ROLE ROLE OF PACKAGI NG, I SSUE SUE S AND TRE TRE NDS I N SU SUPPLY PPLY CHAI N A PROJECT REPORT Under the guidance of Mr. K. Siva NageswaraRao
Submitted by DHANSHYAM V S MAHAVADI (Roll No.: 511110147)
In partial fulfillment of the requirement for the award of the degree Of MBA
IN Supply Chain Management
(2013)
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Acknowledgement
I take this opportunity to express my profound gratitude and deep regards to my guide Mr. K. Siva NageswaraRaofor his exemplary guidance, monitoring and constant encouragement throughout the course of this Project. The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark .
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Acknowledgement
I take this opportunity to express my profound gratitude and deep regards to my guide Mr. K. Siva NageswaraRaofor his exemplary guidance, monitoring and constant encouragement throughout the course of this Project. The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark .
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Bonafide Certificate
Certified that this project report titled ―ROLE OF PACKAGING,
ISSUES AND TRENDS IN SUPPLY CHAIN ‖ Is the Bonafide work of ―DHANSHYAM V S MAHAVADI ‖ 511110147
Who carried out the project work under my supervision.
Signature
Signature
Head Of Department
Faculty In Charge
Department of MBA
Department of MBA
Source One – AmeerpetSource AmeerpetSource One – Ameerpet Ameerpet HyderabadHyderabad
Submitted for the project viva-voce examination held on …………….. 3
Abstract CHAPTER 1:INTRODUCTION: Packaging—What It Is and Why We Need It Scope & Methodology of project
CHAPTER 2:The Role of Packaging in Supply Chain Management Explain value added role of packaging in SCM.
CHAPTER 3:INDIAN PACKAGING — AN AN OVERVIEW Key Statistics & Packaging Materials Used In Indian Industry Packaging—the Drivers, Trends and Issues in SCM
CHAPTER4: PROBLEMS ADDRESSED BY SUPPLY CHAIN MANAGEMENT Address different types of problem associated with SCM.
CHAPTER 5:LOGISTICS Introduction and information carrier in SCM& Conclusion of the Project.
CHAPTER 6:CASE STUDY Case study to explain role of packaging in SCM
CHAPTER 7:BIBLIOGRAPHY 4
Table Of Contents TITLE PAGE
………………………..……………………………………..….1
ACKNOWLEDGEMENT ………………………………………………………2 BONAFIDE LETTER ……………………………………………….……….….3 ABSTRACT …………………………………………………………..………….4 TABLE OF CONTENTS ………………………………………………..….…5-6 LIST OF TABLES ………………………………………………………….……6 LIST OF FIGURES ……………………………………………………….…......7 LIST OF SYMBOLS, ABBREVIATIONS AND NOMENCLATURE ….…...8 SUMMMARY OF THE PROJECT……………………………………………..9 CHAPTER 1:INTRODUCTION, OBJECTIVE&METHODOLOGY OF PROJECT…………………………………………………….10-17 CHAPTER 2:THE ROLE OF PACKAGING IN SUPPLY CHAIN MANAGEMENT………………………..…………………...18-25 CHAPTER 3:INDIAN PACKAGINGANOVERVIEW ……..…………… 26-41 CHAPTER 4:PROBLEMS ADDRESSED BY SUPPLY CHAIN MANAGEMENT…………………………………………….42-67 CHAPTER 5:LOGISTICSUNIT & INFORMATION CARRIER& CONCLUSION OF THE PROJECT………………..…….68-78 CHAPTER 6:CASE STUDY…….…………………………………….……79-86 5
CHAPTER 7:BIBLIOGRAPHY……………………………………………87-88
List Of Tables
Table 1 Logistic Function Table 2 Case Study
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List Of Figures
Figure 1: Identification of goods Figure 2: Basic transvection model Figure 3: Combinations of packages, goods, and facilities Figure 4: Growth Packaging Materials in India Figure 5: Supply chain Management through diagram Figure 6: Link between consumer packaging & SCM Figure 7: Movement of Product through different Channel Figure 8: Outsourcing Figure 9: Relationship Management Figure10: Logistic Unit Figure11:Relation between input & output.
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List of Symbols, abbreviations and Nomenclature
EDI: Electronic Data Interchange RFID: Radio Frequency Identification JIT: just-in time ECR: Efficient Consumer Response BPM :Business Process Management
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SUMMARY:
Packaging has a significant impact on the efficiency and effectiveness of retail supply chains, where improvements can be achieved through the adaptation and development of the concept of packaging logistics. In order to enable these improvements, models are needed that facilitate evaluations along the supply chain and show the activities involved in the packaging logistics process. The knowledge and awareness of the importance and potential of the packaging logistics activities along the supply chain is low. The concept of packaging logistics is explained, a systematic evaluation model from a packaging logistics perspective should look like. Finally, a conceptual analysis model for packaging logistics is presented. The operation of transportation determines the efficiency of moving products. The progress in techniques and management principles improves the moving load, delivery speed, service quality, operation costs, the usage of facilities and energy saving. Transportation takes a crucial part in the manipulation of logistic. Reviewing the current condition, a strong system needs a clear frame of logistics and a proper transport implements and techniques to link the producing procedures. The objective of the paper is to define the role of transportation in logistics for the reference of further improvement. The research was undertaken to assist logistics managers, researchers and transportation planners to define and comprehend the basic views of logistics and its various applications and the relationships between logistics and transportation. Packaging is an essential component of our modern lifestyle. Yet there is a lack of easily accessible and up to date information about the packaging industry and the major trends and issues affecting packaging. This project is designed to rectify this deficiency, and provide a background for the workshop Packaging Our World – Protect, Preserve, Contain, Inform. It provides an overview of the packaging industry; basic facts; key economic indicators; the structure of the industry; key drivers and influences; and environmental issues. The project is more than just a ‗factual‘ description of the industry as it stands at the beginning of this new millennium. We have
also sought to look ahead and address some of the major issues and trends likely to confront the industry in the next decade.
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CHAPTER -1 INTRODUCTION: Packaging — What It Is and Why We Need It
Packaging, in some form, has been in existence for centuries, the growth in its usage has beenparticularly rapid in the second half of the twentieth century in industrialized and developedCountries and, more recently, in many are developing countries. Packaging has evolved from a relativelysmall range of heavy, rigid containers made of wood, glass and steel to a broad array of rigid, semi rigidand flexible packaging options increasingly made from specialized lightweight materials. Today,packaging is produced more quickly and efficiently than ever before. It is generally lighter in weight,uses less material and is easier to open, dispense from, reseal, store and dispose.In India, packaging is an essential component of our modern life style. It touches every aspect ofour daily life. It is fundamental to the way commerce is organized. Without packaging, materialshandling would be messy, inefficient and costly, and modern consumer marketing would be difficult. Packaging is a dynamic force in our society. There have been profound changes in packaging over thelast 50 years — changes that have profoundly benefited our lives. We can now use packaging toextend the shelf life of products on our supermarket shelves. Packaging is now available to dispensethe correct dosage of medicine at the ‗right‘ time. We now have ‗smart packaging‘ in
whichmicrochips can be incorporated to provide information about the packaged product and, in the caseof food, facilitate supply chain management. Add to this the use of ‗intelligent packaging‘
andtime/temperature indicators can be incorporated to provide effective monitoring of product qualityfrom the producer to the consumer.Packaging uses a vast range of materials — adhesives, metals, glass, paper/board, plastics, films and Wood — either singly or in various combinations. The design range is also vast, ranging from tubes topouches, cartons to corrugated boxes to bulk containers, cans to bottles to drums. Add to thesematerials and shapes an equal range of colures and special techniques such as holograms and therange of options increases significantly.Consumer packaging has, by the time of its disposal, delivered significant benefits to the consumer. Ithas ensured the security of the product, delivered it 10
in a clean, safe and saleable form and preventedspillage and spoilage. It has delivered substantial economies and thereby kept prices down byfacilitating ease of handling, warehousing and distribution. Packaging has also reduced both theamount of solid waste going to landfill and the overall environmental impact associated with theproduction and distribution of goods which has been beneficial to society. Purpose, goals and objective of the Project
Packaging is an essential component of our modern lifestyle. Yet there is a lack of easilyaccessible and up to date information about the packaging industry and the major trends andissues affecting packaging in SCM. This Project is designed to rectify this deficiency, and provide abackground for the Role of Packaging in SCM as purpose of packaging – Protect, Preserve, Contain, and Inform. Itprovides an overview of the packaging role in transportation industry; basic facts; key economic indicators; thestructure of the industry; key drivers and influences; and environmental issues. We have also sought to look ahead and address some of the major issues andtrends likely to confront the industry in the next decade. Only time& situation will tell whether ourobservations and comments prove correct. I hope that this project provides some usefulinsights and information for the general community, Research Methodology
The study will be conducted in the following phases: Phase 1:
Assemble and organize the raw case data and information. There are three ways to collect data from a system: ask, observe, and use system documentation. In this research, all of these data collection methods were used. The information for the study has been collected from various sources. The data gathered can be categorized into primary and secondary data.
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Primary Data: Primary data are that is collected afresh and for the first time and is original in
character. It was collected through executive meetings, observation and discussion with concerned personnel. Secondary Data: Data that have been collected by some one else and which have already been
passed through statistical process. Company‘s annual reports, financial statements, performance
sheets, have also been consulted for deriving a lot of comparative statistical information. Phase 2:
Edit data, summarize the information and eliminate redundant data. There are four relevant tests relevant in evaluating the quality of any research study: construct validity, internal validity, external validity, and reliability. Phase 3: Developing a comprehensive collection of the information. Most important phase among the
four phases throughout the Project. A total performance measurement metrics will be developed. Phase 4:
Documentation of the study findings. Final write up and presentation on findings Packaging functions
There are different more or less overlapping classifications of the purpose or functions of packaging. Twede and Parsons (1997) describe the functions of packaging as providing 1) Protection, 2) Utility and, 3) Communication. Together the nature of these packaging functions may be used to analyse the value created by packaging. Stock and Lambert (2001:460-462) provide a more detailed classification of the logistical functions of packaging: 12
• Containment: enclosing the product • Protection: against the physical environment • Apportionment: translating the product into a manageable size • Unitization: represents groupings of products and/or secondary packa ging • Convenience: reduces waste through easier handling • Communication: carries readable logistics and product information
A package is a logistics resource, and the way packages are designed, used, and combined with other logistics resources (e.g. other packages, facilities, and information) influences their degree of utility. In relation to production, how packing and unpacking goods are carried out influences the overall efficiency of a logistics system (Lee and Lye 2002). Packages contribute to providing varying degrees of utility, thereby influencing how goods are transformed through logistics activities. Packages and Information about Goods
The final step is now to investigate how goods and information interplay through packages. Goods, information, and packages are resources that gain value through being combined in relation to managing and operating the flow of goods. The information system plays a key role in this process. Goods are identified based on documents provided through an information system. An information system connects, as discussed in section 2.2, a number of actors and provides these actors with an information content that is adapted to these actors‘ specific needs. The communicative functions of a package
The functions of packaging are all concerned with how packages are mainlyused for logistics and marketing objectives. The protection and utilityfunctions are concerned with the physical handling of the package. Thecommunicative function is associated with supporting the transformation ofgoods and providing information about goods that are used for otherpurposes, such as for promoting products. The two main logistical andcommunicative functions of a package may be described as (see Johanssonet al . 1997): 13
• An information carrier: information attached to the package itself, label, tag or other document
forms that are attached to the package. • As an information source: information concerning the package registered in other media forms
than the package, through documents either in an electronic or paper form. The function of the package as an information carrier is based on the physical presence of information on the package and this information is physically present when transforming goods. The function of the package asan information source is based on identifying the package or goods and isregistered in an information system. This is information about goods thatincludes time, location, and product form. The communicative function thusshows how the package is a link between the transformation of goods and aninformation system in the supply chain. Goods identification and adapting information for use through packages
When a logistics unit is identified, the information about the goods stored inthe information system in relation to their form and location is updated.Identification of goods through a logistics unit is only the starting point of awide range of activities where information provided through identifyinggoods is processed and communicated in a manner that is adapted todifferent actor needs. This is shown in below fig.
