PROJECT REPORT

On

Warehousing Operations in FMCG Industry

Synopsis submitted in partial fulfillment of requirements for

Bachelors of Business Administration
Logistics management

Mentors Name-
Dr. Neeraj Anand

UPES- Dehradun

Submitted by-
FAIZ ALI
500040446
R380214038
BBA LogisticsManagement
2014-2017
College of Management & Economics Studies, UPES

CERTIFICATE
 TO WHOMSOEVER IT MAY CONCERN

This is to certify that the dissertation report on INDIAN TOURISM AND HOSPITALITY
INDUSTRY ANALYSIS completed and submitted to University of Petroleum and
Energy Studies, Dehradun by GayatriTandon in partial fulfillment of the provisions
and requirements for the award of degree of BACHELORS OF BUSINESS
ADMINISTRATION ), 2014-2017 is a bonafide work carried by the scholar under my
supervision and guidance.

To the best of my knowledge and belief the work has been based on
investigation made, data collected and analyzed by the scholar, and this work has
not been submitted anywhere else for any other university or institution for the
award of any degree/diploma.

(Lecturer CMES)
(UPES, Dehradun)
 ACKNOWLEDGEMENT

First and foremost, I would like to thanks my respective mentor Dr. Rajeev Sharm
(Lecturer - CMES) for his valuable guidance and encouragement throughout my
research project on Indian Tourism and Hospitality Industry Analysis. His
expertise, enthusiasm, and dedication for work have been constant source of
motivation for me.

I would like to express my deep gratitude to University of Petroleum and

Energy Studies for extending the opportunity of undergoing the project and
providing with all necessary resources and expertise needed for completion of the
project.

I also convey special thanks to Mr Head of Department (International

Business) for his extended support throughout the project.

GAYATRI TANDON

Enroll no.

BBA Foreign Trade

 TABLE OF CONTENTS
CONTENTS PAGE NO.

CERTIFICATE FROM THE GUIDE

ACKNOWLEDGEMENT
EXECUTIVE SUMMARY

CHAPTER 1 INTRODUCTION
PURPOSE OF A WAREHOUSE
WAREHOUSE MANAGEMENT SYSTEM (WMS)

WAREHOUSING WORLD CLASS PRACTICES

WAREHOUSE DESIGN CRITERIA

OPERATIONAL STANDARDS NEEDED:

BRIEF HISTORY

CHAPTER 2 LITERATURE REVIEW

SUPPLY CHAIN MANAGEMENT (SCM)

SUPPLY CHAIN PERFORMANCE MEASUREMENT (SCPM)
RESEARCH GAP

CHAPTER 3 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
METHOD OF DATA COLLECTION

RESEARCH PROBLEM

LIMITATIONS OF DATA COLLECTION

CONCLUSION

BIBLIOGRAPHY

CHAPTER 1
INTRODUCTION
 INTRODUCTION

A warehouse is a commercial building used for storage of goods.

A warehouse is normally used by manufacturers, importers,
exporters, wholesalers, transport businesses, customs and many
other industries.
 Typically, a warehouse is a large building in industrial areas
of cities and towns and usually has loading docks for loading and
offloading purposes. Most of the goods stored are sent to a
warehouse from railways, air freight and sea freight. Typically one
can find equipments such as cranes and forklifts to move goods.

Traditionally warehouses are used for:

- receiving of goods from a source

- storing of the goods until they are required
- picking of the goods when they are required
- shipping the goods to the appropriate users

PURPOSE OF A WAREHOUSE

The primary role of a warehouse and distribution center is to

facilitate the movement of goods from suppliers to the customers
and by doing so while meeting to customers demand and in a
cost effective manner.
 In order to achieve efficiency in supply chain, stocks have to
be kept, but this is not the main role of a warehouse. Stocks may
be hold for contingencies, or to enable rapid customer service, or
in preparation for a new product launch. But in the most basic
purpose of a warehouse, it is the transshipment area from where
all the goods received are dispatched as effectively and efficiently
as possible.

Reasons for holding stock include the following.

As a buffer/consolidation point between two production

processes
To cover demand during suppliers' lead-time
To enable savings to be made through bulk purchases or
discounts
To cope with seasonal fluctuations
To provide a variety of product in a centralized location

Warehouse should be viewed as a place to transship goods to

customers. Although this may involves some temporary storage
but, essentially, it is a place where customer order completion is
undertaken, combining individual items from various locations
and possibly splitting bulk product.
 Warehouses and distribution centers have become integral
parts of the supply chain, and are increasingly pressured to do
more with less. Therefore there is a pressure to perform better in
warehouses.

In the near future, warehousing needs are predicted to be

increased according to studies done. Customers in general
wanted more for less, because warehousing labor cost is
generally lower than manufacturing cost, the warehouse can
often perform light manufacturing tasks for less cost. As a result,
many facilities are beginning to resemble light manufacturing
plants.

Customers nowadays are smarter and they expect perfect

orders, increasing speed, continuous improvement and greater
selection and customization from their supplier at a lower cost.
As the communication technologies are better and readily
available anywhere nowadays, enabling accurate analysis. Global
competition and pricing pressure forces companies to continue
reduction of cost rather than increasing price.

With all this means that the role of warehouses are getting
bigger in facing such challenges. Performing value-added
services in the warehouse is given a greater priority today than
ever before, as reflected in the fact that warehouses are
beginning to be characterized by the activities they perform,
rather than by their storage function.

Warehouses today are often referred as distribution centers,

operation centers, or fulfillment warehouses. Today, a warehouse
is no longer a standalone part but an integral part of the supply
chain. To achieve such level of efficiency and effectiveness, there
are several solutions and assistance to this and they are called
information technology systems such as Warehouse Management
System (WMS), Electronic Data Interchange (EDI), Radio
Frequency Identification (RFID), Enterprise Resource Planning
(ERP), not to mention the internet and many more technologies
which can enable the achievement of the goal of the warehouses.
WAREHOUSE MANAGEMENT SYSTEM (WMS)

Warehouse Management System (WMS) have been available

since the earliest computer systems were introduced and it
allowed simple storage location functionality. From then on, it
kept on improving until what it is today. Today WMS systems can
be either standalone or as a part of an Enterprise Resource
Planning (ERP) system. WMS can be coupled together with other
complex technologies such as Radio Frequency Identification
(RFID) and voice recognition. However, the basic principle of the
WMS has remained the same, to provide information which allows
efficient control of the materials movement within the warehouse.

Implementation of WMS is often complicated. Project

planning is critical to the success of WMS implementation. It
requires warehouse resources to collect data on the physical
warehouse, materials, inventories as well as defining the
strategies required to operate the warehouse. Adding to the
challenge is to implementing the system while the warehouse is
still in operation.

The complexity of WMS implementation varies with different

businesses. Data on the physical dimensions and characteristics
of each item in the warehouse are required to be collected and
entered into the WMS system. The physical size and weight of
the items are to be calculated, can the items be stored
separately, can it be stacked, all this information are to be fed
into the WMS system correctly. Hazardous material information
needs to be collected so that the item is not stored in certain
areas. This information is only part of the requirements of the
WMS implementation.

WMS system requires decisions or configuration to be made

on how items are to be placed or removed from the system, in
what order, for what types of materials and what methods of
placement and removal should be used. The implementation
requires significant input from the resources that operate the
warehouse on a day to day basis and this can be a strain on
warehouse operations. A successful project will recognize this fact
and ensure that the key personnel required for the
implementation are given adequate back up so that warehouse
operations do not suffer.

After the successful launch of the WMS system, many businesses

will find that the resources required to operate the system is
greater than prior to the implementation. This is primarily due to
the data intensive nature of the software and the fact that
warehouses are in a state of flux; racks are moved, placement
and removal strategies changed, new items added, new
 processes developed. Warehouse accuracy is paramount for the
software to operate and to do this data will need to be entered
accurately and in a timely fashion. Although most WMS
implementations will reduce labor costs in the placement and
removal of materials, there is often an added warehouse
management function required just to operate the software.

NEED FOR WAREHOUSES

1. Seasonal Production :
The agricultural commodities are harvested during certain seasons, but their consumption or use
takes place throughout the year. Therefore, there is a need for proper storage or warehousing for
these commodities, from where they can be supplied as and when required.
2. Seasonal Demand:
There are certain goods, which are demanded seasonally, like woolen garments in winters or
umbrellas in the rainy season. The production of these goods takes place throughout the year to
meet the seasonal demand. So there is a need to store these goods in a warehouse to make them
available at the time of need.
3. Large-scale Production:
In case of manufactured goods, the production takes place to meet the existing as well as future
demand of the products. Manufacturers also produce goods in huge quantity to enjoy the benefits
of large-scale production, which is more economical. So the finished products, which are
produced on a large scale, need to be stored properly till they are cleared by sales.
4. Quick Supply:
Both industrial as well as agricultural goods are produced at some specific places but consumed
throughout the country. Therefore, it is essential to stock these goods near the place of
consumption, so that without making any delay these goods are made available to the consumers
at the time of their need.
5. Continuous Production:
Continuous production of goods in factories requires adequate supply of raw materials. So there
is a need to keep sufficient quantity of stock of raw material in the warehouse to ensure
continuous production.
6. Price Stabilization:
To maintain a reasonable level of the price of the goods in the market there is a need to keep
sufficient stock in the warehouses. Scarcity in supply of goods may increase their price in the
market. Again, excess production and supply may also lead to fall in prices of the product. By
maintaining a balance in the supply of goods, warehousing ensures price stabilization.
Five basic service benefits are achieved through warehousing:

Spot stock,

Assortment,

Mixing,

Production support, and

Market presence

ORGANISATION STRUCTURE OF STORES DIVISION

 Stores manager

Engineer, Inventory Officer 1 Officer 2

Control

Inventory Control
(Warehouse 1) (Warehouse 2)
& Stock Records

Inventory Records Warehouse A Inspection

Control

Inventory
Stock Record Store Keeper 1 Inspection
Controller 1
Controller Controller

Store Keeper 2
Warehousing
Inventory
Controller 2
World
Material Clerk class Practices Materials
Inspectors
Using the best practices in managing the stocks of the industry becomes the part of world class
Clerk/Typist
practices.
Material Clerk Using most efficient methods for controlling the product inventory and adopting
Labour
outsourced techniques in order to control warehouse activities, including receiving, storing,
assembling, kitting, picking and the dispatching of customers/ users orders. Some of the points
need to be kept in mind in relation to the world class practices. They become a platform for the
adaptation of the world class practices in the organization. They are,

1. Receipt and Inspection of Materials:

The following procedures are adopted in a warehouse on receipt of materials;
 Receipt of material: The materials on receipt are taken to their allotted spaces in the
warehouses. The delivery slip and the bill copy are filed in the warehouse for reference.
The original bill reaches the accounts department for the payment to be made.

