SUPPLY CHAIN MANAGEMENTSupply chain management is the management of a network ofinterconnected businesses involved in the ultimate provisionof product and service packages required by end customers . Supply ChainManagement spans all movement and storage of raw materials, work-in-processinventory, and finished goods from point-of-origin to point-of-consumption.It encompasses the planning and management of all activities involved in sourcing,procurement, conversion, and logistics management activities. Importantly, it alsoincludes coordination and collaboration with channel partners, which can besuppliers, intermediaries, third-party service providers, and customers. In essence,Supply Chain Management integrates supply and demand management within andacross companies.Supply chain management (SCM) is the oversight of materials, information, andfinances as they move in a process from supplier to manufacturer to wholesaler toretailer to consumer. Supply chain management involves coordinating andintegrating these flows both within and among companies. It is said that theultimate goal of any effective supply chain management system is to reduceinventory (with the assumption that products are available when needed).Supply chain management flows can be divided into three main flows: • The product flow • The information flow • The finances flowThe product flow includes the movement of goods from a supplier to a customer, aswell as any customer returns or service needs. The information flow involvestransmitting order sand updating the status of delivery. The financial flow consistsof credit terms, payment schedules, and consignment and title ownershiparrangements.SUPPLY CHAIN PRACTICES THAT AN ORGANISATION SHOULD IMPLEMENT ASIT SEEKS TO IMPROVE ITS PERFORMANCE METRICS:1. Create a consensus demand plan: An organization can get consensus on marketrequirements and business assumptions by incorporating new productintroductions, product retirement, upcoming promotions, financial projections,investor commitments and sales forecasts into the demand planning process, andcreating a consensus plan around it. Without building consensus, everyone has adifferent perspective of customer demand and it becomes difficult to synchronizedemand and supply.2. Ensure supply demand synchronization: By using techniques such as Sales &Operations Planning (S&OP), as well as creating a supply plan that maps to demandwhile also incorporating key constraints, a company can ensure that it will be able
to meet its delivery commitments without incurring expediting costs or higherinventory. Such capability not only reduces costs, but increases customer loyalty.3. Streamline supplier interactions: By providing suppliers ongoing visibility intotheir forecast and consumption plans, as well as current inventory status andplanned receipts, manufacturers can get their suppliers to improve replenishmentlead time and become more responsive to their changing needs. It also allows themto implement programs such as Vendor-Managed Inventory (VMI), cut costs throughreduction in inventory and safety stock, reduction in overtimes or expediting costs.4. Get visibility into supply chain events: Traditional supply chains are evolvinginto a worldwide network of suppliers and manufacturing or distribution facilities.Such an environment requires stakeholders to share any shipment or materialinformation such as plans, current status or exceptions with each other in a timelymanner in order to improve overall supply chain performance. Without the ability toprovide such levels of visibility to each other, each stakeholder ends up continuouslyreacting to unplanned surprises with limited time to act, not to mention carryingextra inventory to compensate for such surprises. Visibility into shipments andmaterial-related information promotes faster decision-making within the supplychain and enables each stakeholder to proactively respond to issues. Supply ChainEvent Management (SCEM) addresses these requirements.5. Automate trade compliance: As organizations grow in scale through newproducts and expanded geographical markets, or setting up plants in othercountries, or turning to offshore suppliers, manual methods of managing the exportand import compliance process become exponentially more complex and time-consuming. Even significant increases in headcount may not resolve the issues.Streamlining the export and import management process brings benefits such assignificant cost savings, improved productivity, fewer shipment delays and reducedrisk of penalties and fines due to non-compliance.6. Rationalize the supply base: By reducing the number of suppliers, procurementmanagers can take spending on a category that is currently scattered amongmultiple suppliers and award that volume of spending to a smaller number ofsuppliers to gain volume discounts. Rationalizing the supply base also reducescomplexity associated with new part introduction and simplifies supplycollaboration.7. Integrate engineering and sourcing into supply chain management: Newproduct introduction (NPI) and sourcing are key elements of effective supply chainmanagement (SCM). Without expertly incorporating NPI into the supply chainplanning process, a manufacturer runs the risk of inventory write-offs or shortagesof critical components. Similarly, the sourcing process should incorporaterequirements such as ability to deliver in the right replenishment model,responsiveness and flexibility to react to sudden changes in business needs.8. Continuously measure key performance metrics: One best practice is gettingvisibility into key supply chain performance metrics on an ongoing basis and usingthat information to continuously improve the supply chain. SAPs upcoming supplychain performance management solution will help close the loop for its customers.
