SUPPLY CHAIN MANAGEMENT

Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers . Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. It encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed).

Supply chain management flows can be divided into three main flows:

The product flow The information flow The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting order sand updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. SUPPLY CHAIN PRACTICES THAT AN ORGANISATION SHOULD IMPLEMENT AS IT SEEKS TO IMPROVE ITS PERFORMANCE METRICS: 1. Create a consensus demand plan: An organization can get consensus on market requirements and business assumptions by incorporating new product introductions, product retirement, upcoming promotions, financial projections, investor commitments and sales forecasts into the demand planning process, and creating a consensus plan around it. Without building consensus, everyone has a different perspective of customer demand and it becomes difficult to synchronize demand and supply. 2. Ensure supply demand synchronization: By using techniques such as Sales & Operations Planning (S&OP), as well as creating a supply plan that maps to demand while also incorporating key constraints, a company can ensure that it will be able to meet its delivery commitments without incurring expediting costs

or higher inventory. Such capability not only reduces costs, but increases customer loyalty. 3. Streamline supplier interactions: By providing suppliers ongoing visibility into their forecast and consumption plans, as well as current inventory status and planned receipts, manufacturers can get their suppliers to improve replenishment lead time and become more responsive to their changing needs. It also allows them to implement programs such as Vendor-Managed Inventory (VMI), cut costs through reduction in inventory and safety stock, reduction in overtimes or expediting costs. 4. Get visibility into supply chain events: Traditional supply chains are evolving into a worldwide network of suppliers and manufacturing or distribution facilities. Such an environment requires stakeholders to share any shipment or material information such as plans, current status or exceptions with each other in a timely manner in order to improve overall supply chain performance. Without the ability to provide such levels of visibility to each other, each stakeholder ends up continuously reacting to unplanned surprises with limited time to act, not to mention carrying extra inventory to compensate for such surprises. Visibility into shipments and material-related information promotes faster decision-making within the supply chain and enables each stakeholder to proactively respond to issues. Supply Chain Event Management (SCEM) addresses these requirements. 5. Automate trade compliance: As organizations grow in scale through new products and expanded geographical markets, or setting up plants in other countries, or turning to offshore suppliers, manual methods of managing the export and import compliance process become exponentially more complex and time-consuming. Even significant increases in headcount may not resolve the issues. Streamlining the export and import management process brings benefits such as significant cost savings, improved productivity, fewer shipment delays and reduced risk of penalties and fines due to non-compliance. 6. Rationalize the supply base: By reducing the number of suppliers, procurement managers can take spending on a category that is currently scattered among multiple suppliers and award that volume of spending to a smaller number of suppliers to gain volume discounts. Rationalizing the supply base also reduces complexity associated with new part introduction and simplifies supply collaboration. 7. Integrate engineering and sourcing into supply chain management: New product introduction (NPI) and sourcing are key elements of effective supply chain management (SCM). Without expertly incorporating NPI into the supply chain planning process, a manufacturer runs the risk of inventory write-offs or shortages of critical components. Similarly, the sourcing process should incorporate requirements such as ability to deliver in the right replenishment model, responsiveness and flexibility to react to sudden changes in business needs. 8. Continuously measure key performance metrics: One best practice is getting visibility into key supply chain performance metrics on an ongoing basis and using that information to continuously improve the supply chain. SAP's

upcoming supply chain performance management solution will help close the loop for its customers. 9. Focus on time and inventory: While one can focus on improving multiple aspects of the supply chain, the greatest impact can be had by focusing on continuously improving on two fronts: increasing the velocity of process and information flow and focusing on activities and actions that can reduce inventory within the system. 10. Deploy an integrated solution: When the supply chain capabilities of ERP systems were not as mature as they are today, best-of-breed solutions were the preferred approach. However using such systems created information integration issues. Today, I recommend that companies evaluate supply chain systems from their ERP vendors before looking at other options.

SUPPLY CHAIN DRIVERS

INVENTORY Vendor managed inventory, coordinated by an integrated logistics system, allows inventory to be optimised together with transportation. By knowing the product value as well as storage capacity at each site, and routinely collecting information on consumption rate, current inventory levels, forecasted demand and status of shipments, the system can optimise the right quantities of replenishments to be sent at the right time to ensure that service levels are maintained while minimising cost of inventory and transportation. Inventory refers to all of the raw materials, work in process (WIP), and finished goods within the supply chain. Inventory policies can dramatically alter a supply chains efficiency and responsiveness. It can increase amount of demand that can be met by increasing product availability. Inventory can reduce costs by exploiting economies of scale in production, transportation, and purchasing. It can be used to support a firms competitive strategy. More inventory increases responsiveness, less inventory increases efficiency (reduces cost).

