COLLEGE PROJECT

EXECUTIVE SUMMARY

(1) TITLE OF THE PROJECT:

“INVENTORY MANAGEMENT & CONTROL”

(2) INTRODUCTION OF THE PROJECT:

As per the rules of University of Pune each MBA student has to undergo two

months summer project in a company and needs to prepare project report of it. I have

completed my project in “INVENTORY MANAGEMENT & CONTROL” in

Fleetguard Filters Pvt. Ltd. Situated at Nandur, Pune.

The project primarily focuses on study of inventory management and control

to attain competitive advantage in global market. The topic covers one of the

important elements of the cost in any company and to control this cost, means to

achieve goals of finance i.e. Wealth Maximization and Profit Maximization.

Inventory is the basic requirement of any organization may be manufacturing

or service providing. Inventories are materials and supplies that a business or

institution carries either for sale or to provide inputs or supplies to the production

process. Financially inventories are very important to manufacturing companies. On

the balance sheet, they usually represent from 20% to 60% of total assets. As

inventories are used, their value is converted into cash, which increases operating

costs and decreases profits. Good inventory management is essential.

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Stock control, otherwise known as inventory control, is used to show how

much stock you have at any one time, and how you keep track of it. Efficient

inventory control allows you to have the right amount of stock in the right place at the

right time. It ensures that capital is not tied up unnecessarily, and protects production

if problems arise with the supply chain.

Inventory management and control is important concern to the Finance

Manager because too many finance related things are attached with inventory.

Inventory carries huge cost and if there is improper inventory management and

control in any company, the company may face huge loss in the form of cost of

capital. If a manager is able to control and manage its inventory cost directly it will

lead to proper management of money and optimum utilization of time. In simple

words we can say that proper Inventory management and control helps in effective

utilization of money, and other additional resources in each and every organization.

(3) REASON BEHIND CHOOSING THIS COMPANY AND PROJECT:

(A) COMPANY:

Manufacturing Company:

As Fleetguard Filters Pvt Ltd, Nandur is a manufacturing company, various

practical activities takes place. Therefore, there are various chances of learning

different financial activities. This company can give better practical and financial

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experience of transactions carried out from the purchasing of raw material to the

dispatch of the finished goods to the customers.

Company Profile:

As the brand gives the identity of the organization, the brand Fleetguard is

very popular in both domestic as well as international filtration markets. The brand

name itself attracts me for choosing this organization.

Huge Turnover:

The huge turnover of about Rs.2500 million itself shows that different

financial activities takes place on a large scale which can provide me to learn different

financial activities.

(B) PROJECT:

Inventory in the company involves huge cost in it. It becomes the major

activity to manage and control the inventory. Due to this reason, Inventory

Management & Control is the most suitable topic under project to be studied in

Finance.

(4) LOCATION:

Nandur:

Gat. No. 87/1 & 87/2,

Village – Nandur,

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Taluka – Daund,

District – pune 412202 (India)

(5) DURATION OF THE PROJECT:

As per the syllabus of University of Pune, it is compulsory to undergo two

months summer training project in any company. I have done project from 20th May

to 20th July.

The experience of working in Fleetguard Filters Pvt. Ltd. was really a value

addition for me. It was a great opportunity for me to work with my guide and his

colleagues. They were very helpful. They helped me in solving every problem despite

their busy schedule. With their help it was very easy for me to carry out my project

smoothly within the given span of time. As the various studies shows that 80-90% of

working capital is tied up in inventory, it is very important to utilize resource with

optimum inventory management and control.

OBJECTIVES & SCOPE

To study and understand the meaning of Inventory Management.

To know in depth the Inventory Management & Control procedure in

Fleetguard Filters Pvt. Ltd.

To study & understand different methods & procedure of inventory

management & control.

To know how to prepare the purchase order for timely delivery to the concern

party (Customers). To know the procedure of checking the bills and passing

the invoices.

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To understand process right from procurement of material to consumption of

material.

SCOPE: (A) Area of Operations:

In every department of an organization finance plays a vital role. Without

finance not a single department can function. Right from purchase of material, finance

is needed. That’s why Inventory is to be controlled and managed properly for efficient

operations of every department.

As Fleetguard Filters Pvt. Ltd. is a manufacturing unit, controlling and

managing of inventory level is important. Else the expenses will increase; wastage

will be more. It may also delay the date of commercial production of the organization.

(B) Location and area covered:

Nandur Plant:

It is situated in village Nandur, about 40 Kms. From Pune with a built-up area

of about 5000 square feet area on four acres of land and employing about 100 people

in various departments. Manufacturing of Air and Spin on Filters is carried out in this

plant.

COMPANY PROFILE

(1) NAME OF THE COMPANY:

FLEETGUARD FILTERS PVT. LTD.

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(2) (A) LOGO:

(B) SLOGAN:

ULTIMATE PROTECTION : INCREASES ENGINE LIFE

(C) MISSION STATEMENT:

“Fleetguard is not in the business of manufacturing filters. It is in the business of

helping diesel engine manufacturers to build improved reliability and longer life into

their engines / equipments, leading to better vehicle / equipment performance

throughout its intended product life cycle.”

(D) VISION:

“To be a World Class Filter Company known for caring and delighting the customers

with high quality products and innovative services across domestic and international

markets with aggressive growth and delivering superior financial performance. The

company will be a mode of excellence in meeting social commitment, environment,

health and safety norms and in employee welfare and relations.”

ORGANISATION STRUCTURE:

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Products:

Air Intake System

Air Cleaner Assemblies

Air Filters – Primary & Safety

Lube Oil Filters – SpinOn and Cartridge

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Executive ChairmanS. S. Pandit

Managing DirectorNiranjan Kirloskar

Head MarketingT. H. Dham

Chief Operating OfficerV. Y. Gokhale

Chief Finance OfficerS. K. Kulkarni

Head QualityP. K. Mahapatra

Brand ManagerSumit Sharma

Head Engineering A. G. Khandkar

Head DevelopmentP. P. Deshpande

Head R&DBiju John

Head Production, MCD& HR

S. G. Devkar

By-pass Filters for Lube Filtration

Fuel Filters – SpinOn and Cartridge

Fuel Water Separators

Combo Filters

Hydraulic Filters

Fuel Strainers

Filtration Accessories

Coolant Filters: Water Filters

Coolants

Design Services

VOLVO FILTER:

TATA FILTER:

INDICA AIR FILTER:

CDSS:

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AIR FILTER 4980:

FUEL FILTER 5522:

AIR FILTER 25200:

FUEL SEPERATOR FILTER:

FUEL FILTER 5074:

Fleetguard is worldwide leader in the manufacture of filtration products and

systems supplying over 1000 original equipment manufacturers, dealers/distributor

networks and end users around the world from production and service facilities in

North America, South America, Europe, Australia and Asia.

The Fleetguard product line has expanded to include a technologically

advanced range of air, lube, fuel, hydraulic, and coolant filter elements plus a full

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class of cold weather products, service tools, cooling system chemistry and fluid

analysis programmes.

Fleetguard filters are the genuine filters for Cummins engines and many other

heavy equipment brands. It is the quality that makes Fleetguard filters be used as

replacement parts for almost every make of heavy equipments.

Fleetguard is the number one supplier of Original Equipment filtration

worldwide. Intact, it is the first fit supplier to some 140 different engine and

Equipment manufacturers. Leading names like Cummins, DAF, Scania, VCE, MAN,

John Deere, Komatsu, Kubota and many others. And because Fleetguard works so

closely with the engine designers Fleetguard people understand (more than any other

filter manufacturer) the importance of leading edge filtration technology. Fleetguard

believes in investing in Research and Development and Laboratory testing to meet

international standards

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Fleet Guard FF105 Fuel Filter vs Fram P3528

- More adhesive on the element for better sealing

- No spring to hold element in place, just metal spacer

- Fleet Guards filter holds twice the dirt due to more advanced filter material.

Fleetguard LF3316 v/s Case HA 184775:

- Both strikingly similar filters

- Rust Free Can

- Anti-drain back valve with good rubber gives a better seal.

Fleetguard LF3316 v/s WIX 51784

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- Rubber valve does not fit tightly, paper disc used to makeup for bad fit.

- Less plastisol and no polyester in filter, easy to tear.

Fleetguard Filters has the distinction of being India’s first ISO/TS 16949:2002

certified Filter Company. Our Test Laboratory has become one of the 1st engine filters

testing facility to receive patented 2 filtration media worldwide.

Our range of products include Air, Lube, Fuel, Hydraulic Filters, Air

Housings, Diesel Coolant Additives, Fuel Water Separators of Cartridge and Spin-on

varieties for Automotive, heavy-duty and high-pressure Hydraulic Applications.

