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Relevance of logistics in paper industry
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Project Report
On-
Relevance of Logistics in Paper Industry
Submitted By-
Mr. SHARAD RANAWARE(T.Y.B.M.S) Semester-V
Project Guide-
Prof. RAJIV JOSHI
UNIVERSITY OF MUMBAI
M.L.DAHANUKAR COLLEGE OF COMMERCE
PARLE (EAST) MUMBAI - 400 057
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It would be totally unethical on my part, if I take the entire credit for the
development of this project.
First of all, I sincerely thank to the teaching faculty of the M.L. DAHANUKAR
COLLEGE and also to the University of Mumbai to give us such a big
opportunity to work upon such project.
I would also like to thank respected dr Mrs. Madhavi Pethe the principal of our
college for constantly motivating me to fulfill my project info with thorough
research and study.
I would particularly like to thank Prof. RAJEV JOSHI for being my project
guide and for sharing their valuable experience, advice, guidance, and suggestion
on the subject.
My thanks are also due to the college library for providing me necessary books..
I thus acknowledge their contribution with full sincerity.
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I, Mr. SHARAD RANAWARE, student of T.Y.B.M.S. (2009-10) of
M.L.DAHANUKAR COLLEGE OF COMMERCE, PARLE(E), Mumbai 400 057,
do hereby declare that I have completed the project work titled RELEVANCE
OF LOGISTICS IN PAPER INDUSTRY as a part of my academic fulfillment.
The information contained in this project work is true and original to the best of
my knowledge and belief.
Date: - Signature of the Student
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I Prof. RAJIV JOSHI do hereby certify that, Mr.SHARAD RANAWARE
student of T.Y.B.M.S. (2009-10) of M.L.DHANUKAR, PARLE (E), Mumbai
400 057, has completed the project work on RELEVANCE OF LOGISTICS IN
PAPER INDUSTRYas a part of the academic fulfillment, under my guidance.
The information contained in this project work is true and original to the best of
my knowledge and belief.
Signature of Project Guide Signature of Principal
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INDEX
1. LOGISTICS-INTRODUCTION 8
2. REASON FOR LOGISTICS TO EXITS 10
3. IMPORTANCE OF LOGISTCS 11
4. LOGISTICS AND SUPPLY CHAIN MANAGEMENT 12
o Relevance of logistics in our business. 12
5. UNDERSTANDING YOUR SUPPLY CHAIN 13o Dimension of supply chain 13o External Factor 14
6 MEASURING COST AND SERVICES 31
Distribution Resources Planning
7 BEYOND THE BASICS 34a. Optimizing the supply chain 35b. Materials requirement planning 36c. Just in Time (JIT) supplies 36
8 REVERSE LOGISTICS 38
9 UPCOMING TRENDS IN THE PAPERINDUSTRY 39
10 HISTORY AND EVALUATION OF PAPER INDUSTRY 41
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11 TOP 10 INDIAN PAPER INDUSTRY 4212 PAPER CYCLE 43
13
CASE STUDYREVERSE LOGISTICS OPERATION IN PAPER 44INDUSTRY
14 CONCLUSION 5115 RECOMMENDATION 5216 BIBLIOGRAPHY 53
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Introduction to the concept of logistics
Logistics is concerned with getting the products and services where they are needed when they
are desired. It is difficult to accomplish any marketing or manufacturing function without
logistical support. It involves the integration of information, transportation, inventory,
warehousing, material handling, and packaging.
The operating responsibility of logistics is the geographical repositioning of raw materials, work
in process, and finished inventories where required at the lowest cost possible
The formal definition of the word logistics is: - it is the process of planning, implementing
and controlling the efficient, effective flow and storage of goods, services and related
information from the point of origin to the point of consumption for the purpose of
conforming to customer requirements.
Logistics involves the co-ordinate management of material and information flows
throughout your organisation. Supply chain management deals with the same issues throughout
the chain from your sources to your customers. Its objective is to simplify the supply chain to
control total cost, improve total quality, maximise customer service, and increase profit.
Logistics is a complex discipline: getting the right balance between ways of buying, moving and
storing goods involves juggling a lot of balls at once. But getting it right is extraordinarily
rewarding. Immediately, good practice can take a lot of non-value-added waste out of your
systems. Perhaps more importantly, it will add value to your activities: it will make you more
competitive.
People have different names for these activities when they are managed together. Supply
chain management, logistics and materials management are terms widely (and interchangeably)used. This document mostly uses 'logistics'. People mean different things when they discuss
logistics: they often concentrate on transport, and limit themselves to systems, which move
goods from factory gate to customer. Here we talk about the whole supply chain, and concentrate
on transport, storage, information flows, and commercial relationships.
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Arth Shaw in 1915 pointed out that: the relations between the activities of demand
creation and physical supply illustrate the existence of the 2 principles of interdependence and
balance. Failure to co-ordinate any one of these activities with its group-fellows and also with
those in the other group, or undue emphasis or outlay put upon any one of these activities, it is
certain to upset the equilibrium of forces which mean efficient distribution. The physical
distribution of the goods is a problem distinct from the creation of demand. There are many ways
of defining logistics but the underlying concept might be defined as follows
There are many ways of defining logistics but the underlying concept might be defined as
follows: Logistics is the process of strategically managing the procurement, movement and
storage of materials, parts and finished inventory through the organization and its marketing
channels in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders.
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Reasons for LOGISTICS to exists
Logistics management from this total system is the means whereby the needs of customers are
satisfied through the coordination of the materials and information flows that extend from the
marketplace through the firm and its operations and beyond that to supplies.
For example for many years marketing and manufacturing have been seen as largely separate
activities within the organization. At best they have coexisted, at worst there has been open
warfare. Manufacturing priorities and objectives have typically been focused on operating
efficiency, achieved through long production runs, minimized setups, changeovers and product
standardization. On the other hand marketing has sought to achieve competitive advantage
through variety, high service levels and frequent product changes.
In todays more turbulent environment there is no longer any possibility of manufacturing and
marketing acting independently of each other. It is now generally accepted that the need to
understand and meet customer requirements is a prerequisite for survival. At the same time, in
the search for improved cost competitiveness, manufacturing management has been the subject
of massive renaissance. The last decade has seen the rapid introduction of flexible manufacturing
systems, of new approaches to inventory based on materials requirement planning (MRP) and
just in time (JIT) methods, a sustained emphasis on quality.
Equally there has been a growing recognition of the critical role that procurement plays in
creating and sustaining competitive advantage as part of an integrated logistics process.
In this scheme of things, logistics is therefore essentially an integrative concept that seeks to
develop a system wide view of the firm. It is fundamentally a planning concept that seeks to
create a framework through which the needs of the manufacturing strategy and plan which inturn links into a strategy and plan for procurement.
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Importance of logistics
Logistics is the bedrock of trade and business.
Without selling and or buying there can be no trade and business. Buying and or selling takes
place only when goods are physically moved into and or away from the market.
Take away logistical support trade and business will collapse
Integrates logistical activities
In conventional management environment, various activities of logistics work in isolation under
different management functions. Each pocket trying to sub optimize its objectives at the cost of
overall organizational objectives. Purchasing trying to purchase at minimum price at the cost of
what is needed by operations. Operations produce large quantities at minimum production cost
ignoring demand leading to doom inventory. Logistics function of management brings all such
functions under one umbrella pulling down inter departmental barriers.
