Forecasting Model for Fruits & Vegetables in Retail Outlets

EXECUTIVE SUMMARY

Statement of Purpose

To create an indenting system between Retail Outlets & MIS of Subhiksha Trading Services Ltd in Upper North Region. The system should serve the following purposes

Ø Reduces Inventory

Ø Reduces Time lag in SCM

Ø Reduces Dump

Problem Faced

Ø High level of Inventory

Ø High time lag in SCM

Ø High Dump Value

Solution

Implementation of PRABAL’S INDENTING SYSTEM Version 1 that takes into consideration the following parameters.

Ø Average Sales

Ø Day Effect

Ø Season Effect

Ø Increment Effect

Ø Dump Effect

Ø Days of Stock

Ø Critical Shelf Life

Problem Analysis

The company is leading Retail Chain, which serves Fruits & Vege

tables (F&V) also. The F&V are purchased centrally from

Mandi and supplied to Ware House. The purchase is based are based on the compiled order of the region provided by MIS. MIS compiles the data based on the Indent given by individual RO’s(Retail Outlet).

Indent is made by Supervisor. The education level of Supervisor is less than higher secondary. The indent is given in 2 days advance to MIS. Indent is normally created by gut feeling of Supervisor.

Indent > Supply = Wt loss + Sale + Closing Stock

Closing Stock = Sellable Closing Stock + Dump

Present Methodology

Ø On the Closing of Day i.e at night, closing stock is weighed and recorded.

Ø Each outlet tries to maintain the desirable no. of day’s stock, which has been calculated for each item separately.

Ø Also Critical Shelf Life of each SKU has been calculated and circulated.

Ø While indenting, supervisor normally keeps both the mentioned information in mind.

But the closing stock calculated by them is misleading in two ways:-

• Closing Stock reported consists both sellable Closing stock and Dump.

• Closing Stock is taken at night, while reported in the morning. Considerable amount of weight loss and increase in Dump occurs by the morning.

This deviation from ideal indent at RO level creates a bullwhip effect at Central Purchase Level.

New Methodology

The indent is forecasted, based on the mathematical formulas.

It Considers:-

Ø Average Sales

Ø Day Effect

Ø Season Effect

Ø Increment Effect

Ø Dump Effect

Ø Sellable Opening Stock in the morning

Ø Days of Stock

Ø Critical Shelf Life

Ø Crate Size

1. Gives Recommended Indent
2. Gives the option of modifying indenting by increasing the %age of sales over last day

Nomenclature & Formulae

Nomenclature

DSi = Day Sale of particular SKU on Day i

Average= ∑ DSi (i=1 to 14)

Dump E=( ∑ DUMPi)/14 (i=1 to 14)

INPUTS

DSi where i=1 to 14

OS15 = Opening Stock of Day15 of particular SKU

DUMP15 = Opening Dump Stock of Day15 of particular SKU

STN IN15 = Stock Transfer Inwards(Accepted) on Day15 before Indent is made.

STN OT15 = Stock Transfer Outwards on Day15 before Indent is made.

OUTPUTS

RI = Recommended Indent in no. of crates for Day17

FI = Final Indent in no. of crates for Day17

Recommended STN out in no. of crates on Day15

OPTIONAL INPUT

Increment desired on last day sale in percentage inputs.

REMARKS

Kindly mention that why you are giving this increment when its more than 50% or less than -50%

Formulae

DE= Day Effect

DE= (DS3+ DS4)/2

Avg Sale

SE= Season Effect

SE = ∑ DSi (i=1 to 8)

∑ DSi (i=1 to 7)

Dump E= Dump Effect

Dump E= (( ∑ DUMPi)/14)/Avg (i=1 to 14)

PS= Projected Sale

PS= Avg(1+DE+SE+ Dump E)

DOS = Days of Stock

DOS = OS15 + STN IN15 – STN OT15

Avg

CSL= Critical Shelf Life

Logic Test 1 If DOS > CSL

> Stock out the excess stock

Else >Regular Indent

Logic Test 2 If DOS<1/2*csl

> Additional Indent=AI

> AI= RI*0.45 (0.45 is taken by Hit & Trial)

Else >Additional Stock=0

Recommended Indent = Reco I = RI+AI

Inc= Increment percentage over last day sales (DS14)

FI= Final Indent = Reco I(1+Inc/100)

Supply Chain in Diwali - Ops funda!

Oye, to all.... here's my take on Diwali :) yenjoy.... learn Ops fundas aswell !!!