Fleetguard, USA is the leader in heavy-duty filtration and Fleetguard, India

has an on-going technical and financial collaboration with Fleetguard Inc, USA for

the manufacture of filtration products.

Air Intake Systems:

Air Filters:

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Similarly, air filtration is important to prevent dirt particles from reaching your

engine and causing abnormal wear and downtime. The current oil bath type air

cleaners are 85% efficient in screening out harmful dirt particles; the new dry tape air

filters are 99.9% efficient in capturing harmful dirt particles. The chart below

demonstrates the improved filtration possible from the new (post 1979) dry air filters.

The wear factor with an oil bath air cleaner was better than pre-1979 dry air

filters. However, the new filter media have dramatically improved the ability of dry

type air filters to capture dirt particles; the new air filters provide three times more

protection than oil bath air cleaners.

Air Housing - SpinOn and Cartridge:

Coolants:

One third of the heat generated by the diesel engine is released through the

engine cooling system. It is estimated that 40% of all engine problems originate in the

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cooling system. The resulting “hot spots” cause ring wear, which will result in high

oil consumption and other problems as noted above.

Fuel Filters - SpinOn and Cartridge:

In fuel systems, the dirt particles will have serious impact on the functioning of

the fuel pump and injectors. Again, for fuel pump and fuel system reliability and

durability, high quality filtration must be used to eliminate the abrasive dirt particles

from the fuel system to insure consistent and reliable operation of the fuel system and

consequently, insure engine reliability and durability.

Lube Filters:

Laboratory testing has demonstrated that engine ring wear is directly related to

the size and amount of abrasive particles in the lubrication oil.

MAJOR COMPETITORS:

MAHALEY

BOSCH

MICO

BRANCHES & OFFICES:

CORPORATE OFFICE:

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‘Kirloskar House’, 100 Anand Park,

Aundh, Pune 411007 (India)

OTHER LOCATIONS:

NANDUR:

Gat. No. 87/1 & 87/2,

Village – Nandur,

Taluka – Daund,

District – pune 412202 (India)

HINJAWADI:

Gat. No. 132/2/3,

Village – Hinjawadi,

Taluka – Mulshi,

District – Pune 411024 (India)

HOSUR:

Plot No. 82,

Mornapalli village, SIPCOT,

Phase-II, Hosur 635109 (Tamilnadu)

JAMSHEDPUR:

Plot – A-3, A-4,

Near Adityapur Industrial Estate,

Village – Asanig,

District – Saraikela – Kharsawan; Adityapur, Jamshedpur

HISTORICAL DEVELOPMENT :

Fleetguard Filters Pvt. Ltd. is established in 1987. Fleetguard Filters is India’s

leading manufacturer of heavy-duty air, fuel, lube and hydraulic filters and coolants

for on and off highway applications. It is a part of the renowned Fleetguard group,

which is a Cummins group company worldwide. Fleetguard Filters Pvt. Ltd. has the

distinction of being India’s first ISO/TS 16949:2002 certified Filter Company.

Recently, Fleetguard’s filter performance testing lab bagged the ISO/IEC 17025

accreditation from the National Accreditation Board for Testing and Calibration

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Laboratories (NABL), New Delhi. In doing so, Fleetguard Test Laboratory became

one of the first engine filters testing facility to receive ISO/IEC 17025 accreditation in

India. Fleetguard worldwide has to its credit over 175 OEM products and patented 2

filtration media.

This is the certificate of Accreditation issued by National Accreditation Board

for Testing and Calibration Laboratories to Fleetguard Filters Pvt. Ltd. Nandur, Pune,

in field of Mechanical Testing.

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This is the certificate of ISO 9001:2000 issued to Fleetguard Filters Pvt. Ltd.

for achieving the status of being first filter company.

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LANDMARKS OF FLEETGUARD:

In Fleetguard Filters Pvt. Ltd. there are various landmarks. They add glory to

that company on which they can proud. Some of big landmarks are mentioned here.

JUNE 1992 – Commenced manufacturing of filters.

MAY 1993 – Achieved the status of being the first filter company to be

awarded as ISO 9002 certificate.

AUGUST 1994 – Achieved ‘Single Source’ status in Cummins India Ltd. for

its entire range of Filtration products (Total filters supplied so far – 3 million

nos.

FEBRUARY 1995 – Achieved ‘Single Source’ status in TATA Cummins for

its entire range of filtration products.

SEPTEMBER 1996 – Commenced export to Fleetguard USA.

MAY 1997 – Became the first filter company to achieve QS 9000 certification

NOVEMBER 1998 – Commenced export to insure Japan.

FEBRUARY 1999 – Became ‘Single Source’ to Ingersoll-Rand India for its

entire range of filtration products.

JANUARY 2000 – Became a ‘Single Source’ to Ashok Leyland for range of

vehicles and export vehicles for filtration products.

JANUARY 2000 – Became ‘Single Source’ to Larsen & Turbo, John Deere

for supply of oil filters and screen suction filter for 55 hp tractors.

FEBRUARY 2000 – Became ‘Single Source’ to New Holland for supply of

wet type of air cleaners for 55 hp tractors.

DECEMBER 2000 – Total air intake system for Ashok Leyland.

MARCH 2006 – Got second ranking in the world in COS audit.

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AHCHIEVEMENTS:

Fleetguard Filters Pvt. Ltd. is one of the leading process industries in India.

Located factories in and around Pune. Initially the name of the company was

“Fleetguard Filtration System India Pvt. Ltd.” which was changed to “Fleetguard

Filters Ltd. “on 18th July 1997. It was later changed to “Fleetguard Filters Pvt. Ltd.”

on 6th August 2001.

It has a technical and financial collaboration with Fleetguard Inc. USA. It is

one of the group companies of Cummins in India.

US$ 1 Billion Company, Fleetguard Inc. has the unique advantage of being

world’s largest independent diesel engine manufacturer. (Cummins Inc. USA)

With 23 production facilities in 10 countries, Fleetguard designs

manufacturers and markets over 7000 Filtration and 3500 Exhaust products in more

than 150 countries.

Fleetguard Filters Pvt. Ltd. has its branches at Nandur, Wadki and Hinjawadi

near Pune. Fleetguard Filters Pvt. Ltd. commenced manufacturing of filters in the year

1992 and achieved the status of being the first filter company in India to be awarded

ISO 9002 certification.

In the year 1997 it became the first filter company in India to achieve QS 9000

certification. It is one of the largest manufacturers of filtration products for

automotive industry in India. It has rich experience of working in high tech diesel

engine environment. It has world-class manufacturing and quality systems in place. It

has a backward integration into media (pleated paper) and component.

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Fleetguard Filters Pvt. Ltd. (FFPL) commenced operations in June 1992 from

a filter manufacturing facility in Pune, a large industrial metropolis in western India.

Today FFPL has 5 manufacturing facilities, 250 employees & 150 Dealers and

supplies Filters, Filtration Systems & Coolants to almost every major Engine and

Equipment manufacturer.

To ensure built-in quality in its products, FFPL has invested in backward

integration into several critical areas - setting up its own manufacturing facilities for

Media (Paper), Sheet Metal, Tools & Dies, Rubber Components, Coolant blending &

Adhesives.

MANUFACTURE USING STATE-OF-THE-ART TECHNOLOGIES:

Fleetguard Filters Pvt. Ltd. is a medium scale industry set up for the

manufacture of filters and filter related products. The company offers superior filter

technology products and services, with a range of world-class Air, Lube, Fuel and

Hydraulic filters for both on and off highway applications. As the Indian associate of

the world’s leading heavy-duty filter company.

Fleetguard USA, Fleetguard Filters Pvt. Ltd. is backed by an International

tradition of innovation in filtration technology and media. As well as a presence in

leading global markets with more than 4000 products. Fleetguard Filters are designed

keeping in mind the end customer i.e. the fleet-owner, the single truck-owner or the

tractor owner.