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Fig-1 This identification of goods represents an activity where the roles of thepackage as an information
carrier and as an information source transcendeach other. In order for an identification of goods to function properly, theinformation content in labels or tags on packages and in documents mustcorrespond through information carriers. The use of GS1 codes represents atool to increase the accuracy and efficiency of identification through automating these procedures. When goods are identified, they may beregistered into the information system creating new information content. Aspackages and goods may be classified into different levels, informationabout packed goods is also classified into different levels involving: • Information content: the description of the time, location, and form features of goods and
packages • Information carriers: the facilitators of the transformation ofinformation about goods, text,
numbers, and symbols including GS1codes. • Labels and documents (including RFID tags): facilitates the provision of information in a form
adapted to usage. • The information system: the overall facility within whichinformation about goods is received,
stored, adapted, andcommunicated to meet actor needs.Packed goods are transformed in a manner 15
that is different from that ofunpacked goods, and, therefore, information must be adapted to that of thepacked goods. When goods are packed, the borderline between goods andpackages may become fuzzy, especially when it is the logistics unit and notthe product that needs to be handled. Packed goods are identified usinglogistics units and informed about through a description of the packagingused. Packages thus influence how goods are transformed and howinformation is provided, adapted, and used in a supply chain. The role of thepackage as an information resource is also influenced by the fact that thetransformation of goods involves coordinating different logistics activitiestaking place in a sequential manner. Logistics units are, therefore, identifiedat different stages in the flow of goods. The next step is consequently toconsider how packed goods are identified and transformed in a supply chaincontext consisting of multiple actors exchanging information about goods. Research Model and Research Issues
The use of the package as an information resource is based on its function asa goods containment facility and provides the information to carry outlogistics activities. Information is provided ―through‖ packages and used―through‖ packages. The information system plays a key role in
facilitatingthe transformation of goods by providing the information needed to carry outlogistics activities. The question still remains regarding how information isadapted to the transformation of goods carried out through sequentiallyorganized logistics activities. Section 2.4.1 describes the transvection model(Alderson 1965) used to explain how goods are transformed in a sequentialmanner and how information is used to facilitate this sequentialtransformation. Finally section 2.4.2 presents more detailed research basedon this frame of reference. Transvection View of how Goods are Transformed
Goods are physical resources that have past, present, and future states. Theseaspects regarding the utility of goods are of importance when consideringhow to inform about goods in order to facilitate the transformation of goodsand potentially use this information for additional purposes. This involvescoordination, influencing, and learning both within the supply chain andoutside of the chain. As previously discussed, the past and present states ofgoods are registered based on 16
identifying goods through logistics activities,while the futures state is derived also through plans or orders. A model isneeded that takes into account how goods may be viewed in relation to itsdifferent temporal states and relate these states of goods to how informationabout goods is provided and used to sequentially transform goods and forother purposes.‖ The transvection describes the flow of goods as a step-by-stepprocess of different logistics activities, thus allowing for a ―…piecemealanalysis‖ (Alderson 1965:94) of the material movement and storage in thesupply
chain.he transvection is used here as a foundation to carry out a more detailed study of the flow of goods, including the idle periods of storage and how information is provided and used by actors responsible for controlling goods and assigning goods to logistics activities. The transvection describes a flowof goods as sequentially organised transformations of goods that arecontrolled and assigned through a decision-making event Alderson (1965)terms as ―sorts‖.A transvection gives therefore a detailed understanding of the features of theflow of goods as an activity structure. In a transvection goods may befollowed in a supply chain from the state of conglomerate resources, throughlogistics transforming the goods and placing a product in the hands of anend-user as shown in below fig.
Fig-2 The basic transvection model (circles indicate sorts while arrows show transformation of goods)
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CHAPTER -2 The Role of Packaging in supply Chain Management:
Packaging has been defined as ‗all products made of any materials of any nature to be used for thecontainment, protection, handling, delivery and presentation of goods, from raw materials to Processed goods, from the producer to the user or the consumer ‘. The ultimate test of packaging
iswhether or not it performs its essential task — to contain, preserve and protect the product and toprovide information about the contents of the package. In the past, this functional aspect of the role of packaging — preservation and product security — hasbeen taken for granted by the general community. This has changed in recent years with a number ofincidents in India involving the willful tampering and despoliation of packaged products. Productsecurity is now a major global issue for all companies involved in the packaging supply chain.Product security is just one example of the increasing demand being made of packaging. Thesedemands are being driven by consumers, business pressures, a range of social and demographicchanges, technological innovation and the need to respond to environmental concerns.Consumers are certainly demanding more from packaging — convenience, differing product sizes,easy opening (but also child resistant closures and tamper evident) devices, respect for theenvironment, and minimal cost for packaged products. Convenience foods, individually packed smallserves, microwavable meals, ‗easy‐opening‘ packaging, Home Meal Replacements, secure
packagingfor pharmaceuticals and hazardous substances are all examples of packaging playing a role inassisting and promoting our lifestyles.Packaging has an important marketing role. It is the ‗flag bearer‘ of branded products. Packaging playsan important role in differentiating competing
products and can be decisive in influencing thepurchasing choice made by consumers. The package as a deliverer of brand equity has to work notonly on the retail shelf but ‗online‘ as well.
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Value Add: Role of packaging to check counterfeits of pharmaceuticals
An accepted fact — Packaging of a brand enhances consumer experience with the brand. But till date the only function, packaging of Pharmaceutical product served was to carry product and product information while keeping it stable, till it is consumed. However, Packaging is now being provided with a new function check Counterfeiting. Counterfeit packaged products as commonly understood means producing products and packaging similar to the originals and selling the fake as authentic products. Counterfeit product is an imitation which infringes upon a production monopoly held by either a state or corporation. Goods are produced with the intent to bypass this monopoly and thus take advantage of the established worth of the precious product. It is important to know, as it's a loss at both the ends. (to consumer and to company). As ailments which could be remedied by genuine products may go untreated or worsen. Now, new technologies are being and have been identified to make packaging more counterfeit proof, at all the stages of supply chain, or virtually almost everywhere. Technologies to fix the problem: Overt features are intended to enable end users to verify the authenticity of a pack. Such features will normally be prominently visible, and difficult or expensive to reproduce. Tamper evident packaging systems
Holograms: Holograms and similar optically variable devices (OVD) can be made more
effective when incorporated in a tamper evident feature, or as an integral part of the primary pack.
Film wrappers : A transparent film with a distinctive design is wrapped securely around a
product or product container. The film must be cut or torn to open the container and remove the product.
Shrink seals and bands: Bands or wrappers with a distinctive design are shrunk by heat or
drying to seal the cap and container union. 19
Covert (Hidden) features : The purpose of a covert feature is to enable the brand owner to
identify counterfeited product. The general public will not be aware of its presence nor have the means to verify it. A covert feature should not be easy to detect or copy without specialist knowledge, and their details must be controlled on a ‗need to know‘ basis Bar codes: These are high-density linear or 2 dimensional bar codes incorporating product identity
down to unit pack level, which are scanned and referenced to the central database nano-printing substrate technologies allow
microscopic application of UV inks allow invisible printing onto any substrate including glass vials and ampoules
Unique surface marking or topography : There are several methods for applying a pseudo-
random image to each item in a batch, such as a pattern of lines or dots in one area of the carton, and then scanning the signature into the batch database via secure algorithms, for later authentication Packaging designs as security devices:
Induction : A process where heat is applied just where needed, around the edge of the
aluminum foil inner liner. As a sustained downward pressure of 50-150 phi) is exerted on the cap, an electronic
b) Conduction Foil closures are stamped from a roll of foil/polymer laminate and fed into the chute.
Secure packaging tapes : A simplest features providing Tamper evident and theft protection
at the level of secondary packaging, boxes and logistics containers. The secure packaging tape is equipped with a highly aggressive adhesive and features a unique design
Paper labels with security cuts : The substrate used for these labels is ordinary
coated/uncoated paper. The security features are built in by the label printer at the converting stage. With the help of a special cutting die the face material is given cuts at various angles so that any way one tries to remove these labels the paper will tear off.
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Void labels and tapes : These are perhaps the most important of the tamper evident security
labels. These substrates have text built into them and when as a self adhesive label they are removed, they exhibit the word VOID both in the removed film and the adhesive layer left behind.
Self destructing paper label : These labels are very similar to destructible labels mentioned
earlier. Only in this case the substrate used is a very weak strength paper of low programme. This paper is also heavily loaded with fillers creating a weak and brittle paper. Labels made from such papers fragment into pieces when attempted to be removed
Holographic labels : These labels form a very large and important part of the security label
market and are an ideal choice for product authentication. The optical interaction of the holographic image and the human eye makes it ideal for brand promotion and security. These products reveal the holographic image when tilted in light. The image so revealed can be customised to the need of the brand owners to make the maximum impact Water mark : These are marks that we can see as an image in the paper when we hold it against
light. These are also built into
the paper at the paper making stage in a paper mill. Again here the volume has to be large enough to justify incorporating the markings in the paper making process. However, some converters do print these with inks where security requirements are not of a very strict nature.
RFID: An RFID tag comprises of an antenna with a microchip at its centre. This contains
item- specific and batch information which can be interrogated at a distance, and without requiring line of sight. RFID is a fast emerging technology poised for rapid growth. It maintains confidentiality and ensures that no unauthorised user access to the information. Integrity is observed by giving accurate and complete data and the information will be available whenever needed. Accountability is covered as prescribed. Access is followed by an authorised user. RFID has the potential to greatly enhance many aspects of healthcare and patient safety.