TRANSPORTATION Modes and routes for moving inventory throughout the supply chain. Faster transportation allows a supply chain to be more responsive but generally less efficient. Less than full truckloads allow a supply chain to be more responsive but generally less efficient. Transportation can be used to support a firms competitive strategy. Customers may demand and be willing to pay for a high level of responsiveness. While supply chain design deals with the flow and stocking of goods, transportation optimisation examines the shipment (flow) process itself. The typical transportation optimiser will search for opportunities to aggregate compatible orders or splitting orders to fit the transportation media (e.g. containers), identify pooling points to consolidate orders for long haul using larger & hence cheaper media and routing of pick-up and drop-off orders to increase

backhaul. The judicious use of or to optimise shipment plan has been generating large savings in transportation. 10-35% reduction in freight expenses had been achieved through optimal aggregation/ consolidation, multi-modal multi-leg carrier selection, rating and routing of freight orders. TRANSPORTATION DECISION: Mode of transportation is the manner in which a product is moved (air, truck, rail, ship, pipeline, electronic). Each mode differs with respect to speed, size of shipments, cost, and flexibility.

Routes are paths along which a product can be shipped.

In house or outsource the transportation function. Many companies use third-party logistics providers (3PL) to perform some or all of their transportation activities FACILITIES Places within the supply chain where inventory is stored, assembled, or fabricated. Decisions on location, capacity, and flexibility of facilities have a significant impact on performance. Facilities either store inventory between supply chain stages (warehouses, distribution centers, retailers) or transform inventory into another state (fabrication or assembly plants). Centralization of facilities uses economies of scale to increase supply chain efficiency (fewer locations and less inventory) usually at the expense of responsiveness (distance from customer).

FACILITY DECISION: Location. Centralize to gain economies of scale or decentralize to be more responsive. Other issues include quality and cost of workers, cost of facility, infrastructure, taxes, quality of life, etc. Capacity. Excess capacity allows a company to be more responsive to changes in the level of demand, but at the expense of efficiency. Manufacturing Methodology. Decisions between a product or functional focus, between flexible or dedicated capacity. Warehousing Methodology. Chose between SKU storage (stores all of one type of product together), Job lot storage (stores different products together to satisfy a particular customer or job), or cross-docking. INFORMATION Data and analysis regarding inventory, transportation, facilities, and customers throughout the supply chain. It is potentially the biggest driver since it affects all the other drivers. Information connects various supply chain stages and allows them to coordinate activities.

Information is crucial to the daily operations of each stage of the supply chain.

An information system can enable a firm to get a high variety of customized products to customers rapidly An information system can enable a firm to understand changing consumer needs more quickly Information Decision Components: Push versus Pull. Push systems (like MRP) need information on anticipated demand to create production and purchasing schedules. Pull system (like JIT) need accurate and quick information on actual demand to move inventory and schedule production in the chain. Coordination and Information Sharing. How will the goal of maximizing supply chain profitability be achieved through the coordination of activities and sharing of appropriate information. Forecasting and Aggregate Planning . How will future demand and market conditions be forecast, and to what extent will collaborative forecasting be used. How will aggregate planning be used to meet forecasted demand and to what extent will it be shared throughout the supply chain. Enabling Technologies. Which information technologies will be used and integrated throughout the supply chain- electronic data interchange (EDI), the Internet, enterprise resource planning (ERP) systems, supply chain management (SCM) software. STORAGE AND WAREHOUSE The warehouse acts as a supporting function for logistics and plays a key role in attaining the overall objectives of the firms logistical supply chain system. In todays context, the warehouse is used as a switching facility rather than as long a term storage house. Attention is paid to higher inventory turnover, lower operating cost, and shorter cycle time. Warehouse performance is judged by its productivity and cost performance, while trying to achieve the two polemic goals of customer satisfaction and lower cost of operation. Warehouses are long term investment and must be designed to grow with the business. PACKING Typical system that generates pick list for each vehicle do not necessary know if all items could fit into the vehicle. The discreteness of items will inevitably result in some space that cannot be used. Hence, knowing how items should be packed or stuffed so that capacity is well used is another important cost saver. The load planning software can be integrated with the routing software to generate an optimal stuffing plan that considers compatibility, stack ability and unloading sequence. Planners are thus assured that the routes and loading plans would both work.

LOGISTICS
Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment. It is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements. Logistics is the science of planning and implementing the acquisition and use of the resources necessary to sustain the operation of a system. The science of planning, design, and support of business operations of procurement, purchasing, inventory, warehousing, distribution, transportation, customer support, financial and human resources. Integrated Logistics Management The core enabling technology (besides IT) to bring about integrated logistics is operations research (OR). OR is the application of mathematical methods such as linear programming, game theory, statistical analysis and simulation to solve real world (complex) management problems. It always take a total systems and total cost perspective of the management problem so that the solution does not inadvertently create problems in other areas or that savings in one area does not worsen the overall companys performance. Decision Support Systems (DSSs) are applications embodied with OR technologies to solve specialised problems. These systems have, time and again, proven to produce significantly better solutions to structured problems and in a much shorter time than those produced by the most experienced planner. Coupled with IT applications, it provide a powerful system to tackle and integrate the many aspects of logistics planning. STORE DEPARTMENT Orient craft have a centralized storage, which means there all the fabric trims and other raw material first comes to there main store then further gets distributed from there. When any fabric sourcing is done, it first comes to the main store of orient craft group, then further it distributed to other units as per the requirements. Although there each units also have their own store, but the main store is in 7P unit.

