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A STUDY ON SUPPLY CHAIN MANAGEMENT IN GREEN LEAF TOBACCO-ISSUES & IMPERATIVES FOR OPERATIONAL EXCELLENCE

KrishiKosh

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Title A STUDY ON SUPPLY CHAIN MANAGEMENT IN GREEN LEAF TOBACCO-ISSUES & IMPERATIVES FOR OPERATIONAL EXCELLENCE
 
Creator JANARDHANA REDDY, K
 
Contributor SEEMA
 
Subject STUDY, SUPPLY, CHAIN, MANAGEMENT, GREEN, LEAF, TOBACCO-ISSUES, IMPERATIVES, OPERATIONAL, EXCELLENCE
 
Description The project entitled “A Study on Supply Chain Management in Green Leaf
Tobacco-Issues & Imperatives for Operational Excellence” was carriedout in Ongole
(Prakasham) district of Andhra Pradesh for ITC- India Leaf Tobacco Division
Inspite of ITC - ILTD Company existing since hundred years in tobacco leaf
procurement businesses it is facing problems of supply chain at different operational
levels, which is mainly because of mismatch between supply and demand of leaf tobacco
at Aggregate Godowns (AGGs). The company is spending about 20-25% of total
procurement cost on leaf supply chain. The Company wanted to have an alternative
model which would reduce the overall supply chain cost and also increase the operational
efficiency. Therefore this study has been under taken with the following objectives.
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Main objectives of the project are
1. To study the leaf value chain and comprehend the issues limiting the operational
efficiency from bale to box.
2. To study the various cost components involved in aggregation and logistics for cost
optimization.
3. To study the impact of operational scheduling on quality of leaf tobacco.
In Ongole region, the company has 12 Tobacco Auction Platforms (TAPs) and 8
major Aggregate Godowns (AGGs). Required information was collected from internal
sources of the organization through Company’s Management by direct interaction. The
collected data has been tabulated and analyzed using simple statistical tools and models
like least cost method, transportation model etc.
The results obtained from the study have been described here under.
Issues limiting the operational efficiency from bale to box
From Tobacco Auction Platforms to the Green Leaf Thresher plant (except
loading for GLT) all operations are being done manually which is the main constraint
leading to
a) High cost
b) Shortage of labour
c) Inefficient time management
d) Less operational efficiency at all levels.
Due to the manual operations, the shrinkage and physical losses of leaf tobacco is
around 0.2% as reported by the company’s internal source. Further, because of lack of
clear transportation schedule due to unpredictable flow of varied quantities of tobacco is
leading to mismatch between demand and supply at company’s aggregate godowns.
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Cost components involved in aggregation and logistics of tobacco value chain
The following are the different cost items involved in tobacco leaf value chain
a) Classification and warehousing at TAP’s level
b) Transportation cost from TAP’s to Aggregate Godowns (AGG)
c) Classification at Aggregate Godowns
d) Hiring cost of Godown
e) Transportation cost from Aggregate Godowns to GLT (Green Leaf Thresher-
Chirala)
f) Shipment cost of rejected quantities from GLT to AGGs .
Of all these costs being incurred the major cost item is the transportation of green
leaf tobacco from TAPs to AGGs, therefore more emphasis is paid to work out various
alternatives to minimize transportation cost.
Cost Minimization-Least Cost Method
With the existing transportation plan the company is incurring an expenditure of
Rs. 162214/- per day towards transportation of leaf tobacco from different TAPs to
different AGGs. It is felt that there is a scope for reduction of this cost by bringing in
some structural changes and changes in logistics. Further, the existing system is bringing
in a mismatch between demand and supply at AGGs which can also be rectified by
slightly modifying the activities which thereby improves the efficiency in the system.
By using Solver Software tool three alternatives or models have been suggested to
overcome the short comings. These are
Ideal-I - This model can save Rs 9494/- per day with seasonal saving of Rs 994610/-.
Ideal-II - This model can save Rs 8673/- per day with seasonal saving of Rs 908600/-
Ideal-III - This model can save Rs 5666/-per day with seasonal saving of Rs
993532/-
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When shipment scheduled is compared between three Ideal models with existing
plan, it is observed that Ideal I appears to be of least cost with Rs.152720/-per day.
Impact of operational scheduling on quality of leaf tobacco
In general the operational scheduling has less impact on the quality of leaf
tobacco according to the existing schedule, but when stocks to be sent are delayed for
threshing operation for more than one month at AGGs, colour deterioration has been
reported. It is observed that some stocks which were procured at commencement of
season have been kept in AGGs (especially at ITT) for a long period showing the colour
loss.
The following suggestions are given to the company to improve the operational
efficiency.
1. Alternate models (Ideal I, Ideal II, Ideal III) which can be viable and feasible for
the company may be followed.
2. Mechanizing the godown operations which are the major activities in value chain
may be adopted.
3. Stored leaf tobacco at AGGs is being delayed for threshing operations. Therefore,
it is suggested to follow the First In First Out (FIFO) inventory management
method.
 
Date 2016-08-11T11:38:54Z
2016-08-11T11:38:54Z
2007
 
Type Thesis
 
Identifier http://krishikosh.egranth.ac.in/handle/1/72162
 
Language en
 
Relation D8098;
 
Format application/pdf
 
Publisher ACHARYA N.G. RANGA AGRICULTURAL UNIVERSITY, RAJENDRANAGAR, HYDERABAD.