PROJECT REPORT

ON

“A STUDY ON OUTBOUND LOGISTICS OFSEYANG AUTOMOTIVE INDIA (P) LTD”

BY

BALAKUMAR. VDEPARTMENT OF MANAGEMENT STUDIESSRI RAMANUJAR ENGINEERING COLLEGE

Summer internship project(Batch of 2009-10)

PREFACE

The efficiency of any business can be visible through the actions that are undertaken to

make the products to reach the customers at a given time. Effective outbound logistics

system is used to deliver the products to the customers at a right time.

Outbound logistics is all about movement of finished goods to the customers in a

specified time. It includes receiving purchase order from customers or analyzing the

future demand, directing the production department in terms how much quantity to

produce & at what time period and movement of the finished goods to the hands of

customers.

I have tried to put my best effort to complete this task on the basis of skills that I have

achieved during the last one year study in the institute.

I have tried to put my maximum effort to get the accurate statistical data. However I

would appreciate if any mistakes are bought to my notice by the reader.

DECLARATION

I, BALAKUMAR.V hereby declare that this piece of project report entitled “A Study on

Outbound Logistics of Seyang Automotives India (P) Ltd” for the partial fulfillment

of the requirement for the award of the mark, is a original work done by me under the

supervision and guidance of Prof. Mr. Ramamurthy, Sri Ramanujar Engineering College.

This project work is my own and has neither been submitted nor published elsewhere.

PLACE: CHENNAI

DATE: SIGNATURE OF STUDENT

CERTIFICATE

This is to certify that the summer project work of Mr. BALAKUMAR.V titled A

STUDY ON OUTBOUND LOGISTICS is an original work and this has not been

submitted elsewhere in any form. The indebtness to other work/publications has been

dully acknowledged at the relevant places. The project work was carried out during

25.06.2010 to 26.07.2010 in Seyang Automotives India (P) Ltd.

Date: Mr. P. Seenu (Logistics Manager)

Seyang Automotives India (P)Ltd.

EXECUTIVE SUMMARY

The major objective of the study is to properly understand the out bound logistics of

Seyang Automotive India (P) Ltd (SAIPL) & to suggest measures to overcome the

shortfalls if any.

Transporting of inventories from factory to other firms for further production is known as

logistics management. “Logistics is the process of planning, implementing, and

controlling the efficient, effective flow and storage of goods, services, and related

information from point of origin to point of consumption for the purpose of conforming

to customer requirements.". It involves the relationship between raw material and

finished products.

The goal of out bound logistics is to ensure that the firm is able to continue its operation

and that it has sufficient facilities to satisfy the customer wants without interruption and

also to aid production by receiving and forwarding purchase orders (P.O) from

customers.

Outbound Logistics also aids the finance departments in collecting the debts from

customers with in the specified time

INTRODUCTION

LOGISTICS:

Logistics is the management of the flow of goods, information and other

resources between the point of origin and the point of consumption in order to meet the

requirements of consumers. Logistics involves the integration of information,

transportation, inventory, warehousing, material handling, and packaging, and

occasionally security. Logistics is a channel of the supply chain which adds the value of

time and place utility. Today the complexity of production logistics can be modeled,

analyzed, visualized and optimized by plant simulation software

THE COUNCIL OF LOGISTICS MANAGEMENT (CLM) DEFINES:

Logistics is that part of supply chain process that plans, implements and controls

the efficient, effective flow of and storage of goods, services and related information

from the point of the point of consumption in order to meet the customers’ requirement

DIVISIONS OF LOGISTICS:

Internal focus (Inbound logistics):

External focus (Outbound logistics):

INTERNAL LOGISTICS:

Receiving, storing, and disseminating incoming goods or material for use is called

Inbound logistics.

OUTBOUND LOGISTICS:

Movement of material associated with storing, transporting, and distribution a

firm's goods to its customers is called outbound logistics. The main functions of

outbound logistics are Transportation and warehousing.

OUTBOUND LOGISTICS OFFERS TIME AND PLACE UTILITY:

Outbound logistics provides time and place utilities by means of warehousing

and transportation respectively.

Transportation physically moves products from where they are produced to

where they are needed. This movement across space and distance add value to products.

This value added is often referred to as place utility. Transportation is one of the largest

logistics costs and may account for the significant increase in the selling price for some

products.

Time utility is created by storing the products until they are needed.

Transportation is also a factor in time utility; it determines how fast and how consistently

a product moves from one point to another. This is known as time in transit and

consistency of service respectively.

.

