bharat 024 report

Transportation of Third Party Logistics in India
BHARAT Summer Internship Report in Hansol Logistics India Pvt. Ltd 2015 Page 1
PROJECT REPORT
ON
“TRANSPORTATION OF 3PL IN INDIA”
For
“HANSOL LOGISTICS INDIA PVT. LTD.”
IN PARTIAL FULFILLMENT OF THE AWARD FOR THE DEGREE OF
POST GRADUATION DIPLOMA IN MANAGEMENT
UNDER THE GUIDANCE OF
Prof.Gaurav Gupta
IBA Greater Noida
&
Mr.Sumir Johar
Head of Operations & SCM (Hansol Logistics India Pvt. Ltd)
Submitted by
(BHARAT SAMAVEDAM)
Enrollment No.: FPCG1416/024
P.G.D.M – SEMESTER III
Management Trainee at Hansol Logistics India
INDUS BUSINESS ACADEMY GREATER NOIDA

TABLE OF CONTENTS:
ACRONYMS AND ABBREVIATIONS: ..............................................................................6
STATEMENT BY AUTHOR: ................................................................................................7
ACKNOWLEDGEMENTS: ...................................................................................................8
ABSTRACT............................................................................................................................10
1- INTRODUCTION:.........................................................................................................12
1.1 History of Hansol Group:................................................................................................12
1.2 India Branch overview: ...................................................................................................13
a) Vision of the company: ...............................................................................................13
1.3 Different Departments:....................................................................................................14
1.4 Hansol Presence in India:...............................................................................................16
2- PURPOSE: ......................................................................................................................17
2.1 Supply Chain Management (SCM):...............................................................................17
2.2 Third Party Logistics (3PL):...........................................................................................18
2.2.1 The Layers of Logistics Services:.............................................................................18
2.2.2 Main Core competencies of a Third Party Logistics Provider: ............................20
2.2.3 Advantages:................................................................................................................20
2.2.4 Possible disadvantage of 3PL:..................................................................................21
2.3 Implementation issues and requirements of 3PL collaboration:................................ 21
2.4 Important issues to think about, before contracting with a 3PL provider: ...............22
2.5 Implementation issues:....................................................................................................22
2.5.1 Necessary guidelines:…………………………………………………………….23
2.6 Motivation and aims of 3pL collaboration: ...................................................................24
2.7 Tradeoffs of Inventory: .................................................................................................244
a) The product variety-inventory tradeoff:.............................................................254
b) The lot size-inventory tradeoff:..............................................................................24
c) The transportation cost-inventory tradeoff:.........................................................24
2.8Types of Inventory:.........................................................................................................255
a) Cycle Inventory: ......................................................................................................25
b) Buffer or Safety stock Inventory: ..........................................................................25
c) Anticipation Inventory: ..........................................................................................25
d) Pipeline Inventory:..................................................................................................25
2.9 The basic functions of warehouse:............................................................................288

2.10 Types of Warehouse:..................................................................................................28
a) Public Warehouse:..................................................................................................28
a) Contract Warehouse:..............................................................................................28
2.11Warehouse Layout:.........................................................................................................29
2.12 Warehouse Management System (WMS):...................................................................30
3- TRANSPORTATION: ...................................................................................................31
3.1 Vehicles of transport:…………………………………………………………………...33
3.2 Trade Rotes:……………………………………………………………………………..34
3.3 Port & Terminal facilities:……………………………………………………………...34
3.4 Turn Around Time:…………………………………………………………………….35
3.5 Transit time and cost:…………………………………………………………………. 35
3.6 Nature of Cargo:………………………………………………………………………..35
3.7 Information Monitoring:……………………………………………………………….36
3.8 Choice mode of Transport:……………………………………………………………. 36
3.9 Transporter Details:……………………………………………………………….........37
4- RESEARCH OBJECTIVE:...........................................................................................43
5. RESEARCH METHODOLOGY:....................................................................................45
a) Warehouse details:.........................................................................................................45
b) Manpower details:.......................................................................................................45
c) Ghaziabad D.C Warehouse Layout: .........................................................................46
d) Location labeling on the warehouse floor: (Bins).................................................46
e) Zone Identification:.................................................................................................47
f) Rack identification ..................................................................................................48
5.1Warehouse Management Systems (WMS):....................................................................50
5.2 Warehouse Management Activities: ..............................................................................50
a) Packing stock management:..........................................................................................50
b) Packing / repacking / packing box mgmt. / system conversion etc.: ......................51
Packing / re-packing activities to be done in the supervision of return management
person. He also ensure that the physical conversion accompanies a systemconversion
and a signed off document.................................................................................................51
c) Repairable inventory management:..........................................................................51

d) nCategory stock management: ..................................................................................51
e) Non repairable stock management Scrapping / scrap sale / write off: ..................51
f) Value added activities:................................................................................................51
Other value added services at the warehouse are supporting re-work activities,
snickering, pallatization & bundling etc… Depending on the company requirement
these things needs to be undertaken under the supervision of RLM and Hansol
logistics. ...............................................................................................................................51
g) Sample goods management:.......................................................................................51
5.3 Inbound Management: ....................................................................................................52
a) Resource planning.......................................................................................................53
b) Vehicle reporting.........................................................................................................53
c) Unloading/ Segregation/ Inspection: .........................................................................53
d) Inspection and segregation of goods: ........................................................................54
e) Location management ................................................................................................54
g) Goods stacking ............................................................................................................55
h) Goods Receipt in system.............................................................................................55
j) Insurance claim:..........................................................................................................55
5.4 Order Cycle management at GZD D.C: ........................................................................56
a) Warehouse Order Processing Time: ............................................................................56
b) Order Execution Planning: ........................................................................................57
c) RDD: Requested delivery Date:.................................................................................58
d) Lead time management ..............................................................................................58
e) Customer delivery appointment / delivery confirmation- only for special cases:.58
f) Order rejection logics:................................................................................................58
g) OD follow up & updation:..........................................................................................58
h) POD follow up / collection & updation:....................................................................59
i) Urgent delivery orders (exception):...........................................................................59
j) Order processing & pick list generation:..................................................................59
a) Material picking assignment & labor management: ...............................................59
b) Additional labor for peak days / month end etc.: ....................................................59

W/h manager should work out the requirement of additional labour force required
for peak days / month end in advance..............................................................................59
c) Picking & scanning:....................................................................................................59
d) Work monitoring / handling / loading to vehicle:....................................................60
f) Goods Issue and Invoice generation:.........................................................................61
Once loading is completed, warehouse needs to:.............................................................61
5.5 Outbound Management: ...............................................................................................641
5.6 KPI FOR OPERATIONS: ..............................................................................................62
6. RETURNS MANEGEMENT ...........................................................................................63
a) Commercial Returns: .................................................................................................63
b) Technical Returns:......................................................................................................63
f) Different damage reasons...........................................................................................64
6.1 Housekeeping and Maintenance Plan:...........................................................................64
a) Cleaning:......................................................................................................................66
b) Hygienic environment: ...............................................................................................65
c) BIN accuracy:..............................................................................................................67
d) Visibility of displays:...................................................................................................65
7- DATA ANALYSIS & INTREPRETATION:...............................................................73
8- RESULTS DISCUSSIONS AND CONCLUSION: .....................................................73
9- RECOMMENDATIONS & IMPLEMENTATION:...................................................76
APPENDIX B: REFERENCE AND BIBLIOGRAPHY....................................................89
APPENDIX C: LEARNING FROM THE STUDY............................................................90

Acronyms & Abbrevations :
AV/HA Audio Visual & home Appliances
B2B Business to Business
DC Distribution Center
TR Technical Report
DO Delivery Order
FIFO First In First Out
GI On-time Goods Issued
GR On-time Good Receipts
GRMS Global Return Management System
PO Purchase Order
WMS Warehouse Management System
MR Modern Retail
MRP Material Requirement Planning
ILS Integrated Logistics System
SOP Standard Operating Process
SAP Systeme Anwendungen Produkte (German spelling)
W/H Warehouse
SIEL Samsung India Electronics Limited
3PL Third Party Logistics
KPI Key Performance Indicators
HO Hansol
LT Lead Time
MOQ Minimum Ordered Quantity
POD Proof of Delivery
RDD Requested Delivery Date
IOD Information Of Delivery
RDC Regional Distribution Center
GZB Ghaziabad
HHP Hand Held Product
ZPOP Promotional Products
HME Health and Medical Equipments
SCM Supply Chain Management
Qty Quantity
HQ Headquarters
JIT Just-In-Time
EOQ Economic Order Quantity
SKU Stock Keeping Units
OTRQ On-Time Return Quantity

STATEMENT BY AUTHOR:
This project has been submitted in partial fulfillment of requirements for an advanced degree
at INDUS BUSINESS ACADEMY GREATER NOIDA and is deposited in the college Library
to be made available to borrowers under rules of the Library. Brief quotations from this
dissertation are allowable without special permission, provided that accurate acknowledgment
of source is made. Requests for permission for extended quotation from or reproduction of this
manuscript in whole or in part may be granted by the copyright holder
SIGNED: ………………………. Bharat Samavedam
June 2015, Gurgaon (India)

ACKNOWLEDGEMENTS:
First of all, I would like to thank my Lord for the strength, intelligence, science, wisdom and
health during the writing of this report. Especially my Mentor and faculty Professor Mr.
Gaurav Gupta for his guidance and support throughout the project tenure.
I would like to take this opportunity and thank Mr. Seong Myung Gil- Managing Director &
Mr. Ju Young Min – Chief Financial Officer who gave me the opportunity to carry out my
Internship Project. Especially my supervisors, Sumir Johar - Head of Operations department
and Mr. Suresh chandola – Operations support they have assisted me throughout this work
and always taken the time to discuss different matters and given me important input and
guidance. Nevertheless I would also like to express my Gratitude to Mr. Amol Sapra – Head
Human Resources & Mr. Balbir Sharma – Head Finance, without your devotion this report
would have not been what it is today. We are also grateful for all the support and information
that my fellow interns have given me throughout this work, thanks guys!
Bharat samavedam…………………………
Date:

DEDICATION
Commitment, effort, and dedication were fundamental elements for the
completion of my report, but even more was the support of my family.
today I dedicate them this important academic achievement because
without their support and comprehension I would have not achieved my
goal of doing PGDM program.

