TL 1080

Supply Chain and Logistics Management Practises in MAS Linea Intimo

Ganeshan Anuruddha Janaka Bandara Chandika Dayarathne Suneth Dharmaparakrama Thushan Dharmawardana Randika Nirman Mohomed Roomy Frank Perera Nidarsha Senanayake Vishara Paranagama

101402T 101406J 101450L 101413D 101414G 101433M 101439C 101457N 101460R 101434R

Submission Date: 07th November 2011

Acknowledgements Our sincere gratitude goes to the following persons who have made the completion of this project report possible. Mr. Imalka Upendra - Assistant Manager/Commercial MAS Linea Intimo Mr. Rohan Perera Assistant Manager /Purchasing MAS Linea Intimo Ms. Sumithra Priyanthi Engineer / Quality MAS Linea Intimo

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Table of Contents Chapter 1 Introduction .. 4 Chapter 2 Supply Chain of Anne Taylor Seamless Camisole 5 Chapter 3 Differentiating Anne Taylor Seamless Camisole using Logistics Management .. 10 Chapter 4 Components of Logistics Applied in the Company ... 11 Chapter 5 Effectiveness in Logistics Management ... 13 Chapter 6 Business Process...16 Chapter 7 Logistical Needs and Information Management..18 Chapter 8 Impact of E-Logistics... 19

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Abstract This study is based on the Logistic Management methods utilized in MAS Holdings PVT Ltd Sri Lanka. The objective is to develop a supply chain for a selected product and understand the basic logistics principles applied behind it.

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CHAPTER 1 Introduction 1.1 The place of study MAS Holdings is the South Asias largest intimate apparel manufacture and the regions most rapidly growing provider of competition sportswear. MAS intimates, MAS sportswear, Amante are some sub brands under MAS holdings where they cater for the local and the international market. MAS Linea Intimo is a facility specialised in manufacturing seamless apparel for intimate, leisure, active & sportswear markets. Located in Sri Lanka using state of the art technology, Linea Intimo is a leading supplier for the world famous brands. 1.2 Location

The facility is located in Biyagama Export Processing zone. 1.3 Main Customers and Markets North America, North America, Western Europe, Eastern Europe, Eastern Asia, Southeast Asia, Mid East, Africa, Oceania are the main markets the business is taking place . ADIDAS, NIKE and Anne Taylor are the best customers of Linea Intimo.
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CHAPTER 2 Supply Chain of Anne Taylor Seamless Camisole

Anne Taylor seamless camisole is a unique product manufacture in MAS holdings because of the seamless nature of the product. It uses the state of art technology to create a garment with specifications prescribed by the customer. There are some testing standards that are required and specified by the customer. Anne Taylor sends those specifications including colour temperature, threads per inch, cover factor. This Seamless Camisole is mainly used in Yoga where they mostly concern about the comfort, stretch ability and mainly the capability of absorbing sweat .

MAS holdings purchases Yarn from manufacturers in Italy, these yarns are made out of Spandex fibres. The process of Spandex manufacturing can be described as follows. Step 1 Produce the prepolymer Step 2 Produce the spinning solution Step 3 Pump the spinning solution into a cylindrical spinning cell Step 4
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Fibres are bundled together Step 5 Fibres are transferred through a series of rollers onto a spool. Step 6 Final packaging and shipped to MAS Holdings When there is an order from Anne Taylor, Marketing section places an order in the system which is called as INR system. The main raw materials of this seamless camisole consist of elastics and threads other than Yarn. The order with an exact style no of the garment is then received by manufacturers in Italy and they send those requirements mentioned in the order as a bomb (all the materials required for the camisole are inside that). DHL is the main logistics service provider apart from Expo Lanka Holdings. If the Bomb is in low quantity Air freight is used but mostly sea freight is used for transportation. The basic supply chain for the Anne Taylor Camisole can be identified as follows. 2.1 Knitted Tube Using yarn a tube is knitted accordingly which basically has wales and courses vertically and horizontally. The gap between those wales and courses differ accordingly to Anne Taylors requirements.

courses

waves

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2.2 Basic Supply Chain of Anne Taylor Camisole

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2.3 Development Process Design Engineer makes the computer program including the details (texture, thickness, design, etc) the client need. The clients needs alter according to their customer requirements. The main feature of development process is concept development. In concept development designer get inspired by an inspirational source that can be an object, feeling or a combination of both. Designer ensure that the concept prescribed by the customer is integrated to the design.

