manideepa baidya project
TRANSCRIPT
1
Chapter 1
EXECUTIVE SUMMARY
Initially I was introduced with each and every P&L (procurement & logistics)
department heads and I was asked to go through the production process (Beer
Manufacturing Process) because without knowing the production process I
would have not understand the different logistical activities carried on by the
logistics team of UBL, Kalyani. It was a very different experience for me. I
went through the different phases of Beer Manufacturing. I found the Bottling
and Packaging process of Beer very interesting.
Next I was assigned to different Department one by one like Procurement
Department, Store & Logistics Department and Excise & Despatch Department
to understand the different activities they do. I learnt about UB’s (Kalyani plant)
material handling and storage system (warehousing)
, transportation modes they engage for despatching the Finished Goods.
As my project area was Outbound Logistics I went through the different
activities of Excise & Despatch Department. The warehouse of UBL is under
state Excise (Bonded Warehouse), so I got the opportunity to know the different
taxation levied on alcohol product. I learnt the documentation procedure for
despatching the Finished Goods from the plant to different bonders. I analysed
their production and sales growth with the present increasing rate of
consumption of Beer in West Bengal.
I tried to find the different problem areas of UBL, Kalyani, accordingly
analysed them and suggested related recommendations.
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Chapter 2
COMPANY BACKGROUND
United Breweries Group or UB Group is an Indian conglomerate company
based in Bangalore, India. The company chairman is Vijay Mallya who had
been a member of the Indian Parliament.
The beginning of what is today The UB Group is rooted in the flagship
company, United Breweries Limited, (UBL) also referred to as the Beer
Division of the UB Group. Led by Mr. Kalyan Ganguly, President & Managing
Director, it is the market leader for Beers in India.
United Breweries, Kalyani plant established in the year 1965. It is the most
successful manufacturing plant amongst the other plant of UB. Since the time it
established it never have to look back. With strong logistics/ supply chain
management this plant is running successfully with 41 officers and nearly 280
contractual and 110 permanent labours.
CSR activity:
As a part of CSR, UB Kalyani is associated with ANNE SULIVAN
INSTITUTE for sightless, Kalyani which is situated within 2 km from the plant.
The company is very much concerned and firmly committed to ensuring the
safety of each and every employee, contractor and visitors in the operation
across the country.
Company provides training and internal communication to educate, enable and
motivate their employees and contractors in a conduct of activities in a safe and
responsible manner.
The company also provide a frame work for measuring performance and
ensuring continuous improvements by setting, auditing, and reviewing
objectives, targets, and performance at defined interval of times.
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Chapter 3
OBJECTIVE OF THE STUDY
As a student of Transportation and logistics management of MPSM in
I.I.S.W.B.M, I was provided all the opportunities to learn the various aspects of
logistical management in UNITED BREWERIES, KALYANI which is a Beer
manufacturing company. My project area is concerned with “THE STUDY OF
ALL THE LOGISTICS ACTIVITIES FOCUSING ON OUTBOUND
LOGISTICS OF UB, KALYANI”.
A business implies “transfer of products and/or services from seller to buyer”.
This movement becomes complicated especially when seller and buyer are
physically situated far apart from each other. The outbound logistics bridges the
gap between the seller and the buyer. UNITED BREWERIES of KALYANI
successfully bridges the gap with an effective logistics system which comprises
of inbound logistics, Work in process and outbound logistics.
This dissertation examines how UBL, Kalyani unit deals with various logistics
activities, how they constantly tries to improve their efficiency. The Outbound
Logistics is the main focus area of this dissertation.
The ultimate aim of this research is outlined below:
Studying the entire logistics activities of UB, Kalyani
Analysing the production process and Bottling& Packaging procedure.
Analysis of the key outbound logistics activities in details
Studying the warehousing practices being followed at UBL, Kalyani
incorporates.
To study the Transportation mode they engage for distribution of
Finished Goods
Analysing the production and sales volume growth with reference to
the present demand pattern.
Finding out the key problem areas and suggesting proposals and
recommendations.
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Chapter 4
REVIEW OF LITERATURE
‘Logistics Management’ by V.V. Sople highlights the information related to
different logistics activities like Procurement, production and distribution,
warehousing, Material Handling systems, logistics design for distribution
systems etc with lot of case studies.
‘Modern concepts of Materials Management’ by S. C. Bhattacharya gives
detailed information of material management, different inventory control
systems. This book gives the relation between different departments involve in
Procurement and logistics activities.
Different distribution strategies are discussed in “the handbook of logistics and
distribution management” by Peter Baker. Logistics activities are well defined
in this book.
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Chapter 5
METHODOLOGY
Apart from keen observation of the various processes and practices carried out
in the firm, various methods of data collections were also adopted to get true
and detailed findings. The data collection process were mainly based on the
consultation with respective authorised department heads, but some journals,
websites were also helped to get information on the study area of my project.
Primary data collection
Data regarded the study is collected first hand from the respective
authorised persons like Commercial manager, Logistics head, purchase
officer, Store manager, Warehouse staffs etc.
Secondary data collection
Different websites, journals and books were viewed on Beer
manufacturing and its distribution network.
Analysis of the data
For analysis of data, consultation with respective persons concerned with
the total logistics activities were carried on.
Presentation of data
Bar diagrams, tables, line charts, clustered column charts are used to
present the data collected from different sources of UBL, Kalyani.
Findings the problem areas
Proposals and recommendations
6
Chapter 6
GENERAL OVERVIEW
Logistics is a process of movement of goods across the supply chain of a
company. However, this process consists of various functions that have to be
properly managed to bring effectiveness and efficiency to the supply chain of
the organisation.
Logistical competency is achieved by coordinating its pillars which are:
Order processing
Inventory control
Warehousing
Transportation
Material Handling and storage
Logistical Packaging
Information
All this above activities in logistics needs to be integrated to accomplish the
objective of making the right product at the right place and the right time. For
the focused attention, logistics activities can broadly be divided into three
areas of business operation wherein the logistics needs are quite different.
They are shown in the figure below:
MATERIAL FLOW
INFORMATION FLOW
INBOUND
LOGISTICS
WORK IN
PROCESS
OUTBOUND
LOGISTICS
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An effective distribution system or outbound logistics covers all of the above
functions ensuring a systematic flow. As my project is focused on the logistics
activities and distribution system of United Breweries, Kalyani plant, I have
divided my study area as follows:
6.1 logistics activity
6.1.1 Departmental Hierarchy
6.1.2 Logistics Network
6.1.3 Material Handling & Storage
6.1.4 Transportation
6.2 Production Process
6.3 Bottling& Packaging
6.4 Outbound logistics
6.4.1 Warehouse
6.4.2 Taxation
6.4.3 Distribution
6.4.4 Production & sales analysis
6.1 LOGISTICS ACTIVITY
The logistics activities of United Breweries are very efficient. An integrated
material management approach is one of the causes behind UB’s success. Each
and every department are well integrated. Recent implementation of SAP makes
them more coordinated and operations become smoother than before. In this
section I would like to discuss about UB’s departmental hierarchy and functions
of different departments.
The logistical activities like Material Handling and their storage system,
transportation modes UB engage for inbound and outbound logistical are also
highlighted in this section.
