Table of Contents

Acknowledgment…………………………………………………………………………………………………………………

Executive Summary………………………………………………………………………………………………………………

List of Figures ............................................................................................................................4

Chapter -1: Introduction.............................................................................................................5
1.1 Problem Statement .....................................................................................................5
1.2 Rationale of the Problem............................................................................................5
1.3 Methodology ..............................................................................................................5
1.4 Scope of the Study .....................................................................................................5
1.5 Limitations of the Study.............................................................................................6
Chapter – 2: Details of the organization ....................................................................................8
2.1 Introduction about Godrej & Boyce.................................................................................8
2.1.1 Achievements:.........................................................................................................11
2.1.2 Initiatives: ...............................................................................................................11
2.2 Organization...................................................................................................................12
2.2.1 Product Line: ...............................................................................................................12
2.2.2 Organization Structure: ...........................................................................................13
2.2.3 HR Practices: ..........................................................................................................14
2.3 Corporate Profile............................................................................................................18
2.3.1 Incorporation...........................................................................................................18
2.3.2 Board of Directors:..................................................................................................18
2.4 Business Profile ..............................................................................................................20
2.4.1 Businesses ...............................................................................................................21
2.4.2 Division under Godrej & Boyce Mfg. Co. Ltd. ......................................................22
2.5 SWOT Analysis: ..............................................................................................................26
Chapter - 3: The Problem on Hand ..........................................................................................28
3.1 Introduction to problem ................................................................................................28
3.2 Description of Job ..........................................................................................................28
3.2.1 About Commercial Department ..............................................................................28
3.2.2 Order Processing.....................................................................................................29
3.2.3 BaaN and its use in order processing ......................................................................30
3.2.4 Supply Chain Process at Godrej & Boyce Mfg. Co. Ltd. .......................................35

1
 3.2.5 Logistics...................................................................................................................36
3.2.6 Warehouse..............................................................................................................37
3.2.7 Management at Warehouse.....................................................................................38
Return on Investment - ROI.............................................................................................48
3.3 Cost Analysis ..................................................................................................................51
3.4 Some observations at Appliance warehouse:................................................................65
3.5 Some observations at Sanathal Warehouse:...................................................................67
3.7 Criticality of Task:...........................................................................................................69
Chapter 4: Learning Outcomes ................................................................................................70
4.1 Comprehension of the Task ...............................................................................................70
4.2 Problems faced during Accomplishment of the Task ....................................................70
4.3 Methods adopted to solve the Problems ......................................................................70
4.4 Monitoring of Performance on Daily Basis ....................................................................71
4.5 Overall Learning from the Task......................................................................................71
4.6 Conclusion......................................................................................................................72
Chapter - 5: Recommendation.................................................................................................73
5.1 Recommendations for cost centres: ..............................................................................73
5.2 Other recommendations for observation at warehouse:..............................................77
Chapter 6: Concluding Remarks ..............................................................................................79
6.1 Summary ............................................................................................................................79
6.2 Gains from the Project ...................................................................................................80
6.3 Limitations of the Project...............................................................................................80
6.4 Scope for Further Work .................................................................................................80
6.5 Conclusion......................................................................................................................81
Bibliography ............................................................................................................................82

2
3
List of Figures
Figure 1 - Product Line .............................................................................................................12
Figure 2 - Organizational Structure at Head Office..................................................................13
Figure 3 - Organizational Structure at Branch Office...............................................................14
Figure 4 - Business Profile ........................................................................................................20
Figure 5 - Businesses................................................................................................................21
Figure 6 - Swot Ananlysis .........................................................................................................26
Figure 7 - Sales Order Booking Process....................................................................................31
Figure 8 - Supply Chain.............................................................................................................35
Figure 9 - Supply Chain at G&B ................................................................................................36
Figure 10 - Outward Process....................................................................................................39
Figure 11 - Inward Process.......................................................................................................42
Figure 12 - Interio Defective goods flow..................................................................................45
Figure 13 - Pareto Chart for Cost .............................................................................................51
Figure 14 - Fish Bone Diagram .................................................................................................52
Figure 15- Pareto Sub Costs .....................................................................................................53
Figure 16 - Data Unbilled Items ...............................................................................................54
Figure 17 - Graph : Unbilled.....................................................................................................55
Figure 18- Data & Graph : Damage Stock ................................................................................57
Figure 19 - Data & Graph -1: Damage Stock Categories ..........................................................58
Figure 20 - Data & Graph -2: Damage Stock Categories ..........................................................59
Figure 21- Data & Graph -3: Damage Stock Categories ...........................................................60
Figure 22- Data & Graph -4: Damage Stock Categories ...........................................................61
Figure 23- Data & Graph -5: Damage Stock Categories ...........................................................62
Figure 24 - Data: Loding & Unloading Time .............................................................................67

4
 Chapter -1: Introduction
1.1 Problem Statement
Analyzing ROI & Profitability with special reference to Godrej &
Boyce Mfg. Co. Ltd., at Ahmedabad Branch.

1.2 Rationale of the Problem

The main reason of the problem is the increase in cost at warehouse.
The main cost has been identified from Pareto chart and these costs are
Freight cost, Warehouse cost, Manpower cost & Inventory cost.

1.3 Methodology
The methodology used was on the job training. For data
collection the observation and interview techniques were used
while for analyzing the data quantitative as well as qualitative
techniques were used.

1.4 Scope of the Study

The study will help in getting understanding of the company, the
activities carried out at branch office and warehouse in accordance
with G&B. It will also help in understanding the different costs related
to warehousing activities and using the data to reduce cost related to it.

5
1.5 Limitations of the Study
The numerical data used for the study is estimated value.

The data provided was for some divisions only due to which the study
is talking about different division and the conclusion reached was on
basis from this data only.

Time was a Constrain.

6
7
 Chapter – 2: Details of the organization

2.1 Introduction about Godrej & Boyce

Godrej & Boyce Mfg. Co. Ltd, today, one of the largest engineering and
consumer Products Company in the country has varied interests from
engineering to personal care products. It is also one of the most respected
corporate houses known for its philanthropy and initiation of labour
reforms besides being recognized for its values of fair, transparent and
ethical dealings. The head office is located at Mumbai - Vikhroli.

Godrej has become a self reliance for decades and the signature of Trust.

For this many years, Godrej has changed in form, function and scope of
application, but one thing never changed the tag of ‘RELIABILITY’ and
‘TRUST’.

It was started in 1897 as a locks manufacturing company & now it has

become one of most accomplished & diversified organization in India.
Godrej has become a successful giant through its commitment of
delivering innovation and excellence to its customer. With the consistent
application of this commitment and over hundred years of ethical business
conduct, Godrej has gained reputation for trust and reliability.

8
The brand Godrej in mind of people across the country has different
meaning to it. The company has a wide range of products including locks
& safe, Refrigerators, Air Conditioners, Furniture’s, Machinery tools,
Process Equipments, Engineering workstation, Cosmetics, Detergents,
Edible oil, Chemicals & agro products.

It was the company producing soap without use of animal fat oil for the
first time in the world in the year 1930 & the innovation like this has been
followed by the company for years and now is serving the customers who
need innovations across different businesses. During the Mumbai dock
blast, the Godrej safe was the only security equipment that was not
harmed & from the time it has been expected from each and every product
under the brand name Godrej to be of such quality.

Everlasting locks, Enduring service. Locks are thing that has been started
by Godrej and the locks have become a reflection of trust & confidence
that its customers have seen in Godrej since 1987. From a lock
manufacturing company, Godrej has become a total security solutions
provider.

This is a reflection of the trust and confidence that our customers have
placed in us since 1897. From being a manufacturer of locks, Godrej has
evolved to become a total locking solutions provider with its large range
of products and services to meet expectations of its individual and
institutional customers.

Godrej’s vision has helped it to expand and become successful in different

businesses. It has become one of leading manufacturing company in
products of consumer durables, home appliances, industrial products,
consumer products and agricultural products. The estimate of Godrej
users round the country is 35o million. The Godrej group recently have

9
entered into market of real estate and information technology and these
sectors are seemed to be of great potential which will benefit the group in
the near future.

Godrej is not only limited to industrial excellence but it also have a

determined man power of men and women, having a vision for
themselves and company and do have different talents, who have helped
in building the business of godrej.

