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FACULTY OF BUSINESS AND MANAGEMENT

SEPT / 2011

BBLM 4103

LOGISTIC MANAGEMENT

MATRICULATION NO. : IDENTITY CARD NO. : TELEPHONE NO. E-MAIL LEARNING CENTRE : : :

790121075658002 790121-07-5658 019-2830212 [email protected] PPT BANGI

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CONTENTS 1.0 2.0 INTRODUCTION SUPPLY CHAIN MANAGEMANT 2.1 Materials Management i) Raw Materials Inventory ii) Order Processing iii) Transportation iv) Procurement v) Protective Packing vi) Warehousing vii) Material Handling viii) Information Maintenance 2.2 Physical Distribution i) Just in Time system (JIT) ii) Vendor Monitoring Item (VMI) 3.0 REVERSE LOGISTICS i) Market Claim ii) Retrieve Reusable Material

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CONCLUSION

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REFERENCE

OOI EAN EAN 1.0 INTRODUCTION

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Kian Joo Canpack (Shah Alam) Sdn. Bhd., as a manufacturer for milk powder packer formed in year 2004, as a subsidiary company of Kian Joo Group Berhad, one of the largest producer of packaging material in South-East Asia. The origin business of Kian Joo Group is producing packaging material, from tin-can, aluminum can, carton box, PET bottle, processes food can, dry food can, beverage can, and paint can. In Kian Joo corporate profiles has defined, packaging as part and parcel of marketing a product. Well-designed packaging able to enhances the products marketability and strengthen a brands position in the market. Begin in year 1956, founded by the late Mr See Boon Tay with a few close friends, after a major restructuring and takeover of several smaller tin-cans produce companies, Kian Joo Group had growth and established to list in KLSE. In order to expend the business toward next higher level, the group decided to venture into the business of contract packing.

Contract packing means that the manufacturer provides the service of manufactuer and also packing the products of clients needs which contain the clients brand name. This is extra advantage for Kian Joo Group, as one-line production from produce the outer packaging material, till the inner product as the sole packer for the selective clients. This is the win-win situation that provides the solution about resources, as Kian Joo Group secure in the business contract; and the clients have save on the manufacturing costing to sustain own factory and others packing materials expenses. To fulfill this segment of the market, Kian Joo group has set up two companies; one is Kian Joo Canpack (Nilai) Sdn. Bhd., sole manufacture in soft drinks packer, and Kian Joo Canpack (Shah Alam) Sdn. Bhd., which deals in contract packing for milk powder.

Kian Joo Canpack (Shah Alam) Sdn. Bhd becomes the one-stop center for the companies that produce milk powder. Kian Joo Canpack provided the full service besides research and design related milk powder packing materials, and even the superiority of raw materials (milk powder) to fulfill customers requirement. These include invest and

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develop the supreme of a microbiology lab, which able to assists in the companys task of ensure the best quality of its entire packed product, milk powder.

Currently Kian Joo Canpack is the sole packer for Dutch Lady Milk Industries Sdn. Bhd. They pack milk powder on behalf of Dutch Lady for our Malaysia local market, and also export the Dutch Lady Brand milk powder to Hong Kong, China, and Middle East.

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2.0 SUPPLY CHAIN MANAGEMANT In order to fulfill the needs of its customers, Kian Joo Canpack has utilizes sources for their raw materials from other subsidiaries within the Kian Joo Group. These supply chain link within other sisters companies thus act as the suppliers for Kian Joo Canpack. Among the companies that supply the raw materials are Federal Metal Printing Sdn. Bhd., Box-Pak (M) Bhd., Multi-Pet Sdn. Bhd., and Kian Joo Can Factory Sdn. Bhd.

Although with the supportive from the sources, the daily operation of Kian Joo Canpack do requires good coordination on the supply chain management. According to

Wikipedia.com, had define the supply chain management (SCM) as the management of a network that interconnected business involved in the ultimate provision of product and service packages required by end customers.