HUGE TURNOVER:

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2003-04 2004-05 2005-06 2006-07 2007-080

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

Turnover

PROFIT:

2003-04 2004-05 2005-06 2006-07 2007-080

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

Profit

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BUILDING PHOTOGRAPHS:

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PROJECTION WELDING MACHINE

PLATES ARE KEPT OVER THE

COVER

ELEMENTIS KEPT OVER THE PLATE

SPRING IS KEPT OVER THE ELEMENT

THEN BOWL IS KEPT OVER IT

SEAMING MACHINE

PAINTING MACHINE

THEN IT COOLS IN THE CONVER

IT ROTATES THE FILTER

AND SEALS IT

SCREEN PAINTING MACHINE

LEAK TEST MACHINE

PAD PRINTING MACHINE

Flow of Automatic Assembly Line @FFPL

TOP CUSTOMERS:

Atlas Copco

Ashok Leyland

Cummins India Limited

Fleetguard – USA

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IT PRINTS THE NAME OF THE CO. OVER THE

FILTER

TESTS THE LEAKAGE IN THE FILTER

GASKET FIXING MACHINE

RUBBER FITTER

LENSER & FACER REJECTS THE

DEFECTIVE PIECE

MANUAL PACKAGING IN

POLYTHENE SINGLE CARTON MACHINE

MASTER CARTON MACHINE

Hindustan Power Plus

Hydroline Product

Ingersoll Rand

ISUZU – Japan

Kohler Power System

L&T John Deere

Mahindra & Mahindra

New Holland

Onan Corporation

Open Market

Tata Cummins Limited

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Telco

Volvo India

Godrej Industries

Eicher Motors

Kirloskar Oil Engine

FOUR PILLARS OF ORGANIZATION STRUCTURE:

FOUR PILLARS OF ORGANIZATION STRUCTURE

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BUILD

PRODUCTION

MAINTENANCE

MATERIALS

LOGISTICS

CAPITALISE

DOMESTICMARKETING

INTERNATIONALMARKETING

SUSTAIN

SYSTEMS

HUMANRESOURCE

ACOUNTS

NEW PROJECTS

NEW PRODUCT

DEVELOPMENT

TECHNICAL MARKETING

DESIGN

R&D

DEVELOPMENT

GROUP COMPANIES:

1. FILTRUM TOOLS & COMPONENTS PVT. LTD.- HINJAWADI

CHINCHWAD

NANDUR

2. FILTRUM POLYMER: - HINJAWADI

3. FILRUM PRODUCTS WADKI

NASIK

4. FSSPL WADKI

5. FFTPL SAHAJPUR

CURRENT SCENARIO OF THE COMPANY:

Currently a Rs. 120 cr. Company, Fleetguard has continually delivered

filtration solutions, which has been appreciated by the industry for their Quality,

Performance and Durability. A testimony to this fact is that all Cummins make

engines worldwide have only Fleetguard Filters as original fits on them. In India too,

Fleetguard has maintained this distinction and has even extended it to all TATA

Cummins engines. TATA Cummins Ltd. has certified Fleetguard Filters Ltd. as the

only OE (original equipment) approved and first fit filters on all TATA Cummins

Engines.

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Today, Fleetguard is an OEM (original equipment manufacturer) supplier to

reknowned automotive, engine and compressor manufacturers like Ashok Leyland,

Atlas Copco, Cummins, Eicher Motors, TATA Cummins, TATA Motors, Ingersoll

Rand India, etc.

Fleetguard has its manufacturing and assembly set-ups at multiple locations

near Pune at Nandur, Wadki and Hinjewadi. With an objective of being close to its

customers. Fleetguard has also set up a manufacturing plant at Jamshedpur and one at

Hosur, which will be operational from July 2005.

Fleetguard India and Hollingsworth & Vose & Co., Germany have come

together in a 50:50 joint venture to manufacture filter paper, which is the heart of a

filter, through a new company called filtration technologies India Pvt. Ltd. the

manufacturing plant of this joint venture, located at Nandur, near Pune, was

inaugurated recently by Jurgen Binzer, vice president of H&V the chief guest of the

function was Rick mills, president of USA. Fleetguard Filters is a Rs. 54 crore Pune

based manufacturer of filters for diesel engines and it supplies its filters to clients like

Cummins, Telco, Ashok Leyland and L&T Fleetguard’ USA is a world leader in the

manufacture of engine filters.

While, Fleetguard India is a joint venture between Fleetguard USA and perfect

sealing systems. Fleetguard Filters is perhaps only the third company in the world to

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have its own paper manufacturing plant says S.S. Pandit, Chairman of filtration

technologies and Fleetguard filters, “earlier we had to depend on whatever standard

filter that were available in the market and we used to import 90% of our

requirements from Europe but now we can develop special grades of paper, which are

custom made for our clients and therefore offer them better quality, that’s not all –

this would also reduce our cost by at least 10%. Filtration technologies are planning to

not only develop special grade filter paper for Fleetguard India but also for Fleetguard

factories around the world including the USA, Australia, China and Latin America.

THEORETICAL BACKGROUND

“INVENTORY MANAGEMENT & CONTROL”

Inventories contribute most significant part of current assets of a large

majority of companies in India. On an average inventories are approximately 60% of

total current assets in public limited companies in India. It is therefore absolutely

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imperative to manage inventories efficiently and effectively in order to avoid

unnecessary investment. It is possible for companies to reduce its level of inventories

to a considerable degree, e.g., 10 to 20 percent, without any adverse effect on

production and sales, by using simple inventory planning and control techniques. The

reduction in ‘excessive’ inventory carries favorable impact on company’s

profitability.

TYPES OF INVENTORIES:

1.Raw materials: Raw materials are those basic inputs that are converted into

finished product through the manufacturing process. Raw material inventories

are those units, which have purchased and stored for future production.

2.Work in Progress: Work in progress inventories are semi-manufactured

products. They represent products that need more work before they become

finished product for sale.

3.Finished goods: Finished goods inventories are those completely

manufactured products, which are ready for sale. Stocks of raw materials and

work in progress facilitate production, while stock of finished goods is

required for smooth marketing operations. Thus, inventories serve as a link

between the production and consumption of goods.

4.Lot-Size: This inventory is to take advantage of quantity discounts, to reduce

shipping, clerical and setup costs, and in cases where it is impossible to make

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or purchase items at the same rate they will be used or sold. Lot-size inventory

is sometimes called cycle stock. It is the portion of inventory that depletes

gradually as customers orders come in and is replenished cyclically when

supplier’s orders are received.

5.In-transit: Transportation inventories exist because of the time needed to

move goods from one location to another such as from a plant to a distribution

center or a customer. They are sometimes called pipeline or movement

inventories. The average amount of inventory in transit is

I = tA / 365

where ‘I’ is the average annual inventory in transit‘t’ is transit time in

days, and ‘A’ is annual demand.

Need to hold Inventories:

The question of managing inventories arises only when the company holds

inventory. Maintaining inventories involves tying up of company’s funds and

incurrence of storage and handling costs. If it is expensive to maintain inventories,

why do companies hold inventories? There are three general motives of holding

inventories.

Transaction Motive: It emphasizes need to maintain inventories and facilitates

smooth production and sales operations.

Precautionary Motive: It necessitates holding of inventories to guard against the risk

of unpredictable changes in demand and supply forces and other factors.

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Speculative Motive: It influences the decision to increase or reduce inventory levels

to take advantage of price fluctuations.

A company should maintain adequate stock of material for a continuous

supply to the factory for an uninterrupted production. It is not possible for a company

to procure raw material whenever it is needed. A time lag exists between demand for

material and supply. Also their exists uncertainty in processing raw material may be

delayed because of such factors as strike, transport disruption or short supply

therefore the firm should maintain sufficient stock of raw materials at a given time to

streamline production. Other factors, which may necessitate purchasing and holding

of raw material inventories, are quantity discounts and anticipate price increase. The

firm may purchase large quantity of raw materials than needed for the desired

production and sales levels to obtain quantity discounted or bulk purchasing.

Work in process inventory builds up because of production cycle.

Production cycle is the time span between introduction of raw material in to

production and emergence of finished product at the completion of production cycle.

Till production cycle completes stock of work in process has to be maintained.

Efficient firms constantly try to make production cycle smaller by improving their

production technique.

Stock of finished goods has to be held because of production and sales are not

instantaneous. A firm cannot produce immediately when customer demands goods.

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Stock of finished goods has to be maintained for sudden demands from customers in

case the sales are seasonal in nature; substantial finished goods inventories should be

kept to meet the peak demand. Failure of supply of products to customers when

demands would mean loss of the firm’s sale to competitors. The level of finished

good inventories would depend on the coordination between sales and production as

well as production time.

OBJECTIVES:

In the context of inventory management, the firm is faced with the problem of

meeting two conflicting needs:

To maintain a large size of inventory for efficient and smooth production and

sales activity.

To maintain a minimum investment in inventories to maximize profitability.

These are the two danger point with in which the firm should operate. The

objective of inventory management should be to determine and maintain optimum

level of inventory investment. The optimum level of inventory will lie between the

two danger points of excessive and inadequate inventories.

Each and every firm may face the situation of over-investment or under-

investment in inventories. The major dangers of over-investment are as follows:

Unnecessary tie-up of the funds

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Excessive carrying costs

Risk of liquidity

The excessive level of inventories consumes funds of the firm, which cannot

be used for any other purpose, and thus, it involves an opportunity cost. The carrying

cost, such as the cost of storage, handling, insurance, recording and inspection, also

increases in proportion to the volume of the inventory. Excessive inventories carried

for long period increase chances of loss of liquidity. There are exceptional

circumstances where it may pay to the company to hold the stocks of raw materials.