RAW MATERIAL SOURCING

Orient craft have a very nice and systematic fabric sourcing department. It is a very important department because fabrics are the costliest thing in a garment. So it is very important that an export house choose good and reliable supplier, who can deliver the material on time, at lowest price. When ever the PO comes according to it the merchandiser make a BOM of that order and material in house according to it. BOM contains all the important details of raw material which is sent to various suppliers. So that they can give their own quotations according to the bill of material and send it back to the export house. CRITERIA FOR assessing and selection of supplier Following factors kept in consideration while selecting a supplier:

Price Time Quality Delivery

While selecting a supplier against various quotations which an export house receives is very important job. And it is done keeping following things in mind, where he is getting the lowest price, give delivery at shortest lead time, and the best quality. Various suppliers are as follows: S.NO. 1 ACCESSORY FABRIC SUPPLIER

Alok mills Auro textiles SKC Tex and wets

RMP fabric sourcing Deepika exports Fountain set limited Shaoxing couty Kin tao textile Vardhman Madhura coats Pashupati Malwa (oswal)

ltd. 2 THREADS

3 4 5 6 7

ZIPPER BUTTON ELASTIC FID LABELS AND TAGS

YKK zindal and simex Surabhi Factory ID Code

Manohar filament Kailash ribbons RVF Shore

Accessories purchase department There are two types of purchase against the following type of order :

Job orders Miscellaneous orders

In the first kind of order, all the requirements related to production department are taken into consideration. These requirements are forwarded to the accessories department through ERP system and with the help of ERP accessories department comes to know that the requirements of the production department and place the order according to the department. The codes are generated against each order in ERP and according to these codes requirements are generated. Purchase department checks the quantity of accessories in its previous record to see if more balance is there or not. It then orders the remaining quantity of accessories. At the time of receiving the accessories, the department checks the quality of the items and if it is in the acceptable limit then they accept the items and place to specific bins and enter that bin number into the system against the order. The various trims that can be ordered are: S.NO. 1 2 3 4 5 6 7 TRIMS Main label Size label Style label Button Thread Zipper Polybag

In the second kind of order all the requirements related to supporting items like stationary, house keeping, medicine etc. are taken care of. These requirements

are submitted to the accessories department by the different departments once in a month. The discount available on the purchase are :

Cash discounts Bulk discounts

The documents prepared by the department are: Requisition: For fabric request which is generated by the merchandising department.

PO : Purchase order coming from the buyer.

Lab test report: Accessories are tested are per the requirements of the buyer. Inspection report : To keep a track on the defects when 10% inspection is carried out. Once when the fabric is in-house it is first taken to the quarainted zone, where, the security people receive the fabric in the form of rolls or in loose forms and inspect the quantity of the fabric to see if it matches the quantity mentioned in the suppliers chalan. The receipt is then sent to the concerned person. After all the procedures, quality person continues with the checking process.Outsourced fabric: 100% inspection After following the procedure, 25-100 cm is cut from the fabric, from each roll and with these swatches their corresponding rolls are marked. Lots are made by examining these swatches and the samples are sent to the merchandiser for grouping them under various shades, these rolls are marked with different colored stickers to identify the various shades and lots from each other, the process is called Shade Banding. Role to role variation is checked manually or with a checking instrument called Light Box, with one fact that the weight and ratio of the fabric of the fabric is noticed same, in which, the fabric defect system followed is 4- point system. A report is sent to the merchandiser about defect, lot card, continually card which carries the details of every lot of no. of rolls are there in it. Center selvedge (CC) is the measure in which different roll is joined weight wise .i.e. 1-6, 3-5 etc. through which variation is checked in order to the garments being stitched from the same side of the fabric. Marker is also set and bowing and skewing are the defects found out.

Shrinkage check is done by two ways:

Colourwise Shrinkage wise

For shrinkage testing 28/28 panel is cut from the fabric, color coding eg. Lot 1 to lot 20 is done and stickers are pasted on them. Closure is sent after approval and rejected sample is debited and sent back, which is again inspected by the board of checking and rejection. Rejected fabric is used for making blankets.

Terms and condition for the supplier Fabric will be checked on 4 point system from MTL/ ITS lab and inspection and quality Certificate should be attached with dispatch documents.

Fabric should be free from defects. Fabrics should be in maximum of two shade lots.

The fabric shall be supplied strictly in keeping with material specifications/ technical parameters specified in the purchase order or Quantity.

Packing roll length should be above 30 meters.

Fabric dispatched after due date will automatically result in discount on fabric price/ air freight. Rejected fabric will be replace within 2-3 days of rejection will pick up in the same from OC. Debit-not settlement within in a week Fabric should be delivered with the original document not with chalan. Commercial invoice delivery address should be as OC purchase order. Complete fabric description should be mentioned on invoice.

