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Relevance of logistics in paper industry

Project Report On-

Relevance of Logistics in Paper Industry

Submitted ByMr. SHARAD RANAWARE (T.Y.B.M.S) Semester-V

Project GuideProf. RAJIV JOSHI

UNIVERSITY OF MUMBAI M.L.DAHANUKAR COLLEGE OF COMMERCE PARLE (EAST) MUMBAI - 400 057

Relevance of logistics in paper industry

ACKNOWLEDGEMENT

It would be totally unethical on my part, if I take the entire credit for the development of this project.

First of all, I sincerely thank to the teaching faculty of the M.L. DAHANUKAR COLLEGE and also to the University of Mumbai to give us such a big opportunity to work upon such project.

I would also like to thank respected dr Mrs. Madhavi Pethe the principal of our college for constantly motivating me to fulfill my project info with thorough research and study. I would particularly like to thank Prof. RAJEV JOSHI for being my project guide and for sharing their valuable experience, advice, guidance, and suggestion on the subject.

My thanks are also due to the college library for providing me necessary books..

I thus acknowledge their contribution with full sincerity.

Relevance of logistics in paper industry

Declaration

I, Mr. SHARAD RANAWARE, student of T.Y.B.M.S. (2009-10) of M.L.DAHANUKAR COLLEGE OF COMMERCE, PARLE(E), Mumbai 400 057, do hereby declare that I have completed the project work titled RELEVANCE OF LOGISTICS IN PAPER INDUSTRY as a part of my academic fulfillment.

The information contained in this project work is true and original to the best of my knowledge and belief.

Date: -

Signature of the Student

Relevance of logistics in paper industry

Certificate

I Prof. RAJIV JOSHI do hereby certify that, Mr.SHARAD RANAWARE student of T.Y.B.M.S. (2009-10) of M.L.DHANUKAR, PARLE (E), Mumbai 400 057, has completed the project work on RELEVANCE OF LOGISTICS IN PAPER INDUSTRY as a part of the academic fulfillment, under my guidance. The information contained in this project work is true and original to the best of my knowledge and belief.

Signature of Project Guide

Signature of Principal

Relevance of logistics in paper industry

EXECUTIVE SUMMARY

Title of the Project

Relevance of Logistics in Paper Industry

About the Project Logistics is unique: it never stops! Logistics is happening around the globe, twenty-four hours a day, seven days a week during fifty-two weeks a year. Few areas of business operations involve the complexity or span the geography typical of logistics. Logistics is concerned with getting products and services where they are needed when they are desired. Most consumers in highly developed industrial nations take a high level of logistical competencies for granted. When they go to the store, they expect products to be available and fresh. It is difficult to visualize accomplishing any marketing or manufacturing without logistical support. The project deals with the emergence of logistics in Paper industry and the growing importance of logistics in the companies functioning and improving its efficiency. The project has covered logistic companies in paper industry. Objective of the Project: The main aspects of preparing this project are: To identify the component of logistics To identify the need for logistics. To identify the importance of logistics To categorize the company according to the services they provide. To know about their specialization.

Relevance of logistics in paper industry INDEX

1.

LOGISTICS-INTRODUCTION

2.

REASON FOR LOGISTICS TO EXITS

10

3.

IMPORTANCE OF LOGISTCS

11

4.

LOGISTICS AND SUPPLY CHAIN MANAGEMENT o Relevance of logistics in our business.

12

12

5. o o 6

UNDERSTANDING YOUR SUPPLY CHAIN Dimension of supply chain External Factor MEASURING COST AND SERVICES Distribution Resources Planning

13 13 14 31

BEYOND THE BASICS a. Optimizing the supply chain b. Materials requirement planning c. Just in Time (JIT) supplies

34 35 36 36

REVERSE LOGISTICS

38

UPCOMING TRENDS IN THE PAPER INDUSTRY

39

10

HISTORY AND EVALUATION OF PAPER INDUSTRY

41

Relevance of logistics in paper industry 11 12 13


TOP 10

INDIAN PAPER

INDUSTRY

42 43 44

PAPER CYCLE CASE STUDY REVERSE LOGISTICS OPERATION IN PAPER INDUSTRY

14 CONCLUSION 15 16
RECOMMENDATION

51 52 53

BIBLIOGRAPHY

Relevance of logistics in paper industry

Introduction to the concept of logistics


Logistics is concerned with getting the products and services where they are needed when they are desired. It is difficult to accomplish any marketing or manufacturing function without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging.

The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible The formal definition of the word logistics is: - it is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Logistics involves the co-ordinate management of material and information flows throughout your organisation. Supply chain management deals with the same issues throughout the chain from your sources to your customers. Its objective is to simplify the supply chain to control total cost, improve total quality, maximise customer service, and increase profit. Logistics is a complex discipline: getting the right balance between ways of buying, moving and storing goods involves juggling a lot of balls at once. But getting it right is extraordinarily rewarding. Immediately, good practice can take a lot of non-value-added waste out of your systems. Perhaps more importantly, it will add value to your activities: it will make you more competitive. People have different names for these activities when they are managed together. Supply chain management, logistics and materials management are terms widely (and interchangeably) used. This document mostly uses 'logistics'. People mean different things when they discuss logistics: they often concentrate on transport, and limit themselves to systems, which move goods from factory gate to customer. Here we talk about the whole supply chain, and concentrate on transport, storage, information flows, and commercial relationships.

Relevance of logistics in paper industry Arth Shaw in 1915 pointed out that: the relations between the activities of demand creation and physical supply illustrate the existence of the 2 principles of interdependence and balance. Failure to co-ordinate any one of these activities with its group-fellows and also with those in the other group, or undue emphasis or outlay put upon any one of these activities, it is certain to upset the equilibrium of forces which mean efficient distribution. The physical distribution of the goods is a problem distinct from the creation of demand. There are many ways of defining logistics but the underlying concept might be defined as follows There are many ways of defining logistics but the underlying concept might be defined as follows: Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory through the organization and its marketing channels in such a way that current and future profitability are maximized through the costeffective fulfillment of orders.

Relevance of logistics in paper industry

Reasons for LOGISTICS to exists


Logistics management from this total system is the means whereby the needs of customers are satisfied through the coordination of the materials and information flows that extend from the marketplace through the firm and its operations and beyond that to supplies. For example for many years marketing and manufacturing have been seen as largely separate activities within the organization. At best they have coexisted, at worst there has been open warfare. Manufacturing priorities and objectives have typically been focused on operating efficiency, achieved through long production runs, minimized setups, changeovers and product standardization. On the other hand marketing has sought to achieve competitive advantage through variety, high service levels and frequent product changes. In todays more turbulent environment there is no longer any possibility of manufacturing and marketing acting independently of each other. It is now generally accepted that the need to understand and meet customer requirements is a prerequisite for survival. At the same time, in the search for improved cost competitiveness, manufacturing management has been the subject of massive renaissance. The last decade has seen the rapid introduction of flexible manufacturing systems, of new approaches to inventory based on materials requirement planning (MRP) and just in time (JIT) methods, a sustained emphasis on quality.

Equally there has been a growing recognition of the critical role that procurement plays in creating and sustaining competitive advantage as part of an integrated logistics process.

In this scheme of things, logistics is therefore essentially an integrative concept that seeks to develop a system wide view of the firm. It is fundamentally a planning concept that seeks to create a framework through which the needs of the manufacturing strategy and plan which in turn links into a strategy and plan for procurement.