NEED FOR THE STUDY

To observe the overall outbound logistics of ‘Seyang Automotives India pvt Ltd’

(SAIPL) with its customers and to analyze the critical problem in it.

This study analyses the dispatch functions of Tier II suppliers of original

manufacturers and the problems faced by them.

As Tier II suppliers must posses timely delivery of goods to its customers, this

study also analyses the cycle time of loading and unloading of goods at the supplier as

well as customer end.

OBJECTIVE OF THE STUDY

To observe the outbound logistics of seyang automotives.

To analyse the shipment transactions of Seyang with its customers.

To examine the critical problems involved in dispatching goods.

To examine the problems faced at the customer end.

To identify problems affecting logistics department that arising because of other

departments.

SCOPE OF THE STUDY

This study analyses the outbound logistics of ‘Seyang Automotives India Pvt Ltd’

(SAIPL).

This study covers only the shipments to major customers of Seyang and not for

the outsourcing goods.

This study is all about the outbound logistics and omits the Inbound logistics and

work-in-progress supply chain.

This study is useful to the organisation’s logistics department to improve further

in its process

REVIEW OF LITERATURE

According to ‘Council of Logistics Management’

“Logistics is.the process of planning, implementing, and controlling the efficient,

effective flow and storage of goods, services, and related information from point of origin

to point of consumption for the purpose of conforming to customer requirements." Note

that this definition includes inbound, outbound, internal, and external movements, and

return of materials for environmental purposes”.

According to ‘Canadian Association of Logistics Management’

“Logistics is the process of planning, implementing, and controlling the efficient,

cost effective flow and storage of raw materials, in-process inventory, finished goods and

related information from point of origin to point of consumption for the purpose of

meeting customer requirements”.

Logistics have been around for a long time, in fact since the creation of man there have

been logistics issues to be solved. As a discipline, it started in the military where it was

involved with the movement of troops and resources to areas needed (Lumnus et al

2001).

As a business discipline it has been defined as, the organisational functions that include

the planning, implementation and control of the flow of goods, services and related

information (The Council of Logistics Management, 2001).

There is a lot of overlap with the concept of Supply Chain Management (SCM)

and in some literature it is used interchangeably. Some attempts have been made to

distinguish between the two (see Lumnus et al 2001) who after reviewing literature and

researching with industry professionals, aver that the difference is that SCM goes beyond

logistics to included the suppliers’ suppliers and the customers’ customers. For most parts

however the functions and areas covered would be roughly the same which is the position

taken in this paper.

Logistics was not among the early adopters of Information Technology (IT) but it

is now ubiquitous hence most operations in logistics have some IT application. The

advent of the internet and electronic commerce, have emphasized the role of logistics in

organisations. In fact Bretzke (2000) for instance argues that the failure of so many

companies in e-commerce can be in part accounted for by the neglect of logistics as a key

factor of success, implying a prominent role for companies specializing in the logistics

segment.

Kotler (2000) stated that marketing logistics is referred to as inbound and

outbound distribution that involves the entries supply chain management system.

Marketing logistics may allow a company to gain competitive business advantage such as

cost saving, quality of product, efficiency of logistics and distribution. The company also

could average its benefits of a higher service level against the cost

PROFFESSIONAL LOGISTICIAN:

A logistician is a professional logistics practitioner. Professional logisticians are

often certified by professional associations. Some universities and academic institutions

train students as logisticians, offering undergraduate and postgraduate programs.

LOGISTICIAN’S FUNCTION:

The main functions of a qualified logistician include

Inventory Management ,

Purchasing ,

Transportation ,

Warehousing ,

Consultation and

Organizing and Planning of these activities.

Logisticians combine a professional knowledge of each of these functions to

coordinate resources in an organization. There are two fundamentally different forms of

logistics: one optimizes a steady flow of material through a network of transport links and

storage nodes; the other coordinates a sequence of resources to carry out some project.

PRIME ACTIVITIES OF LOGISTICS:

The key activities of logistics are:

1) Inventory Maintenance:

It is usually not possible or practical to provide instant production or instant delivery to

customers. In order to achieve a reasonable degree of product availability, inventories

need to be maintained as buffers between supply and demand. The extensive use of

inventories results in the fact that, on the average, they account use of approximately on

third of logistics costs, making inventory maintenance a key logistics activity.

2) Order Processing:

Order processing cost tends to be minor as compared to transportation or inventory

maintenance costs. Nevertheless, it is a primary logistics activity. Its essential nature

comes from the fact that there is a critical time element in getting goods and services to

customers. Also it is the primary activity that triggers product movement and service

delivery.

