A

Case Study
On

“Inventory Management

Submitted by:

Tanu Kumari
SEM II
Roll no: 210000000982

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 1.2 Project Objective

• To standardize the Inventory Management system and warehousing practices across all
the CFA.
• To improve the customer service level for primary customers

Holistic View of Organization

Description
There are various organs of the organization like sales representative, logistics, finance,
production facilities, distributors etc.
The end customers get access to products of SCJ via two channels.
1. Traditional Trade channel
2. Modern Trade channel

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To cater to the need of these two channels we have three existing routes:
1. CFA-TTDB-Retailer route
2. CFA-EMT-MT indirect route
3. CFA-MT Direct route
For SCJ the primary customers are TTDB, EMT and MT Direct. SCJ takes the orders from these
primary customers and supply the materials accordingly.
We have broken down the complete order management process in three phases:
1. Phase-1: Order Generation
2. Phase-2: Order Processing
3. Phase-3: Delivery/Dispatch.

3. Phase-1: Order Generation

3.1 Flow Chart

3.2 Description
For MT Direct:

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 • The order is generated via ARS for MT Customers.
• This ARS is based on forecasting for some customers and for others it is based on rate of
sale.
• The order is received either on mail or Implants download it from the portal.
• The implants validate the PO where it is correct or not.
• After the implants find it correct it sends the PO to CG for processing the order
• If the PO is not correct, the PDP consults the Customer for any correction.
• For the MT customers PDP have been established.
• Credit system is there for MT Direct.

For EMT:

• There has been established norms for replenishment for EMT customers.
• The order is received on mail.
• The implants validate the PO where it is correct or not.
• After the implants find it correct it sends the PO to CG for processing the order
• If the PO is not correct, the PDP consults the Customer for any correction.
• For the EMT customers PDP have been established.
• Credit system is there for EMT Customers.

For TTDB:

• TT customers give their order via mail to CFA

• There are no replenishment norms set for them
• TTDB orders are highly influenced by Sales team and the availability of material in the
warehouse
• There is no credit system for CFA, they have to make RTGS payment, only then their
order is processed.

3.3 Present Practice & Its Limitations

• Manual ordering via mail from TTDB

• No specific time/duration of ordering
• Highly influenced by stock availability
• Highly influenced by sales team
• High month end skewness
• In peak seasons:
➢ for some SKUs inventory are there for 15-20 days and for some SKUs inventory
gets short, leads to order every second day

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 ➢ CFA gets vast number of orders and that creates havoc in fulfilling orders and
many a times partial order is processed, ultimately affecting the fill rate and
causing lost sales
• In Non-peak seasons:
➢ Inventory carried is high around 25-30 days, leading to high inventory carrying
cost.

3.4 Ideal Process

• The company does the forecasting on monthly basis for every region.
• Based on the distributor size, their past sales the total forecasting in the region can be
divided into the distributors
• Based on forecasting, lead time, replenishment duration, service level; norms should be
set under suitable replenishment scheme.
• Benefits:
➢ timely orders,
➢ no month end pressure,
➢ lower inventory on customers side,
➢ better assortment of SKUs

3.5 Recommendation 1
“Stock norms should be set for all TT Customers and should be revised for MT customers as per
mutually agreed norms based on restock level, cycle inventory, safety stock and service level.”
proposed replenishment system
In this replenishment model, review period is fixed and we set a restock level for all customers
based on forecasting, service level, lead time, review period etc.
At every review period, the stock difference between restock level and inventory in hand will
get ordered.
In this replenishment model, the order quantity will vary but the ordering duration will remain
constant.

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Where
1. Restock level= d*(RP+LT)+ SS
Where d=average demand per period
RP= Review period
LT= Lead Time
SS= Safety stock

2. Safety stock = SF*√((LT+RP)*SdD^2 + (SdLT *d)^2)

Where SdD= Standard deviation of demand
SdLT= Standard deviation of lead time
SF = safety factor

3. Reorder quantity = Restock level- Inventory in hand at review period

3.6 Recommendation 2

“Centralized order processing should be implemented.”

Benefits of centralized order processing

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 • Holistic view of total orders and replenishment needs, replenishment planning can be
done in a better and faster way.
• Elimination of manipulation of orders on CFA levels.
• Reduction of errors and costs
• Faster order processing and better monitoring
• More time to CFA for order servicing, scope for service improvement leading to
customer satisfaction.