Supports critical functions like operations and marketing
Strong logistics support enables a company to move towards JUST IN TIMEproduction system
for survival in a highly competitive market.
Logistical costs
For individual businesses logistics expenditures are 5% to 35% of sales depending on type of
business, geographical areas of operation, weight/value ratios of products and materials. This is
an expensive operation. Improvement in the efficiency of logistics function yields savings as
well as customer satisfaction
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Logistics and supply chain management:
Supply chain management is about getting a smooth and efficient flow from raw material
to finished goods in your customer's hands. It is a concept, which is increasingly replacing
traditional fragmented management approaches to buying, storing and moving goods.
Traditionally, the management of material flows has centered on stocks of product: on
trains and boats and trucks; in warehouses and stores and factory-floor queues. Managing those
stocks meant buying enough goods far enough in advance to ensure that long, steady production
runs were seldom jeopardised by shortages of components. Tougher competition has brought
shorter product life cycles and made that approach increasingly expensive. Replacing these
'inventory-driven systems' are 'service-driven systems'. This type of system, 'pulled' by customer
demand rather than 'pushed' by a supply system, is long familiar in retailing and over the last
decade has become a necessity in many manufacturing sectors.
This document will help you identify and manage your supply chain. It will give you an
understanding of the elements of logistics and supply chain management. It relates them to cost
and service. And it points you in the right direction to improve your costs, service, and
competitiveness. It is not a tutorial, but it gives managers an outline of the elements within each
discipline, which together can improve competitiveness.
Relevance of logistics in your business:
Before you can start managing your supply chain better you must know:
What you want from your business What your customers want from you How well your competitors meet customer needs.
The place of the logistics discipline in your business depends on the answer to these
questions. For some companies - largely those that assemble physical goods in volume and ship
them to customers - there is an argument that managing the business is indistinguishable from
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managing its logistics. Procurement, transport, manufacturing, sales and customer service can all
benefit from an integrated logistics function, leaving just marketing, personnel, finance and
research as separate functions. In other firms, the role of time and place is less critical. Most
service companies, and many low-volume manufacturing businesses would pay less attention to
logistics skills
Understanding your Supply Chain:
If your company makes a product from parts purchased from suppliers, and those products
are sold to customers, then you have a supply chain. Some supply chains are simple, while others
are rather complicated. The complexity of the supply chain will vary with the size of the business
and the intricacy and numbers of items that are manufactured.
A simple supply chain is made up of several elements that are linked by the movement ofproducts along it. The supply chain starts and ends with the customer.
Customer: The customer starts the chain of events when they decide to purchase a productthat has been offered for sale by a company. The customer contacts the sales department ofthe company, which enters the sales order for a specific quantity to be delivered on a specific
date. If the product has to be manufactured, the sales order will include a requirement that
needs to be fulfilled by the production facility.
Planning: The requirement triggered by the customers sales orderwill be combined withother orders. The planning department will create a production plan to produce the products
to fulfill the customers orders. To manufacture the products the company will then have topurchase the raw materials needed.
Purchasing: The purchasing department receives a list of raw materials and servicesrequired by the production department to complete the customers orders. The purchasingdepartment sends purchase orders to selected suppliers to deliver the necessary raw materials
to the manufacturing site on the required date.
Inventory: The raw materials are received from the suppliers, checked for quality andaccuracy and moved into the warehouse. The supplier will then send an invoice to the
company for the items they delivered. The raw materials are stored until they are required bythe production department.
Production: Based on a production plan, the raw materials are moved inventory to theproduction area. The finished products ordered by the customer are manufactured using the
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raw materials purchased from suppliers. After the items have been completed and tested,
they are stored back in the warehouse prior to delivery to the customer.
Transportation: When the finished product arrives in the warehouse, the shippingdepartment determines the most efficient method to ship the products so that they are
delivered on or before the date specified by the customer. When the goods are received bythe customer, the company will send an invoice for the delivered products.
Before improving your supply chain, you must understand how your systems work now. This
involves collecting information about how you ship, handle and store goods; about how you
move information, and about the requirements of your customers and suppliers for the form and
timing of goods and information flows. With this information you will understand a lot more
about how your business works, and can get on with the job of improving it
There are a number of ways of analyzing the supply chain - and of managing the operation ofit. One of the most useful is the node and link model, which plots links - usually representing
movement over distance - and nodes - places where goods are stored or processed
Dimensions of supply chain?
Most businesses are surprised by how complex their supply chain is. A good first task is to
discover how many suppliers and how many customers you have, where they are, and how
important each is as a percentage of sales or purchases. Clearly, the more complex the system,
the harder it is to manage, and this information will be invaluable later when you are improving
and then simplifying your systems.
Site location Physical distribution Warehousing Transportation Materials handling Inventory management Information handling packaging Forecasting
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Site location
The location of existing sites has far-reaching implications for logistics flows and costs,
particularly in the single European market. Decisions about new locations for stores and
manufacturing sites should be fed with information on customers, suppliers, and transport links.
Physical distribution
Goods move a lot during manufacture and distribution: you need to identify at each stage
how they are moved - the transport mode - and who does the moving - the transport operator.
Inside your site(s) there is likely to be transport, but this shades into materials handling issues, so
concentrate on transport between suppliers and your sites, and between your sites and customers
or intermediaries such as public warehouses or distributors. Physical distribution is not only a
significant cost for most businesses, it has a direct impact on your competitiveness through
speed, reliability and its controllability (or otherwise) in getting goods to your customers on time.
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All customers are becoming more demanding. Producers of intermediate goods are finding that
their customers are demanding JIT (Just in Time) scheduling of deliveries. JIT has been used in
retailing for many years. And while specialist transport operators have developed their services
to meet these needs, many firms have been slow to adapt.
a) Transport modeAir, sea, road, rail? Canals...? For most routes, there is a choice. In many companies, the
choice is made after rudimentary cost analysis. But all modes have characteristics beyond
simple cost per kilogram/kilometer. For each link in the logistics channel particular
modes will have particular advantages. Most freight is now carried inside the UK by
road, a mode that has advantages of speed, flexibility and cost. Rail transport is obviously
suited to trucking bulk loads or very heavy individual items. But even within the road
transport mode, there are many choices depending on your circumstances.
b) Owning and controlling the means of distributionOwning transport is expensive. Increasingly, companies are looking hard at whether they should
own their own transport. As a trip down any motorway will confirm, many have decided that
contracting-out their distribution makes economic sense. There are exceptions: distribution-based
businesses are obvious examples. The local service company which offers free collection and
delivery of clean shirts or typesetting, as an important part of its value to customers is another.
Against that, the UK has developed a highly competitive physical distribution contracting
industry, which can handle most requirements from the occasional parcel collection to the
dedicated operation of large fleets for individual customers. Apart from total cost, key factors
involved in deciding whether or not to own your own transport include:
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Control
The ability to decide what to do with your own transport can be important. Against that,
some contract distribution companies offer good control without burdening you with the
inflexibility of your own vehicles.
Customer service
Whatever the ownership patterns, the key characteristic of successful distribution is that it
delivers the right service to customers. Whatever the relative costs and convenience, if you can't
buy a distribution service that hits that target, you will have to operate your own transport.
Flexibility
Using your own vehicles commits you to a particular mix of shipping sizes and modes.