3) Transportation:

For most firms, transportation is the most important logistics activity, simply because it

absorbs, on the average, approximately two thirds of logistic costs. “Transportation”

refers to the various methods for moving a product. Road, rail, water and air are just a

few of the popular choices. Management of the transportation activity usually involves in

making choices regarding the method of shipment, the routings, and the utilization of

vehicle capacity.

OVERALL LOGISTICS PROCESS:

As logistics is a part of supply chain management, the process of logistics in is

shown below through a diagram

DIVISIONS OF LOGISTICS:

In business, logistics may have either

Internal focus (Inbound logistics):

Receiving, storing, and disseminating incoming goods or material for use, or

External focus (Outbound logistics):

Storage and Transportation of finished goods to the customer end.

OUTBOUND LOGISTICS:

Movement of material associated with storing, transporting, and distribution a

firm's goods to its customers is called outbound logistics. The main functions of

outbound logistics are Transportation and warehousing.

TIME AND PLACE UTILITY:

Outbound logistics provides time and place utilities by means of warehousing

and transportation respectively.

Transportation physically moves products from where they are produced to

where they are needed. This movement across space and distance add value to products.

This value added is often referred to as place utility. Transportation is one of the largest

logistics costs and may account for the significant increase in the selling price for some

products.

Time utility is created by storing the products until they are needed.

Transportation is also a factor in time utility; it determines how fast and how consistently

a product moves from one point to another. This is known as time in transit and

consistency of service respectively.

This project is mainly focusing on the transportation part of outbound logistics as

the company follows just in time (JIT) production system and there is no need for

warehousing.

METHODOLOGY ADOPTED FOR THE STUDY

The research methodology adopted in this study is Observation. Data are

collected through observing the overall dispatching and assembly lines including

the actions of employees and issues with in dispatching. Observation also done in

the customer side of seyang automotives.

Discussion with the company executives, managers and employees.

Discussion with the customer end executives, managers, quality personnel and

employees.

Statement of the problem:

As seyang automotives is a tier II supplier of Hyundai motors who is the original

manufacturer, the products of seyang are moved first to tier I suppliers like ‘hanil

automoties’, ‘Dymos lier’ etc and then passed to Hyundai. For that timely delivery and

maintaining of sufficient safety stock is necessary. This study analysis the critical facts in

the dispatch section of Seyang automotives.

SOURCES OF DATA

Primary Data:

The data collected for the first time through observation and

interview method. The data is also collected by observing the

working of logistic department of Seyang automotives.

It is also obtained by the help of staff members.

Secondary Data:

The data is collected by secondary sources also. The data is

collected through company manual, product brochure, company

website, annual report and other sources.

DATA ANALYSIS AND INTERPRETATION:

OVERVIEW OF LOGISTICS DEPARTMENT:

Logistics department of SAIPL ( Seyang Automotives India Pvt Ltd) is

responsible for the activities for delivering the products to the customer end.

ITS ACTIVITIES INCLUDE:-

1. Receiving the customer order

2. Forwarding the purchase order to the production department

3. Ensuring that the production has been done

4. Arranging the Products in their respective bins

5. Sending goods to the Quality department for quality checking

6. Preparing Invoice

7. Transporting the goods to the customer end

8. Providing continuous customer support

PERSONNEL IN LOGISTICS DEPARTMENT:

The organizational chart of logistics department is as follows:

Under the supervisors there are forty six labours working purely for the purpose of

logistics activities

TRANSPORTS OF SEYANG:

The transport i.e vehicles used for shipments are obtained for monthly

rentals.

The process of maintaining the vehicles also outsourced to the vehicles

owners itself.

TRANSPORT AGENCIES:

Two agencies are undertaking the transport outsourcing process

1. VMS Transport

2. Abi transport

NUMBER OF VEHICLES USED:

Totally there are seven trucks used for shipments.

These trucks are used only for the purpose of shipments and not for other

uses.

VMS Transport:

VMS transport takes the major part of transport providing process. Out of seven

trucks used for seyang’s despatch, six were owned by VMS transport.

Abi transport:

Abi transport provides only one semi truck for seyang.