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A recent analysis reveals that the RFID in healthcare and pharma application markets earned revenue of e 306 million in 2004 and estimates to reach e 1'916.6 million in 2011. Hence we conclude an RFID — containing package maintains all the components of information security and provides Product safety and Brand protection. Three essential components in any RFID system are: the tag, the reader and the software. The tag is an Integrated circuit containing a unique tracking identifier, called an electronic product code (EPC), which is transmitted via E.M. waves in the radio spectrum. The reader captures the transmitted signal and provides the network connectivity between tag data and the system software. The software can be tailor made for the purpose of anti-counterfeiting. A multilayer laminate where the top layer is paper and the chip is sandwiched between the top layer and foam is adhesive coated and laminated to a release liner. The foam in the laminate provides a flat surface for printing on top as otherwise the printing would not be possible on the uneven surface formed as a result of insertion of the chip. a)Passive tag: When RFID tag is within the interrogation zone of the reader (ie. interrogator)
equipment; sufficient power is extracted from the interrogator to power up the tag or circuit, or a special reflective material. It then responds by transmitting data back to the interrogator. b)Active tag: Such tags incorporate a battery to increase range for collating data, tag to tag
communication, etc. But these are much more expensive. c) Semi-active tag : In these tags battery is used to back up the memory and data, but not to boost
the range. With some active RFID tags, the battery is only used when interrogated or when sending a homing pulse at fixed intervals to reduce cost and size. Packaging interdependence with successful logistics
The damage rate of products is one way of describing the supply chain performance in different markets. The packaging materials and designs that are needed will be influenced by consumer/customer demands and handling, storage and transport conditions. The hazards and loads in a logistic system/supply chain will in turn be influenced by packaging design and handling 22
methods as well as products. Let me give an example: A sack holding 50 kilos will be handled differently from a sack holding 10 kilos. The heavy sack may be put on a man‘s shoulder, carried to
the point of destination and there dropped there on the floor, while the 10-kilo sack will be thrown between the men handling the sack. If the product had been packed in a corrugated board box, the handling method would consequently have been selected differently probably some kind of tool, such as a trolley, would be used. The consequence is that the product as well as the type of package chosen and the handling, storage and transport will influence the supply chain efficiency and effectiveness and subsequently the company profit. Thus there is interdependency between packaging design and supply chain design. It is my conviction that a packaging designer needs logistics knowledge and a logistician needs packaging knowledge. Today this is seldom the case beyond some shared common know-how as described above. In a competitive market place, the consumer/customer views are important. More and more companies have the goal of making their organisations consumer/customer oriented to ensure that their businesses will be successful because they meet customer needs and expectations at the same time as they create customer values. But it is not only the final consumer/customer that counts but all the actors from ―cradle to grave‖. I can illustrate the importance of considering all actors along
the chain (sometimes called the total customer) by looking at the development of the retail business in the Western world. The competition has developed new retail structures in many countries and altered supply systems. It has often aided retailers to gain power and control over the supply from manufacturers, producers and wholesalers and made it possible to stipulate transport, handling and packaging. Just take Wal Mart and IKEA as examples. Some of their logistics changes have been driven by legal requirements on safe handling as well as the producer‘s responsibility for used materials. Others have been influenced by new views on food products and their health aspects. Still other changes depend on volatile consumer/customer demands and requirements. New products are also developed by both manufacturers and retailers. The retailers are very sensitive to consumer/customer demands and make sure they have supply chains that can handle changes smoothly and easily (Gustafsson et al, 2006) Many companies will, of course, continue to survive in the short term with outdated views and 23
philosophies on packaging and supply chains in this world. But I believe that the companies that will be most successful in the long run are those that actually pay a great deal of attention to improving, enhancing and developing every aspect of the supply chain. Over time attention to details in the different phases or steps in the chain will provide a winning advantage on service and costs. To become successful I believe it is necessary for product developers, manufacturers as well as distributors to pay attention to both the packaging needs, designs as well as supply chain design – to continuously improve the details to meet the different requirements in different steps. Continuous attention to details is often more important and successful in accomplishing cost saving than major changes carried out on just one occasion. I have participated in studies that show that an expansion into new formats and forms of retailing or deliveries to assembly lines only has been possible because the companies have developed detailed knowledge about the supply chain, logistics and packaging requirements. One example: Tesco in the UK has developed a very interesting fresh food products and sales expansion by paying attention to details to provide packaging that makes it possible to keep the required food product temperature on an even level through the whole supply chain (Gustafsson et al, 2006). Another example is IKEA. The basic idea of flat packages was almost lost for a number of years. The designers forgot that the products had to be transported and handled from production to the customer homes. Today IKEA has people in several places in the organisation with the sole task of ensuring a product development, including the supply chain process that guarantees the utilisation of the flat packaging concept. They pay great attention to packaging and have shown in figures that it positively influences their business (Klevås, 2004, Gustafsson et al, 2005 a). According to Paine (1981:215), ―…packaging is an economic activity whichplays an important part in the production and distribution chain of themajority of goods.‖ Also, ―…the functions of any
packaging will bedependent on the item to be contained and the method by which it is to be transported from the manufacturer to the consumer‖ Paine (1981:20). Thetwo vital physical
interfaces of the package are the goods contained in thepackage and the facilities that contain or handle the package. Facilitieswhere the package is used to store and handle goods include storage rooms,material handling equipment, and information system equipment such ascomputers, printers 24
and scanners.Packaging standards help increase the degree of match betweencombinations of packages, goods, and facilities. How packages, goods, andinformation are combined and used in relation to human resources varies andalso influences the efficiency of logistics activities. This interplay aimed at providing goods to an end-user is shown in the figure:
Fig-3 Types of Packaging used in Supply Chain:
Traditionally, three broad categories of packaging have been identified: 1) Consumer packaging or primary packaging i.e., packaging which constitutes a sales unit tothe final user or consumer at the point of purchase. 2). Grouped packaging or secondary packaging i.e., packaging which constitutes, at the point ofpurchase, a grouping of a certain number of sales units, whether the latter is sold as such tothe final user, or consumer, or whether it serves only as a means to replenish the shelves atthe point of sale. It can be removed from the product without affecting its characteristics. 3). Transport packaging or tertiary packaging i.e., packaging designed to facilitate handling andtransport of a number of sales units or grouped packaging in order to prevent physicalhandling and transport damage. Increasingly, manufacturers are looking to merge — or better co‐ordinate — the functions performed by these levels of packaging in order to reduce costs and facilitate good presentation. Packaging suppliers are helping to develop innovative ways to achieve this with the total cost being less than the sum of the original parts and with functionality either unimpaired or improved.
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CHAPTER -3 INDIAN PACKAGING — AN OVERVIEW KEY STATISTICS
The value of packaging produced in India is estimated to be $ 10 – 10.5 billion. By International standards the India market is extremely small. The value of wo rld Packaging is estimated to be $ US300 billion.
The India industry accounts for slightly in excess of 1% of GDP.
About 30,000 people are directly employed in the production of packaging in India.
The two major packaging manufacturers in India are Indian owned as are a Substantial proportion of small and medium enterprises (SME).
Generally, most packaging produced in India (as elsewhere) is a high volume/low margin business.
‗Value added‘ packaging is where the margins (and costs) are higher. The drivers for
suchpackaging are, however, often in conflict with, and subordinate to, the pressures for cost reductions. PACKAGING MATERIALS
The major packaging materials used in India are glass, metals (aluminium and steel), paper/board(cartons and corrugated), and plastics (HDPE, PET, PVC, polypropylene and polystyrene). Paper/boardpackaging is the largest single material constituting about 36% of the total Indian packagingmarket. Plastics has gained significant market share to be the second largest sector (30%), withflexibles increasing at the expense of rigid plastics. (In the early 1960s plastics had less than 10% ofthe share of the packaging market.) Metal packaging has lost market share in food applications butstill accounts for 20%, with glass at 10%. Other types of packaging make up the remainder .
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Graph-1
PACKAGING INDUSTRY
Size matters in the business of packaging. Concentration and consolidation have been a feature ofthe Indian packaging industry over the last decade. The degree of concentration of the Indian Packaging industry can be seen from the following:
Glass containers: There are now two glass container producers in India (Gujrat) commenced
producing wine bottles from its Gawlerplant in South India in mid2002.
Corrugated boxes: Three companies (Amcor, Visy) account for over 95% of the production of
corrugated boxes.
Aluminums cans: Two companies (Amcor and Visy) produce all the aluminums can manufacture in
India.
Liquid
paperboard
cartons: Tetra
Pak
and
Visy
produce
all
the
liquidpaperboard
cartonsmanufactured in India.
Steel cans:There are approximately six companies producing steel cans/drums/aerosol
Containers/general line in India (Amcor) National Can, and Visy). 27
Plastics: Overall, the least concentrated packaging material sector (with the lowest barriersto entry),
although in some sectors e.g., the manufacture of PET bottles, there are just a few producers. Why is this trend towards concentration occurring? It is not unique to India. The manufacture ofconsumer products is an increasingly global business. The largest users of Indian packaging are,increasingly, multinational companies or India based companies with significant export marketswho demand that the price and quality of Indian packaging meet international standards. Thishas led to rationalization of the manufacture and purchase of packaging and has compelled Packaging suppliers to think in terms of similar enlargement.
Will this trend continue? Overall, the answer is yes but with some important qualifications:
Consolidation is most likely in the plastics sector where there are still numerous smalloperators. In many of the other sectors listed above, concentration has probably reached its limit withonlytwo producers and with the competition authority, the ACCC, not likely to approvemergers or acquisitions by one of the other. According to conventional wisdom, the future in the packaging manufacturing sector lies with thelarge, globally focused companies on the one hand, and small, agile, innovative companies on theother. Those caught in the middle are vulnerable. Despite the concentration and consolidation in the industry, competition between companies and material types remains intense. Competitive pressures are produced by imports, competition fromalternative packaging types and the demands by the major users of packaging that Indianpackaging meet international best practice standards. The Indian packaging industry has been criticised from time to time for being uncompetitive — high cost and poor in terms of innovation. Much of this criticism lacks substance and is self ‐serving.Nowadays the Indian packaging industry is outward looking and export oriented to anunprecedented degree. Like most manufacturing industries in India, some parts of the packagingindustry suffer on account of scale. This means that the discounts attainable from long productionruns are probably.
28
Packaging — the Drivers, Trends and Issues in SCM
Following are some of the major trends and influences that will affect the packaging supply chainover the next decade: Electronic business processes
Electronic technology is having the most effect in business‐to‐ business (B2B) rather than in businessto‐consumer (B2C) relationships. Speed to market is crucial. New products are being developedfaster and entering the retail market much more quickly. Electronic business processes are linkingthe entire supply chain — raw material suppliers, packaging manufacturers, packaging users, retailersand consumers. This provides immediate and accurate information, reduces costs and time delays,simplifies logistics and inventory operations and provides a better response to consumer demands.Packaging customers now have online access to their suppliers' manufacturing logistics systems andvice versa. This enables relatively seamless progress from initiation of product requirements throughto order placement, manufacturing, delivery, invoicing and distribution. The increasingimplementation of packaging optimization software will dovetail with developments in logisticstechnology to increase total pack efficiency. Deliveries within the logistics chain will becomeincreasingly complex, with direct store delivery, central warehousing, distribution centre‘s,
productpicking and robotic scanning. The role of the logistics professional will become increasingly importantto the packaging industry. Supply chain management (SCM) is the management of a network of interconnected businesses
involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply chain management spans all movement and storageof raw materials, workin-process inventory, and finished goods from point of origin to point of consumption (supply chain). Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."Supply chain management 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 29
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 while maintaining necessary product availability.
