oil prices shock and its impact on indian economy

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APROJECT REPORT

ONOIL PRICES SHOCKAND

ITS IMPACT ON INDIAN ECONOMY

Submitted towards partial fulfillment for Award of the Degree ofMASTER OF FINANCE AND CONTROL

(SESSION-2011-12)

Submitted to: - Submitted by:-

Department of Banking, Hemant Kumar Pandey

Economics and Finance Roll No:10504010

MFC 4rd

sem

UNDER THE GUIDENCE OF

Dr. Nagendra Kumar Maurya

DEPARTMENT OF BANKING, ECONOMCIS AND FIANANCE

BUNDELKHAND UNIVERSITY, JHANSI-284128, U.P (INDIA).


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PREFACE

Every management student has to undergo a practical training in order to get an insight of

the real life situation that how the organization actually functions in the competitive

business environment. As a management student has only a theoretical knowledge,

which he / she get from the Institution. But in practice he don`t know how to apply this

theoretical knowledge can be practically applied and gets more benefits .So the

theoretical knowledge thus gained by the student from the institution plays a major role in

understanding various matters and terms which are usually used in the organization .With

this objective in mind, I did my summer internship from Dazzling Dyes Industries, Mau

(U.P.), for the partial fulfillment of Master Degree of Finance And Control.

The duration was six weeks. During this period, I started my rotation, which is a part

of my training, I visited various departments during this period. I started my project on

Inventory Management of Dazzling Dyes Industries in order to understand the whole

procedure or the different types of department as per their grade and entitlement.


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ACKNOWLEDGEMENT

I am highly indebted to all the executives of DAZZLING DYES INDUSTRIES, MAU

who have given me the their precious time and have given their valuable guidance and

important role in making me able to do this vocational training and without whose helpmy effort would not have taken the present from. I am also thankful for the great support

that Mr.Ramashray Pandey-Manager, who has given me opportunity to get training in

Dazzling Dyes Industries. I have no word to express my gratefulness to my project co-

ordinator Dr. Nagendra Kumar Maurya for his inspiring guidance, valuable help and

angelic support for the completion of my project on INVENTORY MANAGEMENT

of DAZZLING DYES INDUSTRIES, MAU, I would like to extend my gratitude to the

management and staff of DAZZLING DYES INDUSTRIES, MAU, for their co-

operation during my training.


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DECLARATION

I hereby declare that this project work has been conducted for the partial fulfillment of

the degree of MASTER OF FINANCE AND CONTROL from BUNDELKHAND

UNIVERSITY, JHANSI. This project report has not been submitted anywhere else for

any other diploma, degree or title.

HEMANT KUMAR PANDEY

ROLL NO. - 10504010

{MFC 3rd sem.}


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INDEX

COMPANY PROFILE THEORITICAL BACKGROUND OF TOPIC METHODOLOGY FINDINGS CONCLUSION RECOMMENDATION


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COMPANY PROFILE

INTRODUCTION:

Dazzling Dyes Industries, Mau is situated in a well developed INDUSTRIAL AREA

OF MAU (U.P.), in INDIA was established & formed in the year 2003 by good efforts of

MR. Ramashray Pandey, MR. J.N.Pandey. Dazzling dyes industries is endeavoring to

make a name in dyes industry. Quality assurance is deals with all methods that

individually & collectively influence the quality of products.

Hence q. a department looks after implementation of GMP, in all aspects of products

manufacture & control .The Q.A. serve as countercheck for different departments like

stores , production, personnel & administration, quality control etc. to ensure that all

activities are perform as per respective SOPS & records are maintained.

Suppliers:

acid dyes, acid milling dyes, acid tpm dyes, aq dyes, paper dyes, direct dyes, reactivedyes, pigment powder, food color, optical whitening powder, vat dyes.

Exporters:

acid dyes, acid milling dyes ,acid tpm, aq dyes, direct dyes, reactive dye, paper dyes,chrome dyes

Manufacturers:


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acid dyes, acid milling dyes, acid tpm ,aq dyes, direct dyes, reactive dyes, paperdyes,chrome dyes.

Contact Details:Company Name : DAZZLING DYES INDUSTRIES

Contact Person : Mr J.N. Pandey

Address : Indusrial area,Tajopur, Mau, Uttar Pradesh, India(275101)

Besides the above mentioned, Q.A. performs additional tasks as under:-of approval of

vendors. Proving the details of storage conditions & monitoring of R.M & P.M. Checking

of the active materials issued from the store department. Independently monitoring &

recording in process checks during manufacturing & packing. Inspection of entire batches

manufacturing & packing records for giving final approval for transfer to finished goods

store. Validation of testing methods. Dyes in manufacturing & filling areas etc.

Real time & accelerates stability testing. Calibration of all laboratory equipments &

instruments. Conduction quality monitoring tasks like manufacturing, cleaning

validation, process validation, complaint. Product recall, training, self-inspection, quality

audit, etc. Approving SOPS of all functional department & product master formula card.

DOCUMENTS & DATA CONTROL:

Dazzling quality gyrates around customer satisfaction. It is towards this end that the

company has the following:

Quarantine , sampling & dispensing

Best manufacturing practices

Regular training Standard operation procedures(SOP)

In-house controls of process Well defined sampling procedure

Effective controls of procedure Well defined sampling procedure


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Proper documentation Process controls

Documents reports & records Reference literature

GMP audit

Clean atmosphere @ air handling

Hygienic conditions Proper uniforms

Quality standards Own R&D

FINANCE DEPARTMENT OF DAZZLING DYES INDUSTRIES.

SECTION UNDER

DAZZLING DYES INDUSTRIES.

PURCHASE SECTION. EMPLOYEE WELFARE SECTION. PAY ROLL SECTION. BANKS & MISCELLANEOUS.

PURCHASE DEPARTMENT:IT INCLUDES THE FOLLOWING FUNCTION:a) Deposits & advance payments to suppliers.

b) Passing of bills for suppliers received

c) Pricing of goods receipt notes

d) Accounting of cash purchase made by materials department

e) Arrangement of cash purchase made by the material departmentf) Arrangement for insurance of transit risk

g) Maintenance of books of accounts

2. EMPLOYEE WELFARE SECTION:


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The section is responsible to give the information to payroll section for payment and

deduction of below mentioned benefits and incentives.

Other welfare schemes:-

LICs group saving linked insurance scheme Personal claims and other payments Leave travel concession Travelling allowance Daily allowance Local conveyance charges Salary advance Transportation of personal effects Loading and unloading charges Insurance charges Excess baggage charges Packing charges Travel expensesfor preparatory trip Reimbursement of expenses for admission of school going childrenFacilities:

Provident fund Scheme for self insurance Other benefits Membership of professional bodies Children education assistance scheme Issue of calculators Productivity linked incentive3. PAY ROLL SECTION:


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Function of the section dealing with establishment can be broadly classified as

follows:

Scrutiny and concurrence of proposal from personal department Payment of salaries and allowances Advances to employees Deduction from pay bills Statutory and statistical requirements.Scrutiny and concurrence of proposal from personal department

Proposals requiring finance concurrence shall be received in the section and scrutinized

with reference to the rules applicable. Cases not covered by specific rules shall bereferred to the appropriate authority for decision.

