) 502,000

Amara Raja Data

Amara Raja Total
Quantity (pcs) 58,560

Manoj Banshilal Pachouri 88 ICFAI Business School

MICO Data
MICO Total
Quantity (pcs) 4,918,625

Bharti Teletech Data

Bharti Teletech Total
Quantity (pcs) 146,888

Voltas Data
Voltas Total
Quantity (pcs) 14,435

Total quantities dispatched for the financial year 2005-06 for Gujarat
state were tabulated in descending order of their quantities as follows:

Companies in descending order of quantities

Company Quantity
MICO (pcs) 4,918,625
IM Tech (cards) 502,000
Titan (pcs) 366,146
Tata Tea (kg) 277,341
Bell (sq. mts) 250,427
Bharti (pcs) 146,888
McFills (boxes) 67,764
Amara Raja 58,560
TVS Motor (bikes) 46,668
MRF Paints (ltr) 33,396
Voltas (pcs) 14,435
BPL Sanyo (pcs) 644

Manoj Banshilal Pachouri 89 ICFAI Business School

Table 6: ABC Analysis - Quantity Wise
Company Quantity % of total Quantity Cumulative % Category
MICO (pcs) 4,918,625 73.60% 73.60% A
IM Tech (cards) 502,000 7.51% 81.11% B
Titan (pcs) 366,146 5.48% 86.59% B
Tata Tea (kg) 277,341 4.15% 90.74% B
Bell (sq. mts) 250,427 3.75% 94.49% C
Bharti (pcs) 146,888 2.20% 96.69% C
McFills (boxes) 67,764 1.01% 97.70% C
Amara Raja 58,560 0.88% 98.58% C
TVS Motor (bikes) 46,668 0.70% 99.27% C
MRF Paints (ltr) 33,396 0.50% 99.77% C
Voltas (pcs) 14,435 0.22% 99.99% C
BPL Sanyo (pcs) 644 0.01% 100.00% C
TOTAL 6,682,894 100.00%

Method for categorizing companies in A, B and C categories is same as

that used in aforesaid value wise ABC Analysis.

It is evident from table that contribution of MICO is largest with 73.6%

and that of BPL Sanyo is least with 0.01%.

Manoj Banshilal Pachouri 90 ICFAI Business School

Transactions Wise ABC Analysis

MRF Data
Transactions
Apr-05 228
May-05 241
Jun-05 215
Jul-05 231
Aug-05 222
Sep-05 268
Oct-05 192
Nov-05 224
Dec-05 193
Jan-06 239
Feb-06 185
Mar-06 167
Total 2605

TVS Motor Data

TVS Motors Total
Transactions (No) 2,057

BPL Techno Vision Data

BPL Sanyo Product Transactions
AUDIO DVD 124A 22
PICNIC 8
SANGEETH A3 14
SPORTY 3
LANTERN RLF 650 RED 9
RLF 750 BLUE 1
RLT 210 D YELLOW 1
GAS TABLE 7100 P (SS) 1
7300 P (SS) 0
TOTAL 59

Manoj Banshilal Pachouri 91 ICFAI Business School

 Titan Industries Data
Fastrack Tommy
Titan Sonata Sunglass Hilfiger TANISHQ TOTAL
Transactions 2,884 1,103 357 206 1,183 5,733

Tanishq Jewellery Data

Gold Plain Gold Studded Gold Coins Silver Silver Coins Platinum
Transactions 335 323 159 9 11 13

PLAIN Gold Plain -

JEWELLERY UCP SOLITAIRE
WITH STONES Jewellery TOTAL
Transactions 199 128 6 1,183

Tata Tea Data

Tata Tea Total
Transactions (No) 1,806

Bell Ceramics Data

Bell Ceramics Total
Transactions (No) 4464

McFills Data
McFills Total
Transactions (No) 67,764

IM Technology Data
IM Technology Total
Transactions (No) 19

Amara Raja Data

Amara Raja Total
Transactions (No) 4,136

Manoj Banshilal Pachouri 92 ICFAI Business School

MICO Data
MICO Total
Transactions (No) 31,926

Bharti Teletech Data

Bharti Teletech Total
Transactions (No) 1611

Voltas Data
Voltas Total
Transactions (No) 5,929

Total transactions done by company to dispatch aforesaid quantity for

the financial year 2005-06 for Gujarat state were tabulated in
descending order of their transactions as follows:

Companies in descending order of transactions

Company Transactions
MICO 31,926
Voltas 5,929
Titan 5,733
Bell 4,464
Amara Raja 4,136
MRF Paints 2,605
TVS Motor 2,057
Tata Tea 1,806
Bharti 1,611
McFills 1,233
BPL Sanyo 59
IM Tech 19

Manoj Banshilal Pachouri 93 ICFAI Business School

Table 7: ABC Analysis - Transaction Wise
% of total
Company No of Transactions Transactions Cumulative % Category
MICO 31,926 51.85% 51.85% A
Voltas 5,929 9.63% 61.47% A
Titan 5,733 9.31% 70.79% A
Bell 4,464 7.25% 78.03% B
Amara Raja 4,136 6.72% 84.75% B
MRF Paints 2,605 4.23% 88.98% B
TVS Motor 2,057 3.34% 92.32% C
Tata Tea 1,806 2.93% 95.25% C
Bharti 1,611 2.62% 97.87% C
McFills 1,233 2.00% 99.87% C
BPL Sanyo 59 0.10% 99.97% C
IM Tech 19 0.03% 100.00% C
TOTAL 61,578 100.00%

Method for categorizing companies in A, B and C categories is same as

that used in aforesaid value wise ABC Analysis.

It is evident from table that contribution of MICO is largest with

51.85% and that of IM Technology is least with 0.03%.

Manoj Banshilal Pachouri 94 ICFAI Business School

 AS-IS ANALYSIS

Process Matrices

Manoj Banshilal Pachouri 95 ICFAI Business School

Definition of AS-IS Analysis

As-Is Analysis phase of BPR is aimed specifically at identifying

disconnects within existing business processes and their specified
intent. Disconnects mean anything that prevents the process from
achieving desired results (e.g., inconsistency between the functions of
a process that cause failings of the existing process to achieve its
intent)

Steps taken to describe the AS-IS process also includes documentation

of the sequence in which activities are performed.

This phase of project report summarizes the notes, facts and findings
of the current business processes at Fairdeal Distribution Services Pvt.
Ltd. The material was collected, analyzed, and presented by me to Mr.
Sharad Jobanputra (Company Guide) and Mr. Bharat Kantharia
(Faculty Guide). This section is intended to serve as input to the
process mapping, flowcharting and TO-BE Analysis section.

My Mechanism: After understanding the workings and processes of

Fairdeal during Organization and Processes phase, my next objective
was to measure all the important processes. For this, all the relevant
documents are gathered and all the processes and sub-processes
studies in previous phase are listed out which are:

1. Verify goods against Goods In Transit

2. Receiving Goods
3. Give acknowledgement to transporter
4. Physical inspection of inbound material
5. Scan barcode serial numbers
6. Make shortage-claim or Damages-claim
7. Intimate shortage claim or damages claim to branch office
8. Unload inbound material
9. Segregate material in brands and shades
10. Arrange for bitumen sheets or pallets
11. Store material according to companies stacking norms
12. Update goods in transit and current stock modules
13. Update stock register

Manoj Banshilal Pachouri 96 ICFAI Business School

14. Make stack cards
15. Place stack cards on goods
16. Re-pack material, if required
17. Re-labeling of goods
18. Stock Maintenance
19. Receive orders from customers
20. Receive stock transfer requests
21. Punch orders
22. Collect cheques from customers
23. Check availability of ordered goods
24. Check availability of customer’s checks with Fairdeal
25. Intimate customers about insufficient cash
26. Make pending orders
27. Short close orders in case of shortage of goods
28. Print invoice
29. Prepare Gate pass
30. Verify ordered quantity against invoice
31. Load material on vehicle
32. Dispatch goods
33. Check stock in warehouse after dispatching
34. Receive ‘goods received’ acknowledgement from customers
35. Pay Octoroi if applicable
36. Receive unsalable material
37. Receive warranty returns
38. Intimate principal about warranty claims
39. Intimate principal about scrap material
40. Generate weekly and monthly reports
41. Claim Octoroi claims from company
42. Claim transport charges from company

Manoj Banshilal Pachouri 97 ICFAI Business School

All the processes and sub-processes mentioned here are not under
control of Fairdeal. Some processes are initiated outside Fairdeal and
some are partially or fully controlled by outside sources like dealers
and branch offices.
Out of these procedures and sub-procedures, eleven most vital
procedures were shortlisted as main processes for further analysis and
remaining out of 42 were classified as sub-processes of these main
processes. The main processes are:
1. Goods Receiving
2. Storing Material
3. Cycle Count
4. Order Punching
5. Order Approval
6. Invoice/ Bill Printing/ Stock Transfer
7. Dispatching
8. Transportation
9. Handling Unsalable Material
10. Handling Warranty Claims
11. Stock Maintenance
These processes are general processes common to all companies
handled by Fairdeal Distribution Services Pvt. Ltd. Those Processes
which are specific to a particular company are indicated by company
name in the parentheses.

These processes were then again studied and process matrices were
prepared for each process.
Process Matrix contains activities that are undertaken in every process.
All activities might not be followed in the process and some activities
are alternate activities. All the process matrices are shown graphically
also which are drawn using Microsoft Visio 2003.

This phase also includes main issues with related priorities and
excerpts from interview of warehouse labours, clerks, store keepers,
security guards, process owners, managers, and directors of Fairdeal.

Manoj Banshilal Pachouri 98 ICFAI Business School

Decide on an approach

Analysis of every process and its activity steps will decide the future of
the process, i.e. whether it will be redesigned or leaved as it. There
are five possible courses of action:
• Drop/abandon: This process is not necessary, or the benefit will
never justify the cost.
• Outsource: It would be a more effective use of resources to have a
supplier carry out the process. Traditionally, this has been the choice
for generic, infrastructure activities such as cleaning and catering.
• Leave as is: The process is fine; the issues were elsewhere (e.g., no
one follows the process, or training is needed).
• Improve: The basic structure of the process is okay, but specific
improvements are possible.
• Redesign: The process should be fully redesigned.

Manoj Banshilal Pachouri 99 ICFAI Business School

Cycle Time, Wait Time measurements

To measure Wait time, Cycle time, Work time and other measures, In
and out time of trucks were noted down. Following are the in and out
times of some of the companies whose material come through
transport vehicles. These times would be compared with industry’s
ideal loading and unloading times to measure Cycle time, Wait time,
and Working time of various processes.

Note: These tables are drawn in Excel sheets and imported to word
document after doing all calculations like Average, difference etc.

Table 8: Unloading times of Transport Vehicles

IN OUT IN OUT
Beetel 13:30 14:30 ARBL 10:25 12:45
12:20 13:15 10:00 13:30
16:30 17:00 10:00 10:45
12:30 13:45 8:15 13:30
11:45 12:15 10:00 12:00
13:00 13:30 18:00 19:30
12:15 12:45
13:50 14:20 Bell 10:30 14:00
11:45 12:15 10:00 15:00
10:00 13:45
Voltas 18:30 19:10 10:45 12:15
17:00 18:15 11:10 15:20
15:00 16:45 11:45 12:15
16:15 17:00
15:15 16:45
11:15 13:00 McFills 16:30 17:45
21:15 22:00 17:15 18:45
10:45 12:15
12:45 13:45
14:15 15:30 Tata Tea 10:25 12:45
13:00 14:00 13:45 16:45

Manoj Banshilal Pachouri 100 ICFAI Business School

Table 9: Loading & Unloading times in TVS (With four labors)

TVS Motors
Loading (20 - 26 Bikes) Unloading (50 - 56 Bikes)
IN OUT IN OUT Loading Time (Hrs) Unloading Time
10:15 13:00 10:35 12:05 2:45 1:30
14:24 16:15 12:10 13:05 1:51 0:55
15:15 17:00 13:10 15:10 1:45 2:00
12:00 13:10 15:30 17:15 1:10 1:45
13:30 14:15 7:50 8:50 0:45 1:00
14:20 16:30 10:30 12:15 2:10 1:45
16:45 18:15 15:45 15:00 1:30 1:15
18:20 19:30 15:30 18:00 1:10 2:30
18:30 19:45 10:00 11:10 1:15 1:10
18:45 19:00 11:20 12:55 0:15 1:35
12:30 14:00 11:30 12:45 1:30 1:15
18:00 20:00 12:50 14:15 2:00 1:25
18:45 20:00 14:45 16:00 1:15 1:15
13:45 14:45 16:00 17:45 1:00 1:45
16:35 18:00 16:30 18:00 1:25 1:30
17:45 18:30 10:45 12:00 0:45 1:15
18:30 19:45 11:30 13:30 1:15 2:00
14:40 16:50 10:00 11:00 2:10 1:00
16:35 18:05 10:30 11:40 1:30 1:10
18:00 19:10 18:10 19:20 1:10 1:10
18:20 19:25 10:00 11:00 1:05 1:00
18:55 19:10 11:10 13:30 0:15 2:20
Avg. Time 1:21 1:28

Table 10: Ideal Unloading times (with four labors)

Industry Ideal Unloading Times

Automobile (TVS) 1 hour

Food & Snacks (McFills) 30 Min
Batteries (Amara Raja) 2 hours (Due to security check for acids)
Home appliances (Voltas) 1 hours
Telecommunications (Bharti) 30 minutes
Tiles (Bell Ceramics) 2 hours

Manoj Banshilal Pachouri 101 ICFAI Business School

Table 11: Fairdeal’s Unloading times

Industry Fairdeal’s Average Unloading Times

Automobile (TVS) 1.28 hours

Food & Snacks (McFills) 1.22 Min
Batteries (Amara Raja) 2.33 hours
Home appliances (Voltas) 1.13 hours
Telecommunications (Bharti) 41 minutes
Tiles (Bell Ceramics) 3.04 hours

It is clearly visible from above tables that Cycle time and Wait time of
Fairdeal’s unloading activities are far more than ideal industry
measures. Some of the reasons for deviations in these measures are
as follows:
1. Lack of space to unload material
2. Lack of sufficient labours
3. Security checks at gate
4. Physical inspection of material
5. Delay in issuing material received acknowledgement

Moving and Non-moving materials

Average cycle time of processes can not be calculated because almost
all companies have fast moving, slow moving and non-moving goods
categories. Cycle times of individual products or brands only can be
calculated which is out of scope of this project.
I would calculate Cycle times of individual products if time permits
after completion of this project.