2.4 Dyeing All the knitted tubes are died as a whole therefore in the first attempt there can be a deviation of shades. The tube which is processed from Yarn is having yellowish colour therefore it is needed to pre-set and colour accordingly. First bulk or the mini bulk of knitted tubes is dyed. After the dyeing process is over it is checked with the standards, this can be done manually or using a spectrometer. There is a special unit called die house to store and provide dyeing solutions in time .They use PASTEL colours to the purpose of dyeing. After getting the approval from Anne Taylor it is driven to the next section of production process.

2.5 Cutting and Trimming In the cutting process fitting construction Engineer cuts off the neck-line and arms and join the trimmings according to the clients need. 2.6 Quality Inspection After this process is over finished good is made. Then it is checked for any defects and deviations in standards in the quality management department. In this process they have multiple tests to perform regarding the properties mentioned. Once they test those properties they ask for the comments from the customer, Anne Taylor. According to the comments of the customer the design and engineering team add extra features. Finally they provide a Red Tag submission to the customer which is considered as the final. After approving the final submission the production process is carried out.
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2.7 Finishing and Packaging

Dispatch Shipment Documentation

Packing Guides

Finished Good

Finished goods then extensively packed into boxes and colour wise and according to the sizes. Then there is a documentation part to be done before dispatching the shipment using freight forwarders in Sri Lanka. The process of shipment can be illustrated as follows.

preparation of shipping schedule

Allocating an invoice

Preparation of invoices

Handover of the invoices to the forwarding agent

Update the shipment shedule

Arrange the gate pass and the dispatch note

Arrange the required vehicles

Arrange loading sheet

Submission of final instructions to the forwarder

Arrange the final shippingdocuments

Shipping

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CHAPTER 3 Differentiating Anne Taylor Seamless Camisole offering using logistics management Differentiation is a major component of a thorough product marketing strategy. Product differentiation is the inclusion of key attributes in your solution that you intend for the customer to perceive as more desirable than those benefits and qualities offered by competitors. MAS Holdings is having the competitive edge over other competitors because of the state of art logistics systems utilized inside the facility. All the logistics systems are computerised and they use systems such as INR system to effectively keep their information flow between suppliers, customers and the agents. The logistics department mainly focuses on eliminating additional costs. Previously they prepared different documentation for each purchase order that goes to Germany. This was a costly and time consuming procedure therefore now they have consoled all the purchase orders and do the documentation part. Forwarders cargo receipt that signifies MAS holdings received the shipment is consoled so the charges are low (FOB). The cargo is sent at once whenever possible to reduce transport costs. Before importing a shipment they do a cost benefit analysis where they decide upon the best cost effective and according to their lead time. Sea, Air or Courier transport will be selected according to breakeven point analysis of each mode. The Logistics department set standard and guidelines and they guide the commercial department to act according so that they decide the delivery time to reduce mishandlings. When there is an order which needs more attention they usually give their best to have the process on time. Adhering to these standards and procedures MAS Holdings has gained the competitive advantage over other players in the market.

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CHAPTER 4 Components of logistics applied in the company

4.1 Inventory Management Before producing the seamless camisole, the planning department produces a sample and calculates the consumption of each raw material required in the production. Depending on the size of the order that should be produced, the total consumption of each raw material is calculated and this is ordered from the Italian supplier through the purchasing department. As such, a pull inventory philosophy operates, where inventory is ordered only to requirement. 4.2 Warehousing All raw materials ordered should reach the warehouse at least 7 days before production commences. This is to ensure that once production starts, the process can proceed without any lags due to unavailability of inventory. Once production is completed, finished goods are packed and kept in warehouses until the date they should be dispatched to the carrier, who has the responsibility of sending the goods to the customer, Anne Taylor. However since the fashion industry is very dynamic, the finished goods are dispatched as soon as possible to reach the customer. As such both raw materials and finished goods do not stay in the warehouse for longer periods of time. 4.3 Transportation Transportation modes for transporting raw materials from supplier to the company and from the company to the customer are usually air transport and sea transport. Courier service is also used sometimes. The cost of a given transport medium and how soon goods should be transported are the factors used to determine the most appropriate transportation mode. 4.4 Information Management Management of information in the company is done through the IT system.

