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Lecture 10 : Tools for Improving Logistics Efficiency — Transcript

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0:01[Music]
0:22[Music]
0:26so hello dear friends welcome back to
0:28nptl online course on Logistics and
0:30Supply Chain management I'm Dr vikas
0:33takur assistant professor Department of
0:35humanities and social sciences IIT kakur
0:38so in the last session we discussed
0:40about the key performance indicators in
0:43logistics function right so what are
0:46those parameters uh any organization
0:48working in this area and or delivering
0:52product or services at your doorstep
0:54must look on those uh parameters or
0:57maybe must try to follow the best
1:00practices in that industry keeping them
1:02as Benchmark and then we have explored
1:06all the functional areas in logistics
1:09like uh transportation we discussed
1:11about we discussed about warehousing we
1:13discussed about Supply we discussed
1:16about distribution performance
1:18indicators and then we discussed about
1:20the overall supply chain or Logistics
1:22performance indicators right so now in
1:25this session it is very important now to
1:28uh find out some tools which can help
1:32you to you know improve those
1:35performance indicators right if you are
1:37lacking somewhere how we can improve
1:39those indicators so in this session
1:41particularly we are going to cover right
1:44so I have picked some uh very famous
1:47tools we are using in operation
1:49management and uh I have tried to use
1:52those tools uh in improving the
1:55logistics management performance right
1:57so very first is plan do check at cycle
2:00which we'll see what are those different
2:02stages right and then very famous 7 QC
2:06tools we will use quality control tools
2:09how we can improve the quality of
2:12shipping the product packaging the right
2:14product and right packaging also right
2:18and then delivery on time and then
2:21accurate delivery right so these these
2:25all things whatever kpis we discussed
2:27we'll try to you know manage those AP uh
2:30using these uh some of the approaches
2:33right and then uh famous framework is
2:36quality Circle then we'll discuss about
2:39how we can Benchmark the best practices
2:41uh in this industry and then finally
2:43we'll be concluding up with the uh you
2:46know how we can improve the overall
2:48performance or the if we'll talk about
2:50the total quality of this complete
2:53Logistics uh Network right so we may
2:56spend couple of session on uh discussing
2:59these techniques
3:00so just go through the quick
3:03introduction so quality is basically uh
3:07there are two different definitions one
3:10is for the customer other one is for the
3:13product supplier the manufacturer who is
3:16offering the product to the market right
3:19so we'll go through these two different
3:21concepts right so quality control is a
3:24crucial aspect of logistics management
3:26to ensure that product reach the
3:29customers end with specified standards
3:31and quality right so if you are
3:35receiving any package at your doorstep
3:37and then if you did not even open that
3:40packet and that is damaged so this is
3:42something will give you you know very
3:45bad impression uh to the customer and
3:48that brand image will be hampered if we
3:49are you know we cannot afford on uh
3:52ordering maybe kind of delicate products
3:55using those corer Services because they
3:57never care about your packet right right
4:00so that kind of perception comes in your
4:02mind and when you see okay we'll buy
4:05these kind of products so we'll not buy
4:07through online platform we'll go
4:09physically we'll check and then we'll
4:11get it home delivered with proper care
4:14right so that should not happen so only
4:17that that will happen only when we are
4:19taking care of those specified standards
4:22and quality right so obviously we'll
4:25talk about these quality measures in
4:27transportation warehousing inventory
4:29management Material Handling and
4:32packaging so quality assurance is a
4:36procedure to ensure quality of products
4:39or Services by preventing mistakes and
4:42defects right in the products and when
4:45we are talking about the logistics so
4:47obviously because manufacturing right
4:49now we are not considering as part of it
4:51when we'll talk about complete supply
4:53chain obviously manufacturing will also
4:55part the part of that right but right
4:57now let's focus only on the correct
5:00deliveries uh to the End customer in the
5:03the product should reach in the right
5:05shape right so when we Define quality we
5:09can Define fit for purpose right first
5:11time fit for purpose means for whatever
5:14purpose it is intended it should fit
5:17right you it should be readily usable
5:20right so your distribution Network
5:22should uh provide the delivery in such a
5:26way that once it is reaching at your