Fig-4 Within the organization, the supply chain refers to a wide range of functional areas. These include Supply Chain Management-related activities such as inbound and outboundtransportation, warehousing, and inventory control. Sourcing, procurement, and supply management fall under the supply-chain umbrella, too. Forecasting, production planningand scheduling, order processing, and customer service all are part of the process as well.Importantly, it also embodies the information systems so necessary to monitor all of theseactivities. Simply stated, "The supply chain encompasses all of those activities associated withmoving goods from the raw-materials stage through to the end user."
Advocates for this business process realized that significant productivity increases couldonly come from managing relationships, information, and material flow across enterpriseborders. LaLonde defines supply-chain management as follows: "The delivery of enhanced customer and economic value through synchronized management ofthe flow of physical goods and associated information from sourcing to consumption." 30
As the "from sourcing to consumption" part of our last definition suggests, though, achievingthe real potential of supply-chain management requires integration--not only of theseentities within the organization, but also of the external partners. The latter include the suppliers, distributors, carriers, customers, and even the ultimate consumers. Increasedshare, in turn, brings with it competitive advantages such as lower warehousing andtransportation costs, reduced inventory levels, less waste, and lower transaction costs.The customer is the key to both quantifying and communicating the supply chain's value,"If we can start measuring customer satisfaction associated with what a supply chain cando for a customer and also link customer satisfaction in terms of profit or revenuegrowth,"
Fig-5
The best companies around the world are discovering apowerful new source of competitive advantage. It's calledsupply-chain management and it encompasses all of thoseintegrated activities that bring product to market and createsatisfied customers. The Supply Chain Management Program integrates topics frommanufacturing operations, purchasing,
transportation,
andphysical
distribution
into
a
unified
program.
Successful
supplychainmanagement, then, coordinates and integrates all of theseactivities into a seamless process. It embraces and links all ofthe partners in the chain. In addition to the departments withinthe organization, these partners include vendors, carriers, thirdpartycompanies, and information systems providers.
31
Fig-6
All companies in the supply chain are under constant pressure to drive down costs, including the cost of packaging. At every point in the supply chain, costs are added. Reducing those costs, simplifying the supply chain and increasing efficiency is now a major goal. Economies and competitive advantage are to be gained from a more integrated, collaborative, co‐operative and long‐term approach to the supply chain by the companies involved.
32
What is the importance of Supply Chain Management
In the ancient Greek fable about the tortoise and the hare, the speedy and overconfidentrabbit fell asleep on the job, while the "slow and steady" turtle won the race. That mayhave been true in Aesop's time, but in today's demanding business environment, "slowand steady" won't get we out of the starting gate, let alone win any races. Managers thesedays recognize that getting products to customers faster than the competition will improvea company's competitive position. To remain competitive, companies must seek newsolutions to important Supply Chain Management issues such as modal analysis, supplychain management, load planning, and route planning and distribution network design.Companies must face corporate challenges that impact Supply Chain Management suchas reengineering globalization and outsourcing.Why is it so important for companies to get products to their customers quickly? Fasterproduct availability is key to increasing sales, says R. Michael Donovan of Natick, Mass. 33
a management consultant specializing in manufacturing and information systems."If we can be there first, we are likely to get more orders and more market share." The ability to deliver a product faster also can make or break a sale. "If two alternatives [products] appear to be equal and one is immediately available and the other will be available in a week, "Supply Chain Management has an important role to play in moving goods more quickly to their destination. " Convenience packaging
Consumers are demanding a wider range of products and greater segmentation (by size, flavour)within those products. Convenience/quick preparation foods providing smaller/single serve portions are in demand. Pre‐cut, pre‐ portioned, smaller, ready‐to‐consume products are increasingly popular, reflecting the importance of convenience to today's consumers. Packs that are easy to open, dispense, reseal and store. Convenience packaging goes beyond the essential purpose of preserving and protecting the product. Consumers want conveniently packaged food products that can be quickly made into meals without sacrificing quality. This is obvious in the range of products displayed in supermarkets — microwavable products, salad kits, zippered pouches and modified atmosphere packaging — thatextends shelf ‐life and maintains freshness. A by‐ product of this demand will be an increase in the amount of packaging per food unit. Marketability
Packaging sells products. Many of the trends listed above — lifestyle changes, greater productdifferentiation, and competitive pressures — are putting an even greater premium on the look, salesappeal and quality of retail packaging. Greater versatility of product presentation will also be called for as an expression of the increasingly diverse and sophisticated demands of consumers. There will be an increasing demand for higher quality graphics and promotional links between graphics and advertising.
34
Packaging for an ageing population- The proportion of the elderly (over 65 years) is expected to
increase to 22% of the population in the first half of the century compared with the current 12% approximately. The ‗graying‘ of the
Indian population will increase the emphasis on the provision of easy ‐opening systems,consistent with ‗tamper evident‘ closures. Readability of labels for the aged and visually impaired willalso
require attention in the designing and labeling of packaging. Given their numbers and affluence,marketing will reflect this changing composition of the popu lation. Other demands
The list of demands made on packaging will also include the following:
Freshness — while consumers want convenience, they also want freshness. In the United
States and Europe, sales of products in modified atmosphere packaging are increasingsignificantly. Other products to extend shelf life are also gaining ground.
Tamper Evidence — The demand for tamper evident packaging will increase ‐ that is,packaging
which possesses a barrier to entry which, if breached or missing, will provide visible evidence to consumers that tampering had occurred.
Labeling — the
demands
on
labels
to
provide
information
will
increase.
Instruction
details,nutritional information, promotional material, bar ‐coding, environmental aspects, etc., will all need to be included on a standard label. There is ‗tension‘ between these drivers with some pushing in opposing directions:
There is some evidence to suggest that the range of packaging materials used bycompanies may be growing less compatible with existing post‐consumer recyclingservices.
The environmental and commercial demand for reduced packaging needs to be balancedagainst the paramount requirement for product security which can lead to an increase inpackaging e.g., tamper evident devices.
While commercial and environmental pressures are requiring a reduction in the amountof packaging, the requirement for convenience/quick preparation foods which areindividually
35
packaged in single or small serves is increasing and, in turn, is leading to anincrease in the amount of packaging per food unit.
The requirement for ‗easy‐opening‘ packaging can, at times, conflict with the demandthat some
products need to have child resistant closures.
The requirement for packaging to be more sophisticated and meet a range of needs isalso leading to an increase in cost. The Environment
For several decades the environment has been a major issue for packaging companies. All packagingmaterials have their environmental pluses and minuses. A self regulatory Environmental Code ofPractice for Packaging has been in operation for many years and has recently been reviewed andupdated. It is designed to provide companies with practical guidelines to evaluate the impact of newand existing packaging. The driving forces behind the prominence of environmental issues forpackaging are threefold — consumers, commercial factors and governments.
Consumers are showing more interest in the environmental credentials of the products theybuy and
the companies they buy from.
Commercially , supply chain factors are playing a role as companies respond to theenvironmental
challenge. Some retail chains have banned what they consider to beenvironmentally unacceptable packaging such as polystyrene boxes. There will be more, notless, of this type of action from retailers around the world. They are responding to pressurefrom their customers and from governments. Commercial reality will ensure that it will becomparatively rare for a company to package a product deliberately with more packagingthan is necessary thus increasing cost and, thereby, making the product less competitive.
Governments around the world, particularly in Europe but more recently in North Asia,
havetargeted packaging for environmental legislation. Government measures have ranged fromcontainer
deposits,
packaging
levies,
bans
on
certain
types
of
packaging
and
mandatingrecycling rates. Pressure to introduce similar measures was undoubtedly building in the1990s. The PCA decided, therefore, that in conjunction with government it would commencenegotiations on a national packaging covenant. 36
The National Packaging Covenant
The first National Packaging Covenant was launched in August 1999. This Covenant was extensivelyreviewed in 2004 and revised in response to the findings of evaluations and a general agreement bystakeholders that the model needed to be significantly strengthened if it was to continue. A new andstrengthened Covenant became effective in July 2005 and incorporates changes made to achievesubstantially improved performance. There are now over 450 signatories, of which over 400 are companies and industry associations inthe packaging supply chain. All Indian, State, Territory (with the exception of the NorthernTerritory) and Local governments are signatories to the Covenant. Local Government organizations from all States except Jammu & Kashmir Ka shmir are also signatories. An up to date list of Covenant signatories, together with the text of the Covenant and supportingregulatory safety net (the NEPM), can be found on the Packaging Council of India homepage. The Covenant is the voluntary component of a co‐regulatory arrangement for managing theenvironmental impacts of consumer packaging in India. It is an agreement based on theprincipals of shared responsibility through product stewardship, between key stakeholders in thepackaging supply chain and all spheres of government. Previous environmental policy for packaginghad focused on packaging materials rather than the entire packaging supply chain. The Covenant is designed to minimize the environmental impacts arising from the disposal of usedpackaging, conserve resources through better design and production processes and facilitate the reuseand recycling of packaging materials. The
Covenant
establishes
a
framework
for
the
effective life
cycle
management
of
consumerpackaging and paper products that will be delivered through a collaborative approach between allsectors of the packaging supply chain, consumers, collectors, reprocessors and government. The strengthened National Packaging Covenant has a term of five years (2005‐10) and incorporates anumber of changes designed to provide a more rigorous compliance and enforcement process including:
37
Recycling
Companies in the packaging supply chain have a long history of actively supporting recycling,including the kerbside collection system. They have also invested heavily in recycling infrastructureand the buy back of recyclates. The use of recycled content in packaging is now widespread. Recycledpackaging is also used to make a variety of other (non‐ packaging) packaging) products. Companies in thepackaging supply chain will continue to make significant investments in capital infrastructure forrecycling. Assessing the effectiveness of different recycling systems and the environmental impact of differenttypes of packaging is a complex task. While recycling is widespread and popular it is not the sole testof the environmental credentials of all packaging. The first study conducted by the NationalPackaging Covenant Council was an ‗Independent Assessment of Kerbside Recycling in India‘.Among the conclusions of this Assessment were the following:
Under the new National Packaging Covenant, an overarching recycling rate of 65% (currently 48%) has been agreed by b y Ministers by 2010, with contributions from:
‐ Paper and cardboard 70‐80% (currently 64%) ‐ Plastics 30‐35% (currently 20%) ‐Aluminum 70‐75% (currently 64%) ‐ Steel 60‐65% (currently 44%) ‐ Glass 50‐60% (currently 35%) ‐ Other materials 25% (currently 10%) ‐ No further increase in the amount of packaging waste disposed to landfill In short, recycling will remain a prominent issue for companies in the packaging supply chain
38
The Outlook – Outlook – What What Lies Ahead?
For companies in the packaging supply chain there is one incontestable conclusion ‐ the demandsand pressures will not abate. Indeed, they will intensify. Globalisation is here to stay. Thetechnological age with all its ramifications has only just begun. Tight controls on costs will remain inplace. Indian packaging will need to be internationally competitive. The specifics are as follows
Efficiency: In the business world of the 21st century we can no longer expect to retain ourcustomers'
business unless we're continually increasing efficiency — efficiency efficiency in ourprocesses, in our product cost and in our business transactions.
