1

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ACKNOWLEDGEMENT

I would like to give my sincere thanks to Mr. BHAVESH

PATHAK who permitted me for training. I would like to thank Mr.
MILIND.J.PARIKH for his friendly co-operation during my
training. My sincere thanks also go to Mr. UPENDRA
JHUNJHUNVALA for providing me the necessary technical
information & guidance regarding my case study about stores
department. I would also like to thank Mr. RAVI SHAHI for
information regarding Purchase. Finally, I would like to thank all
the employees of UltraTech LTD. who shared their knowledge with
me with utmost pleasure.

Signature of student

(8th SEM BE)

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CONTENTS

PARTICULRS PAGE
NO.
1. Industry Profile
2. Company Profile
3. Mfg. Process of Cement
4. Supply Chain Management
5. SCM in Ultratech Cement Ltd.
6. Research & Methodology
7. Findings
8. Inventory control at Ultratech Cement
Ltd..
9. Case study & Recommendations
10. Limitations & Bibliography.

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CEMENT INDUSTRY - INDIA (OVERVIEW)

1. Indian cement industry dates back to 1914 - first unit was set-up at Porbandar
with a capacity of 1000 tones

2. Currently, India is ranked second in the world with an installed capacity of 114.2
million tones. Industry estimated at around Rs.18, 000 cores.

3. Current per capita consumption is 85 kgs. As against world standard of 256 kegs

4. Cement grade limestone in the country reported to be 89 Bt. a large proportion

however is unexploitable.

5. 55 - 60% of the cost of production is government controlled

6. Cement sales primarily through a distribution channel. Bulk sales account for <
1percentage of the total cement produced.

7. Ready mix concrete a relatively nascent market in India

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HISTORY
Soren Kristian Toubro, a civil engineer and Henning Holck Larsen, a
chemical engineer, the founder of Larsen & Toubro Company were schoolmates,
later attended the same engineering college in Denmark. After becoming engineers
both joined, the firm named ‘F. L. Smidth & Company’, which was Cement
machine manufacturing Company.

Then both came to India in 1935 to assess the value of various cement-
manufacturing groups on behalf of F. L. Smidth & Company M/S Copenhagen.
These groups later merged into the Associated Cement Companies. After completing
this task, they searched for proper places for F.L. Smidth’s local offices in India.

In the course of their work, both visited India, observed Indian people, and
decided to start their own business here. They started a partnership concern on 1 st
May 1938 and started undertaking repair jobs on the imported machinery like
pasteurizes, butter Chuns, creams separators since supply of these machines were
stopped due to world war II. Gradually, they began to develop and manufacture
several of these and other types of dairy equipments. Very soon, L & T was
acknowledged as a reliable fabricator with high standards.

L & T has entered in Cement business in 1980. L & T established its first
plant at Awarpur, Mahrashtra in 1983. Second plant was established in 1991 at
Hirmi, M.P. Third and largest plant was established in 1996 at Kovaya, Gujarat.
The fourth plant was established at Tadipatri, A.P. in 1998.

GCW’s operations started from 2 April 1996. It became Asia’s largest cement
producing unit with the capacity of 4.2 million-tone per annum.

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GENERAL INFORMATION

Cement and concrete might be synonymous as household terms, but are by

nature different: cement, an ultra-fine gray powder, binds sand and rocks into a
mass or matrix of concrete. Indeed, cement is the key ingredient of concrete.

Semantics aside, concrete is the signature material in driveways, patios,

basements, and a host of other American household items. It is also the world's most
widely used building material. Annual global production of concrete hovers around
5 billion cubic yards, a volume approximated by yearly cement production levels of
about 1.25 billion tons.

Concrete's global appeal is not accidental - the ubiquitous, stone-like

material is produced from some of the world's most abundant resources, as is
cement.

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A BRIEF HISTORY OF CEMENT

Cement is invented/developed by Joseph Aspelin of U.K. in 1824. Since

hardened cement plaster resembled Portland stone found in Portland, which is a
place in England. That is why it was named as ‘Portland Cement’.

In 1948, Mr. William Aspdin manufactured cement as a commercial product

for selling.

The cement has been in the existence for a long time in the historical
monuments. The evidence of this fact can also be seen in civilization of Mohan-Jo-
Doro.

In India, Portland cement was first manufactured in 1904 by south India

industrial limited. In 1914, new company named India Cement Co. was established
at Porbandar, which is even today in operation as ACC. Since 1904, cement
production is continued and expanded.

To define cement, we can say cement is a mixture of these main following raw
materials:
 Limestone
 Bauxite
 Iron ore
 Marl
 Sweetener
 Clay
 Mineral Gypsum
In other way, when we add gypsum in clinker and refine it in small particles
it is called cement.

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Types of cement:

 Ordinary Portland cement

(A) Blended cement

1. Portland pozzolan cement

2. Portland blast furnace slag cement

(B) Special cement

1. Sulfate resisting Portland cement

2. Low heat cement
3. Rapid hardening cement
4. Oil well cement
5. White cement

SWOT ANALYSIS OF INDIAN CEMENT INDUSTRY

OPPORTUNITIES
 Huge infrastructure demand

 Rapid urbanization

 Increasing demand for consumer durables

 Untapped rural demand

 Increasing interest of foreign producers

THREATS
 Slow growth in infrastructure demand

 Global economic slow down

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STRENGTHS
 Abundant resources

 Low cost and efficient labour force

 Strong managerial capability

 Strong globalize industry and emerging global competitiveness

 Modern new plant & modernized old plants

WEAKNESSES
 High cost of energy

 Higher duties and taxes

 Infrastructure

 Labour laws

 Slow statutory clearness for development of mines

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CHAPTER 1

COMPANY PROFILE

VISION

To be INDIA’S largest cement manufacturing unit

at a single location, producing premium quality
cement with clear focus on all stake holders.

MISSION

GCW will be a vibrant enterprise focusing on

bench marking, sustainable development,
expectation
and aspiration of stakeholders and society.

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1.1 INTRODUCTION
Ultra Tech Cement Limited (Formerly known as L & T Cement Ltd.) is a
very well known name in the field of cement. The registered office and head office of
the company is at Mumbai.
This company’s reputation is based on a strong customer orientation, the
technological sophistication that characterizes its products, and an impressive
record of achievements. Ultra Tech has initiated a transformation process to ensure
that it emerges as a knowledge-based premium conglomerate in the shortest possible
time.
Ultra Tech is India’s cement leader, with over 17 Million-Ton p.a. installed
capacity. Each of its plants incorporated state-of-art technology. Ultra Tech Cement
has strong brand equity and commands a price premium in most markets.
Ultra Tech is committed to a high growth trajectory that will deliver
significant value to its customer and shareholders.
Out of six cement plants of Ultra Tech, GCW at Kovaya is the largest cement
plant in Asia. There are two phases in the plant, which are almost identical in layout
and production capacity. The reason for laying such a big plant near a small village
like Kovaya can be justified by the fact that this region is very rich of limestone
resources, which is the chief raw material for cement production. The estimated
resources of limestone mines are enough to supply raw material for next 40 years to
GCW. Ultra Tech is India’s largest manufacturer of premium quality cement. Ultra
Tech has nationwide network of factories, offices and sales centers. Authorized
stockiest dealing in the company’s product line, including cement, is located directly
or indirectly in every district of the country.