9. Focus on time and inventory: While one can focus on improving multipleaspects of the supply chain, the greatest impact can be had by focusing oncontinuously improving on two fronts: increasing the velocity of process andinformation flow and focusing on activities and actions that can reduce inventorywithin the system.10. Deploy an integrated solution: When the supply chain capabilities of ERPsystems were not as mature as they are today, best-of-breed solutions were thepreferred approach. However using such systems created information integrationissues. Today, I recommend that companies evaluate supply chain systems fromtheir ERP vendors before looking at other options. SUPPLY CHAIN DRIVERSINVENTORYVendor managed inventory, coordinated by an integrated logistics system, allowsinventory to be optimised together with transportation. By knowing the productvalue as well as storage capacity at each site, and routinely collecting information onconsumption rate, current inventory levels, forecasted demand and status ofshipments, the system can optimise the right quantities of replenishments to be sentat the right time to ensure that service levels are maintained while minimising costof inventory and transportation.Inventory refers to all of the raw materials, work in process (WIP), and finishedgoods within the supply chain. Inventory policies can dramatically alter a supplychain’s efficiency and responsiveness. It can increase amount of demand that can bemet by increasing product availability. Inventory can reduce costs by exploitingeconomies of scale in production, transportation, and purchasing. It can be used tosupport a firm’s competitive strategy. More inventory increases responsiveness, lessinventory increases efficiency (reduces cost).TRANSPORTATIONModes and routes for moving inventory throughout the supply chain.Faster transportation allows a supply chain to be more responsive but generally lessefficient. Less than full truckloads allow a supply chain to be more responsive butgenerally less efficient. Transportation can be used to support a firm’s competitivestrategy. Customers may demand and be willing to pay for a high level ofresponsiveness.While supply chain design deals with the flow and stocking of goods, transportationoptimisation examines the shipment (flow) process itself. The typical transportationoptimiser will search for opportunities to aggregate compatible orders or splittingorders to fit the transportation media (e.g. containers), identify pooling points toconsolidate orders for long haul using larger & hence cheaper media and routing ofpick-up and drop-off orders to increase backhaul. The judicious use of or tooptimise shipment plan has been generating large savings in transportation. 10-35%reduction in freight expenses had been achieved through optimal aggregation/
consolidation, multi-modal multi-leg carrier selection, rating and routing of freightorders.TRANSPORTATION DECISION: • Mode of transportation is the manner in which a product is moved (air, truck, rail, ship, pipeline, electronic). Each mode differs with respect to speed, size of shipments, cost, and flexibility. • Routes are paths along which a product can be shipped. • In house or outsource the transportation function. Many companies use third-party logistics providers (3PL) to perform some or all of their transportation activitiesFACILITIESPlaces within the supply chain where inventory is stored, assembled, or fabricated.Decisions on location, capacity, and flexibility of facilities have a significant impacton performance. Facilities either store inventory between supply chain stages(warehouses, distribution centers, retailers) or transform inventory into anotherstate (fabrication or assembly plants). Centralization of facilities uses economies ofscale to increase supply chain efficiency (fewer locations and less inventory) usuallyat the expense of responsiveness (distance from customer).FACILITY DECISION:Location. Centralize to gain economies of scale or decentralize to be moreresponsive. Other issues include quality and cost of workers, cost of facility,infrastructure, taxes, quality of life, etc.Capacity. Excess capacity allows a company to be more responsive to changes inthe level of demand, but at the expense of efficiency.Manufacturing Methodology. Decisions between a product or functional focus,between flexible or dedicated capacity.Warehousing Methodology. Chose between SKU storage (stores all of one type ofproduct together), Job lot storage (stores different products together to satisfy aparticular customer or job), or cross-docking.INFORMATIONData and analysis regarding inventory, transportation, facilities, and customersthroughout the supply chain. It is potentially the biggest driver since it affects allthe other drivers. • Information connects various supply chain stages and allows them to coordinate activities. • Information is crucial to the daily operations of each stage of the supply chain.
• An information system can enable a firm to get a high variety of customized products to customers rapidly • An information system can enable a firm to understand changing consumer needs more quicklyInformation Decision Components:Push versus Pull. Push systems (like MRP) need information on anticipateddemand to create production and purchasing schedules. Pull system (like JIT) needaccurate and quick information on actual demand to move inventory and scheduleproduction in the chain.Coordination and Information Sharing. How will the goal of maximizing supplychain profitability be achieved through the coordination of activities and sharing ofappropriate information.Forecasting and Aggregate Planning. How will future demand and marketconditions be forecast, and to what extent will collaborative forecasting be used.How will aggregate planning be used to meet forecasted demand and to what extentwill it be shared throughout the supply chain.Enabling Technologies. Which information technologies will be used andintegrated throughout the supply chain- electronic data interchange (EDI), theInternet, enterprise resource planning (ERP) systems, supply chain management(SCM) software.STORAGE AND WAREHOUSEThe warehouse acts as a supporting function for logistics and play’s a key role inattaining the overall objectives of the firm’s logistical supply chain system. In today’scontext, the warehouse is used as a switching facility rather than as long a termstorage house. Attention is paid to higher inventory turnover, lower operating cost,and shorter cycle time. Warehouse performance is judged by its productivity andcost performance, while trying to achieve the two polemic goals of customersatisfaction and lower cost of operation. Warehouses are long term investment andmust be designed to grow with the business.PACKINGTypical system that generates pick list for each vehicle do not necessary know if allitems could fit into the vehicle. The discreteness of items will inevitably result insome space that cannot be used. Hence, knowing how items should be packed orstuffed so that capacity is well used is another important cost saver. The loadplanning software can be integrated with the routing software to generate an optimalstuffing plan that considers compatibility, stack ability and unloading sequence.Planners are thus assured that the routes and loading plans would both work. LOGISTICS