Packaging materials: Lighter weight, higher performing packaging materials are under constant
development, as are structural designs, which provide the same level of productprotection at a lower cost.
Packaging suppliers: suppliers : Increasingly, major packaging suppliers are evolving toward becomingtotal
packaging systems suppliers. Packaging systems and carton erecting machinery which cut labour costs are also becoming more commonplace. They're also becoming more tailoredto meet the needs of their specific market.
Machinery: Equipment suppliers are offering new machinery to rationalise packagingoperations.
Multi‐function systems are reducing the space required for packing lines and thenumber of steps in the packaging process.
Packaging design: Changing and more complex lifestyles have also strongly influencedpackaging
design. Pre‐cut, pre‐ portioned, portioned, smaller, ready to consume products areincreasingly popular, reflecting the importance of convenience to today's customers. Packsthat go from the shelf or bin straight into the fridge or straight into the oven. Blister packs,microwaveable packs, zippered pouches, contoured shapes and carry handles on outer packsare just some examples of this trend.
Logistics: Key logistics changes to the packaging industry will see increased customer choice,faster
product delivery, increased manufacturing and inventory controls and increasedsupply chain management efficiency. In the very near future many packaging customers willhave online access to their suppliers manufacturing logistics systems, as we will to theirs.
39
This will enable relatively seamless progress from initiation of product requirement, throughto order orde r placement, manufacturing, delivery, invoicing and distribution.
New technology: Smarter packaging companies around the world are already using newtechnology
to take costs out of their own systems. And they're using Internet links toimprove their relationships and performance with customers. And it's in our type ofindustry — business to business — that that will see the biggest impact of computer technology ande‐commerce. It's those packaging companies who don't get proactive about their Internet strategies who will find them being passed over by their customers.The first decade of the 21st century is likely to be no less frenetic than the last decade, withchallenge and change being the order of the day. day. Companies that stagnate and look for the easyoptions simply will not survive. In order to survive and prosper, companies will need to be flexibleand adaptable and invest, innovate and develop the appropriate skills base to meet the challengesahead. CONCLUSION
Packaging is essential in contemporary Indian society. It is an integral part of everyday lifeand brings real benefits to all Indians. It plays pla ys a key role in the production, preservation,distribution and marketing of goods. Consumer packaging has, by the time of its disposal, delivered significant benefits to the consumer. • Convenience, safety and environmental friendliness are the key requirements of packaging,
withsafety being of paramount importance. • Consumers are demanding more and more from packaging. Change is also being fostered
bycommercial
pressures,
social
and
demographic
changes,
technological
developments
andenvironmental concerns. Packaging manufacturers are being required to respond to thesepressures by ‗value adding‘ to their packaging. • Some key statistics for Indian packaging are as follows: the value of packaging produced inabout
30,000 people are directly employed; 65‐70% ofIndian packaging is used by the food and beverage sector; and paper/board is the largestsingle packaging material followed by plastics, metal and glass. Indian owned companies arethe dominant packaging manufacturers.
40
• Increased concentration and consolidation have been hallmarks of the Indian packagingindustry
over the last decade. This trend is not unique to India. The plastics sector is the mostlikely to witness further consolidation. Some other sectors have probably reached the limits ofconsolidation. • Major trends and influences on packaging over the next decade will be the need to addconsumer
value, electronic business processes, cost reduction/supply chain management,environmental issues and globalisation. Some of these trends and influences are pushing inOpposing directions. • The environment is a major issue for packaging supply chain companies. All sectors
arecontributing to programs and initiatives which minimize the adverse environmental effects ofPackaging.
All
packaging
materials
have
their
environmental
pluses.
Overall,
the
packagingIndustry has a strong record on recycling. The use of recycled content in packaging is nowwidespread.But the demands on packaging and the companies that produce it will increase. More and more willrequire of packaging by consumers, customers and governments. Companies will need to invest
41
CHAPTER -4 DEFINITIONS:
More common and accepted definitions of supply chain management are: 1. Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the longterm performance of the individual companies and the supply chain as a whole (Mentzer et al. , 2001). 2. A customer focused definition is given by Hines (2004:p76) "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out increased, bottlenecks removed and performance measurement must focus on total systems unnecessary costs and focusing attention on adding value. Throughout efficiency must be efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements." 3. Global supply chain forum - supply chain management is the integration of key business processes across the supply chain for the purpose of creating value for customers and Stakeholders (Lambert, 2008). 4. According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.
42
5. A supply chain, as opposed to supply chain management, is a set of organizations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer. Managing a supply chain is 'supply chain management' (Mentzer et al. , 2001). 6. Supply chain management software includes tools or modules used to execute supply chain transactions, manage supplier relationships and control associated business processes. Supply chain event management (abbreviated as SCEM) is a consideration of all possible events and factors that can disrupt a supply chain. With SCEM possible scenarios can be created and solutions devised. PROBLEMS ADDRESSED BY SUPPLY CHAIN MANAGEMENT
Supply chain management must address the following problems: ● Distribution Network Configuration : number, location and network missions of suppliers,
production facilities, distributioncenters, warehouses, cross-docks and customers. ● Distribution Strategy : questions of operating control (centralized, decentralized or shared);
delivery scheme, e.g., direct shipment, Pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier. Including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar). Ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, privatecarrier, common carrier, contract carrier, or 3P L). ● Trade-Offs in Logistical Activities : The above activities must be well coordinated in order to
achieve the lowest total logistics cost.
43
Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered toreduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is thereforeimperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficientand effective Logistics and SCM strategy. ● Information : Integration of processes through the supply chain to share valuable information,
including demand signals, forecasts,inventory, transportation, potential collaboration, etc. ● Inventory Management : Quantity and location of inventory, including raw materials, work-in-
progress (WIP) and finished goods. ● Cash-Flow : Arranging the payment terms and methodologies for exchanging funds across entities
within the supply chain. Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. Theflow is bi-directional.
44
Fig-7 ACTIVITIES/FUNCTIONS:
Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chainpartners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational andfunctional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. 45
Another model is the SCMModel proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American Productivity & Quality Center (APQC) Process Classification FrameworkSM a high-level, Industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint. STRATEGIC LEVEL:
● Strategic network optimization, including the number, location, and size of warehousing,
distribution centers, and facilities. ● Strategic partnerships with suppliers, distributors, and customers, creating communication
channels for critical information andoperational improvements such as cross docking, direct shipping, and third-party logistics. ● Product life cycle management, so that new and existing products can be optimally integrated into
the supply chain and capacitymanagement activities. ● Information technology chain operations. ● Where-to-make and make-buy decisions. ● Aligning overall organizational strategy with supply strategy. ● It is for long term and needs resource commitment. TACTICAL LEVEL
● Sourcing contracts and other purchasing decisions. ● Production decisions, including contracting, scheduling, and planning process definition.
46
● Inventory decisions, including quantity, location, and quality of inventory. ● Transportation strategy, including frequency, routes, and contracting. ● benchmarking of all operations against competitors and implementation of best practices
throughout the enterprise. ● Milestone payments. ● Focus on customer demand and Habits. OPERATIONAL LEVEL:
● Daily production and distribution planning, including all no des in the supply chain. ● Production scheduling for each manufacturing facility in the su pply chain (minute by minute). ● Demand planning and forecasting, coordinating the demand forecast of all customers and sharing
the forecast with all suppliers. ● Sourcing planning, including current inventory and forecast demand, in collaboration with all
suppliers. ● Inbound operations, including transportation from suppliers and receiving inventory. ● Production operations, including the consumption of materials and flow of finished goods. ● Outbound operations, including all fulfillment activities, warehousing and transportation to
customers. ● Order promising, accounting for all constraints in the supply chain, including all suppliers,
manufacturing facilities, distribution centers, and other customers. ● From production level to supply level accounting all transit damage cases & arrange to settlement
at customer level by maintaining company loss through insurance company. 47
Importance of supply chain management Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyondtraditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. During the past decades, globalization, outsourcing and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only afew key strategic activities (Scott, 1993). This interorganizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories(Powell, 1990). It is not clear what kind of performance impacts different supply network structures could have on firms, and little isknown about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complexchain management - Wikipedia, the free encyclopedianetwork structure can be decomposed into individual component firms (Zhang and Dilts, 2004). Traditionally, companies in a supplynetwork concentrate on the inputs and outputs of the processes, with little concern for the internal management working of otherindividual players. Therefore, the choice of an internal management control structure is known to impact local firm performance (Mintzberg, 1979).In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing the earlier "Just-In-Time", "Lean Manufacturing" and "Agile Manufacturing‖ practices. Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network (Coase, 1998).Many researchers have recognized these kinds of supply network structures as a new organization form, using terms such as 48
"Keiretsu","Extended Enterprise", "Virtual Corporation", "Global Production Network", and "Next Generation Manufacturing System". In general,such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in everchangingconstellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans,2001).The security management system for supply chains is described in ISO/IEC 28000 and ISO/IEC 28001 and related
standards
publishedjointly
by
ISO
and
IEC.Supply
chain
business
process
integrationSuccessful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. An examplescenario: the purchasing department places orders as requirements become known. The marketing department, responding to customer demand, communicates with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information sharedbetween supply chain partners can only be fully leveraged through process integration. Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, commonsystems and shared information. According to Lambert and Cooper (2000), operating an integrated supply chain requires a continuousinformation flow. However, in many companies, management has reached the conclusion that optimizing the product flows cannot beaccomplished without implementing a process approach to the business. The key supply chain processes stated by Lambert (2004) ● Customer relationship management ● Customer service management ● Demand management style ● Order fulfillment ● Manufacturing flow management ● Supplier relationship management ● Product development and commercialization 49
● Returns management
Much has been written about demand management. Best-in-Class companies have similar characteristics, which include the following: a)Internal and external collaboration b) Lead time reduction initiatives c) Tighter feedback from customer and market demand d) Customerlevel forecastingone could suggest other key critical supply business processes which combine these processes stated by Lambert such as: 1. Customer service management 2. Procurement 3. Product development and commercialization 4. Manufacturing flow management/support 5. Physical distribution 6. Outsourcing/partnerships 7. Performance measurement 8. Warehousing management a) Customer service management process
Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the sourceof customer information. It also provides the customer with real-time information on scheduling and product availability through interfaceswith the 50
company's production and distribution operations. Successful organizations use the following steps to build customer relationships: ● determine mutually satisfying goals for organization and customers ● establish and maintain customer rapport ● produce positive feelings in the organization and the customers b) Procurement process
Strategic plans are drawn up with suppliers to support the manufacturing flow management process and the development of newproducts. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship where both parties benefit, and a reduction in time required for the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs. c) Product development and commercialization
Here, customers and suppliers must be integrated into the product development process in order to reduce time to market. As product lifecycles shorten, the appropriate products must be developed and successfully launched with ever shorter time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must: 1. Coordinate with customer relationship management to identify customer-articulated needs; 2. Select materials and suppliers in conjunction with procurement. 51
3. Develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. d) Manufacturing flow management process
The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. e) Physical distribution
This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g., links manufacturers, wholesalers, retailers).