5:28home you are getting that product you
5:30can plug and play kind of system should
5:32be there right first time that there
5:35should not be any chance of mistake
5:38right in that so you should be very
5:40right in the very first time you cannot
5:42just ring the bell of the uh door of
5:45someone else and then you are saying oh
5:47sorry this is not yours order I
5:49mistakenly I have uh uh just click
5:53knocked your door wrongly right so that
5:55cannot happen so you have to be correct
5:57in the very first time so just going
6:00through what is the concept of quality I
6:02told you there are two different
6:04perspectives producer perspective and
6:06customer perspective producer
6:08perspective their main focus is on
6:12conformance to specifications right so
6:16if I'm saying that you are designing
6:18your packaging and your packaging should
6:21be ready to Bear all the beer and tier
6:24through the transportation Network when
6:26we are transporting that product it
6:28should be ready so maybe we are checking
6:30the strength of that packaging how
6:32strong that package is so that if that
6:35beer and tier happens during the
6:37transportation right so whether our
6:39product will be safer in that or not so
6:42that means you might be having some
6:44specification related to the strength of
6:46that okay so same way we are defining
6:49the strength of uh we are defining the
6:52parameters in terms of that we can say
6:54we are defining the
6:56parameters right and in par whenever we
7:00are defining parameters we are defining
7:02a proper range up to what they can ex
7:06means uh uh go left or right and still
7:10they are within control we'll consider
7:11it that they are within control so that
7:13range we are defining right so
7:16conformance to specification you are
7:18meeting the predefined specification
7:22that means you are meeting the quality
7:24standards then at what cost you are
7:28meeting those quality standards will
7:29Define your cost function and obviously
7:32will affect your price and obviously
7:34will affect your profit and margins as
7:37well right now if you look on the other
7:41way the consumer perspective to whom you
7:44are making the end delivery so they are
7:46obviously they are not worried about the
7:49specification whatever specification you
7:51are taking whatever strength you are
7:53checking of the box right whatever
7:55quality parameters testing you are doing
7:57with your final product but when it is
8:00reaching at my home I'll just check
8:02whether the packet is okay or not
8:04whether the product is functioning or
8:06not whether the safety parameters are
8:09okay or not so that means whatever
8:11quality characteristics you you are
8:14promising in the market I'll check for
8:16those quality characteristics I'll check
8:18the functionality I'll not go for what
8:21parameter you have designed right or
8:24behind the window whatever is happening
8:26maybe uh your uh if you're talking about
8:29home appliances so what capacity you are
8:32picking for picking the electronic
8:34components or how you are improving
8:36whether it is three star AC four star
8:37five star whatever it is aluminium Bing
8:40copper winding I have nothing to do with
8:42that only thing is if you are saying
8:44that it is five star rating and will
8:46help you to reduce your electricity bill
8:49and will ensure the you know in with
8:52inverter technology will ensure the
8:53proper cooling that is the promise from
8:56your side to means very common customer
8:59and I will be looking for that so once
9:01it is plugged so I should be easily in
9:05in a condition to play that right so
9:07Fitness for use this is how we can
9:09Define the quality for these two
9:11different stakeholders in that
9:12distribution Network one is who is
9:15providing the products or Services other
9:17one is who is receiving the products and
9:19services meaning for Quality meaning of
9:22quality for these two different
9:23stakeholders are different in that
9:26way now when we are ensuring the quality
9:30there are two things two types of cost
9:33right one is cost of conformance and
9:35then is non-conformance let's say if you
9:38are saying that your product is a
9:40quality product or you are saying that
9:42your delivery let's say we specific in
9:45logistics the delivery is always on time
9:49and you are getting always the right
9:56product or the address is always right
10:00right so packaging is always up to the
10:04mark right so these
10:07are the promises now quality means that
10:10I'm getting all these promises right so
10:13to ensure this that product is reaching
10:16in right quantity right quality or
10:19variety or whatever color you picked
10:21whatever stuff is inside that if I'm
10:24receiving that that means you are
10:26conforming to those standards so for
10:28ensuring that that obviously I will be
10:31doing all the quality