ABSTRACT :
Transportation is a key element in the infrastructure. It provides services essential for
promoting development. It plays a significant role in influencing the pattern of distribution
of economic activity and improving productivity. It acts as a life-line linking markets,
educational and health institutions. Above all, it connects the mosaic of cities, towns &
villages of this vast country, thereby underpinning its unity and integration. The transport
system comprises a number of modes. The capacity of each has to be developed to meet its
specific demand within the requirements of the transport system as a whole. The system
has to be viewed at each step as an integrated structure, keeping in mind the relationship
between different transport services. In spite of impressive achievements in the last 65
years, our transport system remains deficient in several respects. Worldwide transport
growth has been consistently higher than the economic growth due to specialization,
sourcing of material on a wider scale, the use of just-in-time strategies, further increase and
dispersal of retail and wholesale activities etc. Prices of transport services have been falling
as a result of increased productivity due to competition among suppliers of transport
services as well as pressure from users who face relentless pressure from global competition
in their own markets. The liberalization of our economy has brought home the urgency of
recognizing that an efficient transportation system is necessary for increasing productivity
and enabling the country to compete effectively in the world market. Adequacy and
reliability of transport infrastructure and services are important factors, which contribute
towards the ability of the country to compete in the field of international trade and attract
foreign direct investment. The Government cannot but play a role in this sphere. Even in a
market economy, the framework that national governments provide for the transport sector
largely determines the level of cost and transport operations. It is, therefore, necessary to
create a policy environment that encourages competitive pricing and coordination between
alternative modes in order to provide an integrated transport system that assures the
mobility of goods and people at maximum efficiency and minimum cost. It is with this
objective in view that the Integrated Transport Policy document has been prepared.
Transport system in India comprises a number of distinct modes and services, notably
railways, roads, road transport, ports, inland water transport, coastal shipping, airports and
airlines. Railways and roads are the dominant means of transport carrying more than 95% of
total traffic generated in the country. Although other modes like coastal shipping and inland

water transport would play a greater role, the railways and roads would continue to dominate
the transport landscape in the foreseeable future. For purposes of policy planning, the transport
system must be viewed as an integrated structure in which various modes complement each
other, interface appropriately and where possible provide healthy competition to each other.
This competition must be conducted within the framework in which each mode is able to
operate on a “level playing field” so that in comparative advantages and economic efficiencies
are properly reflected in the costs to the users.
India’s transport sector is large and diverse; it caters to the needs of 1.1 billion people.
In 2007, the sector contributed about 5.5 percent to the nation’s GDP, with road transportation
contributing the lion’s share. Good physical connectivity in the urban and rural areas is
essential for economic growth. Since the early 1990s, India’s growing economy has witnessed
a rise in demand for transport infrastructure and services.
Indian Railways is one of the largest railways under single management. It carries some
17 million passengers and 2 million tons of freight a day in year 2007 and is one of the
world’s largest employers. The railways play a leading role in carrying passengers and cargo
across India’s vast territory. However, most of its major corridors have capacity constraint
requiring capacity enhancement plans

The first part starts with an introduction about the whole
company, the description of departments, and background of the
study. Furthermore it gives an explanation of the problems faced
by GZD D.C. Then follow the research questions, the purpose of
the paper, and the literature review.

1- INTRODUCTION:
Chapter 1 starts with an introduction of the company, description of departments, and company
operations and background of the study.Furthermore it gives an explanation of the problems faced by
GZD D.C. Then follow the research questions and purpose of this thesis. The chapter ends with the
delimitation of this study and the outline of following chapters.
1.1 History of Hansol Group:
Hansol group is a South Korean Conglomerate founded in 1965 with its headquarters in Jung-
gu, Seoul, SCA, South Korea. Their main operations are construction, electronics, tourism,
chemicals, household interiors, paper products, telecom, and logistics. Hansol to be a part of
Samsung group, and is still owned by one of the relatives of Samsung and Shinsegae family.
1.2 India Branch overview:
Hansol Logistics India Pvt. Ltd. is a Korean pioneer of third party logistics (3PL) services in
India. The company first entered in the Indian market in September 2008. In October 2009 the
Managing Director of Indian Branch joined the company. In June 2009 the company started
warehousing services in Ludhiana and Chandigarh. In May 2009, they started warehousing
service in Delhi and started the same warehousing in Lucknow and Jaipur in January 2009.
Their service solutions are designated to provide end to end supply chain solutions to a wide
spectrum of industry segments. Their main areas of interest are:
 Distribution & Last mile fulfilment (Primary transportation, Secondary Transportation,
Reverse logistics, Home/E-delivery, Inland transportation, Last mile delivery…)
 International freight forwarding ( Air freight, ocean freight, and brokerage solutions) ;
 Value added services (Pick & Pack, Packaging & Labelling, Distribution,
Warehousing, and Transportation management);
 They also satisfy logistical requirements of the company such as network design /
consultancy, inventory management, distribution management, Inventory optimization
and advanced communication solutions, etc.

a) Vision of the company:
Their vision is “Leaping to become the SCM partner growing with customers by staying at the
center of logistics of client value with evergreen mindset and challenging spirit.”
b) Core Values:
c) Slogan:
“The Best SCM Partner Growing with Customers”
d) Logo:
Total Number of Employees: 446 HQ (Global 146 included.)
Homepage: http://www.hansolcsn.com/eng/
1.3 Different Departments:
At the top we have the Managing Director Mr. Myung Gil Seong; his role is to coordinate the
overall operations of Hansol India. There are three business units:
Customer Driven Globalization
Speed Innovation
Our core
values

Sales and Strategy, Mr. Aju, this business unit handle international freight forwarding,
transportation and last mile fulfilment.
Operations Dpt. Mr. Sumir Johar, this department is mainly into warehouses management;
And Chief Financial Officer Mr. Ju Young Min, this business unit is divided into:
a) Finance Dpt. Mr. Balbir Sharma, this department takes the responsibility for
organising the financial and accounting affairs including acquiring and managing funds
for the company.
a) Human Resources Dpt. The Department is responsible for hiring members of staff and
ensuring that they perform to expectation.
b) Innovation Mr. Ju Young Min, their task is to identifying and implements new ways
of doing business in order to stay competitive in the market and gain further market
share. (See the Organizational Chart below.)
c) Organizational Chart
Managing
Director
OperationsSales & Strategy CFO
W/H Operations
Bihar
Freight
Forwarding
Transportation
PAN India PAN India
HRM Finance Innovation
UP Delhi Rajasthan PUN HP Uttarakhand
Patna LKO GZD DEL JAI LUD CHD PWN DDN
HeadOffice

1.4 Hansol Presencein India:
Hansol Logistics India Pvt. Ltd. has extended its operation in all of the four regions of India as
shown in the table below.
North India South India West India East India
Chandigarh
Delhi
Dehradun
Jaipur
Lucknow
Ludhiana
Greater Noida
Parwanoo
Chennai Mumbai
Pune
Nagpur
Wardha
Surat
Ahmedabad
Kolkata
Patna
Table 1: Hansol presence in India, Source: own prepared
.

2. Purpose:
The Purpose of this project is to:
 Identify different warehouse management policies and procedures, basic principles of
warehouse and inventory management to implement in GZD D.C.;
 Understand how to select and set-up a warehouse
 Determining storage requirements
 Understand Warehouse Preparation Planning and Managing Transport management
 Identify the effects of logistics and supply chain management practices and how it can
be utilized to gain a competitive advantage; etc…
This internship project will focus much more on warehouse management issues such
as Transportation management. Why these questions are important, because most of the
3PL providers such as Hansol India consider warehousing as one of the most important
and critical function of SCM. A good Transport management can positively impact the
performance of the company. Furthermore, it can prevent events such as bullwhip
effect, shipment damages and key performance indicators failure, etc.
2.1 Supply Chain Management(SCM):
“Supply chain management is the synchronization of a firm’s processes with those of its
suppliers and customers to match the flow of materials, services, and information with
customer demand” Krajewski, Ritzman, Malhotra & Srivastava, 2010. The term “supply chain
management” first used by consultants in the late 1980s and then analyzed by the academic
community in the 1990s, has become a popular buzzword (Burt, Dobler & Starling, 2003).
Supply chain management includes the link between upstream (such as supply and
manufacturing), and downstream (such as logistics and distribution) value chain entities.
Successful supply chain management requires the integration of these value chain entities to
create cooperative and collaborative environments that facilitate information exchanges,
materials and cash flows (Kukalis, 1989).