Logistics is defined as a business planning framework for the management ofmaterial, service, information and capital flows. It includes the increasingly complexinformation, communication and control systems required in todays businessenvironment.It is the process of planning, implementing, and controlling the efficient, effectiveflow and storage of goods, services, and related information from point of origin topoint of consumption for the purpose of conforming to customer requirements.Logistics is the science of planning and implementing the acquisition and use of theresources necessary to sustain the operation of a system.The science of planning, design, and support of business operations of procurement,purchasing, inventory, warehousing, distribution, transportation, customer support,financial and human resources. Integrated Logistics ManagementThe core enabling technology (besides IT) to bring about integrated logistics isoperations research (OR). OR is the application of mathematical methods such aslinear programming, game theory, statistical analysis and simulation to solve realworld (complex) management problems. It always take a total systems and total costperspective of the management problem so that the solution does not inadvertentlycreate problems in other areas or that savings in one area does not worsen theoverall company’s performance.Decision Support Systems (DSSs) are applications embodied with OR technologies tosolve specialised problems. These systems have, time and again, proven to producesignificantly better solutions to structured problems and in a much shorter timethan those produced by the most experienced planner. Coupled with IT applications,it provide a powerful system to tackle and integrate the many aspects of logisticsplanning. STORE DEPARTMENTOrient craft have a centralized storage, which means there all the fabric trims andother raw material first comes to there main store then further gets distributed fromthere. When any fabric sourcing is done, it first comes to the main store of orientcraft group, then further it distributed to other units as per the requirements.Although there each units also have their own store, but the main store is in 7Punit.RAW MATERIAL SOURCINGOrient craft have a very nice and systematic fabric sourcing department. It is a veryimportant department because fabrics are the costliest thing in a garment. So it is
very important that an export house choose good and reliable supplier, who candeliver the material on time, at lowest price.When ever the PO comes according to it the merchandiser make a BOM of that orderand material in house according to it.BOM contains all the important details of raw material which is sent to varioussuppliers. So that they can give their own quotations according to the bill of materialand send it back to the export house.CRITERIA FOR assessing and selection of supplierFollowing factors kept in consideration while selecting a supplier: • Price • Time • Quality • DeliveryWhile selecting a supplier against various quotations which an export house receivesis very important job. And it is done keeping following things in mind, where he isgetting the lowest price, give delivery at shortest lead time, and the best quality.Various suppliers are as follows:S.NO. ACCESSORY SUPPLIER1 FABRIC • Alok mills • Auro textiles • SKC • Tex and wets • RMP fabric sourcing • Deepika exports • Fountain set limited • Shaoxing couty • Kin tao textile ltd.2 THREADS • Vardhman • Madhura coats • Pashupati • Malwa (oswal)3 ZIPPER • YKK4 BUTTON • zindal and simex
5 ELASTIC • Surabhi6 FID • Factory ID Code7 LABELS AND • Manohar TAGS filament • Kailash ribbons • RVF ShoreAccessories purchase departmentThere are two types of purchase against the following type of order : • Job orders • Miscellaneous ordersIn the first kind of order, all the requirements related to production department aretaken into consideration. These requirements are forwarded to the accessoriesdepartment through ERP system and with the help of ERP accessories departmentcomes to know that the requirements of the production department and place theorder according to the department.The codes are generated against each order in ERP and according to these codesrequirements are generated. Purchase department checks the quantity ofaccessories in its previous record to see if more balance is there or not. It thenorders the remaining quantity of accessories. At the time of receiving theaccessories, the department checks the quality of the items and if it is in theacceptable limit then they accept the items and place to specific bins and enter thatbin number into the system against the order.The various trims that can be ordered are:S.NO. TRIMS1 Main label2 Size label3 Style label4 Button5 Thread6 Zipper7 PolybagIn the second kind of order all the requirements related to supporting items likestationary, house keeping, medicine etc. are taken care of. These requirements aresubmitted to the accessories department by the different departments once in amonth.
The discount available on the purchase are : • Cash discounts • Bulk discountsThe documents prepared by the department are: • Requisition: For fabric request which is generated by the merchandising department. • PO : Purchase order coming from the buyer. • Lab test report: Accessories are tested are per the requirements of the buyer. • Inspection report : To keep a track on the defects when 10% inspection is carried out.Once when the fabric is in-house it is first taken to the quarainted zone, where, thesecurity people receive the fabric in the form of rolls or in loose forms and inspectthe quantity of the fabric to see if it matches the quantity mentioned in thesupplier’s chalan. The receipt is then sent to the concerned person. After all theprocedures, quality person continues with the checking process.Outsourced fabric:100% inspectionAfter following the procedure, 25-100 cm is cut from the fabric, from each roll andwith these swatches their corresponding rolls are marked. Lots are made byexamining these swatches and the samples are sent to the merchandiser forgrouping them under various shades, these rolls are marked with different coloredstickers to identify the various shades and lots from each other, the process is calledShade Banding.Role to role variation is checked manually or with a checking instrument calledLight Box, with one fact that the weight and ratio of the fabric of the fabric is noticedsame, in which, the fabric defect system followed is 4- point system.A report is sent to the merchandiser about defect, lot card, continually card whichcarries the details of every lot of no. of rolls are there in it.Center selvedge (CC) is the measure in which different roll is joined weight wise .i.e.1-6, 3-5 etc. through which variation is checked in order to the garments beingstitched from the same side of the fabric. Marker is also set and bowing and skewingare the defects found out.Shrinkage check is done by two ways: • Colourwise • Shrinkage wiseFor shrinkage testing 28/28” panel is cut from the fabric, color coding eg. Lot 1 tolot 20 is done and stickers are pasted on them.
Closure is sent after approval and rejected sample is debited and sent back, which isagain inspected by the board of checking and rejection. Rejected fabric is used formaking blankets.Terms and condition for the supplier • Fabric will be checked on 4 point system from MTL/ ITS lab and inspection and quality Certificate should be attached with dispatch documents. • Fabric should be free from defects. Fabrics should be in maximum of two shade lots. • The fabric shall be supplied strictly in keeping with material specifications/ technical parameters specified in the purchase order or Quantity. • Packing roll length should be above 30 meters. • Fabric dispatched after due date will automatically result in discount on fabric price/ air freight. • Rejected fabric will be replace within 2-3 days of rejection will pick up in the same from OC. • Debit-not settlement within in a week • Fabric should be delivered with the original document not with chalan. • Commercial invoice delivery address should be as OC purchase order. • Complete fabric description should be mentioned on invoice. • Transit insurance for the goods moved under both from the company as well as from beneficiary of this document is covered by orient craft limited vide policy no.0830000597 issued by TATA AIG insurance Co.ltd New Delhi.