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6.1.1 DEPARTMENTAL HIERARCHY
Junior officer
Procurement
Sr. assistant
despatch
Head
brewer
Manager-
QA
Shift
engineer
Executive
instrumenta
tion
Officer
Procurement
Officer-Store
& logistics
Executive-
purchase
Ex despatch
& Excise
Sr. manager-
asset care
Manager
commercial
Manager
HSE
General Manager
Utility
engineer
Chemist
JMC-2
Office QA
Trainee
chemist
Shift brewer
Assistant
brewer
Assistant-
Procurement
Sr. assistant
despatch
Assistant
despatch
Sr. assistant
accounts
Officer-
finance
Manager
production
Manager
finance
Shift
engineer
production
Shift
engineer
production
Sr. manager
HR
Maintenanc
e engineer
Executive
personnel
Officer
personnel
Procurement & logistics department
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6.1.2 LOGISTICAL NETWORK
The different functions like purchasing, Store keeping, production, finance etc
are the part of material management, and a manufacturing unit should always
follow an integrated approach to material management. Te hierarchy of UB,
Kalyani shown in the figure is an example of integrated material management in
which all the activities concerning materials comes under one head as an
integrated body.
The Procurement and logistics department (P&L) includes:
Procurement and purchase department
Store
Excise & Despatch department
Others are accounts, finance, production, engineer, HR etc. Here the functions
of the departments under P&L and their relationship with other department are
being discussed.
Function of Procurement department:
First PGP (Permit Generation Plan) for the production of coming month comes
from the Corporate Head Office, Bangalore of United Breweries at the start of
every month to the unit head of every unit. According to the PGP, a meeting is
with all the heads of the concerned Department as per the hierarchy mentioned
above to fix:
The production plan SKU wise (No. of Brew per day, Types of brand per
brew)
The amount of Raw material required for production
The amount of Raw materials to be purchased for the following month’s
production.
Material availability
To order required materials as required from PGP
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Enquiry
Receipt of requisition
Making comparison sheet
Placement of orders
Follow up the orders
PROCUREMENT FUNCTION IN FLOW CHART (1):
Permit Generation Plan
(PGP) from Head Office
start of every month
Meeting held with
heads of concerned
dept.
Make Production plan
SKU wise
Raw materials required
for production
Raw materials to be
purchased for production
No. of Brew per day
Types of brand per
brew
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Function of Store:
The Stores function is a vital limb of many of the organisations and industrial
concerns of various departments.
The function of the Stores can be divided into two, namely:
1. Primary functions:
Receiving raw materials and engineering parts.
To collect the Samples of raw materials for quality check.
Maintaining Inward register of materials.
To make available a balanced flow of raw materials, components, tools,
equipment etc.
To receive and issue materials after physical inspection and proper
identification.
Invoice generation
Issuing GRN (good receipt note)
2. Secondary functions:
Standardization and codification of different materials
Store accounting
Stock control
To arrange for collection, acceptance of scrap & other discarded
materials for disposal.
Value added services like Spare parts assembling as per requirement of
engineering departments
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FUNCTION OF THE STORE IN FLOW CHART (2):
Goods received at
the gate
Store person collects
the sample
Sample taken to QC
department
Sample is
accepted
or not?
Rejected and
returned
Receiving of materials
at Store
Entry in Material
inward register
Placing the materials in
respective bins/racks
Entry in Bin Card
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FUNCTION OF EXCISE AND DESPATCH DEPARTMENT IN FLOW
CHART (3):
Checking the stock of
Finished Goods
Received despatch
order from Kolkata
office
Sent to accounts dept.
for clearance
Despatch Sheet and
D.O sent to packing
section for clearance
Gate Pass
Invoice
Excise department for
Excise pass
Gate Pass, Invoice and
Excise Pass sent to
Packaging Department
Despatch
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6.1.3 MATERIAL HANDLING & STORAGE SYSTEM
The speed of inventory movement across the supply chain depends on the
Material Handling methods. An improper method of Material Handling will add
to product damage, and delays in deliveries and there by incidental overheads.
Mechanisation and automation in Material Handling enhances the logistics
system productivity.
Raw Material:
Handling: Raw materials like malt, rice, sugar are come by road. The
vehicles used vary from 9 MT to 21 MT. The unloading process is fully
manual for both weight based and counting based raw materials and
unloading time for a 20 ton vehicle (truck) takes around 45 minutes.
Company is shortly going for Mechanical Handling to put the Raw
Materials directly into Silos.
Storage: raw materials like rice, malt are Stored manually directly to the
silos. Sugar is Stored in sugar hopper. There is no such storage house for
this raw materials but for some special Brand like for Kingfisher Blue a
special type of malt is procured from Argentina , this special malt are
Stored in a storage house in a small amount as required
Finished Goods:
Handling: The packaged Finished Goods are first stacked on the pallet
manually. Then they are taken to Warehouse by using fork lift. At the
time of despatching also the loading procedure is partially done by fork
lift and partially it is done manually, that is the placement of Finished
Goods near the vehicles are done by fork lift and loading from that point
on the vehicles is done manually.
Storage: the packaged FG is placed vertically up to triple stack. A very
little percentage of damages happen during Material Handling both for
raw materials and Finished Goods.
Raw material storage capacity (TABLE 1):
Raw materials
Water Malt Rice Sugar Chemicals Hops Yeast
capacity 540
HL/tank
400
MT
100
MT
30MT 2 MT 1 MT 3MT
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6.1.4 TRANSPORTATION
For transportation of goods from the supplier to the buyer, transportation is the
most fundamental and important component of logistics. After the order is placed
the transaction is not complete till the goods are physically moved to the
customer’s place. The physical movement of goods is done through various
transportation modes. For low unit value products the transportation cost
component is 20% of the product cost. In logistics costs its share varies up to 65-
70% in case of mass consumed low unit priced products.
Depending on the infrastructure of the transportation in the country or region,
firms choose the mode of transportation. Cost is the most important transportation
in selection of a particular transport mode. However, sometimes urgency for the
goods at customers’ end overrides the cost consideration and the goods are sent
through the fastest mode, which is an expensive alternative.
The following modes of transportation are used generally for cargo movement in
India, rail, road, water and air.
In case of UBL, Kalyani, for Raw materials they use the following modes of
transportation:
TABLE 2: FOR RAW MATERIALS
RAW
MATERIALS
SUPPLIER'S LOCATION TRANPORTATION
MODES
TRANSIT TIME
MALT KASHIPUR/RAJASTHAN ROAD 5 DAYS
RICE RAIPUR/JHARKHAND ROAD 3/1 DAYS
SUGAR KOLKATA ROAD 1 DAY
HOPS MUMBAI RAIL 12-15 DAYS
YEAST BANGALORE AIR 2 DAYS
CHEMICALS ROAD 10 DAYS
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TABLE 3: For Bottling and Packaging raw materials
RAW MATERIALS FOR
BOTTLING
SUPPLIER'S
LOCATION
TRANPORTATION
MODES
TRANSIT TIME
NEW BOTTLE
RISHRA/
RISHIKESH
ROAD 1/7 DAYS
OLD BIOTTLE JHARKHAND/
LOCAL
ROAD 2/1 DAYS
CROWN NOIDA ROAD 5 DAYS
LABEL FARIDABAD RAIL 7-8 DAYS
CHEMICALS
SAT LUBE HIMACHAL
PRADESH
ROAD 10 DAYS
CARTON HYDERABAD/
LOCAL
ROAD 5/1 DAYS
For transportation of Finished Goods UBL, Kalyani uses only Road as their
mode of transportation. They won’t have their own fleet and they go in for
outsourcing.