Manoj Banshilal Pachouri 102 ICFAI Business School

Process Matrices [Key Performance Indicators (KPIs)]

Metrics, or key performance indicators (KPIs), give a feel for the

dynamics of the process before diving into the assessment. Metrics
provide useful guidance to focus efforts and requirements.

Table 12: Summary of Metrics

Summary of Metrics
Executing Waiting Involvement Efficiency Cost
Time Time
Cycle time Idle People Attritions Unloading costs
Work time Transit Departments Rework Loading costs
Time worked Queue Dealers Training Storing costs
Queue time Setup Stockists Errors Maintenance costs
Idle time Labor Iterations Re-packing costs
Locations Delay Octoroi charges
Languages Complaints VAT charges
Branch Office Damage costs
Transporters Transportation costs

Manoj Banshilal Pachouri 103 ICFAI Business School

Goods Receiving Process

Goods Receiving process is initiated by either transporter or courier

service provider when material is brought to Fairdeal warehouse. This
process ends with accepting the material for storing it into warehouse.
Some of the main activities in this process are:

Verify goods against Goods in Transit

Goods are checked to see that they comply with the specifications laid
down in the order form. This is particularly important for goods which
have been ordered for a specific purpose, like POP or promotional
goods, rather than for general stock and also for goods which will be
issued directly to users without being entered into normal stock
records and which are received only occasionally (as in IM Technology
case where goods are directly dispatched to Idea Cellular).

Physical inspection of inbound material

To enforce security at a warehouse, a duty officer mans a Gate Office.
This Gate Officer is responsible for:
• Completing meticulous records about vehicles entering or leaving
the warehouse area. This applies to both suppliers' and the
warehouse's own vehicles. In the record is each vehicle's
registration number, details of the delivery note, the name of the
supplier and the times of arrival and departure.
• Giving all drivers clear directions. Drivers employed by external
suppliers are supervised all the time they are inside the warehouse
security area.
• Searching departing vehicles to ensure they contain no
unauthorized load.

Give acknowledgement to transporter

Acknowledgement of goods received is given to transporter either by
signing on copy of LR or by issuing a separate document. Any damage
or shortage has to be mentioned in the document.

Scan barcode serial numbers

A Bar code is a series of wide and narrow bands and spaces which
represent numbers and letters. These bar codes, in machine-readable
format, can be printed on package labels or cases. They can also be
specially printed on labels by a dot matrix, ink-jet or full character
impact printer.

Manoj Banshilal Pachouri 104 ICFAI Business School

The codes are read by a light pen or a fixed-beam reader scanner. The
readers are interpreted by a micro-processor decoder. Decoders are
used to record and identify goods received and goods issued. They are
linked to a computer which updates the inventory control data base,
adjusting records of stock levels automatically.

Make shortage-claim or Damages-claim

If some items are found to be missing or damaged, the first thing done
is to segregate the defective unit or packages. This is the responsibility
of the Store Incharge to sign for the receipt of the consignment.
Where packages are obviously damaged on the outside, the contents
are checked carefully. The transporter's representative then
countersigns the endorsement.
The Depot Incharge may choose to send the goods back. Alternatively,
he has been instructed to qualify his signature on the delivery note by
writing a comment.
Once the loss or damage has been verified, it is notified to the supplier
straight away. He can then make a claim against the carrier, or other
parties.

Intimate shortage claim or damages claim to branch office

If the full complement of items ordered is not received (shortage) or if
goods arrive damaged, compensation has to be claimed from the
insurance company according to company norms.
Storage claim or damages claim are intimated to Area Sales Manager
(ASM), Supply Chain Manager (SCM) and transporter.

Unload inbound material

After inspection of material is complete, material is scanned (if
applicable as in Voltas) for barcode serial numbers and off-loaded from
the lorry. Generally two to four labors are used to off-load material in
Fairdeal.
In TVS motors, Bikes are checked for battery, accessories, tool kit etc
at the time of off-loading.

Manoj Banshilal Pachouri 105 ICFAI Business School

Table 13: Goods Receiving Process
Process 1 Goods Receiving
Goods arrive from factory locations or other locations in case of Stock-
Activities 1.1
Transfers.
1.2 Area branch office is notified about arrival of material. [Voltas]
STM is received from transporter or courier person containing GRN and
1.3
outbound number.
In case of courier service, Individual carton is weighed and verified
1.4.1
against printed weight on carton. [Titan watches]
If weight of carton does not match with printed weight, Carton will be
1.4.2
opened before courier person. [Titan watches]
Docket wise Cartons are opened and watches are checked with packing
1.4.3
slips which are inside the carton. [Titan watches]
1.5 Material unloaded from Lorry.
Material is manually inspected for any physical damage and accessories
1.6 E.g. TVS bikes are checked for whether key and tool kit is with bike or
not, rear view mirror and battery is attached with bike.
In case of physical damage or short supply:
• Supply Chain Manger is informed.
1.7
• Local ASO (Area Sales Officer) is informed.
• Damage claim or Shortage claim is prepared.
1.8 Serial numbers are scanned using cordless barcode scanner. [Voltas]
1.9 Goods received acknowledgement given to logistics person.
1.10 Material is stored in warehouse.
1.11 Upload receiving status on applications like SAP R/3, SDNet, MFG Pro
1.12 Mail is sent to Supply Chain Managers. [Amara raja batteries]

Responsibility Godown Keeper

People Involved 6 Persons
Location Warehouse
Frequency 22,277 pieces per day (300 working days)
Input Dataflow Material status from Goods in transit Module
Documents Invoice cum delivery challan, LR receipt
Output Dataflow Material received notified to branch office through mail
Documents Material received receipt given to transporter
Reports Statutory Monthly report generated
MIS Current Inventory Status
Existing Integrations Current stock in warehouse
Controls STM should match goods in transit

Manoj Banshilal Pachouri 106 ICFAI Business School

Figure 4: Flowchart of Goods Receiving Process

Manoj Banshilal Pachouri 107 ICFAI Business School

Storing Material Process

This process is initiated by goods receiving process and ends with

storing material into scrap warehouse or finished goods warehouse.
Some of the main activities in this process are:

Segregate material in brands and shades

Packages or individual items are clearly marked with identification
codes or descriptions, according to the stock control system prescribed
by the principal company. They are also marked with any information
about restriction of issue.

Arrange for bitumen sheets or pallets

Pallet loads are first checked to see that they are secure. All pallet
loads are properly strapped, banded and fastened to the pallet
according to the type of product.

Store material according to companies stacking norms

Tata tea bags and cartons are stacked in a honey comb pattern.
Batteries in Amara Raja are stored on pallets according to batch to
ensure FIFO. Bell ceramics tiles are stacked batch wise and shade
wise.

Update goods in transit and current stock modules

After goods are received, Goods in transit module is updated and
material in goods in transit module then shifts to current stock with
CFA module.

Update stock register

Physical stock register is updated once material is received or
dispatched from the warehouse. This ensures tracking of material on
daily basis. Stock register is helpful at the time of order punching
when it is verified for stock availability.

Manoj Banshilal Pachouri 108 ICFAI Business School

Make stack cards
Stack cards are prepared to ensure proper maintenance and delivery
of material. They are also used tat the time of safety measures and
cycle count. Stack card contains name of product, name of brand,
number of quantity, batch number, manufactured date etc. Stack
cards can be substituted by barcode labels for better efficiency.

Place stack cards on goods

After stack cards are prepared, they are placed on goods as follows:
• If material is stored in racks, stack card is pasted on rack.
• If material is stored on pallets, stack card is putted on it.
• If material is putted on bitumen sheets, stack card is placed in box.

Manoj Banshilal Pachouri 109 ICFAI Business School

Table 14: Storing Material Process
Process 2 Storing Material
Activities 2.1.1 Separate locations are allotted for product of different companies.
2.1.2 Same company goods are stored product wise.
Yellow lines are marked on the floor of warehouse and material has to
2.2.1
be stored within those lines only.
Bitumen set or pallets are used to store material as par the policy of
2.2.2
company.
Stacking is done according to stacking norms of company. (e.g.: nine
2.2.3
items per stack).
2.2.4 Stacking always is honey comb. [Tata Tea]
2.3.1 Titan products are stored code wise.
2.3.2 Newer Titan products are stacked behind older one to ensure FIFO.
Tiles in Bell Ceramics are stored batch wise as shades change every
2.4
batch.
Lorry number is noted down on seats of TVS bikes and stored brand
2.5
wise. Engine number and frame number are also noted down.
Material is checked for damage. If it is damaged material is stored
2.6
separately in scrap warehouse.
Stack cards are placed on lots containing manufacturing date, batch
2.7
number, and received date to ensure FIFO.
2.8 FMCG products are stored to ascertain FEFO. [McFills]
2.9 Batteries are charged every 40 days. [Amara raja]
2.10 Physical stock is verified against book value on daily basis.

Responsibility Godown Incharge

People Involved 4 Persons
Location Warehouse
Frequency 22,277 pieces per day (300 working days)
Input Dataflow
Documents Invoice cum delivery challan
Output Dataflow Soft copy of stock sent to branch office [Amara raja batteries]
Documents Physical stock register updated
Reports Statutory Monthly report generated
MIS
Existing Integrations Order receiving modules
Controls Location of scrap and finished goods must be different

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Figure 5: Flowchart of Storing Material Process

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Cycle Count Process

This process is carried out regularly at fixed intervals. Time interval

varies from company to company ranging from one day to fifteen
days. For instance, cycle count in TVS Motor and Amara Raja is done
on daily basis while in Titan there is no scheduled time for it.
Store keeper counts the physical stock as per the following rules:
• If material is staked on bitumen sheets, count the number of
cartons or cases of base and multiply it by number of cartons or
cases above it. Then multiply this number with number of pieces
per carton or case to get the total quantity.
• If material is stocked on pallets, count the number of pallets and
multiply the number of items per pallet to get the quantity.
• If material is stored in cartons, count the number of cartons and
multiply the number of items per carton to get the quantity.
• If material is loose, count all materials.
• Very small accessories like screws are measured by weight.

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Table 15: Cycle Count Process
Process 3 Cycle Count
Activities 3.1 Bikes in TVS Motor are counted brand wise and variant wise daily.
3.2 FMCG goods in McFills are counted packs wise and carton wise weekly.
3.3 Amara Raja batteries are counted pallet wise or item wise daily.
3.4 Bell ceramic tiles are counted on fortnightly basis.
3.5 Voltas home appliances are counted item wise weekly.
3.6 Accessory items are counted piece wise or weight wise
3.7 Titan watches are not counted physically.
IM Technology SIM card pieces are not counted as they are cross-
3.8
docked the same day.
Responsibility Godown keeper
People Involved 10 Persons
Location Warehouse
Frequency Company specific ( varies from daily to fortnightly)
Input Dataflow
Documents Book value register
Output Dataflow ASM notified
Documents Update physical value register for date and quantity
Reports Statutory Differences report
MIS Physical stock and Book value stock reports generated daily
Existing Integrations Storing Material, Stock Maintenance
Controls Physical stock must be exactly equal to book value

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Figure 6: Flowchart of Cycle Count Process

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Order Punching Process

Order punching process is initiated either by dealer or branch office,

which includes Stock Transfer requests also, when written or
telephonic order is placed with Fairdeal. This process ends with
computer operator accepting or rejecting the order. Some of the main
activities in this process are:

Receive stock transfer requests

Stock transfer request process is initiated either by local ASM or ASM
of requesting depot to transfer material from one depot to other. This
process is not controlled by Fairdeal other wise procedures of this
process are similar to goods receiving process.