Receiving fabric from mill to an export house is not the headache of the exporthouse. Mill is fully responsible for delivering the fabric to the export house in thereown expense and for that they make there own arrangement. An export house doesnot to make any arrangement for receiving fabric from mill.But when fabric arrives in orient craft main unit which is their main store shouldmake an entry in there ERP system. And after that when they required to movethere fabrics in their other units at that time OC needs to make there ownarrangement for moving raw materials from one unit to another. Normally OrientCraft transfer their raw material in there own trucks. They have their own truckslike TATA 407 etc. Even they use their trucks for dispatching finished goods in localairport and sometimes they move there truck to Mumbai also.Movement of fabric from store to cuttingWhen any requisition comes from the cutting department for fabric to fabric store.The cutting department sends a requisition slip. Then the store department issues aslip along with the fabric. Cutting department in Orient Craft is also basement Justaside of fabric store department. For moving fabric rolls or than from store to cuttingdepartment they use wheel trolleys. And many times fabric rolls are being movedwith the help of labour itself FABRIC ISSUE CHALLANSales Order No. :Run Date :Time :STYLE Fabric Description:
S. NO.FABRICFABRICFABRICISSUELINEROLLNO.ACTUALFIN.WIDTHROLLQUANTITY INMTR.CODECOLORSIZE
MATERIAL FLOW IN CUTTING DEPARTMENTWithin the cutting department fabrics are moved from one section (eg :- bundling,stickering, cut parts) to another with the help of various trolleys and bins.Once the fabric is ready it is been passed to the sewing department with the help oflabors and trolleys.MOVEMENT OF MATERIAL FROM CUTTING TO SEWINGThe sewing lab in orient craft &D unit is in first and second floor. So when thematerials are cut and ready for sewing they are moved in small trolleys from cuttingto sewing department. Few pan power is used to do this job for the whole day, theytake fabric according to style wise.An issuing challan is issued from the cutting department to the sewing department,against the issued fabric.Movement of material from sewing to finishing departmentFinishing department in Orient Craft is in the production floor itself. Just wheresewing ends finishing department is just aside that. So there are small baskets andhelper themselves moving garments from sewing to finishing department.In finishing department there are sections:- • Thread cutting section • Spotting section • Ironing section
And all these section are one after another so there is not much is materialmovement in finishing department. Everything is done with the helpers here.MOVEMENT OF MATERIAL FROM FINISHING DESPATH SECTION Finishing department in Orient Craft is at extremely back side of the 7D Unit. Sofor moving finished goods to the dispatch department, they use trolleys andsometimes they just put the garment in the cartons and use labors to move thegarments to the dispatch department. There dispatch department is quite high atlevel of the truck so while shifting the garment in the dispatch department theysometime use slider for moving the garment into the dispatch department.DESPATCH DEPARTMENTIn the dispatch department there are long tables where the garments are being kept.And then they are packed according to the buyers requirements. And cartonspolybags, everything is used according to the buyer.PackingTypical system that generates pick list for each vehicle do not necessary know if allitems could fit into the vehicle. The discreteness of items will inevitably result insome space that cannot be used. Hence, knowing how items should be packed orstuffed so that capacity is well used is another important cost saver. The loadplanning software can be integrated with the routing software to generate an optimalstuffing plan that considers compatibility, stack ability and unloading sequence.Planners are thus assured that the routes and loading plans would both work.Packing is a very important part in garment sector, especially if you are doingexporting. In that case every thing is done according to the buyers requirements.Various packing materials are • Cartons • Polybags • Kimbles • Foam • Butterfly • HangtagMaterials & Equipments
Flip Fold Shirt FolderThis is easy-to-use folding tool folds shirts to a uniform 9" x 12" size quickly MATERIAL STORAGE SYSTEMWhen the fabrics comes from the mill it comes in the form of a • Roll • ThaanWhen the fabric reaches the store it is kept in various racks and palletsThe fabric for every style is kept together irrespective of their lots due to less space.A board above every stack of fabric gives the information about that particular style.The following information is conveyed by the boards: • Buyer name • Style number • Fabric type • Fabric content • Fabric description • Lengthwise and width wise elongationAlso, for knowing the status of the fabric stack in the store, the boards are coloredto denote their various status.When the fabric enters the fabric store, it is weighed and the entries are done for thefollowing according to the mentioned details on each roll: • Fabric code • Color • Yardage • No. of bills • Bin no. (place of storage known as Bin. Bin numbers are used for tracing generally racks in the case of small things like accessories or small segregated regions in case of fabric rolls). • Fabric store –bin cardIt tells us about the details of the fabric received by the store, to whom and howmuch is left with the store. It consists of the following details:Fabric count, code, construction, received meter, issued to, store balance
As you can see in the above picture there different color chart attached in front ofeach racks, these different color chart have different meaning.For knowing the status of the fabric stack in the store, the boards are colored todenote their availability.PINK - checked fabricRED - Rejected fabricYELLOW - inspected and passedBLUE - unchecked fabricGREEN - fabric yet to be checkedStorage in cutting departmentMaterial storage and packing in Dispatch departmentCartons details
Packing InstructionsThree types of Purchase orders: • Bulk with no pre-packs • Bulk with pre-packs • Packs by storeAll shipping cartons must be in accordance with the following carton size andweight requirements:Minimum: Weight 5 pounds, Length: 9“ - Height: 6“ - Width 4“Maximum: Weight 50 pounds, Length: 36“ - Height: 28“ - Width: 24“Packing instructions for Bulk Pack Orders (with pre pack): o A carton can only contain a unique pre-pack size. Cartons can contain as many of the unique style/color pre-pack size that will fit into a carton without exceeding carton dimensions. o Cartons shipped must be marked with the pre-pack detail/breakout printed on the shipping labels o Multiple Purchase Orders in the same carton should not be combined o All sets and coordinates with two items hung on interlaced hangers with one UPC must be packaged together, top/bottom on same hanger or bundled in a clear poly bag. o All related separates ordered as a set, must be sent in the same shipment with the same Bill of Landing and arrive on the same trailer/container.