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4.5 Materials Management Material management involves handling stocks to minimize damages, selecting appropriate material handling equipment that suits the purpose and selecting appropriate storage mediums. The raw materials are stored in small plastic containers. Forklifts and conveyor belts are used to transport the goods within the factory premises and on the production floor. 4.6 Protective Packaging Protective packaging ensures that goods are undamaged by the material handling equipment, or the environment. Poly packaging is used to prevent damage to the goods from environmental conditions such as dust and water. The plastic containers used for storage prevents goods from being damaged while moving them. 4.7 Order processing Order processing involves translating the customer order into a dispatch requirement, allocating stock to meet the customer demand, allocation to delivery means and delivery dates and times, and invoicing.

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CHAPTER 5 Effectiveness in Logistics Management Since logistics is a process that interfaces and interacts with the entire company and also with external parties such as vendors, customers and carriers, logistics must be effective. Effective logistics revolves around five key issues movement of product, movement of information, time/service, cost and integration. Let us look at each of the above factors in terms of the product Anne Taylor Seamless camisole. 5.1 Movement of Product Product moves should complement the corporate strategy of a company in order to be effective. Products should not simply move, but should flow, from, to, between and among the various parties of the supply chain such that there is a supply pipeline where the product movement is efficient and consistent, thus reducing inventory imbalances in components and finished goods. This is achieved by ordering the necessary trims such as the yarn and thread from its Italian suppliers on time. Ordering is done through the IT system and controls are set to ensure that errors when ordering are minimized as much as possible. Orders above $ 25,000 have to be approved by the purchasing manager and order above $ 50,000 has to be approved by the CEO If the raw materials thus ordered do not reach the factory warehouse at least 7 days before the production is scheduled to start, immediate steps are taken to check their location and to guarantee that they would reach the warehouse before production starts. In order to ensure the smooth flow of product on the production line, production does not start until all raw materials have reached the factory warehouse. By this, the time spent as work-inprogress is minimized. As such product movements is managed effectively. However, there are certain problems regarding the clearance of the shipments from the customs. This is due to the inefficiency of the clearing process. Although this is not a shortcoming on the

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part of the company, government intervention in making the clearance process more efficient would result in a better product movement. 5.2 Movement of information Information is another vital factor. It is important to know what materials are required for production and where they are. When the order is received, the planning department makes a sample product and lists down all the necessary raw materials that go into it. By referring to this, all materials required for the production process is known. Sourcing the material to the country is done by the carrier appointed by MAS holdings. When the exact location of a certain shipment of raw material is required, the company inquires this from the carrier, who uses order-tracking services to find out where the raw materials are at that time. The advanced IT system in place provides accurate details of when orders are scheduled to be received, and when they should be completed and delivered to the customer. Internal information flows between the various departments such as planning, purchasing, logistics, manufacturing and finance are done through the integrated IT system as well as through the usual methods such as phone calls, faxes and e-mails. Morning meetings are held every day to discuss issues that should be given urgent attention and these issues are followed up to make sure that they are solved in the best possible manner. 5.3 Time/Service In the dynamic market environment it is essential to supply the finished product as soon as possible. For this the raw materials must be ordered and arrive completely, accurately and quickly, and orders should be filled quickly and accurately. This is achieved through the use of the sophisticated IT system. 5.4 Cost Logistics effectiveness is often measured through cost. Cost control is essential for corporate profitability. This factor is also managed quite effectively. Sometimes the company needs to order small quantities of raw materials. However, the supplier is only ready to supply in bulk quantities. In cases such as this, the company negotiates with the
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supplier to supply the required lower quantity at a slightly higher price. Even though the price is high, this is much cheaper than buying it in bulk quantities for which the company has no use in the short or the long run. Depending on the volume of the order, the most cost effective transport method is chosen. Whenever possible, water transport is used, since the costs are low compared to air transport. However, when the materials need to be brought down urgently, irrespective of the costs, air transport is used, since customer satisfaction by on-time delivery is also an essential factor. 5.5 Integration Integration within the company (internal integration), and between the company, customers and suppliers (external integration) is vital, since effectiveness requires each relevant element of the organization to perform its specific task well. Morning meetings are used as a method for integration within the company where issues are discussed and addressed. Detailed discussions are held with customers concerning their requirements to ensure that the exact product that they require is produced by the company. The product is developed until the customer is satisfied with it, and then only does production commence. Good relationships are maintained with the suppliers to ensure that the suppliers provide exactly what is required by the company for production purposes. The IT system currently in use by the company, contributes greatly towards both internal and external integration. As such it can be seen that logistics is managed effectively with reference to the above key issues.