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Relevance of logistics in paper industry

Importance of logistics
Logistics is the bedrock of trade and business. Without selling and or buying there can be no trade and business. Buying and or selling takes place only when goods are physically moved into and or away from the market. Take away logistical support trade and business will collapse

Integrates logistical activities In conventional management environment, various activities of logistics work in isolation under different management functions. Each pocket trying to sub optimize its objectives at the cost of overall organizational objectives. Purchasing trying to purchase at minimum price at the cost of what is needed by operations. Operations produce large quantities at minimum production cost ignoring demand leading to doom inventory. Logistics function of management brings all such functions under one umbrella pulling down inter departmental barriers.

Supports critical functions like operations and marketing Strong logistics support enables a company to move towards JUST IN TIME production system for survival in a highly competitive market.

Logistical costs For individual businesses logistics expenditures are 5% to 35% of sales depending on type of business, geographical areas of operation, weight/value ratios of products and materials. This is an expensive operation. Improvement in the efficiency of logistics function yields savings as well as customer satisfaction

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Relevance of logistics in paper industry

Logistics and supply chain management :


Supply chain management is about getting a smooth and efficient flow from raw material to finished goods in your customer's hands. It is a concept, which is increasingly replacing traditional fragmented management approaches to buying, storing and moving goods. Traditionally, the management of material flows has centered on stocks of product: on trains and boats and trucks; in warehouses and stores and factory-floor queues. Managing those stocks meant buying enough goods far enough in advance to ensure that long, steady production runs were seldom jeopardised by shortages of components. Tougher competition has brought shorter product life cycles and made that approach increasingly expensive. Replacing these 'inventory-driven systems' are 'service-driven systems'. This type of system, 'pulled' by customer demand rather than 'pushed' by a supply system, is long familiar in retailing and over the last decade has become a necessity in many manufacturing sectors. This document will help you identify and manage your supply chain. It will give you an understanding of the elements of logistics and supply chain management. It relates them to cost and service. And it points you in the right direction to improve your costs, service, and competitiveness. It is not a tutorial, but it gives managers an outline of the elements within each discipline, which together can improve competitiveness.

Relevance of logistics in your business:


Before you can start managing your supply chain better you must know: What you want from your business What your customers want from you How well your competitors meet customer needs. The place of the logistics discipline in your business depends on the answer to these questions. For some companies - largely those that assemble physical goods in volume and ship them to customers - there is an argument that managing the business is indistinguishable from 12

Relevance of logistics in paper industry managing its logistics. Procurement, transport, manufacturing, sales and customer service can all benefit from an integrated logistics function, leaving just marketing, personnel, finance and research as separate functions. In other firms, the role of time and place is less critical. Most service companies, and many low-volume manufacturing businesses would pay less attention to logistics skills

Understanding your Supply Chain:


If your company makes a product from parts purchased from suppliers, and those products are sold to customers, then you have a supply chain. Some supply chains are simple, while others are rather complicated. The complexity of the supply chain will vary with the size of the business and the intricacy and numbers of items that are manufactured. A simple supply chain is made up of several elements that are linked by the movement of products along it. The supply chain starts and ends with the customer.

Customer: The customer starts the chain of events when they decide to purchase a product that has been offered for sale by a company. The customer contacts the sales department of the company, which enters the sales order for a specific quantity to be delivered on a specific date. If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility. Planning: The requirement triggered by the customers sales order will be combined with other orders. The planning department will create a production plan to produce the products to fulfill the customers orders. To manufacture the products the company will then have to purchase the raw materials needed. Purchasing: The purchasing department receives a list of raw materials and services required by the production department to complete the customers orders. The purchasing department sends purchase orders to selected suppliers to deliver the necessary raw materials to the manufacturing site on the required date. Inventory: The raw materials are received from the suppliers, checked for quality and accuracy and moved into the warehouse. The supplier will then send an invoice to the company for the items they delivered. The raw materials are stored until they are required by the production department. Production: Based on a production plan, the raw materials are moved inventory to the production area. The finished products ordered by the customer are manufactured using the 13

Relevance of logistics in paper industry raw materials purchased from suppliers. After the items have been completed and tested, they are stored back in the warehouse prior to delivery to the customer.

Transportation: When the finished product arrives in the warehouse, the shipping department determines the most efficient method to ship the products so that they are delivered on or before the date specified by the customer. When the goods are received by the customer, the company will send an invoice for the delivered products. Before improving your supply chain, you must understand how your systems work now. This

involves collecting information about how you ship, handle and store goods; about how you move information, and about the requirements of your customers and suppliers for the form and timing of goods and information flows. With this information you will understand a lot more about how your business works, and can get on with the job of improving it There are a number of ways of analyzing the supply chain - and of managing the operation of it. One of the most useful is the node and link model, which plots links - usually representing movement over distance - and nodes - places where goods are stored or processed

Dimensions of supply chain?


Most businesses are surprised by how complex their supply chain is. A good first task is to discover how many suppliers and how many customers you have, where they are, and how important each is as a percentage of sales or purchases. Clearly, the more complex the system, the harder it is to manage, and this information will be invaluable later when you are improving and then simplifying your systems. Site location Physical distribution Warehousing Transportation Materials handling Inventory management Information handling packaging Forecasting 14

Relevance of logistics in paper industry

Site location The location of existing sites has far-reaching implications for logistics flows and costs, particularly in the single European market. Decisions about new locations for stores and manufacturing sites should be fed with information on customers, suppliers, and transport links. Physical distribution Goods move a lot during manufacture and distribution: you need to identify at each stage how they are moved - the transport mode - and who does the moving - the transport operator. Inside your site(s) there is likely to be transport, but this shades into materials handling issues, so concentrate on transport between suppliers and your sites, and between your sites and customers or intermediaries such as public warehouses or distributors. Physical distribution is not only a significant cost for most businesses, it has a direct impact on your competitiveness through speed, reliability and its controllability (or otherwise) in getting goods to your customers on time. 15

Relevance of logistics in paper industry All customers are becoming more demanding. Producers of intermediate goods are finding that their customers are demanding JIT (Just in Time) scheduling of deliveries. JIT has been used in retailing for many years. And while specialist transport operators have developed their services to meet these needs, many firms have been slow to adapt.

a) Transport mode Air, sea, road, rail? Canals...? For most routes, there is a choice. In many companies, the choice is made after rudimentary cost analysis. But all modes have characteristics beyond simple cost per kilogram/kilometer. For each link in the logistics channel particular modes will have particular advantages. Most freight is now carried inside the UK by road, a mode that has advantages of speed, flexibility and cost. Rail transport is obviously suited to trucking bulk loads or very heavy individual items. But even within the road transport mode, there are many choices depending on your circumstances.

b) Owning and controlling the means of distribution Owning transport is expensive. Increasingly, companies are looking hard at whether they should own their own transport. As a trip down any motorway will confirm, many have decided that contracting-out their distribution makes economic sense. There are exceptions: distribution-based businesses are obvious examples. The local service company which offers free collection and delivery of clean shirts or typesetting, as an important part of its value to customers is another. Against that, the UK has developed a highly competitive physical distribution contracting industry, which can handle most requirements from the occasional parcel collection to the dedicated operation of large fleets for individual customers. Apart from total cost, key factors involved in deciding whether or not to own your own transport include:

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Relevance of logistics in paper industry Control The ability to decide what to do with your own transport can be important. Against that, some contract distribution companies offer good control without burdening you with the inflexibility of your own vehicles. Customer service Whatever the ownership patterns, the key characteristic of successful distribution is that it delivers the right service to customers. Whatever the relative costs and convenience, if you can't buy a distribution service that hits that target, you will have to operate your own transport. Flexibility Using your own vehicles commits you to a particular mix of shipping sizes and modes. Common carriers and contract distribution companies allow much faster switching between modes and types of transport within a mode. For some people, the answer could be a mixture of methods, combining a van for small deliveries, a truck which can handle 'base' demand at full utilisation rates, plus outside operators used to deal with peaks and unusual demands. Management skills Unless your business is managing transport, there are strong arguments for using a transport specialist. Large companies can support the fleet sizes needed to justify the management quality and specialist tools needed by competitive transport operations, but it is among larger companies that the move to contract distribution management has been strongest. If your transport management is weak, you become uncompetitive. If your transport management is strong, you may be diverting valuable talent from the rest of your business. Recruitment and training Can you afford to hire and train the right people to operate your vehicles? Road transport is the least productive transport mode in terms of tonne-kilometres per person hour, so labour is always a significant cost. 17

Relevance of logistics in paper industry Return on investment Capital is always scarce: should you be investing in vehicles rather than other equipment? On the other hand, the 'cost of capital' has to be met by someone and the question may be whether resources are available at a lower price from third parties than from your own cash or borrowings.

WAREHOUSING :

There are many different ways to manage storage of goods and raw materials. Manufacturers will often have a plant with raw materials on hand and a warehouse nearby where additional materials can be secured when needed. Some businesses have central warehouses that feed smaller local warehouses. These are often placed strategically throughout the country to take advantage of shipping routes from major cities. In some cases, companies even bypass warehousing altogether by using cross docking. Cross docking is a method of moving products from the point of origin or manufacture directly to the consumer. There may be some minor handling or packaging in between, but warehousing is eliminated. This method reduces the cost of shipping and handling for businesses while eliminating storage costs. 18

Relevance of logistics in paper industry Efficient picking and packaging rely heavily on the logistics management of the warehouse. The slotting profile, or arrangement of stored goods, can have a great impact on how safely and how quickly workers can pick orders and pack them. Items that frequently come in and out of the warehouse should be easy to access and have sufficient space to store a large quantity. Less frequently ordered goods are best stored in less accessible locations. How and when stock is received, unloaded and replenished will influence the speed and efficiency of order fulfillment. This is where technology plays to greatest role. By using software and communications technology, warehouses can pick orders more quickly with few errors

Warehousing is that part of firms logistics System that stores products at and between point-oforigin and point of consumption, and provides information to management of the status, condition, and disposition of items being stored. A warehouse is a point in the logistics system where a firm stores or holds raw materials, semifinished goods, or finished goods for varying periods of time. In the macroeconomic sense, warehousing performs a vital function. It creates time utility for raw materials, industrial goods and finished products. The proximity of market-oriented warehousing to the customer allows a firm to serve the customer with shorter lead times. This warehousing function continues to be increasingly important as companies and industries use customer services as a dynamic, valueadding competitive tool. The warehouse must be in the right place. It must be the right size. It must properly protect its contents. And it must be organised to allow: Efficient delivery and placing Cost-effective use of its space Adequate access to stored materials Security from theft and weather Enough flexibility to deal with the largest (and smallest) items, which will need storage in the numbers that will be needed. Within the warehouse - and between warehouse and overall inventory management and purchasing systems - there is a need for interlocking mechanical and information systems so that stock is --- Put into known places in known order Retrieved quickly and in the right quantity Rotated properly (for example, first-in, first-out) 19

Relevance of logistics in paper industry As with transport (see 'Owning and controlling the means of distribution' above) you have the option of owning and/or managing your own storage facilities, or of contracting-out management and/or operations. Warehouse management is an established discipline: properly applied, its skills can save large amounts of money.

Transportation
Transportation functionality:
Transportation is the most visible of all functions of logistics and high contributor to logistics cost. We can see trucks, containers and wagonloads of material being moved from place to place as an activity directly associated with trade and business. We should also appreciate that this is an activity that adds highest amount of cost to the activity of making inputs and outputs available to consumers. Transportation function moves the products to meet customer expectations at minimum cost.

Modes of Transportation
There are five major modes of freight transportation, airlines, motor carries, pipelines, railroads and water carriers. Each of these modes has distinct characteristics that give them advantage over the others. Which mode is the best depends on the freight hauled cost, speed, reliability, capacity, length of haul and flexibility.

Rail Network
Rail network is fully owned and operated by government of India. This major step for facilitating movement of goods throughout the country at a very low cost for promoting trade and business in the country. Rail network stands for maximum tonne kilometers moved in India now, thereby being an important mode of transport in the country. Rail network accounts for 226 billion tonne kilometers and 55.8% of total tonne kilometers moved in 1982 in India.

Advantages of Rail Transport


Capability to efficiently transport large tonnage over long distances. Speed of operation. Useful for heavy and bulk products. 20

Relevance of logistics in paper industry Intermodal operations have also expanded through alliances. Rail roads are even concentrating on development of special equipment. There are unit trains where the entire train carrying the same commodity, which are bulk products such as coal or food grains. Unit trains are faster, less expensive to operate and quick as it can bypass rail yards and go direct to the products destination.

Disadvantages of Rail Transport


Not effective for small loads and short distances. Less flexible. Moves only on specific routes. Secondary transportation is needed.

Road Transport
Road transport is rapidly pulling the carpet from under the feet of railways, as we saw earlier, post world war. Its popularity is growing everyday. In India, 179.2 billion tonne kilometers were moved by roadways in 1982. This is 44.2% of total tonne kilometers moved by all modes as against 55.8% by railways.

Advantage of Road Transport


Door to door service to customer which neither rail nor sea nor air transport can offer. Very flexible as they can operate on all types of roads. Transport is quite speedy. Highest availability since they can drive directly from origin to destination. Highly suitable for short distances.

Disadvantages of Road Transport


Delays in transit time due to bad road condition and climatic hazards Unsuitable for very heavy and large size loads. Unsuitable for very long distance. More chance of accidents and damages to goods.

Water Transport
This mode is the link between countries separated by water. Business is known to have existed between far off lands for long time in the past. Sailing vessels existed since that far away times.

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Relevance of logistics in paper industry Example: Mechanized water transport came into being in the form of steam ships since 1800; diesel driven ships came into existence since 1920. Water transport is classified into deep water transportation and navigable inland water transportation or domestic water transportation on lakes, rivers or canals. Main advantage of water transportation is its capacity to move extremely large shipment at a very low cost. Inland water transport is not used to its full potential in India although we have used mechanized Inland

Advantages of Water Transport


The main advantage of water transportation is the capacity to move extremely large shipments. Suitable for long distances and large volume shipments. The capability to carry very high cargo at an extremely low variable cost places this mode of transport in demand when low freight rates are desired and speed of transit is secondary consideration. Regularity in sailing.

Disadvantages of Water Transport


The main disadvantage of water transport is the limited range of operation and low speed. Unless the port and destination are adjacent, supplementary haul by rail or truck is required. Labour restrictions on loading and unloading at docks create operational problems and tend to reduce the potential range of available traffic.

Air Transport
Generally, this transport mode is used in emergency rather than in normal times.

Main features of this mode of transport


Speed of transport is highest. Fixed costs are lower than rail or road or pipeline. But operating costs are highest. Air transport brings distant market closer perishables market in gulf countries. Overcomes the hassle and cost of setting up depots and service centers overseas. Full potential of peak seasonal demand can be exploited moving entire facility to meet peak demand. Test marketing is easy. Product can be shipped directly from the factory as time of high importance. 22

Relevance of logistics in paper industry

Advantages of Air Transport


Brings distant and new market within the reach Extends export market Meets seasonal demand at fastest rate Reduces time of delivery for urgent needs Flexibility in carrying goods of varied nature Minimum handling of cargo and hence less damages Low insurance premium due to less transit time.