Payment of salaries and allowances

Pay and allowance shall be drawn by the finances department on the basis of attendance

particular which shall be send by the time office to finance giving details such as name of

the employee. Employee number, number of regular days, over time etc. under the

mechanized system of pay roll accounting, the time cards is after filling in summaryparticulars through finance department to the data processing section. The data

processing section shall prepare a statement, which is checked and confirmed by the time

office subsequently. Pay and allowances are as mentioned below.

Scale of pay Dearness allowance. Special allowance. Cash handling allowance Professional updating expenses


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Rationalization adjustment allowance. ADVANCE TO EMPLOYEERules for various types of advances are prescribed in the personal manual on the basis of

sanction and release order received from competent authority. The section dealing with

advance shall prepare payment voucher debiting appropriate advance account and the

same shall be passed on to cash section for payment. Recovery of advance shall be made

in accordance with the installments given in the sanction order. Where the period of

recovery is prescribed in the rule given in the relevant manuals. The same shall be done

accordingly. All recoveries in respect of particular advance account shall be credited to

advance account. Loans and advances are mentioned below:

1. Conveyance advance.

2. Repair advance

3. Emergency advance

4. Festival advance

BANKS AND MISCELLANEOUS SECTION:-

This section shall be responsible for:

Receipts of cheques and bank drafts Petty cash imprested by cheques and bank drafts Payments Safe custody of valuables and documents Maintenance of special current accounts Maintenance of bank cashbooks. Reconciliation of bank account

BALANCESHEET


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DAZZLING DYES INDUSTRIES

ParticularsMar'11 Mar'10 Mar'09 Mar'08 Mar'07

Liabilities 12

Months

12

Months

12

Months

12

Months

12

Months

Capital5.00 5.00 5.00 5.00 5.00

General Reserves20.76 17.08 14.22 12.60 11.78

Net Worth25.76 22.08 19.23 17.60 16.78

Secured Loans22.31 12.11 3.93 7.20 5.05

Unsecured Loans4.44 0.01 0.00 0.00 0.49

TOTAL LIABILITIES52.51 34.20 23.16 24.81 22.32

Assets

Gross Block12.66 12.24 11.82 11.25 10.25

(-) Acc. Depreciation9.74 8.82 7.83 6.97 6.08

Net Block2.92 3.41 3.99 4.28 4.17

Capital Work in Progress.8.03 1.84 0.00 0.00 0.22

Investments.0.14 0.21 0.36 0.21 0.54


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Inventories12.63 12.55 6.43 6.70 4.98

Sundry Debtors28.87 15.66 10.39 12.97 10.37

Cash And Bank 2.68 1.71 0.70 0.93 0.69

Loans And Advances 11.26 8.60 6.25 5.14 3.51

Total Current Assets55.44 38.52 23.78 25.73 19.54

Current Liabilities12.52 6.71 2.82 3.72 2.11

Provisions1.49 3.06 2.16 1.69 0.05

Total Current Liabilities14.01 9.77 4.97 5.41 2.15

NET CURRENT ASSETS41.43 28.75 18.80 20.32 17.39

Misc. Expenses 0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS (A+B+C+D+E) 52.51 34.20 23.16 24.81 22.32

Table of Contents


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INVENTORY MANAGEMENT

1. INTRODUCTION

The reasons for keeping stock. All these stock reasons can apply to any owner or product

stage.

Buffer stock is held in individual workstations against the possibility that the upstream

workstation may be a little delayed in providing the next item for processing. Whilst

some processes carry very large buffer stocks, Toyota moved to one (or a few items) and

has now moved to eliminate this stock type. Safety stock is held against process or

machine failure in the hope/belief that the failure can be repaired before the stock runs

out. This type of stock can be eliminated by programs likeTotal Productive Maintenance

Overproduction is held because the forecast and the actual sales did not match. Making to

order and JIT eliminates this stock type. Lot delay stock is held because a part of the

process is designed to work on a batch basis whilst only processing items individually.

Therefore each item of the lot must wait for the whole lot to be processed before moving

to the next workstation. This can be eliminated by single piece working or a lot size ofone.

Demand fluctuation stock is held where production capacity is unable to flex with

demand. Therefore a stock is built in times of lower utilization to be supplied to

customers when demand exceeds production capacity. This can be eliminated by
http://en.wikipedia.org/wiki/Total_Productive_Maintenancehttp://en.wikipedia.org/wiki/Total_Productive_Maintenancehttp://en.wikipedia.org/wiki/Total_Productive_Maintenancehttp://en.wikipedia.org/wiki/Just_In_Time_%28business%29http://en.wikipedia.org/wiki/Just_In_Time_%28business%29http://en.wikipedia.org/wiki/Just_In_Time_%28business%29http://en.wikipedia.org/wiki/Total_Productive_Maintenance


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increasing the flexibility and capacity of a production line or reduced by moving to item

level load balancing. Line balance stock is held because different sub-processes in a line

work at different rates. Therefore stock will accumulate after a fast sub-process or before

a large lot size sub-process. Line balancing will eliminate this stock type. Changeoverstock is held after a sub-process that has a long setup or change-over time. This stock is

then used while that change-over is happening. This stock can be eliminated by tools like

SMED.

Where these stocks contain the same or similar items it is often the work practice to hold

all these stocks mixed together before or after the sub-process to which they relate. This

'reduces' costs. Because they are mixed-up together there is no visual reminder to

operators of the adjacent sub-processes or line management of the stock which is due to a

particular cause and should be a particular individual's responsibility with inevitable

consequences. Some plants have centralized stock holding across sub-processes which

makes the situation even more acute.

Inventory needs to be accounted where it is held across accounting period boundaries

since generally expenses should be matched against the results of that expense within the

same period. When processes were simple and short then inventories were small but with

more complex processes then inventories became larger and significant valued items on

the balance sheet. This need to value unsold and incomplete goods has driven many new

behaviors into management practice. Perhaps most significant of these are the

complexities of fixed cost recovery, transfer pricing, and the separation of direct from

indirect costs. This, supposedly, precluded "anticipating income" or "declaring dividends

out of capital". It is one of the intangible benefits ofLeanand theTPSthat process times

shorten and stock levels decline to the point where the importance of this activity ishugely reduced and therefore effort, especially managerial, to achieve it can be

minimized.

LIFO V/S FIFO
http://en.wikipedia.org/wiki/SMEDhttp://en.wikipedia.org/wiki/SMEDhttp://en.wikipedia.org/wiki/Lean_productionhttp://en.wikipedia.org/wiki/Lean_productionhttp://en.wikipedia.org/wiki/Lean_productionhttp://en.wikipedia.org/wiki/TPShttp://en.wikipedia.org/wiki/TPShttp://en.wikipedia.org/wiki/TPShttp://en.wikipedia.org/wiki/TPShttp://en.wikipedia.org/wiki/Lean_productionhttp://en.wikipedia.org/wiki/SMED


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When a dealer sells goods from inventory, the value of the inventory reduces by thecost

of goods sold(CoG sold). This is simple where the CoG has not varied across those held

in stock but where it has then an agreed method must be derived. For commodityitems

that one cannot track individually, accountants must choose a method that fits the natureof the sale. Two popular methods exist: FIFO and LIFO accounting (first in - first out,

last in - first out). FIFO regards the first unit that arrived in inventory the first one sold.