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Board of Directors
Mr. Kumar Mangalam Birla, Chairman
Mrs. Rajashree Birla
Mr. R. C. Bhargava
Mr. Y. M. Deosthalee
Mr. A. R. Gandhi

Executive President & Chief Financial Officer

Mr. K. C. Birla
Manager and Chief Executive Officer
Mr. Saurabh Mishra
Chief Manufacturing Officer
Mr. S. K. Maheshwariv
Chief Marketing Officer
Mr. O. P. Puranmalkav
Executive Vice President — International Business
Mr. Deepak Razdanv
Company Secretary
Mr. Sanjeeb Chatterjee
Auditors
S.B. Billimoria & co., Mumbai
G.P. Kapadia & co., Mumbai
Solicitors
Amrachand & magaldas& suresh a shroff & co.,
Advocates & solicitors, Mumbai

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UNIQUE CHARACTERISTICS

UltraTech cement units are state -of- art technology dry process plants
in corroborating pre-calumniation technology. Advance instruments system;
computerized process control along with online quality control by x-ray ensures
consistently high quality. Process parameter are monitored and controlled by
computer-based systems.

 UltraTech cement plants are Eco-friendly with elaborate pollution

control facilities like electronics precipitators, bad and dust filters.
 Captive mines adjusted to the factories supply high grade limestone
 Infrastructure includes all weather roads, and rail sidings as well as
port handling facilities at Gujarat plant.
 All cement plants are based on the design of F.L. Smith & Co.,
Denmark.

SIZE OF UNIT & FORM OF ORGANISATION

UltraTech cement Ltd. Is large-scale industry according to new industrial
policy 1991,which defines that the firm having investment more than 5crores and
more than 100 employees is consider under large scale industry.
GCW is having investment more than 2600 crores and 600 employees, so GCW
is considered as a large-scale industry.
Public ltd means the company, which has an association not less than 7
members and registered under the Company Act. Public company must add the
word limited’ at the end of its name. A public limited company must have at least
three directors.

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Plants of UltraTech LTD

(1) GUJARAT CEMENT PLANT (GCW)
The plant GCW is located at southwestern coast of Saurashtra in Gujarat. It
is 150 kms from Bhavnagar & 75 kms from Diu. It has received ISO 9002 certificate
in October 1997 for its better quality system in manufacturing and dispatching of
clinker and cement. Clinker and cement are exported to Sri Lanka, Saudi Arabia
and a few European countries. This unit is largest and high production unit of Ultra
Tech. This unit has made record in production and quality of cement.

(2) AWARPUR CEMENT WORKS (ACW)

ACW is located in Maharastra at Awarpur village, which is 212 km away
from Nagpur, and in Chandrapur district. Total capacity of plant is 2.5 MT per
annum. It produces OPC at 33, 43, 53 grade and PPC.

(3) ANDRAPRADESH CEMENT WORKS (ACW)

This plant is located in Tadpatri village, district Anantpur, Andrapradesh.
This plant is equipped with latest equipment to produce OPC of 33, 43, 53 PPC etc.
grades with consistency in the quality. It has its own railway track, which is from
Chennai to Delhi.

(4) HIRMI CEMENT WORKS (HCW)

It is located in Madhyapradesh at Hirmi village, which is 65 km away from
district Raipur. Its installed capacity is 1.45 MT per annum producing OPC at 33,
43, 53 grade.

(5) JHARSUGUDA CEMENT WORKS (JCW)

HCW located at Dhutra village of jharsuguda district in Orissa, which is 15
km away from jharsuguda. It is producing mainly high quality slag cements

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according to ISO455-1989 norms. Installed capacity of this plant is 0.7 MT per

annum. This plant has sophisticated laboratory to maintain quality control goods.

Besides these plants UltraTech has two grinding units located at

1) Magdalla (Gujarat)
2) Ratnagiri (Maharashtra)

Company has two domestic cement terminals at

1) New Mumbai
2) Mangalore

SUBSIDIARIES

 Larsen & Toubro ceylinco (Pvt.) Limited.

 Ceylinco insurance company limited and UltraTech have incorporated
this subsidiary in Sri Lanka.
 Ceylinco is one of the most respected business groups in Sri Lanka
with activities in the field of banking, insurance and finance.
 A bulk Cement terminal has been established near Colombo with
annual output of 0.5 MT.
 Cement in bulk is sourced from Ultra Tech’s Gujarat Cement works
and transported by carriers to Colombo.

 Narmada Cement Company Limited.

The Narmada Cement Company Ltd. At Jafarabad (Gujarat) and two
grinding units at Madgalla (Gujarat) & Ratnagiri (Maharastra) all are port-
based plants. Clinker is shipped by sea from Jafrabad to the grinding units.

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LOCATION OF DIFFERENT PLANTS IN

INDIA

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ORGANISATIONAL STRUCTURE
EVP’S OFFICE

HEAD ERP-CELL MATERIALS PERSONNEL&ADMINISTRATION

ACCOUNT
MANUFACTURING

STORES PURCHASE ACCOUNT

IT

PERSONNEL ADMINISTRATION MEDICAL

SECURITY

PRODUCTION ELECT.&INST. MINES MECHANICAL CPP DESP.&PACK. CIVIL JETTY

SAFETY
PLANT

PROCESS QUALITY MINES CRUSHER MECHANICAL CPP DESP.&PACK. CIVIL JETTY

SAFETY
PLANT

ELECTRICAL INSTRUMENTATION

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CHAPTER 2

MANUFACTURING PROCESS OF
CEMENT AT ULTRATECH CEMENT
LTD., GUJARAT CEMENT WORKS
KOVAYA

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SECTION 1

*************************************************************************************

INTRODUCTION

The GCW Cement production process is here under:

Mines

L.S. Crusher

Belt Conveyor

L.S. Storage

Additives

Raw Mill

C.F. Silo

Preheater

Kiln

Coolax Cooler

Clinker Storage

Cement Mill To Jetty

Cement Silo

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Packing Plant
SECTION 2
MINES
*********************************************************************

2.1 INTRODUCTION:
The lime stone mine, belonging to the Larson & Toubro Cement
Plant is situated 2.5 km. to the west of the plant. On its border, also
lies the mines of the Narmada Cement Plant.
2.2 MINING:
Here in the Kovaya Lime Stone Mine mining is done in two
methods:
1. Conventional Mining
2. Surface Mining
1. CONVENTIONAL MINING
These explosives and detonators are stored is called the magazine.
No civilization is allowed to occur within the periphery of 500 m. Its
walls are made of First of all the top soil is removed with the bulldozer.
This soil is transported to the mines only when ordered, otherwise it is
heaped at the mines.
The drilling machine is used to make holes upto the depth of 10 m

and 150 mm diameter. It also takes samples of soil at various levels

for the assessment of the soil. According to the kind of earth i.e., soft

or hard the placing of explosive is decided.

If the soft earth is charge with an explosive, then the gases pass
through the porous soil and hole is not blasted, hence explosive is
wasted.

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It is very important to ram and compact the earth after piling

explosive. Otherwise it might explode in the air. Even the rock develops
the cracks, so if the drilling machine is used in the area it might get
stuck up in crack.
The blast explosive is manufactured by IDL Chemicals, Rourkela.
It is of 125 mm Diameter. and 83 mm Diameter. It is class 2 explosive
weighting 6.25 kg. The 83 mm Diameter explosive is Aqua dyne, also
manufactured by IDL Chemicals. It weighs 2.77 kg.
The explosive have following compositions:
Nitrate - 60 %
Ag Powder - 10 %
Water - 10 %
Nitroglycerine - 20 %
These explosive are Nitroglycerine based explosive and they are in
a thick paste form and contains salver. The cost is Rs.18/kg.
When we observed the blasting there were 19 holes of depth 10 m
each, so 35x15x10x1.5 tons of limestone is acquired against the usage of
1500 kg of explosive used.
Here the holes blasting affective area are 34 m long and 15 m
wide. The power factor ranges from 3 to 5 which are considered less.
A detonating chord is used to connect these holes to each other.
These are made up to Penta Ethylene Tetra Nitrate [PETN] coater with
plastic. A one meter long chord contains 10 gm of PETN. This is used in
a chord form so that the contact is not broken. It fires at the rate of 6000
m/sec.
A detonator is used to connect these holes and complete the
circuit. The wire is made of steel which is covered with plastic. This wire
is ignited. An Ohm’s meter is used to check whether the circuit is
completed or not. Then the dynamo is charged and the red light on it
lights frequently and fire button is pressed, and blast occurs.

