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PROJECT REPORT

ON Inventory management system

CONDUCTED AT:

FEDERAL MOGUL GOETZE (INDIA LIMITED! "A#ADURGAR#! PATIALA

CONTENT$
A%&no'(e)gement De%(arat*on Cert*+*%ate An Intro),%t*on

$ECTION-A: A "RIEF O.ER.IE/ OF FEDERAL MOGUL GOETZE (INDIA LIMITED! PATIALA

An Introduction to GIL Important Products History Milestones Members of Management Body A Chronological ie! of product Information "ocial Acti#ities Mar$et "hare "ignificance of Logo Primary and "econdary %b&ecti#es ision Mission Important Customers 'apanese Practices of ()" %rgani*ational "et up %rgani*ational Chart $ECTION 0 ": INTRODUCTION TO IN.ENTOR1 MANAGEMENT AND IN.ENTOR1 MANAGEMENT IN FMGIL

Introduction to In#entory Management In#entory Management +echni,ues In#entory Management in -MGIL Categori*ation Codification arious procedure adopted for In#entory Management in -MGIL

$ECTION 0 C: RE$EARC# MET#ODOLOG1 /esearch %b&ecti#es /esearch Methodology

$ECTION 0 D: CONCLU$ION

$ECTION 0 E: $ECTION 0F:

FINDING$ AND $UGGE$TION$ LIMITATION$

$ECTION 0 G: "I"LIOGRAP#1

AC2NO/LEDEMENT
1othing concrete can be achie#ed !ithout optimum combination of inspection and perspiration2 Li$e All other studies3 this !or$ is also result of the interaction of a number of minds !ho directly or Indirectly ha#e contributed for completing this pro&ect2 I o!e a lot to many for the inspection part2 It is #ery difficult to ac$no!ledge so precious a dept as that of learning as that of learning as it4s the only debt that is difficult to repay e5pect through gratitude It is great honor and pri#ilege and pleasure to e5press deep since of gratitude to my pro&ect guide to placing complete faith and confidence in my ability to carry out this study and for pro#iding me their inspiration3 encouragement3 help3 #aluable guidance3 constructi#e criticism and constraint interest2 +hey too$ personal interest in spite of their numerous commitment and busy schedule to help me complete my pro&ect 2my pro&ect !ould not ha#e seen the light of day !ithout their masterly guidance and o#er!helming help2 It gi#es me tremendous pleasure in ac$no!ledging the #aluable assistance e5tended to me by #arious Personalities in successful completion of this pro&ect report2 I than$s all these for helping me in spite of their busy schedules2 At last but not least3 I e5tent my heartfelt gratitude to my family and friends help3 cooperation3 6 constant encouragement for successful accomplishment of my pro&ect2

CERTIFICATE 7
+he pro&ect included in the pro&ect outlined I1 81+%/9 MA1AG8M81+ "9"+8M of -8:8/AL M%G;L G%8+8<8 I1:IA2 "ubmitted to :8"H BHAGA+ I1"+I+;+8 %MA1AG8M81+ %- C%MP;+8/ "CI81C8 affiliated to P;1'AB +8CH1ICAL ;1I 8/"I+92'ALA1:HA/ for degree in master o business administration by P%%'A /A1I has been carried out under my super#ision +his pro&ect report is her original piece of !or$ 6 has not been submitted for any other degree at this or any other institute to best of my $no!ledge

PROJECT GUIDE

C3a4ter 5

INTRODUCTION: It is good to ha#e good!ill It is good to ha#e enthusiasm But it is essential to ha#e $no!ledge Pt2 '2L21ehru +he abo#e ,uoted lines by the great soul Pt2'2L21ehru rightly tell us learning is a #ery necessary Part in ones life of one !ants to achie#e success 6ha#e proper $no!ledge about a particular aspect2 +hus3 the ob&ecti#e of my pro&ect report !as to get more $no!ledge and to go beyond the boo$ish that gi#es Merely theoretical $no!ledge and to closely loo$ at the practicality of the modern industry2 +he topic of my pro&ect is 6IN.ENTOR1 MANAGEMENT7 !hich !as meant to $no! +he pro&ect !as carried at2 -8:8/AL M%GH;L G%8+<8 >I1:IA? LIMI+8:3 Bahadurgarh3 Aspects of in#entory management li$e In#entory control system3 material planning and purchasing3 categori*ation of items3 #aluation of In#entory etc2 +he first section of the report is company profile3 !hich includes the introduction of organi*ation Group3 a brief o#er#ie! of -8:8/AL M%GH;L G%8+<8 I1:IA LIMI+8: and finance aspects at -MGIL2

In the se%on) se%t*on3 an introduction to in#entory management is gi#en !hich includes In#entory control system3 material planning and purchasing3 categori*ation of items3)In#entory management at -MGIL is been e5plained2 +he #arious aspects of in#entory management li$e economic order ,uantity techni,ue3 ABC classification3

In the section)C and :3 research findings are described !hich are used to gather the necessary information and suggestions regarding different aspects of in#entory management are included2 +he last section of the report section)8 includes Bibliography2

8stablished in 1B(03 Goet* >India? Limited >GIL? is &oint enture bet!een the Anil 1anda group and -ederal Mogul3 a Global supplier of ,uality products and solutions to automoti#e Industry2 Goet* >India? Limited !as established in 1B(0as a &oint #enture !ith Goet*e)Cer$e of Germany2 Goet*e)Cer$e of Germany is no! o!ned by -ederal) Mogul Corporation3 a D=2. billion global company and %ne of the leading manufacturers of automoti#e Components in the !orld2 -ederal)Mogul Goet* >India? Limited is the largest Manufacturer of pistons and piston rings in India2 -ederal)Mogul has been creating #alue through inno#ation and leading technology for More than 1EE years2 +oday3 the company is a $ey player in the global mar$etplace3 "er#ing industries that range from automoti#e and commercial #ehicles to railroad and Aerospace2 Customers $no! they can rely on -ederal)Mogul4s ,uality e5cellence in Products3 trusted brands and creati#e solutions2

+his company started !ith a bold idea and o#er time gre! into a FORTUNE (EE Company !ith a global !or$force thousands strong2 +he -ederal)Mogul team has Celebrated countless #ictories and !or$ed hard to o#ercome the ine#itable challenges2 +he products bas$et besides pistons and piston rings also includes cylinder liners3 Light alloy castings and other sintered products2 +he company has its plants located at Bangalore >pistons3 piston rings and pins?3 Bhi!adi >sintered products? 2+he company Has set up its first unit at Patiala >piston3 rings3 cylinder liners and castings?2 and "tarted commercial production in 1B(@2 GIL has installed production capacity of 11 million pistons and (. million piston /ings2

AC8UI$ITION OF E$CORT$ MA#LE LTD

8scorts Mahler Ltd2 !as a (E7(E &oint #enture bet!een 8scorts Ltd2 6 Mahle GmbH >Mahle? manufacturing Pistons 6 Piston Pins at Bangalore 6 Patiala2 Pursuant to the disengagement 6 share purchase agreement among 8scorts Ltd3 Mahle 6 8scorts FMahle Ltd2 Mahle had decided to e5it from the &oint #enture 6 sell its entire share holding in 8scorts) Mahle Ltd2 Ha#ing decided to e5it from this &oint #enture3 also sold its entire share holding in 8scorts) Mahle Ltd2

In #ie! of the fact that the businesses of the 8scorts)Mahle and Goet* >India? Ltd23 are closely inter)lin$ed and ha#e ob#ious financial and technical synergies due to common locations of plants3 common customers3 complementary products etc23 it !as considered ad#isable in the interest of the company to ac,uire the share capital of the 8scorts)Mahle Ltd2 through the special purpose #ehicle >1EEG subsidiary?2 +he ne! company named H8"C%/+" PI"+%1" L+:2I came to e5istence on 1o#213 2EE22 -urther3 8scorts Pistons Ltd2 !as amalgamated !ith Goet* >India? Ltd2 on May 2=3 2EE. and !2e2f2 'une 2EE.3 the name of the company is HG%8+<8 I1:IA L+:2I

1E

Federal-Mogul TPR (India) Limited

-ederal) Mogul +P/ >India? Ltd2 >-ormerly Goet*e +P >India? Ltd? !as formed in 1BB@ as a &oint #enture among -ederal)Mogul Goet*e >India? Ltd23 the leading manufacturer of piston rings in India3 -ederal)Mogul Corporation and +ei$o$u Piston /ing Co2 Ltd23 'apan3 one of the largest manufacturers of piston rings in 'apan2 +he partnership pro#ides the Indian automobile industry !ith hi)tech steel compression rings and multi)piece oil rings for its ne! generation cars3 0)stro$e bi) !heeler and other high)performance engines2 +he plant has the capacity to manufacture 1020 million steel rings per annum2 $3are #o()*ng Pattern: -ederal) Mogul Goet*e >India? Limited -ederal) Mogul ;J In#estments Limited +P/ Co23 Ltd2 (12E G

202( G

202( G +he company has a state)of)the)art plant in Bengaluru for manufacturing of nitrided steel piston rings3 three)piece oil rings3 section steel nitrided oil rings and other steel rings2 +hese products !ill be supplemented by a supply of cast iron or nodular rings by -ederal)Mogul Goet*e India Ltd2 to form the complete set2

-ederal)Mogul is a global supplier of automoti#e components3 modules and systems ser#ing the !orldKs original e,uipment manufacturers and the aftermar$et industry2 +he company utili*es its engineering and materials e5pertise3 proprietary technology3 manufacturing s$ill3 distribution fle5ibility and mar$eting po!er to deli#er ,uality products and ser#ices3 and leading brands2 -ederal) Mogul is focused on dri#ing global profitable gro!th and creating #alue to satisfy customer3 employee and sta$eholder e5pectations2 Head,uartered in "outhfield3 Michigan3 the Company3 !hich reported sales of D=2. billion in 2EE(3 employs 023EEE people !orld!ide2 -ederal)Mogul !as founded in :etroit in 1ABB2 +he Company4s principal customers include many of the !orld4s foremost original e,uipment manufacturers of automoti#e3 light commercial3 hea#y)duty truc$3 agricultural3 marine3 rail and industrial #ehicles and e,uipment as !ell as the !orld!ide aftermar$et2 11

-ederal)Mogul4s products are sold under a #ariety of po!er brands3 including but not limited to3 A8L engine products3 A1C%L !ipers3 ChampionL spar$ plugs and !ipers3 -ell)ProL gas$ets3 -erodoL bra$e pads3 GlycolL bearings3 Goet*L piston rings3 MoogL chassis products3 1ationalL !heel)end components3 1euralL pistons3 PainL gas$ets3 "ealed Po!erL engine products and CagnerL lighting and bra$e products

Pro),%t*on Ca4a%*ty:

P*ston r*ngs P*stons A4r*( ;<-Mar%3 5; A4r*( ;< -Mar%3 5;

99 M*((*on 5= M*((*on INR 95>? M*((*on INR (9;9 M*((*on

T,rnover: Net Pro+*t (a+ter ta: :

Pro),%t Range:

P*stons! 4*ston r*ngs! %y(*n)er (*ners! (*g3t a((oy %ast*ngs! s*ntere) 4ro),%ts

12

Muality Policy
G%8+<8 >I1:IA? LIMI+8: commits itself to leadership in national mar$et for all its products and ensuring total customers4 satisfaction highest in industry2 It commits to de#elop and build an image in the international mar$et to achie#e a sustained annual gro!th in e5ports2

Po(*%y
Ce shall continue to manufacture all our products in conformity !ith accepted international normsN standards2 Ce shall also continue to retain our leadership in de#elopment of products through technical $no!)ho! from our Collaborators and in)house de#elopments2 Consistent de#elopment of human resources through training at all le#els !ill be our ma&or thrust area2

CODE OF ET#IC$: EDERAL-MOGUL GOETZE INDIA LIMITED DIRE TOR! AND !ENIOR MANAGEMENT I@ Intro),%t*on: +his Code of Conduct >OCodeO? is applicable to the Board of :irectors of -ederal)Mogul Goet*e India Limited >OCompanyO? and all the "enior Management Personnel that is all members of the management one le#el belo! the e5ecuti#e director and all functional heads3 hereinafter referred to as Ospecified employeesO2 +he specified employees of the Company ac$no!ledge and accept the scope and e5tent of our duties2 Ce are entrusted !ith the responsibility for the o#ersight of the assets and business affairs of the Company in an honest3 fair3 diligent and ethical manner2 Ce must act !ithin the bounds of the authority conferred upon us and !ith the duty to ma$e and enact informed decisions and policies in the best interests of the Company and its shareholders2 +he Board of :irectors has adopted the follo!ing Code of Conduct and all the specified employees are e5pected to adhere to the standards of loyalty3 good faith3 and the a#oidance of conflict of interest that follo!s7 ODE OF ONDU T FOR

1.