VEHICLES DESCRIPTION:

Vehicle No. Truck model Service provider Used for

6422

3481

2263

1361

1172

1772

4311

Tata semi truck

Tata semi truck

Eicher semi truck

Tata ace mini truck

Eicher semi truck

Eicher semi truck

Tata semi truck

VMS transport

VMS transport

VMS transport

VMS transport

VMS transport

VMS transport

Abi transport

Hanil Plant II

Hanil Plant II

Hanil Plant I

SL Lumax

Emergency purpose

Dymos Lear

Jin – Tech

PERCENTAGE OF SHIPMENTS TO CUSTOMERS AS PER

INVOICE:

TABLE NO 1

Customers Number of shipments

( in 2 weeks)

Percentage

Hanil automotives plant II 250 47.70 %

Hanil automotives plant I 66 12.6 %

Dymos Lear 120 22.9 %

Jin-tech 32 6.1 %

others 56 10.7%

Total 524 100

INTERPRETATION:

From the calculations of number of shipments made in 2 weeks it is clear that

among the customers of seyang, Hanil automotives plant II is the major customer

receiving 47.7% of shipments followed by Dymos Automotives 22.9% and Hani

Automotives plant I 12.6%.

CHART SHOWING PERCENTAGE OF SHIPMENTS TO CUSTOMERS:

CHART NO 1:

SHIPMENTS IN DIFFERENT SHIFTS PER DAY AS PER

TRANSPORTATION:

TABLE NO 2

SHIFTS TIMING TOTAL DESPATCH PERCENTAGE

I 8.00 am to 4.30 pm 16 45%

II 4.30 pm to 12.30 am 12 33%

III 12.30 am to 8 am 8 22%

TOTAL 36 100%

INTERPRETATION:

Among the three shifts, 45% of shipments are made in Shift I followed by Shift II

33% and Shift III 22%

CHART SHOWING SHIPMENTS IN DIFFERENT SHIFTS PER DAY:

CHART NO 2:

SHIPMENTS TO HANIL AUTOMOTIVES PLANT-II PER DAY:

TABLE NO 3

SHIFTS TIMING TOTAL DESPATCH PERCENTAGE

I 8.00 am to 4.30 pm 9 43%

II 4.30 pm to 12.30 am 7 33%

III 12.30 am to 8 am 5 24%

TOTAL 21 100%

INTERPRETATION:

While analysing the shipments of ‘Hanil Automotives Plant II’ seperately for the

three shifts, we can see that 43% of shipments made in shift I, 33% of shipments made in

shift II and 24% of shipments made in shift III.

SHIPMENTS TO HANIL AUTOMOTIVES PLANT-II PER DAY :

CHART NO 3:

SHIPMENTS TO HANIL AUTOMOTIVES PLANT-I PER DAY:

TABLE NO 4:

SHIFTS TIMING TOTAL DESPATCH PERCENTAGE

I 8.00 am to 4.30 pm 2 40%

II 4.30 pm to 12.30 am 2 40%

III 12.30 am to 8 am 1 20%

TOTAL 5 100%

INTERPRETATION:

While analysing the shipments of ‘Hanil Automotives Plant I’ seperately for the

three shifts, we can see that 40% of shipments made in shift I, 40% of shipments made in

shift II and 20% of shipments made in shift III.

CHART SHOWING SHIPMENTS TO HANIL AUTOMOTIVES PLANT-I PER

DAY:

CHART NO 4:

SHIPMENTS TO DYMOS AUTOMOTIVES PER DAY:

TABLE NO 5:

SHIFTS TIMING TOTAL DESPATCH PERCENTAGE

I 8.00 am to 4.30 pm 1 50%

II 4.30 pm to 12.30 am 1 50%

III 12.30 am to 8 am 0 0%

TOTAL 2 100%

INTERPRETATION:

While analysing the shipments of ‘Symos Automotives’ seperately for the

three shifts, we can see that 50% of shipments made in shift I, 50% of shipments made in

shift II and there is no shipments made in Shift III.

CHART SHOWING SHIPMENTS TO DYMOS AUTOMOTIVES PER DAY:

CHART NO 5:

TOTAL REJECTIONS FROM CUSTOMERS (FOR 2 WEEKS):

TABLE NO 6

Customers Number of rejections

( in 2 weeks)

Percentage

Hanil automotives plant II 5 50 %

Hanil automotives plant I 3 30 %

Dymos Lear 2 20 %

Total 10 100

INTERPRETATION:

As ‘Hanil Automotives plant II’ is the major customer, 50% of the rejections are

from it. 30% of rejections are from ‘Hanil Automotives plant I’ and 20% of rejections are

from ‘Dymos Automotives’.

CHART SHOEING PERCENTAGE OF REJECTIONS FROM CUSTOMERS

CHART NO 6:

CHART SHOWING DIFFERENT REASONS FOR REJECTIONS:

TABLE NO 7:

REJECTION REASONS Number of rejections

( in 2 weeks)

Percentage

Quality issues 4 40%

Bin problems 3 30 %

Other Mistakes

(wrong specification and

quantity, wrong invoice etc)

3 30 %

Total 10 100

INTERPRETATION:

Quality is the major reason for rejection standing 40% among the rejections. 30%

of rejections are due to Bin problems and 30% are due to other reasons like wrong

specification, wrong quantity, wrong invoice etc.