Cost Analysis

Avg Orders of Avg Orders of

CG (month) CFAs (month) order per day (CG+CFA)
Time taken to
punch (in min)
<10 4 1190 1620 112
No. of SKUs around 20 6 425 180 24
above 20 8 85 3
TOTAL 1700 1800

CTC of an executive
Order processing time in a day
for order processing
(in min)
No of working days 25 2302 (Rs.) 400000
Time to check order
Order processing time in a day
discrepancy (in
(in hrs)
min)
10 38.37 Total for 6 executives 2400000
Time to generate Taking effectiveness to be 80 %
pick up list 2 as human labour is involved 47.96 CTC per month 200000
No of working hrs in a day 8 Total orders per month 3500
No of executives required 6 Per order cost 57.14

From the above analysis we see, for entire volume of orders the total number of executives
required is 6 and considering their CTC (as per HR team) we arrive at per order processing cost
Rs. 57, which is significantly lower than what the company is incurring at present.

4. Phase-2: Order Processing

4.1 Flow Chart

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4.2 Description
For MT Direct:

• Once the CG receives the order it checks for any discrepancy in the order
• If there is discrepancy it resolves consulting implants and customers.
• If the order is correct then CG punches the order
• Any stock out information is received by deployment team next day of punching the
order via MIS
• Deployment team informs about the in-transit stock to the CG
• CG generates the Pick list as per PDP
• CG sends the pick list to CFA for further processing.

For EMT:

• Once the CG receives the order it checks for any discrepancy in the order
• If there is discrepancy it resolves consulting implants and customers.
• If the order is correct then CG punches the order
• Any stock out information is received by deployment team next day of punching the
order via MIS
• Deployment team informs about the in-transit stock to the CG

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 • CG generates the Pick list as per PDP
• CG sends the pick list to CFA for further processing.

For TTDB:

• CFA checks for any discrepancy in order and resolve them with customers.
• TTDB provides the RTGS payment for the items to be procured
• CFA punches the order
• On confirmation of payment, CFA becomes eligible to generate pick list and tax invoice
• For any stock-out the CFA informs the distributor and distributor can makes changes in
their order.

4.3 Limitations in present Practice

• The activity of CG contacting deployment team and deployment team contacting

transportation team for in transit stock connectivity is redundant.
• There is no back communication to the customers regarding their order received, order
punched, quantity allotted etc.
• The master file of SKUs at company end is not synchronized with that at customer’s end.
Many discrepancies are because of manual updating in customers’ system from the file
sent by Implants.

4.4 Recommendation 3:
“SIT information should be shared with CG directly from transportation team rather than CG
asking for in transit details from deployment team.”
The SIT report shared by transportation team to the deployment team and other concerned
have limitations
➢ It is not exclusive as some of the transport information are kept blank with status
unknown
➢ Contract Manufacturer are not integrated with SAP
➢ Manual Intervention is needed in transport due to which there is need to be make
changes in SIT report

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In the ideal scenario, the CG should get the in-transit information from SAP and if there are any
changes in that information, then transportation team should provide that on real time basis to
CG.

4.5 Recommendation 4:
“Back communication to the customers about the quantity allocated to them and to be
delivered, it can be done either though creating a portal or an app.”

• In short term,

➢ The quantity allocated against a PO should be communicated to the customers

when the final order is punched. For this an app or a portal can be created
• In long term,

The complete tracking of order should be provided to the customers:

➢ Order received
➢ Order being processed
➢ Quantity allocated
➢ Discrepancy in order, order returned for review
➢ Stock Transported
➢ Tracking of trucks

• Advantages:

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 ➢ When the order quantity is high and are being handled by few persons, it is
practically difficult to provide information of queries on phone.
➢ Better customer satisfaction.

4.6 Recommendation 5:
“Automated interlinking between the master files of SCJ and Customer.”
Automated interface should be created that will automatically update master file at customer’s
end once the changes have been made at company’s end.
The firm should go for EDI or any such systems that will link the systems at both end and will
reduce the errors.
At present, there are discrepancies in around 25 % PO received by CG, this can be reduced to a
good extent once there is automatic interlinking.

5. Phase-3: Delivery/Dispatch
5.1 Flow chart

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5.2 Description
For MT Direct:

• Once the CFA receives the pick list it generates the tax invoice
• CFA arranges the vehicle for transport of material
• CFA picks the material bring it to dock and load the material in the vehicle
• CFA follows FEFO in dispatching the material from the warehouse
• The inventories are manually checked for their manufacturing dates
• Presently the cases of material are kept directly on floor in warehouses.

