East Delta University

MBA Program : Spring 2022

Course Title: Supply Chain Management
Course Code: MBA- SCM- 659.1

Continuous Assessment (CA)- 03:

Marks – 30
Individual Student Assessment for Mid Term- Spring -2022

Submitted by:
Sourav Palit
221002906
Date of Submission: 20/03/2022

Submitted to:
Syed M. Tugril Esteyak
Adjunct Faculty,
School of Business Administration
East Delta University

Student Sign: Faculty Sign:

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Contents
Question 1 .................................................................................................................................. 1
A. Define Logistics, How Logistics act as a Value adding Segment across the Supply
Chain? “Logistics and Supply Chain both are Inseparable and not contradictory each other”
– Explain this Statement. ....................................................................................................... 1
B. Explain Key Logistics Goals in SCM. What is Your Understanding on “Physical
Supply Flow and Physical Distribution “in Logistics? .......................................................... 2
C. Supply Chain Drivers is Play a very vital Role for “Supply Chain and Logistical
Excellency across the Company” – How Explain Briefly? ................................................... 8
D. How Supply Chain define Agility viz-a- vis Responsiveness? Briefly discuss How
You explain Supply Chain Excellency through Performance of Supply Chain Drivers
(Especially Efficient & Efficiency Vs Responsiveness in Supply Chain) ............................. 9
E. Write Down Comparison between Efficient and Responsive Supply Chain- Based
on SCM Drivers. .................................................................................................................. 10
F. Discuss on “Cross -Docking “system in Supply Chain. How cross -docking play an
important to deliver the product to end customer, Explain with industry examples. .......... 11
Question 2 ................................................................................................................................ 12
A. What is Your understanding on “Milk Run Logistics” and “Last mile Delivery “?
Explain Focusing on these concepts how Company gets Logistical Excellency, discuss
with example. ....................................................................................................................... 12
B. How “Milk Run Logistics” Concept developed in Bangladesh by Pran Group,
Arrong , Milkvita Etc and these companies are supplying “ Liquid Milk” across this
country – Explain Its Logistical System based on this concept. .......................................... 14
C. Discuss briefly the Concepts, Features and Area of Green Logistics and Green
Transportation with Example sharing. ................................................................................. 15
D. Explain “Logistics must therefore be seen as the link between the marketplace and
the supply Chain”- How....................................................................................................... 15
E. Explain how supply chain can be effective in a multichannel operation to meet four
Key Logistics Goals in SCM, Explain the four Key Goals. ................................................ 16
F. Discuss “Back-hauling” system. How it minimizes transportation cost in Supply
Chain. ................................................................................................................................... 17
Question 3 ................................................................................................................................ 17
A. How Company getting Competitive Advantage through Supply Chain? ................. 17
B. Explain “Strategic Fit and Strategic Drift: with Dell Industry example. How
Strategic fit achieved, Explain. ............................................................................................ 19
C. Why OFM, Explain OFM Briefly. Explain OFM – OTIF as a Logistics KPI. ......... 21
D. What is SRFT, Why SRFT – is an important factor to keep Buyer/Customer
Commitment. ....................................................................................................................... 24
E. What is “Cold Chain management “. Why Cold Chain taking Place in Supply Chain
Functions, Explain It Area and Strategic Importance Managing Product Quality. ............. 24
F. Discuss “Stock Replenishment “system. How Quick stock replenishment system
works to avoid stock out. ..................................................................................................... 25

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Question 4 ................................................................................................................................ 26
A. What is your own understanding on Inventory Planning and Control, what is BOM
and its relation with Inventory? Why do companies maintain inventories? ........................ 26
B. Explain at your own Factors affecting Inventory Management Decision. ................ 27
C. Explain “BOM and why BOM is important and Explain difference between
Inventory and Stock, how it is help to manage Inventory Planning and Control across the
Supply Chain........................................................................................................................ 28
D. If Supply Chain Control over Inventory/Material Management is Failed, Inventory
become a Liability- are you agreeing with That? In what case Inventory considered as
Liability. ............................................................................................................................... 29
E. Explain How Inventory Play Role in Competitive Strategy in Managing “Cost”. ... 30
F. “Though inventory is an Asset for a Company but Inventory Considered as a Waste –
Why, how – Explain in details according to your Strategic Vision. .................................... 31
Question 5 ................................................................................................................................ 32
A. “Inventory in one of Supply chain costs Driver”- from this Statement How Supply
Chain Taking over Control for total business performance of any company minimizing
Inventory. ............................................................................................................................. 32
B. What do You Understand by Maritime Logistics? Mention it Features? What do
You mean by Cargo and Consignment? Mention the International Standard Size and CBM
of Container. What is CBM and How it is Calculate? ........................................................ 33
C. What is your Understanding on “DRP” and “VRP” in Logistics Planning? How both
Concept play a vital role in Logistics Performance. ............................................................ 35
D. What do you mean by “Strategic Fit and strategic drift in Supply Chain? Discuss
“Strategic Drift” taking an example of Dell / Kodak / Nokia etc. ....................................... 36
E. Explain “How Strategic fit” is achieved. .................................................................. 37
F. Explain – “Hub- & Spoke” System. How Hub-Spoke System works. Explain with
industry example. ................................................................................................................. 38

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Question 1
A. Define Logistics, How Logistics act as a Value adding Segment across the Supply
Chain? “Logistics and Supply Chain both are Inseparable and not contradictory
each other” – Explain this Statement.
When used in a business sense, logistics is the management of the flow of things between the
point of origin and the point of consumption in order to meet requirements of customers or
corporations. The resources managed in logistics can include physical items such as food,
materials, animals, equipment, and liquids, as well as abstract items, such as time and
information. The logistics of physical items usually involves the integration of information
flow, material handling, production, packaging, inventory, transportation, and warehousing.
There is often confusion over the difference between logistics and supply chains. It is now
generally accepted that logistics refers to activities within one company/organization related to
the distribution of a product, whereas supply chain also encompasses manufacturing and
procurement and therefore has a much broader focus, as it involves multiple enterprises,
including suppliers, manufacturers, and retailers, working together to meet a customer’s need
for a product or service.
One way to look at business logistics is “having the right item in the right quantity at the right
time at the right place for the right price in the right condition to the right customer.” An
operations manager who focuses on logistics will be concerned with issues such as inventory
management, purchasing, transportation, warehousing, and the planning and organization of
these activities. Logistics may have either an internal focus (inbound logistics) or an external
focus (outbound logistics).
Inbound Logistics: A manager in charge of inbound logistics manages everything related to
the incoming flow of resources that the company needs to produce its goods or services. These
activities will include managing supplier relationships, accessing raw materials, negotiating
materials pricing, and arranging quicker delivery.
Outbound Logistics: A manager working in outbound logistics will be focused on two issues:
storage and transportation. He or she will use warehousing techniques to keep the finished
goods safe and accessible. Since the products may need to be moved out to a customer at any
moment, proper organization is crucial. Having as little product stored as possible can be
advantageous since stored products are not making money, so the outbound logistics manager
often has to balance company cost savings with consumer demand. The transportation function

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is by far the most complex part of outbound logistics. Without transport, there simply is no
logistics. For that reason, it’s critical to be able to move the product from one location to
another in the fastest, most cost-effective, and efficient way possible. Since transportation
involves fluctuations, factors such as delays and changes in fuel costs need to be taken into
account in order to cover all possible scenarios that might jeopardize the efficient movement
of goods.

B. Explain Key Logistics Goals in SCM. What is Your Understanding on “Physical

Supply Flow and Physical Distribution “in Logistics?
For the supply chain to be effective in a multichannel operation, it is necessary for management
to meet four goals:
1) Increased efficiency
2) Improved customer service
3) Increased sales
4) Improved relationships
Each of these goals includes definitive and specific objectives required within an operation.
Fortunately, there are proven best practices to help you achieve those objectives.
Increased efficiency: To increase efficiency, a company must develop cost-effective
transportation rates while reducing overhead, total inventory, and overall cost-per-order
processing. You can improve your warehouse operations, including processes, layout, and
flow, by working closely with your transportation provider. Establish a two-way relationship
with your carrier to frequently share best practices, issues, and opportunities.
Conversely, disjointed transportation flow ties up space on the receiving dock. For example, if
a product doesn’t meet specifications, it must be double-handled, possibly repackaged, stored,
and shipped back to the source. This process uses extra labor and space. What’s more, lack of
a reliable delivery time requires you to carry more inventory, which decreases inventory turns
and increases costs for the added storage space.
To improve logistical efficiencies, consider having the vendor perform value-added services
such as packaging, marking, and quality inspections. This improves the chance of errors being
caught at the source; source-based services speed product flow through the warehouse.
Also, avoid making transportation an afterthought; try to build it into the warehouse process
and layout. Consider inbound and outbound conveyances, queuing up shipments by carrier,
and the capability to pull orders later in the day to increase customer service.