Supply Chain Management is a network of facilities that procure raw material, transform them into intermediate goods and then into the final product. The final product is then delivered to the customer through a distribution system. In a simple word, SCM is a link that starting from the supplier right up to the end-customer. This process is refers to the management of interaction and coordination of the upstream and downstream flows of materials, final goods and related information among supplier, the company, resellers and final consumers.

OOI EAN EAN 2.1 Materials Management

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A tin-can of milk powder, besides the primary raw materials as the ingredient of the milk powder mixed, the tic-can, also the add-on items like plastic cover, the plastic scoop, and the printed label. In order to complete one into production, each raw material needs to be calculating and plan to match with the right quantity. Example as 1.5kg milk powder tincans required 1 plastic cover, one plastic scoop and 1 printed label. When production of 350000 tin-cans, would require few hundred tons of milk powder, tons of plastic cover and plastic scoop, also printed labels. Besides the main product, there are also involve the wrapping material such as film wrap, seal labels, carton and others.

The entire process flow involved, from acquiring raw materials right up to producing the finished goods, planning, monitoring and control are the main tasks involved. To have the efficiency process, that is the reason Kian Joo Canpack does need a department of workforces and also an intelligent system to manage on the planning. The coordinated set of techniques is to plan and execute all steps in the control of the acquire raw materials from vendors, transform them into finished goods, and deliver to customers.

Nowadays, there are several global recognize system like SAP, KIWIPLAN, SWAN, which able to implement and provide the accurate data within the organization, especially in manufacturing industries. The basic function of the system provided inventory control, bill of material processing and elementary scheduling. By using SAP system means that the organization keeps detail all the information needed by management, as long as Kian Joo Canpack has suppliers and customers information consistent, and up-to-date maintain as the data is utmost importance.

Using control systems in each department will make the data and information coordinate and produce the expected result. This will control intensive of the business process and generate immediate feedback.

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The primary materials management activities that able to sustain Kian Joo Canpack supply chain management include:

i)

Raw Materials Inventory Based on common practice, demand increases, production will also increase. As in the manufacturing line, the positive situation can quickly turn into negative when the raw materials needed for production are inadequate, or out of stock. When the new order receive from marketing sides, the material planner able to calculate and make adjustment of how many consumption require for the particular order. By using system control, the material planner able to monitor the inventory stock level, when result show is low, they are able to make purchase inquiry to procurement. Without waiting for the

psychical stock check that take a lot of time. Turn the other way round, material planner also able to provide data which the specify inventory item in the high stock level.

ii)

Order Processing Although Kian Joo Canpack is sole packer for Dutch Lady, however, due to there is different type of product in mild powder, example there are several types of infant milk powder, golden age milk powder with different supplement level and also age 3 and above milk powder. And also the purchase order made from different countries. Thus, the needed of stable order process flow to control of each order received, till the other end of the amount of inquiry of raw material, and the supply chain within the suppliers in term of producing and scheduling. quantity and in time delivery. This is to achieve customer order in

iii)

Transportation Logistic plan play an importance role in Kian Joo Canpack supply chain management. From the starting point of raw material estimate arrival, whenever, any single raw material delay, will give manufacturing process 6

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schedule impact and possible cause delay to the finished goods estimate departure schedule. This means that clients are unable to receive their orders on-time-in-full (OTIF). This could lead to dissatisfied clients and angry customers, here means the market end-consumer, who in need to buy Dutch Lady milk powder for their babies or children, that facing Dutch Lady milk powder out-of-stock in market.