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The place where stones and it is 60 cm thick stacking of explosives

and detonators are done separately. In the case of accidents if explosives
ignite, they just burn, but if detonators ignite, they explode.
The explosives are stacked on a wooden platform, 6 inch above
the ground, so that no harm is caused by rats also. Special care is taken
not to use any iron material in the magazine, instead of iron, Cu is used.
The stacking is done only upto 1.2 m. A red line is marked almost about
2.5 m above the ground which marks the maximum storage capacity. A
passage is left between the stacks, so that if one starts burning the others
might be removed.
These magazines have special Z type ventilators for the purpose of
security. These are also made from Cu.
The vehicle used for carrying the explosives is made from Al. It
has a partition between back part and front part and also a silencer in
front, so there will not any chance of fire.

 Equipments:
 Drilling machines
No -2
Approx Cost - 35 lacs
Make - IBH -10
Power - 210 HP
Dia. of drilling rod- 6 inch
There are 3 rods of 3 m each and hammer of 1.5 m. The hammers
have holes, from which air pressure is exerted so the soil is removed. It
consumes 20 lts of diesel/hr.

 Loading Equipments
Hydraulic Excavators - 3
Approx Cost - 85 lacs

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Make - L&T 300 CK

Power - 324 HP
Bucket capacity - 3.8 m3 [5 tons]
Diesel consumption - 40 lts/hr
 Transporting Equipment
BEML Hall pack -8
Approx Cost - 55 lakes
Make - LW 35
Power - 380 HP
Diesel consumption - 20 lts/hr
 Dozers
No -8
Make - BEML D355A3
Engine – Japanese
Crushing
Crushing is done after the mining. Crusher is located outside the
mining lease area and is about 2.5 km away from stacking site at the
plant. The main aim of the crusher is to crush the lime stone to the
required size and transport the same to the stock pile through RBC.
Lime stone is dumped in the hopper which is of 160 tons capacity
by H-35 BEML dumpers of 35 tons capacity.
From hopper the material is then transferred into the crusher
through an Apron Feeder where the material is finally crushed.

 Technical Specification:
1. Type : Single rotor impactor
2. Size : APPM 1822
3. Mass Flow rate : 950 TPH
4. Feed size : 1400x1300x1100 mm

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5. End product size : 75 mm

6. Motor : 1425 KW at 1000 rpm

 Main Components of L.S. Crusher:

1. Apron Feeder
2. Scraper chain conveyor
3. Impactor
1. Apron Feeder
It comprises of specially fabricated frame on which two heavy
duty endless link assemblies are wounded. The apron flights are of
rolled steels and are bolted on the chains and are used for conveying the
material. The drive arrangement is a D.C. motor and a gear ox
connected to the drive shaft of the apron feeder. The link assembly and
the flight are supported and guided on the top of the frame by deck
rollers. The drive shaft has two sprocket hub assemblies which mesh
with the link assemblies and drive the apron feeder. On the return end
of the apron conveyor is the tail wheel assembly for guiding the link
assembly.
2. Scraper Chain Conveyor
The scraper conveyor consists of a trough assembly within with a
scraper chain assembly travels. The round link chain and fabricated
scraper flight runs on scraper trough while conveying the spillage load
on trough support assemble while returning.
Actual conveying of spillage is done by the bottom strand by
scraping material alone the trough bottom plate. The drive arrangement
consists of an A.C. electric motor and shaft mounted reduction gear box
which directly rotates the drive shaft. At the rear end, the scraper tail
wheel assembly guides the round ling chain assembly.

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3. Impactor
The crusher is Impactor Crusher. Crushing is done by impact and
it is a dynamic operation.
The main size reduction is carried out by striking i.e., by impact
of the impeller bars to the crusher feed. The purpose of the breaker
plates arranged inside crusher is to function as deflecting plated. The
material thrown against them is reflected back into crushing
compartment, where it is again hit by the impeller bars, until it leaves
the crusher through slot between rotor and lower edge of breaker plate.
By the impact of material against roller plates and material gets
crushed and then material is supposed to crush by chunking against
each other. The material is ground to the size of 50-60 mm in first phase.

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SECTION 4
RAW MILL
************************************************
***********************************
4.1 INTRODUCTION
Lime stone, clay, Iron ore fed into mill. The chemical composition
of raw materials is controlled by computer calculations based on
analyses of raw materials, as well as actual amount of compositions of
meal in the homogenizing silo.
During transport to mill inlet, magnetic objects are removed by a
magnetic separator, which is mounted over belt conveyor. Metal
detectors are also built in as further protection. If a metal is detected, a
pneumatically operated gate is activated for discharge of a portion of
materials containing metal piece. Another metal detector is placed near
box feeder, where belt stops for manual removal if a metal is detected.
The box feeder at mill inlet operates as a buffer and as an air
sluice to reduce false air intake. After box feeder, raw material drops on
rotary grinding table. Here, they are thrown under rollers by rotary
movement of table, and ground. The grinding table is driven by mill
main motor.
The material might contains some moisture upto 4%. This is dried
by hot kiln exit gases supplied through nozzle ring surrounding
grinding table.
There are nozzles installed in front of rollers and on grinding
table, for use when temperature or grinding process makes it necessary.
Here, in raw mill hot gas blow is taken from kiln string. It helps
material to dry and thus to less moisture content. Yet moisture content
remains 0.5%, which is necessary for easy operation.

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The mill is automatically stopped when very strong vibrations

occur. The air flow to mill is supplied by fan. A gas recirculation duct
with damper is also installed to ensure sufficient constant air flow. The
air from mill fan is drawn through bag house for cleaning by filter fan.
The raw meal produced is carried by fluxosides and elevators to
C.F. silo for storage. The dust precipitated in bag house filter and
function box is transported to C.F. silo or directly back to kiln
preheater.
The most important feature of raw mill is that instead of balls, it has
rollers. There are three rollers of 50 tons each around centre shaft.
The production of a ball mill can’t exceed more than 150 tons, where
as the kiln needs 450 tons of raw meal. The production of raw mill is
500 tons/hours.
CONTROLLED FLOW SILO:
FLS have developed a new, continuously operated silo for
blending and storage of cement raw mix, called C.F. silo. It extracts
material simultaneously at different rates from a number of outlets in
silo bottom.
The C.F. silo bottom is divided into seven identical hexagonal
sectors. Each of these sectors is divided into six triangular sub sectors.
Thus, the bottom consists of a total of 42 sub sectors. These sub sectors
represent 42 individual areas from which are provided with aerating
units. These 42 separate sub sectors represent 42 individual areas from
which material can be extracted accurately to a predetermined
program.
In actual operation, homogenization is performed by using three
of seven discharge outlets simultaneously, each blower aerating only one
sub sector at a time.
The raw meal flow stream from extraction points of part silos is then
blended in a tank placed after silo.

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SECTION 5
PREHEATER
************************************************
***********************************
5.1 PREHEATER AND CALCINER:
A decisive factor in heat economy of cement dry production
process was development of preheater. With this, it was possible to
obtain very low exit gas temperature of about 250oC which were not
attainable before. At the L&T, Gujarat cement works the preheater is of
F.L.Smidth Company.