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Determine which carriers are able to accommodate business demands, depending on product
type and turnaround time. For example, some multichannel merchants have carriers come into
the center to help load trucks, while others have an inhouse U.S. Postal Service office for
shipping.
Consider whether facilities issues could affect your operation. For instance, limited delivery-
door access can force companies to rely on their carrier to move a loaded trailer and replace it
with an empty one. During peak order-shipment periods, this causes downtime and an
interruption to the workflow when there’s no empty trailer ready to load. Additional loading
doors could solve this issue.
Vendor compliance is at the heart of efficient supply chain management. Simply defined,
vendor compliance means that product arrives from a vendor in proper condition and is
delivered in the agreed-upon manner. In addition to product quality, some vendor compliance
standards include packaging and shipping requirements, advanced shipping notices, master-
case and inner-case sizes, case labeling, product packaging and polybag specifications,
accounting and paperwork requirements, logistics requirements and routing guides, scheduling
appointments and statistical sampling requirements, to name only a few.
The proactive step of instituting a charge-back policy should be clearly stated in a vendor
compliance manual, with the support from senior management. Retailers would rather have
receipts arrive on time and be compliant than deal with the hassle of collecting charge-backs.
But it’s necessary to put financial penalties for non-compliance into effect. Without setting
these standards, a warehouse will have to absorb repackaging and re-labeling costs. And
without compliance policies and enforcement, it’s difficult to implement more advanced
systems of cross-docking, advanced shipment notices (ASNs), just-in-time inventory, source
marking and ticketing, or radio frequency identification.
Traditionally vendors, rather than merchants, have controlled inbound freight decisions. This
practice costs merchants an estimated premium of 20%-60% above actual transportation costs.
But today more merchants are taking control of inbound freight, enabling them to influence
their economies of scale and negotiating power to reduce costs. This is not an easy transition
to make when you consider the number of documents, parties, languages, and currencies
involved in global sourcing. But the benefits are numerous — lower costs, improved visibility
of the inbound goods in transit, and the ability to schedule receipts.
Another major advantage of controlling inbound freight is the ability to combine inbound,
outbound, and reverse logistics to get higher discounts. This always needs to be balanced with
the issue of putting all your transportation eggs in one basket. Carriers have areas of strength
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and weakness. Select vendors for their strengths. Approximately one-third of companies are
using multiple carriers — a growing trend.
Improved customer service: In direct marketing enterprises, fulfillment operations are in
partnership with marketing and merchandising. This partnership is like a three-legged stool —
without all three legs the stool cannot stand. Fulfillment operations’ inbound and outbound
transportation is key to delivering marketing’s promise to the customer to get the shipment
delivered on time and in good condition.
In direct marketing, customer service must be balanced with costs. First is the cost to acquire
a customer, which stands at roughly $10-$25, depending on the efficiency of the prospecting.
This figure includes catalog and other marketing costs, as well as the cost of nonresponses. In
many businesses, u to 70% of all first-time buyers do not purchase a second time. Most direct
businesses need a customer to purchase two or three times to break even.
The second cost element to consider is the high cost of being on backorder. Hundreds of
customer studies show that in most direct businesses it costs $7-$12 to process one backordered
unit of merchandise.
Figure 1 shows the breakdown of backorder costs for a small direct business. If this business
had 200,000 orders with 400,000 units, and backorders were calculated at 20%, then 40,000
united would be backordered. At $7.37 per unit, backorders would cost this direct marketer
$294,800. More important, the numbers don’t include hidden costs: the buyers’ time to
accelerate backorders, air freight to bring stock in faster, the loss of customer goodwill.
Permanently losing a customer because of poor service has the highest cost.
The third type of cost element is the erosion of gross demand by customer returns and customer
and company cancellations. Figure 2 shows typical return rates by category. The higher the
fashion nature of the product, the higher the return rate tends to be. Sized or tailored fashion
products have higher returns.
Returns also cost far more than orders to process, and in many businesses, only one-third of
the returns are exchanges. The cost of processing a return includes
• the original cost of order processing ($3-$6 in most direct business), including indirect
and direct labor, credit-card processing fees, occupancy costs, and phone lines
• customer acquisition costs
• the cost to process returns and refurbishing items, including indirect and direct labor
and occupancy costs
• loss of shipping and handling revenue if refunded from outbound or inbound transaction

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 • loss of gross margin
• potential loss of customer if shopping or return processing experience is unsatisfactory.
For high-return categories and businesses, reverse logistics services typically allow customers
to send returns into the pipeline closest to their location, either at home or via a retail outlet.
The reverse logistics provider should offer systems that provide visibility into goods being
returned in advance of receipt in the retailer’s distribution center. This will not only allow the
merchant to schedule resources accordingly, but it will also give the merchant an estimate of
return goods that will be available to fill new customer orders. Additionally, some merchants
start the refund or credit process when customer returns have been received.
Another aspect of costs is cancellations. Industry standard for excellent customer service puts
cancellations as a percent of demand at 2% or less. For apparel direct marketers, however, it is
not unusual for cancellations to be 4%-8%.
There are no historical selling data for apparel, because of the high percentage of new product.
New products can run 50%-75%, four seasons a year — that’s simply the nature of the apparel
industry. Catalogs with fewer new products or with categories that have a higher ability to be
reordered, have lower cancellation rates. Business-to-business cancellation rates may be less
than 1% to several percent; home decor rates may be from 1% to 3%.
Obviously, the speed of getting resalable returns back into inventory availability and the
reduction of costs of returns can greatly affect profitability. Leading merchants acknowledge
returns as part of the cost of doing business and include a convenient return process as part of
the customer experience.
On the inbound side, shaving several weeks off receiving can save some of the backorder costs
and reduce loss of customers. This is where a potential problem with global sourcing lies. Most
direct marketers are unable to reorder except in large quantities. Receipts are generally not
planned in multiple shipments because of the minimum purchases required.
Increases in supply chain efficiency can reduce inventory levels and out-of-stocks. Take the
radio frequency identification (RFID) used at Wal-Mart. Wal-Mart’s use of RFID is early in
its implementation, but results are already impressive. According to Linda Dillman, Wal-
Mart’s chief information officer, using RFID has reduced out-of-stock merchandise by 16% at
participating stores while improving customer service during the past 12 months. The
concentration has been in higher-priced, faster-moving product. Additionally, Dillman says,
the company can restock RFID-tagged items three times faster than nontagged items.

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Getting efficient inbound logistics systems and vendor compliance in place is the first priority.
While RFID is in the future for most companies, others need to implement solutions that
optimize supply chain efficiency today.
Increased sales: How can inbound and outbound logistics and transportation help a retailer’s
sales? Several opportunities exist for improving service, and those in turn can be used to
marketing’s advantage. Look at inbound and outbound freight as separate operations with
separate requirements. Bundle the volumes wherever possible with your carriers, but recognize
the differences between the channels.
With direct promotions and advertised retail product, maintaining on-time and in-stock position
is a must. Without an available, reliable source of merchandise, you could end up losing sales
and customers. Because it’s difficult to project sales, you need to get product quickly and safely
into the logistics pipeline. Product damage from inbound transportation can seriously reduce
product availability, and of course without product you can sell, profits decline.
Begin by tracking what you have coming inbound–where it is and when it will be delivered.
Import and assemble containers of priority product, since delivery by air freight is costly and
may exceed the margin of low-priced product. Be aware that direct channels are subject to the
Federal Trade Commission’s 30/60-day rule: Direct marketers must notify customers of a
possible delay in receiving and, as a result, outbound shipment, or cancel their orders entirely.
(A note of clarification: The 30-day promise to deliver begins after take the consumer’s order.
If you tell the consumer their order is backordered for two weeks, the thirty days start from the
backordered date. At the end of the thirty days, you’re required to send the customer notice. If
you reach the 60-day point you have to notify the customer the order is still backordered.) In
addition, warehouses are increasingly becoming the “back room” for specialty store operations
in the multichannel environment. If you don’t have product that can be moved quickly into a
retail outlet, you can miss the sale.
As companies become leaner, transportation becomes even more important to meeting sales
goals. Plus, there’s a difference between merchandising stores and catalog promotions. Retail
customers may substitute another product for what they originally came in to purchase, but
catalog and Internet customers are less likely to accept substitutes. That’s why many catalogs
adopt charge-backs for late delivery, backorders incurred, and substituted product.
The logistics of delivering to the customer can hurt sales if the customer’s expectations are not
met–for example, if a gift is delivered late or arrives damaged. If the customer doesn’t want
the product that arrives, returns increase the cost of operation.

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Conversely, logistics can factor into a company’s marketing plan if transportation costs are
under control. According to BizRate Research, 79% of e-commerce companies were planning
to offer free shipping and handling during the past holiday season. Free shipping has proven to
increase sales and average order sizes. Most marketers don’t want to give up this source of
revenue, though, or they offer it only to their best customers or higher-average order buyers. If
your company’s transportation costs are out of control, you’re going to be less willing to offer
shipping promotions.
Building relationships: True two-way collaboration between retailer and carrier is key to the
success of logistics execution. Measures of success are total cost, time in transit, and
responsiveness of the carrier representative.
The single-carrier vs. multicarrier philosophy is one of the primary issues you need to address
with regard to carrier relations. Using one carrier allows a higher aggregate volume of
shipments, which can result in lower negotiated rates. The downside is total dependence on the
carrier and possible problems if there is a carrier service interruption.
A good relationship with your carrier representative is vital. Inevitably there will be issues that
must be addressed. Trust and a positive attitude can influence how those issues are resolved.
Use a structured approach to comparing carriers. When soliciting bids, give carriers as much
information about your business requirements as possible. Throughout the bidding process, and
later when working with carrier partners, follow these guidelines:
• Stay involved with the process.
• Verify results and reports.
• Audit bills.
• Consider the total costs of transportation in your analysis and reviews.
• Keep options open and treat carrier contracts and relationships as dynamic and evolving
— not like a fixed three-year arrangement.
In direct businesses, the purchasing and inventory control departments are responsible for
analyzing inventory requirements, purchasing and purchase-order writing, receipt planning,
vendor communication, routing deliveries, improving backorders, and coordinating required
receipts to prevent backorders and stock-outs. They are generally good partners with fulfillment
in enforcing vendor compliance. In multichannel and multiwarehouse operations, the
purchasing and inventory control departments have the prime responsibility to balance or level
inventory between channels, warehouses and stores to optimize sales and profitability.