Fig-8 52
f) Outsourcing/partnerships
This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally, with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.
Fig-9 g) Performance measurement
Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. Taking advantage of supplier capabilities and emphasizing a longterm supply chain perspective in customer relationships can both be correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes more arrow. A.T. Kearney 53
Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to experts, internal measures are generally collected and analyzed by the firm including. 1. Cost 2. Customer Service 3. Productivity measures 4. Asset measurement, and 5. Quality. External performance measurement is examined through customer perception measures and "best practice" benchmarking, and includes 1) Customer perception measurement 2) Best practice benchmarking. h) Warehousing management
As a case of reducing company cost & expenses, warehousing management is carrying the valuable role against operations. In case of perfect storing & office with all convenient facilities in company level, reducing manpower cost, dispatching authority with on time delivery, loading & unloading facilities with proper area, area for service station, stock management system etc. Components of supply chain management are as follows: 1. Standardization 2. Postponement 3. Customization 54
ROLE OF PACKAGING IN SUPPLY CHAIN MANAGEMENT:
The Packaging Supply Chain Project was established to develop and promote efficient supply chain solutions to the suppliers of packaging materials. They enable their consumers, customers and shareholders to benefit from global business standards and electronic business tools. The project was sponsored by EAN International and has its roots in the development of standard, international multi-industry logistics solutions and tools, such as the EAN•UCCLogistics Label. The two most significant results of the project are key recommendations to the suppliers of packaging materials and a current best practice model of EAN•UCCSystem application in the packaging supply chain. 55
Anot-for-profit association, EAN International, together with 94 national EAN organizations its global partner for the USA and Canada - the Uniform Code Council (UCC),enables efficient international trade by managing and developing a system of identification and communication tools for goods, services and locations. The EAN•UCC System provides the world economy with a global
supply chain infrastructure by means of standard numbering structures, standard data carriers, and standard electronic data interchange (EDI) messages. It is used by over 900,000 companies in more than 100 countries and represents one ofthe largest and fastest expanding business communities in the world. EAN•UCC standards are voluntary
business standards recognized by ISO, CEN and many other private andinter-governmental organizations. They are the key enabler of efficient supply chainmanagement and form the backbone of global Efficient Consumer Response (ECR) initiatives.
EAN•UCC System Provides Global Supply Chain Standards and E -Business tools
EAN•UCC standards enable efficiency gains to be spread from a user company to thebusiness
systems of its suppliers and customers. The standards are indispensable to packagingcompanies, which need to understand them and then deploy them for maximum strategicand operational advantage. While their customers are looking for lower prices, higherquality and service levels, at 56
the same time, they seek to deepen relationships and loyaltyto their suppliers of packaging materials. This translates into ―value chain integration‖ – aprocess of collaboration that optimizes all
internal and external activities involved in delivering greater perceived value to the ultimate customer. Examples of EAN•UCC System implementation – described in section three – demonstrate that packaging companies that have achieved most benefits from applying theEAN•UCC System are those that had primarily introduced it for internal efficiency gains rather
than because they were asked to do so by their customers. The packaging supply chain is demand-driven. A retail sale triggers an ordering process that runs back upstream the supply chain and each participant responds by delivering goods and/or services to his customer. Consumer goods manufacturers and distributors that have adopted innovative practices in managing their demand and supply chains are enjoying higher levels of performance and shareholder returns. Cutting-edge supply chain management practices and use of EAN•UCCSystem tools are considered to be the key enablers of their success. Over the past two decades, the driving force behind EAN•UCC member companies ‗demand for standardization has
evolved from supporting efficient distribution in the 1970‘s, to efficient logistics management in the 1980‘s, and most recently inthe 1990‘s, efficient international trade and e -commerce. While it is
widely acknowledged that the Internet is the promulgator of electronic commerce, it isless known that from the onset EAN•UCC standards are the key enabler ofelectronic commerce - technology enabled automation and acceleration of internal and external company processes.
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Key Concepts Driving EAN•UCC System Application
Key concepts driving EAN•UCC System application can be summed-up in three areas: • Automation of business processes by means of automated data capture and electronic data
processing. • Communication of information in the fastest and most accurate manner by means of standard
electronic messages that automatically updatecomputer applications with data from trading partners. • Time compression, which offers strategic opportunities to improvecustomer satisfaction, not just
by cost reduction, but also by reengineering business processes across the supply chain. All these areas require a holistic view of the supply chain, only attainable by deploying international business standards - EAN•UCC standards. Automation significantly increases productivity and reduces the amount of paper-based administration and associated costs. It also eliminates the inevitable errors resulting from manual data entry and processing. Electronic communication enablescompanies to better manage and control their business cycle and results in improved logistics management. Time compression increases customer service responsiveness and reduces costly imbalances in supply and demand, minimizing inventoryholdings.Above all, the EAN•UCC System enables benefits that go far beyond cost efficiency: it promises greater competitive power, as described in section three. Current bestpractice examples demonstrate that the packaging supply chain can operate withlow stock, automated plan-order-receive-produce-deliver- invoice-payreplenishprocesses, and with the information about inventories, sales and forecasting sharedin ―real time‖ through a seamless IT network running the full length of the supplychain. We are already
witnessing the emergence of supply chain managementexcellence in the form of ECR and other initiatives that link packaging materialThe benefits associated with packaging supply chain management using EAN•UCCstandards go well beyond the efficiencies on which logistics
managers havetraditionally focused.
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These include:
Greater customer loyalty, as demonstrated in the examples of EAN•UCCSystem
implementation by Kappa Packaging, Smurfit France and VanLeer 4P Ronsberg.
Increased product availability with lower inventory, as demonstrated bythe examples of EAN•UCC System application in support of "vendor managedinventory" and "self-billing"
(Kraft Jacobs Suchard and Astra Calvé).
Cost reduction resulting from aligned logistics and an improvedunderstanding of cost-to profit relationships in the context of strategicsupply chain initiatives, such as ECR, or company initiatives as illustrated by AssiDomän Packaging UK and Sara Lee / DouweEgbert examples.
INTEGRATING RFID WITH PLASTIC PRODUCTS AND PACKAGING IN THE RETAIL SUPPLY CHAIN RFID one day at a time:
The Department of Defense stated it intends to move forward on plans to use active radio frequency identification (RFID) technology to support collaborative military coalition operations. With 24 countries (reported in Information Week Feb. 23, 2006). Carrefour Launches RFID Initiative Checkpoint Systems, Inc. has signed a strategic agreement with Carrefour, Europe‘s
largest retailer, to roll out an aggressive source-tagging program to help protect merchandise at the point of manufacture. It will tap into Checkpoint‘s global network and provide a benchmark for
other global retailers who collectively lost $38 billion to shrinkage last year. (Feb 23, 2006) By 2014, RFID labels, which accounted for 10% of total smart label demand in 2004, will account for more than 85% of the market, according to a study from The Freedonia Group Inc., a
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Cleveland-based industrial market research firm. Smart-tek Communications Inc. has completed an RFID tracking alert and containment system, and is set to begin test trials in China as part of the effort to contain deadly Bird Flu. Blood bank supplies at Saarbrucken Clinic are now equipped with RFID (radio frequency identification) chips to help prevent mix-ups with transfusions and other blood treatments. RFID DIRECT BENEFITS Reducing supply chain variables:
Improved ability to match demand and supply
Enhanced control of inventory size and velocity
Improved productivity from source to shelf
Increased product-shelf availability and sales
More efficient transportation operations and reporting
Overall error reduction throughout the supply chain
More efficient transportation operations and reporting
Enhanced product traceability
Ability to measure performance accurately through enabled Business Process Management (BPM)
RFID = Improved Business IQ RFID gives the enterprise the ability to measure performance accurately through Enabled Business Process Management Direct RFID benefits can be summarized in this Business
Intelligence Model
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RFID Benefits: Addressing retail supply chain replenishment challenges & opportunities
Eliminating out-of-stocksManaging the cold chain for perishables
Tracking temperature history
Establishing cold chain accountability
Enhancing shelf & vase life
Reducing shrink & automating discounting
Delivering on freshness guarantees
Sale before expiration date
Reducing labor costs
Trace-back
Creating a ―safety chain‖ for food & pharmaceuticals
Theft & diversion prevention
Counterfeit protection
Eliminating out-of-stocks/ Not exactly.
A recent study performed by the University of Arkansas forWal-Mart compared RFID-enabled stores with non-RFID stores to see if there were any measurable differences. The RFID-enabled stores showed significant improvements;16% more products were available for sale. With $300 billion in sales, it takes little imagination to see the immediate benefit for retailers and their suppliers. RFID value proposition RFID can improve customer confidence by: Delivering present-time
information on the location and condition(temperature, humidity, stress etc.) of perishable products movingthrough the supply chain 61
Providing an auditable electronic trail of events from sourceto consumption
Lowering the overall cost of goods though improved business processand business work flow through the use of dynamic, event-driveninteractive data
Traceability – the ability to identify the source of every ingredient in every product
– the ability to track and trace the products now; to develop a systematic approach Trace-Back
to data collection, retrieval and reporting
New rules empower the FDA in a Class 1 recall to potentially impound suspect food immediately
RFID needs to be a major part of a lot-control trace-back plan that could save time, energy and money by making it easier to identify the causes or the lack of causes in an investigation ( Guide to Federal Food Safety and Security Inspections, UFFVA, Jan. 25, 2005)
RFID can be a key to protecting a brand‘s equity So what is happening in RFID in the food chain?
RFID: Plastic returnable packaging reducessupply chain costs from field to fork:
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Fragmented supply chain with slow technology adoption rate
Extreme diverse product base (grade, date coding, origin etc.)
