DISADVANTAGE OF 3PL:

Loss of control this is the single biggest disadvantage of using a 3PL where there may be a
certain comfort level to servicing your customer when logistics is in house, that feeling is gone
when you outsource to a 3PL.
Higher exit barriers- it is very difficult to reverse the decision to outsource once your
organization has signed up with a 3PL provider. Contracts are usually 2-5 years in length with
penalty clauses for early termination.
Unexpected fees- unless explicitly stead in the contract, extra usage fees may apply. This is
dependent on the type of contract that is used, open-book or closed book. In open book, all costs
are visible to both parties and a management fee is applied or is applied for the 3 PL service. In
closed-book a cost per piece is charged, so as the volume handled increases, the cost increases.
Major part of logistics at ashok Leyland encore plant is taken care of TVS logistics. TVS
logistics provide services like inbound logistics and warehousing. TVS logistics takes care of the
milkrun process and the inter unit process. Mahindra logistics take care of the logistics at the
bhandara and alwar plant. Materials are also transported from the suppliers to ashok Leyland
through other approved logistics services. The supply of materials follow a schedule called as the
rolling plan r production plan. Now let us see and detail about the production plan.

PRODUCTION PLAN OR ROLLING PLAN:

The production plan or the rolling plan is a schedule given by a specified group for the supply of
materials as per he production requirement and the market demand. The production plan is
devised during the first week of every month at the production planning meeting (PPM) the

production planning meeting (PPM) is conducted during the mid of every month for revisions if
any. Ashok Leyland follows a production plan which is scheduled for a period of 12 weeks of
which 6 weeks material requirement is firm and the reset is tentative. At frits, a monthly
requirement is scheduled for the 3 months, and then monthly requirements are converted into
weekly requirements. The supplier and the logistics serive providers (for milkrun and inter unit)
are given the schedule. The supplier supplies the material in accordance with this schedule. The
logistics service province is also instructed to collect the material in accordance with this
schedule.

RECOMMENDATIONS:

The collection schedule should match with the material planning schedule with necessary

updating wherever necessary.

Supplier wise allocation for the collection of the material should be based on the output
of the supplier.

MODELS OF SUPPLY:
To enable a smooth flow of materials from the suppliers and between its units, ashok
Leyland followed various models of supply. They are listed below:
Milkrun process
Direct inbound logistics form suppliers
Inter unit logistics

MILKRUN PROCESS:
Milkrun process, is a logistics technique for the collection and transportation od goods from
suppliers by the logistics servicer with a defiled delivery route, in which various stops are
planned and executed in terms of quantities and timings, rather than awaiting the delivery from
the suppliers. In the milkrun process the suppliers and the logistics service provider are given the
material collection schedule. At ashok Leyland, TVS logistics takes care f the milkrun process at
Chennai, Coimbatore, pune, hosur and Bangalore. In the milkrun process are Chennai, TVS
logistics collects material from 85 suppliers every day in various areas like gummidipoondi (two
routes), ambattur (four routes), guindly, perungudi, MM nagar and point collection (two routes).
All the collected material is consolidated at the hub store wise and the material is loaded in truck
the day material is collected. The manifest is created at the hub for all the items in the truck. The
next day, material is dispatched from the hub to ashok Leyland. At ashok Leyland the material is
inwarded at the gate, goods receipt note (GRN) processed, quality control processed (for nonself-certified items) stores processed and then the material reaches the assembly line. Before in
awarding the material at gate the manifest is verified at the TVS logistics office at ashok Leyland
and cleared for errors if any.
Supplier

milkrun model
Milkrun operation

Supplier

hub

Production
planning (PPM)

12 Weeks Rolling Plan

Schedule given to suppliers and

logistics service providers

Millkurn model
Logistics service
providers to collect
material from suppliers

Delivery of the
material at ashok
Leyland

Receipt of material,
inspection &assembly

Finished product

Delivery of the
material at hub

PROCESS FLOW DIAGRAM FOR SUPPLY OF MATERIALS FOR

MILKRUN MODEL:
Direct inbound logistics from suppliers:
Direct inbound logistics, is a logistics technique for transporting the goods from suppliers, in
which the supplier is responsible for transporting the goods. The logistics carrier may be owned
by the supplier or the good will be sent by other approved logistics service provider. For these
logistics service provider the amount will be paid by ashok Leyland or the amount may be billed
in the invoice. In this model od supply the schedule is given to the suppliers only. The supplier
takes care of sending the material. At ashok Leyland the material is inwarded at the gate, goods
receipt note (GRM) processed, quality control processed (for non-self-certified items) stores
processed and then the material reaches the assemble line. Before inwarding the material at gate,
the manifest is verified for errors if any. If there are any errors. The errors are cleared and then
inwarded at the gate.

