This document discusses operational improvements made to Thermax's warehousing operations. It describes issues like lack of organization, high costs, and inefficient processes that were initially present. A turnaround plan was implemented using Lean and Six Sigma methods. 5S was introduced to organize facilities. Processes were mapped and standardized, and KPIs were established. Inventory management and dispatch operations were optimized. These changes reduced costs, improved on-time shipment rates, and increased inventory turnover. Regular audits and employee training were also part of sustaining these operational excellence improvements.

1. CASE STUDY
How Thermax has Continued Operational Excellence in Warehousing
in Product and Project Business
By Lt Colonel Vikram Bakshi ( Retired)

2. VISION OF LEAN MATERIAL MANAGEMENT
3 PL was not preforming well. Needed replacement
and new 3PL needed support to manage warehouses
To avoid losing material and reduce cost of COPQ
Improve margins in bottom line figures
Get in best processes & Training
Incorporate and drive ERP as a habit
Sustenance in upkeep of material in plants and project
sites.

3. SEQUENCE
MANUFACTURING PRODUCT WAREHOUSING
POWER PLANT PROJECT SITE WAREHOUSING

4. PRODUCT SCM
Boiler Pressure Part
( PP) Manufactured at Plant
EOL Brought Out from
Suppliers as Component
Inventory
Steam & Water mountings
Combustion & Control
system
Control panel
Staging Inventory =
Consolidation & Assembling of
Pressure Part + EOL as
Finished Good Units
FG Units are Dispatched after
receiving
Dispatch Instructions from
Regions
Commercial Units makes it as
Invoiced Units

5. OPERATIONAL ISSUES
Default or Delayed Invoiced Units
Finished goods inventory (FGI) which are not invoiced.
Increases Staging Inventory
Affects Component inventory turnover
Cost of material become obsolete are more
Products to be also ready on scheduled with material availability
Adding unaccounted Pressure parts and inventory

6. WareHouse needed
A Turn Around after a failed 3 PL Partner
Problem No 1 : Lack of 5 S
 Facility looked cluttered and un-organized.
 Can’t find empty locations .
 No waste or scrap management
Problem No 2 : Increased opex cost
 Usage of Cranes
 Demurrages waiting charges
Problem No 3 : Weak Processes
 Ill-defined process flows.
 No visible floor controls for Input and output product flows .
 Poor people productivity .
o No KPi’s / metrics
o Lack of coordination between Thermax and 3 PL Provider

7. Problem No 4 Inbound inventory
Slow receipt processing time resulting in the necessity for high
inventory carrying cost through the supply chain
Cluttered inbound docks . Trailers in the parking lot full with inbound
Problem No 5 Inventory binning
Poor Inventory stock and location controls –
Can’t find stock for customer orders .
Excessive order pick times
Problem No 6 Invoicing
Need to tweak Sales & Marketing DI Plan .
Problem No 7 Dispatch
Picking productivity poor
Additional labor and Partially picked orders
Leading to demurrages costs .
Regularly needing overtime to meet customer orders
Stock loss / FG not completed

8. Problem No 8 Inventory Build up
 Large Number of Pressure Parts with aging till One year
 High cost of Inventories with aging till more than 365 days
Problem No 9 Lack of up gradation of infrastructure
 Low standard basic facilities
Problem No 10 : Lack of HR/IR /Safety Issues compliances

9. TURN AROUND PLAN
BY OPERATIONAL EXCELLENCE
TARGETS
5 S Discipline
Reduce SCM process variation
Improve On Time Shipment (OTS)
Increasing inventory turnover
Reduce cost of crane per day
Reduce cost of Demurrages

10. 5 S
TO CLOSE THE GAP OF
UNTIDYNESS

11. Action Implemented
Sort
Proper area identified for each material and shifted accordingly .
Area distributed on Scrap /non usable / Working Order/ Classification family PU wise
Set in Order
Space for everything is in its place at all times.
Loose material was identified and kept in bins.
Additional racks for vertical uplifting to create space
Shine
Clean and Inspection work culture installed .
Scrap Management put in place.
House Keeping was enforced strictly
Area wise allocation for up keep for better
Accountability enforced for every sector had an owner to ensure its upkeep
Standardize
Proper inward as per space management , enforce to make them follow
Sustain
Walk in anytime to see Top standards of 5 S