Furthermore, there are other supporting activities that able to support on Kian Joo Canpack supply chain management such as, iv) Procurement Kian Joo Canpack foresee as the position of intermediate, between the raw materials suppliers, and also Dutch Lady Product Brand Company. The

procurement holds a role that to balance in between, from the material costing till the selling price. The supply chain management is bringing secure profit for their suppliers and also provides the growth development together with the product company.

v)

Protective packing Kian Joo Canpack has the major advantage among competitor is the mother company is the packaging giant in Malaysia. Thus, the priority from the other sister companies are able support in short lead time and also shortage situation whenever, demand increase. And also the carrier packing cases that in need to use in container delivery like pallets, film wrap, and security labels. In additional, Kian Joo Canpack is supply on the dry food contain, the higher level of food grade packing system are inquiry.

vi)

Warehouse Kian Joo Canpack has a semi-auto warehouse inventory system. With well tidiness practice, the warehouse has the multifunction of save stocks of raw materials, and also loading with the finished goods. 7

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vii)

Material Handling By using system control, any batch of raw materials is receive, the department in charge will checking on the quality of the incoming material and it is then put through the whole process of turning it into finished goods. Before the goods deliver, each process flow will have it quality control, in order to assure the finished goods is in the finest quality for consumer.

viii)

Information Maintenance Since each departments aware on their role, and the data capture in the system for each station and flow to retrieve. From receive on a purchase order till process order to inform internal production for specifies jobs until the monitoring on each deliver, able to reduce any over-supply or outstanding order. By different department of the company would able to known on the rest of the other related departments.

With the combination of entire activity of the work process, an example for Kian Joo Canpack supply chain management would be, the Production side needs to increase its output, as Marketing department received a major order from Dutch Lady Hong Kong, date requirement by December 2011. Meanwhile, the material planners has realize that two of raw materials are not enough in stock, and did request procurement to place order with suppliers. The production planner will assign the working shift and schedule whenever the raw materials supply allocate into the factory, and in the same time, the logistic department, have the transportation booking arrangement for the delivery schedule as per Dutch Lady Hong Kong required.

OOI EAN EAN 2.2 PHYSICAL DISTRIBUTION

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According to www.ediuniversity, Supply Chain Management is all about the delivery for customer and economic value through integrated management of the flow of physical goods and associated information, from raw materials sourcing to delivery of finished products to consumers.

Kian Joo Canpack has expedited on the milk powder raw material sourcing, till the design of the packaging and also the distribution to the location that the buyers required, here mean Dutch Lady. For the inland delivery, Kian joo Canpack able to deliver the large batch of finish goods to several local hypermarkets warehouse; and the hypermarkets will have their own transportation to distribute the goods towards their branches. Besides that, Kian Joo Canpack also deliver the finished goods to Dutch Lady own warehouse, where Dutch Lady own marketing team to distribute the finished goods to smaller commercial buyers, such as local mini-market.

This is cost efficiency for Kian Joo Canpack to direct shipment to hypermarket warehouse in large quantity; and to Dutch Lady Warehouse for their own marketing team to distribute to smaller buyer. In order to fulfill with the marketing demand, and also not to over stock in the customer warehouse, there are two arrangement between Kian Joo Canpack with hypermarkets, and also with Dutch Lady Malaysia.

i)

Just in Time system (JIT) Hypermarkets have the direct attach with the end-user, and based on several festive or promotion periods, one or two high demand Dutch Lady milk powder products may increase within few days, thus, Kian Joo Canpack, need to standby certain level of excess finished goods. Whenever, the demand increase, by just a phone call, the delivery direct send to the hypermarkets loading bay. This is to ensure the hypermarkets will have the enough continual stocks for sales and not have to increase the space usage of the warehouse occupy.

OOI EAN EAN ii)

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Vendor Monitoring Item (VMI) As a vendor for Dutch Lady, Kian Joo Canpack, have the initiate to monitoring the milk powders inventory level in Dutch Lady Malaysias Warehouse. When any of the milk powder storage level low, Kian Joo Canpack already standby and able to send to the Dutch Lady Warehouse. This is extra service provided to Dutch Lady, as Dutch Lady warehouse have contain others selling product from milk powder, yogurts, fresh milks, ice-cream and candy bars, etc. Thus, with self-manage by individual vendor, able to cut-down on manpower to monitor the inventory stocks.