LIFO considers the last unit arriving in inventory as the first one sold. Which method an

accountant selects can have a significant effect on net income and book value and, in

turn, on taxation. Using LIFO accounting for inventory, a company generally reports

lower net income and lower book value due to the effects of inflation. This generally

results in lower taxation. Due to LIFO's potential to skew inventory value, UK GAAP

andIAShave effectively banned LIFO inventory accounting.

SUPPLY CHAIN MANAGEMENT

A supply chain is a network of facilities and distribution options that performs the

functions of procurement of materials, transformation of these materials into intermediate

and finished products, and the distribution of these finished products to customers.

Supply chains exist in both service and manufacturing organizations, although the

complexity of the chain may vary greatly from industry to industry and firm to firm.

Supply chain management is typically viewed to lie between fully vertically integrated

firms, where the entire material flow is owned by a single firm and those where each

channel member operates independently. Therefore coordination between the various

players in the chain is key in its effective management. Cooper and Ellram [1993]

compare supply chain management to a well-balanced and well-practiced relay team.

Such a team is more competitive when each player knows how to be positioned for the

hand-off. The relationships are the strongest between players who directly pass the baton

(stick), but the entire team needs to make a coordinated effort to win the race.

Below is an example of a very simple supply chain for a single product, where raw

material is procured from vendors, transformed into finished goods in a single step, and
http://en.wikipedia.org/wiki/Cost_of_goods_soldhttp://en.wikipedia.org/wiki/Cost_of_goods_soldhttp://en.wikipedia.org/wiki/Cost_of_goods_soldhttp://en.wikipedia.org/wiki/Cost_of_goods_soldhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/FIFO_and_LIFO_accountinghttp://en.wikipedia.org/wiki/FIFO_and_LIFO_accountinghttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/UK_GAAPhttp://en.wikipedia.org/wiki/UK_GAAPhttp://en.wikipedia.org/wiki/International_Accounting_Standardshttp://en.wikipedia.org/wiki/International_Accounting_Standardshttp://en.wikipedia.org/wiki/International_Accounting_Standardshttp://en.wikipedia.org/wiki/International_Accounting_Standardshttp://en.wikipedia.org/wiki/UK_GAAPhttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/FIFO_and_LIFO_accountinghttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Cost_of_goods_soldhttp://en.wikipedia.org/wiki/Cost_of_goods_sold


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then transported to distribution centers, and ultimately, customers. Realistic supply chains

have multiple end products with shared components, facilities and capacities. The flow of

materials is not always along an arbores cent network, various modes of transportation

may be considered, and the bill of materials for the end items may be both deep andlarge.

To simplify the concept, supply chain management can be defined as a loop: it starts with

the customer and ends with the customer. All materials, finished products, information,

and even all transactions flow through the loop. However, supply chain management can

be a very difficult task because in the reality, the supply chain is a complex and dynamic

network of facilities and organizations with different, conflicting objectives. Supply

chains exist in both service and manufacturing organizations, although the complexity of

the chain may vary greatly from industry to industry and firm to firm.

Unlike commercial manufacturing supplies, services such as clinical supplies planning

are very dynamic and can often have last minute changes. Availability of patient kit when

patient arrives at investigator site is very important for clinical trial success. This results

in overproduction of drug products to take care of last minute change in demand. R&D

manufacturing is very expensive and overproduction of patient kits adds significant cost

to the total cost of clinical trials. An integrated supply chain can reduce the

overproduction of drug products by efficient demand management, planning, and

inventory management.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing

organizations along the supply chain operated independently. These organizations have

their own objectives and these are often conflicting. Marketing's objective of high

customer service and maximum sales dollars conflict with manufacturing and distribution

goals. Many manufacturing operations are designed to maximize throughput and lower

costs with little consideration for the impact on inventory levels and distribution

capabilities. Purchasing contracts are often negotiated with very little information beyond


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historical buying patterns. The result of these factors is that there is not a single,

integrated plan for the organization---there were as many plans as businesses. Clearly,

there is a need for a mechanism through which these different functions can be integrated

together. Supply chain management is a strategy through which such integration can beachieved.

Supply Chain Management (SCM) is the process of planning, implementing, and

controlling the operations of the supply chain with the purpose to satisfy customer

requirements as efficiently as possible. Supply chain management spans all movement

and storage ofraw materials, work-in-process inventory, and finished goods from point-

of-origin to point-of-consumption.

According to theCouncil of Supply Chain Management Professionals(CSCMP),

A professional association that developed a definition in 2004, Supply Chain

Management encompasses the planning and management of all activities involved in

sourcing and procurement, conversion, and all logistics management activities.

Importantly, it also includes coordination and collaboration with channel partners, which

can be suppliers, intermediaries, third-party service providers, and customers. In essence,

Supply Chain Management integrates supply and demand management within and across

companies.

Supply chain event management(abbreviated as SCEM) is a consideration of all possible

occurring events and factors that can cause a disruption in a supply chain. With SCEM

possible scenarios can be created and solutions can be planned.

Some experts distinguish supply chain management and logistics management, while

others consider the terms to be interchangeable. From the point of view of an enterprise,

the scope of supply chain management is usually bounded on the supply side by your

supplier's suppliers and on the customer side by your customer's customers .Supply chain

management is also a category of software products.

OBJECTIVES AND NEED OF SUPPLY CHAIN MANAGEMENT
http://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Raw_materialhttp://en.wikipedia.org/wiki/Raw_materialhttp://en.wikipedia.org/w/index.php?title=Council_of_Supply_Chain_Management_Professionals&action=edithttp://en.wikipedia.org/w/index.php?title=Council_of_Supply_Chain_Management_Professionals&action=edithttp://en.wikipedia.org/w/index.php?title=Council_of_Supply_Chain_Management_Professionals&action=edithttp://en.wikipedia.org/wiki/Supply_chain_event_managementhttp://en.wikipedia.org/wiki/Supply_chain_event_managementhttp://en.wikipedia.org/wiki/Logistics_managementhttp://en.wikipedia.org/wiki/Logistics_managementhttp://en.wikipedia.org/wiki/Logistics_managementhttp://en.wikipedia.org/wiki/Supply_chain_event_managementhttp://en.wikipedia.org/w/index.php?title=Council_of_Supply_Chain_Management_Professionals&action=edithttp://en.wikipedia.org/wiki/Raw_materialhttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Supply_chain


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Traditionally, marketing, distribution, planning, manufacturing, and the purchasing

organizations along the supply chain operated independently. These organizations have

their own objectives Sand these are often conflicting. Marketing's objective of high

customer service and maximum sales dollars conflict with manufacturing and distributiongoals. Many manufacturing operations are designed to maximize throughput and lower

costs with little consideration for the impact on inventory levels and distribution

capabilities. Purchasing contracts are often negotiated with very little information beyond

historical buying patterns.

The result of these factors is that there is not a single, integrated plan for the

organization---there were as many plans as businesses. Clearly, there is a need for a

mechanism through which these different functions can be integrated together. Supply

chain management is a strategy through which such integration can be achieved.

Moreover, shortened product life cycles, increased competition, and heightened

expectations of customers have forced many leading edge companies to move from

physical logistic management towards more advanced supply chain management.