10:34checks when I'm doing all the quality
10:36checks obviously there will be one team
10:40who will be doing that there will be
10:42some
10:43equipments we are using to ensure the
10:46quality there will be some facilities we
10:49are using to sort the products we are
10:52using to pack the product and labeling
10:55those product write addresses on those
10:57product so that it should reach to right
10:59customer all this will carry the cost
11:03right this is your cost of conformance
11:06providing the right product we are doing
11:09so many supporting uh activities so that
11:12the right product delivery can be ured
11:15right in that way this is the direct
11:17cost the indirect cost is quality
11:20training when I'm saying that one team
11:22is working who is taking care of the
11:24packaging one team is working who is
11:26taking care in the warehouse handling
11:29one team is totally dedicated on
11:31Transportation Network designing and
11:33then rooting and then delivery and then
11:35everything right whatever functions are
11:37in logistics management so to uh ensure
11:41the quality throughout the channel we
11:43need to train our people it's not that
11:46that distribution is just anyone can
11:48enter into this and can do that Duty
11:50right we discussed about that we need
11:53skilled people in the transportation
11:55Logistics industry who can pack the
11:57product in the right way and and uh who
11:59are professional in packaging right so
12:02that training will also add some cost in
12:06that we are doing some studies some
12:09surveys whether the quality is met or
12:12not that will also add cost into this
12:15this is cost to the Quality right so we
12:20usually say quality is
12:22free this is very important statement
12:26quality is free but when you check this
12:29the quality is not free we'll prove this
12:31how this is free so there is cost of
12:34ensuring the quality you are doing a
12:35regular checkup your team is working on
12:37that equipments are working on that
12:39right and then you are ensuring the
12:40quality you are doing surveys studies to
12:43find out is there any problem sampling
12:45based you are picking the products and
12:46then finding out okay the package is
12:48delivered on time in right condition to
12:51the right customer address was right all
12:54those things you are doing right this is
12:56carrying certain cost so this is the
12:58cost cost of the quality then cost of
13:01non-conformance let's say if we are not
13:03doing that randomly we are peing so what
13:06will happen we'll do the wrong
13:10delivery we'll ship the wrong
13:16product we'll ship obviously product and
13:19then quality will be in
13:23problem right so you might have seen
13:26certain ads or something maybe in the
13:28social media that you are ordering phone
13:30through your e-commerce website and then
13:32in the end you got something else uh
13:36maybe bathing soap or maybe some other
13:38salt packet or something like that right
13:40this usually uh sometimes this happens
13:43so that means so many things can happen
13:47when you are not meeting all those
13:50standards so one thing is order will be
13:54coming back rejected another thing is if
13:58that product is wrong so that will be a
14:00kind of scrap for you and sometimes
14:03items are so if you will again pick
14:06those items those are kind of maybe uh
14:09fasile items if you'll pick those items
14:12again will uh you know come with your to
14:14your uh Distribution Center that you may
14:18break those items sometimes so you are
14:20leaving with the customer only and even
14:22you are giving them refund if it is
14:25damaged during shipment then you have to
14:27do the rework you under warranty period
14:30your engineer will be visiting the site
14:33and then we replace the components free
14:35of cost so you just see this is the
14:39indirect cost that is coming to your
14:43company if you are not shipping your
14:46product in a right way so if I equate
14:50this cost with this cost so if you are
14:53ensuring the quality this all will not
14:55happen right nothing is coming back from
14:59the customer so whatever you are
15:02delivering the right product damaged
15:04product I told you the Share is around
15:06around 25 to 30% because we are damaging
15:09when we are delivering the product so
15:10that is direct cost to the custom and
15:13that is one direct cost indirect cost is
15:16my brand image is also hampered now
15:19customer will never prefer my website or
15:21I told you one survey where 80 or 85%
15:24customers who had any prior bad
15:27experience uh with e-commerce player
15:30related to anything delivery payment or
15:32anything right they they then you know
15:35try to avoid going uh for those uh
15:38e-commerce websites and they want to you
15:40know they they actually prefer then
15:42going physically and check the product
15:44so these are the cost when we are saying