Common carriers and contract distribution companies allow much faster switching between
modes and types of transport within a mode. For some people, the answer could be a mixture of
methods, combining a van for small deliveries, a truck which can handle 'base' demand at full
utilisation rates, plus outside operators used to deal with peaks and unusual demands.
Management skills
Unless your business is managing transport, there are strong arguments for using a
transport specialist. Large companies can support the fleet sizes needed to justify the
management quality and specialist tools needed by competitive transport operations, but it is
among larger companies that the move to contract distribution management has been strongest. If
your transport management is weak, you become uncompetitive. If your transport management is
strong, you may be diverting valuable talent from the rest of your business.
Recruitment and training
Can you afford to hire and train the right people to operate your vehicles? Road transport
is the least productive transport mode in terms of tonne-kilometres per person hour, so labour is
always a significant cost.
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Return on investment
Capital is always scarce: should you be investing in vehicles rather than other equipment?
On the other hand, the 'cost of capital' has to be met by someone and the question may be
whether resources are available at a lower price from third parties than from your own cash or
borrowings.
WAREHOUSING :
There are many different ways to manage storage of goods and raw materials. Manufacturerswill often have a plant with raw materials on hand and a warehouse nearby where additional
materials can be secured when needed. Some businesses have central warehouses that feed
smaller local warehouses. These are often placed strategically throughout the country to takeadvantage of shipping routes from major cities. In some cases, companies even bypasswarehousing altogether by using cross docking.
Cross docking is a method of moving products from the point of origin or manufacture directlyto the consumer. There may be some minor handling or packaging in between, but warehousing
is eliminated. This method reduces the cost of shipping and handling for businesses while
eliminating storage costs.
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Efficient picking and packaging rely heavily on the logistics management of the warehouse. The
slotting profile, or arrangement of stored goods, can have a great impact on how safely and howquickly workers can pick orders and pack them. Items that frequently come in and out of the
warehouse should be easy to access and have sufficient space to store a large quantity. Less
frequently ordered goods are best stored in less accessible locations.
How and when stock is received, unloaded and replenished will influence the speed and
efficiency of order fulfillment. This is where technology plays to greatest role. By using softwareand communications technology, warehouses can pick orders more quickly with few errors
Warehousing is that part of firms logistics System that stores products at and between point -of-origin and point of consumption, and provides information to management of the status,
condition, and disposition of items being stored.
A 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. In the macroeconomic sense,warehousing performs a vital function. It creates time utility for raw materials, industrial goods
and finished products. The proximity of market-oriented warehousing to the customer allows afirm to serve the customer with shorter lead times. This warehousing function continues to be
increasingly important as companies and industries use customer services as a dynamic, value-
adding competitive tool.
The warehouse must be in the right place. It must be the right size. It must properly protect its
contents. And it must be organised to allow:
Efficient delivery and placing Cost-effective use of its space Adequate access to stored materials Security from theft and weather Enough flexibility to deal with the largest (and smallest) items, which will need storage
in the numbers that will be needed.
Within the warehouse - and between warehouse and overall inventory management and
purchasing systems - there is a need for interlocking mechanical and information systems so
that stock is ----
Put into known places in known order Retrieved quickly and in the right quantity Rotated properly (for example, first-in, first-out)
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As with transport (see 'Owning and controlling the means of distribution' above) you have
the option of owning and/or managing your own storage facilities, or of contracting-out
management and/or operations.
Warehouse management is an established discipline: properly applied, its skills can save
large amounts of money.
Transportation
Transportation functionality:
Transportation is the most visible of all functions of logistics and high contributor to logistics
cost. We can see trucks, containers and wagonloads of material being moved from place to placeas an activity directly associated with trade and business. We should also appreciate that this is
an activity that adds highest amount of cost to the activity of making inputs and outputs available
to consumers. Transportation function moves the products to meet customer expectations at
minimum cost.
Modes of Transportation
There are five major modes of freight transportation, airlines, motor carries, pipelines, railroads
and water carriers. Each of these modes has distinct characteristics that give them advantage overthe others. Which mode is the best depends on the freight hauled cost, speed, reliability, capacity,length of haul and flexibility.
Rail Network
Rail network is fully owned and operated by government of India. This major step for facilitating
movement of goods throughout the country at a very low cost for promoting trade and business
in the country. Rail network stands for maximum tonne kilometers moved in India now, thereby
being an important mode of transport in the country. Rail network accounts for 226 billion tonnekilometers and 55.8% of total tonne kilometers moved in 1982 in India.
Advantages of Rail Transport
Capability to efficiently transport large tonnage over long distances. Speed of operation. Useful for heavy and bulk products.
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Intermodal operations have also expanded through alliances. Rail roads are evenconcentrating on development of special equipment. There are unit trains where the entire
train carrying the same commodity, which are bulk products such as coal or food grains. Unittrains are faster, less expensive to operate and quick as it can bypass rail yards and go direct
to the products destination.
Disadvantages of Rail Transport
Not effective for small loads and short distances. Less flexible. Moves only on specific routes. Secondary transportation is needed.Road Transport
Road transport is rapidly pulling the carpet from under the feet of railways, as we saw earlier,post world war. Its popularity is growing everyday. In India, 179.2 billion tonne kilometers were
moved by roadways in 1982. This is 44.2% of total tonne kilometers moved by all modes as
against 55.8% by railways.
Advantage of Road Transport
Door to door service to customer which neither rail nor sea nor air transport can offer. Very flexible as they can operate on all types of roads. Transport is quite speedy. Highest availability since they can drive directly from origin to destination. Highly suitable for short distances.Disadvantages of Road Transport
Delays in transit time due to bad road condition and climatic hazards Unsuitable for very heavy and large size loads. Unsuitable for very long distance. More chance of accidents and damages to goods.
Water Transport
This mode is the link between countries separated by water. Business is known to have existedbetween far off lands for long time in the past. Sailing vessels existed since that far away times.
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Example: Mechanized water transport came into being in the form of steam ships since 1800;
diesel driven ships came into existence since 1920.
Water transport is classified into deep water transportation and navigable inland water
transportation or domestic water transportation on lakes, rivers or canals. Main advantage of
water transportation is its capacity to move extremely large shipment at a very low cost. Inland
water transport is not used to its full potential in India although we have used mechanized Inland
Advantages of Water Transport
The main advantage of water transportation is the capacity to move extremely largeshipments.
Suitable for long distances and large volume shipments. The capability to carry very high cargo at an extremely low variable cost places this
mode of transport in demand when low freight rates are desired and speed of transit issecondary consideration.
Regularity in sailing.
Disadvantages of Water Transport
The main disadvantage of water transport is the limited range of operation and low speed. Unless the port and destination are adjacent, supplementary haul by rail or truck is
required.
Labour restrictions on loading and unloading at docks create operational problems andtend to reduce the potential range of available traffic.
Air Transport
Generally, this transport mode is used in emergency rather than in normal times.
Main features of this mode of transport
Speed of transport is highest. Fixed costs are lower than rail or road or pipeline. But operating costs are highest. Air transport brings distant market closer perishables market in gulf countries. Overcomes the hassle and cost of setting up depots and service centers overseas. Full potential of peak seasonal demand can be exploited moving entire facility to meet
peak demand.
Test marketing is easy. Product can be shipped directly from the factory as time of highimportance.