Disadvantages of Air Transport


Comparatively costly mode of transport Caters on primary transport [airport to airport only] Certain categories of items are not allowed to be transported [hazardous goods as specified by IATA] Facilities not available through out the country Shipping space available is limited

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Relevance of logistics in paper industry

MATERIAL HANDLING:

One extremely encouraging aspect of logistics is the productivity potential that can be realized from capital investment in material-handling equipment. Material handling cannot be avoided in the logistics but can be reduced to minimum levels. Material handling is an integral part of manufacturing activity. It does not add value to the product but adds to the cost. Material handling problems are largely due to the problems of a bad layout. Many a problems of materials handling can be avoided by improving the existing plant layout. In warehouses, material handling operations are performed at the following stages: Unloading the incoming material from transport vehicles Moving the unloaded material to assigned storage places in warehouses Lifting the material from its storage place during order picking Moving the material for inspection and packing Loading packages/boxes/cartons on to transport vehicles.

Within a node - a warehouse, a plant, a retail store - goods have to be moved between incoming transport, storage, processes, and outgoing transport. The spectrum of available systems ranges from one person with strong arms through the supermarket trolley (in its way a revolutionary technology) to fully automated systems incorporating robot order picking and

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Relevance of logistics in paper industry automated guided vehicles (AGVs). Most handling systems, and the packaging adopted by suppliers, are geared to supplier-warehouse-process transactions. In fact increasing numbers of businesses are moving towards JIT deliveries: once supplier quality is sorted out, incoming goods can go directly into the process, without inspection or spending any time in a store.

Analysing the effectiveness of your existing handling systems involves assessing their cost and appropriateness to the rest of your operations. It also means knowing something about the characteristics of different systems. The key factors for assessing a materials handling technology are: The physical characteristics of loads The number of loads to be moved The distance to be moved Speed of movement required

Inventory management

Inventory is a critical element in the supply chain. It can be broadly classified as raw material and components, work in progress, finished goods and operational support inventories. Inventories are maintained in meeting production requirements, supporting operations, extending customer service and hedging against future uncertainties. In supply chain system, inventory is viewed as a liability, which reduces both the profits and the returns on investments 25

Relevance of logistics in paper industry

Few businesses consider the total inventory in the supply chain, including stock at suppliers' premises, stock on trucks and boats, in plant and at distribution outlets. Considered throughout the supply chain stock can be accumulated at places where it is cheap (that is, before value is added) and/or where it adds value to the customer (for example, at or near the customer rather than at or near your plant). In order to manage your of this is about information systems some is about analysing the physical storage, which stock effectively, you must know how much you have, its value, and where and how it is stored. Some interacts closely with materials handling systems. You must also know what your inventory costs. That includes:

Carrying costs.

In addition to the interest on the working capital tied up, there are the costs of storage space, stores staff, handling, deterioration, loss through damage or pilferage, obsolescence (particularly important in retail clothing and electronics), and insurance Opportunity costs.

Stock is normally unproductive capital. Carrying it restricts other investments you could have made with the same money. Stock-out costs.

In retailing, if an item is out of stock it could mean a sale is lost. In manufacturing, for the want of a spare part for a machine tool, production could be halted. A shortage of a raw material could mean using a more expensive substitute. A few large orders mean low purchase costs but high stock costs; many small orders mean low stock costs but high purchase costs. High buffer stocks mean low stock-out costs but high stock carrying costs. You need to strike the right balance between these various factors. 26

Relevance of logistics in paper industry

Information handling:
Goods can't flow without information: information allowing, forbidding, directing physical flows; information checking and confirming; information to provide proof and audit trails for taxes and billing. Because the information flows are so intimately connected with the physical movement of goods, it is sensible to deal with them as part of the same system. Quite often, it is the order processing function which is the weakest link in the network of dependent actions which allow material X to get from A to B. There are specific fixes for poor order processing routines but more generally their design must tie in with the needs and facilities offered by sales forecasting, production planning, procurement timescales, financial security, and the capacity and nature of the distribution, storage and handling systems chosen for the business. Too often, too much of the wrong information moves too slowly to the wrong people. In many companies, this is the legacy of systems based on nineteenth-century technology, unchanged because by and large the right things happen in the end. Examining your information flows allows you to: identify important information needs discard flows that don't add value speed and automate routine information transactions.

There are, of course, many more. In order to assess your current systems against your logistics needs you must establish for each information flow: who originates and 'owns' the information who needs to receive it what it is used for when it must be originated and received (and how much time it actually takes)

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Relevance of logistics in paper industry what information must be transmitted how reliable is the information and the process?

Packaging

Packaging is done to make handling and transporting cost effective. It protects the product in transit and handling. Packing is expected to facilitate lifting and moving by providing easy access to forks or hooks. Packing is also expected to display universal symbols and other instructions for handling. Eg. Pallets and containers, wooden boxes, wrapping etc.

Importance:

Packaging is an important function in logistics ensuring not only protecting materials and goods in the logistics process to ensure maintenance of the right condition until delivery, but also facilitating the other logistics functions of transportation, storage and handling. Packaging also enables communication regarding the contained materials or products. It also helps in improving the appeal of the product to the customer.

Types of packaging: consumer packaging and industrial packaging

Consumer packaging -There is no focus on logistics. Importance is given to marketing appeal and packaging the finished product. Packaging is designed for consumer convenience and appeal, marketing consideration and display. The main emphasis is in marketing. The marketing manager is more concerned with the consumer packaging because it provides information 28

Relevance of logistics in paper industry

important in selling the product in motivating the customer t buy the product or giving the product maximum visibility when it competes with others on retail shelfs.

Industrial packaging focuses on the handling convenience and protection during transportation, material handling and storage. This packaging protects the goods that a company will move and store in the warehouse and also permits the company the effective use of transportation vehicle place. It also have to provide information and handling ease. Industrial packaging is performed at various stages. The first stage is packaging for the product itself. For example soft drinks are packed in cans. The next stage involves packaging these products into larger cartons for enabling quantity handling. The carton is reffered as Master cartons. The next step of packaging involves unitization. In this case the master carton is consolidated into a single large unit to facilitate handling, transportation, storage and protection. The next is containerization, here the unit loads are placed in rigid containers for protection and handling facilitation. This enables efficiency in transport.

Forecasting
Forecasting is a key information resource. Material networks, even when well managed, are relatively lumbering beasts, and should be driven by forecasts (or better still, by firm orders) rather than by hope. So sales forecasting is a vital ingredient. If customers insist on being volatile, sellers must adapt. In some businesses, demand can be increased in slack periods the summer sale is a familiar example. In others, output flexibility must be increased. Better forecasting and a more responsive supply chain are the key ingredients in a virtuous circle of improvement in customer service. Good forecasting reduces the need for instantly-responsive supply chains: responsive supply chains reduce the need for clairvoyance in forecasts. Together they increase your ability to guarantee levels of service. There is more about demand forecasting in 'Improve your forecasting' in the chapter on "Fixing basic systems".