Collect cheques from customers

This process is in use in Bharti Teletech, McFills, Bell Ceramics and
Tata tea where cheques are collected from dealers on behalf of
principal companies. These cheques are then submitted in the account
of the respective principal company.

Check availability of ordered goods

When a customer places an order, it is ensured that the ordered
quantity is available in warehouse. To do so, physical stock register is
checked and verified against book value.

Check availability of customer’s checks with Fairdeal

Some principal companies like Tata tea, McFills and Bell ceramics
require customers to keep advance cheques with Fairdeal. When
customer places an order, it is ascertained before punching the order
that the cheques of respective customers are present with Fairdeal.

Intimate customers about insufficient cash

It is initialed when sufficient cash is not present in customer’s account
or customer’s advance cheques are not present with the depot.
Computer may alert insufficient cash message if customer has placed
order of value greater than his credit limit.

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Table 16: Order Punching Process
Process 4 Order Punching
Orders are taken by sales officer along with DD or in writing by sending
Activities 4.1.1
DD to Fairdeal.
Dealers can also place orders in E-Applications namely; SAP R/3 and
4.1.2
SDNet; or via phone.
Check whether signed blank cheques of concerned dealer are available
4.2 with Fairdeal or not. If not, inform the concerned dealer. [Tata Tea, Bell
Ceramics and McFills]
If company is using SAP R/3, Stock is checked for availability in
warehouse/ depot even before punching the order as SAP R/3 does not
4.3
allow order punching (though pending order can be made) if stock is not
present. [Voltas, Tata Tea]
If order placed via phone it has to be punched into SDNet manually by
4.4
warehouse personnel. [Bharti]
4.5 DD is submitted in Bank and deposit receipt obtained.
4.6 DD details punched into order received form.

Responsibility Computer Operator

People Involved 4 persons
Location Shiromani office and warehouse
Frequency 60 orders per day (300 working days)
Input Dataflow Order details in e-application
Documents Demand Draft or Cheques from dealer
Output Dataflow Order number generated
Documents
Reports Statutory Pending orders report
MIS SDNet, SAP R/3, Financial Accounting System (FAS)
Existing Integrations Storing Material, Physical Stock Register
• Order entry not done if signed blank cheques of dealers are not with
Fairdeal. [Tata Tea, Bell Ceramics, McFills Foods]
Controls
• If stock is not present, order can not be punched into SAP R/3
Module. Though pending orders can be made. [Voltas]

NOTE: Orders are punched into Titan, Bell, Amara Raja, MRF Paints,
TVS Motor, Tata Tea, Bharti and McFills

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Figure 7: Flowchart of Order Punching Process

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Order Approval Process

Order approval process is initiated either by computer operator after

an order is placed with Fairdeal. This process ends with generating
invoice number. Some of the main activities in this process are:

Make pending orders

If ordered material is not present in the warehouse, this order will
remain pending till the ordered material with ample quantity is
received in warehouse from factory location or through stock transfer.

Short close orders in case of shortage of goods

If ample quantity of ordered material is not present in the warehouse,
computer operator modifies the order and changes the number of
quantities ordered from modify order module.

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Table 17: Order Approval Process
Process 5 Order Approval
Activities 5.1 Stock is checked for availability in warehouse/ depot.
5.2 If stock is present order is approved.
5.3 Order is sent for verification by regional sales officer
5.4 Once approved, dispatch order is generated on SDNet. [Bharti]
5.5 If stock is not present, order can be partial dispatched or short closed.
5.6 Notification sent to dealer.
5.7 Check physical stock for threshold stock.
5.8 If stock is below threshold value, place order at company head office.
5.9 Update book stock value
5.10 Stock is checked for availability in warehouse/ depot.

Responsibility Computer operator

People Involved 8 persons
Location Shiromani office and Admin office at warehouse
Frequency 73 orders per day (300 working days)
Input Dataflow Order details from ERP module
Documents Demand Draft or Cheque from dealer
Output Dataflow Dispatching order
Documents Invoice
Reports Statutory
MIS SDNet, SAP R/3, Financial Accounting System (FAS)
Existing Integrations Storing Material, Physical Stock Register
Controls DD details are must for order approving. [Bharti Teletech]

NOTE: Orders are approved in Titan, Bell, Amara Raja, MRF Paints,
TVS Motor, Tata Tea, Bharti and McFills Ltd.

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Figure 8: Flowchart of Order Approval Process

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Invoice/ Bill Printing/ Stock Transfer Process

This process is initiated at the time of dispatching and ends with

printing invoice or stock transfer memo in case of stock transfer.
Invoice is printed in triplet either on company provided pre-printed
stationery or on blank papers.

Table 18: Invoice/ Bill Printing/ Stock Transfer Process

Process 6 Invoice/ Bill Printing/ Stock Transfer
If SAP R/3 or any other ERP package is being used invoice is printed
Activities 6.1
directly from ‘Print Invoice’ menu by entering order number.
If SAP R/3 or any other ERP package is not being used, bill is printed
6.2
manually.
6.3 Invoice contains product specifications along with product value.
6.4 Stock transfer document is printed from ‘Stock Transfer’ menu
6.5 Stock transfer decision is taken by regional sales manager.
Stock transfer order is then forwarded to nearest C &FA depending on
6.6
availability of stock.
No sales tax or VAT is applicable on stock transfers as ownership of
6.7
material does not change.

Responsibility Computer Operator

People Involved 8 Persons
Location Shiromani office and Admin office at warehouse
Frequency 205 invoices per day (300 working days)
Input Dataflow Invoice number e-application
Documents
Output Dataflow Dispatching order
Documents Invoice Printout
Reports Statutory
MIS SDNet, SAP R/3, raja e-ARIMS
Existing Integrations Order Punching, Physical Stock Register
Controls Material movement out of warehouse

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Figure 9: Flowchart of Invoice/ Bill Printing/ Stock Transfer Process

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Dispatching Process

Pick slip is generated and sent to warehouse for picking material.

Every dispatch order and is signed by process manager. When an
order is received in warehouse, it is checked for the correct signature.
Gate pass is then prepared and material is loaded on vehicle or handed
over to courier person. Some of the main activities in this process are:

Verify ordered quantity against invoice

Issues are only made against orders which have been properly
authorized. Sample signatures and initials of all authorized signatories
must are made available to warehouse staff so that they can verify
orders.

Load material on vehicle

At this stage, ordered items are picked from pallets, bitumen sheets,
shelves or racks and assembled in the goods-out area. Here they are
packed, marked and loaded onto trucks for delivery or handed direct
to waiting customers.

Check stock in warehouse after dispatching

It is initiated by store Incharge at the time of loading material. If
material, being dispatched, is found to be below a threshold value,
store Incharge intimates process manager who in turn will notify ASM
and SCM. This material will be indented to factory location for
replenishment.

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Table 19: Dispatching Process
Process 7 Dispatching
Activities 7.1 Take material from warehouse on the basis of FIFO or FEFO.
7.2 Bring material from secondary location to primary location.
7.3 Tiles are dispatched according to batch.
7.4 Material is Loaded on vehicle.
7.5 Gate pass is made to allow goods outside warehouse.
7.6 LR, gate pass and two copies of invoice are given to transporter.
7.7 Transport vehicle is checked for gate pass and physical goods.

Responsibility Depot Incharge

People Involved 15 persons
Location warehouse
Frequency 22,200 pieces per day (300 working days)
Input Dataflow Dispatching details in e-application
Documents Material specification from computer operator
Output Dataflow Dispatching number
Documents Acknowledgement
Reports Statutory
MIS SDNet, SAP R/3, Financial Accounting System (FAS)
Existing Integrations Storing Material, Physical Stock Register
No order can be dispatched without proper documents like Invoice,
Controls
Delivery challan, Gate pass signed by authorized person.

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Figure 10: Flowchart of Dispatching Process

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Transportation Process

This process is extension of dispatching process and is carried out after

material is loaded on the vehicle. Fairdeal provides transportation to
local orders where as outsourced carriers and courier service providers
provide transportation to upcountry orders. Some of the main
activities in this process are:

Prepare Gate pass

Gate pass [refer to format of gate pass in APPENDIX B] is prepared after
material is loaded into lorry or handed over to courier person in the
presence of security Incharge, store keeper and transporter. Purpose
of this document is to keep track of the outbound material leaving the
warehouse.

Pay Octoroi, if applicable

Octoroi is payable in select cities decided by state governments. It
ranges from 4% to 5% of invoice value depending on the type of the
product and city in which Octoroi is payable. Fairdeal pays Octoroi on
behalf of its principal which it claims later.

Receive ‘goods received’ acknowledgement from customers

When material is supplied to a customer, transporter takes goods
received acknowledgement from customer as a proof of correct
delivery. This document is given back to Fairdeal and one copy
remains with transporter which is used at the time of freight
reimbursement.

Claim Octoroi claims from company

As mentioned in Pay Octoroi sub process, Fairdeal pays Octoroi on
behalf of its principal which it claims later. Octoroi is paid on the
material which is transported through its own vehicles or contracted
vehicles. There is no obligation to pay Octoroi when customers take
the delivery at warehouse premises since ownership changes at
warehouse in this case.

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Table 20: Transportation Process
Process 8 Transportation
Local orders are dispatched through Fairdeal’s own vehicles or dealers
Activities 8.1.1
collect their order from warehouse directly.
8.1.2 Up-country orders are dispatched through transport or courier services.
8.2 Octoroi is paid in metropolitan cities.
8.3 Material is unloaded at dealer’s place.
Dealer returns back one signed copy of invoice as acknowledgement of
8.4
goods received.
8.5 Acknowledgement copy of invoice given back to Fairdeal.
8.6 Octoroi charges are claimed from concerned company.

Responsibility Transportation Incharge

People Involved 10 persons
Location warehouse
Frequency 22,200 pieces per day (300 working days)
Input Dataflow
Documents Gate pass from store Incharge
Output Dataflow
Documents Goods Received Acknowledgement
Reports Statutory Freight reimbursement report
MIS Current stock, goods in transit
Existing Integrations Storing Material
No order can be dispatched without proper documents like Invoice,
Controls
Delivery challan, Gate pass signed by authorized person.

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Figure 11: Flowchart of Transportation Process

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Handling Unsalable Material Process

Material is classified into Non-moving, Slow-moving and unsalable

material categories. Dealers or Stockists initiate this process when
material becomes unsalable because of expiry of date, obsoleteness,
change in technology, introduction of new brands, damage or any
other reason. Some of the main activities in this process are:

Intimate principal about scrap material

Fairdeal works closely with its principal companies so that there is a
constant information exchange about stock requirements and stock
levels. Scrap items are kept separate from new items in scrap
warehouse. For instance, if TVS motor decides to discontinue a vehicle,
its spares will become obsolete. Similarly, when scrap material piles up
above its threshold limit, company is notified about its removal.

Claim scrap transport charges from company

Fairdeal has its own dedicated vehicles to deliver local orders to
customers. When scrap material dispatched to principal company
through its own vehicles or contracted vehicles, Fairdeal pays freight
charges on behalf of principal company which it claims from them
later. Transport claims includes loading and off-loading charges which
vary product to product accordingly.

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Table 21: Handling Unsalable Material Process
Process 9 Handling Unsalable/ Non Moving/ Slow Moving Material
Activities 9.1 Dealer claims material as Unsalable.
9.2 Sales officer inspects material.
If material is found unsalable, sales officer recommends it to area sales
9.3
manager.
9.4 Area sales manager approves material as Unsalable.
Material is brought back to Fairdeal warehouse along with written
9.5
approval of sales officer and dealer’s letter containing material details.
9.6 Unsalable material is stored in scrap warehouse at different location.
9.7 After enough stock piles up, notification is sent to company
9.8 Company approves removal of unsalable material
9.9 Transporter is sent to collect the material
9.10 Total quantity is verified against book value
9.11 Material is loaded on vehicle and sent to company locations.

Responsibility Store Incharge

People Involved 12 persons
Location warehouse
Frequency 150 Cartons per month
Input Dataflow
Documents Specification of unsalable material sent by dealer to Fairdeal
Output Dataflow DD details and scrap details mailed to SCM.
Documents Specification of unsalable material sent by Fairdeal to Company
Reports Statutory Monthly scrap material report
MIS Financial Accounting System (FAS)
Existing Integrations Physical Stock Register
Controls Scrap can be sold to company contracted scrap dealer only.