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Systems implications abound for integrating partner systems, implementing supply chain
improvements, and managing necessary IT resources. Hundreds of vendors sell software
systems to streamline the supply and logistics process — an indication of the complex
requirements for controlling the management of logistics. Many IT vendors deal with market
niches, while others deal more generally with logistics overall. Among the functions addressed
by these vendors are
• manifesting and rate shopping plus integrated load and yard management
• inbound transportation management and freight auditing
• ASN/electronic data interchange (EDI)
• inbound and outbound product tracking
• transportation procurement.
• purchase order management
• transportation planning and execution and routing guide management
• carrier management
• enterprise-wide approach to supply chain.

C. Supply Chain Drivers is Play a very vital Role for “Supply Chain and Logistical
Excellency across the Company” – How Explain Briefly?

There 2 types of supply chain drivers, Logistical drivers and cross functional drivers. These
paly very vital role in Supply Chain and Logistical Excellency across the Company. These
drivers greatly influence the performance of a company’s supply chain. Companies can develop
and manage each of these drivers to emphasize the ideal balance between responsiveness and
efficiency, depending on changing business and economic requirements.
Logistical drivers are;
➢ Facilities: The two main facilities are storage and production sites.
➢ Inventory: Inventory denotes all raw materials, WIP, and finished goods in a supply
chain.
➢ Transportation: transportation involves moving inventory from point to point.
Cross functional drivers are;
• Information: Information is data about facilities, inventory, transportation, costs, prices
and customers throughout the supply chain, also gives shipping option to managers.

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 • Sourcing: Sourcing is the particular supply chain activity should be done inside a firm
or procures from other entities.
• Pricing: ricing drivers determine the price of goods and services which the supply chain
produces.

D. How Supply Chain define Agility viz-a- vis Responsiveness? Briefly discuss How
You explain Supply Chain Excellency through Performance of Supply Chain
Drivers (Especially Efficient & Efficiency Vs Responsiveness in Supply Chain)
Supply Chain Agility: The shift from enterprise to supply chain competition has increased the
need to better understand the determinants that lead to successful results for the entire supply
chain and not just for individual members. agility has been suggested as a means by which the
supply chain is able to adapt to the changing needs of the market.
Supply Chain Responsiveness: Supply Chain Responsiveness is defined as the ability of a
manufacturing system to make quick and balanced adjustments to the predictable and
unpredictable changes that characterize today's manufacturing environment.
Supply Chain Excellency through Performance of Supply Chain Drivers (Especially
Efficient & Efficiency Vs Responsiveness in Supply Chain and:
Supply Chain Efficiency in Action: Efficiency saves money and increases profits throughout
your business, but an efficient supply chain can be particularly beneficial to your bottom line.
An efficient supply chain gets products to their destinations in the most cost-effective way. In
today's global marketplace, this is essential. Features of an efficient supply chain:
▪ Optimization. This can include optimized shipping routes, warehouse locations,
personnel and even your computer network to get the best and fullest use out of your
existing infrastructure. Half empty trucks, unused warehouses and redundant computer
systems are simply a waste of Company’s assets.
▪ Inventory management. Too much inventory is costly to purchase, handle, store and
track. Too little inventory can be costly, as well. It can mean lost production time,
expensive last-minute orders and even angry customers. An efficient supply chain finds
the right balance when it comes to inventory.
▪ Customer satisfaction. Supply chain efficiency is directly linked to customer
satisfaction. It gets your products into the hands of the people who need them quickly
and at the best price.

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The Responsive Supply Chain: A responsive supply chain has to do two things: it has to be
responsive to your needs, and it has to be responsive to the needs of your customers.
▪ Order-fill accuracy. In today's highly competitive market, a guarantee of quick deliver
is a real selling point. If that order arrives quickly but is inaccurate or incomplete, then
you've wasted time and money and may have lost a customer as well.
▪ Scalable fulfillment. All businesses experience ups and downs. Sales can be affected
by the season, the weather and the economy. A responsive supply chain is one that can
accommodate changing sales volumes.
▪ Communication. When Company or customers have questions, problems or concerns,
it's vital that there be open lines of communication.

Customer satisfaction. People can sometimes throw a monkey wrench into to the best supply
chain. They order the wrong thing. They change their minds. They need something sooner, not
later. This is when a responsive supply chain really shines.

E. Write Down Comparison between Efficient and Responsive Supply Chain-

Based on SCM Drivers.

Supply Chain Drivers Responsiveness Efficiency

Production ▪ It concentrates on ▪ It relies on a small

overcapacity. amount of surplus
energy.
▪ Its manufacturing is
▪ Manufacturing is
adaptable.
not adaptable.
▪ It contains a large ▪ It has a limited
number of smaller number of core
plants. plants.

Inventory ▪ It means the inventory ▪ It has a poor

is kept at a high inventory ratio.
standard.
▪ Just hold a few
▪ Maintain a variety of things.
products.

Location ▪ Set up a variety of ▪ There are fewer

locations near your sites, but they
clients. cover a wider
market.

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 Transportation ▪ Frequent deliveries ▪ Concentrate on
are made. massive
shipments.
▪ Concentrate on the
versatile and fast ▪ Maintain the
mode. slower, less
expensive mode.

Information ▪ Collect reliable data ▪ While other costs

and disseminate it in a are that, the cost
timely manner of knowledge is
decreasing.
Example ▪ Coopers ▪ Kings
Confectionery

F. Discuss on “Cross -Docking “system in Supply Chain. How cross -docking play an
important to deliver the product to end customer, Explain with industry
examples.
Cross-docking is a logistics procedure, which products from a supplier or manufacturing plant
are distributed directly to an outbound carrier, such as a customer or retail chain. Cross-docking
takes place in a distribution docking terminal, consisting of dock doors on two sides (inbound
and outbound). It is a practice that keeps supply chains moving in a productive, effective
manner. Instead of a standard distribution center, cross-docking facilities are more of a “sorting
center,” where goods quickly pass through since there is minimal space for storage.
Cross-docking warehouses have far less storage space than a distribution center. The docking
terminal consists of inbound and outbound lanes. So, inbound shipments go to a receiving dock.
Then, the products go directly to outbound destinations on forklifts, conveyor belts, pallet
trucks, or other means and are sorted and consolidated before making their way to outbound
shipping. Usually, the goods spend less than 24 hours within a docking terminal.
Cross-docking has three primary methods: continuous cross-docking, consolidation
arrangement, and deconsolidation arrangement. Continuous cross-docking is considered the
most straightforward and fastest method. In continuous cross-docking, products and materials
continuously move to a central site. These products are transferred immediately from an
inbound truck to an outbound truck. This method has minimal wait times. However, if trucks
arrive at the terminal at different times, they will incur a waiting time.

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In the consolidation arrangement method, several smaller products or freight loads combine
into one significant load in the cross-docking facility. This way, incoming freight is combined
with goods stored at the terminal to form full truckload shipments.
Deconsolidation arrangements are the opposite of consolidation arrangement, in which it
breaks down large product loads into several smaller loads for easy transportation. These small
loads usually go directly to a customer.
Trucking companies like cross-docking practice because trucks have fuller loads and exact
destinations for each shipment, saving transportation costs. This way, a shipper can adapt
quickly to new selling channels and market conditions; this shipping method reduces the
overall time to reach each customer. Although this practice delivers significant financial and
operational advantages, companies must implement proper tracking and compliance to achieve
adequate performance. By partnering with PLS Logistics Services, we offer data-driven supply
chain practices to help ensure control and visibility of shipments from supplier to end
customer.

Question 2
A. What is Your understanding on “Milk Run Logistics” and “Last mile Delivery “?
Explain Focusing on these concepts how Company gets Logistical Excellency,
discuss with example.
Milk Run Logistics: The term milk run comes from milk delivery. Milkmen would drive a
route, delivering milk to people's homes and picking up empty bottles. Milk runs also described
trains that would stop at multiple farms to pick up cans of fresh milk to take to a central dairy
for processing.
Milk run in logistics is a process for inbound deliveries to warehouses or distribution centers.
These deliveries can involve internal or external supply chains. In a Milk Run logistics &
transportation approach, a route is designed based on the customer-demand and along the way
there are pickups and deliveries, which can be done in secondary distribution.
Last mile Delivery: Last mile delivery, also known as last mile logistics, is the transportation
of goods from a distribution hub to the final delivery destination — the door of the customer.