ADVANTAGES OF FLS PREHEATER:

 The kiln dimensions can be considerably reduced.
 The calciner can be supplied with combustion air from clinker cooler
at a temperature of approximately 900oC. Since control devices are
located in gas stream behind preheater.
 The process control allows for a suitable margin of safety against
overheating, even at a calciner stage of 90-95%.
 The high degree of calcinations and regular feeding of kiln ensure
stable kiln operation without kiln upset conditions.
The characteristic feature of calciner is through blending of raw
mix and fuel prior to introduction of combustion air and subsequent
initiating of combustion process. The combustion air is drawn from
clinker cooler at a temperature of about 900 oC. The air flows from inlet
to outlet of calciner, with only a low pressure drop.
The heat generated in calciner is utilized partly to raise raw
mixture temperature to calcining level and to implement actual
calcining process. The preheater here has a double string-kiln string and
calciner string 6-stage preheater with low pressure type cyclones.

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Kiln string: 3x6 m + 3x6.3 m cyclone.

Calcining string: 1x2x5.4 m + 1x7.5 m + 2x7.8 m + 2x8 m
By using separate strings for kiln and calciner important
operational advantage of independent and accurate draught control is
obtained.
The raw meal feed is extracted from the C.F. silo into feed bin.
The feed control is based on schenck impact weigher concept. The feed
bin is placed on load cells.
After the feeding system, raw meal is transported to the preheater
inlet by means of elevators and air slides. At preheater inlet, feed is split
into two preheater strings in such a way that outlet temperatures are
equalized.
The preheater is operating as a counter current heat exchanger
with raw meal passing downwards by gravity and air going upwards by
the INDUCED DRAUGHT (ID) fans.
After fifth stage of the calciner string and sixth stage of kiln
string, combined raw meal enters calciner vessel. Here, about 55% of
fuel is fired. The combustion for the calciner is hot atmosphere air
drawn from coolax cooler through a separate tertiary air duct mixed
with combustion has from kiln. The calciner is designed for a gas
retention time of more than 3 seconds. In calciner, raw meal will be
calcined to about 90-95%.
The material from calciner is routed onwards to sixth cyclone
stage of calciner string from where it slides into kiln.
Part of gases leaving top stage of preheater cyclones is taken to
raw mill for drying and transporting raw material before it is taken to
bag house.

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SECTION 6
KILN
************************************************
*********************
6.1 INTRODUCTION:
The kiln is 75 m long and it have 4.75 m diameter. The kiln is
supported on three types of 2 rollers each. It rotates at a speed of 3 to 4
rpm. The burning zone temperature in kiln is around 1400-1500 oC.
Pulverized coal is used as fuel in kiln and calciner. The fuel supply rate
to kiln installation is determined on basis of an evaluation of clinker
quality and current status of kiln.
The exit gas analysis is done for evaluation of combustion process.
The smoke gases must not contain any unburnt substances i.e., C or Co.
They may cause fire and also waste latent heat of unburnt part of gases.
A certain surplus air is supplied during the combustion process, because
of inadequate air is supplied, smoke may contain unburnt gases.
Usually refractory lining of kiln is replaced if the thickness of
bricks is reduces to half of its original size due to wear. Hence, kiln shell
must not be overheated. If kiln shell temperature rises above 400-500 oC,
affected area must be cooled by means of fans. There are 14 fans for this
purpose.
In event of a further rise in temperature kiln must be shut down
for a repair of lining. A radiation pyrometer (scanner) has been installed
for purpose of checking condition of kiln lining during operation.
If there are any hot spots observed, kiln motor is run at lowest
speed until temperature of hot spot has been reduced. In burning zone,
the temperature reaches up to 1400oC and clinkerization occurs.

BURNING PROCESS IN KILN:

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For burning purpose firing is done in kiln. The firing is done

through nozzle, coal is fired, reaching temperature of flame up to
1800oC and maintaining temperature in kiln up to 1400-1500oC of
material.

CHEMICAL PROCEDURE:
During burning and decarbonation of carbonates of Mg and Ca
and removal constitutional water, there are schematically three
consecutive stage of clinker mineral formation. During burning of first
stage up to 990oC all aluminum oxide reacts with lime, generating
monocalcium alluminate silica also starts to combine with lime
generating dicalcium silicate. At this phase of clinker compounds
dicalcium silicate concentration is low.
At second stage of formation, when the material is heated to a
range from 1190oC to 1285oC, monocalcium alluminate formed during
first stage is further saturated with lime reacts with iron oxide creating
dicalcium alluminoferrit which is also called browmmillerite. Formation
of dicalcium silicate which started first stage is now being completed.
At third stage, material reaches temperature above 1285oC, at this
stage of clinker formation, known exothermal effect occurs, which
produces generally 120-150 kcal/kg clinker. The rapid heating of
material by this effect causes clinker to behave in this kiln section
similar to fluidized material, thus increasing the transport velocity of
material which can disturb the regular kiln operation. The partially
fused condition of material permits one part of dicalcium silicate to be
saturated with remainder of the uncombined lime, and thus be
converted to tricalcium silicate. The formation of clinker is completed
with third stage.

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SECTION 7
COOLAX COOLER
************************************************
*********************
7.1 COOLAX COOLER:
The coolax cooler receives approximately 1450oC. Hot clinker
from rotary kiln, cooling clinker down to a temperature which is
approximately 80oC at a production of 6500 tone/day.
Some of thermal energy contained in clinker is simultaneously
recuperated. The thermal energy is transmitted to cooling air which is
subsequently utilized in kiln and calciner.
Grate-1 is designed as CFG system while grate 2 and 3 are
designed as RFT system. From kiln outlet, clinker drops down onto the
inclined grate plates, latter being alternately stationary and moveable.
CONTROLLED FLOW GRATE
The airstreams to first grates is very powerful so that clinker is
well distributed across the entire width of the grates. This will prevent
clinker from being backed together at very high temperature.
A controlled flow means that air is fed to grates, individually
controlled to smaller units of grate. This is accomplished by means of
ducts, with damper of adjusting flow and hence air pressure, to single
zones.
All cooling air is forced upward through narrow gaps in grates to
clinker bed. High air velocity will prevent dust and small clinker
particles from dropping into gaps of grate while cooler is operating.
As mentioned, air ducts are connected to supporting beams which
are also configured as air ducts.
REDUCED FALL ZONE:

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In RFT zone, the clinker is cooled further down to the desired

temperature. In RFT zone, entire airflow is injected under grates,
penetrating up into clinker bed at gap between grates and via openings
at bottom of hollow girders. A pressure loss, corresponding to one-third
of pressure in the components, is allowed for in design of RFT grates
and the hollow girders so as to ensure favorable distribution of air.
The grates carry clinker down to outlet where clinker is pushed
onto and outlet grate, where clinker less than 25 mm, drops through
grate and down into clinker conveying system, whereas remaining
others are pushed off grates and they pass under hammers of crusher
and down to clinker conveying system.

7.2 CLINKER STORAGE:

The reason for storing clinker is, because kiln operation does not
always run simultaneously with finish mill operation. Also, in many
cases, high temperature of clinker leaving cooler does not allow direct
grinding, because hot clinker causes high grinding temperatures, which
impair not only mill operation but also cement quality so, far cooling
and as a production buffer clinker is stored in various storage facilities.
The storage time of a good quality clinker, stored in protected
facilities does not influence grinding process nor the quality of cement.
Even clinker stored for many years in dead space of clinker holes did
not show a drop in quality.
Here, for purpose of clinker storage, they have a clinker yard
erected with aluminium sheets and a clinker silo of R.C.C. The bottom
diameter of silo is 80mts and capacity is 67,000 tons. From the clinker
yard, it is taken to cement mill with help of trucks, whereas from silo, it
is taken via conveyor belt, clinker is also stored in open space. Size of
clinker is 2 to 25mm.