15:47so in the end if we get that if we are
15:50ensuring the quality and maintaining
15:52that brand image we can say that quality
15:54is free right you can overcome these uh
15:58costs
16:00so
16:02uh let's take very simple example and
16:05we'll see why these you know surveys or
16:10research are required to identify the
16:12fals and then what we'll do with when
16:15we'll identify the fults let's say a
16:17very simple example there is some uh
16:21there are so many stages one is is your
16:24packaging packaging is happening at one
16:26stage let's say in three shift
16:31uh three different people are working
16:33let's keep it very simple three people
16:35different people are working right shift
16:37a b c now I can see I'm analyzing that
16:42usually there are some fults or errors
16:46when we are doing the packaging what can
16:48be errors when we are doing the
16:50packaging maybe you you did not uh that
16:54packaging is
16:55damaged and you did not check it and you
16:59packed still you packed in that then you
17:01packed the wrong
17:05product then what can be there you
17:08forgot to put the accessories in that
17:10let's say you are packing the mobile and
17:13charger is missing or sometimes you did
17:16not put the manual
17:19instructions right instruction manual
17:22inside that packaging so these are some
17:24of the common mistakes errors you can do
17:27when you are doing the packaging there
17:28can be so many others right
17:31so now three different people are
17:33working now many complaints are coming
17:37from the markets let's say that there
17:39are issues with the packaging so I need
17:42to find out first issue with the
17:44packaging what type of issues let's say
17:46um this is 1 2 3 4 these four things are
17:51there let's say I'll just analyze first
17:54problem how many time it is occurring 15
17:57times second problem 20 times third
18:00problem 10 times fourth problem five
18:03times so now I can find out that the
18:07second
18:08problem is the highest right highest
18:11frequency 20 times and what is that
18:13problem wrong product packed so per the
18:17person whosoever is working on that he
18:19is packing the wrong product right so
18:21now I identified the problem and then
18:24obviously next important problem is once
18:27we'll uh solve that problem the next is
18:30packaging damaged why packaging is
18:32damaged now for these kind of uh
18:36problems obviously the person who is
18:38working on that is responsible he did
18:41not check the packaging or and obviously
18:44the person the vendor who is providing
18:46you the packaging material as well is a
18:47responsible but the first stage here is
18:50the packaging the person who is working
18:51on that stage now I need to identify
18:54whether this problem is the first person
18:57second person or third person where are
18:59the maximum counts coming the complaints
19:02are coming who was the person operator
19:05sitting on that stage and was handling
19:07these activities right so I identified
19:12the uh shift
19:15operator who is doing
19:17that I identified the problems I
19:20identify I I now prioritize all the
19:24problems and I found that second problem
19:27is the most prioritized we need to to CH
19:29uh take the quick action so let's now
19:31find out problem is diagnosed now now we
19:34need to find out the solution so now
19:36let's move towards the solution shift
19:38operator who is the shift operator let's
19:40say the problem is with the second
19:42person and we are getting the maximum
19:44complaints the with the products which
19:47are packed during his uh period right
19:51now what is the problem with the person
19:55so maybe now there can be so many
19:57problems whether the
19:59he is not
20:00happy with the job he's not happy with
20:04the company
20:07management he is not happy with the
20:09compensation in terms of the salary he
20:11is getting in terms of the medical
20:13things he's getting in terms of the
20:14other hospitalities whatever he is
20:16getting maybe he's not finding his
20:18passion in that job maybe his skills are
20:21not aligned in that job right these can
20:25be the reasons okay so many other
20:27reasons maybe he is Disturbed why he is
20:31Disturbed again maybe personal life he
20:34is Disturbed maybe professional life he
20:36is Disturbed right why professional life
20:39again we need to ask these questions so
20:41that we can find out the root cause this
20:43is the another step where we will find
20:45out why that uh wrong product is being
20:49shipped because the person is Disturbed
20:52professionally let's say person is uh
20:56Disturbed professionally because he is
20:57not finding
20:59passion in that job or his skills are
21:02not aligned that
21:03means he was capable of doing something
21:07maybe something else but we deployed
21:09that Manpower on that workstation where
21:10is the problem problem is with the