The materials are then Unloaded from the delivery trucks. The materials are handled
carefully while unloading. Old worn out truck tires are used to provide a cushioning
effect while unloading heavy materials.

The materials are then inspected for any defects against the required and standard
specifications. This is done by inspection controller in large organizations. The quality
controller also plays a vital role in material inspection.

The Control samples or standards are kept separately to check the materials to be
inspected.

The Storekeeper documents the accepted materials.

2. Issue of Materials
The procedure for the issue of stock items includes that the materials are to be issued, to
authorized persons only and upon presentation of completed and approved store requisition and
issue note.
In large organizations the distribution of issue notes is done by authorized persons. They issue
different colored slips to the different departments when a stock item is issued.
Pink Copy User
Green Copy Finance Department
Original (White) Stores Division

3. Stock & Inventory Management

The biggest problem comes when we keep too much stock with us, so we need a proper check on
getting and sending the material. Stock within the warehouse need to taken care which will
surely increase the cost of the organization and finally, it will increase the price of the product.
 Stock Control is used to evaluate how much stock is used. Stock taking is done by
the Store Keeper. It is also used to know what is needed to be ordered. Stock control
can only happen if a stock take has taken place. Stock rotation must be put into use
with stock control by using the oldest products before the newer products.
Periodic Stock Checking: There must be proper check over the stock; it must be
evaluated from time to time. The task of the operation manager is to make a proper
flow of stock as when it is required. From time to time it must be checked that how
much of goods are with them and give the required information from time to time to
the production department, so that none of the stock will remain stand still.
To ensure a proper check on the product that is with us, we need to use tools, such as;
ABC (Or Pareto) Analysis

ABC analysis is an inventory categorization technique often used in materials management

system. It is also known as Selective Inventory Control. ABC analysis provides a mechanism for
identifying items which will have a significant impact on overall inventory cost whilst also
providing a mechanism for identifying different categories of stock that will require different
management and controls
When carrying out an ABC analysis, inventory items are valued (item cost multiplied by
quantity issued/consumed in period) with the results then ranked. The results are then
grouped typically into three bands. These bands are called ABC codes. It divides inventory
into three classes based on annual cost volume
Class A - high annual cost volume

Class B - medium annual cost volume

Class C - low annual cost volume

Cycle Counting

A cycle count is an inventory management procedure where a small subset of inventory is

counted on any given day. Cycle counts are less disruptive to daily operations, provide an
ongoing measure of inventory accuracy and procedure execution, and can be tailored to
focus on items with higher value or higher movement.
To conduct efficient and accurate cycle counts, many organizations use some form of
software to implement an inventory control system, which is part of a warehouse
 management system. These systems may include mobile computers with integrated
barcode scanners that allow the operator to automatically identify items, and enter
inventory counts via keypad. The software then transmits data to a database on a host
system which can generate inventory reports.

Product coding:

Product code is a unique identifier, assigned to each finished/manufactured product which is

ready, to be marketed or for sale. It enables easy method of tracking the product until it
reaches the customer or end user. The various Codes used are:
Universal Product Code, common bar code used to identify products
Electronic Product Code
Serial number, a number identifying an item

Quality records are maintained for the materials/stock specification.

These include

Procedures to be followed in handling material/stock

Detail specifications of every item.

Inspection reports.

Quality reports.

Descriptive reports.

Details of approval period of retention of various documents.

Material Storage & Handling:
Handling the material is one the most important part of warehousing. Material Handling is the
movement, storage, control and protection of materials, goods and products throughout the
process of manufacturing, distribution, consumption and disposal.
The focus is on the methods, mechanical equipment, systems and related controls used to achieve
these functions. The material handling industry manufactures and distributes the equipment and
services required to implement material handling systems.
Material handling systems range from simple pallet rack and shelving projects, to complex
convey or belt and Automated Storage add Retrieval Systems (AS/RS).

Equipments used for handling material include:

Hydraulic jacks, Dump trucks, Wheel Barrows, Trolleys, Forklift Truck (Diesel/ Battery operated
), Damaged tires used for providing cushion support for heavy materials during unloading; Iron
bars, Slings and ropes, Chain Pulley Blocks, Hammers, Spanners, Pliers, Wooden Blocks, pallets
(Wooden, plastic)
Effective Materials Handling
Good materials handling practice is the responsibility of all members of the
manufacturing team, form the top management down to the trucker working in the aisle
of the plant.
Optimum effectiveness of materials handling procedures can only be attained if each
individual recognizes and plays his part. Education and training in materials handling are
prerequisite to minimum materials handling costs.
In world class warehouses the responsibilities assigned such a staff group may well
include:

1. Determining all new methods for the handling of new materials or products and
selecting the equipment to be utilized.

2. Conducting research in materials handling methods and equipment.

 3. Conducting education and training for all manufacturing personnel in good
Material handling practices.

4. Establishing controls of current materials handling costs by analysis of costs and

comparison to budgets of either unit or total materials handling costs.

5. Initiating and conducting a continuing materials handling cost-reduction or cost

improvement program.

6. Determining measurements for effectiveness of materials handling that can

become the yard sticks for progress in this activity.

7. Developing and conducting a preventive maintenance program for all the

materials handling equipment.

Material Handling Time:

Reducing handling increases the productivity and lowers costs. If we are putting the product into
the store and picking from store it will raise its handling time and will prove to be cost ejective
for the firm.

Again and again putting the resources on a material; whether in its transportation, packaging,
storing, etc will raise the expenses of the firm which is not acceptable in any form.

If we are putting our men, material and money in sending the good to the customer again and
again it will finally affects the overall expenses of the business concern.
In a world class warehouse the materials are inspected before they are shipped, to ensure the
quality and life of the product.

Storing the product in relation to flow/ rate of movement:

Demand will not remain same for all of the year, there will be rise and fall in the demand from
time to time. For whole of the year there will be variations in the demand and supply of the
product, so as per this demand we need to maintain the flow of material within the warehouse.

Demand forecasting is the way of estimating the quantity of a product or service that consumers
will purchase.

Demand forecasting involves techniques including both informal methods and quantitative
methods, such as the use of historical sales data or current data from test markets.

Demand forecasting may be used in making pricing decisions, in assessing future capacity
requirements.

The Operations manager forecasts the demand and accordingly the stock and inventories are
stocked in the warehouse.

Location & Layout of the Warehouse:

A proper zoning of the warehouse must be ensured.

Each and every product must be identified very easily when it is required.
 They must be assigned with the numbers and sign marks in order to identify them easily
and save time.

We must prepare record of item quantity, time and arrival location, storage location,
quantity balance, and ultimate location.

Maintain Real-time information on the quantity, location, status, and history of every
inventory item within the warehouse. Check inventory availability across all warehouses
during order creation.

Support your complex needs with multi-location inventory, kits and assemblies, multiple
units of measure, lot tracking, serialized inventory and specific costing, matrix items.
Provides real-time indicators of material received on status ok, discrepancy material, or
part per million statistics.
Warehouse Location:

There is no limit on the number of warehouses that may be defined within an entity, and there is
no limit on the number of locations that may be defined within a warehouse.
Warehouse locations have many synonyms including bins, zones and storage area, among many
others, but in there must be a location is a specific storage area, which may constitute a rack/bin
type of entry, or a larger bulk storage area. The locations can also identify shop floor areas where
inventory is held prior to pull type material issues. Shop floor locations of this type are
considered by the system to be a part of the warehouse. A separate location classification can
also be given to shipping and/or receiving locations.
For warehouse picking purposes, a location sequence number can be assigned to locations and
will be used as an optional method when defining the order in which sales orders or production
material is to be picked.
A location can also be used to track the inventory of vendor and/or customer distributors. A
single location of the distributor type will be used to cover an entire customer distributor or
vendor distributor inventory.

If the user does not wish to maintain location control in the inventory, both a default warehouse
and a default location must be defined in the facilities parameters. An entry of these two default
values will indicate to the system that only the default location is to be used for all types of
inventory transaction.

Location Flexibility:

Location flexibility refers to the ability to quickly adjust warehouse location and number
in accordance with seasonal or permanent demand changes.

For example, in-season demand for agricultural chemicals requires that warehouses be
located near markets that allow customer pickup.

Outside the growing season, however, these local warehouses are unnecessary.
 Thus, the desirable strategy is to be able to open and close local facilities seasonally.

Public and contract warehouses offer the location flexibility to accomplish such
requirements.

Warehouse Layout and Design:

The Warehouse

Provides for the transportation interface.

Provides for order-picking space.

Provides storage space.

Provides recouping, office, and miscellaneous spaces.

Determines each items order quantity.

Converts units into cubic footage requirements.

Allows room for growth.

Allows adequate aisle space for materials handling equipment.

Warehouse layout includes:

o Zones

o Locations
 o Equipment

o Stations

Zones:

The zones are specific locations inside a warehouse that has common properties.