Why not Rail Transport mode is used?
As United Breweries, Kalyani plant does not have dedicated Rail corridor so
Procurement of raw materials or despatching Finished Goods would become
costly affair. As it involves:
Cost for Unloading from (loading onto) Rake
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Cost for Loading on (unloading from) the vehicles
Cost incurred in the transit of loaded (unloaded) vehicles
Not only that, it also increases damages as multiple handling is involved. And
as the Finished Goods are Excisable UB, Kalyani unit avoid Rail transport
mode to avoid any kind of Risk.
Freight rate involved in transportation (outbound logistics)
The freight rate cannot be fixed for a long times because of different factors.
Calculation of this freight rate for despatching Finished Goods is done taking
into account all the factors involved in it.
The factors involves in the calculation of the freight rate are as follows:
Fuel price
Distance
Capacity
Load size
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6.2 PRODUCTION PROCESS
Introduction: Beer is the worlds most widely consumed alcoholic beverage; it
is the third-most popular drink overall, after water and tea. It is thought by some
to be the oldest fermented beverage. Beer began to be exported to India in the
early days of the British Empire.
The Indian Beer industry has been witnessing steady growth of 10%–17% per year over the last ten years. The rate of growth has increased in recent years,
with volumes passing 170 million cases during the 2008-2009 financial years. With the average age of the population on the decrease and income levels on the
increase, the popularity of Beer in the country continues to rise.
The Indian Beer industry is quite large at around 65 million cases (12 bottles of 650 ml each) and, in the last three years, has grown at 14% annum in the
unrestricted markets. Beer manufacturing requires a license from the centre, which is ratified by the respective state. Till 1989 licensing was restricted; in
1989, the central government relaxed the policy and accepted 460 applications for new projects. Only a few were cleared and fewer still have come on ground
on account of the low and uneconomical capacity of 5,000 kilolitres per annum licensed by the government. However, the capacity is released to 15,000
kilolitres per annum for NRI proposals with 100% foreign equity.
Beer types: There are two types of Beer, Ale Beer and Lager Beer. All Beers,
no matter how great or small, is made from a basic combination of water, malts, hops, and yeast. The difference between the above two types of
Beer is in terms of yeast.
Ales - Ales are brewed with top-fermenting yeast that thrives at mid-range room
temperatures. For this reason, ales are typically stored between 60° and 75° Fahrenheit during the fermentation stage. This type of yeast and the fermentation temperature tend to give ales a fruitier and spicier flavour than
Lagers. In general, ales are more robust and complex.
Lagers - By contrast, Lagers are made with bottom-fermenting yeast that works
best at cooler temperatures, between 35° and 55° Fahrenheit. Fermentation happens more slowly and the Beer is more stable, so it can be stored for longer
than ales. This yeast tends to have less presence in the finished Beer. As compared to ale, Lagers have a cleaner and crisper quality with emphasis on the
hops and malt flavours.
Kalyani United Breweries manufacture Lager Beer only.
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Raw material used in the Beer production:
Water
Malt
Cereal adjuncts (broken rice/rice flake)
Hops
Sugar
Yeast
Chemicals used in different stages of brewing:
Lactic acid
Gypsum
Calcium chloride
Whirl flock (enzyme)
Ultra flow max (enzyme)
Caramel (enzyme)
Znso4 etc.
TABLE 4: CONSUMPTION PATTERN OF RAW MATERIALS
INGREDIENTS(RAW
MATERIALS)
RAW MATERIAL CONSUMPTION*
PER BREW PER BATCH**
PER
MONTH
WATER 260 HL 3380 HL 101400 HL
MALT 3 MT 39 MT 1170 MT
RICE 1.8 MT 23 MT 690 MT
SUGAR 0.5 MT 6.5 MT 195 MT
HOPS 4.5 KG 58.5 KG 1755 KG
YEAST 0.4 MT 1.6 MT 48 MT
CHEMICALS 8 KG 104 KG 3120 KG
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Brands Kalyani United Breweries manufactures:
Kalyani Black Lebel
Kalyani Black Lebel Strong
Kingfisher Premium Lager
Kingfisher Premium Strong
Kingfisher Blue
Kingfisher Blue
Kingfisher Supreme
Kingfisher Special
Brewing process:
There are two brew houses in Kalyani United Breweries, one is old and another
is new. The brewing process includes 4 essential steps:
1. Brew house operation 2. Fermentation and laggering
3. Filtration 4. Bottling and Packaging
The Wort processing or the brew house operation, fermentation & laggering and
the filtration processes are shown in flow diagrams.
The total brewing process of one brew take approximately 8 to 9 hours where Mashing takes almost 3 hours which is profile depended, loitering takes 21/2
hours to 3 hours, wort processing takes maximum 90 minutes & minimum 70 minutes and whirlpool takes 11/2 hours.
The maximum efficiency of the brew house is to produce 14 brews per day.
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1. FLOW DIAGRAM (1) OF WORT PROCESSING:
Sugar
silo
Broken
rice silo
Sugar hopper Rice silo Sugar hopper
Hot
water Rice
cooker
Cold
water
Chilled
water
Mash
kettle
Mash
kettle
Wort
kettle
Wort
kettle
Lauter tun
Wort
holding
tank
Wort
holding
tank
Lauter tun
Unit tank Unit tank Unit tank
Plate heat
exchanger
Grist
case
Malt
silo Malt
silo
Grinder
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2. FERMENTATION AND 3.FILTRATION PROCESS IN FLOW
DIAGRAM (2):
Unit tank/
Fermenter
Unit tank/
Fermenter
Unit tank/
Fermenter
Lab scale
yeast
culture
Small
propagator
Small
propagator
Small
propagator
Yeast storage
tank
Yeast pitching
tank
Filtration
Buffer
tank
BBT
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6.3 BOTTLINGAND PACKAGING:
After removing the residual yeast and protein through filtration the Beer becomes clear bright Beer. The bright Beer transfers to bright Beer tank and it’s
ready for Bottling and Packaging.
TABLE 5: The raw materials that are needed in Bottling and Packaging
process are shown below:
RAW MATERIALS
FOR BOTTLING
SUPPLIER'S
LOCATION
TRANSIT
TIME
SAFETY STOCK
NEW BOTTLE
Rishra/
Rishikesh
1/7 days 2 lacks (330ml)
20 lacks (650ml)
OLD BIOTTLE Jharkhand/
local
2/1 days 20 lacks
CROWN Noida 5 days 35000 crowns
LABEL Faridabad 7-8 days 5000 THO
CHEMICALS
SAT LUBE Himachal
Pradesh
10 days 1000 kg
CARTON Hyderabad/
local
5/1 days 4 lacks
Different machines are used in this Bottling and Packaging process of Beer with
different capacities.
All the machines are connected with conveyor belt through which the bottles are
passed from one machine to another. In terms of bottle the conveyor belt takes the minimum speed of any of the machine as its actual speed. Maximum
conveyor speed is about 58 meter per minute.