The Godrej Group stands in a strong position today. With annual sales in
excess of INR 8269.39 Cr., a workforce of approximately 20,000, and a
strong diversified portfolio, Godrej has proven its ability to deliver strong
financial performance. Inseparable from daily life in India, the Godrej
name has been built on a spirit of innovation that has made it one of the
country's most remarkable industrial corporations

Strong human relationships built Godrej. So it is not surprising that the

company ensures the welfare of its most valuable asset: the people who
comprise it. This band extends to distributors, retailers and suppliers as
well, including them into the fold.

Godrej Industries is part of the Godrej Group, a INR 8269.39 Cr.,

conglomerate with more than 109 years of history and a reputation for
quality and integrity. Godrej Soaps Ltd demerged into two entities —
Godrej Consumer Products Limited and Godrej Industries Limited; the
foods business of Godrej Foods Ltd was hived off and taken over by
Godrej Industries. Godrej Properties was established in 1990 as a premier
real estate development company within the Godrej Group of businesses.

Modern and dynamic, Godrej is also a company that succeeds in

endearing itself to the people of India. The secret lies in its ability to never

10
lose sight of the basic human values it was built on. These are the core
strengths and the very soul of the company.

2.1.1 Achievements:

 In 1897, Godrej introduced the first lock with lever technology in

India.
 In 1902, Godrej made the first Indian safe. In 1920, Godrej made soap
using vegetable oil, which was a huge hit with the vegetarian community
in India
 In 1955, Godrej produced India's first indigenous typewriter
 In 1989, Godrej became the first Indian company to introduce PUF (
Polyurethane Foam)
 Introduced India's first and only 100% CFC, HCFC, HFC free
refrigerators (Claim to be validated)

2.1.2 Initiatives:
 10 X 10 Vision
 INFOR - ERP
 Manufacturing Cluster
 Business Excellence
 Disruptive Innovation
 Kaizen
 Automation and TPM
 Project Management Office
 Social Media
 India Immersion Program with IIT Chicago
 SPRINT Programme
11
 Horizon Programme
 Applause – Appreciation Platform

2.2 Organization

2.2.1 Product Line:

Figure 1 - Product Line

12
2.2.2 Organization Structure:
The organizational chart for the Head Office for all the division is the
same. There are 3 main levels in Hierarchy at H.O. for all the division in
Godrej & Boyce. The Hierarchical Structure is shown as follows:

2.2.2.1 Organizational Structure at Head Office

Figure 2 - Organizational Structure at Head Office

From Vice President to business heads they falls in the S & E band which
is the Strategic and Exclusive Band which are the highest in the Band
level formed by the company for employees.
The Organizational Structure at Branch is different from that of H.O. At
branch the Boards are different. The Branch HR does not have separate
division and there are restricted functional when it comes to branch.

13
2.2.2.2 Organization Structure at Branch Office:

Figure 3 - Organizational Structure at Branch Office

2.2.3 HR Practices:
Recruitment: The following is the process:

Sanction: Recruitment should be made only after the requisition for the
vacancy concerned is sanctioned.
The Sanctioning Authority:
 For temporary vacancies where the requirement of manpower is less
than 10% of existing strength such shall be sanctioned by Divisional Head
concerned.
 For temporary vacancies where the requirement of manpower is
greater than 10% of existing strength such shall be sanctioned by
Divisional Head with approval of Mr. J.N Godrej.
 For all permanent vacancies the Divisional Head should take the
approval of Mr. J.N Godrej.

14
Qualification:
 The minimum entry level for hourly rated employees including
watchmen and drivers is “SSC Passed”.
 Graduates are not to be considered for hourly rated positions.
 Candidate for the post of watchmen/Havaldar/Jamadar besides having
passes SSC must also be an Ex- service man
 The minimum qualification forall unionized staff is Graduation

Appointment of Employee’s Kin:

 Only next of kin (i.e. spouse/son/daughter/brother/sister) of an
employee will be consider for appointment either in Godrej & Boyce Mfg.
Co. Ltd. Or in associate companies .All such appointments should be
subject to the qualification matching the job profile.

Placement of Kin in the same department /plant:

 The appointment of the employee’s next of the Kin will ordinary NOT
be made in the same department /plant/division where the employee
himself placed. However expectation can be at the discretion of
management.

15
Document’s Verification:
 All certificates in original pertaining to their educational qualification.
 Only the original school leaving certificate or the original certificate
as secondary document for proof of page
 The date of birth submitted at the time of appointment shall be
considered as final and a person cannot make change in his/her birth date.
 Expect for unskilled/semiskilled positions, appointment to all other
positions will be subject to the candidates producing original of the
release order from their employee.
 All the original documents must be returned to the employee after
perusal. Photocopies for the same are to be retained in their individual
files after verifying such photocopies with the originals

Medical Fitness:
 The appointment of all candidates should be subject to their being
found medically fit. At Mumbai, the Corporate Personnel Development
shall arrange for the candidate pre employee medical examination with
the company’s medical officer.
 At the branches the candidate should be referred by branch to a local
Medical Practitioners of the choice of the branch who will ascertain the
candidate’s medical fitness.
 No commitment of employment shall be made to any candidate unless
the candidate concerned has been found medically fit.

16
Probation:
 The period of probation as indicated in the appointment letter shall
neither be extended nor shortened.
 If an employee is found unsuitable during the probationary period
then the service of such an employee are to be terminated only on expiry
of the probationary period and not during the probationary period.
 If the services are found unsuitable then the letter of termination shall
be given 2 to 3 days in advance.
 If no such letter of termination is issued prior to the date of
completion of the probationary period then the service of the concerned of
the probationary period if such an employee is in unionized category

Abundant Caution:
 In order to avoid an embarrassing situation the people in the
recruitment and selection process should check the information and
details thoroughly so that all candidates can confirm to the requirement
under this policy.
 For appointment at the branches, the final selection will we intimated
to the candidates by the Branch Manager/Regional Manager concerned.

Re-employment after cessation services:

 Persons whose service has been served for any reason should not be
reappointed on contractual basic or temporary basic or permanent basic
without consulting Corporate Personnel Development.
 For any future clarification which you may need, please contact the
corporate HRD department for appointments in Management Cadre and
Corporate IR department for appointments in all unionized categories.

17
Recruitment of Engineer as Graduate/Diploma Engineer Trainee:
 Every year the recruitment section along with the Line staff
representative visits various premiere engineering colleges for selecting
the graduates.
These were the policies regarding the Recruitment which are adhered by
the Company.

2.3 Corporate Profile

2.3.1 Incorporation
Established in 1897, the Company was incorporated with limited liability
on March 3 1932, under the Indian Companies Act, 1913.

Combined Sales – Subsidiaries and Affiliates

The Company is one of the largest privately-held diversified industrial

corporations in India. The combined Sales (including Excise Duty) of the
Company, its subsidiaries and affiliates, during the Fiscal Year ended
March 31, 2015, amounted to about INR 8269.39 Cr.

2.3.2 Board of Directors:

 Jamshyd Godrej, Chairman of Board of Godrej & Boyce Mfg. Co.
Ltd.
 Adi Godrej, Chairmanof Godrej Group
 Nadir Godrej, Managing Director of Godrej Industries & Chairman
of Godrej Agrovet
 Kavas Petigara, Chemical Consultant & a businessman
 Vijay Crishna, Executive Director of Lawkim Motors Group
 Phiroze Lam, Executive Director

18
 Kyamas Palia, Executive Directore (Finanace)
 Pradip Shah
 Anita Ramachandran
 Anil G Verma, Executive Director & President of Godrej & Boyce
 Navroze Godrej, Directs strategy & innovation at Godrej & Boyce
 Kelki Elavia, Chartered Accountant in Public Practice

19
2.4 Business Profile

Figure 4 - Business Profile

20
2.4.1 Businesses
Godrej & Boyce Mfg. Co. Ltd., business can be biforgated into Office &
Consumer products, Industrial Products and service department. This
biforgation can be futrther classified as follows:

Figure 5 - Businesses

21
2.4.2 Division under Godrej & Boyce Mfg. Co. Ltd.
1. APPLIANCES (ISO 9001/14001)

Godrej appliance was established in 1958 at Vikhroli, Mumbai and is

presently available in 22 cities all over India in form of Refrigerator
manufacturing company. It currently has more than 2000 appliance team
members and more than 15million patrons.