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Figure 12: Flowchart of Handling Unsalable Material Process

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Handling Warranty Claims Process

This process is only partially controlled by Fairdeal as most of the

activities are handled either by dealer or by branch offices. Customers
initiate this process when material they purchased have any pre-
purchase defects or is damaged under warranty period.

Table 22: Handling Warranty Claims Process

Process 10 Handling Warranty Claims
Activities 10.1 Customer claims product replacement under warranty from dealer.
10.2 Dealer notifies service engineer about warranty claim.
10.3 Service engineer inspects product.
10.4 If satisfied, service engineer approves warranty claim.
Product comes to Fairdeal warehouse with product specification and
10.5
warranty letter signed by service engineer.
10.6 New product is dispatched to dealer to replace defected one.
10.7 Company is notified about warranty claim.
10.8 Defected product is stored in scrap warehouse.
10.9 After enough stock piles up, notification is sent to company
10.11 Company approves removal of defected stock.
10.12 Stock is sent to company if it can be repaired or serviced.
10.13 If material is unrepairable it is considered as scrap
10.14 Serial numbers of scrap material are destroyed to avoid re-claims.
10.15 Scrap material sold to company’s scrap dealer
10.16 DD of scrap material sent to company Head Office.

Responsibility Store Incharge

People Involved 4 persons
Location warehouse
Frequency 100 pieces per month
Input Dataflow Warranty claim details in SD module
Documents Warranty claim letter
Output Dataflow Electronic notification to company
Documents Invoice of replaced product
Reports Statutory Monthly Free replacement report
MIS Amara raja E-application (http://localhost/bs/)
Existing Integrations Scrap Stock Register
Controls Service Engineer must approve warranty claim

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Figure 13: Flowchart of Handling Warranty Claims Process

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Stock Maintenance Process

Fairdeal is responsible for maintaining principal company’s stock in

good marketable condition failing to which, Fairdeal will have to pay
for the damages occurred to the stock.
Stock is maintained by doing physical inspection, by ensuring safety
measures and by providing value added services like re-labeling, re-
packing, reporting etc. Some of the main activities in this process are:

Physical Inspection
Fast moving goods are relatively less inspected as they are mostly
fresh. Slow-moving and Non-moving goods have to be inspected
properly. Depot Incharge inspects material on fortnightly basis by
checking stack cards of material.
Some products need special periodic attention like batteries in Amara
Raja have to be checked for any leakages as they contain acids.
Others may need more specific care. For instance, TVS motorbikes
which are stored on roof remain in direct sunlight for a long time.
Physical inspection is also done to ensure that all packages in stock are
kept in good condition. Any that has been damaged or have been
opened for checking are promptly repacked and sealed.
Regular checks are done for spillage and waste. Any rubbish or waste
paper is a fire risk and is removed.

Protection of material
McFills products being consumable products are protected against
moisture, rodents and other hazardous products.
Moisture is regulated in warehouse by building stacks which are hollow
inside so that air can circulate and by turning products over
periodically. Furthermore, warehouse is disinfested at regular
intervals. Rodent preventive measures are also taken to avoid damage
to warehouse stock, particularly food products like McFills foods and
snacks and sunfill oil from Coca Cola.
Fire extinguishers are serviced but their schedule is not fixed. Brass
fire nozzles and foam mixer fittings are also cleaned.

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Re-pack material, if required
If packing or carton of material is found damaged or material is
required to repack for distribution, company provided tape and seal
are applied to it.

Re-labeling of goods
This is value added service provided by Fairdeal to its principal
companies. Re-labeling is done when a new promotional scheme is
launched or a new labeling is required due to price change or seasonal
scheme has to be given.
In this process, Fairdeal provides with the labors who will stick new
labels provided by company to the material. Fairdeal claims the
labeling charges as value added services later with reimbursements.

Generate Reports
Weekly and monthly reports are generated for the purpose of
controlling, tracking, inspecting and reimbursement. Freight claims,
Octoroi claims, value added services claims and Clearing & Forwarding
Agent reimbursements are charged on the basis of these reports.
Apart from these, these reports are also used to track inventory and
movement of goods.

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Table 23: Stock Maintenance Process
Process 11 Protecting Material
Slow-moving and Non-moving goods are inspected by checking its stack
Activities 11.1
cards or batch number and manufactured date
11.2 Bikes are inspected for scratches and damages.
FMCG goods are protected against moisture, rodents, contamination,
11.3
micro organisms.
11.4 Batteries are charged every 40 days in warehouse.
11.5 Moisture content is controlled depending on products
11.6 Fire extinguishers maintained for emergency situations
11.7 Re-pack material packing or cases, if pilferaged during storing
Re-label packs or glue stickers to packs for promotional schemes under
11.8
value added services
Generate reports for the purpose of controlling, tracking, inspecting and
11.9
reimbursement of stock maintenance
Responsibility Depot Incharge
People Involved 2 Person
Location Warehouse
Frequency No strict schedule followed
Input Dataflow
Documents Check last date from Maintenance register
Output Dataflow No of pieces destroyed notified to ASM
Documents Update maintenance register
Reports Statutory Maintenance reimbursement report when asked by management
MIS
Existing Integrations Storing Material, Cycle count
Controls Rodents, expiry dates, theft

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Figure 14: Flowchart of Stock Maintenance Process

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Initial Issues Emerged Out Of AS-IS Analysis

Table 24: AS-IS Analysis -Important issues with priorities

Issues/Observations Priority (High/

Medium/Low)
In Titan watches division Carton is checked for any physical
damage and pilferage, weighted in the warehouse to check
High
uniformity of cartons. If weight doesn’t match, carton can be
opened in presence of courier boy itself.
In Titan watches division Carton contains packing slip containing
number of pieces and codes. This packing slip is validated against
High
stock transfer memo in which number of pieces and price of each
watch is given along with trade discount and sales tax.
To maintain FIFO, stacking is used in which new watches are
placed behind old watches. If new watches come in front, FIFO is Medium
violated.
Enter PIN and IMEI number (for Motorola only) using barcode
High
scanner.
To scan PIN and IMEI number, Motorola cartons have to be
brought upstairs near computer attached barcode scanner. This
consumes labour hours, staff time, increases waiting time and High
hence cycle time. This process can be simplified if cordless barcode
scanner is used.
Lack of group dynamics among employees. Common tasks might
Low
be handled more efficiently by coordinating among each other.
Battery must be charged every 40 days even in warehouse.
Company has provided with a charger which can charge 32 Medium
batteries at one time.
In Amara Raja batteries, Warehouse terminal data is synchronized
High
with company data via dial up virtual private network (VPN).
Serial number is destroyed from batteries to avoid re-claims and a
High
hole is made into battery.
In McFills Foods, Indent form is filled in Microsoft Excel (.xls)
format and attached to email to Company. They are still using very Medium
primitive softwares.
In Voltas, Inwards from Hyderabad have to be done using scanner
as SAP R/3 is still not implemented there. Dadra material is not
Low
required to be scanned as delivery number can be used in SAP R/3
module to get all serial numbers.
No clear plan to manage the involvement of other participants in
Medium
the processes who will be impacted.
Current technology does not provide basic/fundamental warehouse
High
stock information required by management.
Employees should be encouraged to learn multiple (at least two)
companies’ operations like SAP R/3 of Tata Tea and SDNet of
High
Bharti Teletech. This will ensure smooth operations of Fairdeal
even in case of absenteeism or job vacancies.

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Issues/Observations Priority (High/
Medium/Low)
Some employees need HR training to motivate them and to
Medium
develop their business communication skills, listening skills.
Gate pass is mandatory for taking goods outside warehouse. High
Attrition of employees is hindering smooth operations High
Principal companies co-operation to implement barcode readers Medium
Salary structure of employees Medium

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Other Notes from Interviews

These are excerpts from interviews with senior and middle

level managers in the organization:

• Many companies are using very primitive application software

packages which should be upgraded to better ones.
For example: MRF Paints and McFills Foods Pvt. Ltd. are using very
primitive software packages which should be upgraded to better
ones to increase efficiency and speed of transactions.

• Computer operators complain about the lack of meaningful

management information system like slow speed internet services.
There are issues of transferring large business data through
internet because of slow speed of internet connections. These
connections should be upgraded to broadband connections to
improve speed and quality of information sharing.

• There should be a separate person whose duty would be:

¾ To inspect physical location of material,
¾ To check method of stacking material,
¾ To take physical stock,
¾ To inspect for inverted cases, pallet or bitumen sheets etc,
¾ To inspect whether material is stored according to FIFO norms.

This person’s duty would be to take care of material of all

companies and not specific to a particular company as being
followed at present.

Data gathered during this phase would make basis for research in next
phase, TO-BE Analysis.

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 TO-BE ANALYSIS

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Definition of TO-BE Analysis
The goal of To-Be Analysis design is to produce one or more
alternatives to the current situation, which satisfy goals of the
enterprise as stated in the business case analysis and which satisfy the
change-requirements.

AS-IS Analysis phase of this project highlighted the processes which

needed either modification or re-engineering. This phase was aimed at
detailed documentation of activities being carried out in each and
every process. TO-BE phase aims at benchmarking processes being
carried out against best industry practices. To achieve this, processes
were studied from various Warehouse Management Systems. Some of
the processes were benchmarked against other companies’ processes.
For instance, dispatching process was benchmarked against Hindustan
Lever Limited (HLL)’s dispatching process.

Furthermore, I discussed all the processes with process owners and

process users of every company handled by Fairdeal. They provided
me with many suggestions and their usefulness about how efficiency of
Fairdeal can be improved. I also discussed the issues with Mr. Zankar
Jobanputra and Mr. Sharad Jobanputra about benchmarking processes.

Initially, it was planned to take demos of some four or five warehouse

management systems to get best practices from them. It was also
planned to visit some other warehouses nearby so as to study their
processes. But due to lack of time during year-end operations in March
and implementation of VAT in Gujarat from April 2006 afterwards, this
plan could not materialize.

To compensate this, I download 300 mb WinZip version of

IntelliTrack’s Intelliwms and studied it thoroughly after installing it.
This demo version gave me a lot of inputs about Kitting, Waves,
Cubing and many other warehousing concepts.

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Preparation for Implementing Re-Designed Processes

Before designing TO-BE processes, Warehouse must be capable

enough to implement them. For this, proper preparations should be
done like creating warehouse layout, implementing barcode scanning,
sequencing the replenishment and picking processes etc. since a
Warehouse operates within a dynamic environment in which material
moves from receiving to storage to shipping. In order for the
warehouse to operate efficiently, material storage and warehouse
layout should be planned based upon how the goods and materials are
received, stored, picked, and shipped.

Assembling Warehouse Data

To assemble warehouse data, following areas of warehouse operation

should be reviewed:

• Storage Locations
All of the storage locations within the warehouse should be clearly
defined, including the boundaries that separate them. Also determine
whether these locations accommodate all the item types, shapes and
sizes that are required. This may include zones, aisles, rows, and
storage areas in a controlled environment for storing hazardous,
valuable, or temperature controlled materials.
• Items
Define the items the warehouse handles. These items can be defined
in SKUs (Stock Keepting Units).
• Available Space (to support the Cubing feature)
Calculate the space available for item storage to support the cubing
feature.
• Material Flow in the Warehouse
After the usable warehouse space and item size have been
determined, identify the process by which material is moved through
the warehouse (i.e., material flow).

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Warehouse Layout

Figure 15: Warehouse Layout

Warehouse should be divided into in to different sites like Receiving

site, Dispatching site, Scrap site etc. Each site should be coded
accordingly. For instance receiving site can be coded as REC 01, REC
02 etc, Bulk storing site can be coded as A-01, A-02 etc, and
Dispatching site can be coded as D-01, D-02 etc to locate it easily.
Further, yellow lines can be marked on the floor to specify storing
space.

Locations are then added to each site. Locations reside within a ‘Site’
and are added to a site at the Locations form in WMS. When locations
are created for a site, the warehouse space is divided into specific
sites. The following information is required to add a location, and must
be entered in the Locations form in WMS:

Manoj Banshilal Pachouri 144 ICFAI Business School

• Site: the warehouse/facility where this location resides.
• Location Identifier: a unique system identifier that you create for
this location, entered in the Location cell.
• Description: a description of the location (i.e., forward pick,
staging, receiving, picking, storage).
• Cube Size: The cubic size of a location represents the storage
space available in that location, it may be an exact number, or a
close estimate, depending on storage requirements and WMS
objectives.
For example, a location with a cubic size of one hundred can hold
one hundred items with a cubic size of one or it can hold two items
with a cubic size of fifty.
• Pick sequence: assign the location travel sequence when picking
items (picking process) in this cell
• Put away sequence: assign the location travel sequence for
putting away items (receiving process) in this cell.