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The Wash Machine is used to wash the new as well as the old bottles automatically to remove all the impurities or heavy dust, keeping the bottles in
different temperature zone. This is done with phases like prewash, caustic zone wash, pre final wash and final wash. Each phase has different temperature.
Capacity of this machine is about 26000 bottles per hour.
After washing the bottles come to the EBI machine. EBI stands for ELECTRONIC BOTTLE INSPECTION. This is a fully automatic machine
which checks the bottles for examining the bottles that are broken, spotty, cracked and bottles which are not as per the set norms. The flaws have to
be found at a very early stage and it is here that the glass bottle inspection machines are employed in detecting glass faults. This machine has a conveyor belt installed, where the bottles are placed and then inspected. The bottles are
then moved with the aid of the belt on to the inspection chamber. The inspection chamber is laden with cameras in addition to electronic components for
complete inspection of the bottles. These machines are set with an inbuilt rejection system, which gets rid of the bottles not adhering to the set standards
from the conveyor belt. The capacity of this machine is about 30000 bottles per hour.
The bottles are checked to detect the base defects, inner side wall defects, neck finishing defects, cap-neck finishing defects etc. the dispute bottles are either
rejected or get wasted.
Now after the inspection process is done, the bottles are come to Filler Machine. Capacity of this machine is 25000 bottles per hour. The filling machine has 50%
of CO2 and rest 50% is Beer. It’s a double evacuation counter pressure filling machine. There should not have any presence of air in the Beer bottle so in the
first phase the present air in the bottle is vacuumed and in the second phase CO2
pressure is given to vacuum the rest of the air in the bottle. The CO2 pressure is
about 2kg /cm2. After evacuating all the air the bottles are filled with Beer and are sealed with crown. This filling and sealing (capping) procedure looks like the diagram shown below:
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After filling the bottles come into pasteurize machine. In between the filling and pasteurization a manual checking is done to check the crowns, level of the
Beer etc. after filling the Beer still contains with some amount of air which grows Bacteria. To inactive this bacteria the bottles are passed through high
temperature. Where the bottles are filled at 20 centigrade, in this phase they are passed through at about 600 centigrade with the help of water and steam as
bacteria becomes inactive in high temperature. The bottles are kept in that of the above temperature about 10 minutes but not more than that because above this
the Beer would have a cooked flavour which is not at all desired. The capacity of this pasteurisation machine is 24000 bottles per hour. Then again a
manual checking is done.
Now the filled and sealed bottles come to label machine where the bottles are
labelled date wise (if the Beer brewed on 22/03/13 then it will be written as A/22 where A is fixed for all production from the very first day), tank wise (like
if it has matured in unit tank no. 11 then in the label it will be written as T11), and district wise (like if it for BIHAR then it will be written as ‘BHR’. The
capacity of this label machine is 28000 bottles per hour. After labelling the bottles are again checked manually on the line to detect any further defects.
Now the bottles are sent to be packed into the carton and sealed automatically. One packed carton is called one case. One case contains 12 650ml bottle and if
it is 330ml or pint then one case contains 24 bottles of 330ml. This packing process is automatic for 650ml bottle but manual for 330ml (pint) bottle.
Monthly 1 or 2 times UB’s this Kalyani plant has pint production, mostly it produces 650ml of Beer bottle.
There are two carton former machine each having capacity of forming
15000 carton per hour.
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BOTTLING & PACKAGING PROCEDURE IN FLOW DIAGRAM (3):
Filtered clear bright Beer
New and old bottle washed bottles
Wash
machine
EBI
Fillers
Pasteurisation
at 650 C Labelling
machine
Storing at
Warehouse
manually
Carton
sealers
Auto
packers
BBT
Manual
checking
(sighter)
Manual
checking
(sighter)
Manual
checking
(sighter)
Carton former 1
Carton former 2
Conveyor belt
New and old
bottles
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Logistical Packaging
Logistical or industrial Packaging is a critical element in the physical
distribution of a product, which influences the efficiency of the logistical
system. It differs from product Packaging, which is based on marketing
objectives. However, logistical Packaging plays an important role in damage
protection, ease in Material Handling, and storage space economy.
The unitisation of load has a major bearing on logistical Packaging with regard
to the Packaging cost. The load unitization method in UB is done by
palletization. Depending on the method of storage the pallet used in UB is two-
way entry pallet. These pallets are handled by forklift from two sides.
In UB the Packaging material (carton) used for FG are marked by instruction
which protect the FG from damage. Like on the side walls of the carton it is
written that how should be the way of placing the carton (“UP SIDE DOWN”).
UB follows a proper procedure of placing the cartons in the despatching
vehicles so that there is no chance of breakage or damages of the Finished
Goods which is an advantage of this procedure. They maintained a layout like
how many rows, how much the height, how many columns of the FG should be
in the vehicle. They maintained a document called CHECKING/DDESPATCH
SHEET (attached in the Annexure) where the checked the layout and approved
it after which the vehicle gets ready to despatch. Even there is a place of
recording the breakage material also in that document.
Another advantage of this layout is to reduce the mistakes that can happen
during counting of cartons loading on the vehicle.
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6.4 OUTBOUND LOGISTICS
6.4.1 WAREHOUSING
Warehouse:
Warehouses are used to Store goods, for varying amount of time, during their
journeys between point of production and to distribution centres. In logistics
and supply chain perspective, Warehouse performs the storing function, where
goods are Stored in bulk quantities and from there, a new and different small
assortment of goods is selected and moved forward to be dispersed to the new
level. Kalyani Breweries has their Warehouse in-plant where the Finished
Goods are Stored till they are transported to the distribution centres.
Bonded Warehouse:
A Bonded Warehouse is building or other secured areas in which dutiable goods may be Stored, manipulated, or undergoes manufacturing operations without
payment of duty. It may be managed by the state or by private enterprise. In the latter case accustoms bond must be posted with the government. This system
exists in all developed countries of the world.
Upon entry of goods into the Warehouse, the importer and Warehouse
proprietor incur liability under a bond. This liability is generally cancelled when the goods are: exported; or deemed exported;
withdrawn for supplies to a vessel or aircraft in international traffic;
destroyed under Customs supervision; or
Withdrawn for consumption domestically after payment of duty.
While the goods are in the Bonded Warehouse, they may, under supervision by
the customs authority, be manipulated by cleaning, sorting, repacking, or otherwise changing their condition by processes that do not amount to
manufacturing. After manipulation, and within the warehousing period, the goods may be exported without the payment of duty, or they may be withdrawn for consumption upon payment of duty at the rate applicable to the goods in
their manipulated condition at the time of withdrawal. In the United States, goods may remain in the Bonded Warehouse up to five years from the date of
importation. Bonded Warehouses provide specialized storage services such as deep freeze or bulk liquid storage, commodity processing, and coordination
with transportation, and are an integral part of the global supply chain.
The Bonded Warehouse of Kalyani United Breweries is under state excise. UB
has to pay an excise duty before exporting or despatching Finished Goods.
29
Depending on the despatching amount of Finished Goods UB pays the excise duty online in advance.
Warehouse specifications of Kalyani United Breweries:
The capacity of the Warehouse in terms of storing Finished Goods varies
from 1.20 lacks to 1.60 lacks.