Figure 1: an example of supply chain process, source: google.com (fundamental of SCM)
2.2 Third Party Logistics (3PL):
Third party supply of logistics related operations between traders by an independent
organization. Third Party Logistics is the activity of outsourcing activities related to Logistics
and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the
shippers whose business processes they support.
2.2.1 The Layers of Logistics Services:
There are four main interrelated layers of logistics services that involve increasing levels of
service and supply chain integration:
a) First Party Logistics (1PL): Concerns beneficial cargo owners which can be the
shipper (such as a manufacturing firm delivering to customers) or the consignee (such
as a retailer picking up cargo from a supplier). They dictate the origin (supply) and the
destination (demand) of the cargo with distribution being an entirely internal process
assumed by the firm. With globalization and the related outsourcing and offshoring of
manufacturing, distribution services that used to be assumed internally tend be
contracted to external service providers.
b) Second Party Logistics (2PL): It concerns the carriers that are providing a transport
service over a specific segment of a transport chain. It could involve a maritime

shipping company, a rail operator or a trucking company that are hired to haul cargo
from an origin (e.g. a distribution center) to a destination (e.g. a port terminal).
c) Third Party Logistics (3PL): Concerns freight forwarders that could have stakes in a
specific transport segment and its physical assets, but who are offering comprehensive
freight distribution services along transport chains. These services can involve
warehousing, transloading, terminal operations and even forms of light manufacturing
such as packaging and labeling. A 3PL thus tries to organize the tasks related to physical
distribution, so that parts and finished goods can be carried from their origin to their
destination.
d) Fourth Party Logistics (4PL):
It concerns commonly independent and neutral actors such as specialized consulting firms that
are organizing and managing complete supply chains strategies for their customers. They can
be involved in outsourcing decisions, supplier selection and the routing of cargo to support
supply chain management. This often involves agreements (subcontracting) with 3PLs and
2PLs.
Several firms, many global in scope, offer a variety of services spanning 2PL, 3PL and 4PL
layers. About 75% of all 3PL firms are also offering 4PL services.
Figure 2: Layers of logistics services, Source: The geography of transport system, 2014.

2.2.2 Main Core competencies of a Third Party Logistics Provider:
Figure: 3 Core competencies of 3PLs
2.2.3 Advantages of 3PL
1. Cost and time savings for the client
As logistics is the core competence of third party logistics providers. They possess better
know how and a greater expertise as any producing or selling company could be able. This
know how together with the global networks of the often large company size enables a higher
time and cost efficiency. Another point is, that the equipment and the IT systems of 3PL
providers are constantly updated and adapted to new requirement of their customers, so that
they are able to meet the requirements of their customer’s suppliers. And that is more than
essential to a company’s survival. Producing or selling companies often do not have the time,
resources or expertise to adapt their equipment and systems as quickly as necessary. So in
conclusion a 3PL provider can meet the technical requirements in a faster and more cost
efficient way than a company could do itself.
2. Low capital commitment
Thus the fact that most or all operative functions are outsourced to a 3PL provider there is no
need for the client to hold own warehouses or transport assets. There is very less or no tied up
logistics capital. This is very beneficial if a company has high deviations in warehouse

capacity utilization, because a bad capacity utilization ratio at equal fix cost (for warehouse)
is evil for a company’s efficiency and profits.
3. Ability of client to focus on core business
The outsourcing of logistics departments permits the company to focus even more on their
real core business. If logistics is one of the firms’ core businesses then outsourcing doesn’t
make sense. But if logistics is no core competency but rather needed or annoying attachment
it should be outsourced to a logistics provider, because the continuous increasing of business
complexity makes it impossible to be an expert in every division or sector.[4] And if you are
no expert in a division, there is always the opportunity to improve. Often only the core
competency is really adding value to your product. So it is immense important to be best in
class or one of the market leaders to generate profits, because normally the quality of the core
product is the main (not the only, but the main!) reason for the consumer to buy it.
4. 3PLs provide flexibility
Third party logistics provider can provide a much higher flexibility in geographic aspects and
can offer a much larger variety of services than the clients could provider their selves. In
addition to that, the client gets flexibility in resources and workforce size and logistics fix
costs turn into variable costs.
2.2.4 Possible disadvantage of 3PL
The only big disadvantage (if you see it as one) is the loss of control a client has by working
with third party logistics. Eminently in outbound logistics when the 3PL provider completely
assumes the communication and interacting with a firms customer or supplier. By having a
good and continuous communication with their clients most 3PL’s counter and try to charm
away such doubts. Some 3PL’s even paint the clients logos on their assets and vest their
employees like the clients ones.
2.3 Implementation issues and requirements of 3PL collaboration
Due to the fact that a 3PL to client collaboration is a typical strategic alliance, as the author
mentioned earlier in this thesis, there will be an introduction of problem areas in the practical
implementation of strategic alliances. This points are important for a successful strategic
alliance. If they aren’t fulfilled or only badly, this will lead to immense problems. And these

problems will be even more serious in the development of a strategic alliance than in a
company’s daily routine, because damaged faith in respect to the benefits and success of such
an alliance is deadly and destructive for change motivation of all people involved.
2.4 Important issues to think about, before contracting with a 3PL provider
First you have to know about your own logistics costs. Because only if you know exactly
your own costs you can compare it to the costs of à logistics provider. Often it is useful to
know the direct costs of each product and service, because sometime it makes sense to
outsource only some parts of the logistics and leave some products or operating steps
untouched because the in-house logistics is able to do better or cheaper than an external
provider.[8] Another important point is the customer orientation of the 3PL provider. The
provider has to fit to the structures and the requirements of the company. This fit is more
important than the pure cost savings, like a survey of 3Pl providers shows clearly: The
customer orientation in form of adaptability to changing customer needs, reliability and the
flexibility of third party logistics provider were mentioned as much more important than pure
cost savings.
Closely entangled together with the point of customer orientation is the point of a 3PL’s
specialization. The special requirements of the own company should be flow into the decision
which 3PL is the right one to choose. Experts often suggest firms to choose 3Pl providers
with roots in the same area of logistics as the department that shall be outsourced.
Furthermore it is worth to discuss if the company wants an asset-owning or a non-asset-
owning 3PL Provider. 3PL provider without own assets are called lead logistics providers.
Lead logistics provider have the advantage that they have specialized industry expertise
combined with low overhead costs, but lower negotiation power and less resources than a
third party provider has, based on a normally big company size, a good customer base and
established network systems. But 3Pl providers tend to shed clients efficiency consciously by
preferring their own assets in order to maximize their own efficiency. In addition to that third
party logistics provider often are bureaucratic and have long decision making cycles caused
by the size of the company.

2.5 Implementation issues
If a company gets the result that it wants to implement a third party logistics provider into their
processes, it has to work on the following implementation issues. These are points a company
that is purchasing the third party logistics services, has to fulfill.
The startup phase of such a strategic alliance is the most difficult and most critical phase. For
implementation considerations there has to be planned a time frame of between six months
and a year! Otherwise you risk quality and reliability losses. The client company has to
clearly identify their needs and expectations to the 3PL exactly to avoid misunderstandings
and disaffections due to miscommunications. Performance measure has to be set. Concrete
guidelines are necessary.
2.5.1 Necessary guidelines:
 Aims and methods for target achievement have to be set
 Milestones for important actions of the alliance project have to be set
 Actions for encouragement of strengths on the one hand and methods for compensation
of weaknesses have to be planned
 Concept for the integration of alliance partners have to be developed
 Critical parts of the contract have to be discussed and a for both sides responsible
agreement have to be found
 A time frame of the contract has to be given.
Both parties, provider and client, must concentrate on the aim of a good collaboration concept
with mutual beneficial. Otherwise if there is no win-win situation one party suffers and
reduce its efforts.[ Just as important as the good communication between client and provider
is the communication within the workforce and employees and not only within the managers’
level. In the best case the communication is informative, motivating and anticipatory. The
integration of employees should have highest priority! To avoid incertitude of employees,
customers and business partners’ changes in respect to structures and reliabilities have to be
communicated internal and external as early as possible. Good communication is essential
within such a project, employees want to know why a company is outsourcing and what the

expectations of this step are.Upcoming fear in respect to employee reduction have to be faced
within the different departments in an early stage, if there is none, because fear of losing
one’s livelihood is paralyzing the working morale. The employees should be motivated and
mobilized to an active cooperation by understanding the change as a chance.
2.6 Motivation and aims of 3PL collaborations
The first point reported about now, is instantly the most stimulating and propulsive reason for
shippers and companies to commit their selves into strategic alliance collaborations with third
party logistics providers.
Often companies, equal what size they have, aren’t able to improve their market position, as
fast as the hard concurrency and competition in the national and international business
requires, alone. Or if they are able this fast adaption to the market requirements would cause
immense and disproportional costs. So the companies try to get their logistics more efficient
and costs economic by working together with third party logistics provider that have the size,
the experience and the know-how to make the clients supply chain more cost efficient, more
flexible and more profitable ( see also the advantages of 3PL in chapter .The 2014 annual
Third Party Logistics Study (subtitle: The State of Logistics Outsourcing) of Capgemini
investigated, that third party logistics clients have an average logistics cost reduction of 11%,
an average inventory cost reduction of 6%, and an average fixed logistics cost reduction of
even 23% by outsourcing their logistics to 3PL providers. Another important point for
shipper is, that their fill rates and their order accuracy increase what is really important within
the hard competition to satisfy, in special the challenging, but also the general customer
.
2.7 Tradeoffs of Inventory:
As far the performance measurement of a supply chain is concerned, various parameters should
be taken into consideration to insure the tradeoffs in SCM. In fact tradeoffs are considered as
conflicting goals in Supply Chain Management. According to Simchi-Levi et al. (2004) there
are three tradeoffs in inventory management:
(a) The product variety-inventory tradeoff;
(b) The lot size-inventory tradeoff;