NOTES:
¾ When location sequencing is implemented, the sequence number
directs the user, with an RF portable, to a predefined location when
picking and/ or putting away order items. (WMS sorts line items
into the sequence defined and presents the line item in sequential
order.) This reduces the travel time when putting away and picking
orders.

¾ Before establishing a location sequencing for picking orders, putting

away orders, and replenishing stock, it is a good idea to identify the
process by which material is moved through warehouse (i.e.,
material flow), in order to determine the most efficient travel
sequences. A good starting point would be the movement of the top
twenty percent of inventory.

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Specifying the Replenishment Sequence

When a forward pick (or prime) location is restocked, it is possible to

use a replenishment sequence to guide in the put away process. The
replenishment sequence is an inventory move based on the pick
sequence of the bulk storage location. When replenishing a forward
pick location, an item location may be specified. If replenishment is
implemented:
• WMS sorts items requiring restock in a sequence based on locations
where the bulk stock resides and the pick sequence assigned to that
location.
• WMS guides the picker to the lowest picking sequence location for
the first item requiring restock.

Implementing Location Sequencing

To implement location sequencing, a pick and/or put away sequence

number is assigned to a location. (The lower the location sequence
number, the higher it’s priority as a pick or put away location.)

Often, a location with the lowest primary pick sequence number will
have the highest put away sequence number. The table below
highlights a typical location number sequence.

Table 25: Example of Location Sequence Numbers

Location Description Pick Sequence Put Away Sequence

FP-001 Forward Pick 1 8
FP-002 Forward Pick 1 8
REC Receiving 0 0
SHP1 Staging 0 0
01-A-01 Bulk Storage 9 1
01-A-02 Bulk Storage 8 2
Locations REC and SHP1 have a pick and put away sequence number of zero,
which is outside the sequence number range; hence these locations are excluded
from location sequencing.

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Generating Barcode Labels

WMS should be able to generate barcode labels for material stored in

the warehouse. Barcode printing should be integrated with company
specific ERP modules so that material specifications can be directly
imported from these modules. Other facilities that are required for
barcode generation are as follows:

• Label Printing
• Setting Label Characteristics
• Creating Sequential Number Label
• Creating Custom Data Label
• Adding a Customized Label Format

Import-Export Data To and From WMS

The Import-Export Utility allows for the importing of data into WMS
and exporting of data from WMS through the following interfaces:

Data Interfaces Description

Host Picking Communicates picking order activity back to a host system.
Host Receiving Communicates receiving order activity back to a host system.
Inventory Export Exports specified inventory data to a specified text file.
Inventory Import Imports inventory data from a specified text file into the WMS
database.
Item Export Exports specified item data to a specified text file.
Item Import Imports item data from a specified text file into the WMS
database.
Location Export Exports specified location data to a specified text file.
Location Import Imports location data from a specified text file into the WMS
database.
Picking Export Exports specified picking data to a specified text file.
Picking Import Imports picking data from a specified text file into the WMS
database.
Receiving Export Exports specified receiving data to a specified text file.
Receiving Import Imports receiving data from a specified text file into the WMS
database.

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Synchronize Fairdeal WMS and Principal’s ERP Module

To ensure smooth and errorless flow of data from principal company’s

ERP module to Fairdeal’s WMS and vice-versa, some integrating
software should be used with the help of principal company. Trying to
insert data manually in either of ERP module or WMS will increase
chances of erroneous entries which would defeat the purpose of
automating Fairdeal’s operations.

Once both the software packages are integrated, Import-Export

interfaces could be used for transferring data to and from one system
to another.

Though convincing every principal company to provide with integrating

software package is not an easy task and it will take a fairly good
amount of time before this concept comes to reality; but it is also
certain that if data of WMS and ERP module can be synchronized,
operations of Fairdeal will become very easy to execute and maintain.

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To-Be Goods Receiving Process

Goods receiving process should be redesigned in such a manner that it

takes shortest possible time. It is because this process is not totally
internal to Fairdeal and Transporter, Branch office, Head office, dealers
and other staff members are also involved in it.

Fairdeal should get softcopy of Stock Transfer Memo (STM) or transfer

cum delivery challan, whichever is applicable. This will save time spent
in uploading barcode serial numbers in Voltas, TVS Motors and Bharti
Teletech. Moreover, advance intimation will allow Fairdeal staff to
prepare for the coming consignment. In case material is warranty
claim or goods return under unsalable material, proper documents
with quantity and service engineer’s sign should accompany the
material.

Once material comes to warehouse, Vehicle details will be noted down

along with the company’s name for which material has come. Gate
keeper will check the material and intimate Godown keeper and
process owner who will verify documents given by transporter.

Material will then be checked for any physical damages and weight of
cases will be taken if any possibility of pilferage is seen.

At this stage, barcode serial numbers should be scanned to verify that

the correct material is received. This will save time at the time of
dispatching and hence efficiency of dispatching process will increase.

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Table 26: TO-BE Goods Receiving Process
Process ID 1 Goods Receiving
Objective Receive Goods at Warehouse
Function Clearing and Forwarding
Input Dataflow Soft copy of Stock Transfer Memo (STM)
Documents Invoice cum delivery challan, LR receipt, Goods Return Note
Output Dataflow Update Goods-in-Transit module of ERP
Documents Acknowledgement to transporter
Reports Stock receipt report, Inventory report
Process Steps Activities
Plan labor and space required for material. If space or labor is not
1.1
sufficient, make arrangements for coming material.
Goods arrive from factory locations or other locations in case of Stock-
1.2
Transfers and Goods Returns.
1.3 Lorry or Courier vehicle entry made in Gate Register at main gate.
Documents received from transporter or courier person containing
1.4
material specification.
1.5 Material unloaded from vehicle.
In case of Titan, Individual carton is weighed and verified against
1.6.1 printed weight on carton. In case of mismatch, carton will be opened in
presence of courier person.
Material manually inspected for any physical damage and accessories
1.6.2 E.g. TVS bikes are checked for key, tool kit, rear view mirror and
battery.
In case of physical damage or short supply:
• Supply Chain Manger is informed.
1.6.3
• Local ASO (Area Sales Officer) is informed.
• Damage claim or Shortage claim is prepared.
1.7 Transporter copy of STM acknowledged.
1.8 Material stored in warehouse.
1.9 Upload Goods-In-Transit module
1.10 Synchronize data of ERP module and Fairdeal WMS

Process Owner Main Godown Keeper

Integration WMS, Goods Storing, Inventory stock
Points of Concern Can Fairdeal convince its clients to provide with integrating software?
Wish List SAP and WMS data synchronized with each other.
Additional Notes Damages report, shortage report if material found damaged or short respectively

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Figure 16: Flowchart of TO-BE Goods Receiving Process

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To-Be Storing Material Process

After material is received in warehouse, it is sorted accordingly.

Material received under warranty claims and goods returns is stored in
scrap warehouse where as fresh material received from factory
locations or through stock transfer is stored in finished goods
warehouse.

Table 27: TO-BE Storing Material Process

Process ID 2 Storing Material

Objective Store goods in warehouse
Function Warehousing
Input Dataflow Material specification imported from SAP module.
Documents Copy of STM with material serial numbers and specifications
Output Dataflow Barcode labels
Documents Physical stock register updated
Reports Current stock report, Inventory report
Process Steps Activities
2.1 Decide the site of material i.e. scrap site or finished goods site
2.2 Sort the material product wise as applicable
Check material for packing and physical damage. If it needs repacking
2.3
or taping, apply taping and other fixes.
2.4 Update goods specifications in WMS inventory module
2.5 Scan serial numbers of finished goods and transfer them to WMS.
Generate barcode labels for goods lot wise, pallet wise, product wise
2.6
or batch wise, as required
2.7 Stick barcode labels to goods or locations, as applicable
Store goods at their allotted locations according to company specified
2.8 regulations. E.g. Batteries, home appliances and tiles are stored on
pallets where as watches are stored in racks
Process Owner Depot Incharge
Integration ERP module, Goods receiving, Inventory stock
Points of
Concern
Care to be taken while sticking barcode labels so that mismatch does not occur
Wish List RFID could be used to locate and quantify the stock
Additional Notes Additional physical stock register can be maintained for use of physical verification

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Figure 17: Flowchart of TO-BE Storing Material Process

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To-Be Cycle Count Process

Material should be regularly inspected for matching physical stock

against book value and to find any probable harm to sensitive goods
like food products. Frequency of different types of checking can differ
accordingly. For instance, physical stock might be taken on twice a
week basis, where as checking for micro-organism level in foods
storing location can be done monthly or quarterly.

Table 28: TO-BE Cycle Count Process

Process ID 3 Cycle Count

Objective Finding any discrepancy in physical stock against book value
Function Stock keeping
Input Dataflow Cycle count alert displayed to depot Incharge on set day
Documents Printout of current stock from WMS
Output Dataflow Inspection date updated in WMS
Documents Physical stock register updated
Reports Differences report
Process Steps Activities

3.1 Sites inspected for moisture level, rodents, temperature, infestation

and security issues.
3.2 FMCG goods checked for air-leaks, damages, expired dates.
3.3 Titan Carton checked for any physical damage and pilferage,
weighted in the warehouse to check uniformity of cartons.
3.4 Batteries physically checked for damage, type of battery, embossing,
barcode and plastic wrapping.
3.5 Battery must be charged every 40 days in warehouse.
3.7 Bikes inspected for scratches, damages and Engine number slips.

Process Owner Store keeper

Integration Current Inventory stock
Points of It is practically not possible to take physical stock of small products like watches and
Concern spare parts frequently
Wish List RFID could be used to verify physical stock smoothly
Additional Notes Specialists may be hired for checking micro-organism level in food products location

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Figure 18: Flowchart of TO-BE Cycle Count Process

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To-Be Order Punching Process

Detailed study of supply chain and logistics industry revealed that

order punching process does not lie within operations of Clearing &
Forwarding agent. This process lies either with dealer/ distributor or
Branch office of the principal company.

In India, Clearing & Forwarding agents have to bear the burden of

order taking / order punching process because of lack of proper IT
infrastructure and insufficient IT skills of dealers. Most of the
companies in India do not have centralized internet based order
placing systems, nor do dealers have sufficient IT competency and
investment options to place orders online. Apart form these reasons;
broadband connections in India are just coming up and most of the
internet connections used are dial up connections which does not
provide enough speed to perform online transactions.

In light of reasons mentioned above, dealers place their orders either

on phone or in writing, which are then punched into ERP modules by
Clearing & Forwarding agents.

Hence ideally, this process should not be there in Clearing &

Forwarding Agent’s operations.

Manoj Banshilal Pachouri 156 ICFAI Business School

To-Be Order Approval Process

Order approval process is executed according to rules and regulations

of principal company. Some companies’ order approval process resides
with branch office of the company itself, whereas others have
delegated it to Fairdeal. Even in the case of companies whose order
approval processes are undertaken by Fairdeal, this process is only
partially controlled by Fairdeal.

Table 29: TO-BE Order Approval Process

Process ID 5 Order Approval

Objective Approving orders placed by dealers
Function Order verification and dispatching
Input Dataflow Order punched by dealer
Documents Cheque or Demand draft for order placed
Output Dataflow Order approved or rejected, Invoice number generated
Documents
Reports Monthly sales report, Cash report, Current stock report
Process Steps Activities
5.1 Stock is checked for availability in warehouse/ depot
If stock is present in required quantity, order is accepted and
5.2 approved else order can be partial dispatched or short closed.
If company is Bharti Teletech, order is sent for verification by
5.3 regional sales officer.
5.4 Once approved, Pick slip is generated from approved order
5.5 Pick slip sent to store Incharge
5.6 Check inventory stock for threshold value
If stock is below threshold value, place order at company head
5.7 office.
5.8 Synchronize order approval data on WMS and ERP modules
Process Owner Computer Operator
Integration Pending orders, Dispatching, Credit limits of dealers, Current stock available
All dealers might not be capable of placing orders online
Points of Concern
ASM might ask to approve orders to fulfill his targets
All order placing should be automated without any paper work
Wish List
Credit cards be used to replace Demand drafts and Cheques
If material is not present in warehouse, order should not be accepted by ERP
Additional Notes
package when dealers place it.

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Figure 19: Flowchart of TO-BE Order Approval Process

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To-Be Invoice/ Bill Printing/ Stock Transfer Process

Invoice is printed at the time of dispatching fresh material or replacing

warranty claims. It is printed in triplet for the purpose of Octoroi taxes,
VAT and sales tax payments. Stock transfer decision is taken by
regional sales manager. Also, stock transfer document is similar to
invoice except that it is addressed to another Clearing & Forwarding
agent.