A specified employee !ho has concerns regarding compliance !ith this Code should raise those concerns !ith the Compliance %fficer that is the Company "ecretary2 In the e5tremely unli$ely e#ent that a !ai#er of this Code for a specified employee !ould be in the best interest of the Company3 it must be appro#ed by the Board of :irectors2

"pecified employees !ill annually affirm compliance !ith this Code2 +he Annual /eport of the Company !ill contain a declaration to this effect signed by the 85ecuti#e :irector2 II@ Co)e o+ Con),%t: >1?2 A specified employee must act honestly3 in good faith and in the best interests of the Company as a !hole2 >2?2 A specified employee has a duty to perform the functions of office and e5ercise the po!ers attached to that office !ith a degree of care and diligence that a reasonable person !ould e5ercise if they !ere in the same circumstances2 >.?2 A specified employee should consider matters ha#ing regard to7 a? Any possible material personal interest he or she may ha#e in the sub&ect matterP b? +he amount of information appropriate to properly consider the sub&ect matterP and c? Chat is in the best interests of the Company2 >0?2 A specified employee must recogni*e that his or her dominant purpose or ob&ect must be to ser#e the interests of the members of the Company as a !hole3 not the interests of any particular group of :irectors3 employees or sta$eholders or the specified employeeKs personal or commercial interests2 In circumstances of insol#ency or near insol#ency3 the duty to act in the best interests of members is o#erridden by a duty to act in the best interests of creditors2 >(?2 A specified employee must not ma$e improper use of information ac,uired by him to gain a personal ad#antage or to cause detriment to the Company2 >=?2 A specified employee must not ta$e improper ad#antage of his position to gain a personal ad#antage or to cause detriment to the Company2 >@?2 A specified employee must not place himself or herself in a position !here there is a reasonable possibility of conflict bet!een his or her personal or business interests3 the interests of any associated person3 or his or her duties to any other company3 on the one hand3 and the interests of the Company or his or her duties to the Company3 on the other hand2 +he action !hich a specified employee !ill be re,uired to ta$e if he or she is faced !ith an actual or potential conflict of interest or duties in relation to a particular matter being considered by the Company !ill depend on the nature and circumstances of the conflict and may include any of the follo!ing7 a?2 -ully and fran$ly informing about the circumstances gi#ing rise to the conflictP 10

b?2 In case of :irectors abstaining from #oting on any motion relating to the matter and absenting himself or herself from all board deliberations relating to the matterP or

c?2 /esigning from his position2 If a specified employee belie#es that he may ha#e a conflict of interest or duty in relation to a particular matter3 the specified employee should consult !ith the Board of :irectors2 >A?2 A :irector must bring an en,uiring3 open and independent mind to Board meetings3 listen to the debate on each issue raised3 consider the arguments for and against each motion and reach a decision that he or she belie#es3 to be in the best interests of the Company as a !hole2 >B?2 An opportunity must be pro#ided for a specified employee to put his or her #ie!s on issues before the Management3 Board or a Committee3 as the case may be2 Chile specified employees must treat each other !ith courtesy and obser#e the other rules in this Code3 specified employees should be able to engage in #igorous debate on matters of principle2 >1E?2 +he specified employees must not disclose the content of discussion at "enior Management meetings3 Board meetings or Committee meetings outside appropriate and reasonable circles !ithin the Company !ith a legitimate interest in the sub&ect of the disclosures3 unless that disclosure has been authori*ed by the Company3 or is re,uired by la!2 >11?2 A specified employee generally must not engage in conduct3 or ma$e any public statement li$ely to pre&udice the CompanyKs business or li$ely to harm3 defame or other!ise bring discredit upon or disintegrate the Company3 fello! employees or staff2 A specified employee may ma$e such a statement only if the specified employee belie#es in good faith that it is in the best interests of the Company as a !hole to ma$e such a statement2 >12?2 A specified employee shall not disclose or allo! disclosure to other of any confidential information that are either pro#ided or made a#ailable to the specified employees by the Company nor shall use such confidential information for any purpose detrimental to the Company2 >1.?2 A specified employee has an obligation3 at all times3 to comply !ith the spirit3 as !ell as the letter3 of the la! and of the principles of this Code of Conduct and the Code of Conduct and Integrity policies framed by the Company from time to time2 >10?2 A specified employee has to comply !ith the CompanyKs Insider +rading Code !hile trading in the CompanyKs securities at any time2

1(

MAR2ETING ACTI.IT1:
Mar"eting Net#or"

1=

ORGANIZATIONAL C#ART "oar) o+ D*re%tors Des*gnat*on Chairman 6 :irector Managing :irector Chole +ime -inance :irector 6 C-% :irector :irector :irector Cor4orate Lea)ers Manag*ng D*re%tor /3o(e T*me F*nan%e D*re%tor A CFO D*re%tor 0 #,man Reso,r%es Genera( Manager- Cor4orate A Lega( A++a*rs A Com4any $e%retary #ea) - In+ormat*on $ystems #ea) 0 AE B RAD #ea) 0 G(oCa( P,r%3as*ng #ea) - Or*g*na( ED,*4@ $a(es #ea) 0 AM $a(es #ea) 0 $CM Mr2 Andreas Jolf Mr2 "achin "elot Mr2 Pritpal "ingh Jular Mr2 Jhalid I2 Jhan Mr2 1arangampuram "reeni#asan Mr2 "GP 1aidu Mr2 Asho$ "inha Mr2 inod Hans Mr2 Madhur Ane&a Mr2 Alo$ Mana$tala Name Mr2 J212 "ubramaniam Mr2 Andreas Jolf Mr2 "achin "elot Mr2 "unit Japur Mr2 Bernhard Motel Mr2 Mu$ul Gupta

1@

1A

IMPORTANT PRODUCT$:

P*stons
-or their original e,uipment3 FEDERAL MOGUL Pistons is the first choice of e#ery discerning manufacturer li$e +elco3 'ohn :eere3 Hindustan Motors3 Mitsubishi Lancer3 +ata Cummins3 Asho$ Leyland3 Mahindra3 8scorts3 8ither3 Maruti3 Ba&a& Auto3 -iat3 Ba&a& +empo3 + "3 9amaha motors3 "!ara& Ma*da etc2 G%8+<8 has state of the art test bed facilities3 :esign facilities for products3 dies and tooling !ith CA: Q P/%Q8 and test bed facilities2

Production Capacity7

1E million Pistons per annum

Production /ange7 .E mm to .EE mm :ia

A44(*%at*on
Bi)Cheelers3 Cars3 'eeps3 +ractors Light Commercial ehicles3 Hea#y Commercial #ehicles3 High out put locomoti#e diesel engines "tationary 8ngine Industrial

1B

Pro),%ts s,*taC(e +or


0 "tro$e 8ngines 2 "tro$e 8ngines Gasoline 8ngines R :iesel 8ngines C1G 8ngines

Feat,res
Autothermic Autothermatic /ing Carrier N Alfin :ouble C2I2 Groo#es -orged "teel cap pistons Pistons !ith cooling coil +hin Called Pistons for Car +hin Groo#e pistons

2E

GOETZE Piston /ings are the first preference of OEMs 6 Ea+ter mar&etF in India2 GOETZE has state of the art design facilities for products3 tooling !ith CADGPRO-E and test bed facilities2 Goet*e is committed for Inno#ation3 introduction of ne! technology and continuous impro#ement in its products2

Production Capacity7 /ange7 .Emm to .EEmm :IA

(. million /ings per annum

GoetHe man,+a%t,res a '*)e range o+ 4*ston r*ngs +or: Bi)!heelers +ractors Passenger Cars 6 'eeps Commercial ehicles >HC 4s3 MC 4s 6 LC 4s? Locomoti#e 8ngines "tationary 8ngines Industrial +5 +ype 85pander 6 Cr Plated /ails

21

Coat*ng on R,nn*ng $,r+a%e


Chrome Ceramic plated rings >CJ"? Molybdenum Coated /ings Plasma -illed /ings "emi)Inlaid /ings -erro5 -illed /ings Chrome Plated rings Chrome Plated /ing2 $a(*ent Feat,res +hin rings made from "G Iron Asymmetric profile rings "pecially honed chrome rings Lo!er sharp edge rings /e#erse torsion rings Conformable Chrome %il /ings Jeystone 1apier

Cy(*n)er L*ners
GOETZE manufactures !et and dry types of cylinder liners !ith honing3 and slee#es for bi) !heeler applications for our ,uality conscious customers2 A44(*%at*on Bi)!heelers Cars +ractors Light Commercial ehicles Hea#y Commercial ehicles "tationary 8ngines

/ange Production Capacity7 Production Capacity7

(E mm to 12E mm Internal :ia E2( million liners per annum

2E

Feat,res
+hin !ailed Plateau boned Cith and !ithout flanges

Coat*ng
Phosphating2

L*g3t Meta( Cast*ng


Goet*e >India? Ltd2 is ma$ing a !ide #ariety of Light Metal Castings2 +hese include Cylinder Bloc$s3 Cylinder Heads3 Aluminum tube castings and Aluminum cro!n handles for single cylinder engines2

$*ntere) Meta(s Pro),%ts


Goet*e India Limited >"intered Products :i#ision?3 produces a !ide range of sintered metal products for #aried automoti#e applications such as #al#e3 trains3 transmission and oil pumps !ith technical assistance from manufacturing facilities and /6: centers of -ederal mogul sintered products in ;2J23 -rance and ;"A2

Goet*e >India? Limited >"intered Product :i#ision? are suppliers to most of the %28Ms in India and abroad2 "ome of these are7) Maruti ;dyog Limited

21

+ata Motors Ba&a& Auto Limited +#s 8icher Motors Mahindra 6 Mahindra 8scorts "!ara& Ma*da Asho$ Leyland Hero Honda

22

.a(ve Tra*n Parts


al#e seat inserts and #al#e guides are a special category of sintered components for ne! generation engines2 Goet*e India limited >"intered Product :i#ision? uses latest technology N processes along !ith specially sourced po!der Little !onder that auto ma&ors manufacturing engines for #aried applications such as t!oNthree !heelers3 passenger cars3 LC MC 4s3 HC and tractors prefer GIL "intered Products2

$yn%3ron*Her #,Cs
"intered "ynchroni*er Hubs offer a #ery cost effecti#e alternati#e to con#entional hubs and at the same time3 meet the e#er)increasing performance re,uirement of automoti#e designers2

O*( P,m4 Rotor A Gears


"intered %il pump rotor 6 gears are one of the !idest used sintered application in an automoti#e industries2 Goet*e India Limited >"intered Products :i#ision? !ith support from -ederal Mogul "intered Products4 /6: centers has de#eloped its o!n capabilities to design and manufacture oil pump motors2

#I$TOR1 MILE$TONE$

5< 9? 5< 9I 5< 9J

5< K; 5< 5< II 5< J> 5< J9 5< J<

Incorporated as a ' !ith GoetHe /er&e /ing 6 liner production Pat*a(a Piston production as escorts Pat*a(a >Automoti#e :i#ision? >Collaboration7Mahle? Cast iron N -orged piston Pat*a(a production started Pat*a(a Pins N ring carrier production Piston N ring production started "anga(ore "teel rings N Large bore locomoti#e "anga(ore piston Light alloy products Pat*a(a Auto thermic pistons production "anga(ore

2.