This is possible under the condition of inflation and scarcity. Another danger of

carrying excessive inventory is the physical deterioration of inventories in storage. In

case of certain goods or raw materials deterioration occurs with the passage of time,

or it may be due to mishandling and improper storage facilities. These factors are

within the control of management; unnecessary investment in inventories can, thus be

cut down.

Maintaining an inadequate level of inventories is also dangerous. The

consequences of under-investment inventories are as follows:

Production hold ups

Failure to meet delivery commitments

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Inadequate raw material and work in progress inventories will result in

frequent production interruptions. Similarly, if finished goods inventories are not

sufficient to meet the demand of customers regularly, they may shift to competitors,

which will amount to permanent loss to the firm.

The aim of inventory management, thus, should be avoiding excessive and

inadequate levels of inventories and to maintain sufficient inventory for the smooth

production and sales operations. Efforts to be made to place an order at the right time

with the right source to acquire the right quantity at the right price and quality. An

effective inventory should

Ensure a continuous supply of raw material to facilitate uninterrupted

production.

Maintain sufficient finished goods inventory for smooth sales operation, and

efficient customer service.

Minimize carrying cost and time

Control investment in inventories and keep it at optimum level.

The Materials manager has to carry out material requirement planning in

liaison with production and marketing departments. The procurement of inventory

must be programmed to match with the production schedule. Selecting and

developing right kind of source, placing perfect purchase orders .the incoming

material has to be properly received, checked and then inspected for quality. Planning

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of safe and efficient transportation of all types of inventory as well as outwards at

lowest possible rates.

FUNCTIONS OF INVENTORY MANAGEMENT:

The Inventory Management encompasses the following functions;

Material planning

Purchasing

Inventory control

Store keeping

Waste management

Cost reduction

Quality control, etc.

The materials executive handles a large no. of items in actual practice, in any

organization. Some of these items may be very critical or difficult to procure or may

have to be imported, while others are easily available. Moreover, as the no. of items

increases, the effective time spent on each diminishes. To overcome this defect, we

adopt selective control techniques to improve the purchase efficiency. The

fundamental idea behind selective control technique is to put the efforts where the

results are worth it. A firm needs a materials control system to effectively manage its

materials. Following are the several classification based Material Management and

Control techniques;

36

INVENTORY CONTROL TECHNIQUES:

\

37

ABC

Analysis

Usage Value (i.e. consumption per period x price per unit)

HML(High-Medium-Low)

Analysis

VED(Vital-Essential-

Desirable)Analysis

SDE(Scarce-Difficult-

Easy)Analysis

FSN (Fast-Slow-Non-

moving)Analysis

SOS(Seasonal-Off

Seasonal)Analysis

GOLF(Govn.-Ordinary-

Local-Foreign)Analysis

Unit price (i.e. it does not take consumption in to account)

Critically of the item (i.e. loss of production)

Procurement difficulties

Source of procurement

Seasonality

Issues from stores

ABC ANALYSIS:

ABC Analysis:

Large numbers of firm have to maintain several types of materials. The firm

should pay maximum attention to those items whose value is the highest. The firm

should be selective in its approach to control investment in various types of

inventories. This analytical approach is called the ABC Analysis and tends to measure

the significance of each item of inventories in terms of its value. The high-value items

are classified as ‘A items’ and would be under tightest control. ‘C items’ represent

relatively least value and would be under simple control. ‘B items’ fall in between

these two categories and require reasonable attention of management.

The following steps are involved in implementing the ABC Analysis;

Classify the items, determining the expected use in units and the price per unit

for each item.

Determine the total value of each item by multiplying the expected units by its

unit’s price.

Rank the items in accordance with the total value, giving first rank to the item

with highest total value.

38

XYZAnalysis Inventory investment

Compute the ratios (percentage) of number of units of each item to total units

of all items and the ratio of total value of each item to total value of all items.

Combine items on the basis of their relative value to form three categories –

A, B and C.

HML Analysis:

In this items are classified based on the unit value of the item. The limitations on

value are laid down by the management. Say items costingRs.10,000 and more may

be called ‘H’ (High value) items, Rs.1,000 to Rs.10,000 may be called ‘M’ (Medium

value) items, and below Rs.1,000 may be called as ‘L’ (Low value) items.

SDE Analysis:

The scarce, difficult and easy classification relate to difficulty in obtaining these

items. A scarce item may not be easily available in market or may be it is difficult to

manufacture or there are only few manufacturers available and lead time is too much,

or item may be imported one. Such item needs higher level of stocking.

VED Analysis:

V – Vital

E – Essential

39

D – Desirable

VED analysis represents classification of items based on their critically.

‘VITAL’ category encompasses those items for want of which production would

come to standstill.

‘ESSENTIAL’ category includes items whose stock outs cost is very high.

‘DESIRABLE’ items are required but do not cause a loss of production.

Steps Involved In VED Analysis:

Identify the factors to be considered.

Assign weightings according to usage.

Divide each in three degrees

Prepare categorization plan

Evaluate items 1 by 1 against each factor

FSN ANALYSIS:

F – Fast Moving

S – Slow Moving

N – Non Moving

FSN analysis is based on consumption figures of the items. To conduct the analysis

the last of receipt or the last date of issue which is later is taken into account and the

period, usually in terms of numbers of month, that has elapsed since the movement is

recorded. Such an analysis helps to identify;

active items which require to reviewed regularly

40

surplus items whose stocks are higher

non moving items which are not being consumed.

GOLF ANALYSIS:

G – Government

O – Ordinary

L – Local

F – Foreign

The categorizations is been done and as per time and the need of the

departments the purchasing is been done in the organizations. The GOLF analysis

minimizes the problems of the materials categorizations and the items are made

available on time in the organizations.

SOS ANALYSIS:

S – Seasonal

O – Off Seasonal

The materials available in the particular period of the year for the throughout

use of the materials in the organization are the seasonal products where by the

seasonal analysis is to be used in organizations. The items which are available

throughout the year in the markets are termed as the off seasonable items analysis.

The analysis of the off seasonal items reduces the material storage responsibility of

the departments in the organization. As per the need felt in the organization the

41

purchase of the materials can be done in minimum period of time with less

procedures. The costs that we need to consider so that we can decide the amount of

stock to have can be divided into stock holding costs and stock ordering (and

receiving) costs as below:

Holding costs – associated with keeping stock over time:

Storage costs

Rent/depreciation

Labour

Overheads (e.g. heating, lighting, security)

Money tied up (loss of interest, opportunity cost)

Obsolescence costs (if left with stock at end of product life)

Stock deterioration (lose money if product deteriorates whilst held)

Theft/insurance

Ordering costs – associated with ordering and receiving an order:

Clerical/labour costs of processing orders

Inspection and return of poor quality products

Transport costs

Handling costs

42

MATERIAL FLOW CHART:

For Factory:STAGE RESPONSIBILITY

43

Customer Order/ Shortage Report

Check Material

Shortage Material

Physical Verification

G.R.R.

Receipt Inspection

Gate Entry

Supplier Invoice

Material to PEEP Store

Finished Goods Store

Job Order ClosingManufacturing Process

Material Issue

JO/WO Release

S.D. Mhetre

NDH

Marketing

Security

Atish Borate

Supplier

Devidas/ Planner

SVG/DGK/AAG

SDM

SVG/DGK/AAG

SDM

Devidas

BUB

214Challan/Invoice Darade

For Job Worker

SecurityGate Entry

SupplierJob Work Challan

For Job Worker

TECHNIQUE USED FOR INVENTORY CONTROL IN FFPL:

Buffer Penetration Management:

Buffer: Buffer In process inventory, time or budget allowance used to protect

scheduled throughput, delivery dates, or cost estimates on a production process or

project.

Buffer Penetration: Buffer Penetration The amount of buffer projected to be

consumed comparing the current status of the project network, actual durations for

completed activities, projected days to complete for working activities, and estimated

(mean) duration for future activities. Sometimes called Buffer Incursion.

Buffer Management: Weekly updating and communication of projects' buffer status

by asking "how many working days to complete?" for all tasks currently in work, and

projecting buffer penetration. Actions by Project Managers in response to the buffer

report. If buffers are green, Project Managers should take no action. If yellow, they

should plan how to recover time by looking down the chain from the current working

task. If red, they should implement the recovery plan. Actions by task resources to

select which task to work on next when presented with multiple tasks. Resources

should work on critical chain tasks over non-critical chain tasks. If presented with

multiple critical chain tasks, or multiple non-critical chain tasks, resources should

work on the task with the greatest % buffer penetration.