Transit insurance for the goods moved under both from the company as well as from beneficiary of this document is covered by orient craft

limited vide policy no.0830000597 issued by TATA AIG insurance Co.ltd New Delhi. Receiving fabric from mill to an export house is not the headache of the export house. Mill is fully responsible for delivering the fabric to the export house in there own expense and for that they make there own arrangement. An export house does not to make any arrangement for receiving fabric from mill. But when fabric arrives in orient craft main unit which is their main store should make an entry in there ERP system. And after that when they required to move there fabrics in their other units at that time OC needs to make there own arrangement for moving raw materials from one unit to another. Normally Orient Craft transfer their raw material in there own trucks. They have their own trucks like TATA 407 etc. Even they use their trucks for dispatching finished goods in local airport and sometimes they move there truck to Mumbai also. Movement of fabric from store to cutting When any requisition comes from the cutting department for fabric to fabric store. The cutting department sends a requisition slip. Then the store department issues a slip along with the fabric. Cutting department in Orient Craft is also basement Just aside of fabric store department. For moving fabric rolls or than from store to cutting department they use wheel trolleys. And many times fabric rolls are being moved with the help of labour itself

FABRIC ISSUE CHALLAN

Sales Order No. : Run Date Time : :

STYLE FABRIC

Fabric Description: FABRIC FABRIC ISSUE LINE ROLL NO. ACTUAL FIN. WIDTH ROLL QUANTITY IN MTR.

COLO R SIZE S. NO.

MATERIAL FLOW IN CUTTING DEPARTMENT

Within the cutting department fabrics are moved from one section (eg :- bundling, stickering, cut parts) to another with the help of various trolleys and bins. Once the fabric is ready it is been passed to the sewing department with the help of labors and trolleys. MOVEMENT OF MATERIAL FROM CUTTING TO SEWING The sewing lab in orient craft &D unit is in first and second floor. So when the materials are cut and ready for sewing they are moved in small trolleys from cutting to sewing department. Few pan power is used to do this job for the whole day, they take fabric according to style wise. An issuing challan is issued from the cutting department to the sewing department, against the issued fabric.

Movement of material from sewing to finishing department Finishing department in Orient Craft is in the production floor itself. Just where sewing ends finishing department is just aside that. So there are small baskets and helper themselves moving garments from sewing to finishing department. In finishing department there are sections:

Thread cutting section Spotting section Ironing section

And all these section are one after another so there is not much is material movement in finishing department. Everything is done with the helpers here. MOVEMENT OF MATERIAL FROM FINISHING DESPATH SECTION Finishing department in Orient Craft is at extremely back side of the 7D Unit. So for moving finished goods to the dispatch department, they use trolleys and sometimes they just put the garment in the cartons and use labors to move the garments to the dispatch department. There dispatch department is quite high at level of the truck so while shifting the garment in the dispatch department they sometime use slider for moving the garment into the dispatch department.

DESPATCH DEPARTMENT In the dispatch department there are long tables where the garments are being kept. And then they are packed according to the buyers requirements. And cartons polybags, everything is used according to the buyer. Packing Typical system that generates pick list for each vehicle do not necessary know if all items could fit into the vehicle. The discreteness of items will inevitably result in some space that cannot be used. Hence, knowing how items should be packed or stuffed so that capacity is well used is another important cost saver. The load planning software can be integrated with the routing software to generate an optimal stuffing plan that considers compatibility, stack ability and unloading sequence. Planners are thus assured that the routes and loading plans would both work. Packing is a very important part in garment sector, especially if you are doing exporting. In that case every thing is done according to the buyers requirements. Various packing materials are

Cartons Polybags Kimbles Foam Butterfly Hangtag

Materials & Equipments Flip Fold Shirt Folder This is easy-to-use folding tool folds shirts to a uniform 9" x 12" size quickly MATERIAL STORAGE SYSTEM When the fabrics comes from the mill it comes in the form of a

Roll Thaan

When the fabric reaches the store it is kept in various racks and pallets The fabric for every style is kept together irrespective of their lots due to less space. A board above every stack of fabric gives the information about that particular style. The following information is conveyed by the boards:

Buyer name Style number Fabric type Fabric content Fabric description

Lengthwise and width wise elongation

Also, for knowing the status of the fabric stack in the store, the boards are colored to denote their various status. When the fabric enters the fabric store, it is weighed and the entries are done for the following according to the mentioned details on each roll:

Fabric code Color Yardage No. of bills

Bin no. (place of storage known as Bin. Bin numbers are used for tracing generally racks in the case of small things like accessories or small segregated regions in case of fabric rolls).

Fabric store bin card

It tells us about the details of the fabric received by the store, to whom and how much is left with the store. It consists of the following details: Fabric count, code, construction, received meter, issued to, store balance

As you can see in the above picture there different color chart attached in front of each racks, these different color chart have different meaning. For knowing the status of the fabric stack in the store, the boards are colored to denote their availability. PINK - checked fabric RED - Rejected fabric YELLOW - inspected and passed BLUE - unchecked fabric GREEN - fabric yet to be checked Storage in cutting department

Material storage and packing in Dispatch department Cartons details

Packing Instructions Three types of Purchase orders:

Bulk with no pre-packs Bulk with pre-packs Packs by store

All shipping cartons must be in accordance with the following carton size and weight requirements: Minimum: Weight 5 pounds, Length: 9 - Height: 6 - Width 4 Maximum: Weight 50 pounds, Length: 36 - Height: 28 - Width: 24

