Final Report

Submitted by: - Group No 5 (Section – C) Pravin Shinde - 152722 Pra!idhi Pi""ai - 152725# $nubhav %adav %adav - 15272&# Su!an Pinto - 152725' ohammed Sa"im a"i – 152721 *N+,N./% C.N/.0 S%S, SG main"y u!ed 2 !eparate computer !y!tem! or checin and manain the "o3 o inventory4 one or orderin and inventory tracin and other or manuacturin and 3arehou!in operation! $ter cu!tomer! !ined a contract4 they cou"d p"ace order! direct"y on"ine or throuh cutomer6! o3n materia"! manaement !ot3are provided it 3a! coniured to SG SG o""o3ed a t3o-3ee order cyc"e and had a one 3ee in tran!it time on mo!t o it! product!4 !o i a  product 3a! not avai"ab"e avai"ab"e at a 3arehou!e4 a cu!tomer cu!tomer miht have to 3ait a! "on "on a! three 3ee! or the !hipment to arrive hi! decrea!ed the !ervice "eve" SG 3anted to en!ure cu!tomer re!pon!ivene!! and tried to optimie de"ivery co!t! and or thi!4 they had to decide 3hether to 3ait or de"ivery4 tran!er inventory or mae !eparate !hipment! rom other 3arehou!e! Current"y !toc 3a! bein de"ivered to 7 reiona" 3arehou!e! by a third party bu" !hipper at a co!t o 8&#& per pound *nventory 3a! de"ivered rom the 3arehou!e to cu!tomer! by a pound de"ivery !ervice ca""ed 9ined 9ined eet *N+,N./% C$00,NG,S 1 he company6! compen!ation compen!ation proram to achieve ; cu!tomer i"" rate made mo!t o the 3arehou!e manaer! to eep hiher inventory "eve"! than than receed ?& day!6 !upp"y are a"!o reu"ar"y vio"ated hi! a"!o aected the companie! p"an or internationa" e>pan!ion! and company6! taret debt to capita" ratio! are increa!ed to #&; ' $ centra"ied inventory monitorin and recordin ! y!tem at 9a"tham 3arehou!e 3a! not enouh to capture the inaccuracie! cau!ed by damaed4 "o!t4 and !to"en ood!4 human error! and thu! there 3a! a mi!match bet3een computer record! and actua" inventory inventory

,va"uation or addre!!ed cha""ene! in inventory manaement: *t 3i"" be conducted rom main"y ive a!pect!: tran!portation co!t!4 averae inventory "eve"!4 i"" rate! and ina""y additiona" co!t! and beneit! ran!portation Co!t!: o conc"ude4 a! it i! e>pected4 3hen number o 3arehou!e! are decrea!ed tran!portation co!t! are increa!ed a! can be !een rom the ab"e be"o3 @rom the a!pect o tran!portation co!t!4 G0 option ha! the !ma""e!t co!t amount A 3arehou!e!

2 3arehou!e!

1 3arehou!e!

out!ourcin

27&?

25'&

251?

2'&1

$verae *nventory 0eve"!: $! !ho3n in the ab"e be"o34 a! demand areate!4 in other 3ord!4 number o 3arehou!e decrea!e!4 "eve" o inventory decrea!e! a! it i! e>pected hi! i! becau!e4 Bthe reater the deree o co""aboration4 the "o3er the uncertainty (!tandard deviation o the error or coeicient o variation) o the demand mode" (0ecture 4 S"ide ?) hi! imp"ie! that the money tied up in the inventory decrea!e! and thi! e>tra capita" can be u!ed in other area!4 "ie e>pan!ion p"an! to internationa" maret! ota" .ver!toc in A 9arehou!e!

5#7A5'1'

ota" .ver!toc in 2 9arehou!e!

2#5&#&

ota" .ver!toc in 1 9arehou!e!