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Advantages of Air Transport
Brings distant and new market within the reach Extends export market Meets seasonal demand at fastest rate Reduces time of delivery for urgent needs Flexibility in carrying goods of varied nature Minimum handling of cargo and hence less damages Low insurance premium due to less transit time.
Disadvantages of Air Transport
Comparatively costly mode of transport Caters on primary transport [airport to airport only] Certain categories of items are not allowed to be transported [hazardous goods asspecified by IATA] Facilities not available through out the country Shipping space available is limited
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MATERIAL HANDLING:
One extremely encouraging aspect of logistics is the productivity potential that can be realized
from capital investment in material-handling equipment. Material handling cannot be avoided in
the logistics but can be reduced to minimum levels. Material handling is an integral part of
manufacturing activity. It does not add value to the product but adds to the cost. Material
handling problems are largely due to the problems of a bad layout. Many a problems ofmaterials handling can be avoided by improving the existing plant layout.
In warehouses, material handling operations are performed at the following stages:-
Unloading the incoming material from transport vehiclesMoving the unloaded material to assigned storage places in warehousesLifting the material from its storage place during order pickingMoving the material for inspection and packingLoading packages/boxes/cartons on to transport vehicles.
Within a node - a warehouse, a plant, a retail store - goods have to be moved between
incoming transport, storage, processes, and outgoing transport. The spectrum of available
systems ranges from one person with strong arms through the supermarket trolley (in its way a
revolutionary technology) to fully automated systems incorporating robot order picking and
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automated guided vehicles (AGVs). Most handling systems, and the packaging adopted by
suppliers, are geared to supplier-warehouse-process transactions. In fact increasing numbers of
businesses are moving towards JIT deliveries: once supplier quality is sorted out, incoming
goods can go directly into the process, without inspection or spending any time in a store.
Analysing the effectiveness of your existing handling systems involves assessing their cost
and appropriateness to the rest of your operations. It also means knowing something about the
characteristics of different systems. The key factors for assessing a materials handling
technology are:
The physical characteristics of loads The number of loads to be moved The distance to be moved Speed of movement required
Inventory management
Inventory is a critical element in the supply chain. It can be broadly classified as raw material and
components, work in progress, finished goods and operational support inventories. Inventories are
maintained in meeting production requirements, supporting operations, extending customer serviceand hedging against future uncertainties. In supply chain system, inventory is viewed as a liability,
which reduces both the profits and the returns on investments
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Few businesses consider the total inventory in the supply chain, including stock at suppliers'
premises, stock on trucks and boats, in plant and at distribution outlets. Considered throughout
the supply chain stock can be accumulated at places where it is cheap (that is, before value isadded) and/or where it adds value to the customer (for example, at or near the customer rather
than at or near your plant).
In order to manage your of this is about information systems some is about analysing the
physical storage, which stock effectively, you must know how much you have, its value, and
where and how it is stored. Some interacts closely with materials handling systems. You must
also know what your inventory costs. That includes:
Carrying costs.
In addition to the interest on the working capital tied up, there are the costs of storage space,
stores staff, handling, deterioration, loss through damage or pilferage, obsolescence (particularly
important in retail clothing and electronics), and insurance
Opportunity costs.Stock is normally unproductive capital. Carrying it restricts other investments you could have
made with the same money.
Stock-out costs.
In retailing, if an item is out of stock it could mean a sale is lost. In manufacturing, for the
want of a spare part for a machine tool, production could be halted. A shortage of a raw material
could mean using a more expensive substitute. A few large orders mean low purchase costs but
high stock costs; many small orders mean low stock costs but high purchase costs. High buffer
stocks mean low stock-out costs but high stock carrying costs. You need to strike the right
balance between these various factors.
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Information handling:
Goods can't flow without information: information allowing, forbidding, directing physical
flows; information checking and confirming; information to provide proof and audit trails for
taxes and billing. Because the information flows are so intimately connected with the physical
movement of goods, it is sensible to deal with them as part of the same system. Quite often, it is
the order processing function which is the weakest link in the network of dependent actions
which allow material X to get from A to B. There are specific fixes for poor order processing
routines but more generally their design must tie in with the needs and facilities offered by sales
forecasting, production planning, procurement timescales, financial security, and the capacity
and nature of the distribution, storage and handling systems chosen for the business.
Too often, too much of the wrong information moves too slowly to the wrong people. In many
companies, this is the legacy of systems based on nineteenth-century technology, unchanged
because by and large the right things happen in the end.
Examining your information flows allows you to:
identify important information needs discard flows that don't add value speed and automate routine information transactions.
There are, of course, many more. In order to assess your current systems against your
logistics needs you must establish for each information flow:
who originates and 'owns' the information who needs to receive it what it is used for when it must be originated and received (and how much time it actually takes)
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what information must be transmitted how reliable is the information and the process?
Packaging
Packaging is done to make handling and transporting cost effective. It protects the product in
transit and handling. Packing is expected to facilitate lifting and moving by providing easy
access to forks or hooks. Packing is also expected to display universal symbols and other
instructions for handling. Eg. Pallets and containers, wooden boxes, wrapping etc.
Importance:
Packaging is an important function in logistics ensuring not only protecting materials and goods
in the logistics process to ensure maintenance of the right condition until delivery, but also
facilitating the other logistics functions of transportation, storage and handling. Packaging also
enables communication regarding the contained materials or products. It also helps in improving
the appeal of the product to the customer.
Types of packaging: consumer packaging and industrial packaging
Consumer packaging -There is no focus on logistics. Importance is given to marketing appeal
and packaging the finished product. Packaging is designed for consumer convenience and
appeal, marketing consideration and display. The main emphasis is in marketing. The marketing
manager is more concerned with the consumer packaging because it provides information
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important in selling the product in motivating the customer t buy the product or giving the
product maximum visibility when it competes with others on retail shelfs.
Industrial packaging focuses on the handling convenience and protection during transportation,material handling and storage. This packaging protects the goods that a company will move and
store in the warehouse and also permits the company the effective use of transportation vehicle
place. It also have to provide information and handling ease. Industrial packaging is performed at
various stages. The first stage is packaging for the product itself. For example soft drinks are
packed in cans. The next stage involves packaging these products into larger cartons for enabling
quantity handling. The carton is reffered as Master cartons. The next step of packaging involves
unitization. In this case the master carton is consolidated into a single large unit to facilitate
handling, transportation, storage and protection. The next is containerization, here the unit loads
are placed in rigid containers for protection and handling facilitation. This enables efficiency in
transport.
Forecasting
Forecasting is a key information resource. Material networks, even when well managed, are
relatively lumbering beasts, and should be driven by forecasts (or better still, by firm orders)
rather than by hope. So sales forecasting is a vital ingredient. If customers insist on being
volatile, sellers must adapt.
In some businesses, demand can be increased in slack periods the summer sale is a familiar
example. In others, output flexibility must be increased. Better forecasting and a more responsive
supply chain are the key ingredients in a virtuous circle of improvement in customer service.
Good forecasting reduces the need for instantly-responsive supply chains: responsive supply
chains reduce the need for clairvoyance in forecasts. Together they increase your ability to
guarantee levels of service. There is more about demand forecasting in 'Improve your
forecasting' in the chapter on "Fixing basic systems".
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ii. Commercial relationships and transactionsParts of your supply chain are within your premises or otherwise under your direct control.
