DETAILs OF WINTER PROJECT Students Name: Rohit Kumar Jha Division 2 (SYMMS) Roll No.

-104 Project Name- Inventory Control. Companys name: LECHLER INDIA PRIVATE LIMITED
Project Description
EXECUTIVE SUMMARY

Inventory is the most significant part of the company, which accounts for over 30-40% of the companys expenditure. This project reflects the inventory management system of LECHLER

INDIA PRIVATE LIMITED. Inventory means all the materials, parts, supplies, expensive tools and semi finished or finished products recorded on the book by an organization and kept in its stocks, warehouse or plant for some period of time.

The area of focus of this project is to reduce the overall cost associated with inventory by the undertaking activities: Obtaining the list of surplus stock and finding out reasons for growing surplus.

Attempt to reduce the existing surplus. An attempt to prevent further accumulation of surplus Making recommendations to the currently followed purchase procedure Suggesting more effective method for the control of inventory. Reduction of the accumulated/surplus stock period itself reduces unnecessary amount of money blocked in the form of inventory and hence resulting in blocking the working capital of the company.

OBJECTIVES OF THE STUDY

The primary objective of this project is to reduce overall expenditure or costing for the company by lowering the cost associated with inventory.

Various other objectives pursued to fulfill the primary objective are as follows Reduction of existing surplus stock. To avoid any further accumulation of surplus To device an appropriate cost reduction technique of inventory control, which can be used along with the existing technique to improve performance. To ensure uninterrupted supply of materials.

DATA SOURCES

SECONDARY DATAAs the project is based on Aligning the Inventory, hence data involved in the analysis is basically a secondary data. The facts and figures along with the records were taken from the executives of the company. Records related to inventory were taken from purchase department and stores department.

METHOD OF DATA COLLECTION: Since this scope & topic is based on theory it was imperative to use secondary data method for data collection. A real attempt was done to simplify the project research. The report is written in organized appearance. Observations and recommendations are presented in this report in simple and systematic manner.

CONCEPTS OF INVENTORY

The literary meaning of the word inventory is stock of goods. To the finance manager, inventory connotes the value of raw materials, consumables, spares, work-in-progress, finished goods and scrap in which a companys funds have been invested. Good inventory management is good finance

management. An efficient management of inventory should ultimately result in the maximization of the owners wealth. Therefore inventory is considered as locked up capital. Inventories mean tangible property held: a. For sale in the ordinary course of business; or b. In the process of production for such sale or c. For consumption in the production of goods or services for sale, including maintenance supplies and consumables other than machinery spares.

DEFINITION Inventory management may be defined as the sum total of those activities which are necessary for the acquisition, storage, sale and disposal or use of material. It is a subject which merits the attention of the top level management and influences the decisions of the planning and executive personnel.

Decisions relating to inventories are taken primarily by executives in production, purchasing and marketing departments. Usually, raw material policies are shaped by purchasing and production executives, work-in-progress inventory is influenced by the decisions of production executives and finished goods inventory policy is involved by production and marketing executives. The financial manager has the responsibility to ensure that inventories are properly monitored and controlled. He has to emphasize the financial point of view and initiate programs with the participation and involvement of others for effective management of inventories. ASPECTS OF INVENTORY MANAGEMENT Inventories are quite crucial for any business firm. The raw materials inventory, if kept excess of the requirement may lead to unnecessary blocking of the funds in such inventory, while if it is in shortage, it will lead to disrupting the flow of production. Similar things can be said about the work in progress and finished goods inventory. The option before the management is either to keep a very low level of inventory which is also known as hand to mouth policy or to keep a large quantity of inventory ensuring absolute safety.

As said, above, if inventory levels are kept very low. It will lead to frequent stoppages of production. If finished goods inventories are kept very low it will result in distributing the delivery schedule to the

customers. It may further lead to the cancellations of some of the orders. No firm can afford to take such risks.

Alternatively, if inventory levels are kept on a very high level, carrying cost like storage, handling, insurance, recording and inspection also increase in proportion to the inventory volumes. At the same time, as large amount of funds are blocked in those inventories, the liquidity of the firm is severely affected. The high levels of inventory may ensure safety but the cost of holding such a high level of inventory may nullify their advantage.