Buffer Size:

44

Logistics BUB

An estimated duration of time measured from material release to the buffer

origin. Components are lead-time (theoretical cycle time), variation and resource.

Project Control with Buffer Management:

A number of straightforward ways of assessing buffer consumption make it

clear to everyone involved when and where corrective actions need to be taken.

Effective Buffer Management is a critical factor in successful implementations of

Critical Chain-based project management systems.

Buffer Management typically involves a combination of real-time access to

buffer condition and periodic “buffer management meetings.” Real-time, daily

45

updates of project and buffer status are feasible in a Critical Chain environment due to

the simple data needed to update active tasks. That data requires only one number at

the end of each day -- a current estimate of time to complete the task at hand.

Immediate issues can be quickly identified through this process.

Buffer penetration report:

It states the percentage penetration of stock into the buffer and this is a tool

which provides or sets priority to initiate action at the previous link.

BUFFER MANAGEMENT is a control mechanism against common variations of

Demand, Supply, and Murphy (uncertainty).

BUFFER MANAGEMENT IS BASICALY MANAGING THE BUFFERS BY

DIVIDIDING THE BUFFER INTO THREE ZONES:-

Green Zone – This is the safety zone. Inventory in this zone does not require much

attention. In this Zone One CAN dispatch.

Yellow Zone – This is “monitoring area” or SHOULD dispatch.

Red Zone - This is most important zone it is called “EMERGENCY ZONE” OR

MUST here is a need to react

GREEN: 100%

YELLOW: 66.67%

RED: 33.33%

46

The TOC buffers are divided into three, usually equal, zones. The last third of

the buffer is the red zone (the emergency zone). The middle zone is called the yellow

zone and the upper zone is green. As the target level, the buffer in MTS, consists of

both the on-hand stock and the stock in the pipeline, the regular expectations are that

the on-hand stock will be in the Yellow Zone, not too full and not too empty.

When a product penetrates regularly into the emergency level it signal’s more

than just the need to expedite replenishment from production. It is very important that

we recognize what is causing the signals and why.

The reason for frequent or too much penetration into the emergency/ red zone

could be significant demand growth for one or more products. It could be some other

problem that has caused replenishment times to increase. Or, we could be seeing

increasing variability of demand or replenishment time. Whatever the reason we need

to track these and use Pareto to select the most important reasons for emergencies and

then find solutions to the underlying reasons. (This is a nice example of using TOC to

provide information for a 6- sigma or Lean improvement project).

There can also be too few (or no) incursions into the red zone – or on-hand

inventory never goes (far) below the green zone. The green zone is the highest 1/3

part of the target level. When on hand stock is above 66% of the target level it means

the stock is in the green zone and the buffer status is below 33%. Being in the green

47

zone for a relatively long period of time is almost as important as too many incursions

into the red. Too many incursions indicates we are at risk of hurting delivery

performance to our customers, too long a time in the green indicates we have too

much protection – too much stock that we don’t really need. Again we should

discover why a product has too much inventory – a competitor has launched a new

and better product etc. The analysis should lead to the necessary corrective action –

which could be to just lower the target so that we do get a few incursions into the red

(emergency) zone.

Goldratt’s Target Level Management Rules for Distribution Environments:

Since we already have a set of rules for distribution systems, why not use them

for our MTS solution?

1. When a penetration into the ‘red zone’ occurs monitor how deep the penetration is.

If the penetration is too deep or it persists for too long then the target level should be

increased. What is “too deep” or “too long” depends on the required service level for

your business and the amount of risk for a stock-out you are willing to run. Certainly,

if the penetration consumes the entire (or more) red zone the target needs to be

increased. Dr. Goldratt’s recommendation is to accumulate the daily penetration into

the ‘red zone’ during the average replenishment time. If the accumulation is equal or

above the size of the ‘red zone’ then increase the target level by 33% (and by that

action also the size of the emergency level).

48

2. The recommendation for decreasing the target is also by 33% - after actual

inventory has remained in the green for a whole replenishment time period. Drum

Buffer Rope and Buffer Management in a Make-to-Stock Environment by Eli

Schragenheim and Rudi Burkhard 10 The recommendation of a 33% adjustment

ensure a quick response to changing (increasing) demand.

3. Every time you increase the target level WAIT for a replenishment cycle before

starting to check again. Only after a second replenishment cycle should you make

another change up or down.

4. Every time you decrease the target level, then at first the on hand stock is above the

new lower target level (assuming you decreased the buffer by 33% and your green

zone is also 33%). Wait for the inventory to get down below the new green level and

only then start to check again for the conditions to decrease the target level further. In

production (on the shop floor) the previous rules should be used as a general

recommendation, but with a lot of care. A 33% increase in the target level can cause

the release of a relatively large batch that can significantly delay other production and

cause a cascade of increases in target levels and many large batches. We certainly

don’t want to create chaos in production. If the load on the CCR is near to its capacity

limit, then increasing the stock buffers (the target levels) can cause long delays,

causing deep penetrations into the red zone of other products. Increasing target levels

will then be counter-= productive– they would dramatically aggravate the situation.

49

When many products go into the red you also have a dangerous situation that you can

very easily make much worse by increasing all target levels. Further, when you do

increase the target level of a product, it is advisable to split this increase into two or

more batches in order to not cause too long delays to other orders in production.

Elements of Inventory Control Concept:

Various elements of an inventory control model are:

Minimum stock

Maximum stock

Safety stock

Lead-time

Reorder level

Minimum level:

Minimum level is the level below which the inventory level is not allowed to

fall. In case, for any reason, the stock goes below the minimum level, the matter is

reported immediately and action is taken to ensure that the material is received at the

earliest with extra efforts. For example, the items could be purchased from any other

source even at a higher cost, or the items are received by a faster mode of transport

say by air or by courier service. In fact, reaching minimum level is an indication of

the danger of a likely stock-out situation. It is essential to keep an eye on all the items,

which have reached the minimum level. Strict monitoring is necessary for these items.

50

Maximum level:

Maximum level is a control point to avoid any extra stock. An attempt is made

to avoid excessive purchasing that may result in crossing the maximum level, and to

ensure that the money is not blocked unnecessarily. However, in practice there are

situations when maximum level is crossed intentionally to avail other benefits such as

attractive discounts, saving on the transportation/freight charges, or strategic buying

decisions. Crossing of maximum level reflects inadequate inventory control and

should not be allowed without proper analysis of overall benefits. Failure to control

the maximum level may result in non-moving or slow-moving items and

obsolescence. Inventory turnover would be adversely affected if maximum level is not

controlled. The maximum level is fixed by taking into consideration the lead-time for

the item or items of the same group.

Safety stock:

Safety stock is a level, decided by keeping in view the degree of safety

planned against being out of stock. A very high degree of safety would need a high

level of inventory, whereas a low degree of safety would require low inventory stock.

If the risk of being-out-of stock is acceptable, then there is no need of having safety

stock.

Lead-time:

51

The time from the point a requisition for material is raised by the user or the

inventory controlled section has raised a purchase requisition after review of stock

level and a future requirement, to the point when material is received, inspected, and

is ready for use is known as the lead-time. Lead-time depends upon various factors

both internal and external. Internal are mostly under the control of the organization

but the external factors are not under its control planning, assessment, and monitoring

of various elements of lead-time are necessary to get the item at the required time.

(I)Internal Lead-Time:

Internal lead-time has two components. The pre-order lead-time, that is, the

time taken before placement of order and post-receipt lead-time is the time taken for

inspection, making entry of the items in the store records, and the time in issuing the

items to the users.

(A)Pre-Order Lead-time:

The pre-order component of internal lead-time includes the following:

Time in raising requisition,

Checking the specifications,

average annual consumption,

future requirements,

current stock level,

52

arid review of outstanding items ordered but yet to be received,

approval of the purchase requisition and assigning it to the purchase division,

preparing inquiries,

(B)Post receipt of material lead-time:

The post-receipt of the material internal lead-time includes the following:

Unloading of the materials received from the supplier.

Preparation of inspection note.

Arranging inspection by the materials inspector and by the representative of

the user department.

Stock entries after acceptance of materials through inspection.

Receiving issue notes for issue of the materials to the user.

Collecting materials for issue from the bins in the store.

Making the issue entries and handing over the materials to the staff of user

department.

Arranging replacement of any shortage and damaged material.

(II)External lead-time:

External lead-time has four components:

ordering time

production time

dispatching time

transportation time

53

(A)Ordering Time:

The ordering time is the time taken by the seller before receiving the order

from the buyer and includes:

Study of specifications including terms and conditions.

checking the availability of materials for production to meet the date of

delivery as required by the purchaser

Seeking any clarifications on specifications, terms, and conditions say for

terms of payment, mode of transportation, guarantee/warranty, and delivery

schedules. Legal conditions of the contract also take time before an agreed

offer could be made to the buyer.