Pat*a(a 5< <; 5< <> 5< 5< <? <K 5< <I >; >; ;= >; ;? >; ;? >; ;K >; ;K Moly coated N IJA N chrome oil Large rings bore rings N pistons for battle tan$s "anga(ore "anga(ore Composite pistons N ne! ring 8scorts foundry >Automoti#e :i#ision? hi#ed off into &oint #enture !ith ML$ Ma3(e! Germany GoetHe TP (In)*a Lt)@ ) Manufacturer of steel rings Merger of Fe)era(-Mog,( s*ntere) 4ro),%ts Lt)@ '*t3 GoetHe (In)*a Lt)@ Merger of 8scorts 4*stons a%t*v*t*es '*t3 GoetHe (In)*a Lt)@ Introduction of %3rome-%eram*% r*ngs +echnical collaboration for pistons !ith Fe)era(-Mog,( Cor4orat*on Ma&ority sta$eholding ac,uisition by Fe)era(-Mog,( Cor4orat*on 1ame changed OGoet*e >India? LimitedO to OFe)era(-Mog,( GoetHe (In)*a L*m*te)O

C#RONOLOGICAL .IE/ OF PRODUCT INTRODUCTION AT GOETZE@

1B(0 1B=E 1B=1 1B=2 1B=. 1B=( 1B=B 1B@1 1B@B 1BA1

Piston /ings and Cylinder Liners Pistons Assembly of +ractors Motorcycles3 /ail!ays Couplers Automatic "hoc$ Absorbers 8scorts +ractors -ord +ractors Industrial and Construction 8,uipments 85ca#ator Loaders 9amaha /S)1EE3 1EE CC Motorcycles 20

1BA( 1BB1 1BB2 1BB. 2EEA

8lectronic PABS Har#ester Combines "A+ "atellite Communication "ystems Mobile Communications -or$lift +ruc$s

2(

Com4any

MA/J8+

"HA/8

%-

PI"+%1

MA1;-AC+;/8" I1 I1:IA

Com4any Name

Mar&et $3are (M

Goet*e Perfect Circle IP /ing "hriram Piston "AMJ/G Piston Menon Piston

.=2( 122E 1=2( 222( B2E .2(

222(

B .2 (

.= 2(

Goet*e Perfect Circle IP /ings "hriram Piston "AMJ/G Piston Menon Piston

12 1 =2 (

2=

ENPORT DE$TINATION
:ubai Bangladesh "ingapore 8gypt Mauritius ;2"2A Germany 1epal "ri Lan$a

COLLA"ORATION$
A2 G8/MA19 -aun Class B2 'APA1 9amaha Jaya$a Mi$ni

$IGNIFICANCE OF LOGO:

+he logo of -ederal Mogul Goet* >India? Limited has been prepared !ith certain ob&ecti#e in mind and is symbolic in more than one !ay2 "o3 o#erall3 the logo represents GIL4s concern for Cor$manship3 Muality and +echnology2 Vision of the company To be one of the worldss leading automotive solutions provider

M*ss*on o+ t3e Com4any %ur company has committed to increase shareholder #alue by aggressi#ely pursuing gro!th and profit opportunities by pro#iding irmo#ati#e di#erse and high performance products and solutions to meet our customers4 needs2 Ce shall pro#ide our !or$ force !ith an en#ironment that de#elops team!or$3 continuous learning and Impro#ements that re!ards good performers2 Ce !all support our products !ith 11 technical e5pertises at the customers end2 C2 alue the2 8n#ironment and the community and !ould lice to build better ftiture for our children22-or our company customer are $ing and our aim is to satisfy the need of the customers2 In short 6$tea)*(y mov*ng to'ar)s (ea)ers3*4 '*t3 4*ston 'ay to (ea)ers *n C,s*ness7 Cert*+*%at*ons A%3*eve) +he Patiala and Bangalore Plant are both I"% BEE1 I M" BEEE certified and under I"% I +" 1=B0B and I"% 10EE1 certification2 Bhi!adi Plant is also ha#ing the certification of I"% N +" Q 1=B0BNI"% 10EEE certified2 '*t3 v*s*on strategy see*ng *t as t3e Cest

IMPORTANT CU$TOMER$
Asho$ Leyland Ltd2 Ba&a&AutoLtd Ba&a& +empo Ltd Birla 9amaha Ltd2 8icher Motors Ltd2 8lgi 8,uipments Ltd2 8scorts Ltd2 >Auto "uspension :i#ision? 8scorts Ltd2 >-armtrac :i#ision? 8scorts Ltd2 >+ractor :i#ision? -ric$ India Ltd2 Hero Honda Ltd Hero Motorcycles 6 "cooter Ltd2 Hero Motors Ltd2 Hindustan Motors Ltd2 Honda "eil Po!er Products Ltd2 Indian /ail!ays International +ractors Ltd2 Jinetic 8ngg2 Ltd2 Jinetic Motors India Ltd2 Jirlos$ar %il 8ngines Ltd2

JAPANE$E PRACTICE OF 69-$7


Goet*e has adopted the 'apanese Practice of (s2 +his enables the plant to ha#e better !or$ing conditions and also increase !or$ efficiency2 A copy of it also displayed at each shop and depth to moti#ate the employee to!ards healthy !or$ en#ironment2 Meaning and benefits of (" system are as follo!s 5@ $EIRI7 It stands for H"ortingI

+a$e out necessary items and suitably dispose !ith them "ene+*ts: 12 8ffecti#e "pace ;tili*ation 22 "top Material from deteroiting or getting damaged .2 /educe !astage and searching items

>@ $EITON7 It stands for H"et in %rderI

Arrange2 all necessary items in a proper order so that they can be easily pic$ed up for use "ene+*ts: 12 /educe preparation and machine setting and machine setting timings2 22 /educe time in locating or !aiting for +ool Parts and Machines2

=@$IIE$O7

It stands for H"hineNCompletely CleanI

Clean your !or$place completely so that there is no dust any!here2 "ene+*ts: 12 Promotes %rderly and "afe Cor$ing 8n#ironment 22 /educes Brea$do!n and Accidents2 .2 "8IJ8+";7 It stands for H"tandardi*eI Maintain a high standard of house $eeping and !or$ place organi*ational at all times "ene+*ts: 12 Muic$ /esponse through isual Management 22 Create a maintenance system of House $eeping for all the times2

?@ $#IT$U2E:

It stands for H"elf :iscipline AttitudeI

+rain People to follo! Good House Jeeping :iscipline Independently "ene+*ts: 12 "elf :i scipline 22 Impro#es Industrial "afety .2 Creates Healthy Attitude and Habits

A)vantages o+ 9$
Healthy Cor$ing 8n#ironment Impro#es Cor$ 8fficiency Producting Better Muality Products and Higher Producti#ity Cutting Cost :o!n 8nsuring :eli#ery on time "afe Cor$ing High Morale and Better Life

ORGANI$ATION $ET UP
+he organi*ational set up of the follo!ing departments is studied in detail7 12 -inance :epartment 22 Personnel :epartment .2 Purchase and "tore :epartment 02 Production :epartment

FINANCE DEPARTMENT :2G2M2 >-inance?3 Patiala !ho is directly responsible to Plant Head >-inance and Accounts?3 one of the most reputed -unctional :epartment in G%8+<8 >I1:IA? L+:2 C2G2M2 manage the :epartment and under him there are t!o managers3 one is -inance Manager and other is Costing Manager2 +he -inance Manager is assisted by t!o super#isors one of these is responsible for cash and ban$ balances and other is responsible for bills payable2 8ach super#isor is gi#en t!o or three assistants to !or$ under him2 +he amount of in#estment to be put in current assets li$e cash in hand3 ban$ balance3 loans and ad#ances3 in#entories3 accrued e5penses3 di#idends payable etc2 all are decided by -inance

:epartment2 +he reali*ation of cash for the purpose of ra! materials components and spares to pay !ages and salaries to incur day to day e5penses and o#erhead costs3 to meet selling costs to pro#ide credit facilities to customers and to maintain in#entories is also the function of this department2 +he formulation of policies !ith regard to profitability ris$ and li,uidity3 decisions about comparison and le#el of current assets and liabilities3 formulation of production policy to $eep the production steady by accumulating in#entories3 formulation and e5ecution of credit policy is also the function of -inance :epartment2 +his :epartment is responsible for handling transaction relating to purchase of ra! material as !ell as accounts relating to sales2 It is also concerned !ith payment of all e5penses incurred by the company li$e purchase of ra! material3 electricity bills3 repairs etc2 It is also concerned !ith #aluation of #arious costs relating to in#entories2 It deals !ith determination of monthly !ages3 salaries of employees3 fringe benefits of retirement3 pro#ident funds deduction3 incenti#es3 bonus and all the re!ards3 !hich the employees get for rendering their ser#ices to the company

Functions of Finance Department Cas3 F(o': +he plant is preparing C2-2 statements3 to be con#eyed to H%2 +hese include sources as !ell as application of funds2 "imilarly applications of funds related to the salary3 payment to suppliers2 Ma&or e5penses >li$e 8lectricity3 +elephone Bills3 85cise duty and other personal 6 sales 6 administration e5penses?2

Cost*ng: +he costing is being done for all the products manufactured at the plant2 +hese relate to Piston3 /ing3 Cylinder Liners and Light Alloy Products2 +he Historical base is being follo!ed for costing purposes2

Cons,m4t*on: 8#ery item being recei#ed in the plant for consumption2 Input is being accounted for at the plant2 +he ledgers are maintained for e#ery receipt and issue2

PER$ONNEL DEPARTMENT
Personnel department ad#ises the management on all matters relating to personnel administration2 +he top management ta$es into account its ad#ice before arri#ing at final decisions on personnel and administrati#e matters2 Personnel Policies in G%8+<8 >I1:IA? LIMI+8: ha#e been di#ided into three parts7 a2 P8/"%118L -;1C+I%1" to encourage the adoption and utili*ation of latest methods and techni,ues in areas of manpo!er planning and de#elopment and $eeping a#enues of promotion open to employees2 b2 P/% I"I%1 %C%MM;1ICA+I%13 +/AI1I1G A1: C8L-A/8 M8A";/8"3 8MPL%988 C%MM;1ICA+I%1 so that employees contributes their best to company4s ob&ecti#es and also get opportunities for ad#ancement and self)de#elopment2 c2 I1:;"+/IAL /8LA+I%1" bet!een employer and employee so as to promote satisfactory relations by pro#iding channels for up!ard and do!n!ard communication and establishing systematic procedure for redress2