(c) The transportation cost-inventory tradeoff.
a) The product variety-inventory tradeoff:
It is obvious that product variety creates more complexity in SCM. The difficulty in accurate
forecasting of each type of product requires higher aggregate inventory levels to ensure the
same customer service level. According to (Simchi-Levi et al., 2004), the major challenge that
needs to be addressed for a firm supplying a variety of products is how to effectively match
supply and demand for each type of product.
Due to financial constraints, suppliers always pursue lower inventory levels to avoid high
inventory holding cost. And as far the increase in total sales volume is concerned, they are
under temptation to increase product variety also. But it is obvious that when the product
variety increases, inventory levels increase as well, therefore the effect on sales is offset to
some extent by the increase in inventory levels.
b) The lot size-inventory tradeoff:
The ideal scenario for manufacturers is to have large lot sizes that helps reduce setup costs per
unit, in fact, typical demand always does not come in large lot sizes, therefore large lot sizes
lead to high inventory, i.e. the larger is the lot size, and the higher is the inventory level (Simchi-
Levi et al., 2004).
c) The transportation cost-inventory tradeoff:
Transportation costs can be reduced through full loads. Costs can be spread among the largest
possible volume of products. Therefore, high inventory costs may often arise because products
delivered in full loads have to wait for longer periods of time before they are used. (Simchi-
Levi et al, 2004).
.
2.8 Types of Inventory:
Inventory exists in three aggregate categories that are useful for accounting purposes.
 Raw Materials (RM):
RM is the inventories needed for the production of services or goods. They are considered to
be input to the transformation processes of the firm.
 Work-In-Process (WIP):

WIP consists of items, such as components or assemblies, needed to produce a final product in
manufacturing. WIP is also present in some service operations, such as repair shops,
restaurants, check-processing centers, and package delivery services.
 Finished goods (FG):
FG in manufacturing plants, warehouses, and retail outlets are the items sold to the firm’s
customers. But the finished goods for one firm may be the raw material for another.
Another perspective on inventory is to classify it by how it is created. In this context, inventory
takes four (4) forms:
a) Cycle Inventory:
This is the proportion of total inventory that varies directly with lot size. The concept of cycle
inventory includes lot sizing principles. Lot sizing is all about determining how frequently to
order and in what quantity. Two principles apply.
The lot size, Q, varies directly with the elapsed time (or cycle) between orders. If the lot is
ordered every five weeks, the average lot size must equal 5 weeks’ demand.
The longer the time between orders for a given item, the greater the cycle inventory must be.
The formula is as follow:
Average Cycle Inventory = Q/2
This formula is exact only when the demand rate is constant and uniform. Factors other than
demand rate (e.g. scrap losses) also may cause estimating errors when this simple formula is
used (Krajewski, Ritzman, Malhotra & Srivastava, 2010).
b) Buffer or Safety stock Inventory:
To avoid customer service problems and the hidden costs of unavailable components,
companies hold safety stock. Safety stock is surplus inventory that protects against
uncertainties in demand, lead time, and supply changes. Safety stocks are desirable when
suppliers fail to deliver either the desired quantity on the specified date or items of acceptable
quality, or when manufactured items require significant amounts of scrap or rework. Safety
stocks inventory insures that operations are not disrupted when such problem occur, allowing
subsequent operations to continue (Krajewski, Ritzman, Malhotra & Srivastava, 2010).

c) Anticipation Inventory:
Inventory used to absorb uneven rates of demand or supply which business often face, is
referred to as anticipation inventory. Predictable, seasonal demand patterns lend themselves to
the use of anticipation inventory. Uneven demand can motivate a manufacturer to stockpile
anticipation inventory during periods of low demand so that output levels do not have to be
increase much when demand peaks. Anticipation inventory also can help when suppliers are
threatened with a strike or have severe capacity limitations (Krajewski, Ritzman, Malhotra &
Srivastava, 2010, 2010).
d) Pipeline Inventory:
Inventory that is created when an order for item is issued but not yet placed in inventory is
called pipeline inventory. It exists in the form in the form of materials that move from suppliers
to a plant, from one operation to the next in the plant, from the plant to a distribution center or
customer, or from distribution center to a retailer. Longer lead time or higher demands per
weeks create more pipeline inventory. The formula is as follow:
Pipeline inventory = Average Demand during lead time (Av.D), X Number of periods in
the item’s lead time (L) to move between the two points, or:
Pipeline Inventory = Av. D x L
According to Prof ASHIS CHATTERJEE, Inventory can also be classified as Batch or Cycle
Stock, Buffer or Safety Stock, anticipation Stock and Transportation Stock.
 Batch or Cycle stock:
Manufacturing or purchasing an item at a rate higher than its consumption rate, to reduce set-
up / ordering costs. It involves trade-off between inventory and set-up / ordering costs.
 Buffer or safety stock:
This is all about maintaining extra stock over the average requirement to guard against
uncertainty. It involves Trade-off between inventory investment and customer service level.

 Anticipation Stock:
Anticipation stock is all about maintaining extra stock to meet peak season demand. It involves
Trade-off between Inventory carrying costs and costs related to changing production levels.
 Transportation Stock:
Goods-in-transit arises because of the necessity of moving material from one place to another.
Movement rate depends on inventory carrying and transportation costs.
2.9 The basic functions of warehouse:
The warehouse is a point in the logistics system where a firm stores or holds raw materials,
semi-finished goods, or finished goods for varying periods of time.’ (Coyle et al., 2003, p.285).
Three Basic Functions of Warehouse:
According to Lambert & Stock (1993), there are three basic functions of warehouse:
Movement is necessary to store a product properly. It can be divided into three activities:
i. Receiving inbound goods from transportation carriers and performing quality and quantity
checks.
ii. Transferring goods from the receiving docks and moving them to specific storage locations
throughout the warehouse.
iii. Shipping the goods outbound to customers by some forms of transportation.
Storage is the second function of warehousing. It can be performed in two different ways:
i. Temporary storage means that storing a product, which is necessary for inventory
replenishment.
ii. Semi-permanent storage is used for inventory in excess of immediate needs. It is the safety
or buffer stock
The last function of warehouse is the information transfer. When the product is moved and
stored, this function occurs at the same time. It is important for the management to have timely
and accurate information in order to administer the warehouse activity.
The information can cover a lot of things like inventory levels, throughput levels, and data of
the customer, facility space utilization and also about the personnel (Lambert, et al., 1993).
2.10 Types of Warehouse:
One of the warehouse decisions is choosing the type or combination of types to use. There are
three basic types of warehousing: private, public and contract (Bloomberg et al., 2002).
a) Privatewarehouse: The firm producing or owning the goods owns private warehouses.

This type of warehouse is main focus on storing the firm’s own goods until they are delivered
or sold (Bloomberg et al., 2002). Coyle et al. (2003) also stated that stability of warehouse
demand must be examined over multiple products and another advantage of using a private
warehouse is the ability to maintain the physical control over the facility.
b) Public Warehouse:
If a company without large inventory accumulations or a very seasonal need for warehousing
space that they could not utilize a private warehouse consistently and efficiently, they would
find a public warehouse. Or if a company shipping in small quantities for long distances would
also usually find a public warehouse. The reasons for using public warehousing which are: (1)
avoid the capital investment and financial risks; (2) flexibility of public warehousing (Coyle et
al., 2003).
c) Contract Warehouse:
‘Contract warehousing is one specialized form of public warehousing. Some reasons for the
growth of contract warehouses are: (1) product seasonality; (2) geographic coverage
requirements; (3) flexibility in testing new marketing; (4)management expertise and dedicated
resources; (5) off-balance sheet financing; (6) reductions in transportation costs.’ (Bloomberg
et al., 2002, p.76)
2.11 Warehouse Layout:
According to Bloomberg et al. (2002), the objectives of warehouse layout and design should
be as following:
i. warehouse capacity utilization must be optimized
ii. Whatever is stored must be protected
iii. The layout should consider space utilization and stock placement
iv. The warehouse should be as mechanized and automated as possible
v. The warehouse layout should lead to high productivity in receiving, storing, picking, and
shipping
vi. The warehouse design should be flexible and allow for improvement.
From above mentioned, the rational utilization of warehouse space is the most important issue
in warehouse layout management. The good utilization of space should begin with good
warehouse visibility.

