INVENTORY & LOGISTICS

OPERATIONS
 Table of Contents

Introduction..............................................................................................................................3

1. Flow Diagram of Supply chain of Manufacturing Organization.................................3

2. Types of Inventories..........................................................................................................4

Main Inventory Characteristics..............................................................................................4

3. Analyzation of goods and services design concepts are integrated..............................5

4. Role of Inventory in Company Performance.................................................................5

5. Supply chain Metrics to evaluate the performance of organization............................6

6. Suggestion for improvement............................................................................................7

7. Qualities of resources used in the research work...........................................................7

Introduction

The global impact of COVID-19 has influenced the process of the supply chain. COVID-19

has influenced the overall production of the organizations and has disrupted the supply chain

networks severely. For weeks at the start of the year, as COVID-19 was taking its toll on

China, experts were focusing on ‘supply shocks’. These were disruptions to the availability of

goods sourced from China; both finished goods for sale and products used in factories in

developed markets. Companies scrambled to sort out what production was feasible, and what

demand could be met. As the pandemic crisis deepened and nations have begun instituting

lockdowns, supply chains have been experiencing something completely new: systemic

demand shocks, where people are stocking up on consumer staples in order to comply with

restrictions on movements, in some cases buying months’ worth of goods in a single day .

Though the organization are facing a certain future where the manufacturers are speculating

the management of the existing inventory for the short and long term [ CITATION Shu02 \l

1033 ]. The process of inventory for manufacturers is likely to be in stock during the longer

seasonal times i.e. spring and summer season. Rest of season i.e. winter and fall where a

stock may be disbursed with less production and to make availability of the limited stocks.

Whereas, they will be focused on making an increase in sales and staggering SKUs to keeps

the business running smoothly. Companies around the world are taking outbound steps and

thinking out of the box to source inventory and satisfied their customers by delivering their

orders. It's not less than the war out there.

1. Flow Diagram of Supply chain of Lalaari Manufacturing Unit

Fabric and accessories

procurement

Manufacturing/Stitching

Warehouse /Storage

Distribution

E-commerce Retailers

Final Consumers Final Consumers

2. Types of Inventories

Generally, there are types of inventories used by the company are as follows,

 Raw Material

 Raw material considered the basic input for making the production process. That

particular process turned into the final product.

 Work in Process

 That inventory shows that items are getting prepared and required work before

sending it to the market for sale to final consumers.

 Finished goods

 That particular process shows that the items are being done and have been

through to the production process and available for sale.

3. Main Inventory Characteristics

The ability to manage the inventory’s characteristics serves as another function of inventory

systems. Inventory characteristics include how much inventory to order, the order cycle,

which is how often to place orders for the product; as well as supplier information, product

cost, product lead time, minimum and maximum order quantities, lot-size availability,

product unit of measure (pieces, each, tons, bags) and other product characteristics, such as

country of origin and manufacturer’s reference number. These characteristics comprise the

inventory control policies designed for each SKU and it tells the inventory management team

how to specifically manage the SKU level inventory. As at Lalaari manufacturing is at the

core of the operations and after one year of efforts company was about to launch its first retail

store in Lahore coupled with e commerce store for selling its products .All the preparations

were in place when this lockdown situation occurred due to COVID-19. It was a huge setback

on the face of starting a new business .Our main inventory characteristic was that our

products were in finished form after manufacturing 95% of the stock was in ready to sell

form before the announcement of lockdown by government there were very few WIP

inventory with us, however sufficient fabric raw material was available to manufacture more

products if needed be.

3. Analysis of goods and services design concepts integration

Products and services fuel your business with the revenue they generate. Because they are at

the heart of your business operations, it’s important to take a calculated approach to

designing your products and services.