o Pre-packs must be packaged in poly-bag and bundled as one unit.Master Packs: • Inner cartons/packages must be separate for each style, color, size and/or store • Each inner carton/package must include an UCC shipping container label. • Create a carton label with the required information (ship to, ship from, carrier info, PO#, and dept # and place on the outside of the master-pack)Additional Packing instructions given by the buyer to Orient Craft o Cover each garment with a clear, dry cleaning style plastic (1 mm) bag, to prevent wrinkling or soiling. Bag must be sealed at bottom. o Merchandise should be packed ’flat’, lengthwise in cartons. If the merchandise must be folded, use no more than one fold, at the bottom of the garment. o Bundle hangers with string, twine or rubber bands to prevent shifting (do not use metal or tape). o Place cardboard or tissue between alternating bundles if necessary, to prevent crushing and reduce shifting of contents. o Delicate items should be placed on top to prevent crushing. o If improper carton handling during transportation could cause wrinkling, use “THIS END UP” labeling on the carton. o Mark all fragile cartons with a fragile label.Use corrugated packing materials and a container that will prevent productmovement and breakage.Under the prevailing Packaged Commodity Act, six declarations are required tobe made on garment packing: • Size in centimetres • Name of the commodity • Units packed • Date of manufacturing • Maximum retail price • Name and address of the manufacturer.General Carton Requirements • Cartons must be made from re-shippable and recyclable corrugated cardboard. • Accessory cartons weighing more than 40 pounds must have double wall construction and minimum burst strength of 225 pounds.
• Accessory cartons weighing less than 40 pounds must have double wall construction and minimum burst strength of 175 pounds. • Garment cartons regardless of weight must have triple wall construction, and have a minimum burst strength of 275 lbs. • Carton sizes must be consistent for each PO – style. • Cartons cannot be more than 48 inches in length. • Cartons weighing 30lbs or less cannot be bigger than 84 inches in Length and girth. • Cartons weighing less than 49lbs cannot be bigger than 108 inches in Length and girth. • Cartons weighing 50 lbs cannot be bigger than 130 inches in Length and girth. • LENGTH and GIRTH : take the length + circumference of the carton. A carton that is 32”L x 23”W x 10.5” H. You would take the circumference 23 + 23 + 10.5 + 10.5 = 67” than add the length 32” + 67” = 99”Total length and girth for carton is 99”. • Cartons cannot be smaller then 12 inches long, 12 inches wide and 5 inches high. • DO NOT place strapping around carton, use staples to close carton, secure carton with wire, or wrap carton in burlap.Sample Cartons size to meet length + girth30lbs or less 30lb s or lessL W H Length + girth12 12 5 4612 12 12 6016 16 16 8020 20 12 8430 15 12 84
INVENTORY MANAGEMENTVendor managed inventory, coordinated by an integrated logistics system, allowsinventory to be optimised together with transportation. By knowing the productvalue as well as storage capacity at each site, and routinely collecting information onconsumption rate, current inventory levels, forecasted demand and status ofshipments, the system can optimise the right quantities of replenishments to be sentat the right time to ensure that service levels are maintained while minimising costof inventory and transportation.Inventory refers to all of the raw materials, work in process (WIP), and finishedgoods within the supply chain. Inventory policies can dramatically alter a supplychain’s efficiency and responsiveness. It can increase amount of demand that can bemet by increasing product availability. Inventory can reduce costs by exploitingeconomies of scale in production, transportation, and purchasing. It can be used tosupport a firm’s competitive strategy. More inventory increases responsiveness, lessinventory increases efficiency (reduces cost).Inventories are held in following general categories:- • Raw material and components • Work in progress • Finished goods • Maintenance and repairsInventory related costA major portion of the working capital of a firm is blocked in inventory. If theinventory in excess of the maximum level, more funds will blocked and it cannot beused for other productive purposes, resulting in opportunity loss. Hence, funds aretied up unnecessarily. There are other costs related to inventory. The incidence ofthose costs will also be more if inventories are in excess of the optimum level. • Inventory cost • Carrying cost • Ordering cost • Warehousing cost • Damage, pilferage, and obsolescence cost • Exchange rate differentialsI
nventory in orient craft is all the time quite high, because of its number of unit andeach unit doing so much of production. So they always require stock of rawmaterials, so that there might not be any scarcity of raw materials.Inventory management is very important department as the whole process dependson inventory the stock availability. There should a perfect balance between themaximum and minimum inventory that should be available in the store.In Orient Craft many styles are going simultaneously so the WIP in the floor is quitehigh and every day fabric is coming because every day the are getting new orders. Sothe inventory management department needs to be very careful and proactive whilehandling the inventory. Most of there fabrics comes from Surat and bhaddiOrient Craft inventory related cost:-All the ordering cost are taken care by Orient CraftInventory itself is a cost and Orient Craft makes a perfect balance between purchaseand requirements, so that the working capital does not get block. Which means theexporter might have problem in running the business smoothly, because workingcapital is very important in any business, without you cannot run your business.When the raw materials are imported from outside sometimes due to fluctuation ofthe rates orient craft bared some loses also, as deal is done in some other price andsuddenly the currency rate fluctuates. Such a situation is avoided by making all thenecessary terms and condition before the deal is made.Orient crafts inventory carrying cost goes up if they are buying more inventories.Because their main store is in 7P once the materials inhouse in 7P then further it isdistributed in other units, which is done by trucks which automatically increasesthe inventory carrying cost. Because while carrying inventory one unit to anotherthey need to give various challans, octroi etc. and sometimes they need to hire thetrucks also which adds on the carrying cost of the inventory.