Products: Refrigerators, Washing Machine, Air Conditioners, Microwave

Oven

2. Godrej Electrical & Electronics

Godrej Electrical & Electronics, a part of Godrej and Boyce group is

recognized as one of the leading technology solution providers in India.
This division basically caters to the needs of Indian and global customers
in the area of energy and environment related issues with complete
installation and maintenance.

They provide all types of engineering services in the area of Electricals,

Electronics, Compressed air technology, Busbar systems, Instrumentation,
Telecommunication, Automation technology, HVAC, Plumbing, Green
building consultancy, Power infrastructure & Renewable Energy.

3. INTERIO (ISO 9001/14001)

Products: Office Furniture, Seating and Desking Systems, Computer

Furniture and Open Plan Office Systems, Office and Home Storewells,
Sofas and Recliners. Home Furniture, Filing Cabinets and Filing
Systems, Book Stacks and Cases, Sliding/Tambour Door Units,

22
Personal/Industrial Lockers, Customized Storage Systems, Roll-formed
Slides and Components for Furniture

4. LOCKS (ISO 9001)

Every man dreams- but only achiever has the power to transform them
into reality. In 1897, one such achiever, Mr. Ardeshir Godrej, realized
his dreams when he became the first Indian manufacturer to displace
well entrenched foreign brands from the Indian market. The word
‘Godrej’ etched into his metal locks became the symbol of self-reliance
for the generations that followed – the signature of trust. Today, this
dream has gone beyond reality – it has become the symbol of self
reliance for the generations that followed – the signature of trust.
Today, this dream has gone beyond reality – it has become a way of
life.

Products: Padlocks, Ultra locks, Cylindrical Locks, Mechanical and

Electromechanical door locks and related hardware

5. SECURITY EQUPMENT & SOLUTIONS :( ISO 9001 /14001)

As challenges have advanced, so have solutions. Godrej Security

Solutions believes it needs to constantly stay ahead and keep pace with
the latest technology to meet growing needs. This is the reason why they
have always stayed ahead of times by implementing and providing the
latest technologies in our products.

With the pioneering spirit of its founder still the driving force, Godrej
Security Solutions is at the helm of every breakthrough in the country. In
many ways, the company is the security solutions industry of India.

23
Customer trust is legendary. Incidentally, when the Queen of England
visited India in 1905, she chose a Godrej safe to keep her valuables
wherever she stayed in the country. The spirit of innovation blended with
excellent quality has helped us to leave our mark across 45 countries
world-wide.
Products: Strong Room Doors, Safe Deposit Lockers, Cash Boxes and
Coffers, Data/ATM Safes, Burglary and Fire Resisting Safes, Record &
Filing Cabinets, Electronic Coffers, Currency Sorters and Cash Counting
Machines. Fire/Security Doors, Fire and Burglar Alarm/Premises Security
Systems, Video Door Phones, CCTV System. Access Control Systems

6. PRIMA OFFICE EQUIPMENT (ISO 9001)

Godrej Prima is in the business of Vending, AV Solutions & Batteries.

Products: Office Automation Photocopiers, Fax, Multifunction devices

and Mechanical Typewriters (available in over thirty languages);
Conferencing Products and Solutions Projectors, Video and
Teleconferencing Equipment, Plasma Displays and Electronic
Printboards; Vending Machines

7. STORAGE SOLUTIONS (ISO 9001/14001)

Godrej Storage Solutions are pioneers, visionaries and market leaders

for over 5 decades in India in the field of Storage & Material Handling
with world-class design, manufacturing, project management,
distribution & after sales support to service all needs.

Products: Multiflex and Heavy Duty Storage Systems, Tool Storage

Cabinets, Gravity-flow, Mobile and Drive-in System Components,
Mezzanine Floors, Cantilever Storage Systems, Workshop Equipment and
Special Solutions

24
 8. MATERIAL HANDLING EQUIPMENT (ISO 9001/14001)

Godrej Material Handling is the largest manufacturer of material handling

equipment in India. Established in 1963, they provide mobile path
material handling solutions to virtually all industries in manufacturing,
infrastructure, services, aviation, logistics, defence, ports, railways and
power.

Products: Forklift Trucks (Diesel, Electric and LPG) and Attachments,

Container Handling Trucks, Warehousing and Personnel Access
Equipment, Sparc Parts, Services and Maintenance Contracts.

25
2.5 SWOT Analysis:

Figure 6 - Swot Ananlysis

26
27
 Chapter - 3: The Problem on Hand

3.1 Introduction to problem

The problem is finding the causes that are affecting ROI & Profitability
with reference to Godrej & Boyce Mfg. Co. Ltd., and working upon
those are to achieve higher ROI & Profitability.

3.2 Description of Job

3.2.1 About Commercial Department

The Human Resource of Godrej & Boyce Mfg. Co. Ltd. is mainly divided
into functional teams. i.e. Commercial Team and Sales Team.

The Commercial Team was created in the year April 2004. It was created
to fulfil the following objectives:

 To allow Field personnel to concentrate on their core

activities viz. Sales & Service.
 To help the businesses to grow rapidly.
 To develop specialized skills to manage the supply chain in a
professional way.
 To create controllership of the processes and protect
company‘s interest.

The Commercial Team of Godrej & Boyce Mfg. Co. Ltd. performs the
following four major functions.

I) Customer Support Fuction:

 Indenting for Stocks

 Order Processing
 Interfacing with Customers & Dealers
28
  Call Centre Management

II) Adminstration Function:

 Estate Management
 Legal Issues
 HR & Personnel
 Training
III) Warehousing & Logistics
 Receipts & Dispatches
 Inventory Management
 Secondary Transportation
IV) Accounts
 Banking & Treasury
 Expense Management
 Debtors Management
 Statutory Compliance
 Audit

3.2.2 Order Processing

Order Processing is one of the main functions of commercial department
of G&B mfg. Co. Ltd. The orders are booked against the order brought by
sales team from the dealers/ customers. There are mainly two types of
order that are booked i.e. order booking against sales booking & a RPL
type order which is a replenishment order booking which is done when
the order is to be given in form of loan, against non standard item,
transfers, for stock maintenance at warehouse & for internal requirements.
The order processing is done through BaaN a ERP software.

29
3.2.3 BaaN and its use in order processing
ERP is an integrated information system that serves all departments
within an enterprise. Evolving out of the manufacturing industry, ERP
implies the use of packaged software rather than proprietary software
written by or for one customer. ERP modules may be able to interface
with an organization's own software with varying degrees of effort, and,
depending on the software, ERP modules may be alterable via the
vendor's proprietary tools as well as proprietary or standard programming
languages.

In market, various ERP packages are available, which are written

considering worldwide business practices. Some of them are SAP, BaaN,
Oracle Manufacturing, Oracle Financials, People Soft, JDEdwards, and
BPCS. Each is written concentrating on various industry functions in
mind; like SAP on Finance, BaaN on manufacturing, PeopleSoft on
human resources.

Taking account of all the benefits of ERP system, Godrej & Boyce Mfg.
Co. Ltd. has customer ERP system software which runs on BAAN
platform. It is made by Netherlands based company, and company spent
around Rs. 25 crores for the purchase of the product.

BAAN have extensive multi site management capabilities. The complete

financial account and management account requirement of the
organization is addressed. It has complete centralized accounting function
with complete flexibility to consolidate corporate information. It also
takes care of after sales service.

The below mentioned different company codes are being created by the
BaaN company for the integrated smooth functioning of different
divisions.

30
Interio

 235- Desking
 238- Sitting
 240- Storewell
 301- Appliances
 250- Security
 245- SSG Group
 260- Locks
 265- MHE
 285- Prima

Main function of bank is sales order booking that helps in connecting CSF
with logistics department where the further processing is done for
dispatching.