Baudin (2004) indicated that warehouse visibility includes: labels on the grid of columns which
are supporting the ceiling, dock numbers that remain visible when docks are open, three-sided
overhead zone identification signs, aisle/column/level labels on each slot in a pallet rack.
2.12 Warehouse ManagementSystem(WMS):
The computer-based warehouse management system (WMS) has been implemented widely in
many companies. It could assist the warehouse manager to control the various operations, like
receiving, put-away, picking, packing, shipping, storage location, work planning, warehousing
layout, and analysis activities (Coyle et al., 2003). The system could help managers with
workload reductions in terms of data collection, achieving higher accuracy, faster retrieval, and
could support for cycle counting and data mining (Baudin, 2004).
Barcode scanning is used in many warehouses. Its function is to match serial numbers to
customer purchase orders (PO), and the hardware and communication infrastructure to support
a WMS is in place. Figure (6) shows one example of the materials handler scans barcodes for
both location and item number when loading a pallet.
Figure 6: Example of material handler, Source: Baudin, 200

3.Transportation
Transportation is a unique element of the logistics sub-system that seeks to move goods from
points of production to points of consumption in the required quantities at reasonable costs.
Air, sea, and land transport offer time, form and place utilities to the cargo handled, thus
increasing their economic value in international markets. In order to achieve these objectives,
transportation facilities must be sufficient, affordable, reliable, regular and equitable interms
of cost and benefits, so that they are profitably engaged in international trade and logistic
operations. The below figure depicts the various options available under different mode of
transportation in international trade operations
Transportation of cargo can take place via air, water, rail, road, and pipelines using cargo
aeroplanes, freighters, barges, boats, ships, trains, lorries, trucks, and pipelines which have
been placed underground, or sea. The major objective for any trader in international trade
logistics is to minimize the overall transportation costs of cargo by selecting the best mode
possible after studying the circumstances and ensuring that the product reaches to the
customer or importer on time.
Transportation forms a major chunk of total logistics cost because it is directly related to
weight or number of units being transported from one place to another. Transportation costs
are generally determined by factors such as distance between the point of origin ad the
destination, nature of cargo, mode of transportation, size, and quantity of the cargo to be
shipped. Transport costs can be carefully controlled by judicious, appropriate, and prudent
modal choices, and should be constantly reviewed as changes in the business environment
take place. Sometimes, in international trade logistics, there are several points of origin and
many points of destination of cargo, particularly, in case of FMCG and household goods that
add a significant level of complexity to the problem of minimizing transportation costs.
Hence, traders and logisticians should also consider transportation rates along with
transportation costs, which are equally important for minimizing total logistics cost.
Transportation rates are largely dependent on the rates charged by the cargo carriers
companies. The below figure lists the bases of transportation cost determination in
international trade logistics.

Figure : Classification of various modes of transport
Figure : Bases of transport rates of determination
Classification of
transport
Land Transport
Air Transport
Water Transport
Human andanimal transport
Road transport
Railway transport
Pipeline
Inland water transport
Ocean transport
Bases of transport
ratesdetermination
Class rates
Commodity rates
Negotiated or contract rates
Freight of all kinds of rates
(FAK

The freight of all kinds rates are usually lower and the class rate of cargo transportation are
usually higher than other types of rates. Class rates are the prescribed standard rate for any
commodity moving between any two destinations. Commodity rates, on the other hand, may
attract special offer from transportation companies for either continuity of business on regular
basis or for large-quantity shipments. It is unfortunate to note that MSMEs which constitute
around 40 percent of India’s trade, cannot take advantages of commodity rates due to scale
and unitization problem. As a result, they are compelled to utilize the third type of rate,
known as a negotiated or contract rate, which is usually higher than commodity rates. With
increased containerization of trade, which is usually higher than commodity rates. With
increased containerization of trade, a fourth class of rates has come up. This is known as
freight of all kinds, whereby the rates are usually charged per container basis between the
agreed distances, irrespective of what is transported, subjected to hazardous material rules.
Transportation costs vary greatly as per the choice of transport-air, road, rail, or water
transport. The efficiency of any type of transport system largely depends on the quality and
availability of a good transport system. Irrespective of the mode of transportation, every
transport system has some common elements. These elements of the transport system have
considerable impact on the effectiveness and efficiency of different modes of transport and
their utility to users. They are as follows.
3.1 Vehicles for transport Each type of vehicle has got some features that can influence the
decisions of logisticians or traders in employing a particular type of vehicle for transportation
of goods. The dimension of the vehicle, its capacity, and technological advancements are
some of the factors which have a direct relationship with the logistician’s decisions to use a
particular transport system. In water transport the size, speed, and type of ship are important
in knowing what types of ships will be suitable for transiting the cargo, keeping in mind the
nature of the cargo. In case of road transport, it is the capacity, moving dimensions, and speed
of the vehicle which are of great importance. In case of rail transport, it is the existing railway
line capacity, type, and general availability of wagons which drive a logistician’s decisions.
The capacity of transport vehicles, time, and sped that it takes to transport cargo are the
determining factors of throughput of a particular vehicle in a particular section. Capacity
expansion even through best of research efforts has constraints in certain mode of transport,
for example, roads and railways. However, there are no capacity constraints in water

transport as capacity of ships is constantly on the rise due to new technological
developments. The choice of the mode of transport and vehicles to be used for international
logistics operations are largely dependent on factors such as cost, speed, trade routes, risks
involved, and nature of cargo, and time of travel. The choice of a particular mode is based on
analysis of these factors and resultant advantages from one type over another.
3.2 Trade routes Trade routes play an important role in movement of carriers from one point
to another point. The various types of trade routes can be surface roads, navigable waterways,
railway links, and roadways. Logisticians have to select trade routes that offer operational
efficiency without any obstacles for transport of cargo from one location to another location.
For example, India has traditionally used the road transport through Pakistan for transiting
wheat to Afghanistan as the available infrastructure is better, and wheat can be easily
exported from Punjab rather than first bringing it up to kandla, or say Mumbai, and then
sending it to Bandar-Abbas and transporting it via road to Herat in Afghanistan. However,
cargo blockage by Taliban at Khyber Pass (Pakistan) has compelled India to send wheat to
Afghanistan only by sea routes. Sea and air transportation routes are natural modes but are
subjected to man-made obstructions in the changing global scenario. The constant piracy at
Suez Canal by Somalian pirates has compelled many countries and shipping companies to
follow a long trade route via Cape of Good Hope as ship hijacking is common in Gulf of
Aden and Suez Canal access routes. It causes 18days of delay in reaching Europe and the
coast of North America. Land routes are also not free from regulatory barriers as it takes
45days for an indian exporter to transport a container from ICD dadri (Ghaziabad) to Dhaka.
The same journey may have been completed by trucks within a maximum of only eight days.
Hence, trade routes used in transporting cargo are important determinants of effectiveness of
transportation system. Choice of proper trade routes determines the speed, cost, and capacity
of mode of transportation and vehicles to be used. Logisticians should factor that the selected
trade route shall be have adequate capacity to absorb the additional traffic without any delay
as over congestion of trade routes may result in higher costs of logistics operations.
3.3 Port and terminal facilities No mode of transport can be effective until the proper
facilities for handling of cargo such as loading and unloading of cargo are not available.
Terminal facilities have to be provided for loading and unloading of trucks, wagons, etc. on a

continuous basis. Transportation of heavy and bulk cargoes depends on loading and
unloading facilities available at terminals. The terminal facilities also effect the cost of
transportation. If these facilities are provided, then the cost of transportation can be
minimized. Besides these, adequate storage space, loading and unloading facilities, sufficient
number of marshalling yards, and weighing equipment must be available in these terminals.
In India, such facilities are not adequately available and this causes more time for clearance
of imported and exportable cargo for clearance.
3.4 Turnaround time Logisticians and traders should also take note of turnaround time
which is the time from arrival to return of ship at a port as it effects the total transit time in
moving cargo from one location to another. Turnaround time is higher on Indian ports when
compared with similar types of countries as Indian ports do not have adequate terminals and
jetties to accommodate multiple ships at the same time. As a result, ships have to queue-up
for unloading or loading. Additionally, mechanized loading and unloading operations
significantly reduce the turnaround time. These are gantry cranes, conveyor, and mechanical
belts for loading coal, cement, iron ore, aluminum, and other bulk products, that are prime
basis of decision movers in exporter decision criteria for a particular mode of transport to be
used.
3.5 Transit time and cost :Transit time and costs are important factors in the choice of mode
of Transport. Air transport is the fastest but is expensive; water transport is slow but cost
effective, and Rail and road networks are not available all over the world. There is a detailed
discussion on transit Time and cost for each mode of transport
3.6 Nature of cargo
The nature of cargo- regarding whether it is perishable, non
perishable,bulk,Break-bulk, hazardous, inflammable, high value, high volume, etc. – affect
the choice of a particular Mode of transport. The kinds of packing used and the shelf life of
product are also important Elements while engaging a particular mode of transport