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The goal of last mile delivery logistics is to deliver the packages as affordably, quickly and
accurately as possible. last mile delivery is relevant for businesses that deliver products directly
to their consumers.
Logistical Excellency through Milk Run Logistics and Last mile Delivery: Milk run
logistics is a type of inbound logistics. In this system goods are delivered to ware house or
distribution centers. On the other hand, Last mile Delivery refers to the process where products
are distributed to its final delivery destination. In short, it is a part of outbound logistics.
These two concepts are widely used in today's efficient supply chain system. This is the time
where fastest delivery is the necessity. Upsurge of internet-based business modules such as e
commerce etc. are widely dependent on delivery system. In this segment, Milk Run Logistics
and Last mile Delivery module can work as game changer. Let’s take Suzuki India as an
example. Maruti Suzuki spends about 2.5% of net sales on inbound logistics, as it relies mainly
on vendor- managed inventory. Maitra admits that milk run processes had previously been
indigestible for him. However, the company has moved more towards using 3PLs to manage
parts of inbound logistics. “Toyota has gone in for the total 3PL route. We decided to get into
these modern concepts too,” he says. “But our experience has been that when the vendor
manages his supply, the cost is lowest when compared to the 3PL route.” The carmaker has
experimented with milk runs from Faridabad, close to Gurgaon, with Ceva. Maitra says all
suppliers can track supplier movement on a handset. Now he is deliberating whether to
introduce milk runs at other locations, including Bawal, Rohtak and Manesar. Use of this
process improved their distribution process smooth and lag free. As we know there are so many
advantages for which Milk Run Logistics can add value to an SCM process. The advantages
of milk run logistics can be felt soon after its implementation. It Decreases inactive loads,
brings reduction in the rate of malfunctions, it is Flexible and agile.
On the other side, Last mile delivery has its own sets of pros. Streamlined shipping & delivery
process, route optimizations, flexible deliveries and improved order management all of this can
bring smile to the last miles. For example, Amazon officially launches its last-mile delivery
services with “Amazon Logistics” in 2018. This was a step to reduce the eCommerce giant's
fulfilment and shipping costs, which reached $34 billion and $27 billion respectively by 2018.
The Last Mile team helps get customer packages from delivery stations to a customer's
doorstep.
Amazon has grown its Last Mile delivery efforts helping to speed up customer delivery times
and provide new innovators to the customers. Amazon delivers groceries, prime now, 3P, and
Restaurant orders to homes, businesses, Amazon Lockers, and even cars all over the world!
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This network is powered by hundreds of small businesses and tens of thousands of drivers that
leverage Amazon technology to deliver millions of smiles to customers each day. Last mile
delivery process made their delivery system a game changer.
So, from the upper discussion and industry examples, we can say that Company can achieve
Logistical Excellency through both of these concepts.

B. How “Milk Run Logistics” Concept developed in Bangladesh by Pran Group,

Arrong , Milkvita Etc and these companies are supplying “ Liquid Milk” across
this country – Explain Its Logistical System based on this concept.
Using the Milk Run method within your facility/factory has become quite common for many
lean manufacturing facilities. Remember that the lean concept focuses on optimizing every
aspect of production including material handling and transportation. The Milk Run method
simply allows more frequent deliveries of materials and supplies to more than one assembly
area or section of your facility that needs to be re-stocked. Often this helps reduce the levels of
overstocking or having to manual call for more materials.
It also keeps production processes flowing across the shop floor which drastically reduces
downtime. This is why it is regularly applied to optimize a supply chain. In the most common
form of this set-up, operators and material handlers conduct defined standard delivery routes
throughout the facility. These deliveries are most commonly made to areas of the facility that
are in constant need of being re-supplied and are most commonly located on the assembly line.
These delivery routes are normally timed out during the shift to operating at peak efficiency,
to ensure that the assemblers can continuously assemble according to production schedules.
The operator will pick up their materials at a central warehouse or “supermarket” and then
follow the route delivering or dropping off the material to the assemblers at different assembly
stations. These deliveries are most effective and efficient when completed by a tugger train
system, leaving different carts, containers, and materials at the different assembly stations.
Using a tugger train system is most common when implementing a milk run route within your
facility, as using a forklift to complete these routes is very dangerous and quite inefficient. This
is due to the versatility of tugger train systems. The system supports the use of different cart
configurations and is built to navigate aisles and pathways forklifts will struggle with. The
safety record of tugger trains is another reason why it is best for implementing the Milk Run
method.

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In a larger set-up, there will be more material handlers back at the storage area/supermarket
preparing the next milk- run route so the driver of the tugger can easily begin his next delivery
route. Whereas in smaller operations this is completed by the same material handler/driver.
Thus, the method used in preparing the next delivery route usually depends on the size and
practices in a factory or warehouse.

C. Discuss briefly the Concepts, Features and Area of Green Logistics and Green
Transportation with Example sharing.
Green Logistics: Green logistics, also referred to as Eco-logistics, is a measure and sustainable
policy taken by the logistics industry to minimize the environmental impact on transportation,
warehousing, and other logistic activities. This policy is aimed to create a sustainable value
that balances the economic and environmental efficiency.
Features of Green logistics: Green Transportation: It is a concept which identifies the
relationship between the supply chain operations and the natural environment. The main aim
of the green transportation is to reduce or cut the amount of gas emission which leads to
decrease in pollution rates. Most of the green transportation modes are made from low-cost
materials and it's using low-cost energy.

D. Explain “Logistics must therefore be seen as the link between the marketplace
and the supply Chain”- How.
Logistics is an essential component of supply chain management. Companies see logistics as a
critical blueprint of the supply chain. It is used to manage, coordinate and monitor resources
needed to move products in a smooth, timely, cost-effective and reliable manner.
If we systematize all areas of logistics that need to be developed for the rational management
of production resources, we can single out the following functions:
• Warehouse design and management. This role of logistics in supply chain management
covers several tasks at once: from the design of storage facilities to the requirements
for storage of products and ending with the introduction of various automation solutions
(for example, for machinery intended for transporting goods within warehouses);
• The formation of packages. Packaging, tracking and accounting - all of these tasks
allow for end-to-end control of goods on the way to the customer/distributor;

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 • Transportation of products. This includes work with cargo carriers and vehicles listed
in the company's fleet: planning their routes, calculating fuel costs, etc.;
• Working with customs. When an enterprise plans international delivery of goods, it is
very important that during their transportation the goods fully comply with customs
requirements and contain all the necessary documentation;
• Working with intermediaries. Intermediaries in logistics are all third-party, non-
company resources that are directly involved in the implementation of supply chains.
In turn, finding intermediaries with the most acceptable ratio of quality to cost of
services, as well as establishing long-term, reliable relations with them are also included
in the list of tasks for efficient logistics management;
• Working with written off and returned goods. There is also such a thing as “reverse
logistics”, which establishes the rules and routes for transporting the returned/discarded
goods, as well as ways to dispose of them.
E. Explain how supply chain can be effective in a multichannel operation to meet
four Key Logistics Goals in SCM, Explain the four Key Goals.
Multichannel operations increase competition for sales and customers. In multichannel
operation four key logistical goals must be attained for an efficient supply chain. For the supply
chain to be effective in a multichannel operation, it is necessary for management to meet four
logistic goals. Each of these goals includes definitive and specific objectives required within
an operation. Fortunately, there are proven best practices to help you achieve those objectives.
Increased Efficiency: Increased efficiency reduces inventory and total overhead, while
developing cost-effective transportation rates. All facets of the company should work well
together, with the warehouse, transporters, and executive team sharing issues, opportunities,
and ideas. While many companies focus their energy on internal logistics (warehouse), it's
important to remember transportation as a crucial piece of the puzzle. Efficient transportation
enables you to gain control of inbound and outbound logistics.
Increased Sales: Increased sales are, of course, a major goal of inbound and outbound
logistics. By keeping products in stock, delivering shipments on time, and efficiently moving
products through the warehouse, you can avoid losing sales and capitalize on existing orders.
Better Relationships: Because the transportation of goods is one of the last interactions a
retailer has with a supplier, it's important to focus on relationships. By hiring drivers with good
interaction skills, you can better ensure a positive business relationship will result between your
company and your clients.

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Improved Customer Service: Going hand in hand with the idea of better relationships through
healthy interactions is a focus on customer service. Whether dealing with Inbound or outbound
logistics, satisfying customers should be at the heart of everything.

F. Discuss “Back-hauling” system. How it minimizes transportation cost in Supply

Chain.
Backhauling implies planning return trips, tracing the routes meticulously for the transported
goods in each segment of the trip, and – essentially – foresee everything so trucks do not return
empty and thus, maximize productivity.
The idea is simple: the unit will carry out deliveries normally but stopping on its way back at
companies needing to return stock or packaging to the distribution center or at the facilities of
suppliers of raw materials.
From a logistics point of view, it means planning return trips and trace routes to make sure
goods are transported in each segment. This improves the use of vehicles and drivers, increases
productivity, and eliminates the needs of additional trips, which results in a reduction of fuel
waste. The most important aspect of setting up a backhaul strategy is to plan the delivery and
pick up routes well. These must be optimized so they can be efficient. Once a delivery route
has been set, we notice which suppliers are nearby so trucks can pick up goods at those sites
without much detouring. Using fleet management systems to plan routes and GPS tracking are
also helpful because they allow senders to accept jobs faster thanks to the information they
yield on space, locations, and available hours.
This synergy demands previous planning. For example, we can find out what is our
backhauling capacity by defining the available capacity in each distribution center, their range
(distance in miles between distribution centers), and analyzing what type of goods return to
these centers (stores may want to return pieces they cannot sell like pallets or furniture.)

