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Loss of control this is the single biggest disadvantage of using a 3PL where there may be a
certain comfort level to servicing your customer when logistics is in house, that feeling is gone
when you outsource to a 3PL.
Higher exit barriers- it is very difficult to reverse the decision to outsource once your
organization has signed up with a 3PL provider. Contracts are usually 2-5 years in length with
penalty clauses for early termination.
Unexpected fees- unless explicitly stead in the contract, extra usage fees may apply. This is
dependent on the type of contract that is used, open-book or closed book. In open book, all costs
are visible to both parties and a management fee is applied or is applied for the 3 PL service. In
closed-book a cost per piece is charged, so as the volume handled increases, the cost increases.
Major part of logistics at ashok Leyland encore plant is taken care of TVS logistics. TVS
logistics provide services like inbound logistics and warehousing. TVS logistics takes care of the
milkrun process and the inter unit process. Mahindra logistics take care of the logistics at the
bhandara and alwar plant. Materials are also transported from the suppliers to ashok Leyland
through other approved logistics services. The supply of materials follow a schedule called as the
rolling plan r production plan. Now let us see and detail about the production plan.
production planning meeting (PPM) is conducted during the mid of every month for revisions if
any. Ashok Leyland follows a production plan which is scheduled for a period of 12 weeks of
which 6 weeks material requirement is firm and the reset is tentative. At frits, a monthly
requirement is scheduled for the 3 months, and then monthly requirements are converted into
weekly requirements. The supplier and the logistics serive providers (for milkrun and inter unit)
are given the schedule. The supplier supplies the material in accordance with this schedule. The
logistics service province is also instructed to collect the material in accordance with this
schedule.
RECOMMENDATIONS:
The collection schedule should match with the material planning schedule with necessary
MODELS OF SUPPLY:
To enable a smooth flow of materials from the suppliers and between its units, ashok
Leyland followed various models of supply. They are listed below:
Milkrun process
Direct inbound logistics form suppliers
Inter unit logistics
MILKRUN PROCESS:
Milkrun process, is a logistics technique for the collection and transportation od goods from
suppliers by the logistics servicer with a defiled delivery route, in which various stops are
planned and executed in terms of quantities and timings, rather than awaiting the delivery from
the suppliers. In the milkrun process the suppliers and the logistics service provider are given the
material collection schedule. At ashok Leyland, TVS logistics takes care f the milkrun process at
Chennai, Coimbatore, pune, hosur and Bangalore. In the milkrun process are Chennai, TVS
logistics collects material from 85 suppliers every day in various areas like gummidipoondi (two
routes), ambattur (four routes), guindly, perungudi, MM nagar and point collection (two routes).
All the collected material is consolidated at the hub store wise and the material is loaded in truck
the day material is collected. The manifest is created at the hub for all the items in the truck. The
next day, material is dispatched from the hub to ashok Leyland. At ashok Leyland the material is
inwarded at the gate, goods receipt note (GRN) processed, quality control processed (for nonself-certified items) stores processed and then the material reaches the assembly line. Before in
awarding the material at gate the manifest is verified at the TVS logistics office at ashok Leyland
and cleared for errors if any.
Supplier
milkrun model
Milkrun operation
Supplier
hub
Production
planning (PPM)
Millkurn model
Logistics service
providers to collect
material from suppliers
Delivery of the
material at ashok
Leyland
Receipt of material,
inspection &assembly
Finished product
Delivery of the
material at hub
Supplier
Ashok Leyland
Production planning
meeting (PPM)
Finished product
INTERUNIT MODEL
ASHOK LEYLAND,
Production planning
meeting (PPM)
Manufacturing
schedule
Production
Finished product
The goal of vendor managed inventory is t provide a mutually beneficial relationship where both
sides will be able to more smoothly and accurately control the avaibility and flow of goods.
In VMI a manufacture or distributor assumes the role of inventory planning for the customer
extensive information sharing is required so that the manufacture distributor can maintain a high
degree of visibility of its goods at the customers location. Instead of the customer reordering
when its supply has been exhausted, the supplier is responsible for replenishing and stocking the
customer at appropriate levels. Wal-Mart has mastered VMI and is the company against which
many other organizations benchmark themselves.
Customer benefits:
When the supplier can see that its customer is about to exhaust its inventory, the supplier can
better prepare to replenish the customer because the supplier can then better schedule its own
production distribution. Customers will reduce eliminate stock outs because they will not have to
reorder goods at the last minute without knowing whether the supplier has the ability to restock
without interrupting the customers operation. Therefore, part of VMIs goal is to reduce
uncertainty that arises when the supplier is blind to the customers inventory status.
Supplier benefits:
As long as the supplier carries out its task of maintaining predetermined inventory and avoiding
stock outs, it will be able to lock in a VMI- supported customer for the long term with or without
a contract. This will produce a steady and predictable flow of income for the supplier and reduce
the risk that customer will switch supplier (switching would be too costly for the customer). A
VMI arrangement will allow the supplier to schedule its operations more productively because it
is now monitoring its customers inventory on a regular basis. Furthermore, reductions in
inventory will be achieved once the supplier develops a better understanding of how the
customer uses its goods over the course of a year
Demand forecasting
Master production
schedule
Material requirement
planning
SAP
Materials for
production is divide
From store to
Vehicle
Customers
tosales
sale with respective these
After
assembly
verticals
Metallic
Sheet
Nonmetal
Advance shipment
notice
plant upload
bill of
material
partnum
Bracket
ways
child
each
individual
supplier
zzzzzto stores
Transfer
production
planning and
control
Data processing
operator
Casual labor
supplier
Officer
VMI
Executive
CAUSE
ASN not available
material not recovered
waiting for store
confirmation
part number mismatch
ASN quality mismatch
later dispatch
future data issue
ASN wrong
NUMBER OF
INDENT
PERCENTAGE
4
4.6
4
4.6
69
1
2
4
1
1
79
1.1
2.3
4.6
1.1
1.1
NUMBER OF INDENT
4 21 1 4 4
1
69
later dispatch
ASN wrong