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Relevance of logistics in paper industry ii. Commercial relationships and transactions Parts of your supply chain are within your premises or otherwise under your direct control. But other parts involve links with third parties, including: customers suppliers of goods suppliers of services (eg shippers) regulatory authorities (customs, transport, taxation etc). Links with these external bodies involve flows of goods and information. Clearly, your processes and links must work with the processes and 'nodes' represented by your customers and suppliers. But the situation is complicated by the fact that all these parties are dealing with many other people as well as with you. And it is likely to be clouded further by the existence of commercial relationships governed by contracts. In the analysis stage of the work you need to establish what your customer and supplier requirements are for: goods and service - lot sizes, packaging, delivery/collection frequency, responsiveness information - how much, when, etc

3.2 External factors You also need to take account of external factors over which you have no control. You could, for instance, buy a year's supply of an important raw material all at once. If prices rise, or there are shortages, you gain an advantage over your competitors. But apart from the stock costs, prices might fall. In this situation, you will only know what you should have done after you have done it. Avoiding risk is therefore another factor in the quantity equation. You are also constrained on quantity by the time it takes a supplier to make the goods that you want - their lead time. If you want to buy small quantities once a week but your supplier takes three weeks from order to delivery, you may have problems.

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Relevance of logistics in paper industry

Measuring Cost and Service


Particular targets on cost and service need to be set depending on the particular needs of your business. All targets should be quantified and based on things, which can be measured at reasonable cost. To audit, and to keep abreast of changing circumstances, you must acquire information systems to provide key information regularly.

Measuring service. Measuring cost Set achievable targets And measure again Improving performance Armed with an understanding of where you want your business to go and an

understanding about how your systems work now, you can start setting improvement strategies and targets. For some businesses, particularly those who have a steady flow of materials (retailing, process manufacturing), a Distribution Resource Planning system may be advantageous. All businesses will need to set themselves realistic improvement targets and set to work to achieve them. How those targets are set will depend on your business and the goals you have set for it. If, for instance, you are committed to manufacturing bespoke high-value systems with rapid response to customers, a lot of the value you offer is in responsiveness. In your logistics channel you will value the ability of goods to be pulled through the system fast at short notice and will be willing to pay (within reason) for that value. You are likely to set your primary target in terms of service to manufacturing, service within the plant, and rapid service out to customers. If, however, your business has lengthy planning horizons and needs to move large quantities frequently then low cost will be the main aim and you will be willing to accept (within reason) sacrifices in speed or flexibility.

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Relevance of logistics in paper industry Speed/cost trade-offs are quality issues. There are other quality issues - for example, scrap/rework generated by damage in transport or in store - which can be affected by the way you operate the logistics channel. Either way, you need quantifiable targets. This process becomes easier if you deal with each node in the channel as the customer of the preceding node in the chain. Sometimes this will be literally true, as when your output stores are dealing with customer deliveries, or when your suppliers are shipping to you. Even where you are dealing with people inside your own organisation, it is a useful metaphor which helps deal with the transactions in understandable terms - of cost-benefit and value-added. It allows managers and supervisors to negotiate with their internal 'suppliers' in achieving local targets.

Distribution resource planning


A well-established set of tools which optimises inventory and distribution of finished product based on sales forecasts and/or customer orders. Works best when combined with MRPII (Manufacturing Resource Planning) for the manufacturing elements in the supply chain. Neither system addresses supply chain management as part of a total system, but both have been adapted by companies who take supply chain management seriously Integration with customers is important. You and everyone in your company must be working and satisfy your customers. You should review written customer requirements with everyone in the logistics department and with everyone in the company. It is not enough to a company to tear apart the written requirements and hand them to various departments. That is not integration. That is functional silos.

i.

Measuring service The logistics channel is a facilitator - a way of helping goods get made and shipped to

customers - and it must be managed in terms of the service it delivers. The nature of supply chain management, however, is that the chain is a complex system in which changes to one element affect many other elements. So improvement targets should be set cautiously for each element of the logistics channel; then the whole system optimized and targets redefined for planning and implementing change. In addition, you must work to sensible priorities. If your competitors are stealing a march because they offer eight-hour turn-round from order to delivery you must match

32

Relevance of logistics in paper industry or beat that (or find another product/service feature that your customers value higher) as a priority. This means you must know, clearly, what your customers want (ask them) the level of service which customers think they get from you, compared with the service they think they get from your competitors how well your service actually compares (benchmarks) against that provided by both your direct competitors and by comparable businesses in other markets. Answering these questions means investing in reliable research. It is important to make sure that you are chasing improvements that are attainable and valuable to your customers, rather than those, which you think are worthwhile. ii. Measuring cost A good logistics system is about delivering the most profit possible while satisfying customers: it gives value to your business as a whole. Measuring the cost of the logistics channel is important, but operating costs must be weighed against costs and benefits for the organisation as a whole before any useful management information appears. The things you want to measure depend on the business you operate, while the things you measure will depend on your accounting systems and internal information flows. Things you must measure include: purchase costs, including order, set-up, and discount costs (which tend to rise as order sizes reduce and delivery numbers increase) and cashflow (which may improve in the same circumstances) warehouse capital, property and operating costs total inventory cost, together with the cost of too much inventory (obsolescence, scrap) and too little (lost production, lost sales). Remember to include the opportunity cost of using money to buy stock (unproductive capital). 33

Relevance of logistics in paper industry transport costs, in total and by operation/commodity, including utilisation

rates/productivity for self-owned transport production costs transaction and documentation costs throughout the system return on investment for each of the above personnel costs, with productivity measured against industry standards or time and motion studies.

iii.

Set achievable targets Targets which can't be hit don't help anyone. However, a particular problem in businesses

with a history of adequate performance or slow decline is their readiness to accept low achievement. Any number of company recovery stories demonstrate what can be achieved by refusing to accept what everyone 'knows' can and can't be done. This is one of the stronger arguments for recruiting outside consultants or hiring new blood - getting an objective view of what it is reasonable to achieve. .

iv.

Improving performance:

Starting to improve your performance should involve: using basic professional tools to make sure that the elements in the logistics chain are efficient, focusing on those areas which are bottlenecks or failing to contribute to delivering the service you need buying or developing the information systems you need to understand and control what happens in your supply chain using a computer-based system to help optimize your logistics chain based on your actual business, and to help point you to the areas where improvement will bring the most extra profit.

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Relevance of logistics in paper industry

Beyond the Basics


Optimizing the supply chain Materials requirement planning Just in Time (JIT) supplies 5.1 Optimizing the supply chain We have seen that changes to one element in the supply chain are likely to affect the cost and/or performance of other processes. The process of optimising should in theory give the best fit between all the conflicting processes in the business. Most large businesses, and many small ones, are such complex systems that the job of collecting enough data in enough detail to provide an accurate optimization is a mammoth undertaking. Further, to evaluate alternative ways of doing things, the optimizing software must know the costs of all those alternatives in some detail. It can't play hunches with unknown data. a) The optimizing process 1. Gather data 2. Build a model of your business 3. Check the model 4. Let the model improve your profits without any practical constraints 5. Add practical constraints a few at a time to gauge their effects 6. Model a workable system 7. Implement it.

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Relevance of logistics in paper industry

Materials requirement planning


Materials requirement planning (MRP) is widely used in manufacturing and construction businesses. Once a manufacturer has established its production schedule for the coming 6 or 12 months, purchasing can then order and schedule supplies. Quantity and timing requirements are 'dependent' upon the production schedule. Thousands of items, all with variable lead times, often are involved in a production process. The starting point is the master production schedule detailing what will be produced and when. This schedule is then 'exploded' into a bill of materials, a detailed recipe of parts and materials. It provides precise delivery dates and quantities for each component in the recipe. If components arrive any later, production may be stopped. If they arrive any sooner, there may not be space available to store them. Ideally an mrp system runs on a Just in Time basis with no buffer stocks. Materials Requirement Planning (MRP) is a scheduling procedure for production processes that have several levels of production. Given information describing the production requirements of the several finished goods of the system, the structure of the production system, the current inventories for each operation and the lot sizing procedure for each operation, MRP determines a schedule for the operations and raw material purchases. This add-in provides all the features necessary to formulate and solve small examples.