It cost around (RS 500-1000) in one move of truck from unit to unit.Even within the unit also inventory carrying cost are there like orient craft havebrought many trolleys and when man power is used it is also add in the carryingcost of the material from one department to another.INVENTORY HOLDING COSTInventory holding cost is also another cost which comes under inventory.Everyday Orient Craft 7D unit is getting ample of inventory. And these inventoriesare kept in racks pallets, trolleys are used for movement of fabric. And Orient Craftneeds to buy these things which increase the inventory holding cost. Rather holdingmore inventory blocks a huge chunk of working capital.After that these racks and trolleys have some maintenance expense also which alsoadds in the total inventory cost itself. ACCESSORY PURCHASE DEPARTMENTOrient craft follows SAP analysisAs SAP say scarcity, available and plenty orient craft also follow the same procedurefor its inventory purchasing. Material which is in scarcity will be ordered first and soon.Store status:Merchandiser add the item which are required ratio wise and given to sourcingdepartment and make P.O accordingly for update and check quantity and 2 pcs. areproduced by them for calculating thread consumption for the particular piece. Thesetrims are sourced by import or export. After the process of matching trims, auditreport is prepared for further continuous procedure and trims are then ready toissue.They are managing there inventory with the help of ERP system. Enterprise resourceplanning is such a system in which we can track each and every activity one afteranother. And all the activities are related to each other in sequins. This means iffirst activity is not done we can’t do the second operation and further.
Orient Craft initially tried to implement SAP system in its unit but some how it couldnot work and that system was not successful in Orient Craft unit.Then after that they introduced the ERP system which is working very efficiently inall its units.ERP is a centralized planning system which allows the employees of different unit ofOrient Craft to work as a team and each and every individual can check any statusat any time.ERP system is very user friendly software. All the units of orient craft including theentire departments are using this software. And ERP system is Quite less Expensivethen SAP system. ERP SYSTEMLiterarily, ERP refers to Enterprise Resource Planning software. In general, ERP isan industry term for the broad set of activities supported by multi-moduleapplication software that help’s a manufacturer or other business, to manage theimportant parts of its business, including product planning, parts purchasing,maintaining inventories, interacting with suppliers, providing customer service, andtracking orders. Typically, an ERP system uses or is integrated with a relationaldatabase system. In practice, ERP does not live up to its acronym. It does not domuch about planning or resource planning. , ERP refers to Enterprise ResourcePlanning software. In general, ERP is an industry term for the broad set of activitiessupported by multi-module application software that help a manufacturer or otherbusiness manage the important parts of its business, including product planning,parts purchasing, maintaining inventories, interacting with suppliers, providingcustomer service, and tracking orders. Typically, an ERP system uses or isintegrated with a relational database system. In practice, ERP does not live up to itsacronym. It does not do much about planning or resource planningIt attempts to integrate all departments and functions across a company onto asingle computer system that can serve all those departments’ particular needs. Theintegration streamlines internal business processes and improves productivity of acompany.USE OF ERP:It attempts to integrate all departments and functions across a company onto asingle computer system that can serve all those departments’ particular needs. Theintegration streamlines internal business processes and improves productivity of acompany.ERP software offers the following benefits: 1. ERP integrates all aspects of the business processes including: manufacturing, design, customer services, financial, sales and distribution.
By integrating business processes and people anywhere in a company, one can enjoy more efficient work flow and improved productivity. 2. Nowadays, retailers and consumers push for lower prices, better quality and quicker delivery. ERP implementation shows the determination to head for those directions. 3. ERP provides the right information to the right people at the right time anywhere in the world, enabling one to improve productivity, enhance decision making and promote communication between co-workers, customers and vendors 4. For better ERP software, it helps to reduce or eliminate duplicate work, and automates operational tasks and provides easy access to information. ERP, therefore, can deliver significant time savings. 5. Advanced ERP software has the ability to be customized to the extent that screens can be remodelled, fields can be edited and the architecture modified through progressive installation processes. In addition, advanced ERP software can be operated in a secured, web-based environment. These features provide flexibility and convenience in implementation and operation. 6. Some multi-lingual ERP software can perform automatic translation enables almost every style detail to be viewed in several languages including English, Chinese, and etc. It improves the effectiveness of communication. 7. Manufacturing companies often find that multiple business units across the company make the same widget using different methods and computer systems. ERP standardizes the manufacturing processes and improve quality. 8. ERP helps business process flow more smoothly and improves the efficiency of fulfilment process. It leads to reduced inventory. Eventually, it decreases the overall business cost. 9. ERP Systems centralize the data in one place. This eliminates the problem of synchronising changes and can reduce the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure 10. Order tracking, from acceptance through fulfillment 11. Managing inter-dependencies of complex processes bill of materialsAt its simplest level, ERP provides a way to integrate all your business process. Toget the most from the software, one has to get people inside their company to adoptthe work methods outlined in the software. If the people do not agree with themethod and the system has no flexibility to be customized, ERP projects will befailed. Therefore, ERP software should be chosen wisely.ImplementationBusinesses have a wide scope of applications and processes throughout theirfunctional units; producing ERP software systems that are typically complex andusually impose significant changes on staff work practices. Implementing ERP
software is typically too complex for "in-house" skill, so it is desirable and highlyadvised to hire outside consultants who are professionally trained to implementthese systems. This is typically the most cost effective way. There are three types ofservices that may be employed for - Consulting, Customization, Support. The lengthof time to implement an ERP system depends on the size of the business, thenumber of modules, the extent of customization, the scope of the change and thewillingness of the customer to take ownership for the project. ERP systems aremodular, so they dont all need be implemented at once. It can be divided intovarious stages, or phase-ins. The typical project is about 14 months and requiresaround 150 consultants. A small project (e.g., a company of less than 100 staff) maybe planned and delivered within 3-9 months; however, a large, multi-site or multi-country implementation may take years. The length of the implementations isclosely tied to the amount of customization desired.The following are steps of a data migration strategy that can help with thesuccess of an ERP implementation: 1. Identifying the data to be migrated 2. Determining the timing of data migration 3. Generating the data templates 4. Freezing the tools for data migration 5. Deciding on migration related setups 6. Deciding on data archivingProcess preparationERP vendors have designed their systems around standard business processes,based upon best business practices. Different vendor(s) have different types ofprocesses but they are all of a standard, modular nature. Firms that want toimplement ERP systems are consequently forced to adapt their organizations tostandardized processes as opposed to adapting the ERP package to the existingprocesses. Neglecting to map current business processes prior to starting ERPimplementation is a main reason for failure of ERP projects. It is therefore crucialthat organizations perform a thorough business process analysis before selecting anERP vendor and setting off on the implementation track. This analysis should mapout all present operational processes, enabling selection of an ERP vendor whosestandard modules are most closely aligned with the established organization.Redesign can then be implemented to achieve further process congruence. Researchindicates that the risk of business process mismatch is decreased by: • linking each current organizational process to the organizations strategy; • analyzing the effectiveness of each process in light of its current related business capability; • understanding the automated solutions currently implemented.