PUR#CA$E AND $TORE DEPARTMENT Purchase and "tore are t!o :epartments3 !hich go hand in hand2 It is #ery essential that there should be proper synchroni*ation bet!een Purchase :epartment and "tore :epartment2

In G%8+<8 >I1:IA? LIMI+8:3 the main responsibility of Purchase :epartment is to recei#e orders from other :epartments3 do the mar$et sur#ey3 list the potential sellers and the rates3 choose the best and go ahead !ith purchase2 +he purchase order is placed only !ith appro#ed contractors2 +he Purchase :epartment scrutini*e the follo!ing aspects7 a? Muality and +echnical specifications b? :eli#ery c? Prices %nce the purchase order has been placed3 it is sent to stores !here the store gets ready to recei#e the incoming material2 Chen the material is recei#ed3 a notification is sent to the -inance :epartment2 "tores deal !ith an array of material3 !hich can be di#ided into7 a? /a! materials b? Components c? "tandard items or patent items d? Miscellaneous items

PRODUCTION DEPARTMENT
+he :epartment is responsible for production of #arious items fi5ed on basis of production budget3 !hich includes7 a? /a! material budget b? Labor budget c? Plant utili*ation budget

In#entory management

INTRODUCTION TO TOPIC: IN.ENTOR1 MANAGEMENT


In#entory management refers to the process of managing the stoc$s of finished products3 "emi) finished products and ra! materials by a firm2 In#entory management3 if done Properly3 can bring do!n costs and increase the re#enue of a firm2 Ho! much one should In#est in in#entory managementT +he ans!er to this ,uestion depends on the #olume and alue of in#entory as a percentage of the total assets of a firm2 In#entory Management in#ol#es the control of assets being produced for the purposes of sale in the normal course of the companyKs operations2 +he goal of effecti#e in#entory management is to minimi*e the total costs ) direct and indirect ) that are associated !ith holding in#entories2 Ho!e#er3 the importance of in#entory management to the company depends upon the e5tent of in#estment in in#entory2 +he tas$ of in#entory planning can be highly comple5 in manufacturing en#ironments2 At the same time3 it rests on fundamental principles2 +he system used for in#entory must tie into the operations of the firm2 In#entory planning and management must be responsi#e to the needs of the firm2 +he firm should design systems3 including reports that allo! it to ma$e proper business decisions2 +he In#entory Management system and the In#entory Control Process pro#ides information to 8fficiently manage the +(o' o+ mater*a(sP effecti#ely ,t*(*He 4eo4(e an) eD,*4ment! %oor)*nate *nterna( a%t*v*t*es! an) %omm,n*%ate '*t3 %,stomers2 In#entory Management and the acti#ities of In#entory Control do not ma$e decisions or manage operationsP they pro#ide the information to Managers !ho ma$e more a%%,rate an) t*me(y decisions to manage their operations2 +he basic building bloc$s for the In#entory Management system and In#entory Control acti#ities are7 $a(es Fore%ast*ng or :emand Management $a(es an) O4erat*ons Planning Pro),%t*on Planning Mater*a( ReD,*rements Planning

In#entory management Inventory Re),%t*on

T1PE$ OF IN.ENTOR1
Ra' mater*a(s Inventory: +his consists of basic materials that ha#e not yet been Committed to production in a manufacturing firm2 /a! materials that are purchased from firms to be used in the firmKs production operations range from iron ore a!aiting processing into steel to electronic components to be incorporated into stereo amplifiers2 +he purpose of maintaining ra! material in#entory is to uncouple the production function from the purchasing function so that delays in shipment of ra! materials do not cause production delays2 $tores an) $4ares: +his category includes those products3 !hich are accessories to the main products produced for the purpose of sale2 85amples of stores and spares items are bolts3 nuts3 clamps3 scre!s etc2 +hese spare parts are usually bought from outside or some times they are manufactured in the company also2 /or&-*n-Pro%ess Inventory: +his category includes those materials that ha#e been committed to the production process but ha#e not been completed2 +he more comple5 and lengthy the production process3 the larger !ill be the in#estment in !or$)in)process in#entory2 Its purpose is to uncouple the #arious operations in the production process so that machine failures and !or$ stoppages in one operation !ill not affect the other operations2 F*n*s3e) Goo)s Inventory: +hese are completed products a!aiting sale2 +he purpose of finished goods in#entory is to uncouple the productions and sales functions so that it no longer is necessary to produce the goods before a sale can occur2 Methods adopted to #alue ra! material in#entory control T3e +o((o'*ng met3o)s %an Ce a)o4te) to va(,e t3e ra' mater*a(7 R F*rst-In-F*rst-O,t (FIFO : Chen a firm adopts the -I-% method to price its ra! material3 the issue of material from the stores !ill be in the order !hich it !as recei#ed2 +hus the pricing !ill be based on the cost of material that !as obtained first2 R Last-In-F*rst-O,t (LIFO : In the LI-% method3 the material issued !ill be priced based on the material that has been purchased recently2 O /e*g3te) Average Cost Met3o): +he pricing of materials !ill be alone on !eighted a#erage basis >!eights !ill be gi#en based on the ,uantity?2

R In#entory $tan)ar)management Pr*%e Met3o)7 Material is priced based on a standard cost3 !hich is predetermined2 Chen the material is purchased the stoc$ account !ill be debited !ith the standard price2 +he difference bet!een the purchase price and the standard price !ill be carried into a #ariance account2 Re4(a%ement L C,rrent Pr*%e Met3o)7 In this method material is priced at the #alue that is reali*able at the time of the issue2

IN.ENTOR1 MANAGEMENT TEC#NI8UE$


Chile the total ordering costs can be decreased by increasing the si*e of order3 the carrying costs increase !ith the increase in order si*e indicating the need for a proper balancing of these t!o types of costs beha#ing in opposite directions !ith changes in order si*e2 Again3 if a company !ants to a#ert stoc$)out costs it may ha#e to maintain larger in#entories of materials and finished goods3 !hich !ill result in higher carrying costs2 Here also proper balancing of the costs becomes important2 +hus3 the importance of effecti#e in#entory management is directly related to the si*e of the in#estment in in#entory2 +o manage its in#entories effecti#ely3 a firm should use a systems approach to in#entory management2 A systems approach considers in a single model all the factors that affect the in#entory2 A system +or e++e%t*ve *nventory management *nvo(ves t3ree s,Csystems name(y: 12economic order ,uantity 22 reorder point .2 stoc$ le#el

ECONOMIC ORDER 8UANTIT1


+he economic order ,uantity >8%M? refers to the optimal order si*e that !ill result in the lo!est total of order and carrying costs for an item of in#entory gi#en its e5pected usage3 carrying costs and ordering cost2 By calculating an economic order ,uantity3 the firm attempts to determine the order si*e that !ill minimi*e the total in#entory costs2

Tota( *nventory %ost P Or)er*ng %ost B Carry*ng %ost Tota( or)er*ng %osts P N,mCer o+ or)ers : Cost 4er or)er

In#entory management PQUL8NF Chere ; U Annual usage M U Muantity ordered - U -i5ed cost per order +he total carrying costs U A#erage le#el of in#entory 5 Price per unit 5 Carrying cost

REORDER POINT FORMULA


%ne can adopt a much simpler formula !hich gi#es reasonably reliable results in calculating at !hat point in the le#el of in#entory a reorder has to be placed for replenishment of stoc$2 +he formula along !ith its application is gi#en belo!3 using the notation de#eloped earlier2

Reor)er 4o*nt P $ : L B F ( $ : R: L Chere " U ;sage in units L U Lead time in days / U A#erage number of units per order - U "toc$ out acceptance factor +he stoc$)out acceptance factor3 V-K3 depends on the stoc$)out percentage rate specified and the probability distribution of usage >!hich is assumed to follo! a Poisson distribution?2 -or any specified acceptable stoc$out percentage the #alue of V-K can be obtained from the figure presented belo!2

$TOC2-LE.EL $U"$1$TEM +his stoc$ le#el subsystem $eeps trac$ of the goods held by the firm3 the issuance of goods3 and the arri#al of orders2 It maintains records of the current le#el of in#entory2 -or any period of time3 the current le#el is calculated by ta$ing the beginning in#entory3 adding the in#entory recei#ed3 and subtracting the cost of goods sold2 Chene#er this subsystem reports that an item is at or belo! the reorder)point le#el3 the firm !ill begin to place an order for the item2 $AFET1 $TOC2

In#entory %nce again management in real life situations one rarely comes across lead times and usage rates that are $no!n !ith certainty2 Chen usage rate andNor lead time #ary3 then the reorder le#el should naturally be at a le#el high enough to cater to the production needs during the procurement period and also to pro#ide some measure of safety for at least partially neutrali*ing the degree of uncertainty2 +he ,uestion !ill naturally arise as to the magnitude of safety stoc$2 +here is no specific ans!er to this ,uestion2 Ho!e#er3 it depends3 inter alia3 upon the degree of uncertainty surrounding the usage rate and lead)time2 It is possible to a certain e5tent to ,uantify the #alues that usage rate and lead)time can ta$e along !ith the corresponding chances of occurrence3 $no!n as probabilities2 +hese probabilities can be ascertained based on pre#ious e5periences andNor the &udgmental ability of astute e5ecuti#es2 Based on the abo#e #alues and estimates of stoc$)out costs and carrying costs of in#entory it is possible to !or$ out the total cost associated !ith different le#els of safety stoc$2 2anCan Another highly effecti#e !ay of cutting do!n on CIP is through the use of $anban3 'apanese for sign2 Janban is a tagging system that is essentially a communication system designed to inform production across the entire plant about !hat to do and !hen to do it2 8ssentially this is a system that tells people !hen to produce !hat

A"C Pro%e),re +or Categor*H*ng o+ Inventory +he general procedure for categori*ation of items into VAK3 VBK and VCK groups is briefly outlined belo!7 R All the items of in#entory are to be ran$ed in the descending order of their annual usage #alue2 R +he cumulati#e totals of annual usage #alues of these items along !ith their percentages to the total annual usage #alue are to be noted alongside2 R +he cumulati#e percentage of items to the total number of items is also to be recorded in another column2 R An appro5imate categori*ation of items into A3 B3 and C groups can be made by comparing the cumulati#e percentage of items !ith the cumulati#e percentage of the corresponding usage #alues2

In#entory management A)vantages o+ t3e A"C Inventory $ystem

12 It ensures closer control on costly items in !hich a large amount of capital has been in#ested2

22 It helps in de#eloping a scientific method of controlling in#entories3 Clerical costs are reduced and stoc$ is maintained at optimum le#el2

.2 It helps in achie#ing the main ob&ecti#e of in#entory control at minimum cost2

02+he stoc$ turno#er rate can be maintained at comparati#ely higher le#el through 2 scientific control of in#entories2

+he system of ABC analysis suffers from a serious limitation2 +he system analyses the items according to their #alue and not according to their importance in the production process2 It may3 therefore3 sometimes create difficult problems2 -or e5ample3 an item of in#entory may not be #ery costly and hence it may ha#e been put in category C2 Ho!e#er3 the item may be #ery important to the production process because of its scarcity2 "uch an item as a matter of fact re,uires the utmost attention of the management though it is not ad#isable to do so as per the system of ABC analysis2 Hence3 the system of ABC analysis should not be follo!ed blindly2