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SECTION 8
CEMENT MILL
************************************************
*********************
8.1 INTRODUCTION:
Cement clinker and 2-5% raw gypsum is ground together to form
cement. The purpose of grinding mills:-
 Creation of larger reactive surface, so that clinker minerals can react
with water.
 Controlling of setting properties of cement by adding gypsum.
At L&T, there are four cement mills of capacity 133 t/hr. It
consists of two chambers divided by double wall. This wall allows
particles of 4 mm size to pass through. About 27 % of volume consists of
grinding media. The first chambers has high chrome ball of 60 to 90 mm
diameter whereas second chamber has 15-20 mm diameter high chrome
balls In first chamber grinding takes place due to impact and in second
due to attrition. The product is taken to air separator where coarse
particle are recirculated to mill. The mill converts majority of energy
input into heat. Gypsum is dehydrated at 130oC at high temperature.
Gypsum loses its property as cement setting retarded and becomes false
set cement. Hence temperature inside mill is 70-80 oC. For this water is
injected into hottest part of mill where it evaporates instantly. Water is
carried into mill by compressed air through a simple nozzle which
breaks up water into very small drops; from where material goes to air
separator.

8.2 ELECTOSTATIC PRECIPITATOR:

In plate type electric precipitator, only electrical precipitation is
employed. This ESP is used after Coolax Cooler and Cement Mill.

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In addition to precipitation by action of the electrical dust

collection also precipitation of a certain quantity of dust particle by
action of gravity as well as direction and by impact. During the
elimination of every supply, the electrical precipitator works as the dust
settling chamber with collection of 30 to 70 %.
ESP is less efficient than bag house, as it fails to work at high
temperature.

SECTION 9
PACKING PLANT
************************************************
*********************
9.1 INTRODUCTION:
A rotary packing machine is used here having 12 filling spouts.
This machine completes 2.5 rotates per minute. Hence filling 30
bags/minutes or 1800 kg/hour.
The spouts are mounted at the bottom of cylindrical container.
The manual work comprises of placing the empty bags on the spouts as
they pass it. Fluidized cement flows into the rotating container. At the
bottom of the container. Certain amount of fluidized air is added to the
cement to increasing flow ability through the filling spouts into the bags.
Each spout has its own weighing device. By the time the spout
finished one rotation 50 kg of cement is filled into the bag. It is dropped
off on the conveyor belt. All the extra cement falls in the hopper from
where it is transported to the cement silo.
In case of transportation by ship, they are carried to the jetty by 4%
less, long belt conveyor; otherwise they are slide down and loaded in to
the trucks standing underneath.

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3.1 INTRODUCTION

3.1.1. Supply Chain:

“The supply chain is the process of moving goods from the

customer order through the raw materials stage, supply, production and
distribution of products to the customer.”

3.1.2. Supply Chain Management:

Managing the chain of events in this process is what is

known as supply chain management. It includes:

1. Managing supply and demand.

2. Sourcing raw materials and parts.
3. Manufacturing and assembly.
4. Warehousing and inventory tracking.
5. Order entry and order management.
6. Distribution across all channels and delivery to the customer.

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Effective management must take into account

coordinating all the different pieces of this chain as quickly as
possible without losing any of the quality or customer satisfaction,
while keeping costs down.

3.1.3. A Model of Supply Chain Management

Customers
Product and Material Flow

Retailers

Distribution centers Information and Financial Flow

Assembly
/Mfg.

1st Tier supplier 1st tier supplier

2nd Tier
2nd Tier supplier
supplier

2nd Tier supplier

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3.2. WHY TO MANAGE SUPPLY CHAIN?

In recent years it has become clear that many companies have

reduced their manufacturing costs as much as is practically possible
while manufacturing quality- a long time competitive differentiate – is
at a high standard across the board. So meeting customer’s specific
demands for product delivery is seen as the next critical opportunity for
competitive advantage. By managing the supply chain companies will
able to maintain competitive advantage and at the same time
significantly reduce costs. Companies had to turn to more advanced
supply chain management due to shortened product life cycles,
increased competition and heightened expectations of customers.
Implementing an effective supply chain management function,
usually through software, facilitates enhanced customer services,
management of inventories, transportation systems and whole
distribution networks in addition to cost savings. Rapid developments in
information communications technology has been and is crucial for the
development of modern, cost-effective supply chain management
through use of databases, communication systems and advanced
computer software. By analyzing the supply chain, businesses are able
to identify which parts of their supply chain process are not competitive,
understand which customer needs are not being met, establish
improvement goals and rapidly implement necessary improvements.
The supply Chain Council, an independent, not for profit global
organization, which is open to all companies that are interested in
applying and advancing the state of the art in supply chain management

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systems and practices. The SCC founded in 1996 with 69 voluntary

members, now has over 650 members world wide and seeks to promote
use of one standard model for managing supply chains in order to
provide benchmarking capabilities.

3.3. BENEFITS OF AN EFFECTIVE SCM

1. Reduced inventories.
2. Lower operating costs.
3. Product availability.
4. Customer satisfaction.
5. Flexibility.

3.4. SUPPLY CHAIN DECISIONS

There are four major decision areas in supply chain management:
 Location decisions
 Production decisions
 Inventory decisions
 Transportation decisions

3.4.1. Location Decisions:

The geographic placement of production facilities, stocking
points, and sourcing points is the natural first step in the creating a
supply chain. The location of facilities involves a commitment of
resources to a long term plan. Once the size, number and location of
these are determined, these are the possible paths by which the product
flows through to the final customer.

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These decisions are of great significance to a firm since they

represent the basic strategy for accessing customer markets, and will
have a considerable impact on revenue, cost and level of service. These
decisions are determined by an optimization routine that considers
production costs, taxes, duties and duty drawback, tariffs, local content,
distribution costs, production limitations etc. Although location
decisions are primarily strategic, they also have implications on an
operational level.

3.4.2. Production Decisions:

The Strategic decisions include what products to produce and
which plants to produce them in allocation of supplier to plants to DC’s
and DC’s to customer markets. As before, these decisions have a big
impact on the revenues, costs and customer service levels of the firm.
These decisions assume the existence of the facilities but determine the
exact path through which a product flows to and from these facilities.

3.4.3. Inventory Decisions:

These refer to means by which inventories are managed.
Inventories exist at every stage of the supply chain as either raw
material, semi finished or finished goods. They are also in process
between locations.
Their primary purpose to buffer against any uncertainty that
might exist in the supply chain. Since holding of inventories can cost
anywhere between 20 to 40 percent of their value, their efficient
management is critical in supply chain operations. It is strategic in the

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sense that top management sets goals. However, most respondents have
approached the management of inventory from an operational
perspective. These include deployment strategies (push versus pull),
control policies, determination of the optimal levels of order quantities
and reorder points and setting safety stock levels at each stocking
location. These levels are critical, since they are primary determinants
of customer service levels.

3.4.4. Transportation Decisions:

The mode choice aspect of these decisions is the more strategic
ones. These are closely linked to the inventory decisions, since the best
choice of mode is often found by trading off the cost of using the
particular mode of transport with the indirect cost of inventory
associated with that mode.

3.5. INVENTORY MANAGEMENT

Management of inventory has received considerable attention
over the years. Managers ascribe different reasons for holding or not
holding inventory. Some of the major reasons for holding inventory are:
 To improve customer service.
 To hedge against price changes and contingencies.
 To achieve production, purchase and transportation economies.
 To protect demand and lead time uncertainties.