TRANSPORTATION Modes and routes for moving inventory throughout the supply chain.Faster transportation allows a supply chain to be more responsive but generally lessefficient. Less than full truckloads allow a supply chain to be more responsive butgenerally less efficient. Transportation can be used to support a firm’s competitivestrategy. Customers may demand and be willing to pay for a high level ofresponsiveness.While supply chain design deals with the flow and stocking of goods, transportationoptimisation examines the shipment (flow) process itself. The typical transportationoptimiser will search for opportunities to aggregate compatible orders or splittingorders to fit the transportation media (e.g. containers), identify pooling points toconsolidate orders for long haul using larger & hence cheaper media and routing ofpick-up and drop-off orders to increase backhaul. The judicious use of or tooptimise shipment plan has been generating large savings in transportation. 10-35%reduction in freight expenses had been achieved through optimal aggregation/consolidation, multi-modal multi-leg carrier selection, rating and routing of freightorders.TRANSPORTATION DECISION: • Mode of transportation is the manner in which a product is moved (air, truck, rail, ship, pipeline, electronic). Each mode differs with respect to speed, size of shipments, cost, and flexibility. • Routes are paths along which a product can be shipped. • In house or outsource the transportation function. Many companies use third-party logistics providers (3PL) to perform some or all of their transportation activitiesOrient Craft have option of both there own trucks as well as the transporters truck.They have their own set up of trucks. They mostly use their own trucks when goodsare shifted from one unit to another, also sending these good to railway station andairports in Delhi itself.They usually use transporter trucks when the goods go out of Delhi.
Like Orients Crafts most of the export is done from Chennai and Mumbai. So whilecarrying the goods from Delhi to Mumbai or Delhi to Chennai Orient Craft usetransporter truck.Truck rate:- for one trip from Delhi to Mumbai the transporter charge them RS2500/- TRANSPORTATION SYSTEM AFTER EX FACTORY Freight rate criteria
Transit time • By road till Mumbai – normal approx 4 days Express approx 2 days • By train to Chennai - normal approx 4 days • By air to Chennai/ Mumbai – less then one dayFEW LOCAL SUPPLIERS WITH WHOM ORIENT DRAFT DEALS • OM LOGITICS • UNIVERSAL FREIGHT LOGISTICS • GRS CARGO • TIME LOGISTICS • CARAVAN CARRIERS • MUDITA MARKETING • GRS CARGOSEA FORWARDS WITH WHOM THEY USUALLY DEAL WITH • APL • NYK • EXPEDITORS • MAELSHAIR FORWARDS WITH WHOM THEY USUALLY DEAL WITH • EXPO FREIGHT • EXPEDITOR • VAN PARKERselecting or assessing transporter
• Transit time • Rate • Services • Discount • Extra servicesThese are some of the criteria according to which Orient Craft select the transporter.They take quotations from many transporters and then they do a market survey tocheck out the actual rates what is current. Then according to it they compare thebest prices rates and etc then select the best out of them which suits them.FORWADER are always nominated by the buyer. He always suggests theforwarder to the buyer.When the orient craft logistics department contacts with the buyer nominatedforwarder, the forwarder gives the booking number to orient craft and gives all thedetails of the vessel etcDocuments required • Certificate of origin • FOB • Commercial invoice • One cop of packing listThe process of booking to ex country takes place in 15 daysExample: o The forwarder will give the booking number o Forwarder gives book allotment number after 1,2 days. o Give vessel details o Do the custom clearance o They accept only quota invoice in ERP rest every thing.Normal rates in vessel for shipment - 70 to 85 dollar per /kg/cb/mtr
It depends on volume also. The larger the volume lesser the ratesFew of the containers used by orient craft are:-Hence transportation plays a very important role in the whole supply chainmanagement. LETTER OF CREDITA standard, commercial letter of credit is a document issued mostly by a financialinstitution, used primarily in trade finance, which usually provides an irrevocablepayment undertaking. A letter, usually from a bank, requesting a person orcompany to extend credit to a certain person or company and guaranteeingpayment. Most commonly used in the purchase of good from another country. Theletter may be revocable or irrevocable, but most parties insist on the irrevocable.