DE.ELOPMENT$ IN IN.ENTOR1 MANAGEMENT

In recent years3 t!o approaches ha#e had a ma&or impact on *nventory management7 Material /e,uirements Planning >M/P? and 'ust)In)+ime >'I+ and Janban?2 +heir application is primarily !ithin manufacturing but suppliers mightfind ne! re,uirements placed on them and sometimes buyers of manufactured items !ill e5perience a difference in deli#ery2 Material re uirements planning is basically an information system in !hich sales are con#erted directly into loads on the facility by sub)unit and time period2 Materials are scheduled more closely3 thereby reducing in#entories3 anddeli#ery times become shorter and more predictable2 Its primary use is !ith products composed of many components2

In#entory management M/P systems are practical for smaller firms2 +he computer system is only one part of the total pro&ect !hich is usuallylong)term3 ta$ing one to three years to de#elop2 !ust"in"time *nventory management is an approach !hich !or$s to eliminate in#entories rather than optimi*e them2 +he *nventory of ra! materials and !or$)in)process falls to that needed in a single day2 +his is accomplished by reducing set)up times and lead times so that small lots may be ordered2 "uppliers

may ha#e to ma$e se#eral deli#eries a day or mo#e close to the user plants to support this plan2

$UCCE$$FUL IN.ENTOR1 MANAGEMENT "uccessful *nventory management in#ol#es balancing the costs of *nventory !ith the benefits of *nventory2 Many small business o!ners fail to appreciate fully the true costs of carrying *nventory3 !hich include not only direct costs of storage3 insurance and ta5es3 but also the cost of money tied up in *nventory2 +his fine line bet!een $eeping too much *nventory and not enough is not the managerKs only concern2 %thers include7 Cost of /unning out of Goods7 +hese are costs associated !ith the inability to pro#ide materials to the production department and N or inability to pro#ide finished goods to the mar$eting department as the re,uisite in#entories are not a#ailable2 In other !ords3 the re,uisite items ha#e run out of stoc$ for !ant of timely replenishment2 +hese costs ha#e both ,uantitati#e and ,ualitati#e dimensions2 +hese are3 in the case of ra! materials3 the loss of production due to stoppage of !or$3 the uneconomical prices associated !ith VcashK purchases and the set)up costs3 !hich can be ,uantified in monetary terms !ith a reasonable degree of precision2 As a conse,uence of this3 the production department may not be able to reach its target in pro#iding finished goods for sale2 Its cost has ,ualitati#e dimensions as discussed belo!7 Chen mar$eting personnel are unable to honor their commitment to the customers in ma$ing finished goods a#ailable for sale3 the sale may be lost2 +his can be ,uantified to a certain e5tent2 Ho!e#er3 the erosion of the good customer relations and the conse,uent damage done to the image and good !ill of the company fall into the ,ualitati#e dimension and elude ,uantification2

In#entory 8#en if the management stoc$)out cost cannot be fully ,uantified3 a reasonable measure based on the loss of sales for !ant of finished goods in#entory can be used !ith the understanding that the amount so measured cannot capture the ,ualitati#e aspects2

T#E PURC#A$ING PLAN %ne of the most important aspects of *nventory control is to ha#e the items in stoc$ at the moment they are needed2 +his includes going into the mar$et to buy the goods early enough to ensure deli#ery at the proper

time2 +hus3 buying re,uires ad#ance planning to determine *nventory needs for each time period and then ma$ing the commitments !ithout procrastination2 -or retailers3 planning ahead is #ery crucial2 "ince they offer ne! items for sale months before the actual calendar date for the beginning of the ne! season3 it is imperati#e that buying plans be formulated early enough to allo! for intelligent buying !ithout any last minute panic purchases2 +he main reason for this early offering for sale of ne! itemsis that the retailer regards the calendar date for the beginning of the ne! season as the merchandise date for the end of the old season2 -or e5ample3 many retailers #ie! March 21 as the end of the spring season3 'une 21 as the end of summer and :ecember 21 as the end of !inter2 Part of your purchasing plan must include accounting for the depletion of the *nventory2 Before a decision can be made as to the le#el of *nventory to order3 you must determine ho! long the *nventory you ha#e in stoc$ !ill last2 -or instance3 a retail firm must formulate a plan to ensure the sale of the greatest number of units2 Li$e!ise3 a manufacturing business must formulate a plan to ensure enough *nventory is on hand for production of a finished product2

#O/ TO CONTROLL 1OUR IN.ENTOR1

+o maintain an in)stoc$ position of !anted items and to dispose of un!anted items3 it is necessary to establish ade,uate controls o#er *nventory on order and *nventory in stoc$2 +here are se#eral pro#en methods for *nventory control2 +heyare listed belo!3 from simplest to most comple52

In#entory management Visual control enables the manager to e5amine the *nventory #isually to determine if additional *nventory is re,uired2 In #ery small businesses !here this method is used3 records may not be needed at all or only for slo! mo#ing or e5pensi#e items2

Tickler control enables the manager to physically count a small portion of the *nventory each day so that each segment of the *nventory is counted e#ery so many days on a regular basis2

Click sheet control enables the manager to record the item as it is used on a sheet of paper2 "uch information is then used for reorder purposes2

Stu control >used by retailers? enables the manager to retain a portion of the price tic$et !hen the

item is sold2 +he manager can then use the stub to record the item that !as sold2 As a business gro!s3 it may find a need for a more sophisticated and technical form of *nventory control2 +oday3 the use of computer systems to control *nventory is far more feasible for small business than e#er before3 both through the !idespread e5istence of computer ser#ice organi*ations and the decreasing cost of small)si*ed computers2 %ften the &ustification for such a computer)based system is enhanced by the fact that company accounting and billing procedures can also be handled on the computer2

#oint"of"sale terminals relay information on each item used or sold2 +he manager recei#es information printouts at regular inter#als for re#ie! and action2

Off"line point"of"sale terminals relay information directly to the supplierKs computer !ho uses the information to ship additional items automatically to the buyerN*nventory manager2 +he final method for *nventory control is done by an outside agency2 A manufacturerKs representati#e #isits the large retailer on a scheduled basis3 ta$es the stoc$ count and !rites the reorder2 ;n!anted merchandise is remo#ed from stoc$ and returned to the manufacturer through a predetermined3 authori*ed procedure2 A principal goal for many of the methods described abo#e is to determine the minimum possible annual cost of ordering and stoc$ing each item2 +!o ma&or control #alues are used7 1? the order ,uantity3 that is3 the si*e and fre,uency of ordersP and 2? the reorder point3 that is3 the minimum stoc$ le#el at !hich additional ,uantities are ordered2 +he 8conomic %rder Muantity >8%M? formula is one !idely used method of computing the minimum annual cost for ordering and stoc$ing each item2 +he 8%M computation ta$es into account the cost of placing an order3 the

In#entory management annual sales rate3 the unit cost3 and the cost of carrying *nventory2 Many boo$s on management practices describe the 8%M model in detail2

TIP$ FOR "ETTER IN.ENTOR1 MANAGEMENT

At time of deli#ery erify count )) Ma$e sure you are recei#ing as many cartons as are listed on the deli#ery receipt2 Carefully e5amine each carton for #isible damage )) If damage is #isible3 note it on the deli#ery receipt and ha#e the dri#er sign your copy2 After deli#ery3 immediately open all cartons and inspect for merchandise damage2

Chen damage is disco#ered /etain damaged items )) All damaged materials must be held at the point recei#ed2 Call carrier to report damage and re,uest inspection2 Confirm call in !riting))+his is not mandatory but it is one !ay to protect yourself2 Carrier inspection of damaged items 2 Ha#e all damaged items in the recei#ing area )) Ma$e certain the damaged items ha#e not mo#ed from the recei#ing area prior to inspection by carrier2 After carrierNinspector prepares damage report3 carefully read before signing2 After inspection Jeep damaged materials )) :amaged materials should not be used or disposed of !ithout permission by the carrier2 :o not return damaged items !ithout !ritten authori*ation from shipperNsupplier2

In#entory management

IN.ENTOR1 MANAGEMENT IN FEDERAL MOGUL GOETZE INDIA LTD ABC Analysis is being used to manage the in#entories2 A category items contain high #alue items and important material directly lin$ed !ith production2 It includes one product i2e2 CIM"+A/ MB=2C2 B Category includes items3 !hich are directly lin$ed !ith production but are ha#ing less #alue than items2 It includes three products i2e2 "8/ % "9"+8M =AG H9P"I1 8P)=A3 Cutting oil3 Arc light2 Category C includes items products such as mobile oil3 $erosene oil3 po!er oil3 ser#o system 1213 ser#o C;"3 ,uenching oil3 pre#enting oil etc2 In stores computers are being used to store ma5imum3 minimum3 re)order le#els of each item2 /ecently the firm has started using 'I+ techni,ue2 +he purchases of -MGIL are centrali*ed and authority lies !ith the purchase department2 Ma&or purchase is done by head office but local purchase is also for certain items2 Procedure of ac,uiring in#entories starts !ith the receipt of material2 Chen the material reaches the main gate it needs to be inspected and only after inspection of in#oices materials is sent to the store department2 +hen the material is inspected and is appro#ed or re&ected as the case may be2

MATERIAL PLANNING AND PURC#A$ING

Purchasing in -MGIL is centrali*ed and authority lies !ith purchase department2 1o body is allo!ed to ma$e purchase himself3 directly2 -or purchasing purpose a meeting is held at held office in !hich planning is done on basis of last year4s consumption2 After the ra! material planning has been made3 purchase is done by the head office itself and planning report is sent to sub)offices2 Although ma&or purchase is done by head office but local purchase can also be done for certain items2 +he items3 !hich can be locally purchased3 are di#ided into t!o types7)

In#entory management +9P8 W04 >Locally purchasable? +98 W(4 >Head office purchase stoc$ items?

-or local purchase as !ell as for head office purchase le#els ha#e been fi5ed as7)

RECEIPT OF MATERIAL As the material reaches the main gate of the factory3 security person puts stamp on bac$side of in#oice or challan2 After this the material reaches the "tore department

IN$PECTION OF MATERIAL %nce the material has been recei#ed by store then it is the duty of either inspection department or store department to inspect the material2 Here it is chec$ed out that the material is according to specification and the material ,uantity is neither greater nor lesser in number then the order placed if it is according to specification3 then GI/ is accepted2 According to the type of material3 either physical #erification is done or composition of material recei#ed is chec$ed out2 In physical #erification3 the ,uantity of material3 the !or$ing order to material and specification fulfillment is ta$en into account e2g2 for electronic goods2 -or chec$ing composition of the material e2g2 in case of alloy or sand it is seen out3 !hether the recei#ed material has proper composition as per re,uirements of the company2

I$$UE OF MATERIAL

In -MGIL the material is issued for t!o purposes7) 1 2 :irect purpose Indirect 7 7 for manufacturing of components generally in the nature of store and spares3 tools etc2

In#entory management "tore department has t!o types of items7) 12 22 "toc$ 1on)stoc$

+he material as$ed by #arious departments can either be stoc$ items or non)stoc$ items2 If a department has to as$ for stoc$ items it prepares material indents form of the items re,uired in !hich description of material is thoroughly pro#ided2 -our copies of indents are prepared F Blue3 /ed3 9ello! and Chite2 +he department $eeps !hite copy3 itself for record and other three copies are sent to store department here3 /ed copy is $ept by store for record purposes2 Blue copy is sent to -inance :epartment for e#aluation !hile 9ello! copy is sent to Purchase department2 If the material is being purchased for first time3 then purchase department3 as$s for ,uotations from the supplier2 According to these ,uotations3 the purchase department Purchase the material2 If it is routine material3 then the material can be purchased from routine supplier !ithout ,uotations2 "toc$ items re,uired by #arious departments from the store are issued as such and no yello! copy is sent to purchase department but both red and yello! copy are $ept by store department itself2 Chile blue copy is definitely sent to finance department for e#aluation of stoc$ item2