The sales order booking is done in the following manner:

Figure 7 - Sales Order Booking Process

31
1. Sales Order Booking Form:

 Features:
• Different divisions having different order series for booking
particular order.
• Customer code is of six digits.
• The first of six digits is for the division.
• Second is for dealer/customer digit.
• Then three are for particular Dealer/Party
• The last digit is for particular branch.
 Order Types:
• 09A - Regular order
• 09B - Cash Memo
• 09C - R Series (Dealer / Investment )
• 09E - Return order
• 09L - Non-Inventory Credit note
 Details to be filled in form:

• Order Date

• Planned delivery Date

• Reference A&B

• Header & Footer Text

• Specific Postal Address

• Price List Reference - CPL/DPL

• Area code of branch

• Item Code - Generally of 12 Digits

• Warehouse is chosen according to availability of material

32
• Ware houses is chosen from below code: 09A-Manufactured item,
09B-Traded imported Item & 09C-Traded domestic item

• Then Excise, Sales Tax, Octroi, TDS details are filled.

• And order is hence booked.

2. Order Acknowledgements

After order booking a document is generated which contains details of the

product booked with the quantity & pricing of the item in the order
booked. This document is sent to dealer for its reference & confirmation
for further processing of dispatch of material. If there is any non
conformity from dealer regarding the order booked then it is corrected
accordingly & sent for further processing.

3. Picking list (Challan)

Allotment of item & challan generation is done on BaaN where the

booked items are allotted against the stock lying at warehouse in system
& simultaneously challan is generated. This challan includes details of
item like item code, quantity to be dispatched, address of dispatch, truck
allotted, truck number, delivery date, special instruction. There are
chances when demanded item & mentioned quantity is not available &
challan will not be generated. Even there is a chance that challan might
generate but the item is not dispatched from warehouse as due to special
request like to send a single lot & site is not ready from customers & is
this challan is then named as unbilled challan.

4. Maintain Deliveries

After the items are loaded & ready for dispatch the sales order delivery is
maintained in system in order to update the stock list in the ERP.

33
5. Generating Sales Invoice

After maintaining the delivery in system the sales invoice containing the
details of bill amount, delivery address & customer is generated. Total 5
numbers of copies are generated.

This Booked order is accessible to the authorized parties that are H.O.,
Dealers, CSF and Warehouse. A run to check for new order booked is
done at warehouse at around 2 p.m. daily to do the further processing of
dispatches. The order booked after 2 p.m. are generally acknowledged the
day after unless there is any special call for delivery from the sales team.

Supply chain management (SCM) is the oversight of materials,

information, and finances as they move in a process from supplier to
manufacturer to wholesaler to retailer to consumer. Supply chain
management involves coordinating and integrating these flows both
within and among companies. It is said that the ultimate goal of any
effective supply chain management system is to reduce inventory (with
the assumption that products are available when needed). As a solution for
successful supply chain management, sophisticated software systems with
Web interfaces are competing with Web-based application service
providers (ASP) who promise to provide part or all of the SCM service
for companies who rent their service.

34
 Figure 8 - Supply Chain

3.2.4 Supply Chain Process at Godrej & Boyce Mfg. Co. Ltd.
Supply Chain Management (SCM) is the process used to deliver a
company‘s goods to the targeted audience, at the right time, in the most
timely and cost-effective manner possible. It can include everything from
sourcing and manufacturing of a product, to packaging and warehousing
inventory, to managing and promoting sales online through a custom wed
store. Additionally, a comprehensive supply chain management offering
should include professional expertise to assist with critical business
decisions as well as world class operational capabilities such as live
customer service and Web- based visibility and reporting.

35
 Figure 9 - Supply Chain at G&B

3.2.5 Logistics

Logistics is generally the detailed organization and implementation of a

complex operation. In a general 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, warehousing,
and often security.

In military science, logistics is concerned with maintaining army supply

lines while disrupting those of the enemy, since an armed force without

36
resources and transportation is defenceless. Military logistics was already
practiced in the ancient world and as modern military have a significant
need for logistics solutions, advanced implementations have been
developed. In military logistics, logistics officers manage how and when
to move resources to the places they are needed.

Logistics management is the part of supply chain management that

plans, implements, and controls the efficient, effective forward, and
reverse flow and storage of goods, services, and related information
between the point of origin and the point of consumption in order to meet
customer's requirements. The complexity of logistics can be modelled,
analyzed, visualized, and optimized by dedicated simulation software.
The minimization of the use of resources is a common motivation in all
logistics fields.

Logistics being part of SCM plays an important role at warehouse in order

to achieve warehouse goals.

3.2.6 Warehouse

A warehouse is a commercial building for storage of goods. Warehouses

are used by manufacturers, importers, exporters, wholesalers, transport
businesses, customs, etc. They are usually large plain buildings in
industrial areas of cities, towns and villages.

They usually have loading docks to load and unload goods from trucks.
Sometimes warehouses are designed for the loading and unloading of
goods directly from railways, airports, or seaports. They often have cranes
and forklifts for moving goods, which are usually placed on ISO standard
pallets loaded into pallet racks. Stored goods can include any raw
materials, packing materials, spare parts, components, or finished goods
37
associated with agriculture, manufacturing and production. In Indian
English a warehouse may be referred to as a godown.

Godrej and Boyce Manufacturing Ltd. have its two warehouses near
Ahmedabad city. One warehouse is situated at Sanathal and another one is
situated at Changodar. Sanathal warehouse deals with products like
Interio, Locks, Security equipments, Storage Solution Group, Material
Handling Equipments, and Prima. Changodat warehouse deals with the
Appliances i.e. Refrigerator, Washing Machine, Air Conditioners,
Microwave Ovens.

The warehouse at Godrej & Boyce Mfg. Co. Ltd., majorly does the
following tasks in order to decrease the cost to company:

3.2.7 Management at Warehouse

• Freight Management:

It is one of the major areas that account a huge amount of cost to any
warehouse and hence its management is very essential to save any extra
cost. Freight management is to handle or direct with a degree of skill, to
exercise executive, administrative and supervisory direction of the loading
and transporting of goods that need to be shipped or transported from one
destination to another resulting in compensation. For the purpose the
warehouse managers at Godrej plan the route & form the load in
accordance to the vehicle against the price of the goods sold which is
known as TFL (Truck Full Load), and requests the vehicle accordingly to
reduce the cost during the outward process.

38
After taking the run for order booked the warehouse carry out the outward
process for delivering of orders as follows:

Figure 10 - Outward Process

The pick list is generated against the order booked in BaaN of which route
planning is done according to destinations of order booked. If the order is
multi location then the warehouse supervisor needs to make a cost benefit
analysis against the total Truck Full Load of items to be dispatched for
each destination. The analysis is required if single vehicle should be send
or multi small vehicle is beneficial. The order quantity in BaaN form is
converted into excel sheet to pick the item mentioned and stage them at
staging area for further loading.

As soon as the vehicle arrives at the bay of loading division the staged
material is loaded after the inspection of any discrepancy between the
order & staged item by WHS & Security guard. After which system entry
is done to update the system stock & then the vehicle is released with
appropriate papers. The transporter delivers the order to customer and
takes the acknowledgement copy as a proof from the end customer.

To save cost Godrej have fixed its transporter for different division of
business at Ahmedabad branch on contract basis. This helps them to save

39
waiting time for the arrival of vehicle for dispatches and also have availed
insurance on the products that are delivered. This helps them to save their
cost if there is any damage to stock due mishandling or any discrepancy.
Till damages valuing Rs. 20,000 the amount is recovered from transporter
and for damages more than value of Rs. 20,000 is recovered from
insurance company.

The transporters for Ahmedabad warehouse are Jay Mahakali Roadways,

Radhe Krishna Roadways & SR. RoadwaysThe whole Gujarat state is
divided amongst these three transporters. Jay Mahakali Roadways makes
the dispatches of appliances for the north Gujarat. Radhe Krishna
Roadways deals with Saurashtra and local delivery of Ahmedabad city.
While S.R. Roadways deals with the rest of the Gujarat for the dispatch
purpose. Generally, these three transporters make deliveries of appliances
to the dealers. For the individual customers in the local area i.e. in an
Ahmedabad city the loading auto rickshaws make the delivery on a per
piece basis.

• Inventory Management:

Inventory management is a science primarily about specifying the shape

and placement of stocked goods. It is required at different locations within
a facility or within many locations of a supply network to precede the
regular and planned course of production and stock of materials.