Packing instructions for Bulk Pack Orders (with pre pack):

A carton can only contain a unique pre-pack size. Cartons can contain as many of the unique style/color pre-pack size that will fit into a carton without exceeding carton dimensions.
o

Cartons shipped must be marked with the pre-pack detail/breakout printed on the shipping labels
o o o

Multiple Purchase Orders in the same carton should not be combined All sets and coordinates with two items hung on interlaced hangers with one UPC must be packaged together, top/bottom on same hanger or bundled in a clear poly bag. All related separates ordered as a set, must be sent in the same shipment with the same Bill of Landing and arrive on the same trailer/container.
o o

Pre-packs must be packaged in poly-bag and bundled as one

unit. Master Packs: Inner cartons/packages must be separate for each style, color, size and/or store

Each inner carton/package must include an UCC shipping container label. Create a carton label with the required information (ship to, ship from, carrier info, PO#, and dept # and place on the outside of the master-pack) Additional Packing instructions given by the buyer to Orient Craft Cover each garment with a clear, dry cleaning style plastic (1 mm) bag, to prevent wrinkling or soiling. Bag must be sealed at bottom.
o

Merchandise should be packed flat, lengthwise in cartons. If the merchandise must be folded, use no more than one fold, at the bottom of the garment.
o

Bundle hangers with string, twine or rubber bands to prevent shifting (do not use metal or tape).
o o o o

Place cardboard or tissue between alternating bundles if necessary, to prevent crushing and reduce shifting of contents. Delicate items should be placed on top to prevent crushing. If improper carton handling during transportation could cause wrinkling, use THIS END UP labeling on the carton.

Mark all fragile cartons with a fragile label.

Use corrugated packing materials and a container that will prevent product movement and breakage. Under the prevailing Packaged Commodity Act, six declarations are required to be made on garment packing:

Size in centimetres Name of the commodity Units packed Date of manufacturing Maximum retail price Name and address of the manufacturer.

General Carton Requirements Cartons must be made from re-shippable and recyclable corrugated cardboard.

Accessory cartons weighing more than 40 pounds must have double wall construction and minimum burst strength of 225 pounds. Accessory cartons weighing less than 40 pounds must have double wall construction and minimum burst strength of 175 pounds. Garment cartons regardless of weight must have triple wall construction, and have a minimum burst strength of 275 lbs. Carton sizes must be consistent for each PO style. Cartons cannot be more than 48 inches in length.

Cartons weighing 30lbs or less cannot be bigger than 84 inches in Length and girth. Cartons weighing less than 49lbs cannot be bigger than 108 inches in Length and girth. Cartons weighing 50 lbs cannot be bigger than 130 inches in Length and girth. LENGTH and GIRTH : take the length + circumference of the carton. A carton that is 32L x 23W x 10.5 H. You would take the circumference 23 + 23 + 10.5 + 10.5 = 67 than add the length 32 + 67 = 99Total length and girth for carton is 99. Cartons cannot be smaller then 12 inches long, 12 inches wide and 5 inches high.

DO NOT place strapping around carton, use staples to close carton, secure carton with wire, or wrap carton in burlap.

Sample Cartons size to meet length + girth 30lbs or less 30l bs or less H 5 12 16 12 12 Length + girth 46 60 80 84 84

L 12 12 16 20 30

W 12 12 16 20 15

INVENTORY MANAGEMENT
Vendor managed inventory, coordinated by an integrated logistics system, allows inventory to be optimised together with transportation. By knowing the product value as well as storage capacity at each site, and routinely collecting information on consumption rate, current inventory levels, forecasted demand and status of shipments, the system can optimise the right quantities of replenishments to be sent at the right time to ensure that service levels are maintained while minimising cost of inventory and transportation. Inventory refers to all of the raw materials, work in process (WIP), and finished goods within the supply chain. Inventory policies can dramatically alter a supply chains efficiency and responsiveness. It can increase amount of demand that can be met by increasing product availability. Inventory can reduce costs by exploiting economies of scale in production, transportation, and purchasing. It can be used to support a firms competitive strategy. More inventory increases responsiveness, less inventory increases efficiency (reduces cost). Inventories are held in following general categories:

Raw material and components Work in progress Finished goods

Maintenance and repairs

Inventory related cost A major portion of the working capital of a firm is blocked in inventory. If the inventory in excess of the maximum level, more funds will blocked and it cannot be used for other productive purposes, resulting in opportunity loss. Hence, funds are tied up unnecessarily. There are other costs related to inventory. The incidence of those costs will also be more if inventories are in excess of the optimum level.

Inventory cost Carrying cost Ordering cost Warehousing cost Damage, pilferage, and obsolescence cost Exchange rate differentials

I
nventory in orient craft is all the time quite high, because of its number of unit and each unit doing so much of production. So they always require stock of raw materials, so that there might not be any scarcity of raw materials. Inventory management is very important department as the whole process depends on inventory the stock availability. There should a perfect balance between the maximum and minimum inventory that should be available in the store. In Orient Craft many styles are going simultaneously so the WIP in the floor is quite high and every day fabric is coming because every day the are getting new orders. So the inventory management department needs to be very careful and proactive while handling the inventory.