Question 3
A. How Company getting Competitive Advantage through Supply Chain?
As technology transforms and disrupts industries, organizations may be tempted to embrace
every new development. But the critical check is to ensure any technology your organization
employs actually adds value to your supply chain. Take advantage of these advances in
technology to boost the supply chain:

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 • Enable supply chain automation through robotics: While adoption isn’t prolific (yet),
industry giants like Amazon are already looking to robotics to automate the supply
chain, cutting overhead from operations and labor. Amazon “employs” more than
30,000 robots, according to Business Insider, and many major China-based
manufacturers are boosting their use of robots as well.
• Leverage smart supply chains: Organizations can capitalize on big data sets mined from
machines tagged with sensors to move supply chain planning from reactive to proactive.
Applying advanced analytics enables organizations to find and predict issues before
they occur, instead of detecting and responding to issues after it’s too late. While less
than a quarter (23.4%) of organizations report using this now, almost 90% of
respondents agreed this is a good or outstanding opportunity, according to a Supply
Chain Digest Benchmark Study.
• Automate orders: Errors are less likely to occur in automated processes that aren’t
subject to human delays or errors and automating routine orders can help to avoid
financial loss in the form of over- or under-stocking a retailer. For example, P&G
leverages a standardized data warehouse that automates commerce between suppliers
and retailers.
• Employ artificial intelligence (AI): AI applications can tackle customer service
payment processing, IT support, or operations, eliminating overhead costs. P&G is also
embracing this application in its payment processing.
Enable Agile Process Improvement for Supply Chain Advantages
With technological disruptions spurring the need for constant innovation and transformation in
business, staying at the cutting edge often means improving processes with agility and
flexibility. Unfortunately, this type of nimble, adaptive change isn’t always easy in practice, as
supply chains are subject to swings in demand impacted by forces as diverse as national
politics, strikes, and natural disasters. Businesses can support process improvement in several
areas:
• Make supply chain management an organizational priority: In some cases, this means
placing supply chain leadership in the C-Suite, ensuring the supply chain leader is
skilled across multiple arenas, including conflict resolution, building relationships,
technology, operations, finance, and human capital management. Not only does this

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 executive level status ensure the organization is clear on its priority, but it also ensures
the supply chain is represented within other business functions and organizations.
• Integrate the supply chain with other functions: When the supply chain is ingrained in
all the pertinent business functions (for example, product and service development,
marketing, sales, ethics, compliance, and finance), the supply chain process can
collectively be developed alongside the product itself, instead of tacking on the supply
chain process when the product is ready to go.
• Ask partners and stakeholders about their own flexibility: Given all the parties involved
in a supply chain, supply chain leadership needs to understand each player’s individual
ability to respond to swings in demand, back-up plan, measures for success, support of
ethics, access to information, and decision-making practices. A flexible supply chain
requires all links to be flexible.
• Apply Lean Six Sigma to assess the supply chain: Through Lean Six Sigma,
organizations can establish benchmarks for tracking progresses, eliminate errors, and
optimize fulfillment while reducing waste.

B. Explain “Strategic Fit and Strategic Drift: with Dell Industry example. How
Strategic fit achieved, Explain.
Kodak’s failure to seriously pursue digital photography in favor of film photography, their
established business line, plunged them into bankruptcy. What caused Kodak to fail? They had
the talent, capital, technology (they invented the first digital camera in 1985) and had close to
a decade to adapt their business to the true demand of their customer: easily accessible photos
without the hassle of purchasing film. But their failure wasn’t overnight, management knew
that digital photography represented a serious threat to their existing business and neglected
the reality of their environment until they lost most, if not all, of their competitive advantage.
Kodak’s failure was rooted in strategic drift: the gradual deterioration of competitive action
that results in the failure of an organization to acknowledge and respond to changes in the
business environment.
Strategic drift can easily sneak up on you if you aren’t diligent. So, it’s important to understand
the causes of this phenomenon and how to remedy the problem if you find yourself drifting.

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 Four phases of strategic drift

Blue line trending up – changing external environment

Red line – strategic position of the organization.
Phase 1 - Incremental change: Incremental Change occurs before there is any significant
change in the economy, technology, or customer demand (the external environment).
Organizations make incremental change and remain in touch with the environment. There is
no cause for alarm during this phase because there is little distance between external changes
and the strategic action of the organization.
Phase 2 - Strategic drift: Strategic Drift (the name of this phenomenon is also the name of
Phase 2) happens when there is an accelerating rate of change in the external environment and
the organization continues to operate as it did during Phase 1.
Although the organization continues to make incremental progress, it’s not enough to keep up
with the environment’s accelerated rate of change. During this phase, the gradual effect on an
organization can be quite insidious. Often, financial performance declines, and the decline and
its cause (separation of organization from the external environment) isn’t fully recognized by
senior leadership during this phase. Poor financial performance can be easily blamed on
internal issues as opposed to the external environment. Strategic actions that were once enough
for success is becoming gradually less competitive. The slower you react, the larger the delta
between what you offer and what the customer demands, the harder it will be to transform.
Phase 3 – Flux: At this point, management can no longer ignore the gap between what their
customers are demanding and what the organization is providing. The organization understands
that they need to change. It’s likely that they will begin to create a change management strategy.

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However, it may be difficult for existing management to agree on what exactly needs to change
and how it’ll be done. After all, management still may not understand their environment and
therefore the root of their problem; this issue is exasperated if the same management who found
success during the organizations past, are present and still hold powerful positions. It’s difficult
for individuals to grasp that what worked before, won’t work anymore.
At this point, because the organization is so far behind, change needs to err on the side of
transformational as opposed to incremental. Often, there is not decisive action which ultimately
leads to little progress. While management is caught in indecision, environmental change
demand is accelerating and creating more distance between your offering and reality.
Phase 4 - Transformational change or death: The title says it all and leaves management
with two choices:
A change management strategy to make a significant transformation in the organization – This
could result in success or rapid failure.
Continue your outdated strategy – This will result in dying a slow death. Eg. Kodak
For transformational change to occur you need management who are savvy, bold, and who
have the foresight to recognize the direction that needs to be taken.

C. Why OFM, Explain OFM Briefly. Explain OFM – OTIF as a Logistics KPI.
Order Fulfillment Management (OFM): Order fulfillment, also known as supply chain
fulfillment or inventory fulfillment, is the steps between taking new orders and sending the
goods to customers. OFM Process is briefly described below;
Receiving: The first stage of supply chain fulfillment is to receive inventory from suppliers.
Storing Inventory: After the inventory is received, we need to organize and store the products
in your warehouse. The organization of your stock plays a key role in the order fulfillment
system.
Order Processing: An order process is started once the order has been placed.
Item Packing: in this step we need to pack the items using corresponding packages, for
example, using bubble wrap for fragile products.
Delivery of Products: after packaging, we need to deliver the products. In this stage we need
to provide customer information to postal or other delivery services to deliver the products.
Managing Returns and Refunds: If the customers are not satisfied with their purchases or
when goods are damaged during delivery, they can request a return or refund. Now we have to

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determine if you should put the returned product back into the inventory or discard it according
to its condition.
OFMOTIF as Logistics KPI:
KPIs for OFM can be broken out into four key areas: Customer metrics, inbound metrics,
outbound metrics, and financial metrics.
1. Customer Metrics
These metrics includes all KPIs that directly relate in some way to the customer. Because these
KPIs all have the potential to impact customer satisfaction and the chance that they will
complete an order or return for additional business in the future.
• On-Time Shipping Percentage: This refers to the percentage of orders which are
shipped on time.
• Total Order Cycle Time: This refers to the average processing time from the point a
customer places an order to the point that it is shipped.
• Internal Order Cycle Time: This specifically refers to the amount of time that it takes
for your operation to internally process an order.
• Perfect Order Percentage: Perfect order percentage looks at a number of different
metrics to determine what percentage of orders ship on-time, complete, damage-free,
and with correct documentation.
2. Inbound Metrics
This category of key performance indicators refers to any metric related to product coming into
the warehouse.
• Dock-to-Stock Cycle Time: This refers to the amount of time required to put away
goods. It is typically measured in hours.
• Inbound Orders Received: This refers to the number of inbound orders that is processed
per person per hour.
• Lines Received & Put Away: This is related to inbound orders received. This metric
specifically measures inbound lines processed per person in an hour at receiving.
3. Outbound Metrics
Outbound metrics relate to the status of orders as they leave your facility. outbound metrics are
more focused on measuring the efficiency of the processes.
• Fill Rate: Fill rate is used as an indication of a perfect order.

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 • Orders Picked Per Hour: This number measures order fulfillment and shipping
productivity in lines per hour per person, for example, by utilizing automation to reduce
travel time associated with picking.
• Lines Picked & Shipped Per Hour: This refers to the productivity of picking and
shipping in lines per person per hour.

4. Financial Metrics
These KPIs refer to factors which have the potential to directly impact the profitability of your
operation.
• Distribution Costs (as a percentage of sales): This metric refers to the cost of
distributing orders as relative to your operation's total sales.
• Distribution Costs (per unit shipped): This metric refers to the cost of distributing orders
relative to the total units shipped through the operation.
• Inventory Days of Supply: This refers to the amount of finished goods/inventory that is
on hand to cover a number of days of projected usage.
OTIF is generally used to cover the entire supply chain, and therefore, as delivery to the
customer is the final step, then delivery OTIF is an indicator of performance across the whole
supply chain. Although OTIF can be used throughout the whole chain, when it is looked at as
a whole, it corresponds to delivery. A distributor's OTIF score depends on three vital
components of the supply chain all working as they should: purchasing, the warehouse and the
delivery operation.
• Purchasing: First off, the items being ordered need to be in stock. If they're not,
customer is not going to get them on time, and OTIF record will worsen.
• Warehouse: Even if the items are in stock, then there are elements within the warehouse
that could prevent the order going out on time.
• Carrier. Finally, even if the items are in stock, and picked and packed and ready to be
dispatched on time, then the carrier still has to get it to the customer on time and
undamaged.
OTIF identifies where process improvements in final delivery or within the warehouse are
required and where there are any stock issues. It measures the contribution and balance of all
three of these aspects of your supply chain in delivering your orders to your customers on time.