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4.1 PROBLEM STATEMENT

What is the role of supply chain management in cement industry?

4.2 OBJECTIVES
 To understand the entire network of supply chain and the decision
making process.
 To measure the role of technology and its impact on the players
involved in supply chain.
 To understand the different processes involved in manufacturing
and assembly.
 To analyze the vendor management as the important aspect of
SCM.
 To study and analyze the methodology adopted by ULTRATECH
CEMENT LTD.,GUJARAT CEMENT WORKS for inventory
control.
 The difficulties if any, which were faced while implementing
different inventory techniques.

4.3 RESEARCH METHODOLOGY

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Exploratory research and Descriptive research. And I have taken

permission from authorities of ULTRATECH CEMENT LIMITED to
carry out my study on “pareto analysis for inventory consumption in
ULTRATECH CEMENT LIMITED for the year 2009-10”.

I had studied the consumption of various inventories and arrange

them in descending order of their consumption value. Categorize the
inventories in A, B, and C category depending on the fact that they
constitute 90%, 70-90%, or 10-15% of the total consumption value. For
this I had gone through different types of inventories used in
ULTRATECH CEMENT LIMITED.

I also studied the methodology adopted by ULTRATECH

CEMENT LIMITED for implementation of inventory control and
progress made in this condition.

4.4 DATA COLLECTION

Sources of data collection
Primary Data
 Through interviews
 Through observations
Secondary data
 Internet
 Magazines
 Newspaper

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5.7.2 INTRODUCTION TO MARKETING

FUNCTION & ITS ROLES

Marketing is very vital function in any organization. To get high

position in market and advantage over competitors, every company has
to handle its marketing function very carefully. As the whole world is
turning into a global market, marketing function is getting more &
more importance in every company. The term marketing is taking new
shape in changing world. Now just mere selling the product by
advertising is not only a function of marketing but it has to be more
customers oriented. Now a day if company produces the products
according to the needs of the consumer then it can easily sell its
products.

Marketing is a social and managerial process by which individuals and

groups obtain what they need and want by way of exchanging things for
mutual benefits.

Marketing means managing markets to bring about exchange and

rotation ship for the purpose of creating value and satisfying needs and
wants. In simple words, marketing means ‘exchange process involves
works’. Seller must search for buyer, identify their needs, design good
product and service, set price, promote them, store and deliver them.
Activities such as Product development, Research, Communication,
Distribution, Pricing and after sales Services are included in marketing.

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Following figure show marketing environment.

Company
Marketing
Intermediaries End user
Supplier
Market
Competitors

Ultra Tech Cement is marketing its cement in domestic market as well

as in export market. Company is the second largest seller in
domestic market. Company achieved 24% market share. The
company is largest exporter of cement and clinker in India,
with remarkable 2.41 MT of cement and clinker export. The
company’s cement and clinker has good brand image in
Western Europe, Middle East and neighboring countries.
Ultra Tech is also known as Indian cement giant. Company
has obtained accreditation from Bureau varieties quality
international Espanasa, Spain which is a perquisites for
supply of cement to Europe. Ultra Tech is one of the Asian
cement Companies to receive this recognition.

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5 P’s for Ultratech Cement ltd.

PRODUCT

Ultra Tech Cement Ltd. has two products

1. Cement
2. Clinker

Company markets both cement and clinker in domestic market as well

as foreign countries also.

PRICE

Company has their own price policy for the Cement and Clinker.
Right now price of one bag of cement is 149 Rs.

PLACE

Company has wide distribution channel network in state and

within the country. Company has also the dealers outside the country
for export market.

PROMOTION

Company is using various promotional methods for

enhancing its sales and market share. The company is using
various elements of promotion mix like Advertising, Direct

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Selling very effectively. This company has a good advantage

of mouth publicity by the consumers due to top quality
production with good brand equity.

PRICE MIX
Price is the amount of money the consumer has to pay to obtain
the product. Price policy is an important tool for marketing the product.
Cement price depends upon various components like current market,
environment condition, competitor price, company’s objective and cost
of production.
Ultra Tech cement’s prices are considered as premium prices,
based on the good reputation. Company sets its own price and other
players follow.

Market share of company

COMPANY NAME PERCENTAGE

24 %
ULTRA TECH
AMBUJA 24 %
HATHI 19 %
BINANI 12 %
KAMAL 10 %
SIDDHI 03 %
TATA 04 %
04 %
OTHERS

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In Gujarat, Ultra Tech and Ambuja both secure 24% of total market i.e.
almost half of whole market. Therefore, Ultra Tech and Ambuja both
are at a first position in Gujarat.

Branding and labeling

Company has its own brand as Ultra Tech. Labeling on the

cement bags are also as Ultra Tech. Company uses plastic and paper
bags for packing cement. The Metro office purchases these bags. The
Metro office also does labeling. Then from the Metro office, only these
bags are provided to all plants of Ultra Tech.

After branding and labeling the product is delivered to the dealers and
through them it reaches to the target audience. Above whole description
shows the supply chain of the Ultratech Cement Ltd.

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6.1. FACILITY AND LOCATION

 Location is decided on the bases of how dispersed the processing
partners, Raw Material suppliers and consumers are.

 Decentralized locations focusing on suppliers and customers.

 Optimal capacity utilization by manufactures to serve expected

forecasted demand.

6.2. PROCESS
 Operational designs to make finished product.

 At every phase of manufacturing, the wastage is very low.

 Functional focused operational designs- single function for

multiple products.

e.g. Packaging of utensils.

6.3. INVENTORY MANAGEMENT

Inventory management, or inventory control, is an attempt to balance

inventory needs and requirements with the need to minimize costs
resulting from obtaining and holding inventory. There are several
schools of thought that view inventory and its function differently. These

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will be addressed later, but first we present a foundation to facilitate the

reader's understanding of inventory and its function.

WHAT IS INVENTORY?

Inventory is a quantity or store of goods that is held for some purpose or

use (the term may also be used as a verb, meaning to take inventory or
to count all goods held in inventory). Inventory may be kept "in-house,"
meaning on the premises or nearby for immediate use; or it may be held
in a distant warehouse or distribution center for future use. With the
exception of firms utilizing just-in-time methods, more often than not,
the term "inventory" implies a stored quantity of goods that exceeds
what is needed for the firm to function at the current time (e.g., within
the next few hours).

The objectives of Inventory Management are:

 To identify and track all data processing assets in an Inventory System

Repository.

 To define the process by which assets are identified and maintained in the
Inventory System.
 To provide Inventory System access to all necessary personnel (data
entry, update and deletion).
 To provide a full range of reports that will satisfy informational
requirements.
 To document the Inventory Management System within the Standards
and Procedures Manual.
 To provide training to personnel responsible for supporting the Inventory
Management

In this age of cut throat competition material and Inventory control in

practical is seen as as a green pasture where cost reduction can
production an edge to any company I n competing with its rivals.

The materials executive handles a large number of items in actual

practice, In any

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Organization. For example a cement industry has over 40,000 items

consisting of spares,
Refectories, consumables, components, chemicals, stationary& other
items, where as the defense services deal in millions of items.

The importance of each item is a major parameter while deciding about

its inventory quantity. Some of these items may be very critical or
difficult to purchase or may have to be imported while other items may
be easily or off the shelf available. Even in every day life we see that
housewifes does not pay the same attention to salt as she pays to oil or
butter.

Moreover as the number of items increases,the effective time spent on

each item diminishes. To overcome this deficiency we adopt selective
techniques to improve the overall effectiveness of inventory control
function.