A Zone ID used to represent a group of locations that share common properties (refer
zone, shipping zone, returns zone)

Used to manage product flows into and out of groups of locations

Used to determine users work assignments in the zone

May represent a physical area

A location can belong to only one Zone

Locations:

They are various physical areas inside a warehouse

A Location ID is given to a space in a location where inventory is placed for any length
of time

Always associated with a zone and a location

Primary mechanism used for tracking and processing inventory as it is received, stored,
retrieved, and shipped

Example Locations:

o STOR1-01020401 = at Aisle 1, Bay 2, Level 4 Bin 1

 o RECEIVE-1 = Receiving Dock 1

o V1-000001 = Value Added Services Station 1

Equipment:

Equipment defines a vehicle or piece of machinery used to perform a processing activity such as
receive, move, pick, pack, or ship within a warehouse

Stations:

A physical location that is used as a work space in order to perform a specific activity or a
group of activities

A Station is unique for a Node

Used for:

o Creating tasks

o Recording location where work is being performed

o Associating devices that may be used at the station level

Examples:

o Receiving Station

o Ship/Sort Location

o Value Added Services Station

Warehouse Design Criteria
Warehouse design criteria address physical facility characteristics and product movement.
Three factors to be considered in the design process are:

the number of stories in the facility,

height utilization, and

Product flow.

Number of stories in the facility

The ideal warehouse design is limited to a single story so that product does not have to be
moved up and down.

The use of elevators to move product from one floor to the next requires time and energy.

The elevator is also often a bottleneck in product flow since many material handlers are
usually competing for a limited number of elevators

Height utilization

Regardless of facility size, the design should maximize the usage of the available cubic
space by allowing for the greatest use of height on each floor.
 Most warehouses have 20- to 30-foot ceilings; although modern automated and high-rise
facilities can effectively use ceiling heights up to 100 feet.

Through the use of racking or other hardware, it should be possible to store products up
to the building's ceiling.

Maximum effective warehouse height is limited by the safe lifting capabilities of

material-handling equipment, such as forklifts

Product flow

Warehouse design should also allow for straight product flow through the facility whether
items are stored or not.

In general, this means that product should be received at one end of the building, stored
in the middle, and then shipped from the other end.

Straight-line product flow minimizes congestion and confusion.

Operational standards needed:

1. Costs & utilization of Resources :-

 Resources are always limited, so we need to utilize them at the optimum level and make
maximum benefit out of them. Whether it men, material or labor, resources are always
scarce in nature, which demands for its best utilization. Whenever the resources are fully
utilized, the cost will naturally come down.

2. Performance of activities :-

A number of activities are to be performed within the organization or the warehouse.

Every activity to be looked in a better way and should taken care. From lifting the
material from the trucks to taking it to the store, care should be taken, to save the goods
or product from breakage or damage. A machine has to be checked from time to time for
its smoothness of working. Projects need to be handled carefully, while planning and
there execution.

3. Accuracy of activities :-

The orders that are to be given must be dispatched as per the guidelines and in a complete
way. Whenever there is order for the product, as the product is demanded, guidelines are
forward to the production department and as per the specification goods are delivered.

4. Lead time for activities :-

The time taken from the receipt of order till the time of dispatching of goods is known as
lead time.

In the manufacturing environment, Lead Time has the same definition as that of Supply
Chain Management, but it includes the time required to ship the product to the purchaser.
The shipping time is included because the manufacturing company needs to know when
 the parts will be available for Material requirements planning. It is also possible for lead
time to include the time it takes for a company to process and have the part ready for
manufacturing once it has been received. The time it takes a company to unload a product
from a truck, inspect it, and move it into storage is non-trivial. With tight manufacturing
constraints or when a company is using Just in Time manufacturing it is important for
supply chain to know how long their own internal processes take.

Warehouse Safety and Security:

Warehouses deals with large amount of inventory that need to be kept under proper observation
and must undertake the most efficient check system. Goods must be safely loaded and must be
taken care when they are taken out of the vehicle until it reaches the store where it has to be kept.

Entry to warehouse must be limited to authorize personnel.

Operations Manager should hold the warehouse keys at the closing of the warehouse.

Issue of stock and inventory to authorized personnel.

There should be adequate safety from fire and the materials are to be stored under their
required storage conditions.
Multitasking work force:

World class warehouses have multitasked work force; who are able to perform several tasks
within the warehouse. Work force must be active in order to take the decisions as per their talent
in difficult situations. Certain things that need to be considered are as follows;

Communication

In warehousing a message is transferred from one person to another by the means of

communication, which need to be taken care for accuracy.

Managing Change

To be successful with any change initiative - such as a warehouse reconfiguration, a change in

processes or in ways of working - getting the direct input of the warehouse team to your work at
all stages is of paramount importance. These are the people who will be most affected by the
change and involving them early and at all stages enables them to become most efficient.

Warehouse Management Systems (WMS)

It is a key part of the supply chain and primarily aims to control the movement and
storage of materials within a warehouse and process the associated transactions,
including shipping, receiving, put away and picking. The systems also direct and
optimize stock put away based on real-time information about the status of bin
utilization.

Warehouse management systems often utilize Auto ID Data Capture (AIDC)

technology, such as barcode scanners, mobile computers, wireless LANs and
potentially Radio-frequency identification (RFID) to efficiently monitor the flow
of products. Once data has been collected, there is either batch synchronization
with, or a real-time wireless transmission to a central database. The database can
then provide useful reports about the status of goods in the warehouse.

The objective of a warehouse management system is to provide a set of

computerized procedures to handle the receipt of stock and returns into a
warehouse facility, model and manage the logical representation of the physical
storage facilities (e.g. racking etc), manage the stock within the facility and enable
a seamless link to order processing and logistics management in order to pick, pack
and ship product out of the facility.

Warehouse management systems can be stand alone systems or modules of an ERP

system or supply chain execution suite.

The primary purpose of a WMS is to control the movement and storage of materials
within a warehouse you might even describe it as the legs at the end-of-the line
which automates the store, traffic and shipping management.

In its simplest form, the WMS can data track products during the production process
and act as an interpreter and message buffer between existing ERP and WMS
systems.

Warehouse Management is not just managing within the boundaries of a warehouse

today; it is much wider and goes beyond the physical boundaries. Inventory
management, inventory planning, cost management, IT applications &
communication technology to be used are all related to warehouse management.
The container storage, loading and unloading are also covered by warehouse
management today.

Even production management is to a great extent dependent on warehouse

management. Efficient warehouse management gives a cutting edge to a retail
chain distribution company. Warehouse management does not just start with receipt
of material but it actually starts with actual initial planning when container design is
made for a product. Warehouse design and process design within the warehouse is
also part of warehouse management. Warehouse management is part of Logistics
and SCM.

Warehouse Management monitors the progress of products through the warehouse.

It involves the physical warehouse infrastructure, tracking systems, and
communication between product stations.

Warehouse management deals with receipt, storage and movement of goods,

normally finished goods, to intermediate storage locations or to final customer. In
the multi-echelon model for distribution, there are levels of warehouses, starting
with the Central Warehouse(s), regional warehouses services by the central
warehouses and retail warehouses at the third level services by the regional
warehouses and so on. The objective of warehousing management is to help in
optimal cost of timely order fulfillment by managing the resources economically.
Interpretation:

Companies are constantly trying to find ways to improve performance and warehouse operations
is area where supply chain managers can focus to gain maximum efficiency for minimum cost.
To get the most out of the operation, a number of best practices can be adopted to improve
productivity and overall customer satisfaction. Although best practices vary from industry to
industry and by the products shipped there is a number of best practices that can be applied
to most companies.

When considering the level of effort involved in warehouse operations, the greatest
expenditure of effort is in the picking process. To gain efficiencies in picking the
labor time to pick orders needs to be reduced and this can achieved in a number of
ways. Companies with the most efficient warehouses have the most frequently
picked items closest to the shipping areas to minimize picking time. These
companies achieve their competitive advantage by constantly reviewing their sales
data to ensure that the items are stored close to the shipping area are still the most
frequently picked.

Warehouse layout is also important in achieve greater efficiencies. Minimizing travel

time between picking locations can greatly improve productivity. However, to
achieve this increase in efficiency, companies must develop processes to regularly
monitor picking travel times and storage locations.

Warehouse operations that still use hard copy pick tickets find that it is not very
efficient and prone to human errors. To combat this and to maximize efficiency,
world class warehouse operations had adopted technology that is some of todays
most advanced systems. In addition to hand-held RF readers and printers,
companies are introducing pick-to-light and voice recognition technology.

In a pick-to-light system, an operator will scan a bar-coded label attached to a box.

A digital display located in front of the pick bin will inform the operator of the item
and quantity that they need to pick. Companies are typically using pick-to-light
systems for their top 5 to 20% selling products. By introducing this system
companies can gain significant efficiencies as it is totally paperless and eliminates
the errors caused by pick tickets.

Voice picking systems inform the operator of pick instructions through a headset.
The pick instructions are sent via RF from the companys ERP or order management
software. The system allows operators to perform pick operations without looking at
a computer screen or to deal with paper pick tickets. Many world class warehouse
operations have adopted voice picking to complement the pick-to-light systems in
place for their fast moving products.

Fast Moving Consumer Goods (FMCG)

FMCG are products that have a quick shelf turnover, at relatively low cost and don't
require a lot of thought, time and financial investment to purchase. The margin of profit
on every individual FMCG product is less. However the huge number of goods sold is
what makes the difference. Hence profit in FMCG goods always translates to number of
goods sold.

Fast Moving Consumer Goods is a classification that refers to a wide range of

frequently purchased consumer products including: toiletries, soaps, cosmetics, teeth
cleaning products, shaving products, detergents, other non-durables such as glassware,
bulbs, batteries, paper products and plastic goods, such as buckets.