Give and Take - Inventory Management Mom Style!!!


Operations Managament is the essence of life. It's all encompassing as well as it permeates everything! Take for instance this mail. The inputs are my weird thoughts, the output is the mail and the process of typing it, the value add ---------- yeah right :)!!!!

Diwali - the festival of light, is also the season where Mom's all across the globe face up to the big challenge of Inventory control. It's the time for the deluge, the give and take and the smooth maneuvering of gifts from one hand to the other.

Take my home for example. In Diwali, my Kitchen plays the role of a warehouse and MOM the part of the Inventory controller. Her job is not only to procure - gifts for people; but also find the right suitors for the parcels that are received from other people! Its not as simple as it sounds.

The thing about Gifts (mostly sweets and things to eat) is that , you need to do an ABC analysis of the inventory at all times and match the inflow value with the outflow value. If the outgoing value to the source is not atleast approximately equal to the incoming one from that source, it leads to supplier dissatisfaction. Whereas, if the outgoing value is greater than the incoming one, it leads to dissatisfaction of the inventory manager - my MOM .


The second challenge lies in the fact that at all times, the average space utilization of the gifts kept in the kitchen remains the same. So no matter how much MOM tries, the replenishment is always ready. Whenever she is absolutely ecstatic that the final gift was delivered, fresh stock arrives uninvited, with the additional burden of replenishing stock of equal value in order to send a return gift.

The third challenge is how to minimize the spend on gifts, by tactfully directing gift from A to Z and B to H and J to R and so on. At all times, the value of the interaction i.e. A to Home and Home to A should remain approximately equal. And its no easy task, mind it! MOM's through years of experience - recieve, evaluate, procure, inspect, handle, store and deliver gifts with such precision that each and every relationship becomes stronger and not one person is dissatified. It becomes almost second nature, involuntary to them. The challenge also lies in inspecting the gift, without spoiling the wrapper , in order to ensure that the gift has not been customised and codified to our name!

Also, the biggest challenge lies in the security of this inventory from a certain "ME" who has his eyes on the stock at all times. Pilferage - being a threat, stock counting is done twice a day and as it is inevitable, fresh order is placed in order to reach the minumum stock level, to prevent loss of dignity!!! The quantity ordered is instinctively calculated at "Economical" Order Quantities!!!

Finally, having a huge closing stock also creates health hazards for "ME" - because I generally recycle everything by eating it !! I generally END PRODUCT, i.e. I generally make "Finished product" a reality - I finish it alright !!! So the challenge is to have minimal to zero inventory at end of season. At this time, the tit-for-tat theory goes for a toss, and generosity comes to the fore. Even though obsolescence of stock is impossible (thanks to ME) , the stock is handed out in charity to the underprivileged. Not that I am complaining, but one person that is not satisfied is me :) Insatiable is my Nick name anyways.

If you come to think of it, JIT, lean supply chain -minimizing waste are fundas that are so astutely used during Diwali, the festival of light. Salute to MOM's and at some places Dads who manage this festival of give and take with such aplomb. As for my Mom, as I said, she has an addtional task at hand during this season, because for me personally - Diwali isn't the festival of " LIGHT ", my funda is Diwali - the festival of getting "HEAVY " :) hehehehehehehehe. So, a salute to her :)

Fundamentor...

DEPRECIATING VALUE OF THE DOLLAR AND THE GATES THAT IT IS OPENING

This article has been written by Sudeep Bhargava of Globaladroit (www.globaladroit.com)

The depreciating value of dollar in comparison to the major currencies across the globe is a matter of great discussion. Indian software industries and the exporters are feeling the pressure because of the depreciating value.

The value of dollar which was as high as 49.5 rupees per dollar a few years ago, has now come down to around 39.5 rupees per dollar. This marks over 18% degradation in the value.

Is this some way a boon for the Indian business system? I feel YES. I firmly believe that this is an opportunity which has been bestowed to the Indian business to INNOVATE. This is time to rethink about the current business models that are being followed.

This gives an opportunity to look into your business models and shell off the “non value adding” steps which are unnecessarily eating into your operational costs. In other worlds, this could be the time to go “lean”. Applying simple lean principles can give the Indian industry the competitive edge that they badly want to be competitive in the world market.

Improving the “way you work” and not only the quality of the final product or service would see the Indian business develop the competitive advantage. Probably there is no better time than this to apply the principles of Six Sigma and Lean which have given excellent results to the Fortune 500 companies.