The fundamental idea behind selective control techniques is to put the

efforts where the results are worth it. It is wellknown that even though
world consists of millions of people,
But only a few of them deter mines the destiny of all human being.
Similarili even if any organization uses millions of item, only a few
become important from the finance view,
Availability considerations, reasonability, criticality of performance
etc…

In the literature of materials management many methods of selective

inventory control are available at the disposal of inventory controller i.e.
ABC analysis, HML analysis, VED analysis, SDE/SOS/GOLF analysis,
XYZ analysis. All of these are explained as follows:

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INVENTORY CONTROL TECHNIQUE AT ULTRATECH

CEMENT LTD.: MUSIC 3-D TECHNIQUE

Traditional ABC classification and control of inventorybased on

formulae is inadequate for spares, as regular consumption pattern for
spares is generally not available. It also does not emphasizes on critical
items, whose non availability may cause production loss, significant
energy loss or cause unsafe working condition. So need of system which
can take care of all these factors was felt. MUSIC-3D inventory control
methods can take care of all these aspects.

Three dimensions which are taken care simultaneously by classifying

the items for inventory control in MUSIC-3D method are:

Cost

Criticality

Availability.

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If we adopt three level for each criteria such as ABC, SDE, VDE then 27
groups would be formed. It becomes difficult job in practice to follow up
27 groups. Hence two levels for each criteria can be developed using 80-
20 rule i.e. low /high consumption value, critical/non-critical items,
long/short lead time item. This integrated approach resulting in eight
groups is called MUSIC-3D as shown in table:

The categorization to start may be arbitrary based on technical

competence, knowledge and skill. These classifications should be
reviewed periodically at least once in a year. It may be ideal to carry out
this analysis separately for each class of items i.e. raw materials, spares,
etc.

This approach has a simple method of fixing ideal stock levels for items
as under:

IDEAL STOCK LEVEL=K x (LEAD TIME CONSUMPTION)

Ideal stock can be defined as the apparent optimum inventory we have

to keep to meet production requirements to maintain optimum levels.

Ideal inventory=1+k x (LTC)

Minimum inventory=ideal – (LTC/2)

Maximum inventory=ideal + (LTC/2)

Here K is a safety factor varying between 0.5-3.0 which is assigned to

each group based on its criticality, consumption value and lead time.

In order to optimize the inventory, the key action areas are:

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1. LEAD TIME: Internal lead time should be carefully examined,

monitored and reviewed periodically and controls exercised.
Attempt should also be made to reduce the external lead time,
there by reducing the total lead time.

2. STORES AND SPARES: Items should be classified as per

definition into following categories:

a) Insurance

b) Critical

c) Non critical

3. Strict control on consumption norms for high consumption value

items should be exercised.

4. For optimizing inventory other control measures and action plan

are given

So the traditional ABC analysis discusses only the consumption value

without considering the criticality or availability and failed to help
inventory controller, where as MUSIC-3D, which considers all the three
aspects i.e. Criticality, Lead time and Consumption value has been of
immense help to inventory controller. Some of the advantages of
MUSIC-3D are as follows:

1. This system incorporates all features of selective inventory control

methods and divides all items in manageable eight groups.

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2. It provides scientific and logical basis for fixing inventory levels.

It is helpful to inventory controller in following areas of
operations:-

a) Setting effective follow up and chasing system.

b) Deciding tighter procedure and systems.

c) Deciding safety stock and average inventory.

d) Delegation of power.

e) Designing proper MIS and purchase intelligence system.

f) Posting in clerical efforts.

g) Vendor development and vendor rating.

h) Central purchase and central stores.

So this system can provide proper guidelines and way to design effective
inventory control management to inventory controller.

Problems faced and their solutions:-

During the course of implementation of different methods for materials

management, management of ULTRATECH CEMENT LIMITED
noticed many problems but these are solved with joint efforts. Some of
the problems are:-

Long and time consuming exercise:

Categorization of 18000 items was a very long exercise and too when no.
of departments involved were numerous. This problem complicated
further more due to incomplete and ambiguous description of items.
Codification of materials was not equipment based. Hence to identify
place of use of any item itself was very difficult. After proper
identification of spares it could be categories as critical/Non critical/

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Insurance. Volume of work was very large. List of items has to take two
to three times to complete this exercise. But with lot of effort and hard
work this exercise was complete.

Difficulty in categorization of items:-

Categorization of the items into one of the category was very difficult
task because definition was very subjective and opinion may differ
between one to other person. No one wanted to take risk in declaring
any item as non critical because wrong categorization could lead to
stock out of that item and can cause stoppage of plant and production
losses. Difficulty was also experienced due to incomplete description and
lack of information about place of use. But dedicated efforts of user
department made this exercise success. Continuous review of flags was
also decided.

Difficulty in calculation of lead time and lead time

consumption:-

It was very difficult job to provide lead time to about 18000 items.
Database was also not having authenticity of correct indent date.GRN
with the help of which actual past lead time could be calculated. It was
very difficult to calculate lead time manually from each kardex card
and that too taking care of past 2-3 years data. Further it was not made
clear in recommendation that while calculating lead time and lead time
consumption, minimum lead time is to be considered, maximum lead
time is to be considered or average lead time is to be considered.

Past data about lead time of imported items which were earlier
restricted items might have later included in OGL and lead time might
have decreased or vice versa. Due to liberalization imports become easy,
so there has been drastic cut in lead time. So estimation of correct lead
time was also difficult. Average lead time was taken to start with
continuous efforts of purchase department and EDP department helped
in completing this exercise.

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Difficulty in deciding High/Low consumption:-

At the time of introduction of MUSIC-3D many project work also in

progress, so deciding High/Low consumption value on the basis of past
consumption data could also provide misleading information. So while
deciding High/Low flag project job consumption has to be deducted
from total consumption. To solve this problem instead of using 80-20
rule through statistical analysis ULTRATECH CEMENT LTD. selected
a value limit of Rs.50.000/-on the basis of past experience to start with
consumption value flag.

System implementation

To start all item should be provided Critical/Non critical & Insurance

category flags based on the definition given afterwards

High consumption and Low consumption value flags should be decided

by applying 80-20 rule or on adhoc basis i.e. say items with annual
consumption value Rs.50,000 and above as high consumption value
items and balance items as low consumption value items. This limit can
vary according to size/ nature of operations of a unit.

By analyzing past data of lead time or on the basis of lead time provided
by the purchase department for various classes of items long lead time
or short lead time flags should be given to each item. To start with item
with lead time more than six months can be decided as long lead time
items balance items as short lead time items.

Above analysis will enable the inventory controller to identify the items
in eight groups of MUSIC-3D.

For the purpose better control and fixing responsibilities have been
classified into following categories:

a) Stores and spares- Departmental requisitioned/ indented.

b) Stores and spares- Auto indented (Controlled by Materials

Department)

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c) Insurance items.

STOCKING POLICY:

Departmental indented items:-

Stores and spares for which definite pattern of consumption can not be
established; the requisitioning/indenting may be done by user
department based on the consumption of items and stock levels.

While indenting, care should be taken to ensure that total of quantity in

stock, under purchase order indent quantity should not exceed the ideal
stock levels. Indent of these items shall be processed by inventory
control cell after interaction with users.

Ideal stock levels may be calculated with the help of following method,
which takes care of criticality, availability and consumption value.

Ideal stock level = K x (Lead Time Consumption)

“K” Factor

K is a safety factor, which is decided on the basis of eight group of items

formed by taking consumption value, criticality and lead time into
account. Proposed ‘K’ factor is available afterwards. Safety factor is
used to avoid position of stock out caused due to fluctuation in supply
and consumption.