Fast Moving is in opposition to consumer durables such as kitchen appliances that are
generally replaced less than once a year. The category may include pharmaceuticals,
consumer electronics and packaged food products and drinks, although these are often
categorized separately.

The term Consumer Packaged Goods (CPG) is used interchangeably with Fast Moving
Consumer Goods (FMCG).
Three of the largest and best known examples of Fast Moving Consumer Goods
companies are Nestl, Unilever and Procter & Gamble. Examples of FMCGs are soft
drinks, tissue paper, and chocolate bars. Examples of FMCG brands are Coca-Cola,
Kleenex, Pepsi and Believe.

The FMCG sector represents consumer goods required for daily or frequent use. The main
segments of this sector are personal care (oral care, hair care, soaps, cosmetics, toiletries),
household care (fabric wash and household cleaners), branded and packaged food, beverages
(health beverages, soft drinks, staples, cereals, dairy products, chocolates, bakery products)
and tobacco.

The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth largest
sector in the economy and is responsible for 5% of the total factory employment in India. The
industry also creates employment for 3 m people in downstream activities, much of which is
disbursed in small towns and rural India. This industry has witnessed strong growth in the past
decade. This has been due to liberalization, urbanization, increase in the disposable incomes
and altered lifestyle. Furthermore, the boom has also been fuelled by the reduction in excise
duties, de-reservation from the small-scale sector and the concerted efforts of personal care
companies to attract the burgeoning affluent segment in the middle-class through product and
packaging innovations.

Unlike the perception that the FMCG sector is a producer of luxury items targeted at the elite, in
reality, the sector meets the every day needs of the masses. The lower-middle income group
accounts for over 60% of the sector's sales. Rural markets account for 56% of the total
domestic FMCG demand.

Many of the global FMCG majors have been present in the country for many decades. But in the
last ten years, many of the smaller rung Indian FMCG companies have gained in scale. As a
result, the unorganized and regional players have witnessed erosion in market share.

History of FMCG in India

In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a dominant
force in the FMCG sector well supported by relatively less competition and high entry barriers
(import duty was high). These companies were, therefore, able to charge a premium for their
products. In this context, the margins were also on the higher side. With the gradual opening up
of the economy over the last decade, FMCG companies have been forced to fight for a market
share. In the process, margins have been compromised, more so in the last six years (FMCG
sector witnessed decline in demand).

Current Scenario
The growth potential for FMCG companies looks promising over the long-term horizon,
as the per-capita consumption of almost all products in the country is amongst the lowest in the
world. As per the Consumer Survey by KSA-Technopak, of the total consumption expenditure,
almost 40% and 8% was accounted by groceries and personal care products respectively.
Rapid urbanization, increased literacy and rising per capita income are the key growth drivers
for the sector. Around 45% of the population in India is below 20 years of age and the proportion
of the young population is expected to increase in the next five years. Aspiration levels in this
age group have been fuelled by greater media exposure, unleashing a latent demand with more
money and a new mindset. In this backdrop, industry estimates suggest that the industry could
triple in value by 2015 (by some estimates, the industry could double in size by 2010).
In our view, testing times for the FMCG sector are over and driving rural penetration will be the
key going forward. Due to infrastructure constraints (this influences the cost-effectiveness of the
supply chain), companies were unable to grow faster. Although companies like HLL and ITC
have dedicated initiatives targeted at the rural market, these are still at a relatively nascent
stage.
The bottlenecks of the conventional distribution system are likely to be removed once organized
retailing gains in scale. Currently, organized retailing accounts for just 3% of total retail sales
and is likely to touch 10% over the next 3-5 years. In our view, organized retailing results in
discounted prices, forced-buying by offering many choices and also opens up new avenues for
growth for the FMCG sector. Given the aggressive expansion plans of players like Pantaloon,
Trent, Shoppers Stop and Shoprite, we are confident that the FMCG sector has a bright future.

Budget Measures to Promote FMCG Sector

2% education cess corporation tax, excise duties and custom duties

Concessional rate of 5% custom duty on tea and coffee plantation machinery

Budget Impact

The education cess will add marginally to the tax burden of all FMCG companies

The dividend distribution tax on debt funds is likely to adversely effect the other income
components of companies like Britannia, Nestle and HLL

The measure to abolish excise duty on dairy machinery is a positive for companies like
Nestle

Concessional rate for tea and coffee plantation machinery is a positive for Tata Tea, HLL,
Tata Coffee and other such companies

Duty reduction in food grade hexane will have a marginally positive impact on companies
like Marico and HLL

Area specific excise exemptions for North East, J&K, Himachal Pradesh will continue to
encourage FMCG companies to relocate to these areas.

Budget over the

years

Budget 2010-11 Budget 2011-12 Budget 2012-13

From 35-55% to 75% Increased focus on Excise on biscuits

for crude edible oil
From 45-65% to 85%
for refined edible oil
From 35% to 70% for
copra, coconut, tea
and coffee
agricultural reforms reduced to 8% from
with an aim to 16%. Excise on soft
integrate the drinks and sugar
countrywide food boiled confectionery
market also reduced
Deregulation of the All states to switch to
milk processing VAT in FY04
 From 25% to 55% for
crude palm oil
Development
allowance of tea
industry raised to
40% from 20%
All food preparations
based on fruits and
vegetables (pickles,
sauces, ketchup,
juices, jams etc.)
made completely
exempt from excise
duty
Excise on cosmetics
and toiletries halved
to 16%
capacity
Excise duty structure
largely untouched.
Only for tea, the duty
was reduced from Rs
2 per Kg to Re 1
Customs duty on tea
and coffee doubled to
100%
Duty on imported
pulses upped to 80%
Import duty on wine
and liquor slashed
from 210% to 180%
(deadline now has
been extended till end
FY05)
Loans to agriculture
and to small-scale
sector will now be
available at maximu
2% above prime
lending rate (PLR)
Development plans
for roads, ports,
railways and airports
Customs duty on
alcoholic beverages
reduced

India offers a large and growing market of 1 billion people of which 300 million are middle class
consumers. India offers a vibrant market of youth and vigor with 54% of population below the
age of 25 years. These young people work harder, earn more, spend more and demand more
from the market, making India a dynamic and aspirational society. Domestic demand is
expected to double over the ten-year period from 1998 to 2007. The number of households with
"high income" is expected to increase by 60% in the next four years to 44 million households.

India is rated as the fifth most attractive emerging retail market. It has been ranked
second in a Global Retail Development Index of 30 developing countries drawn up by A T
Kearney. A.T. Kearney has estimated India's total retail market at $202.6 billion, is expected to
grow at a compounded 30 per cent over the next five years. The share of modern retail is likely
to grow from its current 2 per cent to 15-20 percent over the next decade, analysts feel.
 The Indian FMCG sector is the fourth largest sector in the economy with a total market
size in excess of US$ 13.1 billion. The FMCG market is set to treble from US$ 11.6 billion in
2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most
product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the
untapped market potential. Burgeoning Indian population, particularly the middle class and the
rural segments, presents an opportunity to makers of branded products to convert consumers to
branded products.

India is one of the worlds largest producers for a number of FMCG products but its
FMCG exports are languishing at around Rs 1,000 crore only. There is significant potential for
increasing exports but there are certain factors inhibiting this. Small-scale sector reservations
limit ability to invest in technology and quality up gradation to achieve economies of scale.
Moreover, lower volume of higher value added products reduce scope for export to developing
countries.

The FMCG sector has traditionally grown at a very fast rate and has generally out
performed the rest of the industry. Over the last one year, however the rate of growth has
slowed down and the sector has recorded sales growth of just five per cent in the last four
quarters.

The outlook in the short term does not appear to be very positive for the sector. Rural
demand is on the decline and the Centre for Monitoring Indian Economy (CMIE) has already
downscaled its projection for agriculture growth in the current fiscal. Poor monsoon in some
states, too, is unlikely to help matters. Moreover, the general slowdown in the economy is also
likely to have an adverse impact on disposable income and purchasing power as a whole. The
growth of imports constitutes another problem area and while so far imports in this sector have
been confined to the premium segment, FMCG companies estimate they have already cornered
a four to six per cent market share. The high burden of local taxes is another reason attributed
for the slowdown in the industry

At the same time, the long term outlook for revenue growth is positive. Give the large market
and the requirement for continuous repurchase of these products, FMCG companies should
continue to do well in the long run. Moreover, most of the companies are concentrating on cost
reduction and supply chain management. This should yield positive results for them.

The profile of major leading FMCG Market Players is as follows:

1. NESTLE INDIA

Nestl India is a subsidiary of Nestl S.A. of Switzerland. With six factories and a large number
of co-packers, Nestl India is a vibrant Company that provides consumers in India with products
of global standards and is committed to long-term sustainable growth and shareholder
satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and
expects the same in its relationships. This has earned it the trust and respect of every strata of
society that it comes in contact with and is acknowledged amongst India's 'Most Respected
Companies' and amongst the 'Top Wealth Creators of India'.

Nestls relationship with India dates back to 1912, when it began trading as The Nestl Anglo-
Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the
Indian market.

Brief History
After Indias independence in 1947, the economic policies of the Indian Government
emphazised the need for local production. Nestl responded to Indias aspirations by forming a
company in India and set up its first factory in 1961 at Moga, Punjab, where the Government
wanted Nestl to develop the milk economy. Progress in Moga required the introduction of
Nestls Agricultural Services to educate, advise and help the farmer in a variety of aspects.
From increasing the milk yield of their cows through improved dairy farming methods, to
irrigation, scientific crop management practices and helping with the procurement of bank loans.
Nestl set up milk collection centres that would not only ensure prompt collection and pay fair
prices, but also instil amongst the community, a confidence in the dairy business. Progress
involved the creation of prosperity on an on-going and sustainable basis that has resulted in not
just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving
hub of industrial activity, as well. For more on Nestl Agricultural Services,
Nestl has been a partner in India's growth for over nine decades now and has built a very
special relationship of trust and commitment with the people of India. The Company's activities
in India have facilitated direct and indirect employment and provides livelihood to about one
million people including farmers, suppliers of packaging materials, services and other goods.