CLA$$IFICATION$ OF IN.ENTOR1 -MGIL in#entory can be classified under follo!ing three main categories7) 12 22 .2 /a! material Cor$ in progress -inished goods

+he ra! material in#entory can be further classified and maintained under follo!ing t!o headings7)

12 22

"tores and spares +ools3 &igs and dies

In#entory management CATEGORI$ATION OF ITEM$ In -MGIL categori*ation of items is done according to the follo!ing categories7) 5@ A"C CLA$$IFICATION

;nder this system items are classified according to their #alue and usage rate2 An item consists of items ha#ing ma5imum #alue but minimum consumption2 B items consist of items of moderate #alue and moderate consumption2 C item consists of items ha#ing minimum #alue and ma5imum consumption2

ITEM A " C

NO@ OF ITEM$ IN M AGE APPRONIMATE 5;M I;M >;M >;M I;M 5;M

>@

N1Z CLA$$IFICATION

+his classification is based on the #alue of in#entory at the end of a gi#en period of time3 normally closing date of a financial year2 S items are those !hose in#entory #alue is high3 9 items are those !hose in#entory #alue is medium and < items are those !hose in#entory #alue is lo! or minimum2 =@ $DE CLA$$IFICATION ($%ar%e! D*++*%,(t an) Easy C(ass*+*%at*on

+his classification is based on the problems that a company may face !hile purchasing of the material from the mar$et due to short supply or una#ailability2 "carce items are those3 !hich are in short supply in the mar$et and are not easily a#ailable2 :ifficult items may be termed as those3 !hich are not scarce but are difficult to arrange and deli#ery period is long2 8asy items are normal standard items stored by #endors and are routinely supplied as per orders2 ?@ GOLF CLA$$IFICATION (Govt@! O4en! Lo%a(! Fore*gn C(ass*+*%at*on

+his classification is based on the source from !hich the suppliers are to be a#ailed2 "ome of the items may be go#ernment controlled or a#ailable through go#ernment)canali*ed agencies2 "ome items are easily a#ailable at central and local le#el and some items may be imported from other countries2 9@ F$N CLA$$IFICATION

In#entory management +his classification is based on the pattern of mo#ement of items i2e2 issue from stores2 -ast mo#ing3 slo! mo#ing and non)mo#ing items2 -ast mo#ing items are regular items and are to be $ept mostly for regular supply2

CODIFICATION OF ITEM$
In -MGIL there are many items of in#entory3 due to such large number3 codes ha#e been assigned to e#ery item2 Ho!e#er code assigned to e#ery item follo!s a specification order3 so that easy identification of e#ery item can be done2 8mphasis on codification is considered #ery much essential in -MGIL2

( ( ( ( ( ( ( ( = = = = = = = = =

/AC MA+8/IAL -%;1:A/9 -L;S8"3 %IL" A1: L;B/ICA1+" PACJI1G MA+8/IAL" G/I1:I1GNAB/A"I 8 MA+8/IAL" :/ILL C;++8/ CA/BI:8 +%%L" M"""NB/A""NPH%"PH%/%;" MA+8/IAL" B8A/I1G )BL+ CI IL A1: PIP8 -I++I1G MA+8/IAL /;BB8/ A1: A8H8: P/%:;C+" 1;+"3 B%L+"3 CA"H8/" 6 "PAC8/" HA1:NI1"P8C+I%1 +%%L" C8L:I1G A1: -I/8 -IGH+I1G MA+8/IAL C8L-A/8 I+8M" CA"+I1G" A1: -AB/ICA+%/"

.ARIOU$ IN FMGIL

PROCEDURE$

ADOPTED

FOR

IN.ENTOR1 MANAGEMENT

PROCEDURE FOR CONTINUOU$ IMPRO.EMENT %b&ecti#e7) +o define procedure for continuous impro#ement2 "cope7) "tores /esponsibility Head "tores "uper#isor "tores

In#entory management Pro%e),re:1? Continuous impro#ement is adopted across the board in stories2

2? "uitable areas of continuous impro#ement and techni,ues shall be identified by Head "tores and listed do!n in continuous Impro#ement Plan2 Head stores shall prioriti*e pro&ects and appropriate actions shall be initiated2 .? Impro#ementNde#elopment obser#ed in one area is suitably adopted in other areas2 0? i2 ii2 iii2 i#2 Impro#ement acti#ities shall be managed by using follo!ing steps7) :eciding ob&ecti#es for impro#ement2 +eam information2 Action identification2 "ystem implementation3 #erification3 documentation and training2

(? +he progress on continuous impro#ement pro&ects shall be re#ie!ed during Management /e#ie! Meeting2 +he continuous impro#ement plan shall be re#ie!ed and updated3 if necessary2 =? /esults of #arious functional continuous impro#ement acti#ities shall be communicated and displayed in respecti#e areas2 Re+eren%es:Continuous Impro#ement Plan Management /e#ie! /eport

PROCEDURE FOR INTRA-DEPARTMENT TRAN$FER %b&ecti#e7)+o define the procedure for intra)plant transfer2 "cope7) Items as per initial material list for purchase Patiala Plant and initial materialist for Head %ffice materials2 /esponsibility7) Chief Head %ffice materials Head Incoming material Head Laboratory Head "tores Head Purchase)Patiala Plant Head ;ser :epartment

In#entory management Pro%e),re:1? -or re,uisition of materials from other plants3 a re,uest for itnra)plant transfer is sent in the format H/e,uest for "toc$ +ransfer2I 2? %n receipt of material the inspection of stoc$ transferred material is done as per procedure for inspection and +esting of Incoming Material and the Patent Materials are inspected as per procedure for inspection of Patent Materials2 .? It is the material re,uired by other plants3 depending upon the a#ailability of stoc$3 raising :ispatch Ad#ice cum Performa In#oice for Mod#at Material or :ispatch Ad#ice cum Performa In#oice for stoc$ transfer transfers the item in stoc$2 Re+eren%es:Procedure for inspection of patent material2 Initial material list for purchase)Patiala Plant2 :ispatch Ad#ice cum Performa for Mod#at Material2 /e,uest for stoc$ transfer2 Procedure for Inspection and +esting of incoming material2

IN.ENTOR1 ACCOUNTING AND .ALUATION ANAL1$I$

In#entory management IN.ENTOR1 TURNO.ER RATIO In#entory turno#er ratio indicates the number of times the stoc$ has been turn o#er during the period and e#aluates the efficiency !ith !hich a firm is able to manage its in#entory2 Inventory T,rnover Rat*o P

"alesNCost of Goods sold Closing "toc$NA#erage In#entory

In GIL In#entory +urno#er /atio U "alesNClosing "toc$

IN.ENTOR1 CON.ER$ION PERIOD In#entory con#ersion period indicates time ta$en for clearing the stoc$ as it measures the #elocity of con#ersion of stoc$ management of in#entory because more fre,uent the stoc$s are sold the less amount of money is re,uired to finance the in#entory and #ice)#ersa2 Inventory Convers*on Per*o) P

1o2 %f Cor$ing :ays In#entory +urno#er /atio

ACCOUNTING AND .ALUATION OF IN.ENTOR1 I1 81+%/9 A" A P8/C81+AG8 %- C;//81+ A""8+"


>;;I >;;J K9@= <M 5>@9 J >< >;;J >;;< <9@; JM 5J@> 9 >; >;;< >;5; KJ M 55@I >;5; >;55 IK@J M 59@J K >= >;55 >;5> <>@9 M 59@> ; >?

Inventory to %,rrent assests Inventory t,rnover rat*o Days o+ *nventory 3o()*ng

=5

In#entory -rom the management abo#e data it can be analy*ed that out of total in#estments in current assets appro5imately B22(G is in#ested in the in#entory in 2E11) 2E12 2 +he reason behind this is that the company is a manufacturing unit2 +here has been a fluctuation in percentage of in#entory of total current assets from 2EE@) 2EEA2 In#entory amounted to =(2.BG in 2EE@)2EEA3 then increased to B(G in 2EEA)2EEB3 =AG in 2EEEB) 2E1E3 and @=2AG in 2E112 Hence it is crucial for -MGIL to ensure proper in#entory management in the organi*ation2

$AP
To)ay %om4an*es are %ont*n,a((y %3a((enge) to *n%rease t3e ve(o%*ty an) trans4aren%y o+ t3e*r s,44(y net'or&s $AP an Inter-net-Case) so+t'are t3at +,(+*((s t3ese nee)s! g*v*ngC,s*ness an) *ts s,44(y-net'or&4artners easy an) seam(essa%%ess to *nventory *n+ormat*on@ -ortunately one can a#oid many of those problems !ith the$AP 2 +he $AP is Internet based and is designed to help enhance #isibility3 collaborate more effec)ti#ely !ith suppliers3 and increase the o#erall speed3 accuracy3and adapti#eness of supply net!or$ $AP3lets an organi*ation and its supply net!or$ partners share*nventory information easily and seamlessly2 It gi#es supply net!or$ partners a central3 secure#ehicle for collaborating and responding to changes in demand2Based on the e5change infrastructure platform3 the $APallo!s to share information and trac$ and audit the full range of transactions and communica)tions !ith suppliers F all #ia the Internet2 And !ith its open3scalable design3 it can be implemented as a stand)alone solution3 or ,uic$ly and easily integrated !ith "AP Business "uite 2 "AP is designed to let an organi*ation) OIn%(,)e a '*)e range o+ s,44(*ers *n net'or& OUse a(erts to en3an%e res4ons*veness@ OEas*(y s3are *nventory *n+ormat*on '*t3 4(ann*ng an) transa%t*on systems@ O De(*ver targete) *n+ormat*on to s,44(y %3a*n 4artners@ OA%3*eve ra4*) res,(ts Cith increased #isibility3 partners across the supply net!or$ can collaborate around *nventory information to dri#e a rangeof business benefits2 -or e5ample3 the solution can help to cut costs through OA reduction in ra!)material *nventory buffers OLo!er unplanned o#ertime as !ell as costs for setup and brea$do!n OLo!er premium freight costs >e5pediting?