21:13placement of that
21:15person who is doing the placement HR
21:18team
21:19is doing conducting the interviews and
21:23in the interview only when they are
21:25going for selection there only they need
21:28to
21:29identify the placement as well that this
21:33person is capable of quality this person
21:37in in the quality Department this person
21:39is capable of doing the production kind
21:41of things this person is capable of
21:43doing the R&D kind of things or this is
21:45capable of marketing the product or what
21:48kind of things he can do right so you
21:52can just see with one problem how we can
21:55identif first we need to diagnose the
21:57problem what are the reasons
21:59we need to find out we need to
22:00prioritize the reason we need to hand we
22:03need to go to the root cause so this
22:05these all tools somehow are interl and
22:09then we can diagnose a particular
22:10situation and we can find out the
22:13solution so we'll go through these tools
22:15one by one so just see how through
22:17automation they have improved their key
22:20performance indicators so this is little
22:22longer video but it is worth watching
22:25we'll give you the complete picture of
22:26the performance indicators you you guys
22:28can just quickly go through these videos
22:31and then we'll uh continue our uh
22:33discussion on the topic so yes so you
22:36can just see this is not a small thing
22:39that
22:4140,000 items 40,000 items per hour they
22:46are handling through their automated
22:49machines and then if you see 11,000
22:53plus facilities they are injecting with
22:56their packages right so how how
22:58beautifully DHL is doing that using
23:01automation if you talk about the
23:03indicators performance indicators you
23:06can just imagine how how much they are
23:09spending on one order if they are
23:10handling 40,000 orders packeted uh
23:14packages in 1 hour right so then if you
23:18are talking about at that level so
23:20obviously you cannot uh uh say that
23:24errors can happen at any time so there
23:27cannot be any excuse so whether uh it is
23:30completely automated plant or you are
23:33doing with your human intervention
23:35whatever it is right but in the end uh
23:39you cannot uh just uh be efficient just
23:43by promising your quality right so these
23:46are some of the tools down the line
23:47we'll discuss uh uh plan and do check
23:51act right so 7 QC tools quality Circle
23:545S approach how it will help us to
23:56improve that and then benchmarking going
23:58to the very first
24:00is so this was obviously four step this
24:04is known as wheel also plan do check act
24:07wheel right so we'll how we'll do that
24:10we'll first plan then we'll implement it
24:13then we'll check the results and then
24:17we'll act accordingly if it is okay
24:19results are okay we'll standardize those
24:21things and if it is not okay again we'll
24:25go for the next phase planning and then
24:27we'll uh do the modifications depending
24:30upon the feedback and then again we'll
24:32implement this circle will keep on going
24:34until that problem specific problem is
24:37resolved then we'll go for the next
24:40problem and we'll again we'll go with
24:42this wheel was this approach was given
24:44by uh Dr William Edwards Deming so
24:48obviously uh the main uh uh Walter
24:51shivat has uh uh is known as quality
24:55Guru as well and uh his contribut in
24:59that his Pioneer in that field right so
25:02even W adwards Deming as well so in
25:05Japan I think there is there are prizes
25:08against their name you Deming price for
25:11Quality so this is how those people are
25:14in that industry
25:16so very first is plan in in the plan
25:20phase you need to define the objective
25:22right so what is the objective like I
25:24told you in uh first you need to
25:27identify the problem what what is the
25:28pro problem right now let's say we
25:30discussed in the example that it is
25:33problem is related to packaging right so
25:35how we can improve the packaging if that
25:38is not fault of the packaging and is the
25:41fault of the person who is actually
25:43working on that stage then we need to
25:46change the plan right so we need to work
25:48with that person if he is not happy with
25:51that work or if he's not happy with the
25:54compensation policy or the all those
25:57things we discussed right then we need
25:59to give him we need to address his
26:01grievances right and then again we'll
26:04Implement those things whatever
26:06suggestions are there and then we'll
26:08again check whether the performance has
26:10improved in terms of the number of
26:12complaints have reduced or not right so
26:14that is the first stage we need to
26:16define the objective then this is if
26:20we'll divide this process into three
26:22substeps we need to identify the
26:24Improvement opportunity where we will
26:26plan that again
26:28there are so many opportunities for the