12. OPEN YARD LAID OUT FAMILY WISE PRODUCT

14. CHAKAN
BEFORE REVAMP
FAN PROPER LAY OUT EOL PROPER LAY OUT PRESSURE PART
PROPER LAY OUT
FG PACKED CASES
PROPERLY LAID OUT
CHAKAN
AFTER THE REVAMP
CHAKAN STORES PROPER
LAID OUT SCRAP MANAGEMENT
TEAM THAT
MADE IT POSSIBLE
Pressure Parts and EOL stored in Chaotic manner Scrap spread
all over
Store haphazard lay put

15. BENEFITS
All Material in open yard segregated family wise .
Easy and traceability of material.
New loading location has been created for Domestic, Export and Project
No crisscross of crane movement
Roads has been cleared, and zero accident has been reported till now.
Turnaround time for unloading and loading has been decreased.
Zero damages for material.

16. Process Improvement
VALUE ENGINEERING
PROCESS
Identifying Internal Customer
needs
Floor control
Documented SOP
Identifying Ownership
KPI
Routine Administration
Work Out with Employees
Pending GRN Control limit
Inventory Binning Accuracy
Picking and Dispatches
Readiness
Quick Strike
1-6 Days
Process Mapping
Basic “Blocking & Tackling”
 Tools
Simple Tactical Focus
Obvious Quick Fixes
Containment
Plug Holes in Dike

17. WASTE IDENTIFIED IN FLOW CHART
Sales Order
Input
By Planner
Plant
Operations
Buyers
Decision
PR
Drawing
PO
Supplier
Vendor
Chincwad
Storage
Assembly
&Consolidation
Center
Chakan
Decision
By planner
Decision
By
Buyer
Output
Wait &
Delay
Transport
Wait &
Delay
INWARD
Operations
QC
Decision
RTV
STORE
BINNING
WRONG
DOCUMENT
GRN
Monthly
Plan
Dispatch
Preparation
Of SYSTEM
FG
COMP
INVENTORY
PHYSICAL
FG PICK
PACK
REWOR
K
DI
BY COMMERCIAL
DISPATCH
CUSTOME
R
END
MISSING
ITEMS
FOC
CUSTOMER
OUT
PUT
INVOICED
Open yard
Wait &
Delay
For Back order
STAGING
INVENTORY

18. Processes we improved and Waste we removed
MPROVE COLLECTION OF MATERIAL
COST REDUCTION OF TRANSPORT
IMPROVING INWARD PROCESSES
IMPROVING BINNING AND INVENTORY MANAGEMENT
IMPROVING DISPATCHES SPEED
REDUCING COST OF DEMURRAGES
USAGE WITH COST REDUCTION FOR MATERIAL HANDLING EQUIPMENT
REDUCING USAGE OF WOOD PACKING
ALTERNATE WAY TO WOOD PACKING

19. IMPROVE ON TIME SHIPMENT
NON VALUE ADDED ACTIVITY
Movement in isolation by any buyer
without any planning .
No regard for correct dimension transport
Small items in big transport
Supply for job work without any planning
of sharing transport.
Bill discrepancy with regard to rate
distance and demurrages .
POSSIBLE SOLUTION
Possibility of clubbing
Consolidation of loads for different kind
of movements.
Type of vehicles suits to load pattern
Scheduling of standard items / parts
inbound movement / on minimum and
maximum stock quantity
1

20. IMPROVING CURRENT STATE IN GRN
GRN
3 Days for Binning
30 Days for Quality Clearance or return of items
RTV Items returned back in time
Non GRN cases were closed with Buyers
Finance Person placed near GATE to prevent incomplete Document from Supplier Inventory to be in
warded. All cases to be solved by Buyer and Supplier outside the gate