It will also not be out of place to mention here that form holds inventories basically for three reasons:a) TRANSACTION MOTIVE: This motive implies that inventories are maintained for the facilitation of smooth production and sales.

b) PRECAUTIONARY MOTIVE: It suggests that the inventories are maintained to take care against the risk of unforeseen changes in demand and supply factors.

c) SPECULATIVE MOTIVE: It says that the inventory maintenance (high or low) decision is affected by the motive to take advantage of price fluctuations.

The aspects of inventory management can be described as follows:1. To ensure that a very high level of inventory is avoided. 2. At the same time to ensure that inventories are not so adequate that it will affect adversely the smooth flow of production and sales. 3. Minimize the carrying cost and 4. Maintain an optimum level of inventories.

OBJECTIVES OF INVENTORY MANAGEMENT To have stocks available as when they are required. To minimize available storage space, but prevent stocks level from exceeding space availability. To meet a high percentage of demand without creating excess stock levels. In other words, neither to over-stock nor to run out is the bet policy. To maintain adequate accountability of inventory assets. To keep all the expenditure within the budget authorization. To decide which items to stock and which items to procure on demand. To ensure adequate supply of materials, stores, spares, etc. minimize stock-outs and shortages and avoid costly interruption in operations. To keep down investment in inventories, inventory carrying cost and obsolescence losses to minimum. To permit a better utilization of visible stocks by facilitating inter-departmental transfers within a company. To provide a check against losses of material through careless of pilferage To serve as a means for the location and disposition of inactive and obsolete items of stores. To provide a perpetual inventory value and a consistent and reliable basis for the preparation of financial statements. To contribute to the nations economic well-being. To contribute to profitability and To bring down the inventory carrying cost inventory management is considerable.

TECHNIQUES OF INVENTORY MANAGAMENT A. FIXATION OF THE LEVELS. B. SELSCTIVE CONTROL OF INVENTORIES. C. JIT D. ANALYSIS OF INVESTMENT IN INVENTORY.

McDonaldss vs. Wendys: An Example Its easy to see how higher inventory turn than competitors translates into superior business performance. McDonalds is unquestionably the largest and most successful fast food restaurant in the world. Lets compare it to one of its main competitors, Wendys.

McDonaldss 2000 Inventories Cost of revenue $99,300,000 $8,750,100,000 1999 $82,700,000

Wendys 2000 Inventories Cost of revenue $40,086,000 $1,610,075,000 1999 $40,271,000

Use the inventory turn formula [cost of sales or cost of revenue divided by the average inventory values] to come up with the number of inventory turns for each business. Between 1999 and 2000, McDonalds had an inventory turn of rate of 96.1549[incredible for even a high-turn industry such as fast food]. This means that every 3.79 days, McDonalds goes through its inventory. Wendys, on the other hand, has a turn rate of 40.073 and clears its inventory every 9.10 days.

This inventory in efficiency can make a tremendous impact on the bottom line. By tying up as little capital as possible in inventory, McDonalds can use the cash on hand to open more stores, increase its advertising budget, or buy back shares. It eases the strain on cash flow considerably, allowing management much more flexibility in planning for the long term.

PURCHASE PROCEDURE OF LECHLER INDIA PRIVATE LIMITED:

OBJECTIVE To ensure that adequate technical & conventional data is provided to the vendors/subcontractor so as to enable them to supply product/material/service to the specified requirements & on-time.

SCOPE This procedure covers direct materials, tools, consumables capital items which go into the product, packaging materials & service sub-contractors. Products & services which do not affect the finished product quality are extended. PROCEDURE
1)

PURCHASE INDENT ACCEPTANCE: a.. Purchase action shall be taken on the basis of purchase indents received from the concerned department or on the basis of reorder levels fixed for the stock items, as received from PPC. Indents received from various departments are filed serially.

b. If the items are being procured for the first time, purchase department shall get the approved drawing or the specification sheet of the items from the indenting department.
2) PROCUREMENT ACTION: a. Details of all purchase orders released by materials department shall be entered in the

purchase order register & the purchase order number as per the register serially. Control shall be allotted to the purchase order released.
b. Imported Material: Purchase orders for imported material shall be placed on vendors

selected based on the recommendations of Lechler principals, or based on the past reorder as recommended by engineering department
c. Indigenous raw material: For raw materials & bought out components procured

indigenously purchase order shall be placed on the vendor selected from the list of approved vendors/sub- contractors. All the purchase order numbers are entered in the purchase order register.

d.