One key question to ask is how to develop other sources of competitive advantage, such as building high-level capabilities which cannot easily be replicated by competitors, or how to change the mix of activities carried out in India versus other countries.

In order to do this, we will have to change their mindset: We will have to stop thinking of themselves as Indian companies and think more like global companies of Indian origin.
Indian companies will need to analyze their portfolio of costs and move production to where it makes the best economic sense. Already, the Indian IT firms are trying to address rising wage costs by moving production within India to lower cost regions like Kolkata or Bhubaneswar and to Tier-II and Tier-III towns.

The challenge that the Indian economy faces is not that of an economic bubble burst but of moving on to the next growth trajectory and economic development. Going by the model proposed by Porter, India has to embark on a journey that needs sowing the seeds for catapulting India into an innovation driven economy unique value.

India will have to definitely accelerate its reform processes and start working to become an innovation driven economy, as that would determine whether the country would become a developed nation by the year 2020. The focus should be on building processes that would be driven by innovation; this would make the economy resistant to external shocks and vagaries of economic cycles and currency fluctuations.

The bottom line is, our policies should concentrate on enhancing our capability in manufacturing, promote entrepreneurship, and provide incentives for innovation.

OEE-Overall Equipment Effectiveness.

hello friends

This aritcle was originally posted by me at http://www.engineeringinformatika.blogspot.com/ and has been crossposted here.

The concept of OEE is quite popular among Manufacturing Industries. It gives a good measure to the concerned authorities that how the Equipment is performing as a whole. It could be of individual stand alone machine or of full line. Though I have known the concept since last 5 years and also have used it many times during my job, but it was also tough to explain it to somebody.

Recently, one of my Professors, Prof Soumish Dev was teaching the concept again as part of Operations Subject. The way he explained it, was simply awesome. I am sharing the same explaination with you.

As can be seen in the picture above. Lets understand the concept from analogy point of view rather than taking it directly to machines and plants.

• Lets assume that there is a student of Engineering, who has 365 days in the year.
  Out of 365 days lets assume that 100 days are for holidays, as no student should study for 365 days. Then 265 days are left. This is known as Loading Time, while 100 days are known as Not Scheduled Time.
• Now, out of planned 265 days of working, student fells ill for aroun 15 days. Now, this gives us actually 250 days, where the student actually worked, and is known as Running Time. While the 15 days are known as Idle Time.


• Now, lets assume that the student claims that at his efficient or effective state of mind an health he can complete 80 pages of a book per day. So, this can be considered as Theoretical Output that is expected during the Running time. So, in this case it would be 250x80=20000 pages in the year. But, actually we found that he has read only 15000 pages. The reasons could be several that reduced his efficiency and effectivenes. So, 15000 pages, is known as Actual Output.

• Now, at the end of the year, teacher took a test of the student. The test was out of 15000 pages he studied during the year. As, the student has read it effectively and efficiently he should have got 100 marks out of 100. But, he got only 70 marks. Now, whats the reason. It means that out of 15000 pages he read only 70% properly. Other 30% was bad quality reading. So, he read only 10500 pages properly and the 4500 pages not properly. So, 10500 can be said as Good Output.

So, now we will calculate the OEE of student during the considered year. It will be comprised of following elements

• Availability i.e. Running Time/Loading Time or we can say actually followed time table w.r.t. planned time table.
• Speed Efficiency i.e. Actual Output/Theoretical output.


• Quality Efficiency i.e. Good Output/Actual Output.

Or if you notice carefully, in the above diagram we have just calculated Good Output/Loading Time.

JIT-JIDOKA(Autonomation)

Hello friends

This article was posted by me originally at http://engineeringinformatika.blogspot.com/2007/09/jit-jidoka-autonomation.html

___________________________________________________________________

This is my third article in series of Toyota Production System and JIT. The earlier two ones were Toyota Production System and Kanban.

I was recently writing the research paper on 'What are the true enablers of JIT?', and one of the true enabler under consideration was 'The enhanced information exchange between supplier and buyer'. In order to prove it to be enabler I presented the following discussion.

Another evidence, strengthening the notion of usage of information systems in JIT from the very start is Jidoka or Autonomation. This is a system, where quality assurance is made a prerequisite of JIT implementation. This is a information system, where if the quality of the product comes out to be bad for considerable number of consecutive times, then the signal is sent, which shuts down all the lines which act as customer or supplier to the defects producing station. This is done to maintain the continuous flow in JIT. If, the signal is not sent, then due to shortage of input material the customer lines will run without actually producing anything. Similarly, if the signal is not sent, then the supplier lines will keep on working leading to overproducing the output product, which the customer station (the defect producing station) would not be able to accept. And above all this is done to bring the immediate focus of everybody on the defects. This focus leads to the immediate remedy of the problem most of the times.