For EMT:

• Once the CFA receives the pick list it generates the tax invoice
• CFA arranges the vehicle for transport of material
• CFA picks the material bring it to dock and load the material in the vehicle
• CFA follows FEFO in dispatching the material from the warehouse
• The inventories are manually checked for their manufacturing dates
• Presently the cases of material are kept directly on floor in warehouses.

For TTDB:

• Once the CFA receives the pick list it generates the tax invoice
• The pick list and tax invoice can be generated only when the payment confirmation is
received and updated on SAP.
• CFA arranges the vehicle for transport of material
• CFA picks the material bring it to dock and load the material in the vehicle
• CFA follows FEFO in dispatching the material from the warehouse
• The inventories are manually checked for their manufacturing dates.
• Presently the cases of material are kept directly on floor in warehouses.

5.3 Recommendation 6:
“Scanning system, wooden pallet & Warehouse Management system (WMS) in warehouses”
5.3.1 Scanning system
It should be incorporated for tracking and managing the inventory
Reasons:

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 • FEFO practice presently is being followed with human intervention only, it’s a complete
manual process and chances of error is high in case of high number of orders
• A large stock of old manufacturing date is still lying in Delhi warehouse:
Product Manufacturing month
➢ All out lotion Oct, Nov 2015
➢ Glade Air freshener gel April, June 2016
➢ Citrus 500 ml spout pouch August 2015
➢ Glade sport morning freshener September 2016
➢ Glade aerosol air freshener Sep, Oct 2016
➢ Mr. Muscle floor cleaner Nov 2016
➢ And so on…

5.3.2 Use of wooden pallets

• Present Situation
➢ High loading and unloading time e.g. 32 feet truck 3 hours
➢ Health problems in manual labor forces in warehouses

• With wooden pallets

➢ Loading and unloading time reduced by 50 % as 32 feet truck loading takes 1-1.5
hours in the warehouses where it is used.
➢ Less health issues to the workers as they will have to carry the inventory on their
shoulders less compared to the present situation
Note:
✓ If wooden pallets are not adding value at present as order size is small, then at lease we
should use bitumen sheet to avoid keeping cases directly on ground.
✓ In only peak time, height needs to be kept high for the inventory otherwise there is
sufficient space to keep the inventory within height suitable for carrying the complete
lot on pallets.

5.3.3 Warehouse Management System

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This should be installed in warehouses so that the tracking of material can be easy. Presently
one look for material as per pick list throughout the warehouse.
Once it will get installed with the pick list, material location will also get printed on the sheet
and then the material can be tracked easily
The other benefit it will provide along with scanning system that all the cases can be tracked
and there won’t be any issue of theft, misplacing etc.

5.4 Recommendation 7:
“Pre-information of the vehicles to be unloaded to CFAs”
CFAs should be informed about the vehicles arriving for unloading and vehicles to load one day
before, or at least in the morning when they start work.
In many companies, from the SAP they get the complete information of vehicle arriving that
day in the morning itself.
But in SC Johnson this information is not provided. Proper mapping may be required in SAP for
this

6. Recommendations Summary
1. Stock norms should be set for all TT Customers and should be revised for MT customers as
per mutually agreed norms based on restock level, cycle inventory, safety stock and service
level.
2. Centralized order processing should be implemented
3. Back communication to the customers about the quantity allocated to them and to be
delivered, it can be done either though creating a portal or an app.
4. SIT information should be shared with CG directly from transportation team rather than CG
asking for in transit details from deployment team.
5. Automated interlinking between the master files of SCJ and Customer should be there.
6. Scanning system, wooden pallet & Warehouse Management system (WMS) in warehouse.
7. Pre-information of the vehicles to be unloaded to CFAs
Additional Recommendation (From TTDB point of view)

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8. In peak time, the TT distributors should be given some credit, as the sales are high and
sometimes they face problem with no credit policy to them.

7. Ideal Process

7.1 Flow chart

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7.2 Description

• All the orders will be received via ARS either on mail or on portal
• COPT (central order processing team) will check for any discrepancy in order and will
resolve it with customers, as there will be automatic linking between the master files
then the number of discrepancies are bound to be less.
• Once the order is correct the COPT will punch the order and book the confirmed
quantity
• For the materials being stocked out, it will get the in-transit information from SAP and
will coordinate with transportation team for real time stock connecting information.
• COPT will generate the pick list as per PDP.
• Once the pick list is generated the back information of this will go to customer and the
pick list will be sent to CFA.
• CFA will generate the tax invoice and arrange for the vehicle to transport the material.
• CFA will pick the material and will load it to the vehicle and the material will be
dispatched to the customers.

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