Most of there fabrics comes from Surat and bhaddi

Orient Craft inventory related cost:All the ordering cost are taken care by Orient Craft Inventory itself is a cost and Orient Craft makes a perfect balance between purchase and requirements, so that the working capital does not get block. Which means the exporter might have problem in running the business smoothly, because working capital is very important in any business, without you cannot run your business. When the raw materials are imported from outside sometimes due to fluctuation of the rates orient craft bared some loses also, as deal is done in some other price and suddenly the currency rate fluctuates. Such a situation is avoided by making all the necessary terms and condition before the deal is made. Orient crafts inventory carrying cost goes up if they are buying more inventories. Because their main store is in 7P once the materials inhouse in 7P then further it is distributed in other units, which is done by trucks which automatically increases the inventory carrying cost. Because while carrying inventory one unit to another they need to give various challans, octroi etc. and sometimes they need to hire the trucks also which adds on the carrying cost of the inventory.

It cost around (RS 500-1000) in one move of truck from unit to unit. Even within the unit also inventory carrying cost are there like orient craft have brought many trolleys and when man power is used it is also add in the carrying cost of the material from one department to another. INVENTORY HOLDING COST Inventory holding cost is also another cost which comes under inventory. Everyday Orient Craft 7D unit is getting ample of inventory. And these inventories are kept in racks pallets, trolleys are used for movement of fabric. And Orient Craft needs to buy these things which increase the inventory holding cost. Rather holding more inventory blocks a huge chunk of working capital. After that these racks and trolleys have some maintenance expense also which also adds in the total inventory cost itself. ACCESSORY PURCHASE DEPARTMENT

Orient craft follows SAP analysis

As SAP say scarcity, available and plenty orient craft also follow the same procedure for its inventory purchasing. Material which is in scarcity will be ordered first and so on. Store status: Merchandiser add the item which are required ratio wise and given to sourcing department and make P.O accordingly for update and check quantity and 2 pcs. are produced by them for calculating thread consumption for the particular piece. These trims are sourced by import or export. After the process of matching trims, audit report is prepared for further continuous procedure and trims are then ready to issue. They are managing there inventory with the help of ERP system. Enterprise resource planning is such a system in which we can track each and every activity one after another. And all the activities are related to each other in sequins. This means if first activity is not done we cant do the second operation and further. Orient Craft initially tried to implement SAP system in its unit but some how it could not work and that system was not successful in Orient Craft unit. Then after that they introduced the ERP system which is working very efficiently in all its units. ERP is a centralized planning system which allows the employees of different unit of Orient Craft to work as a team and each and every individual can check any status at any time. ERP system is very user friendly software. All the units of orient craft including the entire departments are using this software. And ERP system is Quite less Expensive then SAP system.

ERP SYSTEM
Literarily, ERP refers to Enterprise Resource Planning software. In general, ERP is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business, to manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. Typically, an ERP system uses or is integrated with a relational database system. In practice, ERP does not live up to its acronym. It does not do much about planning or resource planning. , ERP refers to Enterprise Resource Planning software. In general, ERP is an industry term for the broad set of activities supported by multi-module application software that help a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. Typically, an ERP

system uses or is integrated with a relational database system. In practice, ERP does not live up to its acronym. It does not do much about planning or resource planning It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those departments particular needs. The integration streamlines internal business processes and improves productivity of a company.

USE OF ERP: It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those departments particular needs. The integration streamlines internal business processes and improves productivity of a company. ERP software offers the following benefits:

1. ERP integrates all aspects of the business processes including:

manufacturing, design, customer services, financial, sales and distribution. By integrating business processes and people anywhere in a company, one can enjoy more efficient work flow and improved productivity.

2. Nowadays, retailers and consumers push for lower prices, better quality
and quicker delivery. ERP implementation shows the determination to head for those directions.

3. ERP provides the right information to the right people at the right time
anywhere in the world, enabling one to improve productivity, enhance decision making and promote communication between co-workers, customers and vendors

4. For better ERP software, it helps to reduce or eliminate duplicate work,

and automates operational tasks and provides easy access to information. ERP, therefore, can deliver significant time savings.

5. Advanced ERP software has the ability to be customized to the extent

that screens can be remodelled, fields can be edited and the architecture modified through progressive installation processes. In addition, advanced ERP software can be operated in a secured, web-based environment. These features provide flexibility and convenience in implementation and operation.

6. Some multi-lingual ERP software can perform automatic translation

enables almost every style detail to be viewed in several languages including English, Chinese, and etc. It improves the effectiveness of communication.

7. Manufacturing companies often find that multiple business units across

the company make the same widget using different methods and computer

systems. ERP standardizes the manufacturing processes and improve quality.