In#entory management O "AP enables users to manage all the items purchased3 manufactured3 sold3 or $ept in stoc$2 "er#ices can also be defined as items3 although they are rele#ant only for sales2 -or each item3 users enter the data rele#ant for a particular area in the system2 +his data is used automatically by the system for purchasing3 sales3 production3 in#entory management3 and accounting2 It Pro#ides optimum support for business processes2 Helps create orders3 deli#ery notes3 and outgoing in#oices3 automatically calculating prices3 sales units3 and gross profit2 8nables complete control o#er stoc$ ,uantities at all times and lets users analy*e the financial aspects of stoc$holding at the same time2 Allo!s users to control production on the basis of the items that are used for production and on the basis of the finished product and any by)products created2 +he follo!ing C,s*ness goa(s an) oCRe%t*ves can be achie#ed through the implementation of "AP in in#entory7 Im4rov*ng C,stomer $erv*%e In%rease $4ee) A E++*%*en%y Lo'er*ng /or&*ng Ca4*ta( Re),%*ng O4erat*ng Costs A In%reas*ng E++*%*en%y

2 +he follo!ing in#entory reports are a#ailable in "AP 7 Items L*st ) 8nables the user to generate a partialNfull list of the items defined in "AP Business %ne3 according to selection criteria defined by the user2 Last Pr*%es Re4ort ) "ho!s the last purchasing and sales prices of an item2 ;sers can generate the report in general or for a specific business partner2 +his report is a#ailable directly from the "alesNPurchasing documents2 Ina%t*ve Items ) :isplays the items that according to the userKs selection criteria are inacti#e2 -or e5ample3 an item !hich is not mentioned in a deli#ery for the last si5 months2 Item 8,ery ) :isplays specific details about a selected item2 Inventory Post*ng L*st Cy Item ) enables the user to hide transactions that affect the cost of the items3 but ha#e no impact on their ,uantities2 Inventory stat,s ) :isplays the committed3 ordered3 in stoc$ and a#ailable ,uantities of the selected items2 Inventory *n /are3o,se Re4ort ) :isplays the balance of the selected items in the selected !arehouses or selected locations2 Inventory A,)*t Re4ort ) pro#ides an audit trail and information regarding the source of the posted in#entory transactions in the chart of accounts2 Chen a user generates this report3 a comparison bet!een the accounting #ie! >stoc$ balance accounts? and logistics #ie! >stoc$ #alues displayed by the audit

In#entory management report? can be made to obtain information regarding #alue changes in in#entory accounts2 "tarting from "AP Business %ne 2EE( A "PE13 !hen printing the report3 it is possible to print the also selection criteria on a separate page2 Inventory .a(,at*on Re4ort ) 8nables the user to #aluate allNpart of the in#entory items in allNsome !arehouses or locations to a selected date3 according to selected calculation method2 If the company manages a non) perpetual in#entory system3 this report ta$es the price assigned to items in the ANP In#oice into consideration !hen the ANP In#oice is based on a Goods /eceipt P%2 "tarting from "AP Business %ne 2EE( A "PE13 !hen printing the report3 it is possible to print the also selection criteria on a separate page2 $er*a( N,mCers Transa%t*ons Re4ort ) 8nables the user to generate a report !hich lists the transactions related to the selected range of serial numbers2 "at%3 N,mCer Transa%t*ons Re4ort ) 8nables the user to generate a report !hich lists the transactions related to the selected range of batch numbers2 "AP Carehouse Management allo!s you to manage your material flo!3 using ad#anced puta!ay and pic$ing strategies2 In the standard system3 these strategies for puta!ay include random puta!ay >ne5t empty bin?3 bul$ storage3 fi5ed bin3 or addition to stoc$2 +he pic$ing strategies include standard strategies first)in first)out >-I-%?3 last)in first)out >LI-%?3 pic$ing by shelf life e5piration date >"L8:? 3or partial ,uantities first2 -or customer)specific strategies3 solutions can be self)defined in user e5its2 "AP In#entory Management manages the stoc$s of a company in ,uantities and #alues2 It is integrated !ith supply chain accounting3 and is responsible for goods receipts3 goods issues and managing different stoc$ categories >such as a#ailable3 bloc$ed stoc$ and in ,uality assurance? and special stoc$s >including consignment stoc$ and pro&ect stoc$?2 "AP In#entory Management pro#ides a compact o#er#ie! of stoc$s in the supply chain2 B818-I+" %- "AP

85pand your business and customer base !ith Ceb)based C/M and e)commerce capabilities2 A complete customer #ie! across sales3 distribution3 and financials helps you unco#er ne! !ays to ser#e your customers faster and better2 +a$e proacti#e control of your business through automatic alerts3 !or$flo!s3 and response to $ey business e#ents and customer needs2 Get out of the reacti#e3 time)consuming Ofire drills2O "treamline your operations by seamlessly integrating $ey business processes such as sales3 purchasing3 in#entory3 and financials together F out)of)the)bo53 eliminating redundant

In#entory management data entries and errors2 Adaptable to your changing needs !ith easy)to)use customi*ation tools to tailor "AP Business %ne to fit your specific business needs and indi#idual user preferences2 Implement a solution you can count on !ith "AP2 "AP Business %ne is offered by "AP3 the !orldKs leader in business soft!are solutions3 and deli#ered by a global net!or$ of certified partners that pro#ide local customer ser#ice and support2

In#entory management

RE$EARC# MET#ODOLOG1
+his part of the report i2e2 /esearch Methodology is intended to gi#e the details of the conecptual frame!or$ !ithin !hich the study has been carried out2 +his section co#ers the follo!ing aspects7 A2 %b&ecti#es of the "tudy B2 /esearch Methodology

A: OCRe%t*ves o+ t3e st,)y 12 +o $no! the functioning of the in#entories and understand the system of procurement of material 3 its receipt 3 inspection and its issuing2 2 2 +o understand the accounting and #aluation of ra! material 3 !or$)in) progress and finished goods2 . 2 +o analy*e the in#entory control techni,ues used by company and their techni,ues 2 0 2 +o study the performance of the company in relation to in#entories and thus pro#ide suggestions if any on the basis of analysis and interpretataion of the data 2

" : Resear%3 Met3o)o(ogy

+he methodology used for the collection of data is of secondary type !hich is being e5plained here 7) $ECONDAR1 DATA It is mainly based upon annual reports 3 maga*ines 3 office reports and #arious published documents of -8:8/AL M%G;L G%8+<8 I1:IA L+: patiala2 :ata has been collected for fi#e years >i2e2 financial year 2EE@)2E12? 3 then compiled and

In#entory management thereafter statistical analysis of the information has been done3 thereafter #arious ratios relating to the in#entories has been calculated and tables sho!ing #ariation in the in#entories for fi#e years ha#e been made2

$/OT ANAL1$I$ Pre#ious years !ere challenging !ith the company4s business constrained by unfa#orable economic conditions2 +he slo! do!n in the industrial production3 in particular in the automobile industry3 had an ad#erse impact on the company4s business2 W"4 WC4 W%4 W+4 5@ ) ) ) ) "+/81G+H" C8AJ18""8" %PP%/+;1I+I8" +H/8A+"

$TRENGT#$

+he ma&or strength of the company is that it is !ell established2 +he relationship bet!een management and employees is #ery good3 as in agreement bet!een management and employees !as signed on March 2E1E2 :ue to this agreement there is no fear of stri$es and loc$outs in the company2 -e! competitors >@ Profit ma$ing and reputed firm A#ailability of s$illed and cheap labour +echnical efficiency %perating efficiency /EA2NE$$E$

+he ma&or !ea$ness of the plant is that it does not ha#e Mar$eting :epartment and it has to depend totally on Head %fficer for mar$eting acti#ities2 Lo! return of capital employed2 Problem of timely a#ailability of ra! material2 -acing some infrastructure problems2

=@

OPPORTUNITIE$

Cith the implementation of 8;/% norms3 there is need for high strength material rings !here reali*ations are much better as compared to standard rings2 In this high technology #alue segment the unorgani*ed sector cannot compete and thus there is tremendous opportunity for the company to increase domestic competition2 +here are increasing opportunities for e5ports to2 High e5port opportunity2 X "cope for further e5pansion in production of e5isting products and some ne! products has increased2 ?@ T#REAT$

+he company faces normal mar$et competitions form other manufacturers and the unorgani*ed sector especially for the lo! #alue segment of industrial and bi)!heeler 2 stro$e rings2 Cith the ongoing liberation of imports and deregulation of Indian economy3 there is a ma&or threat from cheaper imports3 particularly from China2

FINDING$
After carrying out in depth study of the system and procedure of in#entory management being follo!ed at -MGIL2 It has been found that in spite of high in#entory le#els so much care is ta$en off2 +here has been a tremendous increase in the in#entory le#els2 1o consideration is gi#en to maintain ma5imum and minimum le#els of in#entory2 8conomic %rder Muantity >8%M? system is not follo!ed properly22 Among ABC class items no special care has been ta$e of B and C class items although in absolute #alue the amount to crores of in#estments2 Crores of in#estment is becoming slo! mo#ing e#ery year3 !hich is turn is becoming non)mo#ing !hose in#estment is already #ery high2 But a good thing is found in the form of MI" reports prepared on regular basis by -inance :epartment to manage in#entory le#el and re#ie! of slo! and non mo#ing items by all concerned agencies 2 +he contract !ith suppliers for supply of ra! material is decided in ad#ance at the beginning of the year 6 factory recei#es material at that #ery price all throughout the year2 %nly ma5imum 6 re)order le#els are maintained2 1o !eightage is gi#en to minimum le#el due to introduction of sap pac$age2 A" far as pricing of in#entory is concerned company uses !eighted a#erage cost method In this !ay company does not ha#e to face any loss Nprofit out of mar$et price fluctuations2 +he #arious items in ra! material are stored at different locations instead of one central location according to suitability of their use near to the respecti#e departments2 But same are controlled >i2e recei#ed3recorded 6issued? from one central location that is from main gernal store

As 6 !hen material is recei#ed in store 3 the same is being gi#en sap code as !ell as material code 2 and these codes are decided in the company itself 2 !hene#er ne! stoc$ or ,uantity of any item is receic#ed the same is being gi#en respecti#e material 6 sap code2 /e Forder le#el is being calculated in the firm by $eeping ma5imum le#el as a base 6 applying of formula ma52 le#elYma52 lead time2 +he lead time is based on the distance bet!een the sending 6 recei#ing sports More is the distance grater is the lead time far as company4s current figures are concerned I ha#e company4s last year figure dated !hich sho!s that last year company has follo!ing stoc$s a#ailable !ith it2

Inventor*es
> alued at lo!er of cost and net reali*able #alue? /a! materials and components >including "toc$ in transit /s2 .1=2E. lacs >Pre#ious 9ear7 /s2 =B(22. lacs?? Cor$)in)progress -inished goods +raded goods "tores and spares >including "toc$ in transit /s2 02(. lacs >Pre#ious 9ear7 /s2 1220( lacs?? Loose tools /eusable scrap Tota( 2310=2@E 032E@2BB (3.=.2EB =2E2.A <9=@I? =;@K> >=@9= 5=!=?K@;9 23A0.2.E 03.(A2=2 032.(22. 0BE2.1 13.A021= (A(2(. 2.2E1 1.3B2E21=

DETAIL$ OF IN.ENTOR1 Ra' mater*a( an) %om4onents Pig iron Alloys Chromic acid Aluminium "teel strips Pin steel "ilicon Magnesium 1ic$el

>;@K= 95@59 <@K? ?>@<> J?@I9 K>9@J? 5J;@J< I@<> 5=@I>

0A201 .=2.2 ) ..2EE 11B21( (=.2(@ B12.2 .2B= 1B221

Iron po!der "teel po!der Copper po!der :istalloys Bought out rings %thers

59@K5 <5@;> =;@<= K@<9 ?@<9 <9<@IJ >!5?K@I;

.120@ B22=B 1@.2BB .120= .2.A 13(B(2.@ 23A0.2.E

As at =5 De%emCer! >;5> /or&-*n 4rogress Piston rings Pistons Pins al#e train "tructural components Miscellaneous

As at .1 :ecember3 2E11

5!=?J@5> >!><<@=> K;@J> >K5@;5 ><@9< >;<@5= ?!>;I@<<

131.B2@A 23@.A20E 1.E2B. .E12A0 0(22. 2200 03.(A2=2

F*n*s3e) goo)s Piston rings Pistons Pins al#e train "tructural components Miscellaneous

5!<=9@?J >!I=;@J? >;>@9? K>@J< >9@=; ?;K@;? 9!=K=@;<

13@B(2EB 13@EB2EB .0@2E2 1AA2=@ 20211 1@122( 032.(22.