Capital items: Machine tools & other capital equipment having value more than 1 lakh shall be procured against 'capital equipment indenting proposals' accompanied by approved purchase indents. Machine tools & other capital equipments having value less than 1 lakh shall be procured against approved purchase indent. The indents shall be duly signed & approved by the Vice-President (Operations).

e. Whenever an order is placed on a new vendor/sub-contractor that is not yet approved, the

P.O shall be typed on trial purchase order.

f.

The P.O shall include applicable items from the following: i. The type, class, grade or other precise identification.

ii.The title or other positive identification & applicable issues of specifications, drawings, process requirements for approval or qualification of product procedures, process equipment & personnel. iii.The title number & issue of the quality system standard to be applied. g. For regular procured items, an open purchase order shall be placed on the vendors. Delivery schedule from time to time shall be sent to the vendors. If additional quantity is required for some orders, amended schedule shall be sent. h. For regular orders related to brackets & adaptors, the purchase order shall be released once in a month. i. Material movement slip shall be used whenever our material is sent outside for machining/testing. PURCHASE ORDER & AMENDMENT: P.O's shall be raised on the vendor/subcontractor selected as above to authorize the supply of direct material/items/services as per the terms of the contract & delivery mentioned therein. Purchase orders shall be amended whenever required & informed to vendor through P.O amendments. REVIEW OF PURCHASE ORDER: The P.O shall be reviewed for adequacy of the specified requirements prior to release. All the three copies of the purchase orders shall be approved of by the appropriate authorities before release of the P.O to the vendors/sub contractors to the concerned department in LECHLER INDIA PRIVATE LIMITED. The authorize signatures are indicated.
VERIFICATION OF THE PURCHASED PRODUCT:

Whenever specified in the contract, the customer or his representative shall be allowed for the verification of the products either at LECHLER INDIA PRIVATE LIMITED works or at vendor's place of work. The co-ordination for such verification activity shall be done by marketing co-coordinator. DISPOSAL OF NON-CONFORMING MATERIAL: Non - conforming material shall be disposed off as per the procedure. Nonconformities observed shall be reported in the non - conformity analysis register for initiating the required corrective actions. Vendor/sub-contractor shall be intimated demanding corrective action for repetitive non-conformities through supplier corrective action request.

RESPONSIBILITY AND APPROVAL: The authorities of the respective department shall be responsible for review, implementation, control & verification of this procedure. He shall be responsible for providing all means & facilities for smooth working of this procedure.

FORMATS OF PURCHASE
PURCHASE ORDER
Our Older No. M/s.. Date

Your Ref. No.

Date

Please supply the under-mentioned goods to our works Subject to condition overleaf:

Sr. No.

Description

Quantity

Per

Rate

Value

--

Excise: Octroi: Delivery: Payment Terms: Remarks

MST/CST. Freight

PRUCHASE INDENT

Purchase Indent Please Purchase the following materials for Sr. No. Description Code Qty. Reqd. WhenR.eqd .

I~o,: Date:

Stock on Avg. Consuhand mption

Previous rate

Route
.

Inducted By

Stores

Purchase

QUOTATION

Material Code No.

A.B.C.& Co.

Date

M/s.
Name of supplier Minimum qty offered

Specimen of quotations Rate per unit Time of delivery

G RR NO. &. Date

File No.

D. C. NO. &. Date

Terms of delivery

P. O. NO. &.Date

Other terms

The following material(s) have been received and inspected as per details below: Sr. No.
El-O-Matic (India) Pvt. Ltd. Pune

BILL MATERIAL Part Description &.OF Part No.

Receipts

Inspection Results

Bill Of Material

As Per challan

Actually Desc. received Main Assly.

No. Sheet No.

Acce- Rewpted ork

Reed Under without deviaop. tion op

Sr. No

Drawing No.
0

Description

Qty Set

Source Code

Material

Reqd. For

Qty. Regd. (Sets) *

Stock on Hand *

Stock Shortage *

-,

Vendor/Customer Receipt

Accounts

Stores Purchas e

Planning I Sub Cont.