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CHAPTER 6 Business Processes The business process alters from one entity to another entity. The uniqueness of the business process gives the company an added advantage in performing well in the market. In the MAS Holdings business process there are some main aspects. 1. A Goal 2. Specific inputs 3. Specific outputs 4. Uses resources In MAS holdings the business process has mainly influenced by the customer behaviour. The main aspects of the business process can be described as follows. 6.1 Goal A business process has some well-defined goal. This is the reason MAS Holdings does this work, and it is been defined in terms of the benefits this process has for the organization as a whole and in satisfying the business needs. 6.2 Information Business process of MAS Holdings uses information to tailor or complete their activities. Information, unlike resources, is not consumed in the process - rather it is used as part of the transformation process. In formation may come from external sources, from customers, from internal organizational units and may even be the product of other processes. 6.3 Output In MAS holdings the outputs are basically garments. These garments mainly satisfy external requirements. There are also fabrics they manufacture these fabrics becomes the feed of another process.

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6.4 Resource A resource is an input to a business process, and, unlike information, is typically consumed during the processing. The man power and time are considered as the main resources of MAS Holdings. They have effective rewards systems and time management systems for the optimum utilization of resources.

Information

Resource
Goal

Event

Business Process

Output

Reference: http://www.sparxsystems.com/business_process_model.html

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CHAPTER 7 Logistical Needs and Information Management MAS Holdings limited, uses various techniques to have a fine tuned information flow within the company and also outside the company and also to improve it day by day. Being the regions number one supplier of intimate apparel, MAS holdings, handles a large amount of apparel bulks. To serve the customer in an efficient manner and to manage the huge production throughout the year MAS holdings needs to have a well managed information system. The company possess a software INR which is installed on the company network. Every transaction or order should be uploaded to the system. For an individual who is interested in a certain transaction can easily log into the system through his/her account and acquire all the information regarding the respective transaction. To prevent human errors in cases such as ordering the same order twice, the software is programmed to identify the transactions by a code. The company has a well interconnected relationship among its production departments. Through an uninterrupted information flow, the company manages to function without unnecessary interruption. This contributes to uplift the companys efficiency. When dealing with its customers, the MAS Holdings is highly concerned about their logistical needs. To manage the logistics of the company the company possess a logistic manager. He manages not only the schedules of the goods to be transported to the end customers, but also the raw materials which should arrive at the purchase department. If the company is behind schedule or has spent more than the budget, the managers are expected to explain themselves to the senior employers. When managing the logistical needs of the customers and the company, mostly internet mail is used. To contact even the major suppliers of raw materials, the company uses E-mails. If an urgent raw material need arises during production, the company cannot wait for sea freight. The raw materials should be air lifted. For this the company would 1st contact a freight transportation company in Sri Lanka (Normally DHL). And then through their agent the raw material order is placed and is transported to Sri Lanka efficiently avoiding any productions pauses. To face these kind of circumstances, and to serve the valued customers logistical needs particularly, the company always try to manage the information flow very well.
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CHAPTER 8 Impact of E-logistics E-logistics is the process of procurement, movement and storage of materials, parts and finished product inventory and the related information flows, through the organization and its marketing channels over electronic systems such as the Internet and other computer networks. E-logistics facilitates you to identify information technology as an open-ended business solution. The current system of logistics that is in operation in the company can be drastically improved through the use of e-logistics. Suppliers will be integrated better, and this would lead to better performance of the suppliers. Deeper relationships with suppliers would mean that the company would have a competitive advantage. It would also make the managing of suppliers across time zones, languages and currencies much easier.

Information flows, both internal and external will be much faster and efficient if e-logistics is used. This would result in improved decision making and the possibility of errors when information is passed on is reduced to a great extent. Use of e-logistics would make it easy to locate where raw materials such as yarn, trims and dyes, and the finished product is stored, enabling faster processes, thereby reducing the time taken. Reducing time taken between the placing of an order by the customer to the delivery of the finished product is very essential, especially in the fashion industry since the business is very dynamic. It would also help to determine where a certain item is at any point of the supply chain, which would be useful when tracking inventory.

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