8. ERP helps business process flow more smoothly and improves the 9. ERP Systems centralize the data in one place. This eliminates the

efficiency of fulfilment process. It leads to reduced inventory. Eventually, it decreases the overall business cost. problem of synchronising changes and can reduce the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure

10. 11.
materials

Order tracking, from acceptance through fulfillment Managing inter-dependencies of complex processes bill of

At its simplest level, ERP provides a way to integrate all your business process. To get the most from the software, one has to get people inside their company to adopt the work methods outlined in the software. If the people do not agree with the method and the system has no flexibility to be customized, ERP projects will be failed. Therefore, ERP software should be chosen wisely. Implementation Businesses have a wide scope of applications and processes throughout their functional units; producing ERP software systems that are typically complex and usually impose significant changes on staff work practices. Implementing ERP software is typically too complex for "in-house" skill, so it is desirable and highly advised to hire outside consultants who are professionally trained to implement these systems. This is typically the most cost effective way. There are three types of services that may be employed for - Consulting, Customization, Support. The length of time to implement an ERP system depends on the size of the business, the number of modules, the extent of customization, the scope of the change and the willingness of the customer to take ownership for the project. ERP systems are modular, so they don't all need be implemented at once. It can be divided into various stages, or phase-ins. The typical project is about 14 months and requires around 150 consultants. A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3-9 months; however, a large, multi-site or multi-country implementation may take years. The length of the implementations is closely tied to the amount of customization desired. The following are steps of a data migration strategy that can help with the success of an ERP implementation:

1. Identifying the data to be migrated 2. Determining the timing of data migration 3. Generating the data templates 4. Freezing the tools for data migration 5. Deciding on migration related setups

6. Deciding on data archiving

Process preparation ERP vendors have designed their systems around standard business processes, based upon best business practices. Different vendor(s) have different types of processes but they are all of a standard, modular nature. Firms that want to implement ERP systems are consequently forced to adapt their organizations to standardized processes as opposed to adapting the ERP package to the existing processes. Neglecting to map current business processes prior to starting ERP implementation is a main reason for failure of ERP projects. It is therefore crucial that organizations perform a thorough business process analysis before selecting an ERP vendor and setting off on the implementation track. This analysis should map out all present operational processes, enabling selection of an ERP vendor whose standard modules are most closely aligned with the established organization. Redesign can then be implemented to achieve further process congruence. Research indicates that the risk of business process mismatch is decreased by: linking each current organizational process to the organization's strategy;

analyzing the effectiveness of each process in light of its current related business capability; understanding the automated solutions currently implemented.

TRANSPORTATION
Modes and routes for moving inventory throughout the supply chain. Faster transportation allows a supply chain to be more responsive but generally less efficient. Less than full truckloads allow a supply chain to be more responsive but generally less efficient. Transportation can be used to support a firms competitive strategy. Customers may demand and be willing to pay for a high level of responsiveness.

While supply chain design deals with the flow and stocking of goods, transportation optimisation examines the shipment (flow) process itself. The typical transportation optimiser will search for opportunities to aggregate compatible orders or splitting orders to fit the transportation media (e.g. containers), identify pooling points to consolidate orders for long haul using larger & hence cheaper media and routing of pick-up and drop-off orders to increase backhaul. The judicious use of or to optimise shipment plan has been generating large savings in transportation. 10-35% reduction in freight expenses had been achieved through optimal aggregation/ consolidation, multi-modal multi-leg carrier selection, rating and routing of freight orders. TRANSPORTATION DECISION: Mode of transportation is the manner in which a product is moved (air, truck, rail, ship, pipeline, electronic). Each mode differs with respect to speed, size of shipments, cost, and flexibility.

Routes are paths along which a product can be shipped.

In house or outsource the transportation function. Many companies use third-party logistics providers (3PL) to perform some or all of their transportation activities Orient Craft have option of both there own trucks as well as the transporters truck. They have their own set up of trucks. They mostly use their own trucks when goods are shifted from one unit to another, also sending these good to railway station and airports in Delhi itself. They usually use transporter trucks when the goods go out of Delhi. Like Orients Crafts most of the export is done from Chennai and Mumbai. So while carrying the goods from Delhi to Mumbai or Delhi to Chennai Orient Craft use transporter truck. Truck rate:- for one trip from Delhi to Mumbai the transporter charge them RS 2500/-

TRANSPORTATION SYSTEM AFTER EX FACTORY

Freight rate criteria

Transit time

By road till Mumbai normal approx 4 days Express approx 2 days By train to Chennai - normal approx 4 days By air to Chennai/ Mumbai less then one day

FEW LOCAL SUPPLIERS WITH WHOM ORIENT DRAFT DEALS

OM LOGITICS UNIVERSAL FREIGHT LOGISTICS GRS CARGO TIME LOGISTICS CARAVAN CARRIERS MUDITA MARKETING GRS CARGO

SEA FORWARDS WITH WHOM THEY USUALLY DEAL WITH

APL NYK EXPEDITORS MAELSH

AIR FORWARDS WITH WHOM THEY USUALLY DEAL WITH

EXPO FREIGHT EXPEDITOR VAN PARKER

selecting or assessing transporter

Transit time Rate Services Discount Extra services

These are some of the criteria according to which Orient Craft select the transporter. They take quotations from many transporters and then they do a market survey to check out the actual rates what is current. Then according to it they compare the best prices rates and etc then select the best out of them which suits them. FORWADER are always nominated by the buyer. He always suggests the forwarder to the buyer. When the orient craft logistics department contacts with the buyer nominated forwarder, the forwarder gives the booking number to orient craft and gives all the details of the vessel etc

Documents required

Certificate of origin FOB Commercial invoice One cop of packing list

The process of booking to ex country takes place in 15 days Example:

o o o o o

The forwarder will give the booking number Forwarder gives book allotment number after 1,2 days. Give vessel details Do the custom clearance They accept only quota invoice in ERP rest every thing.