Placement of order by the buyer.

Study of order placed by the buyer and providing acceptance.

(B) Production Time:

It is the time taken by the supplier from the point of receiving the order till

production of the items is completed. It includes the following:

Material and production planning

Material procurement

Production time/manufacturing time

Inspection time, before the items are ready for dispatch

(C) Dispatch Time:

54

It is the time required in packaging, documentation, arranging transportation, and

loading of’ the materials on to trucks, rail wagons, carriers or handing over the

materials to the post office or courier.

(D) Transportation Time:

It is the time taken by the transporter or carrier from the point of receiving it

from the supplier until it reaches the destination. Each mode of transportation such as

air, sea, road, or rails has its own requirements of time, documentation, and handling.

It is not only the transporter who is responsible for this component of the lead-time,

but also some government agencies like customs authorities, toll tax authorities, road

tax authorities etc. Sometimes, a lot of time is lost in this kind of routine work.

Transportation time can vary due to various reasons such as traffic jams,

temporary diversions of routes, strike by the transporters, accidents, political

disturbances, or even non-availability of the appropriate transportation facilities.

55

RESEARCH METHODOLOGY

Introduction:

Research comprises defining and redefining problems, formulating,

hypothesis or suggested solutions; collecting, organizing and evaluating data making

deductions and reaching conclusions to determine whether they fit the formulating

hypothesis.

Research is common parlance refers to a search for knowledge. Research is a

scientific investigation. “Research concerns itself with obtaining information through

empirical observation that can be used to systematically develop logically related

propositions so as to establish casual relationships among variables.” Research can be

defined as a scientific and systematic search for pertinent information on specific

topic.

Research is an art of scientific and purposive investigation.

It may be understood as a science of studying how research is done

scientifically. Research is an original contribution to the existing stock of knowledge

making for its advancement. It is the pursuit of truth with the help of study,

observation, comparison and experiment.

56

DATA COLLECTION:

In research methodology collecting data is very important. Data is classified in

two types as primary data and secondary data.

Primary data:-

The primary data includes:

1.Interaction with Stores Manager Mr. N. K. Bavare & Finance manager Mr.

Abhijeet Dongaonkar.

2.Interview of stores department members.

Secondary data:-

Secondary data means the data already available which already collected and

analyzed by someone else. Secondary data can take from various sources like

magazine, annual reports, books, newspapers.

In this study the primary data is collected by the observation method and

through the interaction with staff members. The secondary data is collected trough the

following sources;

57

Experts

Internet

Financial Books

The research process or methodology is the approach to the entire study – it is

the master plan. It is the blueprint for achieving your objectives, one of which is the

production of the dissertation. Irrespective of the research you are going to conduct,

there are several fundamental stages you will have to go through. The diagram below

is a simplified, traditional and highly structured view of the research process.

The diagram shows the systematic nature of the research process.

Unfortunately it is not quite so straightforward as many of the stages overlap and

there is much ‘looping back’ to previous stages. This simplified diagram does not

show the underpinning theoretical issues and questions that have to be addressed. The

following diagram shows the different aspects to be considered under each section.

RESEARCH PROCESS:

58

DEFINE RESEARCH PROBLEM

DESIGN RESEARCH

TYPE OF RESEARCH:

Applied research is the type of the research used in the project work study by

the researcher. The Applied research aims at finding a solution for an immediate

problem facing in the organization. The central aim of the applied research is to

discover a solution for some pressing practical problem.

In the organization the actual problem with the Inventory management and

control was found. Therefore for appropriate and immediate solution with

determining where the actual problem is the researcher has used the applied research.

Applied research is action-oriented research carried out with the intention of solving a

real life problem. It may incidentally contribute to the development of theoretical

knowledge by leading to the discovery of new facts or testing of a theory or to

conceptual clarity.

59

COLLECT DATA

ANALYSE DATA

INTERPRETATION OF RESULTS

The actual problem in the FFPL was found regarding inventory management.

There was no systematic process of issuing materials to the production department

from the stores. Even they were facing with the problem of ineffective inventory

control technique. They were not having the efficient tact of ordering for the required

raw materials for the daily production process.

For this purpose they used to implement the technique of BPR for effective

and efficient inventory management & control technique.

DATA ANALYSIS

Introduction:

In the data analysis, researcher has analyzed the performance of the Fleetguard

Filters Pvt. Ltd. of last five years. Researcher has studied the actual condition of the

company during its financial year with the help of Final Report i.e. Annual Report of

the company of last five years.

This report has also provided the financial condition of the FFPL for the

period. Researcher has also analyzed the actual system which is used by the FFPL for

effective inventory management and control which is known as BPR i.e. Green, Red

60

& Yellow levels for procurement of required materials from the suppliers. Inventory

included in different parts is also taken into consideration by the researcher.

INVENTORY TURNOVER RATIO:

This ratio indicates the number of times inventory is replaced during the year.

It measures the relationship between the cost of goods sold and the inventory level.

The ratio can be computed in two ways.

The average inventory figure may be of two types. In the first place, it may be

the monthly inventory (stock) average. The monthly average can be found by adding

the opening inventory of each month from, in case of the accounting year being the

calendar year. January to January and dividing total by thirteen. If the firms

accounting year is other than calendar by adding the opening inventory of each month

from April to April and dividing the same by thirteen. This approach has advantage of

being free from bias as it smoothens out the fluctuations in inventory level at different

periods. However a serious limitation

of this approach is that detailed month wise information may present practical

problems of collection for analyst.

Formula for Inventory Turnover Ratio:

I.T.R. = Cost of goods sold / Average Inventory

61

YEAR INVENTORY TURNOVER RATIO

2003 9.82 times

2004 9.40 times

2005 10.83 times

2006 13.32 times

2007 16.59 times

2008 13.70 times

INTERPRETATION:

The inventory turnover ratio measures how quickly inventory is sold. It is a

test of efficient inventory management. To judge whether ration of the firm is

satisfactory or not, it should be compared over a period of time on the basis of trend

analysis. It can also be compared with the level of other firms in that line of business

as well as with industry average.

In general high inventory turnover ratio is better than low ratio. A high ratio

implies good inventory management yet, a very high ratio calls for careful analysis. It

may be indicative of under investment in, or very low level of inventory. A very low

level of inventory has serious implications as discussed previously. It is also likely

that the firm may be following a policy of replenishing its stock in too many small

sizes. Apart from being costly, this policy may retard the production process as

sufficient stock may not be available.

62

Similarly very low turnover ratio is also dangerous. It signifies excessive

inventory or over investment in inventory. Thus the firm should have neither too high

nor too low inventory turnover. To avoid both stock out costs associated with high

ratio and the cost carrying excessive inventory with low ratio, what is suggested is

reasonable level of this ratio.

ABC Analysis:

A big organization has a very large number of items, sometimes 50000 to

100000. All items cannot be given equal attention. It is therefore essential to

determine the items or group of items that deserve the maximum control. It has been

observed that a small number of inventory items consume a very large share of

inventory consumption during the year. Further, a little larger number of inventory

items covers a moderate share of annual inventory consumption, and a very large

number of items just cover a very small share of annual inventory consumption.

The Steps in computing ABC analysis are:

Calculate annual usage in units for each item for the past one year.

Calculate the annual usage in US$ for each item by multiplying the annual

usage quantity with the average unit price of each item

Rank the items from highest dollar usage annually to the lowest annual usage

in dollars. Table shows determination of ranks of the items according to the

annual usage in US$ for 10 items.

63

Item No. Average usage

(Units)

Unit Cost

(US$)

Annual usage

(US$)

Rank

1 45 4 180 6

2 120 10 1200 3

3 16 30 480 4

4 180 8 1440 2

5 80 3 240 5

6 1632 5 8160 1

7 60 2 120 7

8 15 4 60 9

9 12 6 72 8

10 12 4 48 10

Arrange the items in the inventory by cumulative annual usage (dollars) and by

cumulative percentage. Categories the items in A, B and C categories

Determination of Ranks by Annual Usage in US$:

Table shows arrangement of items in descending order according to their

annual usage in US$. Table also shows the cumulative annual usage in US$ of the

items. The cumulative usage of inventory items is then divided by the total annual

usage in the inventory to present the percentage cumulative annual usage. It is

observed that item # 6, which constitutes 10% (1 item out of 10 items) of the total

number of inventory items, covers 68% of the annual inventory usage. Item no.4 and

2, which constitutes 20% (2 items out of 10 items) of the inventory items covers 22%

64

of the annual usage of the inventory. Items, 3, 5, 1, 7, 9, 8 and 10 constitutes 70% (7

items out of 10 items) of the total inventory items and cover only 10% of the annual

inventory usage. The items are divided in three categories A, B and C. In general,

only 10% of the inventory items cover about 70% of the annual inventory usage and

are categorized as ‘A’ category items, 20% items cover about 20% of the annual

inventory usage and are categorized as ‘B’ Category items and the remaining 70%

items cover only about 10% of the annual inventory usage and are categorized as ‘C’

category items.