Letter of credit is a document issued by a bank that guarantees the payment of acustomers draft; substitutes the banks credit for the customers credit. It is adocument, issued by a bank per instructions by a buyer of goods, authorizing theseller to draw a specified sum of money under specified terms, usually the receipt bythe bank of certain documents within a given time.A commitment by a bank or other person, made at the request of a customer, thatthe issuer will honour drafts or other demands for payment upon full compliancewith the conditions specified in the letter of credit.Conditional bank commitment issued on behalf of a customer to pay a third party inaccordance with certain terms and conditions. The two primary types arecommercial letters of credit and standby letters of credit.It is an instrument or document issued by a bank guaranteeing debt holderpayment by enabling the bond trustee to draw from the bank the full amount ofprincipal and interest due on each debt payment date.A financial instrument, issued to a company or person by a bank that substitutesthe bank’s credit for the company’s credit.The LC can also be the source of payment for a transaction, meaning that redeemingthe letter of credit will pay an exporter. Letters of credit are used primarilyin international trade transactions of significant value, for deals between a supplierin one country and a customer in another. They are also used in the landdevelopment process to ensure that approved public facilities (streets, sidewalks,storm-water ponds, etc.) will be built. The parties to a letter of credit are usually abeneficiary who is to receive the money, the issuing bank of whom the applicant is aclient, and the advising bank of whom the beneficiary is a client. Almost all letters ofcredit are irrevocable, i.e., cannot be amended or canceled without prior agreementof the beneficiary, the issuing bank and the confirming bank, if any. Typically, thedocuments a beneficiary has to present in order to receive payment includea commercial invoice, bill of lading, and documents proving the shipment wasinsured against loss or damage in transit. However, the list and form of documentsis open to imagination and negotiation and might contain requirements to presentdocuments issued by a neutral third party evidencing the quality of the goodsshipped, or their place of origin.Orient craft is such a huge export house that it deal with many buyer at the sametime. So different buyers have their different terms and condition for letter of credit.And in such case Orient Craft needs to pay some attention in the documentation ofletter of credit.
In HSBC letter of credit following things are there :- • Documentary credit number - I00406005 • Amount - USD 38,025.85 • Issuing bank - BANK OF NEW YORK MELLON UNITED STATES HEAD OFFICE NEW YORK • Applicant - QVC, INC. The bank debit the account • COMMISSION INR 500.00 • SERVICE TAX INR 60.00 • EDUCATION CESS INR 1.00 • TOTAL INR 561.80In accordance with the version of the CPU RULES ( issued by the ICC) as specified inthe credit, we have advised, having received the following authenticatedteletransmission from the BANK OF NEW YORK MELLONSEQ OF TOTAL: 1/3FORM OF DC: IRREVOCABLE TRANSFERABLEDC NO: I00406005DATE OF ISSUE: 06JAN09EXPIRY DATE AND PLACE: 21MAR09 NEGOCIATING BANKAPPLICANT: QVC, INC. 1200 WILSON DRIVE WEST CHESTER, PA 19380BENEFICIARY: ORIENT CRAFT LTD 7-D SECTOR 18, MARUTI INDUSTRIAL COMPLEX GURGAON, HARAYANA, INDIADC AMT: USD38025.85ADDITIONAL AMTS COVERED: WITH IN 5 VARIENCEAVAILALE WITH/ BY: ANY BANK BY NEGOTIATION
DRAFTS AT: SIGHTPARTIAL SHIPMENTS: NOT ALLOWEDTRANSHIPMENT SHIPMENT: NOT ALLOWEDTAKE CHARGES/RECEIPT/DISP FM:CHENNAI,NHAVA SHEVA,CLCUTTA OR COCHIN, INDIAFINAL DEST/DELIVERY/TRANSPORT TO:US PORT DESIGNATED BY FORWARDERSHIPMENT PERIOD: LATEST SHIPMENT DATE- 09/02/28CONFIRMATION INSTRUCTION: WITHOUTGOODS DETAILITEM NO SKU SKN QVC PO QUANTITY UNIT PRICEORIENT CRAFT CREDIT LIMITS30-45 days amount no limit of amount (continuous basis)Only one time transaction ( 20-30 lakh)LC terms of payment • at sight • 60 days • 90 days • 120 daysNote- now days LETTER OF CREDITs are not iN USE NOW the buyer pay either t/ttelex transfer or open accountAll the details of the goods will be there in the letter of credit.SHIPPING TERMS: FOB CHENNAI, NHAVA SHEVA, CALCUTTA OR COCHIN,INDIADOCUMENTS REQUIRED: • Commercial invoice including the manufacturers NAMES, ADDRESS • One copy of packing list with all the size ratio and cartons dimentios. • One original copy of forwarders cargo receipt issued to QVC.inc. • One copy of the country of origin declaration.
• One copy of signed or stamped inspection or survey certificate from: any branch of intertek testing lab.Original bill of credit is attached as an enclosure. BILL OF EXCHANGEA non-interest-bearing written order used primarily in international trade that bindsone party to pay a fixed sum of money to another party at a predetermined futuredate.Bills of exchange are similar to checks and promissory notes. They can be drawn byindividuals or banks and are generally transferable by endorsements. The differencebetween a promissory note and a bill of exchange is that this product is transferableand can bind one party to pay a third party that was not involved in its creation. Ifthese bills are issued by a bank, they can be referred to as bank drafts. If they areissued by individuals, they can be referred to as trade drafts.A written order from one person (the payor) to another, signed by the person givingit, requiring the person to whom it is addressed to pay on demand or at some fixedfuture date, a certain sum of money, to either the person identified as payee or toany person presenting the bill of exchange.