But other parts involve links with third parties, including:
customers
suppliers of goods suppliers of services (eg shippers) regulatory authorities (customs, transport, taxation etc).Links with these external bodies involve flows of goods and information. Clearly, your
processes and links must work with the processes and 'nodes' represented by your customers and
suppliers. But the situation is complicated by the fact that all these parties are dealing with many
other people as well as with you. And it is likely to be clouded further by the existence of
commercial relationships governed by contracts. In the analysis stage of the work you need to
establish what your customer and supplier requirements are for:
goods and service - lot sizes, packaging, delivery/collection frequency, responsiveness information - how much, when, etc
3.2 External factors
You also need to take account of external factors over which you have no control. You could,
for instance, buy a year's supply of an important raw material all at once. If prices rise, or there
are shortages, you gain an advantage over your competitors. But apart from the stock costs,
prices might fall. In this situation, you will only know what you should have done after you have
done it. Avoiding risk is therefore another factor in the quantity equation. You are also
constrained on quantity by the time it takes a supplier to make the goods that you want - theirlead time. If you want to buy small quantities once a week but your supplier takes three weeks
from order to delivery, you may have problems.
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Measuring Cost and Service
Particular targets on cost and service need to be set depending on the particular needs of your
business. All targets should be quantified and based on things, which can be measured at
reasonable cost. To audit, and to keep abreast of changing circumstances, you must acquire
information systems to provide key information regularly.
Measuring service. Measuring cost Set achievable targets And measure again Improving performance
Armed with an understanding of where you want your business to go and an
understanding about how your systems work now, you can start setting improvement strategies
and targets. For some businesses, particularly those who have a steady flow of materials
(retailing, process manufacturing), a Distribution Resource Planning system may be
advantageous.
All businesses will need to set themselves realistic improvement targets and set to work
to achieve them. How those targets are set will depend on your business and the goals you have
set for it. If, for instance, you are committed to manufacturing bespoke high-value systems with
rapid response to customers, a lot of the value you offer is in responsiveness. In your logistics
channel you will value the ability of goods to be pulled through the system fast at short notice -
and will be willing to pay (within reason) for that value. You are likely to set your primary target
in terms of service to manufacturing, service within the plant, and rapid service out to customers.
If, however, your business has lengthy planning horizons and needs to move large quantities
frequently then low cost will be the main aim and you will be willing to accept (within reason)
sacrifices in speed or flexibility.
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Speed/cost trade-offs are quality issues. There are other quality issues - for example,
scrap/rework generated by damage in transport or in store - which can be affected by the way
you operate the logistics channel. Either way, you need quantifiable targets.
This process becomes easier if you deal with each node in the channel as the customer of
the preceding node in the chain. Sometimes this will be literally true, as when your output stores
are dealing with customer deliveries, or when your suppliers are shipping to you. Even where
you are dealing with people inside your own organisation, it is a useful metaphor which helps
deal with the transactions in understandable terms - of cost-benefit and value-added. It allows
managers and supervisors to negotiate with their internal 'suppliers' in achieving local targets.
Distribution resource planning
A well-established set of tools which optimises inventory and distribution of finished product
based on sales forecasts and/or customer orders. Works best when combined with MRPII
(Manufacturing Resource Planning) for the manufacturing elements in the supply chain. Neithersystem addresses supply chain management as part of a total system, but both have been adapted
by companies who take supply chain management seriously
Integration with customers is important. You and everyone in your company must be working
and satisfy your customers. You should review written customer requirements with everyone in
the logistics department and with everyone in the company. It is not enough to a company to tear
apart the written requirements and hand them to various departments. That is not integration.That is functional silos.
i. Measuring serviceThe logistics channel is a facilitator - a way of helping goods get made and shipped to
customers - and it must be managed in terms of the service it delivers. The nature of supply chain
management, however, is that the chain is a complex system in which changes to one element
affect many other elements. So improvement targets should be set cautiously for each element of
the logistics channel; then the whole system optimized and targets redefined for planning and
implementing change. In addition, you must work to sensible priorities. If your competitors are
stealing a march because they offer eight-hour turn-round from order to delivery you must match
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or beat that (or find another product/service feature that your customers value higher) as a
priority.
This means you must know, clearly,
what your customers want (ask them) the level of service which customers think they get from you, compared with the service
they think they get from your competitors
how well your service actually compares (benchmarks) against that provided by bothyour direct competitors and by comparable businesses in other markets.
Answering these questions means investing in reliable research. It is important to make sure
that you are chasing improvements that are attainable and valuable to your customers, rather than
those, which you think are worthwhile.
ii. Measuring costA good logistics system is about delivering the most profit possible while satisfying
customers: it gives value to your business as a whole. Measuring the cost of the logistics channel
is important, but operating costs must be weighed against costs and benefits for the organisation
as a whole before any useful management information appears.
The things you want to measure depend on the business you operate, while the things you
measure will depend on your accounting systems and internal information flows. Things you
must measure include:
purchase costs, including order, set-up, and discount costs (which tend to rise as ordersizes reduce and delivery numbers increase) and cashflow (which may improve in the
same circumstances)
warehouse capital, property and operating costs total inventory cost, together with the cost of too much inventory (obsolescence, scrap)
and too little (lost production, lost sales). Remember to include the opportunity cost of
using money to buy stock (unproductive capital).
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transport costs, in total and by operation/commodity, including utilisationrates/productivity for self-owned transport
production costs transaction and documentation costs throughout the system return on investment for each of the above personnel costs, with productivity measured against industry standards or time and
motion studies.
iii. Set achievable targetsTargets which can't be hit don't help anyone. However, a particular problem in businesses
with a history of adequate performance or slow decline is their readiness to accept low
achievement. Any number of company recovery stories demonstrate what can be achieved by
refusing to accept what everyone 'knows' can and can't be done. This is one of the stronger
arguments for recruiting outside consultants or hiring new blood - getting an objective view of
what it is reasonable to achieve.
.
iv. Improving performance:Starting to improve your performance should involve:
using basic professional tools to make sure that the elements in the logistics chain areefficient, focusing on those areas which are bottlenecks or failing to contribute to
delivering the service you need
buying or developing the information systems you need to understand and control whathappens in your supply chain
using a computer-based system to help optimize your logistics chain based on your actualbusiness, and to help point you to the areas where improvement will bring the most extra
profit.
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Beyond the Basics
Optimizing the supply chain Materials requirement planning Just in Time (JIT) supplies
5.1 Optimizing the supply chain
We have seen that changes to one element in the supply chain are likely to affect the cost
and/or performance of other processes. The process of optimising should in theory give the best
fit between all the conflicting processes in the business. Most large businesses, and many small
ones, are such complex systems that the job of collecting enough data in enough detail to provide
an accurate optimization is a mammoth undertaking. Further, to evaluate alternative ways of
doing things, the optimizing software must know the costs of all those alternatives in some
detail. It can't play hunches with unknown data.
a) The optimizing process1. Gather data2. Build a model of your business3. Check the model4. Let the model improve your profits without any practical constraints5. Add practical constraints a few at a time to gauge their effects6. Model a workable system7. Implement it.