Now, how this signal is generated. In the traditional automobile environment, the operator or the authorized person on the defect producing station pulls the hanging rope (above the station). This rope is connected to all the lines. And pulling the rope from any point leads to the shut down of all the connected lines.The method of generating signal was modified to electronic means, when the rope was replaced by a button available on all the stations. This button, when pressed via common electrical supply shuts down all the connecting production lines. And immediately, the Andon board, with all the stations labeled on it, starts indicating that problem is occurring on a particular station. And recently, with the improvement of Internet and Information Technology this is done by use of sophisticated electronics and software.

This system was enhanced and implemented to an extent, that even the supplier and customer plants were sometimes stopped by the signal.

Operations

This is the "HAT curve" which explains the problem level with time. When ever the restructuring in the organization takes place intially the problems are less but as the people factor comes in the problem amplitude increase. But at the same time if proper action by corporate management is take then the problem will finally subside and will be decrease.

For achieving this the company has to do continuous improvement (CI).

PRODUCTION PLANNING & CONTROL : The fundamentals of PPC

What is Production?
PRODUCTION is basically the transformation /value addition of Input Raw Material into Finished Goods which are called as the “PRODUCT”.

What is Planning?
PLANNING is the Decision making process to achieve the End Objective by choosing the best Alternative which consumes the least amount of input resources and gives the maximum Output.

What is the control?
CONTROL is the process of ensuring that the Planned Production is constantly monitored and maintained and any deviation is avoided.

A Production and Planning System has the following functions to perform :

I. PLANNING phase: Prior planning, Active planning

I.a. Prior Planning :
(1.) FORECASTING - Estimation of type, Quantity and Quality of future order.
(2) Order Writing - Giving authority to one more person to undertake a particular job.
(3) Product Design - Collection of Information regarding Specifications, Bill of Materials, Drawings etc.

I.b. Active Planning:
(1) PROCESS PLANNING & ROUTING- Finding the most Optimum and Economical Process of doing the work and deciding where and how the Work will be done
(2) MATERIAL CONTROL - It involves determining the requirement of material and sources of material in terms of right Quality, right Price, right Time and at right Place and control of the material at every stage.
(3) TOOLS & MANUFACTURING AIDS CONTROL - It facilitates availability of right kind of Tools and Manufacturing aids of right Quality, price at right place and right Time and control over the same.
(4) LOADING - It is the systematic distribution of Work to manpower, machinery / Work Stations etc.
(5) SCHEDULING - Scheduling is the Time phase of the Loading . It is the details of What and in What Sequence the work will be done. It determines the Staring as well the Finishing Time of the respective jobs, the gap and sequence between the jobs.

II. ACTION PHASE :
(6) EXECUTION: This is the transition phase from Planning to action phase. In this phase the Team members/workers are instructed to start the actual work and execute it as per the laid down plan.
(7) DISPATCHING - In this phase the Product manufactured is despatched to the stores for storage, segregation , safely packed for onward despatch to customer’s end so as to satisfy the four “P” of Marketing leading to customer satisfaction.

III. CONTROL PHASE : It runs concurrently with the action phase.
( 8) PROGRESS REPORTING : Data regarding the progress of the Job is collected on a predetermined interval and the same is compared with the pre-set level of performance in terms of Time and resources consumed as laid down in the plan.
(9) CORRECTIVE ACTION - The corrective action is resorted to when it is found that the actual performance has a deviation from the Planned performance. Suitable steps are taken by correction, expedition, replanning or rescheduling in terms of resources allocation, time element, work order or purchase order.

Today logistics play an important role for a company in reducing their overall cost and provide overall satisfaction to their customers in terms of delivering the product to them whether raw materials or finished goods at right place and at right time without any theft, damages, etc. Initially the companies depend upon local transporters for the movement of their materials but with the presence of logistic companies the trend is change. Today logistic company not only helps companies in the movement of materials but also provides complete logistic solutions like warehousing, distribution, inbound and outbound logistics, different mode of transportation depends upon the requirements of customers.

Currently in India for a domestic movement of materials most of the companies will go for road, rail and air mode of transportation.But today companies are interested in introducing new concept which is inland ship movement which help them in the movement of materials along the coastal line of the country and reducing their overall logistic cost.