Tra)e) Goo)s Bra$e pads Hea#y duty CB 8ngine bearings Coolant "par$ plugs Liners 8ngine #al#es Cipers Pistons Miscellaneous

59@59 KK@K; 9@?= >;9@?; 5;@>9 5=5@;; IK@5< >J@=; 59@?5 K=@I9 >@<; K>;@=J

1A2A. (=2E( ) 2E=2EA 1E2.E (122@ BA20= ) 2@2(E ) 212A2 0BE2.1

INTERPRETATION:
12 :o these policies and procedures support internal controlT

80 70 60 50 40 30 20 10 0 Y ES NO C AN'T S AY Y ES NO C AN'T S AY

A%%@ To t3e s,rvey )one I?M res4on)ents re4(*e) yes! 5J M res4on)ents sa*) No an) J M res4on)ents sa*) %anFt sa*) @

2)/3*%3 te%3n*D,es ,se) Cy yo,r organ*Hat*on to %ontro( t3e *nventoryS

70 60 50 40 30 20 10 0 EOQ S TOCK L EVEL EOQ R EOR DERPOINT S TOCKL EVEL

A%%@ To t3e s,rvey K>M res4on)ents say t3e %om4any ,se EO8 Te%3n*D,e@ >5M say t3ey ,se reor)er 4o*nt '3ereas on(y 5IM say t3ey ,se sto%& (eve( te%3n*D,e@

=-/3*%3 met3o)s are ,se) Cy yo,r organ*Hat*on +or *nventory managementS

70 60 50 40 30 20 10 0 3 DC !"#$ %1

F IF O

L IF O

W T . AVG C OS T

As 4er t3e s,rvey %on),%te) t3e res4onses are as +o((o': KJM res4on)ents say t3e*r %om4any em4(oy FIFO met3o)! '3ereas 5=M say t3ey em4(oy LIFO MET#OD an) 5<M say t3ey ,se /e*g3te) Average Cost Met3o)@

? /3o 4re4are) t3e MI$ re4ort o+ *nventory *n yo,r organ*Hat*on an) '3*%3 Cas*s *t 4re4are)S

100 80 60 40 20 0 S TOR E &ANAGER OT'ER S TOR E &ANAGER OT'ER

As 4er s,rvey <JM em4(oyee ans'ere) t3at $tore Manager 4re4are Inventory Re4ort! '3ereas on(y > M ans'ere) t3at *t *s 4re4are) Cy ot3ers@

()Inventory t,rnover rat*on o+ yo,r organ*Hat*onS

60 50 40 30 20 10 0 ()"!* 10 (+* 10 ,(!-) 15 1 5 ()"!* 1 0 (+* 10 15 ,(!-) 15

Most o+ t3e res4on)ents *@e@ 9? M ans'er t3at t,rnover rat*o *s aCove 59@ /3ereas on(y =? an) 55 M ans'ere) t3at *t (*es Cet'een 5;- 59 an) Ce(o' 5; res4@

K -Does management mon*tor an) a44rove t3e 'r*te-o++s o+ oCso(ete an) *na%t*ve *nventor*esS

80 70 60 50 40 30 20 10 0

Y ES NO C AN'TS AY

YE S

NO

C AN'T S AY

A%%@ To D,est*on as& to t3e res4on)ents I< M res4on)ents sa*) 1es ! 55M res4on)ents sa*) No an) rest >; M o+ t3e res4on)ents %anFt aC(e to s3are t3e v*e's@

@?

Is your organi*ation adopt 8%M model for in#entory management or control properlyT

4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0

.)/ %! 0, %'1 /, .

.)/

%!

0, %'1 /, .

A%%@ To s,rvey ?5 M o+ res4on)ents say yes to t3e +o((o'*ng te%3n*D,e@ ?> M res4on)ents 3a) sa*) No to te%3n*D,e an) 5I M %an aC(e to s3are t3e*r v*e's to t3e +o((o'*ng s,rvey @

A? Ho! your organi*ation maintain the le#el of in#entoryT

4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 /, 12/, 3, 01!4.

/, 12/, 3, 01!4. %!%/, 12/3, 01!4. )50)"")%1

)50)"")%1

A%%@ To res4onse +rom t3e res4on)ents ),r*ng t3*s s,rvey =J M res4on)ents +ee( sat*s+a%tory ! >9 M res4on)ents sa*) non sat*s+a%tory an) a(so =I M res4on)ents t3ey sa*) e:%e((ent as 4er t3e*r o4*n*on @

B?

Convers*on 4er*o) o+ *nventoryS

60 80 70 60 50 40 30 20 10 0

(+* 20 30 (+* 30 40 ,(!-) 40

(+* (+* ,(!-) 20 30 30 40 40

A%%@ To s,rvey )one on t3e %onvers*on 4er*o) o+ *nventory J=M o+ t3e res4on)ents s3are CL' >;=;! 55M o+ %o((eag,es 3a) re4(*e) CL' =;-?;@an) rest on(y K M o+ t3e res4on)ents 3a) re4(*e) aCove ?;@

5;

:oes management re#ie! the reconciliation of physical in#entory counts to the in#entory recordsT

80 70 60 50 40 30 20 10 0 .)/ %! N+A .)/ %! N+A

A%%@ To s,rvey )one Cy me IKM res4on)ents are say*ng 1es ! >? M 3a) sa*) No an) rest 5; M %ant res4on) to t3e D,est*on @

$UGGE$TION$
X +he company employs #ery crude methods of in#entory management3 !hich in#ol#es high manual labour and high ordering cost2 X Proper information should be a#ailable for need of components for #arious assemblies at #arious stages2 If this analysis can be carried out by !ay of P8/+ and CPM techni,ues the deli#ery schedules can staggered accordingly and lot of re#enue can be generated by !ay of sa#ing on account of less in#entory holdings and sa#ing in in#entory carrying costs2 Company should use ABC techni,ue for in#entory2 X +he company should ha#e independent material engineering department or material)planning department3 !hich should plan about material re,uirement3 purchases3 planning of production2 X +he company should form realistic production programmed and there should not be fre,uent changes in the same and it must be ensured that programs are made a#ailable !ell in time to all concerned authorities along !ith data !ise se,uence of production2 "uppliers should be sent schedules in time especially for critical and a class items for purchase2 X Comparison data of in#entory le#el should be made a#ailable to different departments and they should be encouraged to bring impro#ements so that in#entory le#els of company are made higher than competitors2 "till better co)ordination should be there bet!een stores3 -inance :epartment and Purchase :epartment to ensure better control o#er in#entory2 X A large part of the assets of company are tried up in this loan and ad#anced and it should try to reduce its in#estments in this and should pool it in the capital in#estments2 X It should try to promote its sales by starting their o!n mar$eting programmed at large scale and face more competition2 X "tandardi*ation of tools can help to eliminate reluctant in#entories through reduction in in#entory le#els3 !hich are increasing due to fre,uent changes in models of pistons etc2 X Problems of past should be $ept under consideration and in#entory holding norms of !ell established items should be thoroughly recei#ed3 !hile fi5ing the ne! in#entory norms2 +heoretically maintained le#els should also be follo!ed practically to stop in#entory crossing2 +his !ill ma$e reduction in in#entory le#els possible2

X +he company needs to impro#e its in#entory turno#er ratio ensuring change of in#entories to sell at faster rate2 X +he company should try to increase its production by bringing in ne! technology and reducing its cost2 X +he concern should try to pay more attention on ra! material con#ersion period because by this they can reduce the duration of manufacturing cycle for this they should try to reduce the ra! material in#entory and also by increasing production2 X In store and spares a part of in#entory3 there are certain items3 !hich are slo! mo#ing3 and there are also certain items !hich are non mo#ing2 +he firm should reduce the in#estment in these items as the funds bloc$s in these can be efficiently utili*ed2 X M/I/ preparations may be restricted to A to 1( days2 "o that ad#erse insurance co#erage and o#er stoc$ing implications could be a#oided2 X 8arlier company !as using !ood bo5es for pac$ing finished goods3 !hich !ere ,uite safe3 and a proper transportation2 But no! the company is using cardboard bo5es for pac$ing yet company has reduced the !eight of pac$ing material per bo52 But ,uantity of re&ected finished material in in#entory has increased2 "o company should gi#e attention to impro#e pac$ing material to maintain its reputation and reducing cost of in#entory2

In#entory management

L*m*tat*ons o+ t3e st,)y


8#ery pro&ect has its o!n limitations2 +he purpose of mentioning is to help readers form a more accurate interpretation of the results2 Present study is sub&ect to the follo!ing limitations !hich !ould be ta$en into consideration2

5 @ LAC2 OF CONFIDENTIAL DATA: +he company does not pro#ide some of the information confidential to the management2 +hus constraints in a#ailability of information resources came in !ay to learn more and thus in better compilation of pro&ect report2

> @ LIMITED TIME: Although the staff of -MGIL !as highly co)operati#e and de#oted enough of its #aluable time on me but because of their busy schedules3 I feel I !as unable to gain complete $no!ledge2 -urther more3 time alloted for the study !as limited to si5 !ee$s Both of these became the limiting factors to get thoroughly familiar !ith entire organisation acti#ities2

= @ LAC2 OF COMPARATI.E DATA FOR INTERFIRM COMPARI$ON: Interfirm comparison of -MGIL !ith other companies has not been done due to non a#ailability of data regarding other enterprises in the same field2

In#entory management

"I"LIOGRAP#1
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Com4re3ens*ve overv*e' http7NN!!!2sageMA"ZBEZ2EEZin#entoryZspec2pdfN22(A=2pdf http7NN!!!2sba2go#NlibraryNpubsNmpZ22pdf http7NN!!!2"J;flo!2comNrefferals2asp http7NN!!!2in#entorymanagement2re#ie!2orgNNcutting Zdo!nZon2html http7NN!!!2a*in#entory management2comN!or$ingZcapital2html http7NN!!!2a*in#entorymanagement2comNplanning2html http7NN!!!2a*in#entorymanagement2comNbusinessZpages2html http7NN!!!2ans!ers2comNstoc$ $eeping unitsNreference2&sp

T3eor*es :onald C2:obler3 :a#id 12 Burt3I purchasing and Materials Management$3 In#entory Management3 'ain "2P3 1arang J2L3 H materials controlI3 Cost Accounting3 Jalyani Publishers3

In#entory management

8,est*onna*re +*((*ng Cy organ*Hat*on em4(oyees to &no' aCo,t *nventory management

1ame7 :esignation7

Age7 :epartment7

Do t3ese 4o(*%*es an) 4ro%e),res s,44ort *nterna( %ontro(S

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/3*%3 te%3n*D,es ,se) Cy yo,r organ*Hat*on to %ontro( t3e *nventoryS /3*%3 met3o)s are ,se) Cy yo,r organ*Hat*on +or *nventory managementS

/3o 4re4are) t3e MI$ re4ort o+ *nventory *n yo,r organ*Hat*on an) '3*%3 Cas*s *t 4re4are)S

Inventory t,rnover rat*on o+ yo,r organ*Hat*onS

K I J <

Does management mon*tor an) a44rove t3e 'r*te-o++s o+ oCso(ete an) *na%t*ve *nventor*esS Is yo,r organ*Hat*on a)o4t EO8 mo)e( +or *nventory management or %ontro( 4ro4er(yS #o' yo,r organ*Hat*on ma*nta*n t3e (eve( o+ *nventoryS Convers*on 4er*o) o+ *nventoryS

5; Does management rev*e' t3e re%on%*(*at*on o+ 43ys*%a( *nventory %o,nts to t3e *nventory re%or)sS

In#entory management