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Materials requirement planning
Materials requirement planning (MRP) is widely used in manufacturing and construction
businesses. Once a manufacturer has established its production schedule for the coming 6 or 12
months, purchasing can then order and schedule supplies. Quantity and timing requirements are
'dependent' upon the production schedule. Thousands of items, all with variable lead times, often
are involved in a production process. The starting point is the master production schedule
detailing what will be produced and when. This schedule is then 'exploded' into a bill of
materials, a detailed recipe of parts and materials. It provides precise delivery dates and
quantities for each component in the recipe. If components arrive any later, production may be
stopped. If they arrive any sooner, there may not be space available to store them. Ideally an mrp
system runs on a Just in Time basis with no buffer stocks.
Materials Requirement Planning (MRP) is a scheduling procedure for production
processes that have several levels of production. Given information describing the production
requirements of the several finished goods of the system, the structure of the production system,
the current inventories for each operation and the lot sizing procedure for each operation, MRP
determines a schedule for the operations and raw material purchases. This add-in provides all the
features necessary to formulate and solve small examples.
Just in Time (JIT) supplies
JIT is not a technique. It's a management philosophy, now adopted by many successful
manufacturing businesses, which aims to bring certainty and smoothness to the flow of materials
through the supply chain, and to eliminate wasteful practices such as holding safety stocks.
Businesses hold stocks because of uncertainty, either about the future level of demand or about
the lead time to manufacture or replenish stocks. As well as coping with extra demand, buffer or
safety stocks are held to cover an unexpected extension of lead times or to carry you if a supplier
delivers a poor quality batch. The more unreliable your supplier, the bigger your safety stocks
need to be.
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What you are trying to develop with a JIT approach is a network of quality-assured supply
partners who can deliver the right quantity to the right place at the right time, every time. The
delivery point may be to a retail outlet or it may be to a production line. Your supplies are
delivered against an agreed schedule with absolute certainty on the day they are required,
rendering expensive safety stocks redundant. Working towards JIT will make your entire
business more competitive, for its implications spread far beyond purchasing and stock
management. Among its requirements are:
Improving your own sales forecasts and, where appropriate, your production planning sothat both purchasing and suppliers can be better informed about requirements. JIT hinges
on planning and certainty
Forging close working relationships with probably a smaller number of suppliers forwhom your business is important. JIT can only work where there is co-operation and trust
Setting up effective information systems so suppliers are immediately aware of anychanges to programmers. Without tight communications, JIT will break down
awarding suppliers long-term contracts which give them the confidence to invest inmeeting your future requirements
a quality assurance programmer under which suppliers are accepting responsibility forquality, monitoring quality during rather than after production, and working towards zero
defects
removing non-value-adding activities throughout the whole supply chain, i.e. looking atthe total cost picture.
Of course, not all things will be achievable. If, for example, transport costs rule out many
small deliveries, your optimum ordering quantity may remain above the quantities needed for
Just in Time. However, by working away at improving these factors, you can increase your stock
turn and service level, thereby realizing many of the economies of the JIT approach.
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Reverse logistics
Reverse logistics stands for all operations related to the reuse of products and materials. It is
"the process of planning, implementing, and controlling the efficient, cost effective flow of raw
materials, in-process inventory, finished goods and related information from the point of
consumption to the point of origin for the purpose of recapturing value or proper disposal. More
precisely, reverse logistics is the process of moving goods from their typical final destination for
the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities
also may be included in the definition of reverse logistics."[1]
The reverse logistics process
includes the management and the sale of surplus as well as returned equipment and machines
from the hardware leasing business. Normally, logisticsdeal with events that bring the product
towards the customer. In the case of reverse, the resource goes at least one step back in the
supply chain. For instance, goods move from the customer to the distributor or to the
manufacturer.
Importance of reverse logistics:
Reverse logistics is important for:
1) Assets utilization (rather we can say re-utilization)
2) Assets recovery (To capture the value, which otherwise will be lost)
3) Profit maximization: Cost reduction through recycling
4) To fulfill the Environmental obligations e.g.: Waste recycling, Hazardous waste management
e.g.: Car batteries disposal.
http://en.wikipedia.org/wiki/Reverse_logistics#cite_note-0http://en.wikipedia.org/wiki/Reverse_logistics#cite_note-0http://en.wikipedia.org/wiki/Reverse_logistics#cite_note-0http://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Reverse_logistics#cite_note-0 -
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Upcoming Trends in the Indian paper Industry
Mainstream trends and challenging the current paper industry strategies
Paper business is consolidate and globalising. Companies with global strategies willgain market shares.
The eastward expansion in paper consumption and production, to Asia and East ofEurope. North American, Western European and Japanese markets are mature.
Electronic media will bring major challenges to print media in advertising. Advertisersare looking for a return on their investment in a media environment where choice has
exploded.
Through advertising and packaging, the dynamics in paper markets reflect more andmore the trends in consumer good marketing.
The dynamics in paper markets reflect more and more the trends in consumer good
marketing.
Paper industry strategies are likely to become
more agile and more versatile
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Share of global and multinational strategies in consumer goodindustries and retailing grow.
Brands are increasingly targeting specific lifestyle groups. This leads to morefragmentation in consumer markets.
Brand loyalty and credibility assume greater importance Pressure towards agile, fast reacting concepts grows in advertising and packaging value
chains.
Machines used in Indian paper industry
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History and Evolution of Indian paper Industry
Paper industry in India is the 15th largest paper industry in the world. It provides
employment to nearly 1.5 million people and contributes Rs 25 billion to the government's kitty.
The government regards the paper industry as one of the 35 high priority industries of thecountry.
Paper industry is primarily dependent upon forest-based raw materials. The first paper
mill in India was set up at Sreerampur, West Bengal, in the year 1812. It was based on grasses
and jute as raw material. Large scale mechanized technology of papermaking was introduced inIndia in early 1905. Since then the raw material for the paper industry underwent a number of
changes and over a period of time, besides wood and bamboo, other non-conventional raw
materials have been developed for use in the papermaking. The Indian pulp and paper industry at
present is very well developed and established. Now, the paper industry is categorized as forest-based, agro-based and others (waste paper, secondary fibre, bast fibers and market pulp).
In 1951, there were 17 paper mills, and today there are about 515 units engaged in the
manufacture of paper and paperboards and newsprint in India. The pulp & paper industries inIndia have been categorized into large-scale and small-scale. Those paper industries, which have
capacity above 24,000 tonnes per annum are designated as large-scale paper industries. India is
self-sufficient in manufacture of most varieties of paper and paperboards. Import is confinedonly to certain specialty papers. To meet part of its raw material needs the industry has to rely on
imported wood pulp and waste paper.
Growth of paper industry in India has been constrained due to high cost of productioncaused by inadequate availability and high cost of raw materials, power cost and concentration of
mills in one particular area. Government has taken several policy measures to remove the
bottlenecks of availability of raw materials and infrastructure development. For example, toovercome short supply of raw materials, duty on pulp and waste paper and wood logs/chips has
been
OutlookOutlook for paper industry in India looks extremely positive as the demand for upstream market
of paper products, like, tissue paper, tea bags, filter paper, light weight online coated paper,medical grade coated paper, etc., is growing up.