Table 30: TO-BE Invoice/ Bill Printing/ Stock Transfer Process

Process ID 6 Invoice/ Bill Printing/ Stock Transfer

Objective Issue a document as a proof of change of ownership
Function Invoice / Bill/ Stock transfer memo printing for handing it over to transporter
Input Dataflow Invoice number generated during order approval
Documents Material ready to be issued acknowledgement form store keeper
Output Dataflow Order completed notification
Documents Invoice/ Stock transfer memo printout
Reports Total transactions report
Process Steps Activities

Invoice printed directly from ‘Print Invoice’ menu of ERP package by

6.1
entering invoice number.
6.2 Print stock transfer memo from ‘Stock Transfer’ menu
6.3 Hand over the printed document to transporter
Process Owner Computer Operator
Integration Dispatching, Pending orders
Invoice will not generate if barcode serial numbers or other data is wrongly
Points of Concern
punched
Wish List Companies replace their legacy IT systems with modern ERP packages
If material is not present in warehouse, order should not be accepted by ERP
Additional Notes
package when dealers place it.

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Figure 20: Flowchart of TO-BE Invoice/ Stock Transfer Process

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To-Be Dispatching Process

As mentioned in AS-IS Analysis phase, Local orders are dispatched

through Fairdeal’s own vehicles and Octoroi charges are also bore by
Fairdeal. Upcountry orders are dispatched via contracted transporters
and these transporters pay Octoroi charges which they claim monthly
at the time of freight reimbursement.

Table 31: TO-BE Dispatching Process

Process ID 7 Dispatching
Objective Transfer ordered quantity from warehouse to dealer’s place
Function Picking material from warehouse and load it on transporter vehicle
Input Dataflow Dispatching details in e-application
Documents Pick slip
Output Dataflow Notification sent to dealer and branch office
Documents Gate pass and LR
Reports Monthly current inventory report
Process Steps Activities

7.1 Pick slip comes to Store keeper

Material picked from locations based on predefined picking
7.2 sequence or kit.
Material loaded on vehicle in presence of store keeper, security
7.3 personnel and driver of vehicle.
7.4 Gate pass made to allow goods outside warehouse.
7.5 LR, gate pass and two copies of invoice given to transporter.
If order is local, Octoroi amount given to transporter to be paid at toll
7.6 tax point.
7.7 Transport vehicle checked for physical goods at main gate
Check dispatched material after picking. If sufficient quantity is not
7.8 present at primary location, bring material from secondary location
to primary location.
Process Owner Depot Incharge
Integration Current stock, Labor Incharge, Security checking at main gate
No order should be dispatched without proper documents like Invoice, Delivery
Points of Concern challan, Gate pass signed by authorized person as breech in security check can
prove fatal for operations of Fairdeal.
Wish List RFID could be used to locate and pick ordered material easily
Copy of signatures of all authorized persons should reside with security team at
Additional Notes
main gate to verify gate pass signatures.

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Figure 21: Flowchart of TO-BE Dispatching Process

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To-Be Transportation Process

As mentioned in AS-IS Analysis phase, Local orders are dispatched

through Fairdeal’s own vehicles and Octoroi charges are also bore by
Fairdeal. Upcountry orders are dispatched via contracted transporters
and these transporters pay Octoroi charges which they claim monthly
at the time of freight reimbursement.

Table 32: TO-BE Transportation Process

Process ID 8 Transportation
Objective Transport ordered quantity to dealer’s place
Function Transporting
Input Dataflow
Documents Gate pass from store Incharge
Output Dataflow Mail to dealer about goods in transit
Documents Goods Received Acknowledgement from Dealer
Reports Monthly freight reimbursement reports
Process Steps Activities
If order is local, use Fairdeal’s own vehicles else use outsourced
8.1
carrier.
8.2 Loaded vehicle leaves warehouse after security check
8.3 Octoroi paid in metropolitan cities, if applicable
8.4 Material off-loaded at dealer’s place
Dealer returns back one signed copy of invoice as
8.5
acknowledgement of goods received
8.6 Acknowledgement copy of invoice given back to Fairdeal.
Octoroi charges and freight charges claimed from concerned
8.7
company

Process Owner Transportation Incharge

Integration Labor Incharge, Security checking at main gate
Points of Concern No lorry should leave warehouse without proper security checks.
Wish List
Fairdeal’s own vehicle are provided additional amount for fuel and maintenance
Additional Notes
while contracted vehicles charge freight charges on monthly basis

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Figure 22: Flowchart of TO-BE Transportation Process

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To-Be Warranty Claims & Unsalable Material Process

Handling Unsalable Material process and Handling Warranty Claims

process which were explained in detail in AS-IS Analysis phase are not
controlled by Fairdeal. These processes are handled on behalf of
principal companies, and hence, are controlled by them. Both the
processes are initiated by dealers or customers and Fairdeal comes to
know about it only when material comes to warehouse as goods
returned.

Hence, TO-BE processes for these two aforesaid processes are not
inside purview of this study.

Though; if time permits, I would work on these processes after my

main study is complete.

Manoj Banshilal Pachouri 165 ICFAI Business School

TO-BE Stock Maintenance Process

Many measures can be taken to maintain stock at Fairdeal in a better

way than maintenance measures in practice at present.
Depot Incharge should inspect material on fortnightly basis by
checking barcode labels of material to determine slow-moving material
and unsalable material.
McFills food bags must be kept at a certain relative humidity and
temperature; adding to it, TVS motorbikes must not remain in direct
sunlight for a long time as their seats may rip apart.
To preserve the quality of stored goods, the moisture content should
be controlled. If the level of moisture is allowed to exceed the stated
safety limit for storing a product, there is a risk of damage by micro-
organisms. Moisture can be regulated in warehouse by proper
ventilation so that air can circulate and by turning over product bags
periodically depending on product needs. Furthermore, warehouse
must be disinfested on monthly basis. Rodent preventive measures
could be taken on quarterly basis.
Details of packing and re-labeling should be conveyed by the
warehouse Incharge about type of packaging required and the
dimensions needed for both individual packages and outer container.
Furthermore, unambiguous instructions must be given to packing team
about how the packages should be marked. This process is important
as many a delay has been caused because the name and location of
the receiver had not been marked clearly or correctly.

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Table 33: TO-BE Stock Maintenance Process
Process ID 11 Stock Maintenance
Objective To maintain stock safety
Function Inventory Management
Input Dataflow Reminder alerted by WMS on set day
Documents Check last date from Maintenance register
Output Dataflow No of pieces destroyed, measures taken notified to Depot Incharge
Documents Update maintenance register
Reports Monthly maintenance reimbursement report
Process Steps Activities
11.1 Proper shading for items stored outside or on roof.
11.2 Bikes are inspected for scratches and damages.
FMCG goods are protected against moisture, rodents,
11.3
contamination, micro organisms.
11.4 Batteries are charged every 40 days in warehouse.
11.5 Moisture content is controlled depending on products
11.6 Fire extinguishers maintained for emergency situations
11.7 Re-pack material packing or cases, if pilferaged during storing
Re-label packs or glue stickers to packs for promotional schemes
11.8
under value added services
Generate reports for the purpose of controlling, tracking, inspecting
11.9
and reimbursement of stock maintenance
Process Owner Depot Incharge
Integration Current Stock module
Points of Concern No lorry should leave warehouse without proper security checks.
Wish List
Fairdeal’s own vehicle are provided additional amount for fuel and maintenance
Additional Notes
while contracted vehicles charge freight charges on monthly basis

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Figure 23: Flowchart of TO-BE Stock Maintenance Process

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 SUGGESTIONS
AND
RECOMMENDATINS

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Characteristics of an Ideal WMS

As ultimate objective of this project is to analyze, document and report

to management the merits and demerits of implementing warehouse
management system in Fairdeal, it would be relevant here to discuss
characteristics of an ideal WMS.
A modern WMS should have powerful computational tools, reliable
information management, performance integrity, operational flexibility
and strong back up and safety measures to avoid any misuse and loss
of data. To attain the aforesaid capabilities it should have:

Multinational Support
WMS should satisfy the most demanding international requirements.
Multi-currency support with main local currencies, euro & dollar
support, support for value-added taxes, combined with an extensive
array of international management features, from consolidation
routines to automatic generation of inter-company transactions, to
manage a global enterprise while complying with a wide variety of
national accounting standards worldwide is also required.

Multi-branch support
WMS should support remote multi-branch operations and help sharing
information between the Head Office and the institution’s branches.
Replication is simply the process of sharing data between databases in
different locations. WMS should replicate data, like the customers and
financial information, to make the data available to all the institution
locations or entities. In other words, it means that information is all
accurate and up-to-date in every location. LAN or WAN networks can
be used to provide multi-branch support.
Fairdeal can use this option as has operations in Ahmedabad,
Bangalore, Dehradun, Hosur and Surat. Also, it is planning to have pan
India presence and is expanding.

Fully Integrated
WMS should be totally linked to all financial modules. Therefore,
management of receivables from clients and payments to suppliers on
pre-defined due dates will be easier with Accounts Receivable and
Accounts Payable modules.

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Third Party Catalog
Third party accounts (Customers, Shippers, Salesmen/Collectors,
Forwarders and Shipping Agencies) should be created as contacts in
the address book. This option eliminates redundant data entry and
reduces errors. It simplifies the management of enterprise-wide
information by using one central database.
Depending on the business relation with the organization, a contact
should be identified as a supplier, a vendor or both at the same time.
Information should be consolidated in the same place and made
available to all modules, where required.

Third Party Information

Third parties should be classified by categories. This feature is
important for segregation in order to provide exceptional reporting
flexibility.
Contact name, main business, contact information, full address
including the default dealing currency help in answering the
information needs and improving the vital relationship with the third
party’s organization.

Credit Limits & Payment Terms

A well planned WMS should provide a flexible definition of the credit
conditions, like the credit limit or payment terms, to accommodate
with a diverse customer and vendor base. The client credit limit should
be controlled when preparing a sales order or a direct invoice.
Debit limit and terms of payments are defined per supplier. They
provide an important feature to streamline cash flow process and help
saving money.

Bill of Lading
A quality WMS should have features to allow an easy creation and
printing of the Bill of Lading. This direct entry facilitates the
management and tracking per container and per client of single and
consolidated shipments.
The system should also be flexible to create a Clearing file from each
Bill and should allow the addition of the related expenses to each file
and to generate invoices for the rendered Forwarding/Clearing
services.

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User Defined Cost Elements
In Clearing and Forwarding, the cost elements can be classified into
items that can be invoiced (i.e. insurance, freight etc.) and others that
cannot (i.e. customs, duties etc.). The user can create an unlimited
number of user-defined cost elements.
When posted to the Financial Systems, items that cannot be invoiced
and are billed at cost, should not affect the Expenses and Revenues
Ledgers, and thus should not influence the turnover of the company.

Invoicing
The system should allow the option to print two separate invoices, one
for the expenses that cannot be invoiced and the other for the ones to
invoice, is also available.
Once all Forwarding and Clearing expenses are processed and
invoiced, the Client File could be closed. If additional expenses need
to be added to a closed file, the file could be re-opened or an
amendment file should be created. Cost/profitability reports should
also be generated later on for any file (i.e. parent or child) or for a
parent file and all its amendments.

Security
WMS should ensure that the right to use all crucial business processes
is secure. Effective tools must be provided to manage security and
provide users with a secure access to Clearing & Forwarding.
Security groups can be created to restrict access to specific functions.
Groups can be assigned different authority levels that filter the rights
of each user belonging to a group.

Data Backup
There should be proper data backup functionalities in any good
Warehouse Management System to ensure unstopped and smooth
operations during unexpected system failures due to earth quakes,
fire, water or any unforeseen natural calamity. Backed up data should
not be stored at the same premise where WMS is installed because
there is danger of loss of both WMS data and backed up data at the
time of damage to this premise.

Manoj Banshilal Pachouri 172 ICFAI Business School

Reports
A well integrated WMS should provide the required flexibility to
produce effective reports and enable the users to export all report data
to an external file, utilizing most of the standard supported data types,
like ASCII, Rtf or Excel.

Furthermore, the system should be able to generate the following,

inclusive but not exhaustive, periodic analysis reports:
• Tracking of expenses by date, for a specific client and a specific
shipment,
• List of invoices filtered by date, customer, invoice status, collector
and currency
• Statistics of containers detailed by commodity
• Statistics of containers
• Expected cargo
• List of client shipments per vessel
• List of customs per client, per file
• Total sales by salesman

Manoj Banshilal Pachouri 173 ICFAI Business School

Suggestions and Recommendations

Detailed study of operations of Fairdeal

during Process Analysis, ABC Analysis, AS-
IS Analysis and TO-BE Analysis revealed
that though procedures being used at
Fairdeal are more mature compared to
other Clearing & Forwarding agents
operating in Gujarat, there are many
issues that should be taken care of to
improve its efficiency. Some of the issues
which need management attention are
discussed below with possible suggestions and recommendations.