The desirable stack height is triple stack but sometimes more than three stacks are manageable.
For 650 bottles there are 85 bottles on one pallet and 60 bottles for 330ml
bottles on one pallet. Each case contains 7.8 litres of Beer and weight of each case is about 13Kg.
The total space of the Warehouse is 2000 sq meter in which 20-25% is engaged for human and equipment moving. There are three forklifts in
the Warehouse of United Breweries, Kalyani each having 1 Ton capacity.
Daily about 50-55 vehicles are engaged for despatching the Finished
Goods. The vehicles are mostly of two types, one is of 9 ton and the other
type is of 16 ton.
One 9 ton vehicle or truck can accommodate 700 cases or cartons of Beer
whereas in 16 ton truck it is about 1200 cases or cartons.
TABLE 6: SKU (STOCK KEEPING UNIT)
Sl. No. BRAND NAME VOLUME
1 Kingfisher Premium Lager Beer 650ml 330ml
2 Kingfisher Strong Premium Beer 650ml 330ml
3 Kalyani Black Label Premium Lager
Beer
650ml 330ml
4 Kalyani Black Label Strong Premium
Beer
650ml
5 Kingfisher Blue Premium Beer 650ml 330ml
6 Kingfisher Draught Lager Beer 50 litres 30 litres
7 Kingfisher Supreme Strong Beer 650ml 330ml
8 Kingfisher Special Lager Beer 650ml
9 Kingfisher Blue Extra Premium Beer 650ml 330ml
30
Loading time for one truck is near about 45 minutes. Minimum two
forklifts are used for loading operation.
Each fork lift is capable of taking 1 ton Finished Goods. That is one
pallet consisting of 85 cases (85 cases*13 KG=1105 KG).
Kalyani United Breweries cater 6 states including WEST BENGAL.
The other states are BIHAR, JHARKHAND, ASSAM, NAGALAND, and MEGHALAYA.
Finished Goods despatching system:
FIFO System: FIFO is an acronym for First In, First Out, which is an abstraction related to ways of organizing and manipulation of data relative to time and prioritization. This expression
describes the principle of a queue processing technique or servicing conflicting demands by ordering process by first-
come, first-served (FCFS) behaviour: where the persons leave the queue in the order they arrive, or waiting one's turn at a
traffic control signal.
UB follows the same system defining it by a different name. They called it
GOBY system where G stands for Green, O for Orange, and B for Blue and Y for Yellow. The stock which comes first at Warehouse should be out first as it is
the oldest stock and this oldest stock is defined by a green card hanging from that particular pallet. Likewise the other colours that are orange, blue and
yellow are arranged according to their production timing priorities. The Yellow card is hanged from the pallet of Finished Goods which comes at the last.
Depending on the colour of the cards the Finished Goods are despatched.
The Warehouse management in United Breweries, Kalyani plant follows
perpetual inventory management system.
Perpetual inventory: Perpetual inventory or continuous inventory describes systems of inventory where information on inventory quantity and availability is
updated on a continuous basis as a function of doing business. Generally this is accomplished by connecting the inventory system with order entry and in retail
the point of sale system.
Perpetual inventory system implies maintenance of up-to-date stock records and
in its broad sense it covers both continuous stock taking as well as up-to-date recording Stores books. According to Weldon, It may be
defined as “a method of recording Stores balances after every receipt and issue to facilitate regular checking and to obviate closing down
31
for sock-taking”. The basic object of this system is to make available details about the quantity and value of stock of each item at all times. The
system thus provides a rigid control over stock of each item of Store can regularly be verified with the stock records in the bin cards kept in
the Stores and Stores ledger maintained in cost office.
Advantages of Perpetual Inventory system:
Saving in time: The long and costly work of stock taking is
avoided. Henc e, interim and final financ ial ac c o unts c an b e p rep ared with greater convenience.
Arrangement of proper verification: In this system a detailed and
more reliable checking of the Store is exercised because of the continuous and random checking.
Verification of Errors: Erro rs are eas ily lo c ated and rectified.
This gives an opportunity for preventing a recurrence in many cases.
Double control: Due to separate records in Bin card and Stores
ledger, double control is maintained.
Optimum size of material: Overstocking and under stocking can
be avoided because perpetual inventory system covers verification of
stock with regards to maximum, minimum and other levels.
Lack of misuse of Material: Under this system, effective control on issue of material is possible, thus misuse of material can be avoided.
Loss of stock due to obsolescence: It is detected at an early stage and
so timely action can be taken to prevent recurrence.
32
6.4.2 TAXATION
EXCISE: An excise or excise tax (sometimes called a duty of excise
special tax) is an inland tax on the sale, or production for sale, of
specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from
customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes.
There are three excise levies on Beer production and despatching.
1) Storage fee: This has to pay for all the production weather it is
exported within or outside of the state. This is fixed at 7.80 Rs per case.
2) Privilege fee: This fee has to pay for export production and for Draught Beer production.
For export production the privilege fee is Rs 0.60 per bottle and for Draught Beer it is 1.50 Rs per B/L.
3) Excise duty: This is applied on the MRP of each bottle ready for despatching. 21% of the MRP has to be paid for one bottle.
AN EXAMPLE:
For example if the price of a Beer bottle suppose 70 Rupees. Then the Excise Duty on that Beer bottle will be 21% of the MRP that is 70 Rupees.
Therefore it comes,
70.00 × 0.21 = 14.70 Rupees
Now if there is 700 cases of 650 bottle of 70 Rupees the total numbers of bottles
will be,
700 × 12 = 8400
Then the excise duty is,
8400 × 14.70 = 123480 Rupees
A note on Draught Beer: Draught Beer, also spelt draft, is Beer served
from a cask or keg rather than from a bottle or can. It is unpasteurised
Beer and it should be consumed within 48 hours.
Draught Beer mainly supplied in Bars, Hotels and Restaurants only in
Kegs.
The Keg volume is mainly 50 litres and 30 litres.
The Warehouse management in Kalyani Breweries follows perpetual inventory
management system.
33
6.4.3 DISTRIBUTION
Distribution refers to the development of arrangement necessary to transfer
ownership of a product and its transportation from where it is produced to
where it is finally consumed.
The distribution function involves two broad aspects:
Marketing channel management: Distribution channel can be defined as a set
of people and firms involved in the transfer of the title to a product as it moves
from producer to the ultimate customer or business user, Whereas marketing
channels are defined as sets of interdependent organisations involved in the
process of making a product or service available for consumption or use.
The marketing channel management involves many enterprises- primary
channel participants and specialised channel members .
Primary channel participants are the management intermediaries such as
distributor, wholesaler, agents, brokers, and retailers. They form a vital link
between the firm and the final user.
Specialised channel members include functional service providers. They are
generally the transport organisations who ship products from supplier to
customers of two different locations for a specific fee.
Outbound Logistics management: Outbound logistics management deals with
the last point of production to the point of consumption. It includes several
functions such as transportation, order processing, warehousing, protective
Packaging, inventory management, and related information and services.
Distribution strategy
Marketing channel
management
Outbound Logistics
management
34
The distribution channel In Kalyani United Breweries follows the same
management style as mentioned above. They engage transport organisation to
distribute the Finished Goods to the distributor Warehouse in different places.