Additionally, in recent years it has become clear that many companies have reduced their

manufacturing costs as much as it is practically possible. Therefore, in many cases, the

only possible way to further reduce costs and lead times is with effective supply chain

management.

In addition to cost reduction, the supply chain management approach also facilitates

customer service improvements. It enables the management of:

Inventories, Transportation systems and Whole distribution networksso that organizations are able to meet or even exceed their customers' expectations.

The major objective of supply chain management is to reduce or eliminate the buffers of

inventory that exists between originations in chain through the sharing of information on

demand and current stock levels.


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Broadly, an organization needs an efficient and proper supply chain management system

so that the following strategic and competitive areas can be used to their full advantage if

a supply chain management system is properly implemented.

Fulfillment of raw materials:Ensuring the right quantity of parts for production or products for sale arrive at the right

time. This is enabled through efficient communication, ensuring that orders are placed

with the appropriate amount of time available to be filled. The supply chain management

system also allows a company to constantly see what is on stock and making sure that the

right quantities are ordered to replace stock.

Logistics:The cost of transporting materials as low as possible consistent with safe and reliable

delivery. Here the supply chain management system enables a company to have constant

contact with its distribution team, which could consist of trucks, trains, or any other mode

of transportation. The system can allow the company to track where the required

materials are at all times. As well, it may be cost effective to share transportation costs

with a partner company if shipments are not large enough to fill a whole truck and this

again, allows the company to make this decision.

Smooth Production:Ensuring production lines function smoothly because high-quality parts are available

when needed. Production can run smoothly as a result of fulfillment and logistics being

implemented correctly. If the correct quantity is not ordered and delivered at the

requested time, production will be halted, but having an effective supply chain

management system in place will ensure that production can always run smoothly

without delays due to ordering and transportation.

Increase in Revenue & profitEnsuring no sales is lost because shelves are empty. Managing the supply chain improves

a company flexibility to respond to unforeseen changes in demand and supply. Because

of this, a company has the ability to produce goods at lower prices and distribute them to


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consumers quicker then companies without supply chain management thus increasing the

overall profit.

Reduction in Costs:Keeping the cost of purchased parts and products at acceptable levels. Supply chainmanagement reduces costs by increasing inventory turnover on the shop floor and in the

warehouse controlling the quality of goods thus reducing internal and external failure

costs and working with suppliers to produce the most cost efficient means of

manufacturing a product.

Mutual Success:Among supply chain partners ensures mutual success. Collaborative planning, forecasting

and replenishment (CPFR) is a longer-term commitment, joint work on quality, and

support by the buyer of the suppliers managerial, technological, and capacity

development. This relationship allows a company to have access to current, reliable

information, obtain lower inventory levels, cut lead times, enhance product quality,

improve forecasting accuracy and ultimately improve customer service and overall

profits. The suppliers also benefit from the cooperative relationship through increased

buyer input from suggestions on improving the quality and costs and though shared

savings. Consumers can benefit as well through higher quality goods provided at a lower

cost.

ACTIVITIES/FUNCTIONS OF SCM IN DAZZLING DYES INDUSTRIES


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Supply chain management is a cross-functional approach to managing the movement of

raw materials into an organization and the movement of finished goods out of the

organization toward the end-consumer. As corporations strive to focus on core

competencies and become more flexible, they have reduced their ownership of rawmaterials sources and distribution channels. These functions are increasingly being

outsourced to other corporations that can perform the activities better or more cost

effectively. The effect has been to increase the number of companies involved in

satisfying consumer demand, while reducing management control of daily logistics

operations. Less control and more supply chain partners led to the creation of supply

chain management concepts. The purpose of supply chain management is to improve

trust and collaboration among supply chain partners, thus improving inventory visibility

and improving inventory velocity.

Several models have been proposed for understanding the activities required managing

material movements across organizational and functional boundaries. SCORis a supply

chain management model promoted by theSupply-Chain Council. Another model is the

SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain

activities can be grouped into strategic, tactical, and operational levels of activities.

Strategic:-

Strategic network optimization, including the number, location, and size ofwarehouses, distribution centers and facilities.

Strategic partnership with suppliers, distributors, and customers, creatingcommunication channels for critical information and operational improvements

such as cross docking, direct shipping, and third-party logistics.

Products design coordination, so that new and existing products can be optimallyintegrated into the supply chain.

Information Technology infrastructure, to support supply chain operations.Where to make and what to make or buy decisions.

Tactical:-
http://en.wikipedia.org/w/index.php?title=SCOR&action=edithttp://en.wikipedia.org/w/index.php?title=SCOR&action=edithttp://en.wikipedia.org/w/index.php?title=Supply-Chain_Council&action=edithttp://en.wikipedia.org/w/index.php?title=Supply-Chain_Council&action=edithttp://en.wikipedia.org/w/index.php?title=Supply-Chain_Council&action=edithttp://en.wikipedia.org/w/index.php?title=Supply-Chain_Council&action=edithttp://en.wikipedia.org/w/index.php?title=SCOR&action=edit


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Sourcing contracts and other purchasing decisions.Production decisions, including contracting, locations, scheduling, and planning

process definition.

Inventory decisions, including quantity, location, and quality of inventory.Transportation strategy, including frequency, routes, and contracting.

Benchmarking of all operations against competitors and implementation of bestpractices throughout the enterprise.

(c) Operational:-

Daily production and distribution planning, including all nodes in the supplychain.

Production scheduling for each manufacturing facility in the supply chain (minuteby minute).

Demand planning and forecasting, coordinating the demand forecast of allcustomers and sharing the forecast with all suppliers.

Sourcing planning, including current inventory and forecast demand, incollaboration with all suppliers. Inbound operations, including transportation from

suppliers and receiving inventory.

Production operations, including the consumption of materials and flow offinished goods.

Outbound operations, including all fulfillment activities and transportation tocustomers.

Order promising, accounting for all constraints in the supply chain, including allsuppliers, manufacturing facilities, distribution centers, and other customers.

Performance tracking of all activities.

INTEGRATED SUPPLY CHAIN MANAGEMENT

An integrated supply chain management streamlines processes and increases profitability

by delivering the right product to the right place, at the right time, and at the lowest


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possible cost. Unlike commercial manufacturing supplies, clinical supplies planning is

very dynamic and can often have last minute changes. Availability of patient kit when

patient arrives at investigator site is very important for clinical trial success.

This results in overproduction of drug products to take care of last minute change in

demand. R&D manufacturing is very expensive and overproduction of patient kits adds

significant cost to the total cost of clinical trials. An integrated supply chain can reduce

the overproduction of drug products by efficient demand management, planning, and

inventory management. Implementation of ERP system (such as SAP) in R&D can have

major ROI by an efficient supply and inventory management system and also by reducing

overproduction.

How Integration Is Achieved In Supply Chain?

Stage 1:

Complete functional independence where each business function such as production or

purchasing does its own thing in complete isolation from other business function. For

instance, production function seeking to optimize its unit cost of manufacture by long

production runs without regard for buildup of finished goods inventory and advance

impact it will have on the warehousing as well as working capital.

Stage 2:

Companies recognize the need of limited integration between adjacent functions such as

distribution and inventory management or purchasing and material control.

Stage 3:

A natural extension of stage two, leading to establishment and implementation of end- to-

end integration. A concept of linkage and coordination is achieved.