Service design is the coordination and combination of people, communication, and material

components to create quality service. Product design is the combination of manufacturing

capabilities with product and business knowledge to convert ideas into physical and usable

objects

The analysis of the goods and services design concept which is integrated as an organization

is keeping their focus towards creating a competitive advantage by making the differentiation

in which the organizations could offer the unique method for their high quality of products

[ CITATION Smi02 \l 1033 ] . With the support of this process, they could lower the cost in

comparison to their competitors offering the same products in the market and make the rapid

response from their customers in demand by making the execution of the rapid design and as

well as the establishment of their products. The integration of the products and process

development of the organizational management techniques which are simultaneously

integration of all acquisition of essential with the help of using the integrated team of

products which is used to optimize the design, manufacturing, and process of supportability

for the manufacturing organization. At Lalaari we offered unique products of block print

methodology coupled with designs of solids .Block print is an outdated manual printing

technique which is quite intriguing in fashion these days, people are fed up of this new age

printed clothes and are gradually moving towards traditional methods and techniques, block
print became our hot selling product owing to upcoming Eid event and prolonged lockdown

of markets. Our other

products of solid designs which were simple clothes meant to be worn for home wear and

making the customer feel relaxed while staying at home.

Due to prolonged lockdown this product also showed tremendous sale. The question arises

how we were able to sell our products even without opening our first outlet? This pandemic

situation has caused severe blows to the businesses which have to pay hefty rents of big

malls and fixed salaries of employees and also have to look for overhead charges at the same

time it has given a steep rise to e commerce business , after analyzing the lockdown situation

we shifted whole of our focus towards e commerce , production unit was utilized for

manufacturing of PPE for health workers and the remaining building with implementation of

SOPs was converted into whole ecommerce setup . Our unique product designs proved

fruitful and just few days before Eid we were able to sell most of the product through e-

commerce.

Besides a sound product design we built a string service mechanism to ensure timely

deliveries to our online customers as delays in deliveries and disruption in supplies are the

most critical our comes of this pandemic. Since we were operating from Lahore so prepared a

team of local riders apart from our courier service which were meant to deliver the product to

the customer from Lahore the same day. Same day delivery mechanism resulted in terms of

positive customer feedback and repeat orders.

3. Role of Inventory in Company Performance

Inventory management systems play a vital role in making the organizational performance

more effective and efficient. For successful operational efficiency and organizational

performance, they have to implement certain strategies to gain a competitive advantage

amongst other existing market players. In our case it is inventory which has played a vitol

role towards generating sales and meeting customer requirements .Even though it was such a

time period small brands were struggling to complete their products into finish form ,most of

the brands have their products in halfway of production means if someone has a cloth dying

factory they could not get it because of the closure and if some inventory is at embroidery set

up it also remained that way till the time ban is lifted. Here I would I like to highlight the

factors from our country’s point of view, closure of the markets other than essential items

promoted further the culture of online buying as in our country Eid festival after ramzan is a

sacred event and everyone tends to buy new clothes , so soon after the ban was lifted people

poured into the market in huge numbers . Then there was a huge daunting task for retailers

especially to provide new designs to customers as there was a little time left in Eid and

wholesalers were unable to get the products from manufacturers and it severely effected the

whole supply chain and inventory levels of all the players .

Multi stores were running after wholesalers and brand for provision of stock and they were

even willing to buy products on cash which generally does not happen in this field.

A strong finished goods inventory levels helped us meeting any demand levels even though

of the multi stores and retailers apart from e commerce. With the help of this finished

products inventory Lalaari boosted sales on multiple fronts like e-commerce,multi stores,

retailers and shopping stalls in areas under permanent lockdown like cantonments where even

couriers for online buying were not allowed to enter and people were in dire need of clothes

for their kids and families to celebrate the Eid.On the contrary there is another argument that

small brands or businesses which do not have their e commerce in place have struggled to get

rid of their inventories held with them as it is said an inventory held without sale is a head

ache for the company and day by day its adding up to the loss of the company.
4. Supply chain Metrics to evaluate the performance of the organization

Generally, supply chain metrics are considered by developing the specific measurement

which is further to be used in the qualifying and defining the performance of the

organizational supply chain. Therefore, such metrics are to be used in examining the accuracy

of the inventory and turnover metrics and inventory to sale ratio. Following are the main

supply chain evaluation used to evaluate the performance of the organization i.e.