Here distributors are the primary channel partners whereas the transport
organisation is the functional service providers.
Despatching Documentation:
Inform authorised transporters for placement of trucks for different
bonders for next day morning
Transporters bring the DO to the logistics department. A specimen of the
DO or Delivery Note is shown below.
FORMAT OF A DELIVERY NOTE:
Sl. no. 123 Delivery Order Date ……………………………
ABC GOODS CARRIERS PVT. LTD. 9, XYZ road, Kolkata – 123, (W.B.) INDIA
FAX: 123456 MOBILE: ……………………..
TO
United Breweries Ltd.
Kalyani, Nadia
Sir,
We are sending a vehicle no……………………………………………………… at your end.
Kindly supply us the followings:-
1. KBL Beer………………………. Cases
2. KFL Beer………………………. Cases
3. KFS Beer………………………. Cases
4. KBL (P) Beer………………….. Cases
5. KFL (P) Beer………………….. Cases
6. ………………………………………..
7. ………………………………………..
Yours Faithfully,
ABC GOODS CARRIERS PVT. LTD.
35
Logistics department attach Beer despatch sheet and vehicle inspection
check list mentioning SKU wise/Brand wise quantity to be loaded in the
DO to the specific bonder.
After loading the truck the FG department sends one loading slip
mentioning quantity loaded along with batch number to the logistics
department. A specimen of Beer Despatch Sheet and one Vehicle Inspection Check
List are shown below.
FORMAT OF A BEER DESPATCH SHEET
BEER DESPATCH SHEET UNITED BREWERIES LTD.
KALYANI UNIT DATE………………
NAME OF THE PARTY TRUCK NO. DESTINATION
BRAND QTY. BATCH NO. QTY MFD
Security In charge Packing In charge
36
FORMAT OF A VEHICLE INSPECTION CHECK LIST
UNITED BREWERIES LIMITED Vehicle Inspection Check List
SL. NO.: PLANT NAME: ____________________
Date: _________________________ Vehicle No: ________________________
Vehicle In Time & Date: ___________ Transporter: ________________________ Vehicle Capacity: ________________ Vehicle out Time & Date: ____________
Vehicle Type: (Open Body/Container) _______ Vehicle Indented For (Destination): _____
__________________________________
Inspection of Physical condition of the vehicle
1. Cleanness of the vehicle: clean/Dirty (please tick) 2. No. of tarpaulins in the vehicle: _______________ Nos. 3. Any bad odour from the vehicle: yes/no (please tick) 4. Insects/pest found on the vehicle: yes/no (please tick) 5. Floor/wall of the vehicle in the perfect shape: yes/no (please tick) 6. Rust/condense water on the floor & wall of the
Vehicle: yes/no (please tick)
7. wooden angles available with the vehicle: yes/no (please tick)
Remarks (if any):
________________________________________________________________________________________________________
Documents carried by the vehicle
1. Vehicle registration certificate: yes/no (no. __________)
2. Cross verification of vehicle chassis no. : yes/no (no.__________)
3. Verification of driving license: yes/no (no.__________)
4. Verification of vehicle pollution certificate yes/no (no. __________)
Remarks (if any):
______________________________________________________________________________________
______________________________________________________________________________________
Authorized signatory authorising signatory
Dated: SECURITY
37
Logistics department makes an invoice slip and gate pass on the basis of
the loading slip and sends it to the excise department.
FORMAT OF AN INVOICE SLIP
United Breweries Ltd. – Kalyani Vittal Mallya Road, Plot No:18, ‘D’ Block Kalyani, Nadia, WB, Kalyani – 741235
Regd. Office : UB Tower, Level 3,4 & 5Ub city, 24 Vittal Mallya Road, Bangalore-560001
Customer Name & Address No:
Lst/Tin No. & Dt Gate Pass No. & Dt:
Cst no. & Dt: Transporter:
Import Permit No: vehicle No:
Export permit No: Transport Permit No:
Excise Leaf No: LR/GC/LWB Note No. & Dt:
SL No. Item Description Unit Unit Rate Qty (Unites) Qty (litres) Amount(RS)
Amount in Words
We hereby certify that goods mentioned in this invoice are warranted to the off the nature and the
quantity, which they purport to be
For united Breweries ltd – Kalyani
Authorised Signatory
38
FORMAT OF A GATE PASS
On receipt of the Invoice excise department issues Transport pass
On completion of the documentation process, transporter goes to the FG
supervisor for scrutiny
After clearance of gate pass, security personnel allow the loaded truck to
release.
This is the total documentation procedure of despatching the Finished Goods.
United Breweries Ltd., Kalyani caters the eastern zone of India to fulfil their
demand. The states UBL, Kalyani serves including WEST BENGAL are
BIHAR, JHARKHAND, ASSAM, NAGALAND, and MEGHALAYA.
GATE PASS
PK OF 19
UNITED BREWERIES LIMITED
KALYANI DATE…………………
Please allow……………………………………………………………………………………………
Address…………………………………………………………………………………………………..
to take the following goods
Description of the Materials Invoice No Date Vehicle no Leaving Time
Signature
39
6.4.4 PRODUCTION AND SALES ANALYSIS
DEMAND ANALYSIS:
The consumption pattern of Beer in India has experienced a sharp increase. If w
the consumption pattern of Beer in West Bengal can be analyse the
consumption of Beer in India can be well assumed.
TABLE 7: DISTRICT WISE CONSUMPTION OF BEER (IN LAKH BL)
DISTRICT 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Bankura 7.25 8.23 13.449 15.415 14.484
Bhirbhum 5.83 7.63 13.218 16.342 16.713
Burdwan (East) 8.4 9.39 16.09 21.12 21.88
Burdwan (west) 28.1 35.11 52.291 52.185 40.688
cooch Behar 3.106 3.83 6.519 8.269 11.923
Dakshin Dinajpur 1.936 2.08 4.264 4.767 5.007
Darjeeling 16.86 21.3 35.616 35.737 44.234
Hooghly 22.99 22.99 42.926 49.469 52.658
Howrah 27.334 30.05 43.247 52.04 57.111
Jalpaiguri 7.07 9.8 16.94 18.983 27.526
Kolkata (North) 28.76 30.08 39.839 43.192 46.684
Kolkata (south) 38.72 39.54 47.121 51.706 51.227
Malda 5.39 7.62 13.281 17.324 21.002
Murshidabad 5.76 8.83 16.187 20.936 24.008
Nadia 10.451 13.09 23.902 28.662 32.177
North 24-Parganas 34.96 39.68 62.807 78.369 81.799
Purba Medinipur 19.52 23.88 38.705 51.389 58.749
Paschim Medinipur 19.086 21.13 33.73 39.819 42.556
purulia 6.874 7.72 11.444 16.527 13.642
South 24-Parganas 31.19 41.1 61.921 80.347 87.747
Uttar Dinajpur 4.883 6.49 10.64 11.795 14.674
TOTAL 334.47 389.57 604.137 714.393 766.489
SOURCE: UBL, KALYANI
40
LINE CHART (1) SHOWING CONSUMPTION PATTERN OF BEER IN
WEST BENGAL DURING THE PERIOD OF 2007 TO 2012
Demand analysis is basically the Study of sales generated by a good
or service to determine the reasons for its success or failure, and how its
sales performance can be improved.