Stage 4:


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The linkage achieved in stage three is extended upstream to suppliers and down stream to

customers. It represents true supply chain integration. This concept is also called c o-

managed inventory (CMI).Force of supply chain management is on trust and cooperation

and the recognition that is properly managed the whole cane be greater then the sum ofits part.

Inventory Decisions:

These refer to means by which inventories are managed. Inventories exist at every stage

of the supply chain as either raw material, semi-finished or finished goods. They can also

be in-process between locations. Their primary purpose to buffer against any uncertainty

that might exist in the supply chain. Since holding of inventories can cost anywhere

between 20 to 40 percent of their value, their efficient management is critical in supply

chain operations. It is long term in the sense that top management sets goals. However,

most researchers have approached the management of inventory from short term

perspective. These include deployment strategies (push versus pull), control policies ---

the determination of the optimal levels of order quantities and reorder points, and setting

safety stock levels, at each stocking location. These levels are critical, since they are

primary determinants of customer service levels.

INVENTORY CONTROL MANAGEMENT

Inventory database

An important component of inventory planning involves access to an inventory database.

It is a structured framework that contains the information needed to effectively manage

all items of inventory, from raw materials to finished goods. This information includes

the classification and amount of inventories, demand for the items, cost to the firm for


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each item, ordering costs, carrying costs and other data. The task of inventory planning

can be highly complex. At the same time it rests on fundamental principles. In doing so

we must understand and determine the optimal lot size that has to be ordered. The EOQ

(economic order quantity) refers to the optimal order size that will result in the lowesttotal of order and carrying costs and ordering costs. By calculating the economic order

quantity the firm attempts to determine the order size that will minimize the total

inventory costs. In examination of the two curves reveals that the carrying cost curve is

linear i.e. more the inventory held in any period, greater will be the cost of holding it.

Ordering cost curve on the other hand is different. The ordering costs decrease with an

increase in order sizes. The point where the holding cost curve i.e. the carrying cost curve

and the ordering cost curve meet, represent the least total cost which is incidentally the

economic order quantity or optimum quantity.

PRODUCTIVITY

In the industries there will be a competitor who will be a low cost producer and will have

greater sales volume in that sector. This is partly due to economies of scale, which enable

fixed costs to spread over a greater volume but more particularly to the impact of the

curve. It is possible to identify and predict improvements in the rate of output of workers

as they become more skilled in the processes and tasks on which they work. Bruce

Henderson extended this concept by demonstrating that all costs, not just production

costs, would decline at a given rate as volume increased. This cost decline applies only to

value added, i.e. costs other than bought in supplies. Traditionally it has been suggested

that the main route to cost reduction was by gaining greater sales volume and there can be

no doubt about the close linkage between relative market share and relative costs.

However it must also be recognized that logistics management can provide a multitude of

ways to increase efficiency and productivity and hence contribute significantly to reduced

unit costs. In todays more turbulent environment there is no longer any possibility of

manufacturing and marketing acting independently of each other. It is now generally

accepted that the need to understand and meet customer requirements is a prerequisite for


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survival. At the same time, in the search for improved cost competitiveness,

manufacturing management has been the subject of massive renaissance. The last decade

has seen the rapid introduction of flexible manufacturing systems, of new approaches to

inventory based on materials requirement planning (MRP) and just in time (JIT)methods,a sustained emphasis on quality. Equally there has been a growing recognition of the

critical role that procurement plays in creating and sustaining competitive advantage as

part of an integrated logistics process. In this scheme of things, logistics is therefore

essentially an integrative concept that seeks to develop a system wide view of the firm. It

is fundamentally a planning concept that seeks to create a framework through which the

needs of the manufacturing strategy and plan, which in turn link into a strateprocurement.

Inventory Flow:

The management of logistics is concerned with the movement and storage of materials

and finished products. Logistical operations start with the initial shipment of a material or

component part from a supplier and are finalized when a manufactured or processed

product is delivered to a customer. From the initial purchase of a material or component,

the logistical process adds value. By moving inventory when and where needed. Thus the

material gains value at each step. For a large manufacturer, logistical operations may

consist of thousands of movements, which ultimately culminate in the delivery of the

product to an industrial user, wholesaler, dealer or customer. Similarly for a retailer,

logistical operations may commence with the procurement of products for resale and may

terminate with consumer pickup or delivery. The significant point is that regardless of the

size or type of the enterprise, logistics is useful and requires continuous management

attention.

INVENTORY- related costs

Inventory carrying cost (ICC):Tax, Storage, Capital, Insurance, Obsolescence, Ordering,

Communication, Processing, including material handling and packaging, Update

activities, including receiving and date-processing


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BASIC INVENTORY DECISION

There are two basic decisions that must be made for every item that is maintained in

inventory. These decisions have to do with the timing of orders for the item and the size

of orders for the item.

Basic Inventory Decisions

How much? When?

Lot sizing decision

Determination of thequantity to be ordered.

Lot timing decision

Determination of the timingfor the orders.


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RELEVANT INVENTORY COSTS

Relevant Inventory Costs

Item Costs Holding CostsOrdering

CostsShortage Costs

Direct cost for

getting an item.

Purchase cost

for outside

orders,

manufacturing

cost for internal

orders.

Costs

associated with

carrying items

in inventory.

Storage and

other related

costs.

Fixed costs

associated with

placing an

order (either a

purchase cost

for outside

orders, or a

setup cost for

internal

orders).

Costs associated

with not having

enough inventory

to meet demand.

EOQ:

The EOQ can be calculated with the help of a mathematical formula. Following

assumptions are implied in the calculation:


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1. Constant or uniform demand- although the EOQ model assumes constant demand,

demand may vary from day to day. If demand is not known in advance- the model must

be modified through the inclusion of safe stock.

2. Constant unit price- the EOQ model assumes that the purchase price per unit of

material will remain unaltered irrespective of the order offered by the suppliers to include

variable costs resulting from quantity discounts, the total costs in the EOQ model can be

redefined.

3. Constant carrying costs- unit carrying costs may very substantially as the size of the

inventory rises, perhaps decreasing because of economies of scale or storage efficiency or

increasing as storage space runs out and new warehouses have to be rented.

4. Constant ordering cost- this assumption is generally valid. However any violation in

this respect can be accommodated by modifying the EOQ model in a manner similar to

the one used for variable unit price.

5. Instantaneous delivery- if delivery is not instantaneous, which is generally the case; the

original EOQ model must be modified through the inclusion of a safe stock.

6. Independent orders- if multiple orders result in cost saving by reducing paper work and

the transportation cost, the original EOQ model must be further modified. While this

modification is somewhat complicated, special EOQ models have been developed to deal

with it. These assumptions have been pointed out to illustrate the limitations of the basic

EOQ model and the ways in which it can be easily modified to compensate for them.

The formula for the EOQ model is:

EOQ =

Where, A= Annual consumption, B= Buying cost per unit, C= Cost of material per unit,

S= Storage cost or other carrying cost

Limitations of the EOQ formula-


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1. Erratic changes usages- the formula presumes the usage of materials is both predictable

and evenly distributed. When this is not the case, the formula becomes useless.

2. Faulty basic information- order cost varies from commodity to commodity and the

carrying cost can vary with the companys opportunity cost of capital. Thus the

assumption that the ordering cost and the carrying cost remains constant is faulty and

hence EOQ calculations are not correct.