3.7 Information Monitoring
In a globally competitive environment, traders and logisticians have to constantly monitor
Information On issues related to customer services, packaging, labelling, material handling
equipment, inventory Control, warehousing facilities, effectiveness of transportation, and
Other elements of trade logistical Sub-systems. Such information monitoring may include the
Following.
1. Information processing to various departments of the firm about the date of delivery,
date of Shipment, packing, labelling and marking requirements, shipping instructions,
quality standards, and Ensuring that production may start well in time to fulfil the
deadlines of orders.
2. Information about the present stock position of raw and finished materials at each
location of the Firm.
3. Information monitoring with regard to customer satisfaction level and looking after the
Changes Required in the existing system based on consumer’s inputs.
3.8 CHOICE OF MODE OF TRANSPORT
3.8.1Introduction
With the ongoing process of economic liberalization and globalization, trade logistics has
come to the Forefront in the international business strategies of multinational enterprises and
small and medium Enterprises (SME) units. In the present environment, efficiency in
logistics operations plays an Important role in determining a firm’s competitiveness in
international markets. In order to emerge as a major player in global trade, nations are
investing billions of dollars in their trade logistics Infrastructure. This investment is vital
because a smooth and an effective transportation system is Essential for planning
an efficientproduction and distribution system to tap global markets. It helps

exports firms to be competitive with just-in-time production system and uninterrupted
customer service and helps them manage the overall logistics
3.9 Transporter Details
Transporter Details
SL
No.
WH Transporter Name
Vehicle Number Vehicle Size ( F
1 CHANDIGARH GULZAR TEMPO CARRIER
CH03U2057 14
CH04C7443 14
CH03C8640 10
CH01TA4526 7
2 DEHRADUN SIDHARTH TRANSPORT
UA07P 9557 TATA DI 207
UA07Q9072 TATA DI 207
UP07G 4468 14
UP07K9443 14
UK07CA 2956 19
UK07CA 2958 19
HR58 4400 24
HR58 4402 24
3 LUDHIANA INTERZONE TRANSPORTCO.
HR68A0048 18
HR37A4282 18
HR04N0384 24
HR04N0602 24
HR04N0883 18
PB65H7323 24
PB65H7327 24
HR37A5354 18
HR375356 32

HR38Q0045 32
HR37A5356 32
CH01M8756 18
PB65H0364 18
PB65L9948 18
PB65L5832 18
PB65L5834 18
NORTHERN CARGO
HR37A4365 24
HR37A4367 24
HR37B2329 18
HR373716 18
HR68A2686 14
HR378568 14
HR37A1500 18
HR37A1501 18
PB65H0365 18
HR687825 24
HR687824 24
PB65L7516 18
HR687826 24
PB65M9939 18
PB65H7841 18
PB65H7843 18
HR37B4366 24
TRANS ROAD LINE
HR68A2272 18
HR682272 18
HR04N0311 18
HR04N1443 18
CH03H0435 18
PB65K5286 18

PB65H2758 18
HR68A1984 18
HR38K2985 18
HR37A6129 18
5 LUCKNOW KAMAL SONS
UP32AN5937 PICKUP
UP32DN1682 PICKUP
UP32EN0482 PICKUP
UP30T5223 22FT
UP32BN0211 19FT
UP32CN4996 19FT
UP30A6923 22FT
UP30T3149 22FT
UP32AN7669 22FT
UP32CZ2399 22FT
UP32CZ6701 22FT
UP32CN9621 TATA ACE
UP32CZ5176 TATA ACE
UP32CZ9355 TATA ACE
UP32DN3154 TATA ACE
UP32DN3297 TATA ACE
UP32DN4021 TATA ACE
UP32DN4022 TATA ACE
UP32Z8858 CANT
UP32CZ6674 TATA ACE
UP30T3148 22FT
UP32AN7589 19FT
UP32EN7888 TATA ACE
5 PARWANOO MAHAJAN ALLIED
14
17
6 JAIPUR KAPOOR FREIGHT CARRIER RJ14GE2020 32

RJ14GB2020 32
RJ141G8688 32
RJ14GC1734 32
RJ14GB2015 32
RJ14GC9603 32
RJ14GC2056 32
RJ14GF6156 PICKUP
RJ14GD2155 PICKUP
RJ14GB8682 PICKUP
RJ14GD3044 PICKUP
RJ08GA0298 PICKUP
RJ14GB8100 PICKUP
RJ14GA4572 TATA ACE
RJ14GA6255 PICKUP
RJ14GC8617 PICKUP
RJ14GC3885 TATA ACE
RJ14GE2032 TATA ACE
RJ14GE6432 PICKUP
7 GHAZIABAD
NEW RAJDHANI TRANSPORT
SERVICE
UP16K-9582 15 Ft
DL1LG-8845 15 Ft
UP16AT-3142 17 Ft
DL1LR-0073 17 Ft
DL1LR-0072 17 Ft
DL1LG-6194 17 Ft
UP16BT-0330 15 Ft
DL1LM6611 22Ft
DL1LR5036 17Ft
DL1LR5037 17Ft
DL1LR5038 17Ft
DL1LG3594 14Ft

UP16BT0768 17 Ft
DL1LE-3908 17 Ft
DL1LE-4668 17 Ft
HR38F-0245 17 Ft
HR38G-9997 17 Ft
HR47A-0331 17 Ft
HR55-7437 17 Ft
HR55E-7098 17 Ft
UP16AT-2856 17 Ft
UP16AT-3143 17 Ft
UP16AT-3144 17 Ft
UP16AT-3145 17 Ft
UP16AT-3479 17 Ft
UP16AT-4446 17 Ft
UP16AT-4447 17 Ft
UP16AT-5410 17 Ft
UP16AT-8996 17 Ft
8 Delhi Amar Cargo Transport
DL1LP2020 17
DL1LP2221 17
DL1LP2225 17
DL1LP3267 17
DL1LP2547 17
DL1M5655 17
DL1LP2828 17
DL1LP2283 17
DL1LP2472 14
DL1LP2474 14
DL1M6036 22
DL1M6112 22
DL1M5727 20

DL1M5728 20
DL1M6180 20
DL1M6181 20
HR69B1057 20
HR69B1058 20
HR69B1059 20
HR69B1060 20
DL1LR3902 ECO_Van
DL1LR3903 ECO_Van
DL1LR4913 ECO_Van
DL1LR5637 ECO_Van
DL1LR3957 ECO_Van
DL1LR4120 TATA Ace
DL1LR4121 TATA Ace
Jatin Auto Service
DL1LN3613 Auto_6 feet
DL1LL6891 Auto_6 feet
DL1LF5071 Auto_6 feet
DL1LE7815 12
HR69B1106 22
HR69B1105 22
DL1LR8075 17
DL1LR8074 17

New Rajdhani Transport Service
DL1LE 8845 17
DL1LE 8846 17
DL1LG6194 19
DL1LR5036 19
DL1LR5037 19
DL1LR5038 19
DL1LR5039 19
DL1LG0072 19
DL1LG0073 19
4. ResearchObjective:
The research objectives for this project are listed below:
OBJECTIVE 1: To study the Warehouse details & Manpower details which includes size of
warehouse, Inventory, Daily GR, Daily GI, Number of Docks
OBJECTIVE 2: To study Warehouse Management System in Ghaziabad D.C covering two
broad ranges
OBJECTIVE 3: To study about Inbound vehicle management and space planning for inbound
stock, as well as same for the Outbound Management
OBJECTIVE 4: To observe order cycle management at Ghaziabad D.C which includes
warehouse order processing time, lead time management
OBJECTIVE 5: To study KPI for operations which is very important in warehouse operations
OBJECTIVE 6: Returns management procedure which includes insurance claim, Damage
Disposal, Second sales, Servicing, Repairing

In this Chapter we will be discussing the outcomes
of our Research Methodology. The author will
present the conclusion about the whole project and
summarize the implications of the research.

5.ResearchMethodology:
OBJECTIVE 1:
a) Warehouse details:
Size of
W/H
Inventory Daily GR Daily GI No of Docks
Qty
Days of
Inventory
Qty Vehicle Qty Vehicle GR GI
64668 50000 15 Days 5200 5 6500 9 2 3
Required time for loading per truck: 50 minutes
Required time for unloading per Truck: 60 minutes (32 ft)
Number of bins: more than 108
Source: warehouse report
b)Manpower details:
Logistics Head: Mr. Amit Kumar, Mr. Praveen Kumar
Partners: SDS (staff), Satya Sai (labour), Swift (security), NRTS (Transporter).
Total Staffs
Sup + Labors +
HK +
Electrician Security
Total 55 11 29 15
Hansol 7 7 0 0
Partner 48 4 7+18+3+1 15
Source: Warehouse report.
From the empirical findings; we got to know that HANSOL Logistics India is in partnership
with various organizations. As a 3PL it provides End-to-End supply chain solutions to a wide

spectrum of industry segments. Its FMCG partner signed a deal with Hansol to fulfill its
requirements. Hansol owns in total 14 warehouses across India and the major part of their
revenue is coming from the main partner FMCG Giant. Ghaziabad DC warehouse is one of
those various warehouse especially for inventory management activities.
c)Ghaziabad D.C Warehouse Layout:
As what has been mentioned in theory part, warehouse visibility is very important to improve
the efficiency on warehousing operations.
There are several ways to strengthen the visibility inside the warehouse:
d) Location labeling on the warehouse floor: (Bins)
Distinct floor mark in warehouse can help forklift drivers to find the correct zones, regions or
aisles easily. Usually, the bright yellow will be used for the floor mark color. At the same time,
the grid of columns is one popular way for workers to identify the areas. The grid location
labels can be affixed on all sides of columns. Figure (7) shows the example of column grid
labeling. Compare with this example, we can observe from Figure (7) that Ghaziabad
warehouses are lack of this kind of identification labels.