Lot of companies concern that if they move their materials via sea then it will take more time but as far as cost is concern it will reduce upto 15 to 20 percent if the materials is move via sea and also companies will have no tension about any damages, theft and moreover any union problem when materials move from different states.

Concept about this business
Logistic Movement: North to South


In above diagram there are basically two modes of transportation that companies follow. The first one is movement of materials by road which most of the companies follow but as per new concept the other mode is to move materials via ships along the coastal line.

The movement of materials from parts of north starts and it will move to kandla port via road in which materials are moved in the containers and from Kandla port it will move to port of Cochin via ship by doing transshipment along the coastal line.
After Cochin it will move to Chennai and reach up to Calcutta along the coastal line.


Something about 3PL

Third Party Logistics (3PL), the concept of a single professional logistics service provider managing the entire logistics functions of a company, had originated in the developed economies of Europe and America, to relieve industries from huge logistics costs apart from the hassles of dealing with multiple in-coherent logistics service providers. It proved to be immensely successful in improving logistics efficiency of majority of industries and quickly gained popularity, spreading across the globe. In the process, several professional logistics service providers offering that kind of services have emerged to be leading 3PL providers with operations in multiple continents.

In the initial stages, 3PL providers offered only basic logistics services such as warehousing and transportation. But with growing logistics needs of organizations to remain competitive in globalized economies, 3PL providers have evolved to offer several other value added services ranging from packaging to supply chain planning.

Trend about 3PL in INDIA
3PL industry’s origin in India can be traced back to mid 1990s. The industry was pioneered by global logistics majors as a part of extending these services to the Indian subsidiaries of multinational companies in automobile, electronics and FMCG sectors. Indian subsidiaries of multinational companies in these sectors took cue from their parent companies and began to outsource a share of their logistics functions to these specialist service providers. Though insignificant in the first few years, Indian 3PL industry is experiencing a rapid growth after year 2000. The number of participants in this industry had grown to be more than 400 by year 2006.

The Indian 3PL industry can be divided into three distinct tiers - National Major 3PL companies with nationwide presence, Regional 3PL companies with strong presence in one or two regions, and Small Remote 3PL companies.

Factors that are driving Indian Logistics towards 3PL

Value Added Tax (VAT), the Indian Government’s proposed uniform tax regime, is expected to drive Indian industries towards using more 3PL services. Introduced partially in 2005, a full implementation of this regime is expected to necessitate having centralized large warehouses in regional hub cities, to achieve best efficiency in logistics. Since building such large warehouses requires huge investments, most Indian companies are likely to outsource the warehousing function, creating immense potential market for 3PL service providers. Leading companies in major industries have already started planning for the new scenario and the required warehousing capacity to be outsourced. Others are expected to follow them soon.

The government of India’s increased focus on improving logistics infrastructure is expected to have a huge positive impact on 3PL market. The government has invested US $17 billion to upgrade highway networks, with the implementation of two major projects, namely the Golden Quadrilateral network and the North-South-East-West (NSEW) Corridor. Apart from this, in a remarkable infrastructure related decision, the government has opened up rail freight operations to private players, thereby creating opportunities for cheaper and faster movement of goods. Transportation by rail is definitely cheaper than by road, as trains are faster and have lower costs per unit distance traveled. This is expected to enable 3PL service providers in offering more cost-effective services to clients, thereby increasing the 3PL usage by all industries.

Kanban

Hello Friends

This is my second article of the series of Toyota Production System on this blog. I m not making it very elaborate and cumbersome. For more details there is lot of literature available on the net. My only objective in writing this article is to give the jist of the methodology and to share my experiences with the readers.

What is Kanban?

Kanban is a critical element of Toyota Production System, by acting as enabler to JIT. It was developed in Toyota Motor Corporation in Japan during 1950’s. Now it is a very popular tool in lean manufacturing.

Essentially, the most important role Kanban plays by enforcing and checking Pull System in manufacturing. Literal meaning of Kanban comes from Kan- card, Ban- signal. So, it’s a information system employing cards that enables and checks the usage of Pull System.

Pull & Push System

Without taking too much length of the article I will briefly explain Pull and Push System. Lets suppose there are four stations in an assembly line as shown in the fig’s. Station 1 is the first station and feeds material to the second station and so on.

In the pull system, the production schedule is given to the station 1. The station 1 accordingly makes the first component and pushes it to the station 2 and so on. In this way, along with the material flow station 1 is giving the information target also to the station 2, that how many components it needs to make.