The Company continuously focuses its efforts to better understand the changing lifestyles of
India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness
through its product offerings. The culture of innovation and renovation within the Company and
access to the Nestl Group's proprietary technology/Brands expertise and the extensive
centralized Research and Development facilities gives it a distinct advantage in these efforts. It
helps the Company to create value that can be sustained over the long term by offering
consumers a wide variety of high quality, safe food products at affordable prices.

Nestl India is a responsible organization and facilitates initiatives that help to improve the
quality of life in the communities where it operates. Beginning with its first investment in Moga in
1961, Nestls regular and substantial investments established that it was here to stay. In 1967,
Nestl set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in
the area into soluble tea. The Nanjangud factory (Karnataka), became operational in 1989, the
Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestl commissioned two factories
in Goa at Ponda and Bicholim respectively. Nestl India is now putting up the 7th factory at Pant
Nagar in Uttaranchal

Products

Product Category Brands

Milk Products NESTL EVERYDAY Dairy Whitener
NESTL EVERYDAY Ghee
NESTL Curds
NESTL CEREMEAL
 NESTL Jeera Raita
NESTL Fresh 'n' Natural Dahi
NESTL Fruit 'N Dahi
NESTL Milk
NESTL Slim Milk
NESCAF CLASSIC
NESCAF SUNRISE
Beverages NESTL MILO
NESCAF 3 in 1
NESCAF Koolerz
Prepared Dishes MAGGI 2-MINUTE Noodles
MAGGI Healthy Soups
MAGGI Dal Atta Noodles
MAGGI MAGIC Cubes
Chocolates &
NESTL Milk Chocolate
Confectionaries
NESTL KIT KAT
NESTL MUNCH
NESTL MILKYBAR
NESTL MILKYBAR CHOO
NESTL BAR-ONE
POLO
NESTL Eclairs
NESTL ACTI-V
POLO Powermint

Financial Trends
Rupees in Millions

2001 2002 2003 2004 2005

Gross Sales 19,210.0 20,472.0 22,798.3 23,728.2 26,438.9

 Domestic Sales # 16,110.9 18,109.8 20,226.9 21,292.8 23,847.1

Export Sales 3,099.1 2,362.2 2,571.4 2,435.4 2,591.8

EBITDA * 3,143.6 3,985.3 4,446.8 4,509.9 5,220.5

Other Income 162.3 284.0 278.3 144.5 237.4

Impairment loss on fixed assets 13.9 212.5 22.2 23.3 26.4

Provision for contingencies 180.9 313.6 229.6 266.9 223.2

Profit before taxation and exceptional

2,577.7 3,188.4 3,991.5 3,864.9 4,690.6
item

Net Profit before exceptional item 1,731.5 2,069.1 2,630.8 2,519.2 3,095.7

Exceptional item - net of tax - 53.9 - - -

Net Profit after exceptional item 1,731.5 2,015.2 2,630.8 2,519.2 3,095.7

Earnings per Share (Rs.) 17.96 20.90 27.29 26.13 32.11

Dividends per Share (Rs.) 14.00 18.00 20.00 24.50 25.00

# Domestic Sales include excise duty also

* EBITDA - Earnings before Interest, Tax, Depreciation and Amortization.

1. Hindustan Lever Limited (HLL)

The Global arm of Hindustan Levers Limited is Unilever's and its mission is to add
Vitality to life. Their products meet everyday needs for nutrition, hygiene, and personal
care with brands that help people feel good, look good and get more out of life.

HLL has deep roots in local cultures and markets around the world which gives them a
strong relationship with their consumers, which are the foundation for their future
growth. They benefit from there wealth of knowledge and international expertise to the
service the local consumers - a truly multi-local multinational.
Brief History
In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap bars,
embossed with the words "Made in England by Lever Brothers". With it, began an era of
marketing branded Fast Moving Consumer Goods (FMCG). In 1931, Unilever set up its first
Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers
India Limited (1933) and United Traders Limited (1935). These three companies merged to form
HLL in November 1956; HLL offered 10% of its equity to the Indian public, being the first among
the foreign subsidiaries to do so. Unilever now holds 51.55% equity in the company. The rest of
the shareholding is distributed among about 380,000 individual shareholders and financial
institutions. Pond's (India) Limited had been present in India since 1947. It joined the Unilever
fold through an international acquisition of Chesebrough Pond's USA in 1986.

The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in HLL's
and the Group's growth curve. Removal of the regulatory framework allowed the company to
explore every single product and opportunity segment, without any constraints on production
capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most
visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company
(TOMCO) merged with HLL, effective from April 1, 1993. In 1995, HLL and yet another Tata
company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited, to market
Lakme's market-leading cosmetics and other appropriate products of both the companies.
Subsequently in 1998, Lakme Limited sold its brands to HLL and divested its 50% stake in the
joint venture to the company.

HLL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, which
markets Huggies Diapers and Kotex Sanitary Pads. HLL has also set up a subsidiary in Nepal,
Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in
the Himalayan kingdom. The NLL factory manufactures HLL's products like Soaps, Detergents
and Personal Products both for the domestic market and exports to India.

The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods
and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with
significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB
Group and the Dollops Icecream business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two plantation
companies of Unilever, were merged with Brooke Bond. Then in July 1993, Brooke Bond India
and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater
focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL
launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into
a strategic alliance with the Kwality Icecream Group families and in 1995 the Milkfood 100%
Icecream marketing and distribution rights too were acquired.

In January 2000, in a historic step, the government decided to award 74 per cent equity in
Modern Foods to HLL, thereby beginning the divestment of government equity in public sector
undertakings (PSU) to private sector partners. HLL's entry into Bread is a strategic extension of
the company's wheat business. In 2002, HLL acquired the government's remaining stake in
Modern Foods.

In 2003, HLL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam
Group of Companies, a leader in value added Marine Products exports.

Present Stature
Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer Goods
company, touching the lives of two out of three Indians with over 20 distinct categories
in Home & Personal Care Products and Foods & Beverages. They endow the company
with a scale of combined volumes of about 4 million tonnes and sales of Rs.10,000
crores.
HLL is also one of the country's largest exporters; it has been recognised as a Golden
Super Star Trading House by the Government of India.

HLL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's,
Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna,
Kwality Wall's are household names across the country and span many categories -
soaps, detergents, personal products, tea, coffee, branded staples, ice cream and
culinary products. They are manufactured in close to 80 factories. The operations
involve over 2,000 suppliers and associates. HLL's distribution network, comprising
about 7,000 redistribution stockists, directly covers the entire urban population, and
about 250 million rural consumers.

HLL believes that an organizations worth is also in the service it renders to the
community. HLL is focusing on health & hygiene education, women empowerment, and
water management. It is also involved in education and rehabilitation of special or
underprivileged children, care for the destitute and HIV-positive, and rural development.
HLL has also responded in case of national calamities / adversities and contributes
through various welfare measures, most recent being the village built by HLL in
earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused
devastation in South India.

Products

Product Category Product Name Brands

Personal Care
Soap Lux

Pears
Lifebuoy
Liril
Hamam
Breeze
Dove
 Rexona
Ponds
Skin Care
Fair & Lovely
Sunsilk
Hair Care: Naturals
Clinic
Pepsodent
Oral Care
CloseUp
Axe
Deodorant
Rexona
Color Cosmetics Lakme
Ayurvedic Healthcare Aysh

Fabric Care Laundry Surf Excel

Rin

Wheel
Brooke Bond
Tea
Beverages Lipton
Coffee Bru
Salt Knnor Annapurna
Foods Sauces Kissan
Ice Creams Kwality Walls
CHAPTER 2
LITERATURE
REVIEW
 LITERATURE REVIEW

This chapter examines key concepts and approaches used in the research. There are
various interconnected themes in this literature review, covering the themes of supply
chain management and supply chain performance measurement. The review begins with a
brief discussion of supply chain management, later focuses on performance measurement
of supply chain that involves on the issues of: l) Supply chain performance measurement
models or frameworks 2) Performance measurement factors for supply chain in medium-
sized industries 3) Modelling supply chain networks performance using various
approaches and lastly on 4) Information systems for supply chain such as warehouse
management systems

Supply Chain Management (SCM)

This section outlines definitions and development of supply chain management, evolution
of supply chain management, advantages of supply chain management for manufacturers
and supply chain management practices.

Supply chain management is a concept that evolved in the manufacturing industries in the
early l980s. It is developed from innovations such as just in time (JIT) and total quality
management (TQM) [24, 25]. Supply chain management can be seen as an example of
evolutionary and cumulative innovation, which is often described as emanating from
internal programs aimed at improving overall effectiveness [6]. The focus is not only
limited to increasing the internal efficiency of organizations, but also has now been
broadened to include methods of reducing waste and adding value across the entire supply
chain [26]. Supply chain management has shifted the emphasis from internal structure to
external linkages and processes, and is dependent on the interaction between the
organization and its external environment, with strong feedback linkages and collective
learning. It is seen as a set of practices aimed at managing and coordinating the whole
supply chain from raw material suppliers to end customers which develop greater synergy
through collaboration along the whole supply chain [27].
The principal objective of supply chain management is to satisfy the end customer
requirements and the focus is on how organisations utilise the processes,
technology, and capability of suppliers to enhance their own competitive advantage.
Supply chain management research generally focuses on improving the efficiency
and competitive advantage of manufacturers by taking advantage of the immediate
supplier's capability [28].