Figure (7): The example of column label grid.
Source: Baudin, 2004.
Figure (8): Ghaziabad Warehouse
Source: own made from GZD warehouse.
In Ghaziabad Warehouse the space is divided into different bins. To make the bins management
easier, all these bin numbers are recorded in the scale system ILS (Integrated Logistics System).
This makes items tracking and identification and inventory management and control much
more efficient.
e) Zone Identification:
According to author’s experience, one common solution for zone identification is to hang a
“name card” above every specific zone. Maybe the flat “name card” as shown in the figure (9)
cannot be seen from every direction, especially in the large rooms.

Figure (9): Zone Identification system in GZB D.C
Then we can use the triangular signs above the racks. This kind of shingle is visible from all
directions. Figure (10) gives us an example of “name card” for zones. Unfortunately, we did
not find this zone identification signs in Ghaziabad warehouses.
Figure (10): The example of shingle of zone.
Source: Lining Bai & Ying Zhong, 2008
f) Rack identification
Rack identification is the most useful and effective method for identify locations in pallet racks
by three coordinates for aisle, column within the aisle, and level within the column as shown
on the figure (11) below.
Figure (11): The example of identify locations in pallet racks (rack identification),Source: Lining Bai,
2008.

When the author visited Ghaziabad warehouse, we encounter some problems about the rack
identification. In such a well-known 3PL organization like Hansol Logistics, the use of racks
should be common to insure the safety while stacking inbound inventory in the warehouse.
Surprisingly the author came to realize that Ghaziabad D.C is not making use of these racks in
the warehouse.
Also there is no item location guide. Some items’ number was simply shown on the label.
Figure (12) shows us one suitable item location guide board on the side of racks.
Figure (12): The example of item location guide; Source: Baudin, 2004

OBJECTIVE 2:
5.1 Warehouse Management Systems (WMS):
The warehouse is using two different systems simultaneously SAP and ILS. The SAP system
is from the partner Samsung and ILS is from Hansol Logistics.
Ghaziabad D.C uses the barcode scanning system which can make the inventory control
operation efficiently and accurately. The SAP system is used for the whole inventory
management purpose, data maintaining and report generation while as ILS is used to:
 Capture Accessorial Charges
 Full Real Time RF Functions
 Automatic Invoice Creation
 Blind Receiving
 Cycle Counting and Physical Inventory
 Multiple Billing Parameters
 Multiple Custom Billing for Each Owner
 Kitting and Assembly
 Ad Hoc Report Writing
 Integrates Container and Yard Management
 Manage inbound (GR process), Outbound (GI process) and also for bin management
purpose, etc.
The warehouse management system in Ghaziabad D.C covered two broad ranges:
1- Warehouse Management Activities, covering physical warehouse management
activities and Inventory management.
2- Key Performance Indicators Management, covering transactions management;
5.2 Warehouse Management Activities:
a) Packing stock management:
Box damaged inventory needs to be segregated and separated from saleable inventory at the
time of goods receipt itself. These inventories should be shifted to box damaged category

immediately on GR in the system. Any inventory damaged after that or while handling inside
the warehouse also needs to be shifted to packing and converted in the system itself. Warehouse
needs to keep the technical report to shift any such stock to packing category. These units will
then go for a re-packing activity then only it should be brought back to saleable category.
b)Packing / repacking / packing box mgmt. / system conversion etc.:
Packing / re-packing activities to be done in the supervision of return management person. He
also ensure that the physical conversion accompanies a system conversion and a signed off
document.
a) Repairable inventory management:
This stock is the GRMS returned stocks or insurance sets. Service is responsible for the
liquidation. But warehouse needs to follow-up and ensure the ageing days are not increased.
b) nCategory stock management:
Done base on GRMS grading. Liquidation needs to be done through BCH/ BLE etc…
c) Non repairable stock management Scrapping / scrap sale / write off:
Logistics is responsible for the liquidation of “D” category stock. Periodic approval needs to
be taken for scrap write off.
d) Value added activities:
Other value added services at the warehouse are supporting re-work activities, snickering,
pallatization & bundling etc… Depending on the company requirement these things needs to
be undertaken under the supervision of RLM and Hansol logistics.
ZPOP: Promotional items, Gift and finished goods converted to ZPOP should be handled as
per the guidelines of the marketing team. Storage of such goods should be at the prescribed
area and all movements to be done based on System transactions.
e) Sample goods management:
Products in sample category moved as per the Hansol Logistics sample management team.
Inventory management is the prime responsibility of the warehouse. Apart from proper receipt,
storage, and re-distribution warehouse needs to undertake the following activities to ensure that
accuracy and consistency of the inventory:
 Daily / weekly stock counting

 Cycle counting / physical stock take
 Reconciliation
Warehouse in charge should ensure the following:
Conduct 100% stock count on by every 7th and by every 15th of the month.
100% SKU wise inventory accuracy should be maintained (quantity terms).
Any unaccounted stock in the warehouse should be escalated to HO / regional logistics
immediately on occurrence of the event.
Any un-resolved variances need to be reported to Regional / HO co-coordinator immediately.
OBJECTIVE 3:
5.3 Inbound Management:
(Inbound vehicle management and space planning for inbound stock).
Inbound management starts from the point of checking and monitoring in transit (shipments
coming to the w/h) stock movement. This consists of checking with the respective carrier /
transporter for timely delivery, check the warehouse space availability in advance and plan
space for next day arrivals.
Sometimes warehouse needs re-arrangement of goods in order to create adequate space for
inbound goods and aligning resources for next day receipt.
(See appendix A for the complete inbound operation flow chart)
Figure- 14 Process flow Inbound, source: own prepared.
Receipt of
ASN in
ILS
System
Daily
Inventory
receiving
plan
Appointme
nt
scheduling
Good
check in &
Inspection
at staging
area
Goods
location &
put away
confirmati
on at
designated
locations
Receipt
close

a) Resource planning
Resource planning here in GZD D.C means organizing and scheduling the required resources
like labor and the time of activity etc…
b) Vehicle reporting
Vehicle reporting is the starting point of goods receipt at the warehouse. There should be proper
gate entry for the in-coming vehicle. The shipping documents needs to be send to the warehouse
manager immediately on arrival.
Warehouse manager has to decide the unloading priority based on the company requirement.
If there is no priority received from the company the goods receipt must be First in First Out
rule. If there is any priority given by the company warehouse manager t will decide how to
manage that.
c) Unloading/ Segregation/ Inspection:
All Normal receipts must be unloaded at staging area for inspection and segregation. This can
be achieved by manual unloading and mechanized unloading.
To ensure safe handling of goods, warehouse personnel first verify the height of the warehouse
dock viz-a-viz height of truck body level. If the Warehouse dock and truck body level is not
matching, then necessary equipment such as a metal/wooden ramp should be used to adjust the
height so that the unloading people can easily firm up reach inside the vehicle pick / hold the
products while unloading from vehicle.
While unloading Warehouse supervisor to ensure that the products, especially larger in volume
and heavy in weight must not be dragged by pulling the straps. Products should be moved only
with the help of a trolley or pallet jack as the case may be.
Security guard at the gate should count all the material while unloading and match model wise
as per the documents received along with the vehicle.
Any abnormality found at the time of unloading is to be reported back to the origin and the
concerned person in Region and Hansol.
Unloading supervisor must sign and release acknowledgement to vehicle driver, with clear
remarks in case of damage or loss etc.

d) Inspection and segregation of goods:
All goods must be physically inspected and model wise segregated first for the counting
purpose. Each material then must be checked for the packing damaged / shortage etc…
e) Location management
Location management should be controlled by WMS system. However considering the
physical constraints the same can also be done manually
After unloading material, depending upon the movement nature and product type the
warehouse supervisor should ensure proper selection of location within warehouse. Given
below are some guide lines:
f) Put Away guide lines:
ACs and other heavy items are stored within close proximity to dispatch gates to ensure less
handling damages.
Small items such as HHP, HDD, OMS, CAMERA, MP3 etc., should always be stored in a
strong room and should be away from dispatch gates for security reasons. All access to this
area is permanently being controlled by security.
In case of any damages in the consignment received, damage stock is separated from good
stock and being stored in repairable location. Necessary system updation should be ensured.
After necessary approval this stock should be moved to necessary location such as repairable,
packing & insurance.
g) Goods stacking
Products are stacked as per Stacking Norms mentioned on the carton as shown below
(wherever possible to be stacked to full height to ensure maximum space utilization).
A single stack must not contain two different models
Different lots of same models to be stored in separate BINS.