At Godrej, Ahmedabad warehouse they manage a huge amount of

inventory. The inventory that they transferred in the FY 2014-15 was

40
around 400 Cr. This stock was managed in the area of 1,00,000 Sq. Ft., of
which the appliance division has been allotted the maximum amount of
space i.e. around 48% of the area, then 35% is allotted to Interio, 5% to
Locks, 3% to Prima, 3% to storage,2% to Security, 2% to MHE and 2%
for spares.
This area is divided into more than 2000 SKU’s that keeps products of
different models from different divisions. This helps in quick
identification for the product place and hence helps in time saving &
reduces the risk for dispatch of faulty material.
Moreover the stock is to be maintained when replenishment order is
booked the head offices dispatches the stock ordered & the stock is
unloaded i.e. is an inward process at warehouse. The inward might be for
other reasons as well like for transfers from branches, Sales order returns
from suppliers or dealers. The inward process at warehouse is as follow:

41
 Figure 11 - Inward Process

The warehouse manager is informed about the dispatches that are done
against order and is in contact with transporter in case, gathering
information about the estimated receiving date against purchase order
made for indenting process. The item may be coming from H.O and if the
stock is not available at H.O. then inter branch transfer might take place.
The inward might also take place of goods coming from customer return.
The warehouse head plans the activity according to the estimated delivery
for the day and on the arrival the vehicles are unloaded according to the
man power resource available at warehouse in sequence of arrival of
vehicle.

42
When the vehicle enters the premises of warehouse the entry of vehicle is
done in the gate register. Then vehicle comes to unloading bay where the
visual inspection of truck is done in order to check any damage and to
keep a look upon damages during the unloading of stock and to find out
any discrepancy in stock quantity.

If any discrepancy is found in the stock against PO then it is noted on

GCN. After unloading the unloading sheet containing the count of items
unloaded it is signed by the driver and then all documents are sent to
computer entry operator for the system entry for stock updating.

They also do a Perpetual Inventory Count daily in order to find any

discrepancy in the stock at warehouse. Perpetual Inventory Count is a
process in which the wall to wall count of stock is not done whereas the
stock count of only those SKU’s is done where any movement of stock
was done on previous day. This helps in time saving which is consumed
by W2W count. But they do also have W2W count once in a month to
check if there is any discrepancy due any other activity than stock
movement that might be internal movement, outward, inward or any other
reason.

Another aspect to management of inventory is managing the damaged &

defective inventory at warehouse. Damage and defect are altogether
similar but are warehouse these both are different. Damage is any lack of
quality in accordance to standards. This manage may be in visual like
colour or texture of the product, dents, damage in the system, damage of
packaging, damage of cabinets and many other damages. While defect is
incapability of the product to deliver or to work at the desired level, that is
related to functionality of product.

43
Defects such as the compressor is not able to cut off the according to
room temperature, the air conditioner is not able to cool the room,
Refrigerators not able to provide conditions that can keep the vegetables
fresh, and defects similar to these kind.

At Godrej & Boyce Mfg. Co. Ltd., The damaged and defective stocks are
kept separately into different SKU’s so as these items may not go out for
delivery and further processing on these products in order to treat them
and gain returns. The damage may be of primary type that is
manufacturing defect which might be from the Head office side or other
may be of the secondary type that is the material is sent to dealer and
damage occur there.

These damaged stocks are categorized into three categories:

i. Category-1:
The items having maximum damages are categorized into this category.
The items in this category are sold at 60% discount and these products are
treated in warehouse - 091

ii. Category-2:

The items having less damages than above are sold at a discount price of
40% and are treated at warehouse - 092

iii. Category-3

The products in these category is having the least amount of damages that
can be rectified and sold at 5-10% discount and are treated in warehouse –
093

44
Many items that are not usable are identified as scrap and are sold at more
than 90% discount and the rates depend on the size and type of the
product.

The stock coming to warehouse is firstly brought to the inspection

warehouse as like for interio is A88 and does a system entry. Then an
employee from service department goes to warehouse for inspection of
the items and does the categorization of the stock according to the
condition of the item.

As in Interio division if the product is identified as scrap would be sent to

warehouse D1’, if there is minor damage like scratches or dents than it is
sent to D2’ and is sold at 70% discount as a second sale and if the items is
not fully functional due to lack of any part then it is to warehouse D3’. In
addition to this if any manufacturing defect is found in the above
categories then they are sent to their sub categories namely D49, D50 and
D51.

Figure 12 - Interio Defective goods flow

To keep the movement of stock and decrease the storage cost of the items
stored at warehouse the norms for the service department is set to work
quickly upon the stocked items. Any item coming to the inspection
warehouse should be moved within 7 days as per the categorization and
45
any item coming to D3 warehouse should be repaired and moved to FG
within the 15 days. The items in D2 are sold at Second sale mela quarterly
and for disposal of scrap items is carried out on monthly basis for which
the scrap dealers are fixed to sell the scrapped material.

Stock Health Management/ Housekeeping:

Stock health management is one of the toughest jobs to perform at
warehouse. One need to take care of each and every aspect of safety in
according to safeguard the stock piled at warehouse. Damages that might
occur at warehouse are the one during piling of stock, internal
movements, damages due to rodents, obsolete stock and other.

At Godrej & Boyce Mfg. Co. Ltd. Warehouse they maintain the stock
health by the following:
They do have rodent boxes in order to safeguard the electronic items from
damages, do have SOP’s and predefined safety rules to follow in order to
protect stock from damages & Mishandling.

They do follow FIFO process during dispatches in order t o move the old
stock that is lying at the warehouse. But in some cases for locks division
they are not able to follow the same as some of the products are locally
imported & some are foreign imported and hence have change in pricing
and according to the price quoted to dealer they do dispatch the product
accordingly. For the same purpose they have colour coding bands & TO’s
contains the instruction which priced material is to be dispatched.

46
For the other products they do maintain the stickers of month over
packaging to easily identify the manufacturing date & dispatch
accordingly.
To maintain the quality of the product sent to customer in special cases
when material is sent for project news, showcasing of product or other
than Pre Delivery Inspection of products is done in which inspections of
good in terms of colour, dents, damage or defect is done.

Even the norms of stacking are defined on the packaging of the product
and keeping them according to the norms is essential in order to protect
the product from damages from overloading or mishandling. For this the
labours at warehouse are trained and encouraged to pile up the stock
according to the norms.
The ware house is area is divided into three parts:
 Area for keeping the stock which is divided into SKU’s
 Area for walking known as Aisle
 Area for office work

The warehouse keeper ensures that the product is kept according to norm
so as to keep stock safe and properly utilize the space available for
stocking. It also ensures that no material is kept in such a way that product
is not lying in the walking area as it could possibly cause hazard to the
material as well as to the manpower employed at warehouse which is also
a loss to company.

Even Sop’s for opening and closing of warehouse is defined in order to

ensure that the bays are locked properly so that any possible incident
related to stock inaccuracy may not arise

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Return on Investment - ROI

A performance measure used to evaluate the efficiency of an investment

or to compare the efficiency of a number of different investments. ROI
measures the amount of return on an investment relative to the
investment’s cost. To calculate ROI, the benefit (or return) of an
investment is divided by the cost of the investment, and the result is
expressed as a percentage or a ratio.

Where,

Profit =Income – Expenses

Total Capital =Investment in Fixed Asset + Working Capital

Working Capital = Receivables + Stock

To increase ROI, following steps can be taken into consideration:

 Increase Turnover of the company i.e. revenue realized from sales:

o The business must be such that the business can spend more time with
customer in order to understand the customer’s problem and their needs to
make products customer centric.

48
o All the work should be done at back office other than sales in order to
make the sales person free from all other doings so that he/she can focus
on their core job.
o A one point centre for dealer, customers & head office should be
created so that the data transfer time can be reduced and quick action
upon the problem can be taken from a single point only.
o Order to Bill cycle should be improved as it would help to satisfy
customer by delivering the product immediately and the bill value can be
realized quickly. This would in turn reduce the receivables turnover rate.
o MIS module should be developed, such that it can help to generate
reports that can help in taking quick and profitable decisions.

 Reduce the cost of expenses:

o The major expenses like freight, telephone, electricity, infrastructure,

and others should be reduced.
o Manpower optimization should be done. Should try to improve the
time utilization of the available man power, should try to optimize the
effort and try to utilize as much as intellect possible.
o All the wastages of Man, Machine, Material, Management, Methods
& Money.