It is important to recognize that supply chain management is complex and has

proved to be difficult to implement. Its success is associated with the challenging
and difficult development of a new culture based on shared learning, greater
transparency and trust. With a greater reliance on suppliers and the increasing
emergence of outsourcing and fierce competition, the main challenge for supply
chain management is to sustain and continuously improve the coordination and
integration of all interactions and interfaces in order to enhance the overall
performance of the supply chain. It is, therefore important to associate the concept
of supply chain management based on continuous improvement with performance
measurement [6].

Supply Chain Performance Measurement

(SCPM)

This section highlights on various issues of performance measurement of supply

chain including performance measures, performance measurement systems,
strategies, framework adopted by organizations.

Performance measurement is defined as the process of quantifying effectiveness and

efficiency of action. Effectiveness is the extent to which a customers requirements
are met and efficiency measures how economically a firms resources are utilised
when providing a pre-specified level of customer satisfaction [29].

Development of the literature on performance measurements can be divided into

two distinct phases: The first phase relates to the period until the l980s and
concentrates on financial measures such as profit, return on investment and
productivity. The second phase, which commences in the late l980s, corresponds to
the emergence of new management concepts such as supply chain management. It
attempts to place a greater emphasis upon the inclusion of less tangible and non-
financial measures in performance measurements [30].
In SCM, the hierarchy of metrics is often used to refer to one of three different
constructs:

The individual metrics;

The metrics sets; and

The overall performance measurement systems (PMSs).

Performance measurement systems are described as the overall set of factors used to
quantify both the efficiency and effectiveness of action. The ability to assess supply
chain performance among and across interlinked organizations is an important
factor of success for leading supply chains organizations and differentiates them
from poorly performing supply chain members [3l].

At the highest level, the performance measurement system (PMS) level integrates,
coordinates metrics across the various functions and aligns the metrics from the
strategic to the operational levels. The challenge is to design a structure for every
activity, product, function, or relationship to the metrics (i.e., grouping them
together) and extract an overall sense of performance from them. Several different
approaches have been proposed for developing such an integrative system. These
include:

l. The Balanced Scorecard, as presented by Kaplan and Norton [32, 33].

2. The Strategic Profit Impact model [34]; and

3. The Theory of Constraints (TOC) measurement system [35].

The development of a PMS may conceptually be separated into phases of design,

implementation, and use [36]. The design phase is about identifying key objectives
and designing measures. In the implementation phase, systems and procedures are
put in place to collect and process the data that enable the measurements to be made
regularly. In the use phase, managers review the measurement results to assess
whether operations are efficient and effective, and the strategy is successfully
implemented. This may also lead to challenging the strategic assumptions.

The performance of supply chain management is required to measure up with

respect to some standard models or frameworks. The following is the discussion on
various approaches adopted by researchers and their pros and cons:
According to Beamon (l999), three types of performance measures (resources,
output and flexibility) have been identified as necessary components in any supply
chain performance measurement system, and she has proposed flexibility
quantitative measurement approach for supply chains [37]. However, it lacks system
thinking, in which a supply chain must be measured widely across.

Gunasekaran et al. (200l) illustrate and discuss different performance measures and
metrics of the supply chain management with the help of a framework that gives
cohesive picture to address what needs to be measured, and how it can be dealt with.
The framework is classified into strategic, tactical and operational levels of
management. The metrics are also divided into financial and non-financial, so that, a
suitable costing method based on activity analysis can be applied. However, due to
the large number of metrics and measures given in the framework, firms find it
difficult to use. Also, the framework does not provide guidelines to prioritise these
metrics [2, 38].

Chan and Qi (2003) have proposed an innovative performance measurement method

to contribute to the development of supply chain management from five core
processes: supply, inbound logistics, core manufacturing, outbound logistics and
marketing & sales. These process-based systematic perspectives are employed to
build an effective model to measure the holistic performance of complex supply
chains (cross organization). Fuzzy set theory is introduced to address the real
situation in judgment and evaluation processes. However, this proposed model
overlooks the decision making ability across strategic, tactical and operational
levels [39].

Otto and Kotzab (2003) have designed suitable metrics to measure the effectiveness
of supply chain management in six unique sets of supply chain metrics from six
perspectives on supply chain management. Each perspective follows a particular set
of goals, which consequently leads to a particular set of performance metrics. The
various perspectives, which contributed the most to the development of supply
chain management, are: system dynamics, operations research or information
technology, logistics, marketing, organization and strategy. Each perspective has its
very own notion of a supply chain, its standard problems and solutions, and its
performance metrics. However, all the metrics are not used in business practice to
measure supply chain performance [40].
Gunasekaran et al. (2004) developed a framework to promote a better understanding
of the importance of supply chain management performance measurement and
metrics. The proposed framework considers the measurement of supply chain
processes (plan, source, make and deliver) with respect to strategic, tactical and
operational levels and evaluates a score for prioritize for each metric by three levels:
high, moderate, and less important level from an empirical study of selected British
companies. It lacks identifying critical success factors for the whole supply chain
system. Furthermore, for evaluating the score, the organization, suppliers and
customers should come together to discuss how they would address the
measurement and improvement of supply chain management performance [2].

Huang et al. (2005) have summarized the supply chain operations reference (SCOR)
model, its benefits along with illustrative case stories and describe a computer-
assisted tool to configure supply chain threaded diagram per SCOR specification.
Supply chain configuration is an integral part in SCOR project implementation.
Currently, the configuration of as-is or to-be threaded-diagram describing a
supply chain is done manually. To automate this process, a computer-assisted
configuration tool has been developed and described. However, the configuration
tool can so far only deal with a single manufacturing facility of a company. It does
not take into account the interactions among multiple manufacturing facilities. Thus,
this research limits to only single manufacturing facility, of a company [4l].

Li et al. (2005) have identified six aspects of SCM practises: strategic supplier
partnership, customer relationship, information sharing, information quality, internal
lean practices and postponement. This approach is connected very closely to
information sharing. Sharing qualified information can lead to flexibility. In this
context, SCM activities include making, sourcing, delivering time and
postponement. They have identified performance outcomes as delivery
dependability and time to market. Delivery reliability means capability of providing
products to customer. Time to market means the time to introduce new products to
market more quickly than competitors are able to do [42].

Bhagwat and Sharma (2007) have developed a balanced scorecard (BSC) for
measuring and evaluating day-to-day business operations of supply chain
management from following four perspectives: finance, customer, internal business
process and learning and growth. Three case studies develop and apply in small and
medium sized enterprises (Medium-sized enterprises) in India. The balanced
scorecard developed in this paper provides a useful guidance for the practical
managers in evaluation and measuring of supply chain management in a balanced
way and proposes a balanced performance measurement system to map and analyze
supply chains. However, additional research is recommended in order to determine
whether the proposed perspectives and measures are necessary and sufficient [43].

Chae (2009) offers an industry-oriented, practical approach to performance

measurement in supply chain management contexts and proposes key performance
metrics which can be easily adapted for different businesses. A list of essential key
performance indicators (KPIs) is presented. Potential KPIs develop for each of the
SCOR models four meta-process (plan, source, make and delivery) and have to be
hierarchically grouped such as primary and secondary metrics. The review of
industry standards and best practices in supply chain performance measurement
suggests that less is better as to developing performance metrics. Companies
should focus on only a small list of KPIs which are critical for their operations
management, customer service, and financial viability. The lack of this development
model is the return process not considered in this work [44].

Thakkar et al. (2009) proposed an integrated supply chain performance

measurement framework for the case of small and medium-sized enterprises
(Medium-sized enterprises) in India using set of qualitative and quantitative insights
gained during the case study research. The proposed framework integrates the
features of balanced scorecard (BSC) and supply chain operation reference (SCOR)
model to deliver a comprehensive performance measurement framework for
medium-sized enterprises. It also outlines the detailed guidelines for the
implementation and use of the framework. The research also reports a set of
performance indicators for the supply chain processes like source, make and deliver
in medium-sized enterprises. It also relates the measures with various supply chain
cycles like procurement, manufacturing, replenishment and customer order, but it
does not consider decision making levels [45].

Ilkka Sillanp, (20l0) in his thesis, has presented the framework of supply chain
performance measurement. The key elements for the measurement framework are
defined as time, profitability, order book analysis and managerial analysis. The
measurement framework is tested by measuring case supply chain performance. The
measurement framework is a valid framework for supply chain performance
measurement in manufacturing industry. The measurement framework offers
guidelines for measuring the supply chain in manufacturing industry [46].