CHART SHOWING DIFFERENT REASONS FOR REJECTIONS:

CHART NO 7:

SUMMARY OF FINDINGS:

1. I observed the Logistics department of Seyang Automotives India Pvt ltd (SAIPL)

for one month

2. There are three major customers for Seyang. They are :-

Hanil Automotives Plant II.

Hanil Automotives Plant I.

Dymos Automotives.

3. Hanil Automotives Plant II is the major customer, as about 48% of total

shipments are done with it.

4. The company follows three shifts per day pattern.

Shift I - 8.00 am to 4.30 pm

Shift II - 4.30 pm to 12.30 am

Shift III - 12.30 am to 8 am

5. 45% of total shipments are done in shift I

6. While analyzing the shipments to the customers individually, we came to know

that all the three customers receives shipments in the shift I itself.

7. Shipment is reduced in to half in Shift III while comparing to Shift I.

8. Most of the rejections are from Hanil Automotives Plant II as it receives more

goods.

9. As quality is the major reason for rejections, there are other reasons that are

directly related to logistics department such as using of non-standard and

uncleaned Bins, Wrong specification, wrong quantity, Wrong invoice, etc.

10. Problems that are found by interviewing the customer side are as follows:

1. Using of non-standard bins.

2. Dust and uncleaned bins.

3. Wrong specification of goods.

4. Wrong quantity.

5. Wrong tag identification.

6. Mistakes in Invoice.

7. Quality issues.

8. Late delivery of goods.

SUGGESTIONS AND RECCOMENDATIONS:

1. New standard bins have to be purchased based on the products shape and weight.

2. An accounting of the bins has to be maintained to avoid pilferage and theft of

bins.

3. Instead of appointing uneducated contract labour the company can appoint

educated company labours and also can recruit educated candidates in

apprenticeship basis.

4. The supervisors has to check the shipments twice before making invoice so that

Mis-specification of goods, wrong quantity in dispatch and ,mistakes in invoice

can be avoided

5. Proper ERP system has to be implemented to make the work simplier and to share

the inter and intra departmental information at the right time.

CONCLUSION:

Seyang Automotive India Pvt Ltd (SAIPL) with its emergence tracing back to

2007 has been proved to be one of the prominent Tier-II suppliers of Hyundai Motors

India Pvt Ltd who is the Original Manafacturers of the Equipments, i.e cars.

SAIPL is not directly supplies goods to Hyundai rather it supplies to the Tier I

suppliers namely Hanil Automotives plant II, Hanil Automotives Plant I and Dymos

Automotives who are the key customers of SAIPL.

The Logistics department of SAIPL provides continuous supply of goods to its customers based on their daily requirements. The logistics department also receives ‘Purchase Orders’ from its customers and forwards it to the production department and aids production department

ACKNOWLEDGEMENT

A work is never a work of an individual. I owe a sense of gratitude to the intelligence and

cooperation of those people who had been so easy to let me understand what I needed

from time to time for completion of this exclusive project.

I am greatly indebted to my guide Prof. V.Rajesh, faculty guide for Finance (summer

internship), Sri Ramunjar Engineering College and Mr. G.Sekar M.D. of Gopal Metal

Containers (P) Ltd and Mr. Thanigaivel, Auditor for their constant guidance, advice and

help which enabled me to finish this project report promptly in time.

I am also grateful to Mr.M.NithyaSundar correspondent, Mr.G.Kamaraj secretary,

Principal Mr.Karmegam and HOD, Sri Ramanujar Engineering College, for permitting

me to undertake this study.

Last but not least, I would like to forward my gratitude to my friends and other faculty

members who always endured me and stood with me and without whom I could not have

completed the project.

B.GOPINATH

NEED FOR STUDY

Estimation of working capital is much more important than estimation of long term

capital. I have chosen this topic to understand the depth and role of working capital in

GMC (P) LTD.

SCOPE OF THE STUDY

To identify negative aspects of Working Capital Management.

To understand pitfalls in Working Capital Management

It will help Internal Auditor to check performance Working Capital Management

To the organization, my project will be a good model to learn about their Working

Capital Management efficiency.

LIMITATIONS

Time period is very short and it’s not possible to observe every aspect of working

capital management practices.

The project is mainly based on information gathered from secondary data, mainly

the printed balance sheet and profit and loss account

It is applicable only to the GMC (P) Ltd between ’08 and ‘09