Figure (15): Example of stacking norms mentioned on the carton of a washing machine.
h) Goods Receipt in system
Goods receipt in WMS system to be confirmed in SAP system also to make sure it is available
for sales. This has to be a mandatory process by which one need to put the GR Number on the
receipt documents before filing.
i) Check list maintenance:
The Good Receipt (GR) information summary needs to be recorded and the GR activity
checklist should be completed by the end of the day.
j) Insurance claim:
Claims made by the warehouse should have the following documents in original and a copy
should be maintained by the warehouse in charge:
 Copy of GR
 Copy of Invoice/STN
 Copy of monetary claim lodged on the transporter along with proof of dispatch of this
letter through government registered post.
 Damage/shortage certificate from transporter
 Any other documents required by the surveyor for quantification of loss & provided by
warehouse personnel.
 Technical report from service for claims other than shortages. (see the figure below)

 Copy of FIR lodged with police (if applicable)
 Photographs of damaged goods.
 Survey report (if applicable).
 Copy of any other correspondence related to the claim.
Figure (16): Example of Technical for insurance claim purpose.
OBJECTIVE 4:
5.4 Order Cycle management at GZD D.C:
a) Warehouse Order Processing Time:
Definition:
This indicator measures the average amount of time (e.g., minutes, hours, days, weeks) from
the moment an order is received at the storage facility until the time the order is actually shipped
to the client. The order processing time can be calculated for a specific shipping facility
averaged across orders or on average for orders to a specific client or for a specific product.
Formula:
∑ (date & time order is shipped – date & time shipping order was received)
____________________________________________________________
Total number of orders processed

Purpose and Issues:
This indicator helps monitor the order processing performance and the efficiency of a shipping
facility. It also helps identify opportunities for improving staff performance in order
management and a facility’s response time.
Data Sources Data Requirements
Order requests Date and time shipping order was received
Shipping log reports Date and time order is shipped
Total number of orders
Since Hansol Logistics India is not a make to store company also it’s not buying its products
from a supplier, they are therefore not incurring any ordering cost. So order cycle management
here is resumed to the order processing time management of their Dealers, vendors and
distributors.
The order cycle often answers the question “How often should we order?” while the EOQ
method answers the question “How much should we order?” For example, the total sales value
in 2013 was INR 13,615,585,687.76, the average daily inventory must be at least INR
37,302,974 (INR 13,615,585,687.76 / 365 days). The longer the order cycle the larger the
inventory requirements. Thus, if the order cycle is 15 days, the average inventory must be at
least INR 559,544,617 (37,302,974 X 15 days). If the order cycle is shortened to 10 days, then
the average inventory requirement is at least INR 373,029,745 (37,302,974 X 10 days).
k) Order Execution Planning:
Order execution planning refers to the preparation of order processing as per customer
requirements by using warehouse resources & capacity. It includes Order administration,
Vehicle management, goods picking, validations, loading, documentation and shipping. Order
Administration refers to following:

l) RDD: Requesteddelivery Date:
Warehouse needs to check each and every order with their RDD. If RDD cannot be met as per
the LEAD TIME the order needs to be send back to sales for necessary correction of RDD as
per LT.
m) Lead time management
The Lead Time for each customer has to be calculated based on the order processing time,
loading time and actual transit time. All physical constraints like check post, control zone, no
entry zone etc. To be considered for the final Lead Time.
n) Customer delivery appointment / delivery confirmation- only for special cases:
Customer appointments to be taken for the delivery of goods for special delivery orders and
high volume and value orders so that waiting time can be reduced and productivity of the
effective delivery can be improved.
o) Order rejection logics:
 Order should be rejected on the following conditions.
 Customer refused to take delivery / refused at the time of delivery confirmation /
appointment
 Requested by the creator of the order for various reasons
 RDD is lower than the actual delivery LT
 MOQ (Minimum Ordered Quantity) -If order quantity is less than 3 units or the total
order value is less than Rs.50000/-
Special guidelines
On time GI and out bound delivery exception report needs to be run every day and execution
has to be bases on that. While prioritizing other orders, these exception orders must be
executed.
Outbound activity is based on the daily scheduled ship list from system and all exceptions to
be managed manually. Warehouse must complete the GI due list to manage the KPI.
p) OD follow up & updation:

Run IOD exception report and follow-up and complete the IOD as per LT. Report issues to
next level for resolution. OD updation should be based on daily IOD due list, this list needs to
be updated on normal course on the system to complete the KPI.
q) POD follow up / collection & updation:
There are routine activity and weekly review on pending POD. Exception report from system
and escalate the issues to BLE > REGION –AND THEN HO also.
r) Urgent delivery orders (exception):
Urgent delivery means delivery of the orders by special means irrespective of LT and also
supersedes the FIFO rule. This has to be managed as per the requirements time to time.
FIFO: FIFO rule is to be followed while executing normal order.
s) Order processing & pick list generation:
Order processing is selecting a group of orders and waving together to material picking. You
can do order processing based on various route planning. Urgent orders can be executed
separately. Once wave is cleared the work will be created and pick list can be printed from ILS.
5.5 Outbound Management:
(See the complete flow chart in appendix A)
a) Material picking assignment & labor management:
Once pick list is generated the same can be assigned to various material picking groups lead
by warehouse supervisors. Supervisors will have a team of people who actually pick materials
physically.
b) Additional labor for peak days / month end etc.:
W/h manager should work out the requirement of additional labour force required for peak
days / month end in advance.
c) Picking & scanning:
Supervisors direct labors to the picking location (BIN location) and get the materials physically
picked up from BIN location to the destined staging location. Materials will be picked up in
the order it is pick list. In the staging location, material will be arranged in the same order.
Once complete picking is done, the same picking work should be completed through ILS.

Once picking work is completed the shipment status will be shown as “loading pending”.
d) Work monitoring / handling / loading to vehicle:
The warehouse supervisor / picking group leader should
control and monitor the entire picking work, product
handling, staging and loading to the work. Once the
group picking and vehicle loading is completed he
should sign the document and submit back to the
warehouse in charge by mentioning the vehicle details
on the pick list itself.
The vehicle should be closed and sealed in presence of
the warehouse security guard and picking supervisor.
Adequate buffer stock, edge protectors and corner angles
is to be used for shipping.
Figure 17: Example of Forklift used to carry inventory, source: Baudin, 2004.
Figures 18: Loading going on in GZD D.C
e) Vehicle covering / corner angles & goods protection:
Adequate protection is to be done for the goods while shipping through trucks especially when
shipping upcountry locations. In case if you are using open body trucks, after loading ensure
closure of the body with proper weather proof tarpaulin to avoid any damage due to rains or
water seepage. Corner angles are to be used for shipments where material is shipping in open
body trucks. For tarpaulin usage, ensure corner protectors are in place while tying the tarpaulin

to avoid carton damage. You should also ensure that nobody stands on the products loaded
while tying tarpaulin.
f) Goods Issue and Invoice generation:
Once loading is completed, warehouse needs to:
 Complete the GI in WMS system
 Physical shipping (LR/documentation)
 Ensure proper documentation for dispatch & release vehicle
 Data maintenance locally in Excel down load from ILS by customer / per month
Figure (19): Process Flow-Outbound, Source: own prepared.
Receipt of orders in ILS
Order scrutiny, cleareance and rejections
Route planning/ scheduling wave creation as
per route and release work
Pick list printing & picking work from
location to staging area
Load completion and shipment closing &
invoice printing
Release shipment from w/h
IOD confirmation & updation
POD receipt and reconciliation

OBJECTIVE 5:
5.6 KPI FOR OPERATIONS:
KPI Target Concept and Formula
On time GR 95% • unload the materials within 24 hours from the report date of a
vehicle
• total received qty on time/total received qty corresponding of
period GR date * 100
Vehicle Detention amount • The materials arrived at a warehouse should be unloaded on
time
• Rs 700 per day after 24hours, Rs 1,000 after 5days from the
report date
Inventory
Consistency
100% • The materials kept should be matched with the book which is
maintained by system exactly
• Sum(absolute value of SEC-3PL inventory difference)
/ Sum( MAX(SEC, 3PL inventory quantity by model))
On Time GI 100% • The materials should be delivered in same day whatever the
orders are coming before 4PM
and be delivered till 1PM tomorrow if the orders are coming after 4PM
• Sum(Planned GI Date - Actual GI Date <= +- 1) / GI Qty
corresponding of period GI Date
On Time
Outbound
Delivery
99% • The materials dispatched should be unloaded at a dealer’s point
within the lead time set
• GI Qty. satisfying( RDD - POD >= 0 ) / GI Qty with RDD is in
the corresponding week
On Time IOD
Receipt
99% • A transporter should report at the same day when the materials
are unloaded at a dealer’s point
• [IOD receipt date - delivery completion date within IOD ≤ 2
days / GI quantity of DO
within corresponding period of IOD receipt
On Time Return • The materials should be picked up within 10days from the date
when a return DO creates
• [ 0<= [Return GI – Return DO] <= 10 ] satisfying GI Q'ty /
return GI Q'ty within the period of
return DO GI
Sales OTRQ • The material should be delivered within RDD and IOD should
be updated within 2 days
• GI Q'ty satisfying IOD <= RDD AND IOD receipt within 2 days
/ GI quantity of DO in case
that the RDD is within the corresponding period
Table (7): Key Performance Indicator for operations, Source: company report.

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