The summary of various performance measures and measurement framework dealt

in literature are tabulated in the table 2.l. The abbreviations used for categorizing is
as shown below
Quality (Q) Cost (C) Delivery(D) Flexibility (F)
Agility (A) Responsiveness(R) Non financial (NF) Qualitative (QL)
Quantitative (QN)

Table 2.1: Supply chain performance measures from literature

Framework / Performance measures Category of

Author / Authors
Measure
Beamon(l999) Resources, output and flexibility [37] QN
Performance model with system C, A, Q
perspective, cost, speed and customer
Holmberg,S. (2000)
Suwignjo, U.S Bititci, and service level,model
Quantitative agility[48]
[47] QN
AS Came, (2000)
Gunasekaran.A, Patel C Strategic, operational and tactical focus QN, QL
and Tittiroglu E (200l) [38]
Stephens, (200l) Measures based on process [49] C,R, QN

De Toni and Tonchia Cost and non cost [50] C, NF

(200l)
Supply chain collaboration efficiency; Q, QN
coordination efficiency and
Hieber(2002)
configuration
Cost, quality,[5l]resource utilization, C, Q, QN,
flexibility, visibility, trust and F, A
Chan(2003)
innovativeness
Input, [52]
output and composite measures, QN, QL
Chan and Qi (2003)
processes of supply chain [39]
Quality, cost, delivery and flexibility C, Q, QN,
Chunhua Tian, Yeuting
perspective performance measures at F, A
Chai, Yi Liu, Shouju Ren
department, enterprise and supply
(2003)
Felix T S Chan, H J Qi, Innovative Performance Measurement Q, QN, QL
chain level[53]
H K Chan, Henry C W Method [54]
Lau, and Ralph W L,
 Framework / Performance measures Category of
Author / Authors
Measure
Financial, time based measures, non C, T, NF
Stefan Tangen, (2003)
cost [55]
Changrui Ren, Yueting Active performance management QN, QL
Chai, Yi Liu, (2004) system [56]
Archie Lockamy III, SCOR model [57] QN
Kevin McCormack
David J. Parsons, Robin J. Relationship between productions run QN, Q
Clark, Kevin L. Payette, lengths and overall supply chain
(2004)
Gunasekaran A, Williams, performance [58]measuring costs and
Framework for C, NF
H.J and Mcgaughey R. E. performance [59]
(2005)
Li, S., Rao, S., Ragu- Strategic supplier partnership, CRM, QL,QN, Q,
Nathan, T. S., & Ragu- information sharing, quality, internal C
Nathan, B.(2005) lean practices
Finance, and processes,
business postponement [60]
customer, C, QN
Liwen Wu, Yutao Song
environment, core enterprise ability
(2005)
[6l]
Quality, framework incorporating Q, QN
Fynes,B., Voss,C.,
dimensions of SC relationships and
Abhijeet K. Digalwar, quality performance
Theoretical [62]
framework for the QN, Q, C
Bhimaraya A. Metri performance measures of World Class
(2005) Manufacturingevaluation
Supporting [63] level(HITS- QL, T, Q, C
Human, Institution, Technology,
MAO Zhaofang et al.
Surroundings) and operational
(2006)
evaluation level(TQFS Time, quality,
Supply chain performance QN, C, Q
measurement approach which
Z., Li, X. Xu, & Arun
evaluates a supply chain from both
kumar (2007)
Supply
structural and Chain Performance
operational levels [65] QN
Measurement Based on SCOR Model
Tong Ren, (2008)
[66]

Supply chain performance measurement in medium-sized enterprises

Globalization has thrown Indian Industries in to a competitive market, where

imports and multinational companies are a biggest threat. The new competition is in
terms of reduced cost, improved quality products with higher performance, a wider
range of products and better services all delivered simultaneously to enhance value
to customers [4]. There is increasing demand for high-quality products and
highly
capable business processes by large organizations which have left no choice on the
medium-sized industries than to consider the implementation of new technology and
innovative business strategy. Failure to meet even one of these imperatives can
jeopardize industries well-being and survival. Also, if industries fail to provide the
quality products and services, there is a risk of losing customers who will opt for
one of their competitors. A key driver of growth is innovation that surprises and
delights the customers with new, differentiated and relevant benefits.

Garg et al. discusses the issues affecting the cost and delivery performance in Indian
industries, while the big companies are focusing on profit, medium-sized enterprises
have products well in quality at lower price. The smaller players who are willing to
work with lower profit margins are gaining both volume and market share. The
price- value offering from these small players fetch customers towards them [67].

Sahay and Mohan outline the supply chain practices followed by Indian
organizations. They primarily focus on the status of four major supply chain
dimensions namely; Supply chain strategy, Supply chain integration, Inventory
management, and Information technology. The study recommends that Indian
organizations should align supply chain strategy with business strategy in order to
deliver highest customer satisfaction, streamline processes for supply chain
integration to achieve operational excellence, form partnerships to minimize
inventory and maximize profits, and focus on infrastructure and technology
deployment to build an Indian specific supply chain. Moreover, coupled with this, is
the action required by the Indian government to improve the infrastructure for the
smooth functioning of supply chain [68].

Quayle designs a survey to identify current trends of supply chain management

practice in UKs small to medium-sized Industrial enterprises. The analysis
identifies the adaptation of supply chain management techniques and relationships
between customers and smaller suppliers. The outcome indicates a lack of effective
adaptation from traditional relationships to the modern collaborative electronic
commerce for supply chain. Another result identifies issues which businesses need
to address to improve the performance of their supply chains, and improve their
competitive position by grasping the benefits of effective supply chain management
[69].

To compete and sustain in this globalised world it is necessary for medium-sized

enterprises to improve their operational system. The manufacturing system in
medium-sized enterprises generally consists of obsolete technology, low reliability,
high changeover time, and minimum flexibility, high employee turnover, less skilled
and de-motivated workforce. These organizations also lack in managerial skills for
Quality Management, Inventory Management and Production Planning & Control.
These factors result in high cost, inferior quality, high rejection and rework, and
poor delivery performance. For sustainable growth the organization must adopt
introduction of innovative products/ processes, quality & productivity improvement
techniques, and effective technology management and establish a performance
measurement system to assess the improvements achieved.

Also medium-sized enterprises adopt outsourcing strategy to offer competitive

pricing to gain increased market share [70]. Westerlund et al., have described that a
medium- sized enterprises response to globalization is closely connected to its
business model, which is manifested through the firms networking strategy and the
nature of the offerings [7l].

With the Information Technology boom, small industries have also been influenced
by them in both positive aspect (more market information, extended customer base,
new market exploration, business alliances, information about new technology, cost
saving, right information on right time etc.) and negative impact (short term loss of
market due to increased customer awareness about quality and cost effective
products, initial cost, skilled persons to operate the system) [72].

Modelling approaches for performance measurement of supply chain

network

The selection of the modelling approach directly affects the type of problem and
structure that can be investigated. Understanding the advantages and limitations of
these approaches can help other researchers to choose the correct approach to study
their problem [73].

Modelling and simulation is the use of models, including emulators, prototypes,

simulators, and stimulators, either statically or over time, to develop data as a basis
for making managerial or technical decisions. Many efforts for modelling and
simulating SC systems have been made since the l950s. In the 2000s, SCM
performance measurement was presented using different approaches.
Simulation modeling and supply chain

Shepherd and Gnter [74] categorize SC performance measurement research into

operational, design and strategic research. The operational research focussed on
mathematical models for improving SC performance [75, 76]. Design research
focuses on optimizing performance through re-designing the SC. Design research
can be categorized according to the type of research model; Deterministic analytical
models [77], Stochastic analytical models [78], Economic models [79] and
Simulation models [80, 68]. Strategic research evaluates how to align the SC with a
firms strategic objectives [82].

Terzi and Cavalieri provide a comprehensive review made on more than 80 articles,
with the main purpose of ascertaining which general objectives simulation is
generally called to solve, which paradigms and simulation tools are more suitable,
and deriving useful prescriptions both for practitioners and researchers on its
applicability in decision-making processes within the supply chain context. The
authors report that network SC design, SC strategic decision support, demand and
sales planning, inventory planning, distribution and transportation planning, and
production planning and scheduling are some of the important aspects of SCM
where simulation has been applied successfully. Also, authors highlight the
importance of discrete event simulation, parallel distributed simulation (PDS) and
the high level architecture (HLA) in the context of SCM [83].

Santa-Eulalia et al. proposed taxonomy to organize the literature review on

modelling and simulation techniques for supply chains [84]. It is divided as follows:
SC Simulation: represents essentially descriptive modelling techniques, in
which

the main objective is to create models for describing the system itself.

SC Optimization: refers to normative models, i.e. models that suggest how the
system should or ought to be. Modellers develop these kinds of models mainly
to discover the ideal situation concerning the modelled system (optimal
behaviours).

Basic Hybrid Approaches: it is interesting to note that in between

Simulation

techniques and Optimization approaches, there is a basic hybrid approach called

Simulation Optimization. This technique combines characteristics of both SC
Simulation (i.e. descriptive models) and SC Optimization (i.e. normative
models), and it is being widely discussed in the literature.
 Artificial Intelligence: descriptive and/or normative models, used to create
models that try to mimic systems including human behaviour for supply chain
management. Modellers employ these models to describe the system, or for
optimizing it, or both.

Analytic Hierarchy Process (AHP)

Analytical hierarchy process was developed in l972 as a practical approach in

solving relatively complex problems [85]. It is used for multi criteria problems in a
number of application domains such as in Flexible manufacturing systems [86],
Decision making and priority theory [87], Total Productive Maintenance [88] and
Facilities location [89]. The general approach of the AHP is to decompose the
problem and make pair- wise comparison of all elements on a given level with
related elements in the level just above it belong. A highly user friendly computer
model is developed which assists the user in evaluating his/her choices.

AHP involves the following steps:

Problem decomposition and hierarchy construction: The top level of the

hierarchy is the overall objective. The next level is the criteria. Below this
level are the sub criteria.

Determine alternatives: The decision alternatives are constructed and added

to the lowest level of the hierarchy.

Pair-wise comparison: Pair-wise comparison aims at determining the relative

importance of the elements in each level of the hierarchy. It starts from the
second level and ends at the lowest level. The decision maker needs to
express the preference between each pair of the elements.

Weight calculation: Mathematical normalization methods are used to

calculate the priority weights for each level.

Consistency check: A consistency ratio (CR) is calculated. If it is greater

than l0 per cent, then the decision maker is not consistent in making the pair-
wise comparison. The decision maker should review the comparison and
make adjustment.
 Hierarchical synthesis: The calculated priority weights at different hierarchy
levels are integrated to allow overall evaluation of the alternatives.
 Determine priority for all alternatives: The alternative with the highest
overall priority weight is chosen [90]

Supply Chain Information Systems & Performance Measurement

Information technology is an important enabler of efficient supply chain
strategies. As compared to traditional supply chain, todays supply chains are
highly complex systems with multiple production and storage facilities. This
requires an integrated information system (IS) for sharing information on
various value-adding activities along the supply chain. IT is like a nerve
system for SCM. This is largely caused by variability of ordering.
Information sharing between members of a supply chain using EDI
technology should be increased to reduce uncertainty and enhance shipment
performance of suppliers and greatly improve the performance of the supply
chain system. Companies need to invest large amount of money for
redesigning internal organizational and technical processes, changing
traditional and fundamental product distribution channels and customer
service procedure and training staff to achieve IT- enabled supply chain.
Literature review on warehouse management systems is dealt further.