ABC Ranking:

Item No. Annual usage

(Units)

Cumulative

Annual Usage

(US$)

Annual usage

Percentage

(%)

Category

assigned

6 8160 8160 68 A

4 1440 9600 80 B

2 1200 10800 90 B

3 480 11280 94 C

5 240 11520 96 C

1 180 11700 97.5 C

7 120 11820 98.5 C

9 72 11892 99.1 C

8 60 11952 99.6 C

65

10 48 12000 100 C

Total 12000

ABC Category Summary:

Category Item # % of items in

inventory

Dollars in the

category

% dollars in the

category

A 6 10 8160 68

B 4,2 20 2640 22

C 3,5,1,7,9,8,10 70 1200 10

Total 10 100 12000

This calls for different attention to various categories of A, B and C items. The

most important point in ABC analysis is how to differentiate between a few important

inventory items from the others, so that the management could focus its attention on

them to get the best advantage.

The impact of the high cost of ‘C’ category items of inventory due to stock

levels being more than the requirements is not much. However, any increase in

inventory items of category ‘A’ when compared to their average annual consumption

would have great impact on the inventory investment. Extra effort to keep the

66

inventory of ‘A’ Category items low without affecting the plant operations would give

very good results. Therefore, category ‘A’ items requires very tight inventory control.

Items of category ‘B’ need moderate attention and category ‘C’ items need minimum

attention.

In real life situations, there may not be a clear division of items in three

categories of ‘A’, ‘B’ and ‘C’ and it may be required to divide the inventory into four

or five categories, that is, ‘A’, ‘B’, ‘C’ and ‘D’ or ‘A’, ‘B’, ‘C’, ‘D’ and ‘E’. The

management may decide on such categorization for better control, based on the

annual usage of the items.

Control through ABC Analysis:

ABC analysis is an important tool to control the inventory investment in an

organization. It provides good guidelines for adopting appropriate purchasing policy

for different categories of items and also for the amount of attention, which is

required for different levels of management, to be given to various items. According

to the importance of ‘A’ category item, top level of management must devote a major

part of its time in procurement of ‘A’ category items, both from the point of view of

cost control as well as controlling the quality to be procured. Creating a keen price

competition for ‘A’ category items brings excellent results. Similarly, frequent

purchases of ‘A’ category items in appropriate lots will ensure against any shortage.

At the same time, no excessive stocks are built up for these items.

67

‘B’ category items also deserve attention from the top level of management,

but not to the same extent as that of on ‘A’ category item. The middle level of

management may be given the responsibility to monitor the procurement of this

category of items. The top level of management should just oversee that actions for

procurement of the ‘B’ Category items are taken as per directions and guidelines laid

down by it.

The lower level of management should manage the ‘C’ category items. The

management should lay down systems for establishing rate contracts or blanket

contracts with reputed suppliers to purchase materials without much effort and with

minimum paper work. Even cash purchases may be permitted to procure immediate

requirements of the ‘C’ category items. This approach of divisions in management

attention will help in developing appropriate procurement policies and ensuring that

the purchases are made in the most economical way and that at the same time there is

no shortage of materials.

ABC ANALYSIS IN FLEETGUARD FILTERS PVT.LTD:

First of all distributors category will be decided on the basis of last one year sale

For example:

Month: Jan Feb March April May June July Aug Sep

Sale: 50 75 85 100 150 200 300 400 500

Month: Oct Nov Dec

Sale: 600 550 500

68

The highest sale Rs.600 is in the month of October, so this sale will be taken as for

deciding the norms.

4 weeks in a month- 600/4=150(in quantity)

So 7 days stock is 150- green level or buffer.

Now, NORMS FOR DISTRIBUTOR:

A category would

contain

goods which are sold every day (fast moving goods)

B category would

contain

goods which are sold once or twice in 2 months (medium

fast goods)

C category would

contain

goods which are sold once in 6 months (slow moving

goods)

NOW NORMS FOR DEPOT:

There are totally 15 depots in India and 1 plant warehouse (PWH).

Delhi depot is responsible for 6 distributors in its region.

So (A+B) category of 6 distributors = A category of Delhi depot.

All 15 depots A category= A category of PWH.

CURRENT ASSETS

2007-08 2006-07 2005-06 2004-05 2003-04

Stock At Cost

Raw MaterialsPending 67197204 71355137 80260122 84878376

Work In Pendin 7782547 1889077 1659338 1152332

69

Progress gFinished Mfg. Goods

Pending 42878611 25495672 17234095 13717304

Material In Bond

Pending 13421726 2537961 12966794 9462391

Stock In TransitPending 600633 NIL NIL 757564

Trading StockPending NIL NIL 332749 1650636

Sundry Debtors Considered Good

Pending

Considered Doubtful

Pending 4592309 12585121 7862132 6208644

Other DebtsPending

263253789

173818841

259443658

207002495

Cash And Bank Balances

Cash On HandPending 204732 231791 126172 101249

Cash At Bank In Deposit A/C

Pending 62600458 61905466 12608728 6440446

Cash At Bank In Current A/C

Pending 18313644 8410063 27438381 12576644

Other Current Assets

Insurance Claims Receivable

Pending NIL NIL NIL 348168

Loans And Advances

Advances Recoverable In Cash Or In Kind

Pending

123738183 53113274 61805809 67480356

DepositsPending

106922042 55153629 30839276 17582685

Deposits With Excise Authorities

Pending 18336864 18550271 11340913 12877406

Advance Income Tax And T.D.S

Pending

190834849

120516249

103300036 87817235

TOTAL CURRENT ASSETS

Pending

920677591

605562552

627218203

530053931

70

LIST OF CURRENT ASSETS OF THE COMPANY:

77%

1%12%

8%

1% 1%

% OF DIFFERENT MATERIALS IN 2003-04

RAW MATERIAL

WORK IN PROGRESS

FINISHED GOODS

MATERIAL IN BOND

STOCK IN TRANSIT

TRADING STOCK

71%1%

15%

11%

1% 1%


RAW MATERIAL

WORK IN PROGRESS

FINISHED GOODS

MATERIAL IN BOND

STOCK IN TRANSIT

TRADING STOCK

70%2%

25%

2% 1%


RAW MATERIAL

WORK IN PROGRESS

FINISHED GOODS

MATERIAL IN BOND

STOCK IN TRANSIT

TRADING STOCK

71

AVERAGE STOCK OF RAW MATERIAS:

DURATION OF WORK IN PROGRESS INVENTORIES:

72

IN RUPEES

2007-08AVG. STOCK OF RM 101779326.5Opening 67197204Closing 136361449ANNUAL CONSUMPTION OF RAW. MAT 1671704901Op. Stock 67197204Purchases 1740869146Closing Stock 136361449AVG.DAILY CONSUMPTION OF RAW.MAT 4643624.73RUPEES 46,43,624.73 For 1 dayRUPEES 1,017,88,254 21.92 DAYS

DURATION OF FINISHED GOODS INVENTORY STORAGE:

Calculation of Debtors Collection Period:

73

DURATION OF W.I.P

IN RUPEES2007-08

ONLY 4 HOURS(1/6TH OF A DAY) AVG.STOCK OF WIP 59,81,924Opening 77,82,547Closing 41,81,301ANNUAL COST OF PRODUCTION 1,97,23,49,041Opening W.I.P. 77,82,547Consumption Of Material 1,67,17,04,901Manufacturing Expenses 66,77,889Administrative Expenses 29,03,65,005Closing W.I.P. 1,98,08,066AVG. DAILY COST OF PRODUCTION 54,78,747RUPEES 54,78,747 FOR 1 DAYRUPEES 59,71,834.23 1.09 DAYS

DURATION OF FINISHED GOODS STORAGE

IN RUPEES2007-08

MAXIMUM 24 HOURS (1 DAY) AVG. STOCK OF F.G. 54290032.5Opening 42878611Closing 65701454ANNUAL COST OF SALES 2,00,24,30,570Opening F.G. 42878611Cost Of Production 1,97,23,49,041Selling Exps. 52904372Closing F.G. 65701454AVG.DAILY COST OF SALES 55,62,307.14RUPEES 55,62,307.14 FOR 1 DAYRUPEES 5,42,88,117.69 9.76 DAYS