 Optimize the asset available:

o There are Three ways to increase value

o Increase returns from existing assets (i.e. run the income statement
more efficiently) (e.g. plan operations more efficiently to do more
volume of work with existing material handling assets & warehouse)

49
o Invest additional capital and generate returns exceeding cost of capital
(e.g. higher sales and returns by creating a spare parts depots in different
regions)
o Release Capital by selling assets where returns do not justify cost of
capital.(e.g. sell a warehouse where it is no more viable)

 Increase the advances received from business

 Reduce Working Capital
o Reduce Stocks
 The stocks available at ware house can be categorized into two i.e.
allotted and allocable stocks.
 The allotted stocks are the one which are booked against a order and
is ready for dispatch.
 While the allocable stocks are the one which are available as
inventory and are ready for allotting against the order.
 The stock of allotted stock can be reduced by improving the
throughput time
 While stock of allocable stock can be reduced by managing the
indenting procedure for stocks and the buffer stock.
o Reduce Outstanding

To increase ROI of warehouse we will be focusing on the major cost

centre for warehouse. These cost centres can be identified using a
Pareto chart diagram which will help us to know what are the major
area of concerns related to cost and according to the priority i.e. on
basis of maximum cost incurring area will be focused. The Pareto
diagram for different cost is presented below:

50
3.3 Cost Analysis

Figure 13 - Pareto Chart for Cost

80% of area of cost is covered by first four costs that are Freight,
Carrying cost, Man Power and warehousing cost.

The freight cost incurred annually for Ahmedabad branch is 10% of

total inventory carried. That is 10% of 24 cr., which is equal to 4.8 cr.
The manpower cost at warehouse per person including the office staff
and labours is 5lakh/annum and there are 40 people working at
warehouse which makes a total of 2cr., expense on manpower. The
inventory carrying cost is 105% of total inventory i.e. 2.4cr. The
warehousing cost i.e. largely including the part of rent is 1.8 cr.

Now we will make fish bone diagram to proceed further.

Fishbone

51
 Figure 14 - Fish Bone Diagram

The sub reasons for the above mentioned costs are:

 Unbilled items – The cost occurring like storage cost, good will
cost, waiting time cost, customer loss cost are the unbilled items
cost. It incurs around 17% of total cost.

52
Pareto Chart

Figure 15- Pareto Sub Costs

According to fishbone and Pareto diagram the highest cost is incurred

due to unbilled items.

The following are the reasons that have been identified for products
lying in unbilled category:

1. To be billed in coming 2 days.

2. No truck load formation
3. Physical Stock out
4. System related issues
5. Road permit not available
6. Payment awaited
7. Cheque blocked/ dishonoured
8. Blank cheque not available
9. Awaiting instruction from sales team
10. Customer will confirm date of delivery with W/D

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11. Order cancelled
12. Site not ready
13. Awaiting balance material
14. HO billing/ interstate
15. Replacement

The data for the same is presented below:

Figure 16 - Data Unbilled Items

54
And the bar for same is presented below:

Figure 17 - Graph: Unbilled

As it can be observed from the graph and data available in above

mentioned three divisions the major reasons found out to be are site not
ready, Customer will be confirming the delivery date to the dealer,
payment awaited, cheque being dishonoured and to be billed in coming
2 days.

 Then other big cost next to unbilled items is vehicle mix cost. It is
the cost incurred due to choosing of a vehicle not as per the load
formed at the time of dispatch and increasing the freight cost
ultimately. During booking for a vehicle after calculating TFL the
management calls for a bigger truck or smaller trucks as per the load

55
formed. The vehicle mix is the cost occurred due to calling for a
vehicle which cost higher. This mostly might be due to non availability
of the truck at the time of booking or not analyzing every possible
alternative. This cost is around 15% of total cost.
 Strangers – The strangers are the products which are non moving
and are accumulated at the warehouse for a longer period of time.
The cost occurred due to non moving stock at warehouse in form
of blocking of space and incurring storage cost on it or material
handling/housekeeping cost which is incurred in order to maintain
stock health. This is around 12% of the total cost.
 Load-ability – The cost occurred due to less space utilization of the
vehicle available on basis of volume and weight incurs a cost.
Many a times occur when the vehicle space is not fully utilized due
to which higher freight is incurred on the value or Load formed, the
reason for not utilizing full load is due to way of loading which
physically might take up large space and make space unavailable
for other stock that can be loaded. This cost is normally around
10% for warehouse.
 Damages - This are the cost incurred due to space occupied by the
damage stock at warehouse, which incurs inventory cost and
housekeeping cost on it. The average cost incurred due to damages
by the warehouse is around 8%.

Analysis of damaged categorized stock:

There is a large value of damage stock is accumulated at the warehouse

which is categorized. The data for interio division was collected and the
data is as below:

56
 Figure 18- Data & Graph : Damage Stock

As seen in bar graph the highest value of damaged stock is in company

240 covering 57% of total damaged stock which is followed by company
235 with 22% of total damage stock and of which 14% is covered by
company 242.

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 Figure 19 - Data & Graph -1: Damage Stock Categories

The above categorization with ageing data is for company 235. Here
maximum value of damaged stock is lying in damage category 2 and the
stock age is more than 60 days and a high amount is of more than 365
days. It also have stock lying in damage category 3 which is of above
30days and most of stock is lying is of age more than 365days.

58
 Figure 20 - Data & Graph -2: Damage Stock Categories

The above categorization with ageing data is for company 238. Here the
maximum value of damaged stock is lying in category-2 that is for second
sale and most of stock is lying is of age having 60-365 days.

59
 Figure 21- Data & Graph -3: Damage Stock Categories

The above categorization with ageing data is for company 240. Here the
maximum value of damaged stock is lying in category-2 that is for second
sale and most of stock is lying for more around a year which is taking up a
large area at warehouse. Even a large value stock of category 3 is lying
which is not repaired due to non-availability of spares from Head office.

60
 Figure 22- Data & Graph -4: Damage Stock Categories

As seen above the maximum value of stock is lying in warehouse is of

damage category 2 followed by stock of damage category 3 and
inspection goods.

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 Figure 23- Data & Graph -5: Damage Stock Categories

The above data is for addition in damage for the month May at
warehouse. This graph shows that the maximum addition occurred in
damage category 2 i.e. about 51% followed by addition of 34%in
category-3.

As seen above most of the damaged stock in interio division is lying in

category 2 and category 3 and which is aged 180 days and above which is
occupying a large space at warehouse.

If we look at the figures it is approximately 14lakh of damaged material

lying of interio division and which occupies 1120 sq. Ft., of area (In
interio avg. Area occupied for stock worth 1cr is 8000 sq. Ft.) and avg.
Cost per sq. Ft. Is Rs.15 which makes the damage stock of interio cost
annually a cost of INR 2, 01,600.

62
 Detention Cost – It is a penalty charge that is charged for late
delivery of items to the dealers. The detention cost for
warehouse is around 7%.
 Stacking – The labours at warehouse might not follow all the
stacking norms that might be defined by the company in order to
protect the product and packaging from damages. It might occur
in the case that the stacking norms says the number of packages
that can be stacked one upon other is 2 but at times the labour
stacks more than 2 package over it which causes damage to the
product. Even it might be the reverse case in which stacking
norms defines that the number of packaging that can be loaded
one over other is 3 and labour might have kept only 2 package
stocked up which incurs a cost as this would take up more space
at warehouse and the space is underutilized. This cost is around
6% of total cost.
 Peak Time/ Valley time Cost – Month ending is the peak time
for the warehouses and during at this time most of the trucks are
loaded and unloaded at warehouse. Due to requirement of higher
throughput the current man power might not be able to give the
desired throughput and which makes liable to hire manpower on
temporary basis which cost around 60-65% more than normal.
The normal cost per labour is 350/day but at peak time in order
to get a higher work force the warehouse need to spend 250
more per labour. This cost is around 5% of total cost incurred at
warehouse.
 Shortage/Shrinkage Cost –Many a times it occurs that the stock
is available in the system but it is difficult to find the same at the
warehouse, which is a discrepancy. Due to this discrepancy the
order might not get completed on time and penalty cost for late
63
 delivery is incurred moreover the stock is still utilizing the space
at warehouse and incurring a storage and handling cost over it.
The cost incurred due to this type of anomalies is 5%.
 Delay in approval – For delivery in special cases the warehouse
need to take a sanction from Head office as it would be incurring
a higher cost than normal and due to which the stock is still
unmoved at warehouse incurring a storage cost and incurring a
late delivery cost that is penalty cost on late delivery. The delay
in the approval is due to long process of getting the sanction
from head office. The cost incur due to this delay is around 4%.
 Training – The labours at the warehouse need to be trained in
order to handle and maintain the health of the stock. In the case
when proper training is not available than the labour might not
handle the material properly and which in turn cause product
damage or in the case when labour is not able to maintain the
health of stock according to norms than it might incur a cost.
This cost incurred is around 3%.
 Warehouse Space – The warehouse is a large area where stock is
maintained and at time due to violation of some norms and not
following the instructions properly a cost of handling or product
may incur and this cost is around 3% of total cost.
 Man Power Deployment - The cost incurred when higher
amount of man power is employed than necessary as the existing
man power is underutilized. It is around2%.
 Safety Cost – The cost incurred due to non usage of safety
material by the workers that cost to company in times when the
worker gets hurt or the product is damaged. This cost is around
2% to warehouse.