Just in Time (JIT) supplies


JIT is not a technique. It's a management philosophy, now adopted by many successful manufacturing businesses, which aims to bring certainty and smoothness to the flow of materials through the supply chain, and to eliminate wasteful practices such as holding safety stocks. Businesses hold stocks because of uncertainty, either about the future level of demand or about the lead time to manufacture or replenish stocks. As well as coping with extra demand, buffer or safety stocks are held to cover an unexpected extension of lead times or to carry you if a supplier delivers a poor quality batch. The more unreliable your supplier, the bigger your safety stocks need to be.

36

Relevance of logistics in paper industry What you are trying to develop with a JIT approach is a network of quality-assured supply partners who can deliver the right quantity to the right place at the right time, every time. The delivery point may be to a retail outlet or it may be to a production line. Your supplies are delivered against an agreed schedule with absolute certainty on the day they are required, rendering expensive safety stocks redundant. Working towards JIT will make your entire business more competitive, for its implications spread far beyond purchasing and stock management. Among its requirements are: Improving your own sales forecasts and, where appropriate, your production planning so that both purchasing and suppliers can be better informed about requirements. JIT hinges on planning and certainty Forging close working relationships with probably a smaller number of suppliers for whom your business is important. JIT can only work where there is co-operation and trust Setting up effective information systems so suppliers are immediately aware of any changes to programmers. Without tight communications, JIT will break down awarding suppliers long-term contracts which give them the confidence to invest in meeting your future requirements a quality assurance programmer under which suppliers are accepting responsibility for quality, monitoring quality during rather than after production, and working towards zero defects removing non-value-adding activities throughout the whole supply chain, i.e. looking at the total cost picture. Of course, not all things will be achievable. If, for example, transport costs rule out many small deliveries, your optimum ordering quantity may remain above the quantities needed for Just in Time. However, by working away at improving these factors, you can increase your stock turn and service level, thereby realizing many of the economies of the JIT approach.

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Relevance of logistics in paper industry

Reverse logistics

Reverse logistics stands for all operations related to the reuse of products and materials. It is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics."[1] The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer. Importance of reverse logistics: Reverse logistics is important for: 1) Assets utilization (rather we can say re-utilization) 2) Assets recovery (To capture the value, which otherwise will be lost) 3) Profit maximization: Cost reduction through recycling 4) To fulfill the Environmental obligations e.g.: Waste recycling, Hazardous waste management e.g.: Car batteries disposal. 38

Relevance of logistics in paper industry

Upcoming Trends in the Indian paper Industry

Mainstream trends and challenging the current paper industry strategies


Paper business is consolidate and globalising. Companies with global strategies will gain market shares. The eastward expansion in paper consumption and production, to Asia and East of Europe. North American, Western European and Japanese markets are mature. Electronic media will bring major challenges to print media in advertising. Advertisers are looking for a return on their investment in a media environment where choice has exploded. Through advertising and packaging, the dynamics in paper markets reflect more and more the trends in consumer good marketing.

The dynamics in paper markets reflect more and more the trends in consumer good marketing. Paper industry strategies are likely to become more agile and more versatile

39

Relevance of logistics in paper industry Share of global and multinational strategies in consumer good industries and retailing grow. Brands are increasingly targeting specific lifestyle groups. This leads to more fragmentation in consumer markets. Brand loyalty and credibility assume greater importance Pressure towards agile, fast reacting concepts grows in advertising and packaging value chains.

Machines used in Indian paper industry

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Relevance of logistics in paper industry

History and Evolution of Indian paper Industry


Paper industry in India is the 15th largest paper industry in the world. It provides employment to nearly 1.5 million people and contributes Rs 25 billion to the government's kitty. The government regards the paper industry as one of the 35 high priority industries of the country. Paper industry is primarily dependent upon forest-based raw materials. The first paper mill in India was set up at Sreerampur, West Bengal, in the year 1812. It was based on grasses and jute as raw material. Large scale mechanized technology of papermaking was introduced in India in early 1905. Since then the raw material for the paper industry underwent a number of changes and over a period of time, besides wood and bamboo, other non-conventional raw materials have been developed for use in the papermaking. The Indian pulp and paper industry at present is very well developed and established. Now, the paper industry is categorized as forestbased, agro-based and others (waste paper, secondary fibre, bast fibers and market pulp). In 1951, there were 17 paper mills, and today there are about 515 units engaged in the manufacture of paper and paperboards and newsprint in India. The pulp & paper industries in India have been categorized into large-scale and small-scale. Those paper industries, which have capacity above 24,000 tonnes per annum are designated as large-scale paper industries. India is self-sufficient in manufacture of most varieties of paper and paperboards. Import is confined only to certain specialty papers. To meet part of its raw material needs the industry has to rely on imported wood pulp and waste paper. Growth of paper industry in India has been constrained due to high cost of production caused by inadequate availability and high cost of raw materials, power cost and concentration of mills in one particular area. Government has taken several policy measures to remove the bottlenecks of availability of raw materials and infrastructure development. For example, to overcome short supply of raw materials, duty on pulp and waste paper and wood logs/chips has been

Outlook
Outlook for paper industry in India looks extremely positive as the demand for upstream market of paper products, like, tissue paper, tea bags, filter paper, light weight online coated paper, medical grade coated paper, etc., is growing up.

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Relevance of logistics in paper industry

Top 10 Indian Paper industry, 2007 (figures in 000 tonnes)


Company Capital Expenditure (INR billion) 25.0 12.5 12.0 8.6 8.2 7.2 6.6 5.7 3.9 3.5 3.5 2.9 2.4 0.9 & 0.5 103.2 Capacity Addition (000 TPA) 200 240 200 84 90 180 30 15 75 140 30 55 60 30 20 1,449

ITC Ltd BILT Whitefield Paper Mills AP Paper Mills Ltd West Coast Paper Mills Hindustan Ltd Newsprint

Hindustan Paper Corp TNPL Century Pulp & Paper Rama Paper Mills Ltd Seshasayee Paper Sirpur Paper Mills Ltd JK Paper Ltd Star Paper Mills Ltd Orient Paper Industries Total

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Relevance of logistics in paper industry

Paper cycle

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Relevance of logistics in paper industry

CASE STUDY

Reverse Logistics operation in paper industry


Abstract
Reverse logistics is an issue that has attracted the attention of researchers since the last decade due to an ever increasing an ever increased awareness about economics, environmental and social benefits associated with them. In this paper, we report a case study of an Indian paper manufacturing company. For this company proper management of reverse logistics is key to its survival and growth .SAP-LAP Methology has been used for critical examination of the case company . It is observed from the case study that reverse logistics practices are at a growing stage in Indian paper manufacturing company. Indian companies are not fully utilized the real benefits of reverse logistics and there are ample opportunity for the improvement in reverse logistics operations.