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Top 10 Indian Paper industry, 2007
(figures in 000 tonnes)
Company CapitalExpenditure
(INR billion)
CapacityAddition
(000 TPA)
ITC Ltd 25.0 200
BILT 12.5 240
Whitefield Paper Mills 12.0 200
AP Paper Mills Ltd 8.6 84
West Coast Paper Mills 8.2 90
Hindustan NewsprintLtd
7.2 180
Hindustan Paper Corp 6.6 30
TNPL 5.7 15
Century Pulp & Paper 3.9 75
Rama Paper Mills Ltd 3.5 140
Seshasayee Paper 3.5 30
Sirpur Paper Mills Ltd 2.9 55
JK Paper Ltd 2.4 60
Star Paper Mills Ltd 0.9 30
Orient Paper &
Industries
0.5 20
Total 103.2 1,449
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Paper cycle
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CASE STUDY
Reverse Logistics operation in paper industry
Abstract
Reverse logistics is an issue that has attracted the attention of researchers since the last decadedue to an ever increasing an ever increased awareness about economics, environmental and
social benefits associated with them. In this paper, we report a case study of an Indian paper
manufacturing company. For this company proper management of reverse logistics is key to its
survival and growth .SAP-LAP Methology has been used for critical examination of the casecompany . It is observed from the case study that reverse logistics practices are at a growing
stage in Indian paper manufacturing company. Indian companies are not fully utilized the real
benefits of reverse logistics and there are ample opportunity for the improvement in reverse
logistics operations.
Introduction
In this paper we report case study of an Indian paper manufacturing company that were dealing
with some aspects of reverse logistics operation in their organization .Reverse logistic is an issuethat has attracted attention of researchers since the last decade due to increase awareness about
economic, environmental and social benefits associated with them .In simple terms a reverse
logistic refers to the process moving goods from their typical final destination to another point,
for the purpose of capturing value otherwise unavailable ,or for the proper disposal of productsIndustries are finding out that all the sales transactions are done by them are not final .In fact
they must cope with escalating volume of returned /unsold/damaged/end-of-use/end-of-life
products with increase competition in market and shrinked profit margin, companies areincreasingly interested in saving achieved through the recovery of constituent materials. concerns
to the environment and sustainable development have increased the relevance of reverse logistics
in present day industrial scenario .Several countries have passed legal legislation prescribing
norms for the product recovery and proper disposal of product. Today customers are educatedand are more conscious of environmental friendly products. Some studies have indicated thatcustomers are even willing to pay more for green products for cause of the environment thus
economics as well as ecological reasons have given rise to new interest in the area termed as
Reverse logistics.
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REVERSE LOGISTICS IN OPERATIONS IN PAPER INDUSTRY
Ratna et al., (1992) opine that paper industry is often regarded as a mature industry, where theproducts and production are stable and competition between companies is mainly limited to cost
management. Due to it mature and large size, pulp and paper industry has considerable potential
to cause environmental damage in different stages of product life cycle as forest management,pulp production, pulp bleaching, paper production, waste production etc. Patti et al. 2004 present
a cost optimization model for multi variety recycled waste reverse logistic system for a paper
industry which could help in developing appropriate manufacturing strategies that is units ofvarieties of paper produced, comparison of cost in different scenario of demand, etc. The waste
management methods in paper industry include recycling, energy recovery and land filled
disposal. Recycling is the preferred option in these companies. Thus reverse logistics operations
assume great significance in paper industry.
CASE METHODOLOGY
Sushil (2000) has recommended the use of SAP-LAP methodology for critical examination of a
case company. SAP-LAP paradigm is the basis of flexible system management. This paradigm
considers three basic entities in any management context viz. situation, actor, and process. Itcould be seen that a situation is to be dealt by an actor or a set of actors through a process or a set
of processes. The freedom of choice exists with an actor who could be an individual, a group or
an organization as a whole.An interplay of situation, actor and process (SAP) leads to learning action and performance
(LAP). The obtained learning would direct the possible actions to be taken for handling the
situation, which would result into the performance of the system with the new learning and
actions the situation, actor and processes might result in a change into a new level. Such adynamic interplay of SAP and LAP will act as the basis of ongoing managerial inquiry.
The SAP-LAP paradigm incorporates both learning and action in a symbiotic manner coupled
with performance .It not only takes into consideration optimization of processes but alsoincorporates multiple perspectives of various participative actors in a managerial process. Thus
SAP-LAP analysis offers a learning and interpretive framework of inquiry into the problem
under consideration.Therefore, for the organization which are in the process of adopting new technologies SAP-LAP
framework could prove to be a useful methodology for analyzing the problem. For the adoption
of reverse logistics practices, organization is not only adopting new management practices but
also new technologies. Thus, SAP-LAP analysis could best fit in for the analysis of the cases.
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CASE OF COMPANY P1 (PAPER SECTOR)
COMPANY BACKGROUND:
P1 is one of the Indian largest manufacturing company .The company was incorporated in 1938with an intial installed capacity of 20TPD and ever since has grown phenomenally. It is an ISO-
9000-2000 accredited company manufacturing a wide range of paper of different grades
pacakaging , priniting and other industrial premium grade catering to almost all the segments ofcustomers. P1 has four paper machines producing a wide range of products catering to different
segments and requirements of customers.a massive modernaization and expansion programme is
in progress to increase production , improve competitiveness and reduce pollution. P1 ha s fine
distribution network throughout the country besides exporting papers to neibouring countries. P1manufactures 61000 TPA of writing, printing and packaging papers in 2004-2005. In recognition
of the continued efforts towards energy conservation by the Indian paper manufactures
association in year 2005.
MANUFACTURING PROCESS :
Manufacturing process at p1 is depicted fig 2. P1 manufactures, industrial and printing papersusing forest, based with fibrous raw material viz .bamboo ,poplar ,etc. Besides these ,waste paper
is also used as raw material. The quality control personnel from the quality department of P1
take a sample of the wood to determine its moisture contents. The woods are subsequently tested
and the report is sent. The selected wood is transported from the timber yard by the tractor ,buffalo carts to the chipper house as per requirements . Woods logs upto 300 mm diameter are
cut in the chipper house the oversize chips go for the further chipping the under chips go to the
dust disposal section and the chips of required size are fed to the digestor house. The requiredsize of the chips lies between 3 to 30 mm. P1 has six digestors each with an installed capapcity
of 85m. In the process wood chips are treated with the cooking liquor in a pressing vessel at
temperature .The prepared paper pulp is now washed and screened. The soda recovery unit dealswith the production of white liquor steam and lime. These products are used for consumption in
plant toward the production of different qualities of paper and board paper. The aim of stock
preparation unit is to make the raw pulp ready for the paper machine to achieve the desired
property in the paper .From blending chest ,the pulp is pumped to mixing chests through refiners.Dye, filter and other sizing chemicals are added in the mixing chest as per the required
characteristics of the paper.Subsequently refining of the pulp is done in which the fibers are
subject to mechanical treatments to get the desired properties of the paper. P1 has four paper
manufacturing machines. The desired paper are finally cut to the desired size and marketingdepartments dispatches the order as per requirement of the customers.
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REVERSE LOGISTICS ACTIVITES AT P1 :
P1 is conscious of its social responsibility towards the cause of the environment and has investedheavily in reducing pollution. The environment management at P1 indicates how a company
progresses from reacting to environment issue to developing a proactive appoarach to the
problem .P1 has taken important steps for reducing energy consumption, water pollution, airpollution and solid wastes generated. The company has taken important steps to reduce water
consumption and decrease the overall volume of pollution discharges.