Here the demand of Finished Goods is being represented graphically for a
particular year. By this the particular growth pattern of the demand of the
Finished Goods can be well observed.
The demand analysis was found from the PGP that is the Production generation
plan given the data for the year 2012-2013 from the month April’12 to
March’13. It is already been discussed that the PGP for any particular month is
sent by the corporate office at the end of every previous month so that the
material and production planning can be done smoothly. The PGP contains
brand wise, SKU wise and month wise demand pattern.
Due to space constraints the demand pattern of Finished Goods from different
states including West Bengal is attached up to the month August’12.
0
100
200
300
400
500
600
700
800
900
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
TOTAL
41
TABLE 8: YEAR WISE PRODUCTION AND DESPATCH SINCE LAST
9 YEARS
YEAR PRODUCTION DESPATCH
2003-2004 1833096 1855450
2004-2005 2005644 1994962
2005-2006 2158115 2144599
2006-2007 2169567 2106685
2007-2008 2455489 2460482
20038-2009 3576442 3612932
20039-2010 4620464 4606873
2010-2011 5430807 5435171
2011-2012 5071008 5064926
2012-2013 6188062 6117340
LINE CHART (2): GROWTH IN PRODUCTION AND DESPATCH
SINCE LAST 9 YEARS:
The growth pattern of production and despatch shows a steady growth over a
period of time. Earlier the growth in consumption of Beer in West Bengal has
shown. If we compare these two graphs then it is found that UB, Kalyani is
successful in fulfilling the demand growth.
UB, Kalyani has already made a new Brew House to increase the production
and to fulfil the increasing rate of consumption pattern. UB’s Beer production
has increased from 5 Lakh cases/ Month to 9 lakh cases/ Month approximately.
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
DESPATCH
PRODUCTION
42
TABLE 9: THE PGP IS ATTACHED BELOW
BRAND STATE APRIL MAY JUNE JULY AUGUST
KBL W.B. 3500 4500 4200 4200 4100
KBLP (330 ml.) W.B. 6600 8300 7600 6100 4500
KBLS W.B. 141000 173000 139000 107000 63000
KFL W.B. 10200 8900 9000 7900 5600
KFLP (330 ml.) W.B. 2400 2600 2400 2800 2500
KFS W.B. 269100 401000 375000 313000 272000
KFSP (330 ml.) W.B. 600 900 900 1000 600
KF BLUE W.B. 5100 5500 5000 4400 6400
KF BLUE (330ml.) W.B. 300 300 300 300 200
KFL (WB-BSF)
KFL C.S.D.(W.B.) 22000 24900 19300 20000 11200
SPL C.S.D.(W.B.)
KFS C.S.D.(W.B.) 4200 9100 6000 6300 3900
KF SUPREME BIHAR 140000 100000 225000
KFSUPREME(330ml) BIHAR 1000 2100
KF SPECIAL BIHAR 12200
KF SPECIAL (300ml) BIHAR
KBLS BIHAR 30000 25000
KFS BIHAR
KFL C.S.D.(BIHAR)
KFS C.S.D.(BIHAR)
KFS JHARKHAND
KFL JHARKHAND
KFS C.S.D.(JHARK'ND)
KFL C.S.D(J'KND-BSF)
KF BLUE ASSAM 3400 4400
KF BLUEP (330 ml.) ASSAM 100 200
KFS C.S.D.(ASSAM)
KF BLUE MEG'LAYA
KF BLUEP (330 ml.) MEG'LAYA
KFS C.S.D.(N'LAND)
KFL C.S.D.(N'LAND)
KF SUPREME JHARKHAND 30000 25000
KF SPECIAL JHARKHAND 2100
KF SPECIAL (300ml) JHARKHAND 400
KFSUPREME(330ml) JHARKHAND
KF BLUE BIHAR
KF BLUEP (330 ml.) BIHAR
KF BLUE ARUNACHAL
KF BLUEP (330 ml.) ARUNACHAL
KFDRT W.B. 600 600 600 600 500
TOTAL
6,40,100
6,44,200
5,69,300
6,03,600
6,68,400
Source: UB, KALYANI
43
Apart from other states if West Bengal is taken, then the percentage of demand
out of the total can be observed. Minimum 50 % of the total demand is coming
from West Bengal and there is a rule given by West Bengal excise that demand
of West Bengal must be fulfilled before fulfilling the demand of other states.
COLUMN DIAGRAM (1): THE DEMAND FROM WEST BENGAL IS
SHOWN GRAPHICALLY:
LINE CHART (3): GRAPHICAL REPRESENTATION OF DEMAND
ANALYSIS:
0
200000
400000
600000
800000
1000000
1200000
1 2 3 4 5 6 7 8 9 10 11 12
DEM
AN
D
total WB
TOTAL
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
De
man
d (
Cas
es)
44
From the above graph the seasonal effect can be analysed. The Beer
consumption pattern changes during summer and winter. In summer the
consumption of Beer increases. In the summer period that is from the month
April to the month June the graph shows the maximum demand level of Beer.
During monsoon (June to September) the demand level is moderate whereas it
falls sharply during winter (November to January).
This seasonal fluctuation has a very important role in logistics activities. Lot of
logistical challenges come with these fluctuations, and it is the role of the
logistics manager to maintain the stock and maintain the production process
during this period.
Challenges due to seasonal variability:
Raw material Procurement planning: This planning is very important as
there is no exact trend of demand. Demand fluctuates, so as the
Procurement planning. During peak season the Procurement of raw
materials should be well planned so that there is no stock out situation
came at the time of peak demand or stock surplus during off peak season.
So this is a challenge of the logistics department to plan the Procurement
amount of raw materials.
Even before the PGP comes in their hand if they can speculate the
demand of the coming period through the past demand trend analysis, the
situation can be well handled.
Maximum utilisation of resources: The utilisation of resources like
storage space, production house, manpower is one of the major
challenges during peak and off peak season. During peak season the
production house need to run at its full capacity whereas during off peak
season production becomes less. So then it’s a challenge to run the
production at its full capacity. The manpower which is one of the main
recourse of any organisation has to utilise at its fullest capacity.
Place utilization at Warehouse: The Warehouse of United Breweries,
Kalyani is a Bonded Warehouse. It has taken as a lease under West
Bengal excise. So an amount has to be paid under this scheme. So space
utilisation is an utmost challenge during peak and off peak season.
45
Vehicle scheduling: United Breweries, Kalyani plant does not possess
transports at their own. They engage transporters for distribution of
Finished Goods.
So a prior notification to the transporters about the coming demand
pattern is a good practice to avoid vehicle shortages.
Financial challenges: during off season the maximum Finished Goods
stock remains in the Warehouse, which involves cost (of the Finished
Goods), as the sale becomes less .
The Finished Goods have a specific shelf life (6 months), so if it is not
sold within a specific time period it can be spoiled.
INVENTORY MANAGEMENT
Inventories represent the aggregate of those items which are either, yet to be utilised/
consumed in the production of goods and services or held in the ordinary course of
business or in the process of production for sale (i.e. work-in-progress).
The principle items of inventories are as follows:
a) Raw Materials: These are those materials which have undergone no conversion whatsoever since their receipt from the suppliers. These items
include barley malt, sugar, hops, rice flakes etc.
b) Finished Parts/Packaging Materials: They may either be bought-out-parts
or piece parts.