Introduction
In this paper we report case study of an Indian paper manufacturing company that were dealing with some aspects of reverse logistics operation in their organization .Reverse logistic is an issue that has attracted attention of researchers since the last decade due to increase awareness about economic, environmental and social benefits associated with them .In simple terms a reverse logistic refers to the process moving goods from their typical final destination to another point, for the purpose of capturing value otherwise unavailable ,or for the proper disposal of products Industries are finding out that all the sales transactions are done by them are not final .In fact they must cope with escalating volume of returned /unsold/damaged/end-of-use/end-of-life products with increase competition in market and shrinked profit margin, companies are increasingly interested in saving achieved through the recovery of constituent materials. concerns to the environment and sustainable development have increased the relevance of reverse logistics in present day industrial scenario .Several countries have passed legal legislation prescribing norms for the product recovery and proper disposal of product. Today customers are educated and are more conscious of environmental friendly products. Some studies have indicated that customers are even willing to pay more for green products for cause of the environment thus economics as well as ecological reasons have given rise to new interest in the area termed as Reverse logistics.

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Relevance of logistics in paper industry

REVERSE LOGISTICS IN OPERATIONS IN PAPER INDUSTRY

Ratna et al., (1992) opine that paper industry is often regarded as a mature industry, where the products and production are stable and competition between companies is mainly limited to cost management. Due to it mature and large size, pulp and paper industry has considerable potential to cause environmental damage in different stages of product life cycle as forest management, pulp production, pulp bleaching, paper production, waste production etc. Patti et al. 2004 present a cost optimization model for multi variety recycled waste reverse logistic system for a paper industry which could help in developing appropriate manufacturing strategies that is units of varieties of paper produced, comparison of cost in different scenario of demand, etc. The waste management methods in paper industry include recycling, energy recovery and land filled disposal. Recycling is the preferred option in these companies. Thus reverse logistics operations assume great significance in paper industry. CASE METHODOLOGY

Sushil (2000) has recommended the use of SAP-LAP methodology for critical examination of a case company. SAP-LAP paradigm is the basis of flexible system management. This paradigm considers three basic entities in any management context viz. situation, actor, and process. It could be seen that a situation is to be dealt by an actor or a set of actors through a process or a set of processes. The freedom of choice exists with an actor who could be an individual, a group or an organization as a whole. An interplay of situation, actor and process (SAP) leads to learning action and performance (LAP). The obtained learning would direct the possible actions to be taken for handling the situation, which would result into the performance of the system with the new learning and actions the situation, actor and processes might result in a change into a new level. Such a dynamic interplay of SAP and LAP will act as the basis of ongoing managerial inquiry. The SAP-LAP paradigm incorporates both learning and action in a symbiotic manner coupled with performance .It not only takes into consideration optimization of processes but also incorporates multiple perspectives of various participative actors in a managerial process. Thus SAP-LAP analysis offers a learning and interpretive framework of inquiry into the problem under consideration. Therefore, for the organization which are in the process of adopting new technologies SAP-LAP framework could prove to be a useful methodology for analyzing the problem. For the adoption of reverse logistics practices, organization is not only adopting new management practices but also new technologies. Thus, SAP-LAP analysis could best fit in for the analysis of the cases.

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Relevance of logistics in paper industry

CASE OF COMPANY P1 (PAPER SECTOR)


COMPANY BACKGROUND:

P1 is one of the Indian largest manufacturing company .The company was incorporated in 1938 with an intial installed capacity of 20TPD and ever since has grown phenomenally. It is an ISO9000-2000 accredited company manufacturing a wide range of paper of different grades pacakaging , priniting and other industrial premium grade catering to almost all the segments of customers. P1 has four paper machines producing a wide range of products catering to different segments and requirements of customers.a massive modernaization and expansion programme is in progress to increase production , improve competitiveness and reduce pollution. P1 ha s fine distribution network throughout the country besides exporting papers to neibouring countries. P1 manufactures 61000 TPA of writing, printing and packaging papers in 2004-2005. In recognition of the continued efforts towards energy conservation by the Indian paper manufactures association in year 2005. MANUFACTURING PROCESS : Manufacturing process at p1 is depicted fig 2. P1 manufactures, industrial and printing papers using forest, based with fibrous raw material viz .bamboo ,poplar ,etc. Besides these ,waste paper is also used as raw material. The quality control personnel from the quality department of P1 take a sample of the wood to determine its moisture contents. The woods are subsequently tested and the report is sent. The selected wood is transported from the timber yard by the tractor , buffalo carts to the chipper house as per requirements . Woods logs upto 300 mm diameter are cut in the chipper house the oversize chips go for the further chipping the under chips go to the dust disposal section and the chips of required size are fed to the digestor house. The required size of the chips lies between 3 to 30 mm. P1 has six digestors each with an installed capapcity of 85m. In the process wood chips are treated with the cooking liquor in a pressing vessel at temperature .The prepared paper pulp is now washed and screened. The soda recovery unit deals with the production of white liquor steam and lime. These products are used for consumption in plant toward the production of different qualities of paper and board paper. The aim of stock preparation unit is to make the raw pulp ready for the paper machine to achieve the desired property in the paper .From blending chest ,the pulp is pumped to mixing chests through refiners. Dye, filter and other sizing chemicals are added in the mixing chest as per the required characteristics of the paper.Subsequently refining of the pulp is done in which the fibers are subject to mechanical treatments to get the desired properties of the paper. P1 has four paper manufacturing machines. The desired paper are finally cut to the desired size and marketing departments dispatches the order as per requirement of the customers.

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Relevance of logistics in paper industry

REVERSE LOGISTICS ACTIVITES AT P1 : P1 is conscious of its social responsibility towards the cause of the environment and has invested heavily in reducing pollution. The environment management at P1 indicates how a company progresses from reacting to environment issue to developing a proactive appoarach to the problem .P1 has taken important steps for reducing energy consumption, water pollution, air pollution and solid wastes generated. The company has taken important steps to reduce water consumption and decrease the overall volume of pollution discharges. REDUCING ENERGY CONSUMPTION Paper industry is one of the largest consumers of energy. Electricity and steam are the two key resources for effective management in this industry. To reduce energy costs , P1 has invested in co- generation facility. Also the steam produced at various sources is used for energy requirement at P1 .These accounts for 40% of the total energy consumed by P1. In recognisation to the continued efforts towards energy conservation, P1was awarded commendation certificate for the year 1999 under the national energy conservation award scheme in paper and pulp sector.

REDUCING WATER POLLUTION Water is principle ingredient used in large volume in paper and pulp industry. Waste water released from paper industry include chlorinated phenolics, dioxins, phosphates and suspended sediments etc. At P1 all the effluents undergo chemical treatments for removing the hazardous material and the quality of waste paper discharged into the environment is as per the norms set up by the pollution control board . Process waste water is fully recycled for use in making starch glue , P1 used bubble diffusion and total stream polishing for the treatments of waste water. REDUCING AIR POLLUTION Air emissions from P1 include sulphur di oxide , hydrogen chloride etc. P1 is equipped with paper dust collectors ,dust precipators and flue gas de sulphurization devices that reduce air emissions well below the regulatory standards . REDUCING SOLID WASTE Paper mills also produce non hazardous solid wastes such as sludges derived from their pulping and bleaching processes . In P1 it is ensured that the produced solid wastes are chemically treated before disposing off to the enviornmnet . The interview with the logistics managers indicated that recycling was the most preferred reverse logistics operation being followed at P1 . The logistics manager at P1 were of the view that the production line at P1 was tuned for producing virgin quality papers .They said that the company 47

Relevance of logistics in paper industry was planning to buy equipments in near future for recycling waste papers . Logistics managers were of the view that financial constraints, lack of appropriate performance metrics and lack of information and technology system were the main barriers affecting the implementation of Reverse logistics at P1 . SAP LAP ANALYSIS OF P1 CASE : Situation P1 is one of the leading producers of quality paper in the Indian paper industry since its entry into Indian market in 1938. The supply chain of P1 is complex one since it manufactures papers for a wide range of applications Serve competition exists in the paper in the paper industry with the recent entry of some MNCs in the market. There is an increased demand for production of environmental friendly printing papers that reduce the impact on the environment. More than half of the suppliers of p1 are small and belong to the rural areas . thus , the co-ordination with the suppliers is not reliable , leading to uncertainties P1 has not fully utilized the benefits of e business technologies. The company has a strong dealership network in the major Indian cities. More stringent environmental laws are in force for proper disposal of the wastes generated from the production of paper . P1 only produces virgin quality papers.