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 D. What is SRFT, Why SRFT – is an important factor to keep Buyer/Customer
Commitment.
Shipment Right First Time:
According to shipment right first time, we must give priority to shipment. Among all other
activities, we have to do the shipment first and without any delay. There will not be any missing
commitment or missing the deadline. For example, A buyer want 10000 pairs of shoes within
a certain date. We must have to make the supply chain planning in a way so that we do not
miss the shipment deadline. We need to ensure that, the buyer will get the products in time. If
we can do such effective plan, we will be able to produce and deliver the ordered units on time
immediately. So here, we can see SRFT as we never miss any deadline and the first attempt.
Why SRFT is an important factor to keep Buyer/ Customer Commitment:
Ensuring SRFT is essential for getting repeat clients & loyal customers. If customers get
products on time, they will be pleased and it will create possibilities to repurchase. It will create
a positive vibe among the customers and a sense of loyalty will grow. If we cannot ensure
timely delivery, we will probably lose customers. As a result, we will lose market share and it
will hamper company's profitability and reputation. Through SRFT we can keep ready our
product on time to deliver. Therefore, to keep buyer or customer commitment Shipment Right
First Time is essential.

E. What is “Cold Chain management “. Why Cold Chain taking Place in Supply
Chain Functions, Explain It Area and Strategic Importance Managing Product
Quality.
Cold Chain management: Cold chain logistics is a temperature-controlled supply chain. In
short, it's a transportation chain that maintains freight at an agreed upon temperature throughout
the logistics process. For example, ice cream must be kept frozen to preserve its shelf life. If
temperatures go above the sub-zero ranges, the product will lose its solid state and it'll no longer
be considered to be unusable.
Suppliers of food and pharmaceutical products heavily rely on the cold chain to ensure
shipment doesn't become compromised before they reach the market.
Reasons Behind Cold Chain: We need to keep certain products cold. It may seem simple but
it's a very important process. Low temperatures prevent sensitive products from altering the
state and reducing their shelf life. If we cannot do this properly products can be damaged. And

24
here cold chain management becomes handy. The two ways to preserve temperature sensitive
products are:
✓Freezing - for long-term preservation
✓ Refrigeration - used to keep a product's shelf life from deteriorating in the short term, which
is usually days for food and weeks for other products like pharmaceuticals.
Area and Strategic Importance of Cold Chain in Managing Product Quality: The cold
chain ensures that perishable products are safe and of high quality at the point of consumption.
Without cold chain, the fresh or frozen food produce, chemicals and, arguably more
importantly, the vaccines being shipped will likely perish. In 2017, the degradation of
temperature-sensitive drugs during shipping cost $5.4 billion av. globally. So, it's clear that
cold chain is very important in food, chemical and pharmaceutical etc. sectors.

F. Discuss “Stock Replenishment “system. How Quick stock replenishment system

works to avoid stock out.
The inventory replenishment meaning, otherwise known as stock replenishment, refers to the
process of inventory moving from reserve storage to primary storage, then onto picking
locations. It’s important to note that inventory replenishment is sometimes used to define both
ready-to-sell inventory as well as raw materials received from suppliers.
Depending on the unique structuring of your business, a team or series of teams will be
compiled to oversee inventory. Usually, these teams consist of the warehouse managers and/or
planners who focus on ensuring that the company has enough stock to produce goods and/or
fulfill orders.
These teams can be broken down into a variety of disciplines, with some focusing on inventory
ordering procedures as the company grows and evolves, and others grappling with the short-
term; the latter are the professionals who spend their time monitoring the inventory counts.
When the counts drop to the pre-proposed re-order point, then the designated team will contact
the appropriate parties within the supply chain to replenish the items. Remember, this occurs
with both ready-to-sell inventory as well as raw materials, direct from the supplier.
Every competent warehouse has its own set of replenishment rules. Typically, these are
somewhat moveable, depending on the severity of the case, but they are usually written after a
demand forecast is produced.

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Question 4

A. What is your own understanding on Inventory Planning and Control, what is

BOM and its relation with Inventory? Why do companies maintain inventories?
Inventory Planning: The process of determining the optimal quantity and timing of Inventory
for the purpose of aligning it with sales and production capacity. Inventory planning has direct
impact a company's cash flow and profit margins especially for smaller businesses that rely
upon a quick turnover of goods or materials.
Inventory Control: Inventory Control is the supervision of supply, storage and accessibility
of items in order to ensure an adequate supply without excessive oversupply.
Bill of Materials (BOM): BOM is a listing of all the subassemblies, intermediates, parts, and
raw materials that go into a parent assembly showing the quantity of each required to make an
assembly. Basically, a bill of material (BOM) is a complete list of the components making up
an object or assembly. Bills of materials come in different types specific to engineering,
manufacturing etc.
Relationship between BOM and inventory: The importance of a BoM to inventory control
is that it provides a complete and accurate picture of what is required, all the materials needed
for planned work and the processes associated with creating a single product.
A BOM provides a description of the individual components and the relationship between each
separate part used in production. All components required to manufacture a complete shippable
item are listed by part number, description and quantity. An effective BoM should also include
detail of the tools and equipment required for assembly, sub-assembly and any consumables
needed in the manufacture of the final shippable product.
Having an all-inclusive measure of total assembly optimizes inventory control, enables better
decision-making, highlights areas for improved efficiency, cost-effectiveness and enhanced
quality.
Why do companies maintain inventories: Keeping inventory well-stocked is a crucial aspect
of keeping bsuiness operations running smoothly. There are a few main reasons why companies
chose to keep inventories stocked in their facilities.
First, keeping inventory on hand allows a company to meet any expected increases in demand.
It also ensures that the appropriate number of products are available, should there be an
unexpected increase in demand. Plus, keeping a strong inventory supply allows a company to
benefit from periodic price reductions when making bulk purchases of needed raw materials.

26
And in the event that a facility's systems fail or break down, having inventory available means
the company won't take too large of a hit in sales, as there will be a supply of products that can
still be sold while systems are down. Lastly, steady inventory allows a company to regularly
ship products to retailers as needed, instead of having to send periodic batches based on the
production cycle or individual orders.
In addition to these key reasons, there are financial motivations for companies to keep their
inventories well-stocked. Not only does inventory figure into a company's cost of goods, it also
contributes to a business profit margin. For accounting purposes, inventory counts toward a
company's total assets, and it even determines a company's liability when it comes to taxes.
Because inventory is so integrally tied to companies' financial operations, understanding how
it affects business is critical for ensuring future success.

B. Explain at your own Factors affecting Inventory Management Decision.

There are 6 Factors Affecting Inventory Management. Those are;

When managing inventory processes, there are a variety of factors which we need to consider.
Both external and internal factors can affect inventory management in different ways, and it is
important to be aware of these variables.
• Financial Factors: Factors such as the cost of borrowing money to stock enough
inventory can greatly influence inventory management. In this case, finances may
fluctuate according to the economy, and it is wise to keep an eye on changing interest
rates to help plan your spending.
• Suppliers: Suppliers can have a huge influence on inventory control. Successful
businesses require reliable suppliers in order to plan spending and arrange production.
An unreliable or unpredictable supplier can have huge effects for inventory control.
• Lead Time: Lead time is the time it takes from the moment an item is ordered to the
moment it arrives. Lead time will vary widely depending on the product type and the
various manufacturing process involved, and therefore changes in these factors can
require changes to inventory management.
• Product Type: Inventory management must take into consideration the different types
of products in stock. For example, some products may be perishable and therefore have
a shorter shelf life than others. In this case inventory must be managed to ensure that
these items are rotated in line with expiration dates.

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 • Management: Finally, responsibility for managing business' inventory sits with the
owner, co-owners and the people who manages. While we may have multiple
employees acting as managers to oversee inventory processes, they typically will not
have the same stake in the business as the owners do.
• External Factors: There are multiple external factors that may affect inventory control.
For example, economic downturns may occur and this is something that you will
generally have very little control over. Assessing the economy is a must in order to
guard against stock outs or a buildup of excess inventory.

C. Explain “BOM and why BOM is important and Explain difference between
Inventory and Stock, how it is help to manage Inventory Planning and Control
across the Supply Chain.

Bill of Materials (BOM): A bill of materials (BOM) is an extensive list of raw materials,
components, and instructions required to construct, manufacture, or repair & product or
service. A bill of materials usually appears in a hierarchical format, with the highest level
displaying the finished product and the bottom level showing individual components and
materials.
Importance of a BOM:
• Improve material management by responding to changes in production.
• Reduce inventory levels and obsolete parts.
• Reduce manufacturing costs.
• Minimize clerical and engineering efforts by optimizing the tasks of maintaining and
changing multi-level bills.
• Supports variable length part numbers and unlimited descriptive text.
• Easy methods for accessing part information.
Differences between Inventory and Stock:
Stock items are the goods which are for sell to customers. Inventory includes the products we
sell, as well as the materials and equipment needed to make them. Inventory includes finished
products and all the assets a business owns or uses to complete production, there are four main
types of inventories: raw materials, work in progress, MRO supplies and finished goods. Stock
includes finished products, parts, materials whatever you sell to customers. The more stock-or
products-you sell, the more revenue your business generates.