REDUCING ENERGY CONSUMPTION
Paper industry is one of the largest consumers of energy. Electricity and steam are the two key
resources for effective management in this industry. To reduce energy costs , P1 has invested in
co- generation facility. Also the steam produced at various sources is used for energyrequirement at P1 .These accounts for 40% of the total energy consumed by P1. In recognisation
to the continued efforts towards energy conservation, P1was awarded commendation certificatefor the year 1999 under the national energy conservation award scheme in paper and pulp sector.
REDUCING WATER POLLUTION
Water is principle ingredient used in large volume in paper and pulp industry. Waste water
released from paper industry include chlorinated phenolics, dioxins, phosphates and suspendedsediments etc. At P1 all the effluents undergo chemical treatments for removing the hazardous
material and the quality of waste paper discharged into the environment is as per the norms set
up by the pollution control board . Process waste water is fully recycled for use in making starch
glue , P1 used bubble diffusion and total stream polishing for the treatments of waste water.
REDUCING AIR POLLUTION
Air emissions from P1 include sulphur di oxide , hydrogen chloride etc. P1 is equipped with
paper dust collectors ,dust precipators and flue gas de sulphurization devices that reduce air
emissions well below the regulatory standards .
REDUCING SOLID WASTE
Paper mills also produce non hazardous solid wastes such as sludges derived from their pulpingand bleaching processes . In P1 it is ensured that the produced solid wastes are chemically
treated before disposing off to the enviornmnet .
The interview with the logistics managers indicated that recycling was the most preferred reverselogistics operation being followed at P1 . The logistics manager at P1 were of the view that the
production line at P1 was tuned for producing virgin quality papers .They said that the company
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was planning to buy equipments in near future for recycling waste papers . Logistics managers
were of the view that financial constraints, lack of appropriate performance metrics and lack ofinformation and technology system were the main barriers affecting the implementation of
Reverse logistics at P1 .
SAPLAP ANALYSIS OF P1 CASE :
Situation
P1 is one of the leading producers of quality paper in the Indian paper industry since itsentry into Indian market in 1938.
The supply chain of P1 is complex one since it manufactures papers for a wide range ofapplications
Serve competition exists in the paper in the paper industry with the recent entry of someMNCs in the market.
There is an increased demand for production of environmental friendly printing papersthat reduce the impact on the environment. More than half of the suppliers of p1 are small and belong to the rural areas . thus , the
co-ordination with the suppliers is not reliable , leading to uncertainties
P1 has not fully utilized the benefits of e business technologies. The company has a strong dealership network in the major Indian cities. More stringent environmental laws are in force for proper disposal of the wastes
generated from the production of paper .
P1 only produces virgin quality papers.
ACTOR
Management of p1 especially the managing director and general manager of logistics andsupply chain department.
The employees of P1 in general and those in logistics and supply chain departments. Suppliers of P1 Dealers of p1 Business consultant of p1
PROCESS
Suppliers of p1 are connected to the factory by conventional means of telephonefax etc.
The main raw material used for the production of pulp are wooden material , nonwooden material and agriculture residue .
For the imported materials received at kandla port and delhi port airport it hasentered into a long term transportation contract with third parties specializing
in the operation.
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Internet keeps p1 in touch with the business community of words paper industry The company uses four state of art paper machines for manufacturing quality
papers
LEARNING
In P1 the production planning is based on advance orders .in such ascenario , accurate forecasting is neccssitated.
Usage of waste paper as raw material could cut down the cost ofproduction .
Energy cost is a major source of expenses for p1 To attain a clean corporate image , proper disposal of product is necessary Financial constraints and lack of appropriate performance metrics are
identified as the main barrier in the implementation of reverse logistics at
P1.
For effective interaction with its customers efficient use of informationand communication technology is necessary.
Seminars and workshops on the benefits of reverse logistics could bearranged for the dealers and suppliers .
ACTION
More amount of waste paper should be used as the raw material foremphasizing source reduction and also for reducing cost.
Co generation facility should be installed to reduce energy ,cost , andlower the carbon dioxide emissions.
The hazardous chemicals and bi-products of manufacturing should beproperly treated before discharging these into the environment.
E- business technologies should be used for the online management ofentire value chain .at present only the dealers are connected to thecompany by extranet network . This should be extended to the suppliers.
Third party logistics service providers are available who are specializaingin reverse logistics operations. P1 could think of outsourcing theseactivities in a phased manner so that it could concentrate on its core
competencies.
Benchmarking of reverse logistics operation and developing appropriateperformance metrics in reverse logistics operation are important actionsneeded for the growth of p1
The websites should be more user friendly showing th einforamationneeded by the member of the supply chain.
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PERFORMANCE :
Installation of cogenerated facility would reduce energy cost and lower carbondioxide emissions . this would give p1 a competitive advantage over others .
Outsourcing of reverse logistics operations to third parties could further help P1finetunning of its logistics activities.
By emphasizing proper disposal of products, the corporate image of p1 can beincreased They can also win the goodwill of the customers .
With customers focused website ,the customers could have the option of choosingthe product specification and placing order online.
Benchmarking and performance metrics in reverse logistics operations couldprovide the company an opportunity to identify the gaps while implementing
reverse logistics programs
ConclusionIn this paper, we have discussed a real life case study of an Indian paper manufacturing
industry dealing with reverse logistics operations in their organization. This case study has
provided some interesting observations about the status of reverse logistics practices in theIndian context. One of the main features of reverse logistics operations at P1 is that it has taken
sufficient measures for the protection of the environment such as chemical treatment of effluents
and proper disposal of hazardous by products, etc. Also, one of the major drawbacks at P1 is that
it only produces virgin(new) quality papers from wood pulp. Waste papers are sparingly used asraw material for preparation of pulp and paper.
One of the main shortfalls of reverse logistics activities at P1 is the lack of an
efficient information and communication technologies (ICT) for the integration of its reverselogistics activities. Most of the suppliers of P1 are based locally and are connected byconventional means such as telephone ,fax,e-mail etc. The company had implemented an in-
house developed ERP system, which attained limited success .Thus for effective integration of
reverse logistics, use of ICT should be increasing at P1.P1 has ample opportunity for the improvement in its reverse logistics activities .Interaction
with the logistics and supply chain managers at P1 indicated that financial constraints and
company policies are the chief barriers of reverse logistics operations. The continuous lineproduction at P1 is tuned with producing virgin qualities of paper. Logistics and supply chain
management of P1 were of the view that if waste paper is used as raw material, additional
technologies would be required for removing the dye present in the waste papers.P1 at present is
not using these technologies due to financial constraints. Thus, in the long run p1 should usethese technologies for effective implementation of its reverse logistics activities.
Its observed from the case study that reversed logistics practices are at a nascent stage in
the Indian paper manufacturing industries. Indian companies have not fully utilized the real
benefit of reverse logistics. There are ample opportunities for the improvement in reverselogistics operations.
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This case study was conducted with some limitations as well. Company had some
reservations in revealing some of its technical information and data associated with the reverselogistics activites. Thus ,this was one of the major constraints in this exercise.
Conclusion
Indian paper industry is currently in the midst of a transformation with major capitalexpenditure underway and improving operating efficiencies is the major concern of the
all players. All players are committing a large amount of investment, focusing on:
Improving the operational efficiencies through rightsizing pulping capacities Brown-field capacity expansions Backward integration into captive power Adherence to pollution norms by chemical recovery
The paper industry would witness an investment worth INR100.0 billion in next 2-3years. The top 10 domestic players in paper sector would account for around 70% of the
capex planned to b