In the push system, the production schedule is given to the station 4. the station 4 demands the number of components required from station 3 and so on. In this way the information is passed on from station 4 to station 3, that how many components it needs to make.

The push system is good when the certainty is the system is high, but normally its not so. Normally there is lot of uncertainties like change in demand, machine breakdowns, defective components, etc. This uncertainty leads to building up of inventory at every station. While in the case of pull system, actually the customer is driving the demand, by feeding the information of limited time period to the station 4. This enables the system to be flexible and more responsive to the market demands. The pull system, enforces that if one station is out of order then the whole line will stop example : if station 3 breaks down, then it won’t be able to supply to station 4 and it will stop and it won’t demand anything from station 2 and it will stop. This leads to reduced inventory at every step, which liberates the cost stuck in the inventories.

So, there should be a system that enables the pull system. Here Kanban comes into picture.

How Kanban works?

The simplest method used for Kanban is Dual Kanban. The elements of this system are :

• Production-ordering Kanban Card
• Withdrawal Kanban Card
• Kanban Post

A Production-ordering Kanban - specifies the kind and quantity of product which the preceding process must produce. The one illustrated (right) shows that the machining process SB-8 must produce the crankshaft for the car type SX50BC-150. The crankshaft produced should be placed at store F26-18. The production-ordering Kanban is often called an in-process Kanban or simply a production Kanban.

A Withdrawal Kanban - specifies the kind and quantity of product which a manufacturing process should withdraw from a preceding process. The withdrawal Kanban illustrated (right) shows that the preceding process which makes this part is forging, and the person carrying this Kanban from the subsequent process must go to position B-2 of the forging department to withdraw drive pinions. Each box of drive pinions contains 20 units and the shape of the box is `B'. This Kanban is the 4th of 8 issued. The item back number is an abbreviation of the item.

Kanban Post - Each process (area, cell) on the production line has two Kanban `post-boxes', one for withdrawal and one for production-ordering Kanbans.

Using Kanbans on a production line

At regular intervals a worker takes withdrawal Kanbans that have accumulated in his process post-box, and any empty pallets, to the location where finished parts (components, assemblies) from the preceding process are stored. Each full pallet has attached to it one or more production-ordering Kanbans which he removes and puts in the appropriate post-box belonging to the process that produced the parts. The worker now attaches a withdrawal Kanban to the pallet and takes it back to his own process area. When this new pallet begins to be used, its withdrawal Kanban is put back into the withdrawal post-box. At each process on the line, production-ordering Kanbans are periodically removed from their post-box and used to define what parts and quantities to produce next.

Enablers for Kanban are Quality Assurance and Production Smoothing as can be seen in this fig. If these things are not followed instead of becoming a boon to company Kanban becomes headache. I myself faced this problem when I designed Kanban System in one of the companies I worked for. But the moment I enforced Quality Assurance and Production Smoothing, the Kanban was able to play its meant role. I designed the system so that we are able to avoid the pilferation of material on the assembly lines. The pilferation, lead to inaccurate data punching in ERP software of SAP. The problem was that we were following push system. The worers were getting material more than required for the particular shift. This lead them to neglect the material falling on the shopfloor. The material which fell down was never picked by them, but by sweeper landing it to dustbins. So, actually the ERP was showing that the material of 100 assemblies was there, but it was of only 90. Now this inaccuracy of data, lead to backfire of whole Supply Chain. The stores were not aware that they are not storing enough material to support the production, so they didn’t order to vendors. Vendors didn’t knew that they have to produce this much supply components, so the vendor didn’t plan. But our customer has to be satiated at any cost. So, the result was use of defective parts, stealing parts from other lines, pressurizing vendors to produce more than its capacity. This chain of activities lead to the firefighting in all the related departments like PPC( Production Planning and Control), Production, Purchase, Stores, Vendors and so on. But the core reason was pilferage or push system. So, I proposed this to my company. And fortunately, I was given project to implement it. I studied around eight companies for designing it including Maruti Udyog Limited, Toyota, GE and others. Finally, when we implemented it, the results were simply mind blowing. I never thought that it could be so powerful. My only aim was short sited that is to check material pilferage. But the results were that the inventory of 48 hours on shop floor got reduced to 4 hours, production doubled, manpower was cut by 25 %, production incharge who earlier was always fighting for material on shopfloor didn’t need to go to shop floor for a week. This was one of the major turning point in my life. And I came to understand and appreciate the power of Toyota Production System or Lean Manufacturing and till now directly or indirectly I m pursuing career in it.
I hope the article would be helpful to the readers. Wait for next article of the series by me.