Normal rates in vessel for shipment - 70 to 85 dollar per /kg/cb/mtr It depends on volume also. The larger the volume lesser the rates

Few of the containers used by orient craft are:-

Hence transportation plays a very important role in the whole supply chain management.

LETTER OF CREDIT
A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking. A letter, usually from a bank, requesting a person or company to extend credit to a certain person or company and guaranteeing payment. Most commonly used in the purchase of good from another country. The letter may be revocable or irrevocable, but most parties insist on the irrevocable. Letter of credit is a document issued by a bank that guarantees the payment of a customer's draft; substitutes the bank's credit for the customer's credit. It is a document, issued by a bank per instructions by a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time. A commitment by a bank or other person, made at the request of a customer, that the issuer will honour drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters of credit and standby letters of credit. It is an instrument or document issued by a bank guaranteeing debt holder payment by enabling the bond trustee to draw from the bank the full amount of principal and interest due on each debt payment date. A financial instrument, issued to a company or person by a bank that substitutes the banks credit for the companys credit. The LC can also be the source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. They are also used in the land development process to ensure that approved public facilities (streets, sidewalks, storm-water ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled

without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment was insured against loss or damage in transit. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin. Orient craft is such a huge export house that it deal with many buyer at the same time. So different buyers have their different terms and condition for letter of credit. And in such case Orient Craft needs to pay some attention in the documentation of letter of credit.

In HSBC letter of credit following things are there :

Documentary credit number - I00406005 Amount - USD 38,025.85 - BANK OF NEW YORK MELLON UNITED STATES HEAD OFFICE NEW YORK Issuing bank

Applicant

- QVC, INC.

The bank debit the account

COMMISSION INR 500.00 SERVICE TAX INR 60.00 EDUCATION CESS INR TOTAL INR 561.80 1.00

In accordance with the version of the CPU RULES ( issued by the ICC) as specified in the credit, we have advised, having received the following authenticated teletransmission from the BANK OF NEW YORK MELLON

SEQ OF TOTAL: 1/3 FORM OF DC: IRREVOCABLE TRANSFERABLE DC NO: I00406005 DATE OF ISSUE: 06JAN09 EXPIRY DATE AND PLACE: 21MAR09 NEGOCIATING BANK APPLICANT: QVC, INC. 1200 WILSON DRIVE WEST CHESTER, PA 19380 BENEFICIARY: ORIENT CRAFT LTD 7-D SECTOR 18, MARUTI INDUSTRIAL COMPLEX GURGAON, HARAYANA, INDIA DC AMT: USD38025.85 ADDITIONAL AMTS COVERED: WITH IN 5 VARIENCE AVAILALE WITH/ BY: ANY BANK BY NEGOTIATION DRAFTS AT: SIGHT PARTIAL SHIPMENTS: NOT ALLOWED TRANSHIPMENT SHIPMENT: NOT ALLOWED TAKE CHARGES/RECEIPT/DISP FM: CHENNAI,NHAVA SHEVA,CLCUTTA OR COCHIN, INDIA FINAL DEST/DELIVERY/TRANSPORT TO: US PORT DESIGNATED BY FORWARDER SHIPMENT PERIOD: LATEST SHIPMENT DATE- 09/02/28 CONFIRMATION INSTRUCTION: WITHOUT GOODS DETAIL ITEM NO SKU SKN QVC PO QUANTITY UNIT PRICE ORIENT CRAFT CREDIT LIMITS 30-45 days amount no limit of amount (continuous basis) Only one time transaction ( 20-30 lakh) LC terms of payment

at sight 60 days 90 days 120 days

Note- now days LETTER OF CREDITs are not iN USE NOW the buyer pay either t/t telex transfer or open account All the details of the goods will be there in the letter of credit.

SHIPPING TERMS: FOB CHENNAI, NHAVA SHEVA, CALCUTTA OR COCHIN, INDIA DOCUMENTS REQUIRED:

Commercial invoice including the manufacturers NAMES, ADDRESS One copy of packing list with all the size ratio and cartons dimentios. One original copy of forwarders cargo receipt issued to QVC.inc. One copy of the country of origin declaration.

One copy of signed or stamped inspection or survey certificate from: any branch of intertek testing lab. Original bill of credit is attached as an enclosure.

BILL OF EXCHANGE
A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date. Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts. A written order from one person (the payor) to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at some fixed future date, a certain sum of money, to either the person identified as payee or to any person presenting the bill of exchange.