Warehouse Management Systems

Warehousing takes up to between 2% and 5% of the cost of sales of a corporation

[9l] and with todays highly competitive global business environment organizations
are emphasizing on return on assets, and hence minimizing warehousing costs has
become an important business issue [92]. Many firms are automating their basic
warehousing functions to achieve the increase in throughput rates or inventory turns
required for their warehousing operations to be cost-effective [93].

The use of information systems for warehouse management is studied extensively in

literature. Complexity of warehouse management is indicated among others by
amount and heterogeneity of handled products, the extent of overlap between them,
amount and type of technology as well as characteristics of associated processes
[94]. As the complexity increases, it becomes necessary to use Warehouse
management systems for handling warehouse resources and to monitor warehouse
operations. The warehouses with a high amount of processed order lines and a large
amount of stock keeping units will be best supported by customized software. It is
difficult to update daily operations of inventory level, locations of forklifts and
stock keeping units
(SKUs) in real-time by using the bar-code-based or manual-based warehouse
management systems [95].

RFID technology is adopted to facilitate the collection and sharing of data in a

warehouse. Tests are performed for evaluating the reading performance of both the
active and passive RFID apparatus. Implementing RFID technologies requires a
thorough cost-and-benefit analysis of implementation. The costs of RFID
implementation include tag reader costs, communication costs and other
infrastructure costs. RFID can improve the automatic checkout process at a retail
store, so it can reduce inventory costs as a result of more efficient shelf
replenishment. RFID technologies can support the redesign of business processes;
improve data quality; real-time data collection; synchronization and information
sharing between the players of supply chain [94]. RFID implementation can also
bring about additional benefits such as, reduction losses due to shop lifting and
increased use of point of sale applications [96].

Designing warehouse operations - It is necessary to allocate warehouse resources

efficiently and effectively to enhance the productivity and reduce the operation costs
of the warehouse [92]. One vital area determining the efficiency of warehouse is the
determination of the proper storage locations for potentially thousands of products
in a warehouse. Various factors affecting the storage assignment like order picking
method, size and layout of the storage system, material handling system, product
characteristics, demand trends, turnover rates and space requirements have been
extensively studied. It has been suggested that selecting appropriate storage
assignment policies (i.e. random, dedicated or class-based) and routing methods (i.e.
transversal, return or combined) with regards to above factors is a possible solution
to improve the efficiency [93]. Various decision support models and solution
algorithms have also been established to solve warehouse operation planning
problems [94].

To effectively design the warehouse operations, which is essential to improve the

performance of the warehouse lean tools such as value stream maps are used which
eliminates the non value added activities.

Value Stream Mapping is the simple process of directly observing the flow of
information and material as they occur and summarizing them visually. A Value
Stream involves all the steps, both value added and non-value added, required to
bring
a product or service through the process steps. A Current State Map is drawn by a
cross-functional, multi-disciplined team to document how things actually operate
(this is the as-is process vs. how it should be). Then, a Future System Map is
developed to design a lean process flow through the elimination of the root causes
of waste and through process improvements all leading to an Implementation Plan
that details the action steps needed to support the objectives (the what, who, and
when).

The benefits of Value Stream Mapping include:

It helps visualize more than just the single-process level

It establishes priorities for improvement efforts

It helps to identify the waste and the source of that waste

It is focused on no cost or expendable improvements

It provides a common language to talk about the processes

It is based on objective information

It forms the basis of an implementation plan

It shows the link between information flow and material flow

WMS Implementation - Implementation of Warehouse Management System

(WMS) will necessarily provide an increase in accuracy, reduction in labor costs, if,
the labor employed to maintain the system is less than the labor saved on the
warehouse floor and a greater ability to service the customer by reducing cycle
times. WMS not only leads to inventory reduction but also enhances storage
capacity. An increase in accuracy and efficiency of the receiving process might lead
to reduction in level of safety stock required. But the consequence of this reduction
will hardly be visible to the overall inventory levels. WMS might just not affect the
factors (lot sizing, lead times and demand variability) controlling the inventory
levels. However, WMS is instrumental in providing a more efficient and organized
way which leads to increased storage capacity [92].

The implementation of WMS for a company demands significant investment and

time period (several months) which has to be justified with the benefits obtained
after implementation. The justification involves the excellent analysis of the current
situation of the warehouse and warehouse operation for a specific period of time
tuning the WMS. The firm should be prepared to change the entire process and
system storage. Only WMS implementations without changing the process does not
lead to cost savings or efficiency improvements, it will only reduce errors due to
human factors.

Cost Benefit Analysis It is a process by which business decisions are analyzed.

The benefits of a given situation or business-related action are summed and then,
the costs associated with taking that action are subtracted. Some consultants or
analysts also build the model to put a value on intangible items, such as, the benefits
and costs associated with living in a certain town. Most analysts will also factor
opportunity cost into such equations.

In CBA, benefits and costs are expressed in money terms, and are adjusted for the
time value of money, so that all flows of benefits and flows of project costs over
time (which tend to occur at different points in time) are expressed on a common
basis in terms of their "net present value."

Research Gap

In this chapter the various literatures in the field of performance

measurement of supply chain is reviewed and the gap of the research is
identified. It can be seen that there is scant of literature on use of
performance metrics and measurement system in Indian manufacturing
industries. So, an attempt is made to address this issue.

Literature reveals that the decisions are made at three levels: that is strategic,
tactical and operational level. To support these, various models are
developed for measuring performance taking different parameters which are
not addressed in literature.

Literature states that due to intense competition, information systems play a

vital role in the supply chain. New technologies are emerging and they have

huge impact on the supply chain performance. But the implementation of

these technologies involves huge investment and hence cost justification is
essential. In this regard, cost benefit analysis of an emerging technology,
Warehouse management system, which is adopted only by few Indian
companies are dealt.
Summary

This chapter focused on various themes of supply chain performance measurement

available in the literatures. The literature pertaining to performance measurement,
modeling approaches for decision making, and information systems for supply chain
performance measurement was reviewed. Literature review led to identifying the
research gap and setting the objectives for the research work.
 CHAPTER 3

RESEARCH METHODOLOGY
Research Methodology

The research is exploratory research as primary and secondary data have been used.

Data Sources

Articles

Websites

Business problems in WMS

There are several business links that make up the strength of the supply chain. If a chain is
only as strong as its weakest link, then smart business managers realize the necessity to
keep them all as strong as possible.What follows is a list of five common warehouse
management problems that can arise:

Redundancy
Nothing is less efficient than having to do the same thing twice or three or four
times. Many times, one warehouse worker will pass a ticket on to another, and
another, and another, and so on.

Picking efficiencies
Another argument to be made for automated systems is that it streamlines picking
efficiency. If there is no automation in place, pickers dont always take the most
efficient route to the inventory, which causes a serious process inefficiency.

Poor facility layout

Optimizing the layout of your warehouse will make much more effective use of
your space. In other words, if your storage systems, racking, and pallet patterns are
most efficiently laid out, you may find that you can actually use a much smaller
space.
 Inventory awareness
If pickers arent aware of the location of key inventory, the whole warehouse
operation will be slowed dramatically. Make sure there is a system in place that
allows pickers to be constantly aware of inventory, especially the high-selling items.

Accuracy
Of course, accuracy is really the key to almost any efficient operation. If you dont
have an automated system in place that keeps an extremely accurate check on
inventory, an entire list of things can go wrong. If nobody is sure whats actually in
stock, unnecessary build-ups of the wrong items can occur and consequently,
shortages of heavily demanded items can drive customer dissatisfaction. Nothing
can hurt a business like a large amount of orders that cant be filled due to poor
inventory accuracy.

METHOD OF DATA COLLECTION

1. Primary data collection

2. Secondary data collection

Research problem

Customer management

Forward distribution

Reverse logistics solution

Order management

Logistics operations
 Tools

1. Questionnaire for organization and customer

2. One to one contact via telephone , face to face.

Limitations of data collection

Observations susceptible to observer bias

Survey and questionnaire

size and diversity of sample

Biased information by the respondents

Lack of contact with respondent

Unable to probe for additional details

 CONCLUSION

Today we are essentially operating in a global market. In this era of crumbling economic
barriers, the customer reigns supreme. The successful enterprises in this fiercely competitive
economy are those which are able to ensure a high level of customer satisfaction and at a
considerably low cost. The focus today is not on meeting the customers expectations, but on
exceeding them. The strategic role of logistics and supply chain management in this regard
becomes vital.

To achieve the objectives of logistic and supply chain management, it is essential to have a well-
defined organizational structure that supports the corporate mission and improves and influence
logistics system performance. With the growing nature and scope of logistics and supply chain
management in the overall performance of the enterprise over the years, there have been changes
in the logistics organizational structure from being a part of various functions like manufacturing,
finance, and marketing to a core function.

While designing a logistics organizational structure, firms need to follow certain principles
of organization, like unity of command, span of control, authority and responsibility, line
and staff relationships, centralization and decentralization of power etc.

At the same time, it is essential to take into consideration the various factors like the size of
organization, corporate structure and strategy, the role of logistics and supply chain management
in the overall value-addition activities, availability of IT infrastructural resources, and
environmental uncertainty.
 BIBLIOGRAPHY

SUPPLY CHAIN MANAGEMENT L.C. JHAMB

INTERNATIONAL LOGISTICS PIERRE DAVID

SUPPLY CHAIN MANAGEMENT SUNIL CHOPRA

WEBSITES

www.logisticworld.com
www.fmcg.com
www.google.com