26:30Improvement which opportunity we will
26:32pick first like I told you the highest
26:35occurring problem was 20 times right
26:38which was we were shipping the wrong
26:40product so there is the greatest
26:43opportunity we should explore it first
26:45because then we can reduce the highest
26:48number of complaints coming from the
26:50markets right then we need to set the
26:53measurable targets now if we are uh
26:56implementing that what what is the
26:58target next 1 month it should 20 it
27:01should be reduced to 12 or 10 right then
27:05again again two months review will be
27:07doing five then again maybe 6 months
27:10we'll see the consistency is there or
27:14not right the way now the new person or
27:18the same person after that handling the
27:20Grievances how he is doing that then we
27:23need to prepare the action plan as per
27:25that we'll uh prepare that WEA we will
27:28sustain this plan for other workers also
27:32maybe others are also not happy right
27:35now maybe not creating the problem and
27:37maybe in future that can happen or we
27:40need to change if we need to change we
27:42need to come up with the new policy
27:44right so that we need to take care so
27:46this is the first stage where we will
27:48plan then second is do now once we have
27:52plan we need to test that
27:55plan so you need to test the plan right
27:59whether how you can test that you need
28:01to actually perform as per that action
28:04so uh in in very simple way if I'll try
28:07to you know uh conclude this let's say
28:12uh I'm having some process this is the
28:14process we are doing right this process
28:18is having certain
28:20output now this
28:23output I need to compare with some
28:26standards which we have already set up
28:29in that right so I'll compare with out
28:32this actual output with the standards
28:35whatever standards we have set now we'll
28:37see is there any
28:41deviation in the actual output from the
28:44standard if the answer is no we will
28:49continue with the
28:56process and this positive feedback is
28:59provided right if the answer is yes
29:02there is deviation we need to take the
29:05corrective
29:08action not only corrective action we
29:11need to take the Kaa corrective action
29:13as well as the preventive action
29:15corrective action immediately either we
29:18need to change the process or we need to
29:21change the raw material being supplied
29:23or we need to change the technology
29:26whatever it is taking we need to change
29:29that thing as per the corrective action
29:32preventive action is that in future that
29:35should not happen we should make some
29:37policy so this is the complete cycle
29:39right how we are controlling the output
29:42how we are comparing this output with
29:44the fixed standard right so you will
29:47Implement that then you will check so if
29:50goal has been met then that cycle will
29:53be over we'll take the next problem if
29:56it is not met again again we need to
29:58change we'll take that feedback we'll
30:01take the corrective action and then
30:03either we'll change the raw material or
30:05we'll change the process or we will
30:06change that technology right act so in
30:10the end if it is your goal is met we
30:14need to act accordingly in future as
30:17well so that means we need to sustain
30:19that procedure for the other employees
30:22as well because they may be feeling in
30:24the same way so this is the first tool
30:27plan do check act which we can Implement
30:30and uh we can use to ensure the quality
30:33through your Logistics distribution
30:36Network right so how does this plan do
30:39check act will enhance the logistics
30:42quality so quality cost are associated
30:45with obtaining the required quality
30:48right so they relate for instance the
30:50deployment of an industrial preventive
30:52maintenance like we talked about quality
30:54cost right all the opal cost are quality
30:57cost whatever we are testing we are
30:59doing or Manpower training we are doing
31:01equipment we are using facility we are
31:03using that those all those things are
31:05adding to the Quality cost and then non
31:08quality cost if you are not meeting
31:10those uh standards and you are making
31:13the fault delivery again and again then
31:15you can just imagine your situation in
31:17the market because then customer will
31:19not be interested placing order on your
31:21website right so and if it is related to
31:25some financial transaction so obviously
31:27we'll think 100 times before placing the
31:29order so this is all about uh uh the
31:33plan to check act cycle in the next
31:35session we'll continue our uh other
31:38quality tools which can be used to
31:40improve the uh Logistics quality uh so
31:44we'll we'll continue with the 7 QC tools
31:46so uh that's all for this session thank
31:48you very much

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