21. IMPROVING BINNING
BINNING IMPROVED
Binning Card under
implementation
FIFO Colour Code
Auditing for 100 %
Accuracy

22. HOW WE ARE MAKING INVENTORY LEAN
How Pressure Part was reduced How EOL was reduced
Pressure Parts to be invoiced according to planned
customer DI which was fixed
All Pressure Parts identified to be invoiced
Left over will be reallocated to new order
Canceled to be shifted back to Compo
Option to sell it at reduced prices also
EOL more than 180 days returned back from
Staging to Component Inventory
QC verified the useable inventory
Old non useable inventory scrapped to earn some
value
More than 30 days inventory monitored

23. SIX DAYS FOR EXPORT
ORDER PLACED ON CONTAINER FIRM BASED ON DATE TO DISPATCH
CLOCK STARTS POST RECEIPT OF EMAIL OF CONFIRMATION OF MOVEMENT OF CONTAINERON
TO WAREHOUSE ON FIRST DAY
PACKING FG TIME AND LOADING CHECK TIME INCLUDED IN 24 HOURS OF SECOND DAY
MOVE TO PORT ON THIRD DAY
ACCELARATED LOADING WITHIN NEXT THREE DAYS
FOCUS ON TIMELY AND SAFE LOADING IN EXPORTS.
REDUCING DEMURRAGES
5

24. COST REDUCTION ON MATERIAL HANDLING EQUIPMENT
Area of Improvement
 Crane Consumption was very high ranging from 9 to 11
 No discipline or monitoring mechanism how many cranes are required for a day's
work
 Every individual stake holder wanted a crane for himself
 Cranes were most of the time idle after initial work for which they were tasked
6

25. ACTION IMPLEMENTED
Proper demand analysis of crane is done for work requirement for the day.
Crane utilization with sharing concept started.
5 S or improving area reduced crane demand for picking packing and no cross movement leading to
requirement of less number of cranes.
Correct tonnage of crane was also monitored as that reduced cost .
Security was alerted to identify to ensure 8 hour shift to half day shift or sharing.
Crane operators lunch time was matched with own team so that common rest timing are observed.

26. BEFORE AFTER
If Fan packed in Wooden Crate If Fan packed in Corrugated Box
Saving per Box = A-B = 6777.50 – 5133.82 = 1643.68
Wood Saving per Case =Crate –Base = 23.75 – 7.91 = 15.84 CFT

27. 27Copyright © 2013 Accenture All Rights Reserved.

28. Aim: To Improve Store Management
at Site for reduction of material loss
and improve documentation with
accounting .
Material should be preserved with Store under 5 S
Traceability and made available when ever needed
No waste or loss of any kind due to ill defined process.
COPQ to be less

29. A few more reasons
Surplus Material to be Accounted
for and traceability organized
Timely receipt inspection needed
to be done during inward

30. Why was the Opex project
needed
5 S needed
implementation
Fire and Rain / Flood Hazards also lead to
High COPQ due to spoilage

31. Srl
No
Action Taken
1 Proper Estimation : Approval stage for budget allocation of store and
preservation
2 Store Management manual , Training to site team
3 Store Construction & Infrastructure Improvements
4 Timely support of MH + Unloading team Manpower based + material like
Sleeper/Tarpuline
5 Systematic Inward to outward as per Store process

32. Srl
No
Action Proposed /Taken
6 Store Documentation ( DBR+ Stock register + MDR+ Thorough inspection on
receipt.
SRN at site and payment to Supplier linked to received at Site
7 Preservation and Storage
8 Safety and Security of Material
9 Checks and Control Weekly report + Audit and Physical verification +
Photograph + Formalized MIS
10 Duplicate Manual report to be streamlined by ERP generated report