ACTOR Management of p1 especially the managing director and general manager of logistics and supply chain department. The employees of P1 in general and those in logistics and supply chain departments. Suppliers of P1 Dealers of p1 Business consultant of p1

PROCESS

Suppliers of p1 are connected to the factory by conventional means of telephone fax etc. The main raw material used for the production of pulp are wooden material , non wooden material and agriculture residue . For the imported materials received at kandla port and delhi port airport it has entered into a long term transportation contract with third parties specializing in the operation. 48

Relevance of logistics in paper industry Internet keeps p1 in touch with the business community of words paper industry The company uses four state of art paper machines for manufacturing quality papers

LEARNING In P1 the production planning is based on advance orders .in such a scenario , accurate forecasting is neccssitated. Usage of waste paper as raw material could cut down the cost of production . Energy cost is a major source of expenses for p1 To attain a clean corporate image , proper disposal of product is necessary Financial constraints and lack of appropriate performance metrics are identified as the main barrier in the implementation of reverse logistics at P1. For effective interaction with its customers efficient use of information and communication technology is necessary. Seminars and workshops on the benefits of reverse logistics could be arranged for the dealers and suppliers .

ACTION More amount of waste paper should be used as the raw material for emphasizing source reduction and also for reducing cost. Co generation facility should be installed to reduce energy ,cost , and lower the carbon dioxide emissions. The hazardous chemicals and bi-products of manufacturing should be properly treated before discharging these into the environment. E- business technologies should be used for the online management of entire value chain .at present only the dealers are connected to the company by extranet network . This should be extended to the suppliers. Third party logistics service providers are available who are specializaing in reverse logistics operations. P1 could think of outsourcing these activities in a phased manner so that it could concentrate on its core competencies. Benchmarking of reverse logistics operation and developing appropriate performance metrics in reverse logistics operation are important actions needed for the growth of p1 The websites should be more user friendly showing th einforamation needed by the member of the supply chain.

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Relevance of logistics in paper industry

PERFORMANCE :

Installation of cogenerated facility would reduce energy cost and lower carbon dioxide emissions . this would give p1 a competitive advantage over others . Outsourcing of reverse logistics operations to third parties could further help P1 fine tunning of its logistics activities. By emphasizing proper disposal of products, the corporate image of p1 can be increased They can also win the goodwill of the customers . With customers focused website ,the customers could have the option of choosing the product specification and placing order online. Benchmarking and performance metrics in reverse logistics operations could provide the company an opportunity to identify the gaps while implementing reverse logistics programs

Conclusion
In this paper, we have discussed a real life case study of an Indian paper manufacturing industry dealing with reverse logistics operations in their organization. This case study has provided some interesting observations about the status of reverse logistics practices in the Indian context. One of the main features of reverse logistics operations at P1 is that it has taken sufficient measures for the protection of the environment such as chemical treatment of effluents and proper disposal of hazardous by products, etc. Also, one of the major drawbacks at P1 is that it only produces virgin(new) quality papers from wood pulp. Waste papers are sparingly used as raw material for preparation of pulp and paper. One of the main shortfalls of reverse logistics activities at P1 is the lack of an efficient information and communication technologies (ICT) for the integration of its reverse logistics activities. Most of the suppliers of P1 are based locally and are connected by conventional means such as telephone ,fax,e-mail etc. The company had implemented an inhouse developed ERP system, which attained limited success .Thus for effective integration of reverse logistics, use of ICT should be increasing at P1. P1 has ample opportunity for the improvement in its reverse logistics activities .Interaction with the logistics and supply chain managers at P1 indicated that financial constraints and company policies are the chief barriers of reverse logistics operations. The continuous line production at P1 is tuned with producing virgin qualities of paper. Logistics and supply chain management of P1 were of the view that if waste paper is used as raw material, additional technologies would be required for removing the dye present in the waste papers.P1 at present is not using these technologies due to financial constraints. Thus, in the long run p1 should use these technologies for effective implementation of its reverse logistics activities. Its observed from the case study that reversed logistics practices are at a nascent stage in the Indian paper manufacturing industries. Indian companies have not fully utilized the real benefit of reverse logistics. There are ample opportunities for the improvement in reverse logistics operations.

50

Relevance of logistics in paper industry This case study was conducted with some limitations as well. Company had some reservations in revealing some of its technical information and data associated with the reverse logistics activites. Thus ,this was one of the major constraints in this exercise.

Conclusion
Indian paper industry is currently in the midst of a transformation with major capital expenditure underway and improving operating efficiencies is the major concern of the all players. All players are committing a large amount of investment, focusing on: Improving the operational efficiencies through rightsizing pulping capacities Brown-field capacity expansions Backward integration into captive power Adherence to pollution norms by chemical recovery The paper industry would witness an investment worth INR100.0 billion in next 2-3 years. The top 10 domestic players in paper sector would account for around 70% of the capex planned to be implemented between 2007-09. Metso Corporation must tap the opportunities available in the Indian paper industry. Although big players form the considerable market share, but the company should also tap the medium and small players for expansion in India.

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Relevance of logistics in paper industry

RECOMMENDATION
Indian paper industry needs the following for being globally more competitive. i. ii. iii. iv. v. Sustained availability of good quality of raw materials (forest based) and bulk import of waste paper to supplement the availability of raw materials. Adequate modernization of the manufacturing assests. Improvement of the infrastructure. Quality improvements and reduction in cost of production Import policy conducive for import of material, equipment, instruments, raw materials & technologies which are bearing of the quality and environment.

Based on the recommendations made in the Report and in consultant with the industry Associations, action plans are being finalized in consultation with other Ministries/Departments concerned. The Main Action Points proposed are as under:

Infrastructure
Improvements of key ports, roads and railways and communication facilities which will help the entire industrial sector including pulp & paper.

Raw Material
(i) For Wood Based industry Revision of forest policy so that plantation can be raised by industry/ Cooperatives of farmers/State Government. Degraded forest land to be made available to the industry for raising plantations. (ii) For Waste Paper based Industry Import of waste paper at minimum import duty. Introduction of eco labeling system where in products made from recycled fibre are rated higher than the products made form virgin fibre. Introduction of modern and effective collection and grading system. (iii) For Agro Based Industry Funds to be made available for technology upgradation for handling & processing of agro residue fibre, in small & medium scale industries. Government Policies

52

Relevance of logistics in paper industry Accelerated depreciation to partially mitigate high capital intensity. Allow duty free imports of new & second hand machinery/equipment for Technology Up gradation.

Bibliography

1. 2. 3. 4.

WWW.LOGISTICS MANAGEMENT.COM www.indian paper industry www.google.com


DONALD J. BOWERSOX & DAVID J. CLOSS, Logistical Management The Integrated Supply Chain

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Relevance of logistics in paper industry

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Relevance of logistics in paper industry

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