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How BOM helps to manage Inventory Planning and Control across the Supply Chain
The Bill of materials used in businesses mostly functions as the roadmap to the functioning of
a finished product.
• Plans the purchasing with the help of automation.
• Keeps a tab on the total purchases of all the materials required sequentially, helping a
cost-effective plan to materialize.
• Maintains proper records and plans materials requirements.
• It also helps in keeping a lab on inventory control, thus preventing and reducing waste.
• Bills of materials designed for any product pave a path ahead and also allow scope for
rising productivity and yield, thus resulting in more profit.
BOM Example: While building a racing bike, the builder will need an assortment of various
tools required to make the bike from scratch. Items like wheels, brakes, seat, handles, a pulley,
a chain, plenty of small nuts, and screws along with various other things. A BOM for building
a racing bike would also contain the quantities required for each of the items. Now, based on
the type of Bill of materials, it might also contain the steps to build up the bike. along with the
labor and time consumed by each step. The BOM is like the basic blueprint laid out to build,
rebuild, or repair any item or product of interest. All the workers involved in the manufacturing
and post-production processes as well must be aware of the manufacturing BOM I connects
the various units required for the final product to be ready.

D. If Supply Chain Control over Inventory/Material Management is Failed,

Inventory become a Liability- are you agreeing with That? In what case
Inventory considered as Liability.
The finished goods that a company gathers before selling to end users are known as inventory.
But not only the finished goods but also raw materials used in production are regarded as
inventory because they go through the production process or goods that are in transit.
Inventory is an element of current asset since it's typically sold off within a year or less. Since
there's an expectation that the inventory will be used or sold off within the one year or within
the accounting period. For this reason, it is always listed as a current asset in the balance sheet.
We know, a good inventory management can make supply chain both efficient and responsive
and give good financial results thus making it a great asset for the company. But, if inventory
management is not efficient enough, the same inventory can turn into a huge liability.
Unsold and surplus inventory can become a huge liability for the business as there that the
business may have to incur to store it. Besides, some inventory items have a limited are costs

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shelf life and can soon become spoilt, obsolete or may lose their value. Again, with most goods
or materials, there is significant cost involved in storing and preserving them, such as the cost
of warehouse space, depreciation, maintenance, manpower, utilities, insurance, handling,
statutory compliances, physical verification, losses, and obsolescence. Thus, the longer the
goods or materials are stored, the higher would be their costs incurred on them, or increasing
cost of goods under storage.
For example, if one has excess inventory of slow-moving product at warehouse, it will take up
some space. As a result, the money is also stuck which could have been put to some productive
use (buying raw material/ increasing distribution channel/ simply earn interest from bank). In
that Case Inventory is considered as Liability. So, If Supply Chain Controls over Inventory or
Material Management is failed, in that case the Inventory becomes a Liability.

E. Explain How Inventory Play Role in Competitive Strategy in Managing “Cost”.

Inventory Plays Role in Competitive Strategy in Managing "Cost": Every business inventory
requires a lot of focus, and such attention is provided through Inventory Management and
control. Through efficient inventory management and control, a company can formulate its
competitive strategy mainly in cost management. We know inventory usually involves the most
considerable cash-flow in any business, both concerning purchasing and selling stock.
Some of the most important roles that inventory management plays in formulating competitive
strategy in managing cost are as follows;
• Better Inventory Accuracy: With solid inventory management, we can know what's
in stock and order only the amount of inventory you need to meet the demand.
• Resource wastage reduction: A perfect inventory management can decrease wastage
of various resources. Over stocking of inventory, causes over expense of energy, time
and human resources and thus it generates extra costs for the company. An efficient
inventory management can reduce such wastage and decrease these types of unwanted
cost.
• Storage cost Reduction: As the inventory management controls the size of inventory,
it reduces cost related to storage. Uncontrolled inventory needs extra storage which
usually causes a very large amount of rental expenditure. Solid Inventory management
can control this cost.
• Avoids costly interruptions in operation: Inventory Management and control are
beneficial in limiting the misuse of inventory and resources. By avoiding these types of
costly interruptions, businesses can reduce any 'hidden' costs.
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 • Brings Potential Saving: Proper Inventory Management and control can Bring in
Potential Saving as benefits of inventory management. These benefits of inventory
management provide businesses with monetary and real-time benefits.
• Facilitates Purchase Economies: Good Inventory Management and control helps in
Facilitating Purchase Economies and maintaining steadiness in production operations.
This reduces purchase cost.
So, from the above discussion we can say that, Inventory management controls wastage,
resource mismanagement and reduces unwanted costs. Thus, it plays a very vital role in
Competitive Strategy in Managing Cost.
Though inventory is an Asset for a Company but Inventory Considered as a Waste:
Inventory is regarded as an asset because this are the goods which are expected to be sold or
used up within the year or the accounting period. If the goods are sold within the expected
period, it becomes cash and that can be inject into the company's finance as investment.

F. “Though inventory is an Asset for a Company but Inventory Considered as a

Waste – Why, how – Explain in details according to your Strategic Vision.
A When your inventory adds no value and has significant costs associated with it; it is a
“waste”. The cost of steel is significant, and that cost generates no return if it sits on the floor,
a rack or shelf. The longer it sits there the more it hurts your cash flow. And we have proven
this.
By reducing the raw steel or semi-finished product required to operate; our customers have
reduced the capital required to support their operations. With our Steel Efficiency Review™
visits, we have uncovered that many of our customers will use inventory to help minimise the
impact of inefficiencies in their processes. Their stock appears critical, valuable and essential,
but once you scratch the surface, this inventory becomes unnecessary. When used as a buffer,
a security blanket or insurance system to cover up internal errors and supplier performance; it
can hurt the largest of businesses and at times even bankrupt them.
The 7 Wastes the SER® is built on refers to this form of waste as “excess inventory”. The
rationale for this is that any business manufacturing, fabricating or transforming steel products
in any way cannot operate with “zero inventories”. To achieve zero inventory our customers
would need to:
1. Process incoming raw materials as soon as they arrive.
2. Process them in one operation (or a linked series of operations), and

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 3. Deliver their finished goods immediately to allow step #1.
Also known as the true form of “Just In Time” (JIT). Although it may be impossible to achieve
this, it is important to work towards this goal. With our SER® we aim to introduce an
acceptance of inventory waste that will work for our customer and us as their partner.
Another key finding that we have uncovered is that higher steel inventory levels also drive up
slow and obsolete stock. Damage to steel products also increases as more inventory is stored
for longer times in our customer’s warehouses. And the larger the inventory levels, the more
labour is required to maintain accuracy and best fit.

Question 5
A. “Inventory in one of Supply chain costs Driver”- from this Statement How
Supply Chain Taking over Control for total business performance of any
company minimizing Inventory.

Inventory is one of the Supply chains costs Drivers: The last major driver of supply chain costs
is inventory costs. Companies across the supply chain spectrum - from retailers to
manufacturers to suppliers - rely on inventory as a buffer against supply and demand
uncertainty and volatility. Efficient inventory cost management is vital for the successful
functioning of manufacturing and retailing organizations. Inventory consist of raw materials,
work in progress, spare parts or consumables, goods in transit and finished goods. It is not
necessary that an organization will have all these inventory classes, but whatever may be the
inventory items, they need efficient management as, generally, substantial share of the
company's funds is invested in inventory.
The following are the benefits of strong inventory management:
• Better Inventory Accuracy: With solid inventory management, we can know what's
in stock and order only the amount of inventory you need to meet demand.
• Reduced Risk of Overselling: Inventory management helps track what's in stock and
what's on backorder, so you don't oversell products.
• Cost Savings: Stock costs money until it sells. Carrying costs include storage handling
and transportation fees, insurance and employee salaries. Inventory is also at risk of
theft, loss from natural disasters or obsolescence.
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 • Avoiding Stockouts and Excess Stock: Better planning and management helps a
business minimize the number of days, if any, that an item is out of stock and avoid
carrying too much inventory.
• Better Terms with Vendors and Suppliers: Inventory management also provides
insights about which products sell and in what volume. Use that knowledge as leverage
to negotiate better prices and terms with suppliers.
• More Productivity: Good inventory management solutions save time that could be
spent on other activities.
• Increased Profits: A better understanding of both availability and demand leads to
higher inventory turnover, which leads to greater profits.
• A More Organized Warehouse: An efficient warehouse with items organized based
on demand, which items are often sold together and other factors reduces labor costs
and speeds order fulfillment.
• Better Customer Experience: Customers that receive what they order on time are
more loyal.
So, from the above discussion we can say that, inventory cost management plays a very vital
role in business performance. A good inventory cost management can reduce wastage,
minimize costs, retain existing customers, acquire new customers and thus it drives the
company towards profitability. On the other hand, an inefficient inventory cost management
system can turn a profitable company into a failed one.
For Example, Toyota was the first to implement the inventory management system named JIT
effectively in 1970 and is still one of the most successful companies practicing JIT.