With implement JIT and VMI system, Kian Joo Canpack able to provide value-added service to the clients and efficiency into planning its own production schedule. These also involve whenever, order from oversea, whereby, need to calculate on the shipment schedule and the custom term and condition for the goods clearance from the port. Even, there are some urgent requirement and do need to fulfill end-market demand, have sending the finish goods by air freight, that transportation cost three to ten time higher than ocean freight.

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OOI EAN EAN 3.0 REVERSE LOGISTIC

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With the definition from OUM BBBLM4103 module, products sent to customers might be returned by customer if a wrong product is delivered, or not the condition not as per customer requirement. Therefore, procedures and arrangements for the products to be returned from customers locations must be established. Kian Joo Canpack, a specialist in milk powder, a consumer product that require higher quality assurance, as anything goes wrong in the ingredient, chances to cause food poisoning and fatal. Thus, each step of process will need quality approval before shipment out from the factory.

3.1 Market Claim Based on a case study, there are recorded that Kian Joo Canpack had involve in wrong labeling for the tin-cans, that need to obtain reverse logistic, which the goods need to ship back to the factory for abolish. In the meantime, replace with the collective label goods to the clients. There are procedure involve in corrective action plan, and financial rebate, while to comfort on the customer satisfaction.

For this scenario, has involved in market claim. Eventually the product had been selling to end-user and the respond on different ingredient from the actual and the label. Since this is the supply chain, Kian Joo Canpack and the label supplier need to bear on the refund cost. And the follow-up process to find on which area had loop-hole need to enhance on the preventive action.

3.2 Retrieve Reusable Material Kian Joo Canpack has practice on reverse logistic on reusable material. A full load container that delivery the finish goods to customer, there are involve with other packing component that able to reuse, such as pallet. Each pallet made from wood, and contain expenses cost. Customer selling the milk powder to end-user with displays the tin-can on the racks. Thus, pallet function is only to transfer the finish goods from warehouse to transportation and to warehouse, after that, the end-warehouse will have full of pallet, and basically as a waste for the clients.

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In order for cost saving efficiency, Kian Joo Canpack has agreement with each local warehouse management, by fix on every delivery on begin of month; can retrieve back those blank pallets, while loading on the finish goods, and uploading the pallets. This is a win-win situation, whereby the warehouses able to save on the disposable cost for the pallets, and Kian Joo Canpack able to reuse on the material.

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OOI EAN EAN 4.0 CONCLUSION

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From one company into another company, supply chain management provides a linking solution start from suppliers to manufacturer to seller, and to end-user. And able to reverse from end-user, where the feedback is able to move backward and reach on the supplier.

In research on Kian Joo Canpack process flow, able to foresee that there are going to be more and more supply chain system into consumer products. Since the advantages are secure for sole supplier to the main manufacturer and the distributors. With The

advantage of Supply Chain Management usually refers to an effort to improve a company's processes for product and service, from the product design, raw material purchasing, inventory research, distribution flow, customer satisfaction and other elements of the supply chain redesign supply chain that processes in order to achieve streamlining.

SCM is the collective responsibility for procurement, manufacturing, planning and delivery. Apart from good manufacturing activities within Kian Joo Canpack itself, the ability to have the right product with right quantities at the right place and obtain minimal cost is also very importance. All the state and process need to be managed accurate so that it would not risk the other aspects of the business environment such as procurement, sales and marketing. With the efficiency of supply chain management able to provide the organization in order to review their business plan according to the sales trends and other market factors.

(Words 2881)

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OOI EAN EAN REFERENCE

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Nor Pujawati Md Said (2010), BBLM4103 Logistic Management (5 th ed). Kuala Lumpur: Open University Malaysia

Ediuniversity.com (2011), module of the Supply Chain Strategy [online] http://www.ediuniversity.edu.com

SAP (2011), SAP Best Practices for Supply Chain Management [online] http://www.sap.com

Wikipedia.com (2011), Supply Chain Management [online] http://www.wikipedia.com

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