Salary Structure of Employees

Presently, salary structure of employees is fixed salary structure in
which employees are paid a fixed amount per month. Salaries are
decided based on designation and years of work experience of
employee. It will be important to notice here that since Fairdeal has to
deal with less educated employees who are just matriculate or pre-
university pass-outs, it is difficult to implement all HR practices for
them. Also it is not possible to give increments in salary regularly to
them because in such case Cost to Company (CTC) of Employee will
increase marginal productivity of Labor (MPL) which will be against
interests of Fairdeal.

Recommendations: Salary structure should be modified to variable

salary structure in which one component should be fixed and other
should be kept variable as incentives and bonuses. Clearly measurable
targets should be defined and communicated to employees which
would be basis for deciding incentives and bonuses of individual
employee. These targets can be defined in such a way that neither
they are too impractical to achieve nor they are too easy to achieve
because if target are too easy, every employee will meet them and
there will be no utility of setting variable salary, and if targets are too
difficult to achieve they will not motivate employees to work hard and
objective of variable salary to motivate employees will be lost.

Current Status: This issue has already been taken up by management

and it is planned to implement variable salaries from year 2006.

Manoj Banshilal Pachouri 174 ICFAI Business School

Location of barcode scanning in Bharti Teletech
All Motorola cases have to be brought to SDNet terminal upstairs from
Godown to scan their IMEI numbers. This consumes manpower as well
as time in carrying the cases from one place to other.

Recommendations: IMEI numbers can be scanned in Notepad in the

Motorola warehouse at the time of receiving mobile phone containers
and then this text file can be sent to SDNet terminal for uploading
IMEI numbers.

Current Status: This suggestion has been partially accepted as

scanning in beta testing phase has been done in Godown itself but
scanning at time of receiving is still to be implemented.

Training to Computer Operators

No formal training is given to SDNet operators in Bharti Teletech. They
have learnt it by R&D and trail and error methods.
For example: uploading IMEI number using text files was there from
beginning but operator at Fairdeal learnt it by trail and error only after
one year of his tenure.

Recommendation: Formal training sessions should be arranged by

experienced trainers arranged either by Bharti Teletech or Fairdeal.
These sessions should be off-the job type as well as on-the job type.

Current Status: Pending

Multi-company operations
Fairdeal’s employees are specialized in one company operations only.
Since there is only one computer operator and one Godown keeper in
most of the companies, smooth operations of Fairdeal are disturbed
when computer operator of Godown keeper is at leave. Operations in
such situations are handled either by process owner or by Mr. Zankar
Jobanputra, COO of Fairdeal.
Recently in April 2006, this issue was highlighted in Bharti Teletech
when its computer operator Mr. Sunil Patel resigned from the job. The
operations which were handled by him alone could not be handled by

Manoj Banshilal Pachouri 175 ICFAI Business School

process owner, COO, Sales officer of Bharti Teletech and even Mr.
Sharad Jobanputra had to scan serial numbers himself.
Investing COO time or process owner’s time in such activities is not
advisable for development of a company.

Recommendations: Employees should be encouraged to learn handling

multiple (at least two) companies’ distribution channels like SAP R/3 of
TATA Tea and SDNet of Bharti. This will ensure smooth operations
even in case of absenteeism and job vacancies. Employees can be
allotted to one company’s operations and one secondary companies
working can be taught to him at the time of joining. New employees
will learn better than those who have been working for a long time on
single SD network.
For example: if one employee is absent or quits his job, there should
be another employee in Fairdeal who is at least 80% efficient, if not
more, in handling absent employee’s work. Also, Employees should be
motivated, encouraged and trained to behave courteously with channel
partners (e.g. Area Sales officer and Logistic peoples like truck drivers
etc) as well as dealers and Stockists. It has been seen that some
employees lack courtesy and communication skills.

Current Status: Initiatives have been taken to impart multi-operational

skills in employees.

Noting down serial numbers of bikes in TVS Motor

When serial numbers and frame numbers of TVS bikes are noted down
manually, there are human errors in noting down numbers because of
confusion in 0 & 8, 3 & 8 which look similar when printed by dot matrix
printer. This also happens because of scratches on barcode labels or
insufficient lighting.

Recommendation: Cordless barcode scanner can be used to scan serial

numbers instead of doing it manually. This will reduce human errors as
well as increase efficiency of receiving and dispatching also. TVS
should ask SAP R/3 to provide them with integrating software which
can transfer data to and from cordless barcode scanner and SAP R/3
module.

Current Status: This issue has been communicated to TVS head office
at Hosur and barcode scanners are soon to be implemented.

Manoj Banshilal Pachouri 176 ICFAI Business School

Damages in TVS Motor at time of Loading
In TVS Motor, there are instances of damages to bikes at the time of
loading. It is noted that sometimes bikes are loaded on transport
vehicles by riding them. During one such loading, a bike fell off the
loading track and there was severe damage to both labor and bike.
Though these damages were sometimes claimed from outsourced
labor contractor, measures should be taken to avoid these types of
human errors.

Recommendation: To ensure proper loading of vehicles, Company

regulations of vehicle loading must be strictly followed according to
which bikes are loaded by dragging them from handle.

Current Status: Waiting for management’s approval

Bring down TVS bikes from roof

Stairway is used when bikes are required to bring down from roof or
when it is required to take them to store on roof. It is to be noted that
this stairway, in TVS Godown, is constructed at right angle. Also it
does not have any protection grill which adds fuel to fire and bikes
may fall anytime at time of taking them downstairs or upstairs.

Recommendation: A new straight stairway should be constructed

which should be properly grilled to avoid any accident. Further, a lift
can be used to substitute stairway.

Current Status: Waiting for management’s approval

Shading of TVS Godown Roof

TVS Godown roof does not have any shading and vehicles are lying in
direct sunlight even in scorching heat of Ahmedabad summers. Direct
heat in summer damage seats of bikes and shining of paint fades
away. To prevent these damages, bikes are brought downstairs when
space is available. It is a time consuming process and costs Fairdeal in
form of money and labor hours.

Recommendation: This Roof should have tin or cement shading which

will ensure time saving in taking vehicle down and bikes will be secure
against heat and water during rainy season.

Current Status: Waiting for management’s approval

Manoj Banshilal Pachouri 177 ICFAI Business School

Interconnectivity of computers in TVS Motor
TVS division has two computers, one for SAP R/3 operations and other
for assistant works. As of now, data has to be transferred using Floppy
disks from one machine to another.

Recommendation: These computers should be connected to each other

through network connection.

Current Status: Both computers have been connected through LAN.

Preparation for space for goods in transit in TVS Motor

Many a times, Lorries have to wait for a long time to unload bikes as
there is no space in warehouse to store them. Bikes are only unloaded
when some bikes are dispatched to dealers and space is created.
Though, it does not have any adverse effect on Fairdeal’s operations, it
consumes transporter’s time and resources.

Suggestion: Transporters should be encouraged to intimate Fairdeal in

advance about their arrival. This will help Fairdeal in arranging for
bikes space and avoid parallel unloading. Although, Fairdeal can get
arriving consignment from goods in transit module of SAP R/3, it is not
possible to get the exact date and time of arrival. Hence if transporters
can intimate 24 hours before arriving warehouse, it will be beneficial
for both transporter and Fairdeal.

Current Status: Status quo

Lack of group dynamics

There is no group dynamics and feeling of team work among
employees working for different companies. My personal interview with
warehouse staff and computer operators revealed that juniors are not
getting co-operation form seniors. Seniors are afraid of sharing
information with juniors because they are afraid of loosing referent
power over juniors.

Suggestions: Information sharing should be encouraged in Fairdeal.

Current Status: Matter forwarded to management

Manoj Banshilal Pachouri 178 ICFAI Business School

Goods Receiving in Titan
When material is received in Titan, boxes are weighted and verified
against printed weights on boxes. If weights are found normal, these
boxes are then opened and watches are verified for number of pieces
per code. This is a time consuming process as sometimes more than
10,000 pieces are received in a single transaction. Adding to it,
chances of human errors are also there in taking down incorrect code.

Recommendation: Box must not be opened and barcode scanner

should be used to scan barcode labels which are printed on box itself.
These barcode labels will get the number of watches code wise.
Moreover, these scanned barcodes could be used at time of billing
because presently computer operator has to punch all material codes
manually at time of billing.
Note: This is already being practiced in Bharti Teletech for Motorola
mobiles.

Current Status: Discussions in progress with management

Goods Returns in McFills

There are more sales returns in McFills compared to any other
company. This material consumes time in segregating material, storing
and maintaining it. This is a bottleneck as a lot of time is consumed in
maintaining non-moving and unsalable material. Also, Single person is
handling computer operations as well as store for McFills. Though
transaction volume is comparatively lower it is creating problems for
customers as computer operator is not available when he is in store.

Suggestions: Sales returns and unsalable material should be sent back

to company as soon as possible.

Current Status: Status quo

Manoj Banshilal Pachouri 179 ICFAI Business School

Obsolete softwares in McFills and MRF Paints
McFills and MRF Paints are using very primitive software which has
erroneous entries. It is not in position to implement VAT through its
software. Apart from that, McFills data cannot be audited from
software as most of the quantities are showing negative stock. Though
type of software to be used is decided by principal company’s
management but since Fairdeal is paying for computer operators, cost
of any erroneous transaction is bore by Fairdeal.

Recommendations: Fairdeal should communicate this issue with its

principal companies.

Current Status: Status quo

Speed of Internet Connections

Bell Ceramics, MICO, McFills and MRF paints are using dial up
connections for information sharing. Their online portals use utilities
which require high speed broadband connection. There is severe
problem in sending attachments to company administration also as
uploading speed of internet is slow.
For example: when file attachments of more than 2 mb are to be sent
to McFills head office, there is problem of uploading these files. At such
times, computer operator has to wait for off-time when internet
connection speed is relatively more.

Suggestions: Fairdeal should ask these companies to implement broad

band connections.

Current Status: Discussions going on with principal companies

Material Indentation in McFills

Material is indented by Mr. Bharat in McFills which is responsibility of
Area Sales Manager and not of CFA personnel.

Suggestions: This activity can be annulled.

Current Status: Status quo

Manoj Banshilal Pachouri 180 ICFAI Business School

Unloading in Voltas and TVS Motors
Voltas and TVS Motor trucks have to wait for unloading material in
absence of required number of labors. Since, Voltas and TVS Motor
products require more than one labor for a single item, a minimum
number of labors are required to unload the truck, failing to which
material can not be unloaded.

Recommendations: There should be preplanned arrangement of labors

and storing space to avoid wait time.

Current Status: Mater forwarded to labor Incharge

Implementing Warehouse Management System (WMS)

Most of the operations of Fairdeal are executed manually which
consume a lot of time and money. Paper work is major mode of
communication with dealers and principal companies which is again a
time consuming and costlier process. Moreover, processes of all
principal companies are handled separately and there is no link
between them because of which employees know operations of one
company only.
Reports of reimbursements for value added services like re-labeling,
re-packing; freight charges; Octoroi claims; Warehouse rents; labor
charges etc are prepared into Microsoft Excel sheets and printed. This
process can be annulled if WMS can be implemented as most of the
reports can be generated from it directly.

Recommendations: WMS should be implemented as soon as possible

as it will automate most of the processes. It will reduce paper costs
and processing times as well. All divisions will be integrated and it will
be possible to use data of one division in another.
In long run, this WMS can be extended to other locations of Fairdeal
like Surat, Hosur, Dehradun and Bangalore also.

Current Status: Management has taken up this issue with utmost

priority and negotiations are in progress with WMS vendors. Demo of
WMS have been seen and WMS that fulfills company requirements
would be implemented in 2006.