3. Costly calculations: the calculation required to find out EOQ is extremely time

consuming. More elaborate formulae are even more expensive. In many cases, the cost of

estimating the cost of possession and acquisition and calculating EOQ exceeds the

savings made by buying that quantity.

4. No formula is a substitute for common sense- sometimes the EOQ may suggest that we

order a particular commodity every week (six-year supply) based on the assumption that

we need it at the same rate for the next six years. However we have to order it in the

quantities according to our judgment. Some items can be ordered every week; some can

be ordered monthly, depends on how feasible it is for the firm.

5. EOQ ordering must be tempered with judgment- Sometimes guidelines provide a

conflict in ordering. Where an order strategy conflicts with an operational goal, order

strategy restrictions should be developed to permit honoring the goal.

Quantity discounts: In the EOQ analysis, it has been assumed that material prices and

transportation costs were constant factors for the range of order quantities considered. In

practice, some situations occur in which the delivered unit cost of a material decreases

significantly if a slightly larger quantity than the originally computed EOQ is purchased.

Quantity discounts, freight rate schedules and price increases may create such situations.

These additional variables can also be included in the formula.

Cost of carrying inventory: Carrying material in inventory is expensive. A number of

studies indicated that the annual cost of carrying a production inventory averaged


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approximately 25% of the value of the inventory. The escalating and volatile cost of

money has escalated the annual inventory carrying cost to a figure between 25% - 35% of

the value of the inventory. The following five elements make up this cost:

1) Opportunity cost (12% -20%) 2) Insurance cost (2% 4%) 3) Property taxes (1% -3%) 4) Storage costs (1%- 3%) 5) Obsolescence and deterioration (4% - 10%). Total

carrying cost (20%- 40%)

Let us briefly look into these costs: Opportunity cost of invested funds

When a firm uses money to buy production material and keeps it in the inventory, it

simply has this much less cash to spend for other purposes. Money invested in external

securities or in productive equipment earns a return for the company. Thus it is logical to

charge all money invested in inventory an amount equal to that it could earn elsewhere in

the company. This is the opportunity cost associated with inventory investment.

Insurancecost

Most firms insure the assets against possible losses from fire and other forms of damage.

Property taxes: This is levied on the assessed value of a firms assets, the greater the

inventory value, the greater the asset value and consequently the higher the firms tax

bill.

Storage costs:

The warehouse is depreciated every year over the length of its life. This cost can be

charged against the inventory occupying the space.

Obsolescence and deterioration. In most inventory operations, a certain percentage of the

stock spoils, is damaged, is pilfered, or eventually becomes obsolete. A certain number

always takes place even if they are handled with utmost care. Generally speaking, this

group of carrying costs rises and falls nearly proportionately to the rise and fall of the

inventory level.

The ABC Classification:


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Indicators that classifies a material as an A,B or C part according to its consumption

value .The classification process is known as the ABC analysis.

The three indictors have the following meanings:

A-important part , high consumption value

B-less important , medium consumption value

C-relatively unimportant part , low consumption value

The ABC classification system is to grouping items according to annual sales volume, in

an attempt to identify the small number of items that will account for most of the sales

volume and that are the most important ones to control for effective inventory

management.

Reorder Point: The inventory level R in which an order is placed where R = D.L, D =

demand rate (demand rate period (day, week, etc), and L = lead time.

Safety Stock: Remaining inventory between the times that an order is placed and when

new stock is received. If there are not enough inventories then a shortage may occur.

Safety stock is a hedge against running out of inventory. It is an extra inventory to take

care on unexpected events. It is often called buffer stock. The absence of inventory is

called a shortage.

ABC Inventory Classification

The ABC classification process is an analysis of a range of items, such as finished

products or customers into three categories: A - outstandingly important; B - of averageimportance; C - relatively unimportant as a basis for a control scheme. Each category can

and sometimes should be handled in a different way, with more attention being devoted

to category A, less to B, and less to C.


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Inventory Control Application: The ABC classification system is to grouping items

according to annual sales volume, in an attempt to identify the small number of items that

will account for most of the sales volume and that are the most important ones to control

for effectiveinventory management.

Break-even analysis depends on the following variables:

Selling Price per Unit: The amount of money charged to the customer for each unitof a product or service.

Total Fixed Costs: The sum of all costs required to produce the first unit of aproduct. This amount does not vary as production increases or decreases, until new

capital expenditures are needed. Variable Unit Cost: Costs that vary directly with the production of one additional

unit.

Total Variable Cost The product of expected unit sales and variable unit cost, i.e.,

expected unit sales times the variable unit cost.

Forecasted Net Profit: Total revenue minus total cost. Enter Zero (0) if you wish tofind out the number of units that must be sold in order to produce a profit of zero

(but will recover all associated costs)

Break-Even Point : Number of units that must be sold in order to produce a profit of zero

(but will recover all associated costs). In other words, the break-even point is the point at

which your product stops costing you money to produce and sell, and starts to generate a

profit for your company. where:

Q = Break-even Point, i.e., Units of production (Q),

FC = Fixed Costs,

VC = Variable Costs per Unit

UP = Unit Price
http://home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/Inventory.htmhttp://home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/Inventory.htmhttp://home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/Inventory.htmhttp://home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/Inventory.htm


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Therefore,

Break-Even Point Q = Fixed Cost / (Unit Price - Variable Unit Cost)

Stock control and inventory

Stock control, otherwise known as inventory control, is used to show how much stock

you have at any one time, and how you keep track of it. It applies to every item you use

to produce a product or service, from raw materials to finished goods. It covers stock at

every stage of the production process, from purchase and delivery to using and re-

ordering the stock. Efficient stock control allows you to have the right amount of stock in

the right place at the right time. It ensures that capital is not tied up unnecessarily, and

protects production if problems arise with the supply chain.

Supply chain vendor management inventory:

Allows supply chain partners to share critical order, demand and inventory information in

real-time and uses both integrated and web based applications to reduce administration

costs, shortening cycle times and help lower inventory levels. Our unique, managed

supply hub requires little upfront investment, yet quickly starts delivering high

performance in real time.

Inventory Control Overview

Normal Inventory

As it sounds, this type of inventory item will be used for the majority of your parts. It will

correctly track the inventory received and sold on a first in first out basis, will handle cost

of sales, and will warn you when you're out of stock.

Non-Inventory Type

This is used for selling things that are not really inventory items. For example, you could

be selling warranty, but because you don't have warranty in a box to sell, and you'll never


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run out of stock, you won't need to keep inventory control on it. As well, there is no cost

of sale adjustments with non-stock items. The system will not calculate how much you

paid for the item, and therefore will not try to remove that value from inventory in the

general ledger. If you are selling something that does cost you money, you will have tohandle these details manually.

Labor Parts

You (probably) don't have technicians hanging from hooks in your back room, so like

non-inventory items, the system will not try to remove them from inventory when you

sell a labor item. The two differences between Non-Inventory items an Labor items are

that you can optionally have the system ask you for the technician code that did the workso that you can print reports showing who did what work. As well, the system will

optionally ask for a comment to explain what was done so that the description of the

service work can be printed on the invoice. Note too that you can optionally keep track of

how much time was spent and how much time was billed for on a per job basis. At the

end of the month, you can then print technician productivity reports to compare total time

spent compared to billable hours. In the automotive industry, some mechanics can do the

work faster than is what is billed because the billing is based on industry standards.