,

ICHD.BY IDATE

I APPR.BY

DATE

STORES ORGANIZATION

Normally substantial amount of company's working capital is invested in stores. Due attention should be given to stores routine. There should be system of proper accounting of materials and supplies and it should be given same attention as is given to accounting for money. Raw materials and supplies are equivalent of cash. They form an important part of manufacturing and it is essential that they should be safeguarded and accounted for properly. TYPES OF RAW MATERIAL a. Raw Material Stores: It is the store where in incoming raw material, which directly contributes to the final product, is received, stored and issued to the production department at various stages.

b. Engineering Stores: In this store, materials required of running of plant, which do not directly contribute as a part of finished product, are stored. Machinery spares, consumables, stationery etc. are stored in this and issued as per requisitions raised by various users.

c. Finished Goods Stores: It is the place where the finished products are stored after production and are ready to dispatch to the respective locations or warehouses.

FUNCIONS OF STORES DEPARTMENT

In the company, the duties or functions broadly cover three types - physical task of storing and preserving material, technical job of providing storing facilities and administrative procedure for documentation and accounting of material movements. Referring to a full - fledged storehouse of LECHLER INDIA PRIVATE LIMITED the following duties and function can be enlisted.

1. Classification and codification of numerous materials by using suitable method of codification is done in the stores. Then the manual of material - codes is circulated among store staff and other concerned department managers.

2. The stores department takes physical charge of the material forwarded by goods receiving and inspection section and places them in the respective bin. 3. The stores department provides necessary facilities for preserving the quality of materials as long as they are in its custody. 4. It examines that issue procedure is properly followed by confirming the materials supplied to production department only against written formal request/demand by authorize through document material requisition note. 5. It keeps watch on actual stock level and compares the same with pre-set stock limits (Maximum, Minimum, Reordering etc.) so that stock moves within limits. 6. Department prepares purchase requisition note for getting replenishment of stock when actual quantity reaches reordering level. 7. The department carryout a regular review of stock for slow and fast moving materials, damaged and substandard materials and reports such facts to top management. 8. It ensures that correct accounting entries are entered in stock register and records for each transaction like receipt, issue, return to supplier return from shop floor. 9. It arranges for all type of information and data required by top management and other concerned officers, specially keeping ready the details of stock position / balances. 10. The stores department undertakes physical verification (stock taking) for reconciling actual balance with the book balance and identifying discrepancies, if any, with possible

causes for the same. STORES DOCUMENTS AND RECORDS Importance of stores documents & records:The stores department is all the time expected to give latest information about stock balance, movement of the materials, and condition of the material. Such reporting has to be based on some authentic source and hence, the stores and other concerned departments - purchase, production, costing have to record their instructions, actions, decisions by using well designed documents and registers. The store keeper is primarily held answerable for each and every internal movement of materials, particularly for the stock under his custody. Proper safeguarding and identification of materials should be done by the storekeeper.

STORES ACCOUNTING RECORDS There are two basic records of inventory control viz. Bin Cards maintained by store keeper and store ledger accounts kept by costing department. It is the parallel accounting exercise based on same facts, recording same transaction i.e. movements of materials. Simultaneously posting of same entries in two independent sets of accounts offers facility of reconciliation, which in turn acts as an effective tool of inventory control.

BIN CARDS:-A bin card is used by storekeeper to keep quantitative records for all the items of materials and goods in his stores. This is a document maintained by store keeper in his stores to assist him to control stock.

The format of the bin card is given below: A bin card is used for each material. Each receipt, issue or return is recorded on the bin card in a chronological order and the latest balance is shown after each receipt and issue. Bin card is hung up in a convenient place outside the bin, rack or shelf. Bin cards are hung near the bins, so that they are readily available for making entries as and when the goods are placed into the bin or taken out. All bins racks or shelves, etc. should be numbered consequently in order to indicate their location to the store keeper and his assistance. This numbering also serves to connect the bin card with the bin, to which

it belongs.

STORES LEDGER SYSTEM

It is kept in the costing department. The store ledger is generally maintained in the form of loose leaf cards, because they can be removed and inserted easily. Each account in store ledger represents an item of material. The format of store ledger is shown below: -

The store ledger provides a continuous record of material and stores, received, issued, returned or transferred. It discloses the balance in hand both in quantity and value at any point of time. It serves the management with the perpetual inventory record for necessary for decision making. Material Receipt Report, Material Requisition, Material Return Note form the basis for making entries in store ledger accounts. Entries made in the store ledger are identical to those on bin cards except that money values are shown only in store ledger. It is very important that store staff should have nothing to do with writing up of stores ledger account, which should be written only by the staff of costing department.