CONSUMPTION VALUE
The High/Low consumption value can be determined on the basis of 80-
20 rule. Its accounting for about 80% of total yearly consumption,
which are about 20% of number of items can be classified as high
consumption value items and rest 80% of items accounting for 20% of
total consumption value can be termed as low consumption value items.

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This analysis should be carried out every year and classification

reviewed accordingly.

AVAILABILITY

It can be defined as High and Low on the basis of location and nature of
industry. It may also be decided by rule of thumb to start with.

CRITICALITY

It can be decided by users department by taking into considerations

parameters of definition afterwards.

INVENTORY AN OVERVIEW:-

Inventory, it’s a detailed list of those movable items which are necessary
to manufacture a product to maintain the equipment and machinery in
good working order.

Inventory is actually the money kept in the showroom in the shape of a

high speed steel bit, a mild steel rod, milling cutter etc.

TYPES OF INVENTORIES:-
RAW MATERIAL:- To hold stocks of raw materials, an organization
deploys its primary production sections or process to obtain raw
materials from manufacturers and stockists.

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WORK IN PROGRESS:- The holding of both raw materials and

stocks of finished goods is generally a planned activity. In process stocks
however, are likely to exist in any manufacturing organization, whether
they are planned for or not.

FINISHED GOODS:- The stock of finished goods provides a buffer

between customers demand and the manufacturers supplies.

FLABBY INVENTORY:- It comprises of finished goods, raw

materials and store held because of poor working capital management
and inefficient distribution.

PROFIT MAKING INVENTORY:- It represents stock of raw

materialsand finished goods held for realizing stock profits.

SAFETY INVENTORY:- It provides for failures in supplies,

unexpected spurt in demand etc. although there may be an insurance
cover.

NORMAL INVENTORY:- It is based on production plan, lead time

of supplies and economic ordering levels. Normal inventories fluctuate
primarily with change in production plan. Normal inventory also
includes a reasonable factor of safety.

EXCESSIVE INVENTORY:- Even an efficient organization may be

compelled to build up excessive inventory for reasons beyond its control

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as in the case of a strategic import or as a measure of a government

price support of a commodity.

RESEARCH FINDINGS AND SUGGESTIONS:-

1. For ‘A’ category items:-

a) The high value items or A class items are limited and few in
numbers or quantity needs careful and close control.
b) For the control to be effective for A class items, minimum
level, maximum level and reorder level are to be set.
c) For a class items, the purchase procedures and the quantity
are to be thought of well in advance and to be purchase well
in time and not only this, handling must also be carried out
properly.
d) A class items are costly and generally accounts for 70-80%
of total inventory. So they are purchased in small quantity
but often and just before their use.

2. For ‘B’ category items:-

a) ‘B’ class items are medium valued items and lie between ‘A’
and ’C’ category items. Such items needed moderate
control.
b) ‘b’ class items are purchased on the basis of past
requirements and according to the planned production
schedule.
c) ‘B’ class items are ordered whenever the quantity reaches
the re-order point.
d) ‘B’ class items are comparatively less costly than ‘A’ class
items and stock upto three months may be maintained.

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3. For ‘C’ category items :-

a) ‘C’ class items constitute major portion of the inventory in
quantity with the least value on the total inventory cost.
b) Controlling ‘c’ class items with intensive or moderate care is
uneconomical due to the percentage of total items.
c) ‘C’ class items are procured just before they are finish and
detail expediting is not necessary for them.

Control Measures:-

1. The consumption value of ‘A’ category items should be strictly

controlled by the highest level.

2. The policy for ‘A’ category items should be very low inventory
combined with frequent ordering and / or staggered deliveries
with effective follow up.

3. Norms of consumption should be tight with materials planning

formulate on an accurate and upto date information.

4. A concentrated efforts must be made to apply on various cost

reduction methods like Value engineering, Waste reduction,
Standardisation and vendor rating.

5. The number of sources must be increased with centralized

purchase and stores for ‘A’ category items.

6. Medium controlled exercised for moderate consumption value

items, very little control on low ‘C’ category items.

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SUGGESTIONS ON THE BASIS OF CASE

STUDY

By the pareto analysis of the consumption value of inventory in

ultratech cement ltd. Gujarat cement works, I concluded that 21872
major items out of 45600 items accounts for 84% of the total
consumption. So to control such a large group it is required to control
the major ‘A’ category items by improving the quality and reducing the
cost of the items. Following methods can be utilized for this purpose:-

1. Life Value Analysis : Life value analysis of critical items has a

potential to reduce consumption and turn reduction in inventory. It is a
meaning ful amalgamation of LIFE CYCLE ANALYSIS and VALUE
ANALYSIS.

a). Life Cycle analysis- it is a methodological approach to analyse

and identify the reason for failure, to take corrective measure to

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improve the life of a component defects and others reasons such as

process, lubrication etc.

b). Value analysis- It is a systematic investigation of selected

components with the goal of discovering and eliminating unnecessary
costs with out interfering with their function and reliability.
Life value analysis results in two major things:-
- Improve life of component.
- Reduce cost of component.
2. Reduction in lead time- reduction in lead time can be done by
using quickest mode of transportation for timely supply of materials.
Time to time delivery can reduce the extra blockage of inventories and
hence reduce the cost.

3. Vendor Selection and Appraisal:- In today’s competitive

environment with a customer oriented approach source development is
given highest importance for quality materials, timely procurement at
competitive prices.

4. Vendor Rating: - Periodic vendors assessment and performance

monitoring on quality and delivery so that only those vendors who meet
company’s requirements and standards constantly are retained as
vendors in approved vendor list.

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CONCLUSIONS

As we all know that all items are not of equal importance. Some of them
are more important than others. These more important items
constitutes only 20% of the total inventory and results in the 80% of the
total inventory and results in the 20% of total consumption. In this way
pareto is proved in every case same is the case in ULTRATECH
CEMENT LTD., GUJARAT CEMENT WORKS.

On the basis of pareto analysis of inventory consumables it is concluded

that near about 20% of the item is responsible for more than 80% of the
total consumption value. So pareto analysis is better proved in case of
ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS.

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The main 20% of the inventory is formed by the A and B category items
and the major consumables of these category mechanical spares, DG
Sets, Heavy earth moving m/c spares and instrumentation spares.

Inspite of good pareto curve of inventory for consumption in

ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS, it is
also concluded that there are still options of betterment in this area as
only 21872 items are responsible for 84% of the total consumption. So
these items can be further easily controlled or improved to reduce the
consumption cost.

ITEMS IN DESCENDING ORDER OF CUMULATIVE

CONSUMPTION VALUE

Dept Amount(Rs in lacs) No of items

Mech 4420.27 8491

Process 1448.06 921

Electrical 796.86 5018

Mines 611.68 3080

Instrument 476.95 1116

DG SET 105.43 539

CPP/TPP 58.5 1526

RO Plant 36.56 1181

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Total 7954.31 21872

Others 1515.11 23728

Grand total 9469.42 45600

% of total consumption 84%

TREND OF STORES & SPARES INVENTORY

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LIMITATIONS OF STUDY

 As the primary data collected through tight scheduled of

personal interview, it may happen that bias attitude of the
respondents has been entered into data collection.
 Time constraint: Many of the respondents have given same
appointment time to give response. Some of them did not
respond very well due to their busy schedule.
 Research was aimed to study the supply chain but most of the
respondents gave response related to sales and marketing. So it
was very difficult to bring them on track.

BIBLIOGRAPHY

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1. Books
 MATERIALS MANAGEMENT BY A.K.DUTTA
 SUPPLY CHAIN MANAGEMENT OF
G.K.PUBLICATIONS.
2. Websites
 WWW.GOOGLE.COM
 WWW.ADITYABIRLA.COM
 WWW.ULTRATECHCEMENT.COM

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