Consignment Items

Consignments can be used to keep track of inventory that you don't own, but at the time

you sell it, you must pay for it. You'll be able to generate several reports, including a list

of inventory that is on consignment but not sold and a list of inventory sold on

consignment, but not yet paid for.

Floor Plan Inventory

Floor planning is very similar to consignment, except that you take possession and own

the inventory when you receive it, but you don't have to pay for it until it's sold, or until

it's been in the store for a negotiated period of time. However, you do own the inventory


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and do have to pay for it sometime. Some floor planning companies want the ability to

check the inventory serial number by serial number for the larger items, and others may

just want to count the number of each model number on hand. Regardless, Windward

System Five can handle it. On the accounts payable side, you will be able to keep track ofwho you owe the money too (Floor Planning Company) and who you actually bought the

inventory from (Supplier) and generate proper histories of each.

Tire Inventory

Windward System Five has the ability to sort and categorize tires by their size, aspect

ratio and rim size. In addition, you will also be able to search for the tires by just entering

in some of the search criteria and having the system bring up a window of all matches.When the list brings up a list of tires that can all fit the vehicle, the system can sort the

list to show the items with the highest quantity in stock at the top of the list and the items

that are out of stock at the bottom of the list. This will help you sell what you actually

have to sell instead of creating special orders.

Product Inventory

Products are items such as vehicles that you might service or repair after selling them to

the customer. That is, they are an item in the database that can be sold, and when sold, are

automatically added to the customer's list of products that can be worked on.

Examples are vehicles, trucks, recreational vehicles, fridges, air conditioners, and

chainsaws. The system will let you keep additional information on these products, such

as make, model, year, and other comments, and will also be able to list all the work or

repairs performed between two dates. Windward System Five can also track whole goods

such as recreational vehicles by keeping track of the cost of the item before the sale, add

ones and pre-delivery inspection items. In addition, the system can generate a "wash out"

report one level deep to show the costs and income associated with the trade in.

Serialized Inventory


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Those items that need to be tracked by their serial numbers can be marked as serialized

inventory. For example, fridges, stoves, computers, and chainsaws might all be serialized.

Note that if you plan on servicing these items in the future and keeping track of all work

you do on them, they should be entered as products instead of serial numbers.

TYPES OF INVENTORY

Several different types of inventories are conducted, depending upon the type of

materiel involved and type of information needed. Bulkhead-to-Bulkhead Inventory

A bulkhead-to-bulkhead inventory is a physical count of all stock materiel within the

ship or within a specific storeroom. . A bulkhead-to-bulkhead

inventory of a specific storeroom is taken when

a random sampling inventory of that storeroom


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fails to meet the inventory accuracy rate of 90 percent when directed as a result

of a supply management inspection (SMI). It is

also taken when directed by the commanding

officer or when circumstances clearly indicate thatit is essential to effective inventory control.

Specific Commodity Inventory

The specific commodity inventory is a physical

count of all items under the same cognizance

symbol, FSC, or that support the same operational function, such as-

boat spares, electron tubes, boiler tubes, or fire brick. This inventory is taken underthe same conditions as a bulkhead- to-bulkhead inventory; however, prior knowledge

of specific stock numbers and item location is required to conduct a specific

commodity inventory

Special Materiel Inventory

A special materiel inventory requires the physical count of all items that, because

of their physical characteristics, costs, mission essentiality, and criticality, are

specifically designated for separate identification and inventory control. Special

materiel inventories include, but are not limited to, stocked items designated as classified

or hazardous. Special materiel inventories also

include controlled equipage and presentation silver

Advantage Inventory Control

The Inventory Control gives you the ability to handle your inventory your way. As one of

the most flexible and comprehensive modules in the Advantage, you can choose the level

of control that best suits your specific business needs. Your inventory can be valued on a

LIFO, FIFO or Average cost basis. You can choose to use parts explosions, serialized

inventory, parts allocations, vendors, warehouses and an audit trail. The system can also


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track the quantity sold for each item for the last 12 months and, using this data, provides

a sales analysis report to help you better manage your stock. Financing is aided by the

serialized aged report that shows which serialized items have been in your inventory the

longest and how much you have outstanding. Pricing can be standardized by rounding toa given factor or by being set to a specific suffix. With the Below Minimum report,

reordering stock is automatic and accurate. Inventory Control is a standalone module

that can also be integrated with Purchase Orders, Point of Sale, Billing/Order Entry, Job

Cost, Time Billing and Quick Sale.

21character alphanumeric item number field

Lookup on item number, item description (21 characters) and group (15 characters) fieldsTracks serialized items. Allows for superseded, preceded and substitute items. Unlimited

additional descriptions can be added to items. Handles markup and gross profit cost basis.

Can automatically update item pricing and discounts. Handles core pricing. Produces a

reorder report based on minimum stock quantities. Tracks unlimited vendors per item

and recommends a best vendor. Tracks allocations including explosion allocations. Up

to 254 discounts per item, including quantity break discounts. Unit conversions can be

defined for each item for both buying and selling quantities. Allows for warehouse

transfers and other quantity adjustments. Set up special sale dates for item discounting.

Produces physical inventory forms. Imports physical inventory and received quantities

from data collected with hand-held computers. Provides up to 255 levels of parts

explosion to allow you to identify all components of your assembled stock.

Automatically updates cost and price on explosion items based on subassembly changes

Reports the best and worst selling items in each of eight different categories. Tracks

items by location or quantity in multiple warehouses. Can automatically generate items

based on a template item .Utilizes Rapid Entry to facilitate entry of item data.

Disadvantages:

conveyor needs to be slightly declined for carton movement (one way);


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may require addition of powered booster units in some applications;

cannot be used for inter-floor movement except for down travel

goods need to be manually pushed when horizonta no positive control over moving

carton produces line pressure when accumulating.

Require efficiency of land

We propose a method for valuing new, recoverable, and recovered assemblies (products,

components, parts, etc.) in production systems with reverse logistics. Values of

assemblies influence their opportunity holding cost rates and are hence essential for

comparing inventory strategies in average cost models. We argue that the proposed

method is 'correct' from a discounted cash flow (DCF) point of view. We refer to someprevious results on valuing assemblies in systems without disassembly of returned

products that seem to confirm this. Furthermore, we test the method for a specific

example with disassembly of returned products. The simulation results indicate that the

method indeed leads to (nearly) DCF optimal inventory strategies.

Packaging

In industry with its large product volumes, low margins and fierce competition, is

constantly seeking efficiency improvements in its supply chain. The grocery retailindustry uses an immense amount of packaging and is directly affected by packaging

logistics activities. There is, therefore, a potential for efficiency improvements in the

grocery retail supply chain through the integration and development of new systems of

packaging and logistics. Packaging handling is identified as one of the main activities that


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has a strong impact on the overall logistical cost of chain. This research article

investigates packaging handling evaluation methods and discusses how these are

employed to benefit the industry from the industry, have been used to evaluate packaging

and logistics activities. This work, together with a literature review, was used to identifythe need for evaluative methods and the present availability of such methods. The results

indicated a lack of sufficient and usable packaging handling evaluation methods in

today's grocery and packaging industry especially from a logistical point of view. The

paper also highlights the lack of systematization among the few methods used and

discusses how these can be used to build a systematic and multifunctional evaluation

model in order to utilize the information from different studies to build a knowledge base

for the future.