Since both bin card and store ledger account are written up from the same basic document, the quantity balance are shown by these records should agree. The reasons for discrepancies bin balances fewer than two sets are due to such reasons as:

a. Failure to post a particular transaction b. Wrong posting in store ledger account c. Wrong casting d. Theft and e. Items placed in wrong bin.

To avoid the problem of disagreement, the two sets should be reconciled either continuously over a period. For automatic reconciliation, store department sends the original documents to the revised balance of bin card after its inclusion. Costing department watch that the balance of bin card intimated with the original document is correct. FORMAT OF STORE LEDGER

Store Ledger Account X.Y Material Code No: Bin No: Unit:

z. & Co
Maximum Stock Minimum Stock Re-older Level Ordering Qty

Ordered

Reserved

Received

Date

Ref.

Qty.

Date

Ref.

Qty.

Date

OR Note

Qty.

Rate

Value

Issued Sr. No. Qty. Rate Value Qty.

Stock Rate Value Date

Stock verified Initials Remarks.

DATA ANALYSIS

LIST OF PHYSICALLY CHECKED INVENTORY:

The lists of inventories in accordance with above mentioned categorization were procured from the management information system/electronic data processing department. The format is shown as below: REVIEW OF ALL THE ITEMS AT THE STORE:

REVIEW OF ALL THE ITEMS WITH ITS VALUE AND QUANTITY:

STOCK AS ON:-31.03.2010

SR. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

MATERIAL DESCRIPTION 1 CORE PVC CABLE 16 MM2 1 CORE 1 MM2 BLACK 1 CORE 1 MM2 BLUE 1 CORE 1 MM2 GREEN 1 CORE 1 MM2 GREY 1 CORE 1 MM2 ORANGE 1 CORE 1 MM2 RED 1 CORE 1 MM2 WHITE 1 CORE 1 MM2 YELLOW 10 PIN PLUG PRIYANTRONIX

STOCK 3 0 100 300 200 0 150 200 100 2

RATE 89.00 5.89 5.89 5.89 5.89 5.89 5.89 5.89 5.89 303

TOTAL 267.00 0.00 589.00 1767.00 1178.00 0.00 883.50 1178.00 589.00 606.00

11. 12. 13.

10 PIN RECEPTACLE PRIYANTRONIX 2 CORE PVC CABLE 1.5 MM2 2 ROLL DRIVE WITH G BOX ( 250 RPM)

3 5

293 24

879.00 120.00

11

1850.00

20350.00

14.

2 ROLL DRIVE WITH G BOX ( IMPORTED) Geared roller 1 3100.00 3100.00

15.

2 ROLL DRIVE WITH G BOX ( IMPORTED) Plain roller 0 25 10 3100.00 31 108 0.00 775.00 1080.00

16. 17. 18.

3 CORE PVC CABLE 1.5 MM2 3 PIN PLUG & SOCKER MS TYPE 3 PIN PLUG PRIYANTRONIX ( TORCH)

6 6 116 30 10 8

59 55 41 66 64 58

354.00 330.00 4756.00 1980.00 640.00 464.00

19. 20. 21. 22. 23. 24.

3 PIN RECEPTACLE PRIYANTRONIX (WF/PS) 4 CORE PVC CABLE 1.5 MM2 4 CORE PVC CABLE 2.5 MM2 4 PIN PLUG PRIYANTRONIX 4 PIN RECEPTACLE PRIYANTRONIX 4 ROLL DRIVE UNIT WITH G BOX ( 145 RPM)

5900.00

0.00

25.

4 ROLL DRIVE UNIT WITH G BOX ( 66 RPM/37 RPM)With Motor 4 2 0 1 800 330.00 0.10 330.00 80.00 8150.00 4500.00 32600.00 9000.00

26. 27. 28. 29.

4 ROLL DRIVE WITH G BOX (IMPORTED) 6 PIN PLUG & SOCKET ( MS TYPE) 92 TEETH AFCO TAG ( SOLDERING TYPE)

30. 31. SR. NO. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48.