1?'255'1#

@or .ut!ourcin

No SG anaed *nventory

@i"" /ate: /ather than u!in one i""-rate or over a"" product! o the company4 dierent rate! or dierent  product! can he"p the company in decrea!in inventory co!t! re"ated to4 at "ea!t4 or !ome o the product! .3ned 9arehou!e

.ut!ourcin

,r"enmeyer

,r"enmeyer

Griin

&?&2&?A'

&?#1?5A21

Griin

&#7521A?? &5'2&?2'

$dditiona" Co!t! and Deneit!: 81& i""ion can be avoided rom 9arehou!e maintenance e>pen!e! i the 3arehou!in operation! are out!ourced to G"oba" 0oi!tic! . *mp"ementin Propo!ed Po"icy Chane!: Greater enforcement by the warehouse managers of maintaining only sufficient inventories in the warehouses to meet the company’s target fill rate of 99%.

erit!: aretin ; i"" rate 3i"" he"p the company to avoid 1&; underae co!t and &?; overae co!t! /einorce maret "eader!hip by e>ceedin the maret !tandard o 2; i"" rate

/i!!: aintainin a hiher "eve" o inventorie! 3i"" "ead to the overae co!t! durin demand "uctuation! Discontinuation of the practice of allowing sales people to maintain trunk stock.

erit!: ,icient inventory manaement /i!!: Ei!continuation o trun !toc 3i"" di!ab"e the company rom !hort notice de"iverie! Creation of daily reports and weekly summaries on inventory movements for every warehouse

erit!: 9ith the u!ae o "ate!t inventory manaement * !y!tem!4 dai"y report! and 3ee"y report! can  be ea!i"y enerated 3ithout any manua" intervention! hi! 3i"" a"!o he"p the company in reducin the  bacorder /i!!: $dditiona" re!pon!ibi"ity or the 3arehou!e manaer! to eep the report! and !ummarie!F ho3ever thi! can be mitiated by the u!e o * !y!tem! Periodic physical audits and control procedures for all warehouse stocks.

erit!: Eemand and !upp"y o the inventorie! acro!! the 3arehou!e! can be ea!i"y monitored and mi!match bet3een computer record! at the centra"ied 3arehou!e and actua" inventory can be avoided /i!!: 9ithout havin eicient 3arehou!e proce!!e! "ie the above !tep!4 the phy!ica" audit! a"one 3i"" not "ead to any improvement! in the "on run4 a! the error 3i"" radua""y creep into the !y!tem Changing arehousing !unctions

Centra"iin the 9arehou!in @unction: *n thi! option4 the company can maintain a centra"ied 3arehou!e near the manuacturin !ite near 9a"tham and !erve the cu!tomer order! rom a"" the reion! 3o centra"ied 9arehou!e!: 9ith t3o 3arehou!e! option4 SG can thin o poo"in the order rom ea!t and 3e!t !eparate"y by addin one 3arehou!e in 3e!t in addition to the current 3arehou!e in 9a"tham4 3hich i! "ocated in ea!t he demand! in the centra" part can be poo"ed rom the!e t3o 3arehou!e! independent"y aintainin the current eiht 9arehou!e!: 9ith thi! option o eiht 3arehou!e!4 each 3arehou!e 3i"" be re!pondin to the demand in it! reion independent o a"" the other 3arehou!e! .ut!ourcin the 9arehou!in unction!: *n thi! option4 SG can out!ource the di!tribution unction to G"oba" 0oi!tic! (G0)4 3ho provide! de"ivery !ervice! that inc"uded centra"ied 3arehou!in in $t"anta he out!ourcin !eem! to be the mo!t eicient option! due to 0o3e!t inventory co!t4 Ne"iib"e 3arehou!in operation e>pen!e!4 No SG manaed *nventory4 Detter i"" rate at "o3er co!t4 *n!urance co!t  borne by the G"oba" 0oi!tic! Creative "ptions

/e!tructurin .rder-@u"i""ment Step!

SG can thin o !hippin the inventorie! to the cu!tomer direct"y rom other 3arehou!e! in ca!e o in!uicient inventory at the oriina" 3arehou!e and thereby the company can avoid the tran!er price  bet3een the 3arehou!e! P"an ahead Company !hou"d revie3 it! !tratey in deve"opin maret! e!pecia""y in $!ia Paciic and 0atin $merica iven the re"ative !aturation o North $merican and ,uropean maret! SG !hou"d e>p"ore the po!!ibi"ity o e!tab"i!hin their o3n !a"e! oice! and increa!e their dedicated repre!entation in the!e deve"opin maret!4 !omethin 3hich the di!tributor! 3i"" not be ab"e to oer due to their ve!ted intere!t! ,conomie! o Sca"e SG i! e>periencin an increa!e in "o3-end competition and !tandardiation in