Vendor-Managed Inventory

Company focused on delivering operational services to high-tech companies, needed to

take advantage of vendor-managed inventory (VMI) postponement and optimal

fulfillment solutions to stay competitive in its low-margin manufacturing marketplace. Its

objective was to find ways to reduce inventory redundancy, improve customer

responsiveness by reduced cycle times and simplify supplier management and

procurement administration. The manufacturer also needed to augment existing

infrastructure, while reducing investments in additional personnel, facilities and systems

Vendor Managed Inventory (VMI)

Vendor Managed Inventory supports the efficient flow of materials into the

market. Working closely with you and your suppliers, we automate the forecast

management process with Web-based software that enables the flow of supply to more

accurately mirror storeand even shelf-leveldemand.

Move your inventory in and out of our distribution centers and manage demand planning.

We can store and stage product for replenishment at our often freeing or limited store

rooms. We provide forecast visibility, comparing actual demand against DC-on-hand,


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store-on-hand and in-transit inventory. When store or inventory falls below pre-

determined levels, auto alerts are sent to you and your supplier to prompt replenishment.

Postpone inventory ownership until shipment to your site. Once your inventory is moved

to the work with your suppliers to transition inventory ownership until demand occurs.

Perform value-added services, allowing you to more efficiently manage the flow of goods

into manufacturing or directly to market.

Vendor Managed Inventory (VMI)

Vendor Managed Inventory by Kuehne + Nagel supports the efficient flow of materials

into the market. Working closely with you and your suppliers, we automate the forecast

management process with Web-based software that enables the flow of supply to more

accurately mirror storeand even shelf-leveldemand.

Move your inventory in and out of our distribution centers and manage demand planning

with Web-based applications. We can store and stage product for replenishment at our

DCs, often freeing up your own DC space or limited store rooms. We provide forecast

visibility, comparing actual demand against DC-on-hand, store-on-hand and in-transit

inventory. When store or DC inventory falls below pre-determined levels, auto alerts are

sent to you and your supplier to prompt replenishment. Postpone inventory ownership

until shipment to your site. Once your inventory is moved to the Kuehne + Nagel DC, we

work with your suppliers to transition inventory ownership until demand occurs. Perform

value-added services, allowing you to more efficiently manage the flow of goods into

manufacturing or directly to market.


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WAREHOUSE

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

manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.

They are usually large plain buildings in industrial areas of cities and towns. They come

equipped with loading docksto load and unload trucks; or sometimes are loaded directly

from railways,. They also often have labour for moving goods, which are usually placed

on ISO standardpalletsloaded intopallet racks.

warehouse are with workers working inside. The pallets and product are moved with a

system ofconveyorsand coordinated byprogrammable logic controllersandcomputers

running logistics automation software. These systems are often installed in refrigerated

warehouses where temperatures are kept very cold to keep the product from spoiling, and

also where land is expensive, as automated storage systems can use vertical space
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efficiently. These high-bay storage areas are often more than 2 meters high, with some

over 10 meters high.

The direction and tracking of materials in the warehouse is coordinated by the WMS, or

Warehouse Management System, a database driven computer program. The WMS is used

bylogisticspersonnel to improve the efficiency of the warehouse by directing put ways

and to maintain accurateinventoryby recording warehouse transactions.

Traditional warehousing has been declining since the last decades of the 20th century

with the gradual introduction of Just In Time(JIT) techniques designed to improve the

return on investment of a business by reducing in-process inventory. The JIT system

promotes the delivery of product directly from the factory to the retail merchant, or from

parts manufacturers directly to a large scale factory such as an automobile assembly

plant, without the use of warehouses. However, with the gradual implementation of

offshore outsourcingandoffshoringin about the same time period, the distance between

the manufacturer and the retailer (or the parts manufacturer and the industrial plant) grew

considerably in many domains, necessitating one warehouse in any typical supply chain

for a given range of products.

Recent developments in marketinghave also led to the development of warehouse-styleretail stores with extremely high ceilings where decorative shelving is replaced by tall

duty industrial racks, with the items ready for sale being placed in the bottom parts of the

racks and the crated or palletized and wrapped inventory items being usually placed in

the top parts. In this way the same building is used both as a retail store and a warehouse.
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TRANSPORT

Transport or transportation is the movement of people and goods from one place to

another. The term is derived from the Latin trans ("across") and portiere ("to carry").

Industries which have the business of providing equipment, actual transport, transport of

people or goods and services used in transport of goods or people make up a large broad

and important sector of most national economies, and are collectively referred to as

transport industries.

MODES OF TRANSPORT USED FOR TRANFER OF INVENTORY

Conveyor transport , Human-powered transport,Hybrid transport,Transport is a major

use of energy,,NewRail transport , Road transport Mobility Agenda including human-

powered transport such as walking and cycling , Sustainable transportation , Proposed

future transport.Transport is a major use of energy, and transport burns most of the

world'spetroleum. Transportation accounts for 2/3 of all U.S. petroleum consumption.

The transportation sector generates 82 percent of carbon monoxide and 56 percent of

NOx emissions and over one-quarter of total US greenhouse gas emissions.[4]

Hydrocarbonfuels also produce carbon dioxide, a greenhouse gaswidely thought to be
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the chief cause of global climate change, and petroleum-powered engines, especially

inefficient ones, create air pollution, including nitrous oxides and particulates (soot).

Although vehicles in developed countries have been getting cleaner because of

environmental regulations, this has been offset by an increase in the number of vehiclesand more use of each vehicle.

Other environmental impacts of transport systems include traffic congestion and

automobile-oriented urban sprawl, which can consume natural habitat and agricultural

lands. Toxic runoff from roads and parking lots that can also pollute water supplies and

aquatic ecosystems.Alternative propulsioncan reduce pollution. Low pollution fuels may

have a reducedcarboncontent, and thereby contribute less in the way of carbon dioxide

emissions, and generally have reducedsulfur, since sulfur exhaust is a cause ofacid rain.

The most popular low-pollution fuels at this time are biofuels: gasoline-ethanol blends

andbiodiesel.Hydrogenis an even lower-pollution fuel that produces no carbon dioxide,

but producing and storing it economically is currently not feasible. Plug-in hybridsare

energy-efficient vehiclesthat are going to be in the mass-production.

Another strategy is to make vehicles more efficient, which reduces pollution and waste

by reducing the energy use.Electric vehiclesuse efficient electric motors, but their range

is limited by either the extent of the electric transmission system or by the storage

capacity ofbatteries. Electrified public transport generally uses overhead wires or third

rails to transmit electricity to vehicles, and is used for both rail and bus transport.Battery

electric vehiclesstore their electric fuel onboard in a battery pack. Another method is to

generate energy usingfuel cells, which may eventually be two to five times as efficient as

the internal combustion engines currently used in most vehicles. Another effective

method is to streamline ground vehicles, which spend up to 75% of their energy on air-resistance, and to reduce their weight. Regenerative braking is possible in all electric

vehicles and recaptures the energy normally lost to braking, and is becoming common in

rail vehicles. In internal combustion automobiles and buses, regenerative braking is not
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