ALU PLATE ( CHOKE MTG) AMEETER 0-1500 A MATERIAL DESCRIPTION AMMETER 0-1000 A AMMETER 0-400 A AMMETER 0-600 A ANTI SPATTER SPRAY 500 ML ANTISPATTER GEL 300 GM BAKELITE INS PLATE BAKELITE STRIP ( INPUT CABLE) BEARING 6004 BEARING 6006 BEARING 6007 BEARING 6009 BEARING 6010 BEARING 6011 BEARING 6202 BEARING HOUSING (MS) 100*65 BEARING HOUSING (MS) 125*100 2+3

75 2 STOCK 3 4 0 0 3 1 2 4 5 5 1 0 0 8 10 5

10.00 333 RATE 333 333 333 68.00 55.00 55.00 10 125.00 185.00 225.00 240.00 485.00 552.00 80.00 1840.00 1840.00

750.00 666.00 TOTAL 999.00 1332.00 0.00 0.00 165.00 55.00 20.00 500.00 925.00 1125.00 240.00 0.00 0.00 640.00 18400.00 9200.00

BEARING HOUSING 100MM DIA*125 MM LONG BK WASHER AND BUSH (FOR O/P TERMINAL)

10

960.00

9600.00

49.

0 165 60

13 5.00 4.00

0.00 825.00 240.00

50. 51.

BK WEDGES ( FOR CHOKE) BOBBIN NO 13( 2 NOS/SET)

52. 53. 54. 55. 56. 57. 58.

BOBBIN NO 7 ( 12 NOS/SET) BRASS NIPPLE ( GAS HOSE) BRASS NIPPLE 3/8" * 1/8"

100 125 29

7.00 12.50 20.00

700.00 1562.5 580.00

FACTS OBSERVED DURING PHYSICAL VERIFICATION OF INVENTORY

The following points are also the points as to why the materials have become non moving and slow moving at LECHLER INDIA PVT. LTD: MISPLACEMENT OF INVENTORY: Many of the items found to be misplaced. Either the material was placed in appropriate bins &racks or the change of bin was not updated in the system. RETURNED MATERIAL: the returned material from the shop floor is again mixed with the same stock from which it is issued. No separate treatment is given to the returned material. CRITICAL PURCHASE: Many high value non-stocking items were found in the stores, which were yet not consumed. OBSOLETE, SURPLUS 7 WASTE: OBSOLETE: Those materials and equipment which are not damaged and which have economic growth but which are no longer useful for company operation owing to many reasons such as changes in production line, process, design changes etc. SURPLUS: Those materials and equipment which have no immediate use, but have accumulated due the faulty planning; purchasing and forecasting but they have usage value in future. SCRAP: Those materials like process wastage, such as training, boring, flashes they may have end uses, and they have no market value.

THUS OBSOLETE & SURPLUS= SLOW MOVING ITEMS (S) AND SCRAP=NON MOVING ITEM

FACTS OBSERVED DURING PHYSICAL VERIFICATION OF INVENTORY

The following points are also the points as to why the materials have become non moving and slow moving at LECHLER INDIA PRIVATE LIMITED : MISPLACEMENT OF INVENTORY: Many of the items found to be misplaced. Either the material was placed in appropriate bins &racks or the change of bin was not updated in the system. RETURNED MATERIAL: the returned material from the shop floor is again mixed with the same stock from which it is issued. No separate treatment is given to the returned material. CRITICAL PURCHASE: Many high value non-stocking items were found in the stores, which were yet not consumed. OBSOLETE, SURPLUS 7 WASTE: OBSOLETE: Those materials and equipment which are not damaged and which have economic growth but which are no longer useful for company operation owing to many reasons such as changes in production line, process, design changes etc. SURPLUS: Those materials and equipment which have no immediate use, but have accumulated due the faulty planning; purchasing and forecasting but they have usage value in future. SCRAP: Those materials like process wastage, such as training, boring, flashes they may have end uses, and they have no market value.

THUS OBSOLETE & SURPLUS= SLOW MOVING ITEMS (S) AND SCRAP=NON MOVING ITEM

RECOMMENDATION AND SUGGESTION

The company was recommended to adopt a locking system which is as follows:-

Security for inventory is a must for every received material.

Security for GRR(Goods receipt report) is a must

For any transaction valid and released Purchase Order is required.

For any excess received material more than Purchase order receipt requires the approval of the Vice President - Operations for acceptance.

The GRR details are to be updated within 5 days in the system or the information is blocked and manually updated in the stores.

Suppose stock is under safety level, the required quantity is to be ordered after the approval from the Vice President - Operations of the company.

For critical items emergency stock is maintained in stores and recommended in the system and used with the approval of the Director-Operations of the company.

Due to business constraint the item-springs is stored in the stores department for 2 months.