Bought-out-parts are those finished sub-assemblies, or assemblies which are
purchased from the outside suppliers (for example Beer bottles). These
include standard parts as well as parts produced by the suppliers to the buyer’s
design (for example cartons, labels etc).
Piece-parts (work made part) are those parts which are manufactured at the
company’s own plant from the basic raw material.
c) Work-in-progress: They comprise of the item or materials in partially
completed condition of manufacture. Raw material becomes work-in-progress
46
after the first operation. Once the raw materials like malt, rice, sugar hops etc
enter the brew house for boiling they become work-in-progress material. Work-
in-progress material can also be found in the chilling silos, filling lines etc.
d) Finished Product: They are the final products ready to be shipped. Products
leave the work-in-progress classification and enter into the classification of
Finished Goods at the point of final inspection when they are ready for delivery
to the customer or to the Finished Goods Store. Beer enters the finished product
stage after the completion of the fermentation process and when desired quality
checks are done. After the fermentation process they are passed to the chilling
section, this is where a work-in-progress converts into Beer ready to be issued for
bottling.
Inventory turnover ratio:
In accounting, the Inventory turnover is a measure of the number of times
inventory is sold or used in a time period such as a year. The equation for
inventory turnover equals the Cost of goods sold divided by the average
inventory. Inventory turnover is also known as inventory turns, stock turn, stock
turns, turns, and stock turnover
The formula for inventory turnover:
The formula for average inventory:
The average days to sell the inventory are calculated as follows:
47
TABLE 10: PRODUCTION/ DESPATCH & STOCK DETAILS
(2012-2013):
[FIGURES IN CASSES]
MONTH OPENING STOCK PRODUCTION DESPATCH CLOSING STOCK
APRIL 20868 601816 607066 15555
MAY 15555 586389 600669 1127
JUNE 1127 606050 587599 19442
JULY 19442 601604 524479 96506
AUGUST 96506 536071 529582 102906
SEPTEMBER 102906 559910 564194 983897
OCTOBER 983897 497075 555054 40356
NOVEMBER 40356 459260 364831 134689
DECEMBER 134689 163415 142642 155375
JANUARY 155375 107993 175867 87368
FEBRUARY 87368 601662 557347 131584
MARCH 131584 866818 908010 89722
TOTAL
6188063 6117340
The price of the Finished Goods involves many factors. Like the cost involved
in production of that Finished Goods, cost involved in total Logistical
Activities, etc. apart from this there is Excise Duty that has to be paid to the
Government, Delivery charges, bottle Deposits, sales tax, etc.
But as price is not shared by UBL, KALYANI it has been assumed. Let the
price of a case is X including all the above mentioned costs. Now it becomes
easy to calculate the Average Inventory, Inventory turnover ratio and Average
Days to Sell the Inventory.
Inventory turnover ratio is used to measure the inventory management
efficiency of a business. In general, a higher value of inventory turnover
indicates better performance and lower value means inefficiency in controlling
inventory levels. A lower inventory turnover ratio may be an indication of over-
stocking which may pose risk of obsolescence and increased inventory holding
48
costs. However, a very high value of this ratio may be accompanied by loss of
sales due to inventory shortage.
TABLE 11: THE ITOR CALCULATION IS SHOWN IN A TABLE
BELOW:
MONTH AVERAGE INVENTORY INVENTORY TURN OVER RATIO
APRIL 182115 3.33
MAY 8341 72.01
JUNE 10285 57.13
JULY 57974 9.04
AUGUST 99706 5.31
SEPTEMBER 543401 1.04
OCTOBER 512126 1.08
NOVEMBER 87523 4.17
DECEMBER 145032 0.98
JANUARY 121372 1.45
FEBRUARY 109476 5.09
MARCH 110653 8.2
TOTAL
Inventory Turnover Ratio measures company's efficiency in turning its
inventory into sales. Its purpose is to measure the liquidity of the inventory. Inventory Turnover Ratio is figured as "turnover times". Average inventory
should be used for inventory level to minimize the effect of seasonality. This ratio should be compared against industry averages.
A low inventory turnover ratio is a signal of inefficiency, since inventory usually has a rate of return of zero. It also implies either poor sales or
excess inventory. A low turnover rate can indicate poor liquidity, possible overstocking, and obsolescence, but it may also reflect a planned inventory
build up in the case of material shortages or in anticipation of rapidly rising prices.
A high inventory turnover ratio implies either strong sales or ineffective buying (the company buys too often in small quantities, therefore the
49
buying price is higher).A high inventory turnover ratio can indicate better liquidity, but it can also indicate a shortage or inadequate inventory levels,
which may lead to a loss in business. From the above table it is found that during the month December the sale
became very less so as the inventory turnover ratio, again it was high enough in the month of May and June due to low average inventory which was a good
sign. But sometimes high inventory levels are unhealthy because they
represent an investment with a rate of return of zero. It also opens the company up to trouble if the prices begin to fall.
This are all the analysis that can be done based on the Data provided by UB,
Kalyani Plant.
50
Chapter 7
ANALYSIS & RECOMMMEDATIONS
After analysing the logistics activities, there are few problem areas especially in
the outbound logistics were found. If the problems can be solved then the efficiency can further be improved.
Bottlenecks in Warehouse:
There are three forklifts in the warehouse each having capacity of 1 ton. Minimum two forklifts are engaged for loading the Finished Goods on
the vehicles depending on the requirements. One engaged for stacking the finished goods after Packaging to the warehouse.
If any of the Forklift breaks down then the efficiency of the despatching
activity also goes down.
The floor is uneven. For that there is a chance of falling the cartons which
increases the damages.
Even due to this uneven floor and multiple handling of cartons rattling
happens which can increase the pressure of co2 in the bottle and the bottle can break.
Vehicle availability is a problem as UB doesn’t have their own
transportation system.
The excise pass is a hand written document which is very lengthy.
Recommendation:
Use of Forklift having capacity of 2 Ton, so that it can take two stacks at
a time.
Floor should be even.
Dedicated transporter is a solution of the above problem. Depending on
the demand frequency, load size if specific routes can be dedicated to
specific transporters then vehicle availability becomes smoother.
If the Excise pass can be generated through system instead of hand
written then it becomes a smooth and short process.
Store should be more organised.
Non moving particles should be cleared timely to prevent the space
wastage.
51
Chapter 8
CONCLUSION
I hope that organisation pay attention to various proposals and
recommendations suggested in the project.
By adopting some of these proposals the organisation may manage its
departmental activities in more efficient way.
52
BIBLIOGRAPHY
BOOKS:
“LOGISTICS MANAGEMENT”, 2ND EDITION BY V. V. SOPLE (PAGE 13
TO PAGE 16)
“MODERN CONCEPTS OF MATERIALS MANAGEMENT” BY S. C.
BHATTACHARYA (PAGE)
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http://www.scribd.com/doc/23322561/Final-Report-of-Inventory-Management-
111 (ACCESSED ON 2nd MAY, 2013)
http://en.wikipedia.org/wiki/Bonded_warehouse (ACCESSED ON 27th APRIL,
2013)
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http://en.wikipedia.org/wiki/Brewing (ACCESSED ON 3rd APRIL, 2013)
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