Supplier

direct inbound model

Ashok Leyland

Production planning
meeting (PPM)

12 weeks Rolling Plan

Schedule given to Suppliers

Supplier to transport the material by

other approved logistics service provider

Delivery of the material at Ashok

Leyland

Receipt of material ,inspection

& assembly

Finished product

PROCESS FLOW DIAGRAM FOR SUPPLY OF MATERIALS FOR

DIRECT INBOUND MODEL:
Inter unit logistics:
Inter unit logistics, is a logistics technique for transporting the goods between various units of
ashok Leyland. TVS logistics and Mahindra logistics takes care of the inter unit process. TVS
logistics takes care of the inter unit process at Chennai, hosur and alwar unit. Mahindra logistics
take care of the logistics at bhandara and alwar unit. A manufacturing schedule is devised and
given to the production department. The production department at the entire unit support each
other for the requirement of material. The logistics. The logistics service provider is advised to
collect the material from the unit by the production and deliver at ashok Leyland. At ashok
Leyland the material is inwarded at the gate, goods receipt not (GRN) processed, stores
processed and then the material reaches the assembly line. Before inwarding at the gate, the
material is validate and cleared for errors if any.

INTERUNIT MODEL

ASHOK LEYLAND,

ASHOK LEYLAND, ENNORE

Production planning
meeting (PPM)

Manufacturing
schedule

Production

Support to other units with

logistics service providers (TVSL
& Mahindra)

Logistics service providers to collect

material from various units

Delivery of the material

at Ashok Leyland

Receipt of material ,inspection

& assembly

Finished product

PROCESS FLOW DIAGRAM FOR SUPPLY OF MATERIALS FOR

INTERUNIT LOGISITICS MODEL:
VENDOR MANAGED INVENTORY :
CHAPTER-6
A means of optimizing supply chain performance in which the manufacturer is responsible for
maintaining the distributors inventory levels. The manufacturer has access to the distributors
inventory data and is responsible for generating purchase orders.

Under the typical business model:

When a distributor needs product, they place an order against a manufacture. The distributor is in
total control of the timing and size of the order being placed. The distributor maintains the
inventory plan
Vendor managed inventory model:
The manufacture receives electronic data (usually via EDI or the internet) that tells him the
distributors sales and stock levels. The manufacturer can view every item that he distributor
carriers as well as true point of sale data. The manufacturer is responsible for creating and
maintaining the inventory plan. Under VMI, the manufactures generates the order, not the
distributor.

The goal of vendor managed inventory is t provide a mutually beneficial relationship where both
sides will be able to more smoothly and accurately control the avaibility and flow of goods.
In VMI a manufacture or distributor assumes the role of inventory planning for the customer
extensive information sharing is required so that the manufacture distributor can maintain a high
degree of visibility of its goods at the customers location. Instead of the customer reordering
when its supply has been exhausted, the supplier is responsible for replenishing and stocking the
customer at appropriate levels. Wal-Mart has mastered VMI and is the company against which
many other organizations benchmark themselves.
Customer benefits:
When the supplier can see that its customer is about to exhaust its inventory, the supplier can
better prepare to replenish the customer because the supplier can then better schedule its own
production distribution. Customers will reduce eliminate stock outs because they will not have to
reorder goods at the last minute without knowing whether the supplier has the ability to restock
without interrupting the customers operation. Therefore, part of VMIs goal is to reduce
uncertainty that arises when the supplier is blind to the customers inventory status.
Supplier benefits:
As long as the supplier carries out its task of maintaining predetermined inventory and avoiding
stock outs, it will be able to lock in a VMI- supported customer for the long term with or without
a contract. This will produce a steady and predictable flow of income for the supplier and reduce
the risk that customer will switch supplier (switching would be too costly for the customer). A
VMI arrangement will allow the supplier to schedule its operations more productively because it
is now monitoring its customers inventory on a regular basis. Furthermore, reductions in

inventory will be achieved once the supplier develops a better understanding of how the
customer uses its goods over the course of a year

VENDOR MANAGED INVENTORY AT ASHOK LEYLAND:

The vendor managed inventory in encore plant of ashok Leyland is managed by Mahindra
logistics (3pl). The role Mahindra logistics is maintaining the logistics of part numbers between
the vendor (supplier) to customer (ashok Leyland).
Their duty is for the management of delivery of right part number to right a store at right time so
that the part number to the assembly do not delay. One more responsibility of unloading of part
numbers from vendor end to the VMI area and storing them at respective stores is other activity.

Demand forecasting

Master production
schedule

Material requirement
planning

SAP
Materials for
production is divide
From store to
Vehicle
Customers
tosales
sale with respective these
After
assembly
verticals

Metallic
Sheet
Nonmetal

Advance shipment
notice

plant upload
bill of
material
partnum

Bracket
ways

child
each

individual
supplier

zzzzzto stores
Transfer

production
planning and
control

Goods receipt notice

Local supplier
Advance
shipment notice

Data processing
operator

Casual labor

supplier
Officer

VMI

Executive

CAUSE
ASN not available
material not recovered
waiting for store
confirmation
part number mismatch
ASN quality mismatch
later dispatch
future data issue
ASN wrong

NUMBER OF
INDENT

PERCENTAGE
4
4.6
4
4.6
69
1
2
4
1
1

79
1.1
2.3
4.6
1.1
1.1

NUMBER OF INDENT

4 21 1 4 4
1

69

ASN not available

material not recovered

waiting for store

confirmation

part number mismatch

ASN quality mismatch

later dispatch

future data issue

ASN wrong