64
  Unsafe Practices – This are the practices that are followed by the
workers during handling of the material which incurs around 1%
of cost to warehouse.

3.4 Some observations at Appliance warehouse:

 There were plenty of fire extinguishers available at the warehouse

and were completely filled, but those extinguishers were not visible
properly and were covered by the products kept at warehouse. As
these extinguishers were not visible, at the time of any case of fire
it would become difficult to identify the place of these
extinguishers and would become a risky job to reach these
extinguishers and blow off the fire as the packaging of the product
covering the visibility is of carton and is very close to extinguisher.
Due to this huge loss of products and life is possible.

 There were uncovered wires at the warehouse and outside there was
a uncovered wire box that can get short circuited and can cause fire
and ultimately loss of money in form of products and loss of
manpower.

 The area near the water became slippery due to spilled water on
floor from water cooler which can cause accident and can cause a
delay in the ongoing process.

 Waste on the aisle i.e. walking area was observed that can too cause
a accident and can cause delay in work as anyone can fall and if
labour falls while carrying any product than it can also cause

65
 damage to product being carried as well the products near to the
area.

 The workers were not wearing all safety equipments and if any
accident happens than it might cause harm to them.

 The workers were not using material handling equipments available

at the warehouse premises for carrying material to and fro from the
truck while loading and unloading of the materials and which can
cause harm to the worker if one drops the product on oneself as
well it may cause damage to the products carried.

 The stacking norms were not observed properly as per the box
guidelines and due to which the products were covering a space
greater than expected and even the products might get harmed due
to the same.

 While loading of the trucks in appliances division it is mandatory to

note down the cabinet number of each and every appliance going
out of the warehouse. This noting was done by the warehouse
supervisor at the while loading of the stock and this noting was
taking much of time and was making the loading process slow.

66
 Figure 24 - Data: Loding & Unloading Time

3.5 Some observations at Sanathal Warehouse:

 When the load formation is done for dispatch then it is done for
particular dealer/ distributor and vehicle is called as per the load for
single dealer only. This cause to call different vehicles for different
dealers.

 Also the load formation is done division wise only for example if
there is order for interio and security at the same time then load

67
 formation for interio division will be done separately and for
security division would be done separately and then vehicle is
called as per the load available. This causes to call for different
vehicles for every division and ultimately increase the freight cost
incurred.

 Stocked material on the aisle i.e. walking area was observed which
can cause accident and can cause delay in work as anyone can fall
and if labour falls while carrying any product than it can also cause
damage to the product being carried as well the products near to the
area.

 Sometimes the workers load wrong product in the truck which

causes to call back of the wrong supplied of good and again
delivery of the good to be supplied which might add to the cost and
cause dissatisfaction in supply chain partners.

 The challan generating process is time consuming and the driver

sometimes need to wait for the challan generation that causes delay
in dispatch of goods.

 The volume calculation is done manually for different order which

makes the calculation slower and delay the process of calling of
vehicle followed by load formation process.

 Some of the packages were damaged which can cause small parts to
fall from the package while delivering of package and
simultaneously at the time of installation the technician needs to go

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 and get back the missing part which cost time, money and
satisfaction of customer.

3.7 Criticality of Task:

There are multiple division that are being handled at Ahmedabad branch
& the criticality about the task is collection of the data and its analysis
according to the divisions would be a critical task and moreover the
analysis would regarding single division would not support for each and
every divisions and analysis of each and every divisions cannot be applied
to every division.

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 Chapter 4: Learning Outcomes

4.1 Comprehension of the Task

 The different task that was performed at warehouse and branch

office was to understand the business process and the recent
working for different processes done at office.
 To understand the working, importance and use of the processes
carried out at warehouse.
 To understand the different cost related to logistics and
warehouse.
 To give a solution for reducing the costs related to warehousing
and logistics.

4.2 Problems faced during Accomplishment of the Task

 Lack of knowledge regarding the procedure, for finding the cost

areas and solving them out.
 Data for the analysis was not provided to us directly.
 Lack of data analytical skills.
 Lack of understanding regarding which data to be used and how.
 Understanding the processes and working of warehouse.
 Understanding the different businesses and their working.

4.3 Methods adopted to solve the Problems

 Help from senior managers to know and understand their

approaches for finding the cost areas and their solutions to it.
 Data was taken in form of percentage and was converted into
values according to assumptions.
 Used different graphical and numerical models to understand the
analysis.
 Took help from executives and worker to understand the
processes and working at warehouse.
 Took help from executives executing sales order and purchase
order at the office.

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4.4 Monitoring of Performance on Daily Basis

A database was maintained to monitor the performance and analyze

how to fill the loopholes. I personally maintained a note of my daily
work and also industry mentor was assigned to keeps an eye on it.

4.5 Overall Learning from the Task

 Came to know about the different tasks performed at warehouse
and importance of each task performed there.
 Understood warehouse manager is only a custodian not the owner
of the items kept at warehouse.
 The care needed for manpower at warehouse and the care to be
taken for safety of products.
 Understood the practical use of Pareto Chart and how to
implement the same for problem solving with fishbone diagram.
 Developed managerial lateral thinking.
 Understood each and every small thing should be noticed and
worked upon.
 The measure should be taken firstly on the 80% of the things for
the cause and working little on remaining 20% as the return on
20% will be less than on 80%.
 Even understood the 20% should not be ignored especially when
they are easy to be solved out.
 Understood the hierarchy structure and its importance.
 Understood why different arrangements of distribution channel
made.
 Logistics is backbone for any industry.
 Effective Logistics and warehouse management can help in
reducing the cost to company and hence increasing profitability of
a company.
 Understood the safety aspects at warehousing.
 Developed a problem solving approach and analytical approach to
solve our problems.

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4.6 Conclusion

There were many problems that were faced during the period but
with the help of my colleagues and organization mentor a proper
solution was provided. The main issues was data collection and time
management as most of time the employees were busy and
especially at the time of peak season that was month ending and had
a limited time for imparting knowledge out of their busy schedule.
Even data collection was one difficulty as it was against company
policy to provide data we had to assume the data on the percentage
form as gathered from executives and from the observations at
warehouse. Out of this problem had a great learning with a touch to
the real industry which will help in becoming a better manger.

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 Chapter - 5: Recommendation

5.1 Recommendations for cost centres:

 Unbilled Items:
 Find methods for forming truck load formation like software can
be developed which can help in calculation on both value and
dimensions basis and leaves the decision on the manager.

 Improve upon the forecasting method used for the demand of stock at
warehouse as they take the same amount as forecasted value which was
the figure of sale last year which can help in reduction of physical stock
out.
 Up-gradation in system is required.
 Regular follow up for payment should be taken before ordering of
material for order and advances should be taken to assure the purchase of
product.
 Have periodic review of cheques to avoid situation of cheques not
available and would help in preventing from a situation of delay.
 Proper follow up with salesman/customer/project sites is needed in
order to understand the expected delivery time and order the material
accordingly with a remark to H.O. for the expected delivery date so that
they start production on that basis.
 Material Balance awaiting cannot be ignored as in case of complete
order execution the whole lot is needed to dispatch to customer and this
can be only handled from head office in order to receive material at full at
a time.