33. Timely Store
Construction
Positioning of
Store Manager /
Unloading team
Store & Preservation
Policy and Scrap
Instruction
Safety and
Security
Guidelines
Day Book Register
MRIV
MDR and SRN
MIV
Stock ledger
Scrap Disposal
Inventory Reconciliation
Packing Slip
Inward Material
Customer Free Issue
LP Items
ERP and IT
team
Project and
Construction
Material team
Initial Estimate for
Store Management
Organization
Goal
ZERO LOSS OF
MATERIAL
Store Delivery
Service
Quality and
Safety
INPUT
ENABLERS
GUIDE &
OWNERSHIP
OUTPU
T

34. Note Worthy Initiatives
Inward: Ensuring it is linked with
SRN so that visibility of material
and correct documentation is
maintained at all times
Photo of inward taken and kept as
record
MDR: Getting Linked with Issue
Management
Issue: Issue of Material taking
place through ERP
Stock ledger >ERP Based
Cyclic Count of Inventory
Area upkeep Photographs
being send once a week
Reconciliation of inventory
with contractor done
regularly wart balance /return
Scrap yard and Scrap bin
being maintained
Training on ERP at site by
ERP team

35. VISUAL DISPLAY OF RESULTS OF
INITATVES TAKEN

36. Training conducted on
Material Management for
Site and Store team
WE
CONDUCTED
TRAINING FOR
STORE AND
SITE TEAM
TRAINING OF PEOPLE

37. MIS REGULARIZED
EVERY
MONDY WE
GET
MIS OF
DBR
STOCK
LEDGER
SRN STATUS

38. PROPER PROCESS OF INWARDS WITH PHOTOS
ALONG WITH MDR AND RIR DOCUMENTS

39. TRACKING
MDR
MDR FOLLOWED UP IN TIME

40. WE ALSO
TRACK
PENDING SRN
SRN TO BE
MADE WITHIN
7 DAYS
Average now
is 4 days

41. We ensure
Our stock
ledger is
updated with
correct status
of material

42. MATERIAL
ISSUE
THROUGH
ERP

43. REGULAR
PHYSICAL
COUNTING
RECONCILATION
WITH STOCK
LEDGER

44. MEASURABLE MIS
FORMULATED AND SEND TO ALL CONCERNED

45. INTERNAL
AUDITS
REVIEWS
UNDERTAKEN

46. AUDIT VISIT
REPORT
FOLLOWED UP
WITH
CORRECTION
ACTION TAKEN
SITE AUIDTS
RECTIFICATION

47. GRID PLANS MADE

49. STORE

51. CAGE SYSTEM FOR
SAFETY OF INSTRUMENTS AND SPARES

52. RACKS

53. PAINT
STOCKING

61. MATERIAL SAFEKEEPING AND PROPER USAGE
WILL BE A HABIT AND IMBIBED IN OUR DNA NOW
Streamline Inward with Output at Site
Manage Space and Movement of Material
Monitor Waste and Aging of Material
Reduce Scrap and Unused material

62. GOING FORWARD
ERP process
Best lesson learned
from each sites to be
made uniform
practice in
implementation for
new sites
Consistent and
Stability of
processes by team
Live with the
Mantra: Zero Loss
a Habit !

63. Overcoming Resistance to
Change
Set goals, measure, provide
coaching and feedback,
reward and recognize
Communicate the
what, why, how,
when, who,...
Educate and
train in new skills
Not
Willing
Not Able
Not Aware

64. Processes have improved
stress free working and
reduced pain area
Regular work out meeting with employees have resolved
many of their issues also
Making a social pact or work out meeting with all employees
for maintaining continuity of purpose
Rationalized working Hours without rework

65. SUMMING UP OF RESULTS

66. Process: Six Sigma DMAIC model
established (Define, measure,
Analyze, Implement and Control).
Operations :
Lean model in working ways
KPI established
5S as a culture and scrap
Management
Value Streaming methods to
reduce waste of any kinds
Gemba Culture for all
Safety culture improved
People
Aligned with process
expectations
Disciplined and Looked
after !
Most Legal /IR compliances
completed
 Infrastructure Improvement
What We Did Well

67. MD VISIT TO INSPECT MATERIAL

70. WON GOLD AWARD FOR SIX SIGMA
TURE AROUND SETUP IN QUALITY CIRCLE
FORUM