Perfect order rate

Perfect order rate makes the insight of the KPI's of the critical supply chain for their business

operating in the multitude of the different organizational sectors. Therefore, the perfect order

rate examines the success of the organization for the ability to deliver the order without

damage. This process will help the organization to stand out with such inaccuracies,

damages, delays, and inventory losses [ CITATION Ott03 \l 1033 ]. Therefore, with this process

of perfect order rate the better because of the KPI has a direct influence on customer retention

and as well as customer loyalty. Therefore, the organization must require to make this KPI

better which brings customer retention and increase loyalty which ultimately plays a vital role

in increasing their market share.

On-time Shipping

On-time shipping is an important metric of the supply chain used to measure the performance

of the organizational supply chain. Where the prime objective for the on-time shipping

suggested that it is the superb indicator of the supply chain metrics which allow making the
need for the shipping in the particular type of order to the client and customer or as well as

the partner. Therefore, such KPI will assure to set the benchmark shipping time to make the

relative to each product which in return allows optimizing the shipping and process of

delivery by reducing the time of their turnover and as well as boosting the satisfaction of their

customer level

Customer order fulfillment

Due to self-isolation, quarantining and stay-at-home orders emerging as a result of the

pandemic, companies are seeing a notable increase in online shopping and local deliveries for

non-discretionary goods.

Actions taken:

Hiring 3rd Party courier service

Widening delivery windows from immediate or same day delivery, to two or three day

delivery, in order to give retailers time to rationalize the scheduling and routing of deliveries

in order to save time and mileage 

Temporarily shifting production employees to delivery jobs

Lower online order size to qualify for free shipments and relaxing return windows to provide

more flexibility for customers

Capping purchases of high demand products 

Reserving periods of the day for high-risk shoppers, as well as for cleaning and sanitizing the

warehouse
5. Suggestion for improvement

Having a clear picture of your inventory is helpful at any moment in business. However,

during the COVID-19 outbreak, knowing what you have in stock is more important than ever.

During a pandemic with shipping delays and material shortages, you want to be able to

clearly track what was ordered versus what was delivered. You also want to keep in close

contact with suppliers so you know which materials you will be able to replenish and which

items you might not be able to purchase for a while.

The better you are able to track your inventory during this time of potential shortages, the

more strategic you can be about the inventory you assign to jobs. Proper inventory tracking

processes can also help you as you stagger the field staff entering the warehouse to grab

materials while maintaining social distancing guidelines.

Supply chain management includes the examination for procurement of the organization,

production and transportation accuracy, and handling of the warehouse and material

management. Inventory management plays a very important role in making the organization

effective and efficient in every aspect. This method allows us to use resources ineffective

way and make the organization smooth in its operations. Thus, organizations require

improvement to make their focus onto the need of their strategy of constant development onto

the demand of their customers by changing the culture according to the time and as well on

the dealer's demand [ CITATION Kau01 \l 1033 ]. Thus, as per the vision and mission of the

organizational management, it needs to be adopted its procedure and policies towards

continuous improvements. Hence, they must have to make the plan for their continuous
improvement in the organizational management through the management of the strategic

assessment and key components and culture of the total quality management which

underlying the environment of the organizational production. Thus, the development and

training of their employees and field staff are mandatory which directly related to the field

task nature of organizations. Though, health and safety and first aid must require as necessary

for organizational management.

3. Qualities of resources used in the research work

Shutler M and Storbeck J (2002). Part special issue editorial: performance management. J

Opl Res Soc 53: 245–246

Liker JK and Wu Y (2000). Japanese automakers. US suppliers and supply-chain superiority.

Sloan Mngt Rev 42: 81–93

Lai K, Ngai EWT, and TCE Cheng (2002), Measures for evaluating supply chain

performance in transport logistics. Transp Res Part E 38: 439–456

Otto A and Kotzab H (2003). Does supply chain management really pay? Six perspectives to

measure the performance of managing a supply chain. Eur J Opl Res 144: 306–320.

Kauffinan RJ and Walden EA (2001). Economics and electronic commerce: survey and

research directions. Int J Electron Commerce 5:25–26

Smith PC and Goddard M (2002). Performance management and operational research: a

marriage made in heaven? J Opl ResSoc 53: 247–255