 Vehicle mix cost – Software can be designed in order to give

suggestion about the vehicle mix to be call for and number of

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 transporters contracted must be increased in order to get vehicles
when needed.

 Strangers – Inform sales team about the strangers. Convert non-

moving to moving wherever possible by encouraging the sales team
to sell those items and should be kept informed about the same
regularly. A system can be developed that can inform the sales
team about the ageing stock lying at warehouse or sales team must
be having access to the data for the same or else the sock can be
sold at a higher discount.
 Load-ability – The labours can be trained more about the stacking
of the items and how to utilize the available space. In case if load
utilization is efficiently due to low amount of material to
transported than the load formation can be done for 2-3 dealers at a
time which would help in increasing the turnover by reducing time
of waiting of order for truck full load and will also help in reducing
the freight cost that might occur as in case to send two different
trucks for the dealers or else while load formation the order from
multiple division must be acknowledge at a time which would help
in reducing the waiting time for the other division for Load
formation and would also help in reducing the freight cost
accordingly.
 Damages – The damages should be categorized and look for stock
is lying in which category as in the case of Interio division most of
space is occupied by damaged stock category 2 & 3 which is
second sale products and the products lacking of spares. Thus
exhibition for second sale products must be encouraged more and
service team must be trained and awarded if they complete the
target of repairs in category-3 on time in case of spares are

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 delivered from Head office. The damage occurring can be also be
reduced by iidentifying damage, this can be identified while
loading/unloading of stock, by inspecting the material which is
lying at warehouse for a greater period. Should take corrective
action for damage, for example some of the products packaging
were observed to be damaged that can be packed again or else
preventive measure such as packing providing extra packing from
head office itself or can be incorporated once it has been unloaded
at warehouse.

 Detention Cost – Improve through put time by having quality and

quantity transporters. If in case the delivery is late due to
transporter side than transporter should be penalized and if the
delivery is late from warehouse side than reviewing of unbilled
must be done and the challan generating process can be modified in
order to get print of those quickly.
 Stacking – The labours at warehouse should be trained for
following the stacking norms and labour following it should be
awarded and not following should be penalized. Even the
warehouse supervisor should be inspecting any violation of the
norms.
 Peak Time/ Valley time Cost – Variable labour employment
strategy must be used.

 Shortage/Shrinkage Cost – Remove all discrepancies in stock that

can be done by regular monitoring of stock lying at the warehouse
by PIC and improving the inward and outward processes. Review
on loan material i.e. check and inspect the material coming and
going for demo purpose. Review in transit stock to make sure there
is no discrepancy and the stock is safe. Scanners system can be

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 installed in order to tag both item and place for particular item in
warehouse which will help against the discrepancy occurring.
 Delay in approval – For delivery in special cases the warehouse
need to take a sanction from Head office as it would be incurring
a higher cost than normal and due to which the stock is still
unmoved at warehouse incurring a storage cost and incurring a
late delivery cost that is penalty cost on late delivery. The delay
in the approval is due to long process of getting the sanction
from head office. The cost incur due to this delay is around 4%.

 Training – The workers should be given training about safety and

should be informed about benefits of safety equipments regularly.
Workers should be encouraged to use the material handling
equipments in order to increase the safety of man power as well as
of the product. The labourers need to be trained to keep the
products as per the guidelines on box and the supervisor must make
sure about the same.
 Warehouse Space – Stacking norms should be followed and
should be ensured that it is followed regularly.
 Man Power Deployment - The manpower should be utilized
properly for example if labour at warehouse is not involved in
any task of loading/unloading than it can be engaged into
housekeeping of warehouse and extra cost of housekeeping
workers can be reduced.
 Safety Cost – Proper safety training should be conducted. Proper
safety equipments should be provided and the worker should be
encouraged to wear them by rewarding or awarding them. Even
penalty can be introduced when safety norms are violated.

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5.2 Other recommendations for observation at warehouse:

 Scanner system can be installed to reduce the time of noting and

performing the task of data entry into the system which will help in
making the process smooth and quick. This would also help in
avoiding any mistakes by the data entry operator during noting and
entering the data. The scanner would take max of 2s time to update
the cabinet number into the system which is less than avg. time for
noting only.
 Wrap packaging can be introduced so as to pack different items
together so as to reduce the time of loading and unloading of the
product and making the process more simpler
 The Space between the products and extinguishers should be
increased.
 The wiring should be corrected as soon as possible and should be
reviewed yearly or half yearly.
 Provision for dustbins must be increased especially near the project
area.
 Leakages and damages in the systems installed must be inspected
and corrected on regular basis.
 Supervisor must keep a check that the material should not be laying
on the aisle as it could damage and labourers should be trained
accordingly.
 If scanner system is implemented than the chances of wrong
material loading will decrease as a place for a particular product
can be entered into system and the map for picking up the item can
be generated.
 The outer packaging of the product must be improved so as it can
become more though to get it damaged and care should be taken
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 while loading and unloading of the material by the labour so as no
damage is caused.
 Have stock in correct category that can be done by the inspection
team to make sure no product is lying in wrong category and a
check on regular basis should be done.

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 Chapter 6: Concluding Remarks

6.1 Summary
The project was to understand the working of Godrej & Boyce
Mfg. Ltd. at the branch office and Warehouse and give
recommendations in reference to observations related to ROI and
profitability.
The project mainly focused on understanding the main cost
related to the activities carrying at warehouse and giving
recommendation to reduce in order to get effective and efficient
warehousing with keeping the same service level desired. For the
same the understanding of basics function like order booking,
purchase order booking, report making at branch office by
executives was understood and the different activities related to
warehouse like warehouse management, logistics management,
freight management and inventory management was understood.
After understanding the basic activities there was a need to
observe different cost and analyze the same in order to reduce the
cost and make an effective warehousing. For the analysis the cost
were found and listed into a fishbone diagram and a Pareto chart
on basis of the value of cost was made and the suggestion on the
main cost centres were given to reduce and create an effective
warehousing system.

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6.2 Gains from the Project

 Gained knowledge related to different warehousing activities.

 Gained knowledge about SOP’s and their importance.
 Understood the importance of different activities.
 Developed analytical skills.
 Developed a practice of observing things in order to make
processes better.
 Understood importance of data produced related to each and
every activity carried out.
 Understood the importance of organization structures.
 Understood how cost is related to profit.
 Understood that each and every function and activity has its own
purpose, though adding a cost but without which would increase
cost in return.
 Understood where to focus and where not to.

6.3 Limitations of the Project

 The project time frame was one of the biggest limitations as

getting clear understanding of different processes and observing
things in this time frame was not possible.
 The data collected and used was on approximate value.
 The data collected was for some divisions only and
recommendations were given on these data collected only.

6.4 Scope for Further Work

 Real values can be taken into consideration for getting depth
knowledge on the problem.
 The project is lacking implementation of the recommendations
and their outcomes which can be studied and implemented.

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6.5 Conclusion
In any business logistics plays an important role in fulfilling the demand of
customers may it be end consumers or channel partner. It helps in providing
the customer right thing, at the right time, and in a right quality & quantity
demanded. If the logistics department of any company is not working
effectively than it adds cost to the company and reduces the ROI and profit
margin for the company. Thus the logistics department of the company
should be focused to reduce the cost incurred over it. Moreover these
logistics department cannot alone fulfil the requirement without an
arrangement of proper warehousing facilities. These warehouses should be
able to effectively manage the inventory lying at their place in order to
maintain its quality, quick and timely delivery to customers and keeping
safety stocks at the time of high demand. If any company is able to manage
these two functions effectively & efficiently than it can cut down its cost at a
very high extent.

If we look at Godrej & Boyce Mfg. Co. Ltd. it is effectively able to manage
these two main functions at Ahmedabad warehouse. But with a little
transformation and modernization to their warehouse they can effectively
cut to the cost of these operations carried out.

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Bibliography

Internet:
http://en-wikipedia.org/wiki/Godrej-Group
http://www.godrej.com/godrej/GodrejIndustries/index.aspx?id=12
http://www.godrej.com/GodrejIndustries/ourcompanies.aspx?id=12&men
did=1095
http://www.karmayog.com/lists/Godrejtrust.htm
http://www.GodrejAppliances.com
http://ex-wikipedia-org/wiki/Marketing-Research

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