Limited bar coding creates huge data synchronization issues
Highly uncertain weather conditions – make plans for yield variable
Commodities pricing business model effects supply chain efficiencies
Field-to-grower tracking – potential ben0065fits:
Asset tracking (returnable plastic containers, totes, equipment etc)
Lot traceability (auditable electronic trail of events )
―First-Mile‖ analysis – soil and weather data collection
Expedited operations
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Truck-to-DC tracking – potential benefits:
Order management and fulfillment visibility
Case-level pipeline visibility (location, condition)
Metrics for shrinkage / loss prevention
RFID-enabled shipping & receiving
Physical location and product-condition data
DC-to-store tracking – potential benefits:
Order management and QC data validation
Store / DC automated replenishment
FEFO and product-freshness / shelf-life expectance
Automated receiving and shipping
Potential SKU / grade / age-based pricing
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FOOD SUPPLY CHAIN TRACEABILITY Stages of Excellence™ 1 & 2
At Stage 1, a company has
Manual processes for checking and monitoring time, temperature & critical conditions
Reliance on single source point and simple devices for measurements
Written reports and record keeping
Limited hours of food safety training
Limited process improvement tools
At Stage 2
Quality control personnel are on site to monitor time, temperature and critical conditions
Reading of tracking information is computerized
Loading and unloading, temperatures and critical information is recorded
There are weekly compliance audits
Food safety training and testing of all personnel is in place
There are ongoing educational systems to reinforce cold chain requirements
There is video monitoring of compliance activities
Tracking and tracing is via bar code / RFID; batch matching of products through the supply chain
Stages of Excellence™ 3 & 4
At Stage 3 • RFID trace-back planning is an integral part of logistics planning
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• Training and monitoring of all critical aspects of the perisha ble chain, from coolingdown of chilled
products, to processing facility, to loading out into refer-trucks, todisposition at distribution center, and shipment out to store processing area for display • Radio-based monitoring of time and temperature • RFID k ey performance indicators are developed and implemented
At Stage 4 • RFID perishable supply chain management is an integral part of informationmanagement and
transportation system • RFID / GPS (Global Positioning System), wireless -based local area networkfor sending and
receiving information from all critical parts of the supply chain • Identifies and communicates vehicle, pallet and case positions via GPS • Wireless downloading of data, monitoring time and temperature 24 /7 • A system automatically alerts owner when operating conditions are exceeded • Appropriately documents temperatures during trips • Planning system integrates across the supply chain
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RFID ASSISTS IN LOSS DETECTION
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CHAPTER -5 LOGISTICS INTRODUCTION
Logisticsis the management of the flow of goods and services between the point of origin and the point of consumption in order to meet the requirements of customers. Logistics involves the integration of information,transportation, inventory, warehousing, material handling, and packaging, and often 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 logistics unit
As goods are transformed on their downstream journey, the use of packagesto contain goods increases. Packages contain goods and possibly also anumber of other smaller packages. At facilities where logistics activities arecarried out, it is the packages which are primarily observable. In the case ofpacked goods, the goods themselves are a more ―obscure‖ logistics resourcesince the goods are hidden from visibility. The term ―logistics unit‖ has beendeveloped by GS1 in order to
communicate how to use GS1 codes. Whenbar codes or RFID tags are read, it is only the outer packaging layer that isused as an information carrier. The ―logistics unit‖ represents a
precisedescription of the outer package level that is identified in relation to logisticsactivities. A logistics unit is fundamentally a combination of goods and oneor more packages as shown in fig. 2.10 below:
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Fig-10 The logistics unit is the visible aspect of the transformed goods. It is the GS1(GTIN and SSCC) code attached to the logistics unit that is registered and informs about the present state of goods. Information Carriers
Information contents are stored and communicated through texts, numericalcodes and symbols. These are, consistent with the discussion in Section 2.3,termed information carriers. Several of the cases show how GS1 codes playan important role in facilitating the provision and use of information aboutgoods. GS1-based numerical codes are widely used in the cases to identifyproducts and goods. Codes are commonly used throughout the supply chain;hence, they represent a kind of unifying technical language. In the studiedcases, the application of GS1 codes is shown as used on consumer-levelpackages of Marian fish filet and TINE Lettmelk. Pallets and boxes of Dolebananas and Marian fish filet use GS1 transport codes in their labeling.
In some of the product cases, numerical codes are not used on the labels,leading to increased manual handling of the identification of these goods,such as when Corona strawberries and Dole bananas are registered by thecashier at a supermarket, and when IFCO crates of Corona strawberries orrollracks containing only TINE Lettmelk are identified. The numerical codemay be used to provide other information such as descriptive text andnumerical data related to manual handling procedures. 69
Text found onconsumer packages is used to inform and influence the consumer; anumerical code is incomprehensible to him/her. Text also accompaniescodes in documents used in orders, transport, and picking goods.
Bar codes on labels based on GS1 numerical codes are used when goods areregistered or assigned, permitting an increased level of automaticinformation processing and exchange. This is evident when Nor-CargoThermo scans goods, including Marian products, when loading andunloading its trucks. The only manual handling involved in thisidentification process is when moving the goods into a visible range of thescanner, and when controlling the information on the barcode withdocuments, verifying that the right goods are in the right place at the righttime according to distribution plans. When bar coded labels on goods orproducts are scanned they are automatically registered into an informationsystem. Text is then used to facilitate manual communication, as numericalcodes are less comprehensible without additional information or mechanismsto translate them into text. Retailers order a large number of products everyweek and have limited time to learn the codes used for each product. Textsare therefore used when the information is read manually; a barcode is usedwith a reading device. Based on this registration a text may be provided in adocument, either electronically or in paper form, for manual reading.
Of the studied products, only Corona strawberries are not labeled usingcodes. When retailers order Corona strawberries they do this based onCorona strawberries having a GS1-based code within the BAMAinformation system. It is not possible to control goods automatically throughidentification since the label on the IFCO crate does not carry the same codeas the documents. Therefore, Corona strawberries must be registeredmanually. Based on this registration the data may be interpreted into codesallowing for automatic exchange of information within BAMA‘s OLFI andLORRY
information systems. ORIGINS AND DEFINITION
The term logistics comes from the Greek logos (λόγος), meaning "speech, reason, ratio, rationality, language, phrase", and more specifically from the Greek word logistiki (λογιστική), meaning
accounting and financial organization. The word logistics has its origin in the French verb loger to 70
lodge or to quarter. Its original use was to describe the science of movement, supplying & maintenance of military forces in the field. Later on it was used to describe the management of materials flow through an organization, from raw materials through to finished goods. Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, military officers with the title Logistics were responsible for financial and supply distribution Matters. The Oxford English Dictionary defines logistics as "the branch of military science relating to procuring, maintaining and transporting materiel, personnel and facilities." Another dictionary definition is "the time related positioning of resources." As such, logistics is commonly seen as a branch of engineering that creates "people systems" rather than "machine systems". When talking in terms of human resources management, logistics means giving inputs, i.e. "recruiting manpowers", which ultimately work for the final consumer or to delivery.
Packaging is a coordinated system of preparing goods for safe, secure, efficient and effectivehandling, transport, distribution, storage, retailing, consumption and recovery, reuse or disposalcombined with maximizing consumer value, sales and hence profit (Saghir, 2002). Above it‘sfundamental function of protecting, containing and preserving the product, the functions
ofpackaging are manifold and complex and the definition here can be related to three maincategories i.e. logistics, marketing and environment. Jönson (2000) presents an overview ofimportant packaging functions. Table-1
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Packaging may be classified as primary, secondary or tertiary, reflecting the levels of packaging (Jönson, 2000). These definitions should be used together with the consideration of packaging as a system, with hierarchical levels. See Figure 1. This approach highlights the natural interaction
between the different levels of packaging and facilitates an understanding of their Interdependence. It can therefore be argued, in a systems fashion, that the performance of the packaging system is affected by the performance of each level and the interactions between these levels. Many definitions and terms are used by practitioners when discussing packaging. Summarizes some of the communally used packaging terms and definitions. Often several terms are used to describe the same type of packaging, but seen from different aspects. This complicates understanding the scope of the packaging system and does not facilitate communication among different functions and disciplines. Dominic et al. (2000) define Packaging Logistics as ―An approach which aims at developing packages and packaging systems in order to support the logistical process and to meet customer/user demands.‖ This definition reflects a traditional point of view that considers packaging
as a part of the logistical system, and addresses only a one-sided relation where packaging adapts to the logistical system.
Fig-11 72
A widely accepted illustration of the interaction between logistics and marketing, where packaging is treated as a warehousing and material handling matter. The interface between logistics and marketing is here where logistics addresses the place aspect in the marketing mix and hence enables customer service. If packaging is to be considered as merely a subsystem of logistics, as shown in the common literature available, than it should be a part that indirectly mainly facilitates customer service. But packaging is closely related to the productitself and contributes to all of the 4P-s in the marketing mix. Packaging is a vital tool in the marketing mix, too often ignored by companies, but twice as much is annually spent on this as on above-the-line advertising and promotions (Rod, 1990). By its marketing capabilities and properties, packaging plays a decisive role in facilitating meeting consumers‘ needs and expectations. Packaging is not simply a marketing or distribution
adjunct but pervades the total system view (Wills 1975). The traditional point of view, described above, does simply not cover the multi-functional nature of packaging, neither does it recognize its close relation to the product and influence on most logistical activities. The term logistical packaging has been used by academics (Paine 1990;Twede 1992;Twede & Parsons 1997) but refers to a limited point of view, where it addresses packages that are customized for mainly logistical functions. Therefore the concept of Packaging Logistics, beside of focusing on the interface between the systems of Packaging and Logistics, recognizes the interdisciplinary nature of packaging and consider also, among other disciplines, its interfaces with marketing. See Figure 4 for an illustration.
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FURTHER RESEARCH
Here the packaging issues have been stretched from a single company, single function level to a broader multifunctional and above all a supply chain level. It is obvious that packaging issues are concerned with products life cycles, especially when treating consumer products, and a product life cycle approach is fundamental. The implications of such an extension should be of interest to explore and be subject for further research. The procedure presented focuses on internal supply chain perspective, and would be strengthened by including a consumer perspective. Organizational issues have an impact on the packaging function in the companies and further on the overall awareness and consideration of the influence of packaging logistics on the performance of a company or a supply chain. Organizational maturity is a prerequisite for any improvement effort and this is als o the case of the packaging logistics improvement in today‘s Indian retail supply chain. Therefore, organizational conditions in the grocery retail supply chain needs to be investigated and explored. It should be interesting to explore the applicability of the process oriented view adopted here in the today‘s organizational structures. The suggested model here
represents a starting point in the process of establishing a generic packaging logistics performance model, which requires proper methods, models, tools and techniques. Efficient and effective tools and techniques that support the steps presented in the suggested procedure needs to be investigated 74
and implemented. Available tools from disciplines such as product development, logistics, marketing and operations management should be identified, investigated, adjusted, implemented and tested. Simulation is a powerful tool that is favorable to use when complexity level is high. The use of simulation to serve the steps of the suggested procedure should be interesting to evaluate.
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CONCLUSION OF THE PROJECT:
The objective of this Project is to investigate the role of the package as aninformation resource in a supply chain context. The package is a physicalresource that is designed in accordance with principles of packagingtechnology. This study concentrates on the package regarded as a logisticsresource. This role of the package involves functions regarding howpacka ges carry goods, provide utility in relation to logistics activities, andfacilitate communication. In this study focus is directed to communicativeaspects of using packages.Within logistics and supply chain management studies regarding usingpackages have mainly been directed towards how packages carry goods. In asupply chain the package may be therefore be regarded as a core logisticsresource since it facilitates the provision of products to an end user. Thisview is also based upon that when goods are packed, the goods themselvesare concealed, and therefore it is packages, and not the goods themselvesthat need to be accounted for. In addition, packages serve a vital purpose as amarketing resource in a retail setting and when informing about products in apurchasing situation.The use of the package as an information resource is described as aninterplay between, the package, information and the transformation of goods.This interplay is used to structure the frame of reference and to design theresearch process.