B. What do You Understand by Maritime Logistics? Mention it Features? What do

You mean by Cargo and Consignment? Mention the International Standard Size
and CBM of Container. What is CBM and How it is Calculate?
Maritime Logistics: "Maritime logistics is referred to as the process of planning,
implementing and managing the movement of goods and information involved in the ocean
carriage. There are three important actors in maritime logistics system: shipping, port/terminal
operating, and freight forwarding.
Features of Maritime logistics: Maritime logistics is responsible for the managerial
proceedings of systematically managing the ocean movement of goods and information in the
most efficient and effective way in order to be successfully integrated into the logistics system.
Features of maritime logistics are as follows:

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 • Shipping: The act of carriage of cargo from point A to point using the ships which
• falls under the Maritime industry.
• Port/Terminal Operating; A terminal is an area or location which serves as a pathway
for handling transport process (loading and/or unloading cargo) or it can also act as a
transfer point for passengers. Any of the place where goods are loaded or unloaded
onboard a vessel/vehicle for transport is referred to as a terminal.
• Freight Forwarding: The cargo that is carried using the shipping services offered by
the shipping lines using ships which falls under the maritime industry.
• Cargo: Cargo refers to goods or produce being transported from one place to another -
by water, air or land. Originally, the term "cargo" referred to goods being loaded
onboard a vessel. These days, however, cargo is used for all types of goods, including
those carried by rail, van, truck, or intermodal container.
• Consignment: Consignment is an arrangement between a reseller (consignee) and their
supplier (consignor), that allows the reseller to pay for their products after the products
have been sold. The reseller eventually pays the supplier for the products they've sold
and returns the products they have not sold.
International Standard Size and CBM of Container: ISO containers are the ideal shipping
container as their dimensions are regulated by the International Standards Organization (ISO).
These regulations allow ISO containers to use space as efficiently as possible regardless of the
method of transport.
Height: Standard ISO containers measure 8 ft. 6lin., but they are available in several discrete
heights measuring from 4 ft. to 9 ft. 6 in. Containers that measure 9 ft. 6 in, tall are called
extended height or high cube containers while 4 ft. and 4 ft. 6 in. containers may be referenced
as half height containers.
Width: The majority of all ISO containers measure 8 ft. or 2,438 mm wide. ISO Containers
that exceed this dimension are grouped into two other size ranges: Alpha characters C, D, E
and F identify containers that are greater than 2.438 mm, but less than 2,500 mm. Containers
that exceed 2,500 mm are referenced by L. M. N. and P.
Length: The most common lengths are 20 and 40 ft. Other lengths include 24, 28. 44, 45, 46,
53, and 56 ft.

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CBM: CBM, as known as Cubic Meter, is the freight volume of the shipment for domestic and
international freight. This measurement is calculated by multiplying the width, height and
length together of the shipment.
The conversion rate depends on shipping method
• By air: 1 CBM = 167 Kg
• By road: I CBM-333 Kg
• By sea: 1 CBM- 1000 Kg
How to calculate CBM?
CM (length*width*height) * quantity of items
The unit of length, width, height must be exchanged into meter (m).

C. What is your Understanding on “DRP” and “VRP” in Logistics Planning? How

both Concept play a vital role in Logistics Performance.
Distribution Requirements Planning (DRP): The Distribution Requirements Planning
process ensures that goods are delivered in the most efficient manner. This includes considering
the quantity of the various materials required in production and the direct location that it is
needed to arrive at in a given time.
Vehicle route planning: Vehicle Route planning is a planning process in which vehicle and
route for distribution process are determined to execute DRP in efficient way. VRP analyses
the following data traffic updates, vehicle size, and driver schedules. It also monitors
performance at all times reporting driver information, fuel efficiency, carbon emissions, and
other business KPIs.
Role of DRP and VRP in Logistics Performance:
DRP and VRP plays very vital role in logistics performance.
➢ DRP always connects to the current inventory and forecasts of field demand to
manufacturing's MPS and MRP. DRP allows for a fully integrated system and a
continuous flow of information throughout the network. This pushes for a much more
efficient and adequate production process/flow that ultimately cut costs and waste
within a manufacturing operation.
➢ DRP is also accurately able to anticipate future requirements in the field. This enables
for decreased inventory and costs within an operation and ultimately increases the
organization's profit. Anticipation of future requirements is by far one of the most
beneficial aspects pertaining to distribution requirements planning (DRP).

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 ➢ DRP matches material supply to demand, once again ultimately matching inventory to
the customer service requirements and cutting costs within an operation. DRP also
pushes for faster decision making, utilization of demand forecasting, planning initiation
accuracy, and enhances overall customer service.
Vehicle Route planning is essential for logistics and distribution companies as it allows them
to provide a more efficient delivery service. There are many transportation challenges in the
delivery industry and multiple factors can cause delays, resulting in poor service and customer
complaints.

D. What do you mean by “Strategic Fit and strategic drift in Supply Chain? Discuss
“Strategic Drift” taking an example of Dell / Kodak / Nokia etc.
Strategic fit: Consistency between customer priorities of competitive strategy and supply
chain capabilities specified by the supply chain strategy – Competitive and supply chain
strategies have the same goals.
Strategic Drift: Strategic Drift is a critical concept within the realms of Strategic Management.
Strategic Drift usually occurs when organizations are unable to keep pace with the changes that
happen in their immediate environment which in turn leads to their slow and gradual demise.
Organizational changes such as 'transformation take place over a fixed time period and can be
sensed. On the other hand, strategic drift happens over an extended period of time and usually
cannot be felt until it is too late.
Kodak and Strategic drift: Kodak's failure to seriously pursue digital photography in favor
of film photography, their established business line, plunged them into bankruptcy. They had
the talent, capital, technology and had close to a decade to adapt their business to the true
demand of their customer: easily accessible photos without the hassle of purchasing film. But
their failure wasn't overnight, management knew that digital photography represented a serious
threat to their existing business and neglected the reality of their environment until they lost
most, if not all, of their competitive advantage. Kodak's failure was rooted in strategic drift.
Nokia and Strategic drift: Organizations that do not align with the external environment and
not respond rapidly to changes face the risk to undergo strategic drift. Strategic drift can be
described as the phenomenon where the strategy of an organization gradually fails to keep in
line with the environment in which the organization operates. As a result of the above, the
organization fails to keep its strategic position, which leads to an organization crisis and
frequently is followed by a transformation or a bankruptcy. The aim of this dissertation is to
study the case of Nokia Corporation and support the hypothesis that Nokia had undergone a

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strategic drift. Nokia, after a successful course in the mobile phone market from the late 90's
to late 00's, ended to the sale of its mobile phone division to Microsoft in 2014. To examine
whether the hypothesis is true or not, financial data and market share figures were collected
and analyzed from various sources. Additionally. SWOT and Porter's five forces analysis were
conducted. As per the results of the study, Nokia Corporation, from 2009 onwards had indeed
passed through all the 4 stages of strategic drift, as a consequence of wrong strategic decisions
and internal weaknesses. Inability to detect the changes that occurred in the external
environment and adapt accordingly was the main reason, where factors such as the inability to
foresee the future of the market, the bad management, lack of expertise and underestimation of
the competition gave the final hit.

E. Explain “How Strategic fit” is achieved.

A company need to achieve that all-important strategic fit between the supply chain and
competitive strategies A competitive strategy will specify, either explicitly or implicitly, one
or more customer segments that a company hopes to satisfy. To achieve strategic fit, a company
must ensure that its supply chain capabilities support its ability to satisfy the targeted customer
segments There are three basic steps to achieving strategic fit:
➢ Understanding the customer and supply chain uncertainty. First a company must
understand the customer needs for each targeted segment and the uncertainty the supply
chain faces in satisfying these needs. These needs help the company define the desired
cost and service requirements. The supply chain uncertainty helps the company identify
the extent of disruption and delay the supply chain must be prepared for.
➢ Understanding the supply chain capabilities. There are many types of supply chains,
each of which is designed to perform different tasks well. A company must understand
what its supply chain is designed to do well.
➢ Achieving strategic fit. If a mismatch exists between what the supply chain does
particularly well and the desired customer needs, the company will either need to
restructure the supply chain to support the competitive strategy or alter its strategy.

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 F. Explain – “Hub- & Spoke” System. How Hub-Spoke System works. Explain with
industry example.
The hub and spoke model refer to a distribution method in which a centralized "hub" exists.
Everything either originates in the hub or is sent to the hub for distribution to consumers. From
the hub, goods travel outward to smaller locations owned by the company, called spokes, for
further processing and distribution.
Hub and Spoke Model vs. Point-to-Point
There are many benefits of the hub and spoke model, and it's perhaps easiest to understand
these by comparing the hub and spoke model to the model it was intended to replace: the point-
to-point model. The exact opposite of the hub and spoke model, the point-to-point model has
goods and services go directly from Point A to Point B without going to a centralized
distribution hub.
In the point-to-point model, transportation costs can actually be higher than in a hub and spoke
model. This happens because more routes are created in a point-to-point model, whereas
products can be grouped and efficiently shipped following set routes in a hub and spoke model.
A hub and spoke model also make it possible for transport drivers to travel shorter distances
and stay in a more centralized area. That's because drivers can switch at the hub. In a point-to-
point system, there's no company space for drivers to easily meet and switch.
Hub and Spoke Model Airlines Example
The airline industry revolutionized the hub and spoke model. Airlines operate out of a
centralized hub and use regional airports as the spokes from which they offer flights. Aviation
experts acknowledge that the hub and spoke model resulted in the rapid increase of the airline
industry thanks to an increase in the efficient use of relatively scarce air transit resources (only
a certain number of airports exist, for example).
The smaller regional airports (the "spokes") transport passengers to one of the larger centralized
hub airports. From there, a connecting flight can take them to another regional airport. This is
more efficient than having numerous direct routes ("point to point") from regional airport to
regional airport. The disadvantage of this model is felt primarily by the passengers, who might
experience delayed flights and increased transit time by getting on two different flights rather
than one direct flight.
Congestion at centralized hub airports can also cause dissatisfaction among travelers. Although
many large airlines believe the advantages of the hub and spoke model outweigh the
disadvantages, some smaller airlines are capitalizing on the service gap of offering regional
point-to-point flights.

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