Manoj Banshilal Pachouri 181 ICFAI Business School

 Project Activity-Time Schedule

Table 34: Project Activity-Time Schedule

Activity Activity Code of Activity Activity Deliver- Person

Code Description Immediate Start Date End Date able work Responsible
Predecessor product
01 Study org. 13-02-06 25-02-06 Project Manoj
structure and Proposal Pachouri
processes
02 Understanding 01 20-02-06 27-03-06 Workflow Manoj
process notes Pachouri
workflows
03 Draw process 02 21-03-06 28-03-06 Matrix Manoj
matrices charts Pachouri

04 “AS-IS” 01 26-02-06 03-04-06 Interim Manoj

Analysis Report Pachouri

05 Personal 01 08-03-06 10-04-06 Interview Manoj

interviews of Document Pachouri
warehouse
staff
06 Complete “TO- 04 03-04-06 02-05-06 Flowchart Manoj
BE” Analysis & Matrix Pachouri
07 Identifying 04 12-04-06 06-05-06 Process Manoj
Process Gaps Report Pachouri

08 Document 01 27-02-06 07-05-06 Final Manoj

findings of the Report Pachouri
project

Manoj Banshilal Pachouri 182 ICFAI Business School

Table 35: Gantt chart of Project Activity-time Schedule

Activity Week number

Code 1 2 3 4 5 6 7 8 9 10 11 12 13 14

01

02

03

04

05

06

07

08

Manoj Banshilal Pachouri 183 ICFAI Business School

Table 36: Organizational responsibility

Activity Description Fairdeal ICFAI

Study organization structure Provided relevant documents None
and processes

Understanding process Provided Basic Facility like Provided Guidelines

workflows Internet, Library,
transportation
Draw process matrices Provided Suggestion Provided Microsoft Visio
2003

Complete “AS-IS” Analysis Provided Relevant Data Provided AS-IS Analysis

formats

Personal interviews of Provided Employee Time None

warehouse staff

Complete “TO-BE” Analysis Provided Inputs about Provided TO-BE Analysis

benchmarked processes formats

Identifying Process Gaps None None

Document findings of the Provided printing facility None

project

Manoj Banshilal Pachouri 184 ICFAI Business School

 APPENDICES

APPENDIX A: Key staff involved in the project

Table 37: Key Staff Involved In the Project

Contact Designation
Mr. Zankar Chief Operating Officer (COO)
Mr. Vinod Process Owner
Mr. Hemant Thakkar Process Owner
Mr. Saurabh Process Owner
Mr. Mitesh Shah Process Owner
Mr. Vinod Chief Accountant
Ms. Anal Computer Operator
Ms. Komal Computer Operator
Mr. Bharat Computer Operator & Store Incharge
Mr. Praveen Computer Operator
Mr. Sunil Patel Computer Operator
Mr. Narendra Computer Operator
Mr. Tushar Computer Operator
Mr. Devadutt Computer Operator
Mr. R. P. Singh Security Incharge
Mr. Shabbir Store Incharge
Mr. Raman Store Incharge
Mr. Mohan Store keeper
Mr. Santosh Security Guard
Ms. Stuti Receptionist

Manoj Banshilal Pachouri 185 ICFAI Business School

APPENDIX B: Fairdeal’s Document Formats

Figure 24: Format of Gate Pass of Fairdeal

Manoj Banshilal Pachouri 186 ICFAI Business School

Figure 25: Format of Invoice

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Figure 26: Format of Advance Intimation of Warranty Return

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Figure 27: Format of Lorry Receipt (LR) of Fairdeal

Manoj Banshilal Pachouri 189 ICFAI Business School

Figure 28: Format of Lorry Receipt obtained by Fairdeal

Manoj Banshilal Pachouri 190 ICFAI Business School

Figure 29: Format of Warranty Replacement Delivery Challan

Manoj Banshilal Pachouri 191 ICFAI Business School

Figure 30: Format of Warranty Return Delivery Challan

Manoj Banshilal Pachouri 192 ICFAI Business School

APPENDIX C: Flowcharting Shapes

Figure 31: Flowcharting Shapes

Manoj Banshilal Pachouri 193 ICFAI Business School

 REFERENCES

Bibliography

1. iimcal_paper.pdf: A Survey of the Third-Party Logistics (3PL)

Service Providers in India by Subrata Mitra ([email protected])

2. Fairdeal Distribution Services Pvt. Ltd. documents and manuals

3. ICFAI Business School SAP R/3 study material

4. SAP R/3 - Sales and Distribution by Tata McGraw Hills publication

5. SAP R/3 – Material Management by Tata McGraw Hills publication

6. White paper DELIVERING RESULTS: EVOLVING BPR FROM ART TO

7. ENGINEERING by Richard J. Mayer, Ph.D.; Associate Professor of
Department of Industrial Engineering Texas A&M University.

8. White paper Business Process Analysis [1] by Bob Glushko

([email protected])

9. User manuals & catalogs of IntelliTrack Warehouse Management

System software.

10. 3PL is Growing - The Hindu Business Line, Monday, Mar 01, 2004

Manoj Banshilal Pachouri 194 ICFAI Business School

Internet Sources

1. http://www.web.uct.ac.za/
2. http://www.fairdeal.org
3. http://www.fairdealdistribution.com
4. http://www.informationweek.com
5. http://www.localegovnp.org.uk/webfiles/national/projects/Ryogen
6. http://www.mrf.com/
7. http://www.voltas.com/
8. http://www.tata.com/voltas/index.htm
9. http://www.tata.com/titan/index.htm
10. http://www.titanworld.com
11. http://www.tatatea.com
12. http://www.beetel-india.com:9080/
13. http://localhost/bs/
14. http://web.uct.ac.za/
15. http://en.wikipedia.org/wiki/Warehouse_management_system/
16. http://www.intelliTrack.net/
17. http://www.bestwms.com/
18. http://www.about.com/
19. http://www.logisticsfocus.com/
20. http://www.pasa.doh.gov.uk/pharma/docs/sup_chain/03_Phase%
202%20Report%201pasav2.1.pdf
21. http://www.logisticsfocus.com
22. http://www.softwaredesign.com.lb

Manoj Banshilal Pachouri 195 ICFAI Business School

 GLOSSARY

ABC Analysis: ABC Analysis is an inventory management tool based

on the tenets of Pareto Analysis. It categorizes inventory by its highest
value and greatest volume. With this information, inventory managers
can focus on increasing those inventory SKUs with the greatest
potential positive return for the organization.

Activity Based Costing: An accounting method that enables a

business to better understand how and where it makes a profit.

As-Is Analysis: As-Is Analysis phase of BPR is aimed specifically at

identifying disconnects within existing business processes and their
specified intent. By disconnects, we mean anything that prevents the
process from achieving desired results (e.g., inconsistency between
the functions of a process that cause failings of the existing process to
achieve its intent.)
The steps taken to describe the AS-IS process also includes a
documentation of the sequence in which activities are performed.

Barcode Scanner: An instrument used to decode information coded

in parallel bars format and labeled to products.

Bar Code Labels: Labels that use bar code symbols to capture
inventory information. These labels can be created within the WMS
application or a separate bar code application.

Bill: It is a printed document like Invoice which contains product

specification along with its value. Only difference between invoice and
bill is that while bill is raised in case of cash purchase, invoice is raised
in case of credit purchase

Business process: A business process is simply the series of steps or

activities needed to convert some ‘input’ into the required ‘output’.

Business Process Reengineering: It is a methodology for either

significant improvement to a business process, or for radical change
in, or complete replacement of, such a process.

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Central Warehousing Corporation (CWC): CWC is under the
Ministry of Food and Civil Supplies. It is complemented by 16 State
Warehousing Corporations (SWC). Together, the CWC and the SWC
have a monopoly in overseeing a network of 1,515 warehouses which
are spread all over the country.

Challan: Challan is a printed document containing description of

products sold or transferred. It is generally raised when goods are sold
on credit or when instant money transfer is not involved.

Computerized Truck Routing: method of using computers to

generate truck routes based on stop locations, delivery appointments
and backhauls.

Courier agency: It is a commercial concern engaged in the door-to-

door transportation of time-sensitive documents, goods or articles
utilizing the service of a person, either directly or indirectly, to carry or
accompany such documents, good or articles.

Cycle Count: It is regularly scheduled inventory count that cycle

through inventory.

Cross Docking: Cross docking enables an operator to place newly

received inventory directly into a staging area, as opposed to putting
the item into a storage location.

Cycle time: It is the total elapsed time, end to end, from the time the
cycle starts or is triggered until the cycle completes with all results
accomplished. It is sometimes called calendar time, or wall-clock time
for shorter cycles, because it is the time that would pass on the
calendar or clock on the wall during the cycle.

Enterprise Resource Planning (ERP): ERP Facilitates company wide

information system covering all functional areas and performs core
corporate activities and increases customer service augmenting
corporate image. It attempts to maximize productivity through
restructuring and reorganizing the different divisions and departments
in the organization

FEFO: Abbreviation of First Expiry First Out. It is a stacking practice in

warehousing non-durable products which aims at ensuring that
material that is expiring first is dispatched first.

Manoj Banshilal Pachouri 197 ICFAI Business School

FIFO: Abbreviation of First In First Out. It is a stacking practice in
warehousing which aims at ensuring that material that is stored first is
dispatched first.

Idle time: During idle time, the process is just waiting, perhaps
because the work is not on a critical path, or because it has not been
routed expeditiously, or just because the process is designed that way.

Invoice: Invoice is a printed document containing description of

products sold along with their value. It is raised after challan and
contains value of product also.

Kitting: A ‘kit’ represents a preset group of items, of varying

quantities. When the kitting process is used in the warehouse
management system, predetermined items that are part of a kit are
picked from inventory when the kit item number is selected as part of
a pick order.

Non Moving Material: Non moving material is that material which is

not being demanded by dealers for various reasons including product
becoming obsolete or out-of-date, product expired etc. These
materials occupy a significant amount of space in the warehouse.

Octoroi: It is a tax levied by Municipal Corporations of Metropolitan

cities on goods purchased or used inside Municipal Corporation region.

Pallet: Pallets provide an alternate storage area for inventory.

Because they are portable, if pallets are used, it is possible to move
large amounts of inventory at once. Additionally, pallets improve
inventory tracking and control efficiency when moving large amounts
of material (same or unlike items) around the warehouse.

Queue time: It is the time an item is lined up before a critical or

bottleneck resource. The work item is ready to go on, but is waiting for
the resources for the next step to get to it. In a manufacturing
environment, partially finished goods will stack up before a bottleneck
machine during queue time.

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Radio Frequency Identification: Known as RFID in short, it is a
relatively new technology which uses chips embedded in products in
conjunction with transmitters located across a logistics chain to
determine the exact location of merchandise anywhere in the world.
When an item having RFID tag passes through electromagnetic zone of
RFID, an antenna captures the information from this tag and passes
this information to central computer.

Setup time: It is the time required for a resource to switch from one
type of task to another. This is also most obvious in a manufacturing
situation—the operator might need to mount a different bit on a milling
machine before beginning work on a new lot of a different product
type.

Slow Moving Material: slow moving material is that material which is

in less demand in the market and inventory stock in warehouse is
more than budged stock.

Staging Area: Area in the warehouse from which goods are shipped.

Stock-Transfer: This is inter - distributor or inter – depot transfer of

material in case of shortage of stock at one location to supply material
to customers at time.

Stock Transfer Memo: This document is used in transferring material

from one location to another when change of ownership is not
involved. Invoice is used in transferring material when change of
ownership is involved.

Supply Chain: supply chain may be defined as ‘Flow of materials

through procurement, manufacture, distribution, sales and disposal’.

Supply Chain Management: Supply Chain Management may be

defined as "the integrated management of all linkages and value
added activities from the supplier's supplier to the customer's
customer in such a way that enhanced customer value is achieved at
lower costs.
Supply Chain Management is interplay of all the functions and
integrates marketing, planning, distribution and purchases with the
entire manufacturing process.

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SWOT Analysis: It is an analysis tool that forces decision makers to
look their strengths, weaknesses, opportunities and threats associated
with their business environments.

Time worked: Time worked counts the actual work hours of work
expended on the process. Sometimes more than one person (or other
resource) is working on the process at a time: this measure would be
the total hours paid for if workers are the resource being measured. If
only one person at a time works on the process, work time and time
worked are the same.

To-Be Analysis: The goal of To-Be Analysis design is to produce one

or more alternatives to the current situation, which satisfy goals of the
enterprise as stated in the business case analysis and which satisfy the
change-requirements.

Transit Time: It is the time spent in transit between steps. Strictly

speaking, when the work is being moved, that is a step in itself, but no
other value is being added other than transport.

Unit of Measure: A unit of measure (UOM) allows measuring the

amount of an item in a structured and distinct unit. Units of measure
define a base unit of measurement such as each, and then higher
increments of the base unit such as carton, bundle, and case.

Unsalable Material: This term unsalable material is widely used in

FMCG goods and non durable goods. It consists of air-leaked packets,
damaged packets, expired packets etc.

Vendor Managed Inventory: The practice of retailers making

suppliers responsible for determining order size and timing usually
based on receipt of retail POS and inventory data. Its goal is to
increase retail inventory turns and reduce stock outs.

WIP: Work In Progress. This term is used in manufacturing industry

where raw material is in under the process of converting to the
finished goods but is not yet completed.

Warehousing: It is the part of materials management concerned with

the storage of the kind and quantity of goods that consumers and
users require.

Manoj Banshilal Pachouri 200 ICFAI Business School

Workflow: Workflow integrates the entire organization with flexible
assignment of tasks and responsibilities to locations, positions, jobs,
groups, or individuals. It integrates every employee in the 'value chain'
by providing a versatile inbox (universal inbox) at his or her
workplace, which can be configured individually.

Work time: It is the time the process is actually being worked on.
Most processes have at least some time during which processes are
waiting and not being worked on; if all this non-productive time could
be eliminated, cycle time and work time would be the same.

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Manoj Banshilal Pachouri 201 ICFAI Business School