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CHAPTER -6 CASE STUDY (1) An example of a package in Supply Chain Management application:To Reduce Cycle Time, Kick Those Bad Habits
One of the chief causes of excessive order-to-delivery cycle times is the existence of longstanding"bad habits" that result when companies fail to revise internal processes to reflect marketchanges. The existence of separate, independent departments tends to perpetuate these inefficientpractices. Taking the supply-chain management view, on the other hand, helps companies identifythe cumulative effects of those individual procedures. Eliminating such bottlenecks improvesproduct availability and speeds delivery to customers--both of which can increase sales and profits. The caseConsultant R. Michael Donovan illustrates the point with the tale of a client
thatmanufactures a made-to-order machine part. Average order-to-delivery time varied between sixand nine weeks. As a result, the manufacturer was losing business to "replicators" that couldproduce low-quality "knockoff" versions in just three weeks. Donovan and his colleagues analyzedthe manufacturer's entire supply chain, from order entry and raw-materials supply all the way tofinal delivery. They found problems at every step of the way : Handwritten orders were being rekeyed into
thematerials-planning system on weekends, which meant that some orders were sitting around un processed for an entire week. One day production control would be overwhelmedwith a week's worth of orders. It often took them several days to plow through the backlog andissue manufacturing orders.Once those orders had been cut, the engineering department required one week to producetechnical drawings. They needed several more days to match up drawings with orders and otherdocumentation. Those information packets then would go to the manufacturing line, where thescheduling system allowed three weeks' time for production The solution Supply Chain experts were able to slash order-processing time, including thegeneration
of engineering drawings, from about two and a half weeks to one day. They made somealterations to the manufacturing process to speed up production. While they were cutting waste outof physical processes, the consultants also were finding ways to speed up the flow of informationand to improve 77
the accuracy of production orders. One day, materials flow is closely correlated withinformation flow, and leadtimes have been cut from an average of six to nine weeks down to fewerthan three weeks.
(2) CASE STUDY ON TRANSPORTATION OF THE PACKAGE ALENDRONATE SODIUM TABLETS USP 70MG
TABLE OF CONTENTS
S. No.
Title
Page#
1
Objective
2
General Information
3
3
Possible Causes
4
4
Approach
4-9
5
Conclusion
9 - 10
6
Corrective and Preventive action
3
10
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1. OBJECTIVE
To perform investigation on the customer complaint on Patches or scuffing of ink on the package of Alendronate Sodium Tablets 70mg Name of the Product
:
Alendronate Sodium Tablets 70mg
Batch Number
:
Unknown
Manufacturing Date
:
Unknown
Expiry Date
:
Unknown
Nature of Complaint
:
Patient had difficulty in opening the package of Alendronate Sodium Tablets USP 70mg.
Complaint Number
:
ABC
Date of Reporting
:
07t April 2012
Complaint sample received
:
16t April 2012
Reference Number
:
XYD
Complainant
:
Dr. XYZ
Reported by
:
ABC
on
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3. POSSIBLE CAUSES
Possible causes for this customer complaint are:
3.1 Artwork of Alendronate Sodium Tablets 3.2 Packing process
4. APPROACH
Following is the approach to verify the possible causes 4.1 Review of Complaint Communication. 4.2 Review of Complaint sample. 4.3 Review of Batch packing process. 4.4 Review of packing materials. 4.5 Review of Artwork. 4.6 Review of Control Samples. 4.7 Review of Previous complaints of similar nature.
4.1
Review of Complaint Communication:
Customer complaint was received for Alendronate Sodium Tablets USP 70mg with unknown batch Number.
The complainant (Cherie Ringer) was 68 years old and her mother is 95 years and both are using Alendronate Sodium Tablets USP 70mg from a number of years.
The complainant stated that 50% of people using this product have some form of arthritis especially in the hands.
The patient complained that the blister packaging was very difficult to open and struggle each week and usually end up using sharp point of scissors to actually get into the plastic where the pill is. The foil never tears off smoothly.
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The patient also stated that using this sharp point, always worries that she may puncture the pill itself thus making it harmful to swallow.
This complaint was communicated to Pharmacovigilance Associate, Investigation was carried out by considering the above information.
4.2 Review of Complaint Sample:
Complaint sample was revised on 16th April 2011.
The photographs of the complaint sample are as below.
Based on the details on cardboard it is confirmed that the complaint sample belongs to AurobindoPharma Limited Unit-III. However batch coding details are not clear to perform batch specific investigation.
Investigation was carried out by considering the above given information.
4.3 Review of the Batch Packing process: Batch
number and details like manufacturing date, Expiry date was not provided by the
complainant. Hence batch specific investigation was not performed. However
general investigation was performed. Alendronate Sodium Tablets USP 70mg
Tablets was packed on Blister Packing Machine.
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The
in process checks with respect to coding details, quantity of tablets per blister, knurling,
peeling tendency of printed Aluminum foil, text and color, blister sealing and forming
temperatures were checked by Production and Quality assurance (QA) at a frequency defined in the Batch Packing Record along with the other in process checks. The
secondary packing activity of Alendronate Sodium Tablets USP 70mg was performed on
Cold sealing machine. The
in process checks with respect to batch details, peel visibility, seal integrity, peelability
of foil for printed card board ; coding details, carton text and color, insertion of leaflet,
patient information sheet, weight of filled carton, number of units packed in shipper were checked by Production and Quality assurance at a frequency defined in the batch packing record along with the other in process checks.
The packing of Alendronate Sodium Tablets USP 70mg involves
Primary packing on Blister packing machine.
Secondary packing on Cold sealing machine
4.3.1
Primary packing involves sequence of events as follows
Tablets were fed into the hopper. From Hopper the tablets pass through the tablet feeding channels.
From the channels the tablets will be fed into the formed blister cavities.
The formed cavities along with the tablets shall pass through the Non-filled detector system/camera.
The formed cavities along with the tablets shall be sealed and passed through the punching satiation.
At punching station the blisters cut as per the pack size, and get collected for secondary packing.
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4.3.2
Secondary Packing profile of Alendronate Sodium Tablets USP 70mg is as follows
Secondary packing was performed on Cold sealing machine.
Cold sealing machine (Eco bliss linear sealing machine) is a semi automatic machine in which the blisters are placed manually.
Inspected blisters shall be placed manually in open printed cardboards and closed immediately.
These closed printed cardboards shall be placed on the sealing tool continuously
while the sealing tool is in motion.
The pre closed printed cardboards travels in linear direction on the sealing tool
and
gets sealed in the sealing station.
Sealed printed cardboards get dispensed at the other end of the machine and gets collected in labeled crates for further packing.
One leaflet, one patient information sheet and one sealed printed cardboard shall be placed manually in a carton over coded with batch details.
4.4 Review of Packing materials:
The primary packing materials used for the packing of Alendronate sodium Tablets USP 70mg blister are as follows.
Lidding Material: Peelable Lidding Foil 50 GSM Paper/12 Micron PET/20 micron
Aluminum foil (Width – 232mm).
Forming Material: Clear 250 Micron PVC laminated with 50 Micron Aclar(Width –
236mm).
These packing materials were tested as per the approved specification and the
results
found satisfactory. Based on the above, it is concluded that there is no impact of the packing materials on this complaint.
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4.5 Review of Artwork:
Reviewed the blister artwork of Alendronate sodium Tablets USP 70mg and found satisfactory.
The blister pack of Alendronate sodium Tablets USP 70mg 4‘s is child resistant (peel-push foil) and then made as (Ecobliss pack) calendar pack.
After blistering process the 4‘s blister is packed into the printed card board as shown
in the
figure below.
The patient has to open the blister from the end as shown in the figure above
i.e. the
blister should be peeled off from the end where it is written ―PEEL‖.
This pack is specially designed with peelable foil so that the tablets can be
removed
easily by peeling off the foil.
Alendronate Sodium Tablets USP 70mg four count peel blister was evaluated as a poison preventive package and certified by PERRITT Laboratories, NJ, USA.
The certification states that the Alendronate sodium Tablets USP 70mg four count peel blister package is 84
Child -Resistant effectiveness = 90.00%
Senior-Use Effectiveness = 96.00%
The certification by PERRITT Laboratories for Alendronate sodium Tablets USP 70mg four count peel blister is here with enclosed as Annexure-I.
4.6 Review of Control Samples:
As part of the investigation campaign batches of Alendronate Sodium Tablets USP 70mg Batch Number XYZ-A were reviewed with respect to peeling out the foil and removal of tablets. Blister foil was peeled out easily and tablet was pushed out.
No discrepancy was observed during the peeling off the foil from the blister and
tablet was
removed easily from the blister.
These control samples were verified as part of earlier complaint investigation.
4.7 Review of Previous complaints of Similar nature: Similar five complaints were reported in the year 2010 and 2011 for Alendronate Sodium
Tablets USP 70mg.
The complainant stated that he had problem in opening the package.
During the investigation of the above complaints, it was concluded that the blister artwork was developed for Alendronate Sodium Tablets USP 70mg with peelable foil.
Upon review of control samples peelable foil was peeled out easily and tablets were removed from the blister.
The Alendronate Sodium Tablets USP 70mg four count peel blister was evaluated as a poison preventive package and certified by USA stating that Senior-Use Effectiveness is 96.00%.
Hence, there is no issue with respect to the design and usage of blister package of Alendronate Sodium Tablets USP 70mg.
As well we have received letter from the complainant stating that now he is able to open the pack without the aid of scissors for Complaint number CU6010.
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5. CONCLUSION Based on the above investigation, following conclusion is drawn.
Batch packing was performed as per the instructions specified in the Batch packing record.
Upon review of control samples, peelable foil was peeled out easily and tablets were removed from the blister.
The blister pack of Alendronate sodium Tablets USP 70mg 4‘s is child resistant (peel-push foil) and then made as (Ecobliss pack) calendar pack.
The Alendronate Sodium Tablets USP 70mg four count peel blister was evaluated as a poison preventive package and certified by PERRITT Laboratories, NJ, USA stating that Senior-Use Effectiveness is 96.00%.
Based on the above investigation it is concluded that the blister artwork was developed for Alendronate Sodium Tablets USP 70mg with peelable foil.
Hence, there is no issue with respect to the design and usage of blister package of Alendronate Sodium Tablets USP 70mg.
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CHAPTER -7 BIBLIOGRAPHY
1. Harland, C.M. (1996) Supply Chain Management, Purchasing and Supply Management, Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics. In: Slack, N (ed.) Blackwell Encyclopedic Dictionary of Operations Management. UK: Blackwell. 2. Mentzer, J.T. et. al. (2001): Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 1 – 25 3. Hines, T. 2004. Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier. 4. Mentzer, J.T. et. al. (2001): Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 1 – 25 5. CSCMP Supply Chain Management Process Standards 6. Baziotopoulos, 2004 7. MacDuffie and Helper, 1997; Monden, 1993; Womack and Jones, 1996; Gunasekaran, 1999 8. Drucker, 1998; Tapscott, 1996; Dilts, 1999 9. Lambert, Douglas M.Supply Chain Management: Processes, Partnerships, Performance, 3rd edition, 2008. 10. Doug Page,"Dayton Region a Crucial Hub for Supply Chain Management", Dayton Daily News, 2009-12-21. 11. Doug Page,"Dayton Region a Crucial Hub for Supply Chain Management", Dayton Daily News, 2009-12-21. 12. Investor Words definition of "tax efficient" 13. The Airship Z-Prize 14. Wal-Mart's Sustainability Index and Supply Chain Green Standards 15. http://en.wikipedia.org/wiki/Dodd – Frank_Wall_Street_Reform_and_Consumer_Protection_Act 16. http://en.wikipedia.org/wiki/Conflict_minerals 87