Debtor’s Turnover Ratio:

= Net Credit Sales

Average Debtors

= 2,57,72,36,668

30, 77, 08,018

= 8.37 i.e. 8 times

Debts Collection Period:

= 360 days

8 times

= 45 days

Calculation of Creditors Payment Period:

Creditor’s Turnover Ratio:

= Net Credit Purchase

Average Creditors

= 1,74,08,69,146

24, 54, 28,782

= 7.09 i.e.7 times

Creditor’s Payment Period:

= 360days

7 times

= 51 days

NET OPERATING CYCLE OF FFPL:

74

2007-08

Net operating cycle 27 Days

Raw Material 22 Days

(+)Work in Progress 1 Days

(+)Finished Goods 10 Days

(+)Debtors Collection Period

45 Days

(-)Credit Availed Period 51 Days

PERFORMANCE OF COMPANY IN LAST FIVE YEARS:

PERFORMANCE OF THE COMPANY (AMOUNT IN

RS.THOUSANDS)

2007-08 2006-07 2005-06 2004-05 2003-04 2002-03

TURNOVER PENDING 1983404 1456332 1235324 938628 690007

TOTAL EXPENDITURE PENDING 1751521 1299535 1110131 862952 632901

PROFIT BEFORE TAX PENDING 231883 156797 125193 75676 57106

PROFIT AFTER TAX PENDING 154560 97882 75607 56452 42317EARNINGS PER SHARE (IN

RS.) PENDING 1312 887 428 319 239.35

DIVIDEND RATE PENDING 200% 100% 100% 100% 100%

TAX PAID PENDING 77323 58915 49586 19224 14789

Inventory control technique used in FFPL:

There are a number of techniques which play an important role in the

inventory control program. These techniques are very helpful in rationalization of

inventory control approach and assist in formulation of inventory control policies. As

75

concern of FFPL Inventory control techniques we are controlling FFPL inventory by

DBM.

DBM – Dynamic Buffer Management:

Increase Norms

Decrease norms

Conversion of B & C category into to A category

INCREASE NORMS:-

Norm will get increased if 1/3rd of the stock has been sold.

For example:

GREEN YELLOW RED STOCK SALE1/3RD FROM SALE FROMGREEN LEVEL FOR APARTICULAR DAY 300 200 100 300 100INCREASE NORMS BY 33% 99NEW GREEN LEVEL 399 266 133 0

Norm will be increased if there is a stock out situation.

For example:

GREEN YELLOW RED STOCK SALESTOCK OUT 300 200 100 300 300INCREASE NORMS BY 33% 99 66 33NEW GREEN LEVEL 399 266 133 0

DATE GREEN YELLOW RED STOCK GAP SALE CLOSING

76

BALANCE17.04.2008 300 200 100 300 0 200 10018.04.2008 399 266 133 100 299 50 33819.04.2008 399 266 133 338 61 280 11820.04.2008 399 266 133 118 281 10 10821.04.2008 399 266 133 108 291 5 10322.04.2008 399 266 133 103 296 20 83

In 2 Replenishment cycles the summation of the Red penetration of any part is greater

than or equal to 1/3rd of Green level then norm will get enhanced.

After increase in norms we need to wait for 1 RLT before initiating next increase

DECREASE NORMS:-

If the stock penetrating in green zone continuously four RLT, Norms will be

decreased by 33%.

Conversion of B & C category into to A category:-

Any Part No B & C Category is ordered for minimum 3 times by the Distributors in a

particular month, the Part will move to A Category.

EXAMPLE FOR PART MOVEMENT M FROM B & C TO A

ORDER FROMPRIORIT

YPO NO

ORDER DATE

DELAY

PART NO

A.J.MILL STORE STK O-808-0708 6-FEB-08 27 AF004180

77

AGENCY PVT. LTD. - SONEBHADRA

001829 0 M

A.J.MILL STORE AGENCY PVT. LTD. - SONEBHADRA

STKO-808-0708-

00199623-FEB-08 10

AF0041800 M

A.J.MILL STORE AGENCY PVT. LTD. - SONEBHADRA

STKO-808-0708-

00205528-FEB-08 5

AF0041800 M

Conversion of A category into C category: -

A part of “A” category will be converted into “C” category when the part is in green

level for 8 continuous replenish lead time (RTL).

Example for decrease norms and part movements from A to C

Part no. FF5052

Pack size-12 pieces=1 box

1 RLT= 2 DAYS FOR X DISTRIBUTOR

78

So now when the green level becomes equal to the no. of pieces in the box the part no.

is moved

to the C

category goods and this is how the ABC analysis technique is used in Fleetguard

Filters Private Ltd.

BPR REPORT OF ANAND ENGINEERING WORKS FOR 07-07-08

Fleetguard Filters Pvt. Ltd., Nandur PlantSupplier Name - Anand Engineering Works

Trigger No -

0005 / 08

Item Code Item Description%

Pentrn.

Tot. Reqd.

Open Rel.

New Rel.

Priority Date

804007199 WASHER, METAL 100.00 34 - 34 2 RED 07/Jul/

79

GREEN LEVEL YELLOW LEVEL RED LEVEL STOCK300 200 100 30099201 134 67 30066135 90 45 3004490 60 30 3003060 40 20 300

2041 27 14 3001327 18 9 300918 12 6 300612 8 4 300

08

807011099 ENDPLATE ASY 100.00 5 - 5 2 RED07/Jul/

08

807013499 ENDPLATE, METAL 100.00 30 - 30 2 RED07/Jul/

08


08

808016299 ENDPLATE ASY 100.00 1,500 - 1,500 2 RED07/Jul/

08


08


08


08


08


08


08

808019699 ENDPLATE, METAL 95.60 1,434 - 1,434 2 RED07/Jul/

08

807017599 ENDPLATE, METAL 92.64 7,804 2,095 5,709 2 RED07/Jul/

08


08


08

807006099 ENDPLATE, METAL 87.68 121 60 61 2 RED07/Jul/

08

808012299 ENDPLATE ASY 87.22 1,856 - 1,856 2 RED07/Jul/

08

101097699 CLIP, MEDIA 85.26 25,577 9,290 16,287 2 RED07/Jul/

08


08

101150499ENDPLATE & BY-

PASS VALVE 79.83 479 - 479 2 RED07/Jul/

08

807016099ENDPLATE ASY,

WELDED 78.45 1,693 2,020 (327) 2 RED07/Jul/

08


08

839057899 RING, METAL 75.37 1,435 810 625 2 RED07/Jul/

08


08

807019399 ENDPLATE, METAL 68.44 12,319 370 11,949 2 RED07/Jul/

08

80


08


08


08


08

807004399 ENDPLATE, METAL 58.72 64 - 643YELLO

W07/Jul/

08

806007799 CLIP, MEDIA 54.49 170 - 1703YELLO

W07/Jul/

08

101101699 WASHER, METAL 52.96 143 - 1433YELLO

W07/Jul/

08

807017199 ENDPLATE, METAL 52.38 11 10 13YELLO

W07/Jul/

08AF018429

9 AIR FILTER, SAFETY 51.73 1,138 846 2923YELLO

W07/Jul/

08

806011999 CLIP, MEDIA 51.49 345 - 3453YELLO

W07/Jul/

08

101022699 CLIP, MEDIA 51.43 737 - 7373YELLO

W07/Jul/

08

807017099 ENDPLATE, METAL 50.00 10 10 -3YELLO

W07/Jul/

08

808012099 ENDPLATE ASY 48.96 1,175 - 1,1753YELLO

W07/Jul/

08

806001599 CLIP, MEDIA 48.64 1,364 - 1,3643YELLO

W07/Jul/

08

101118699 CLIP, MEDIA 48.57 4,371 1,000 3,3713YELLO

W07/Jul/

08

806004399 CLIP, MEDIA 47.06 200 - 2003YELLO

W07/Jul/

08

101002699 CLIP, MEDIA 46.64 402 - 4023YELLO

W07/Jul/

08


W07/Jul/

08

101021699 CLIP, MEDIA 46.56 318 - 3183YELLO

W07/Jul/

08


W07/Jul/

08

806014599 CLIP, MEDIA 45.86 576 - 5763YELLO

W07/Jul/

08

807013999 ENDPLATE, METAL 45.58 1,897 - 1,8973YELLO

W07/Jul/

08

839006499 MEDIA, WIREMESH 44.92 915 - 9153YELLO

W07/Jul/

08

101099699 CLIP, MEDIA 44.08 544 - 5443YELLO

W07/Jul/

08101205699 CLIP, MEDIA 43.93 141 - 141 3YELLO 07/Jul/

81

W 08

101047699 CLIP, MEDIA 42.27 3,872 - 3,8723YELLO

W07/Jul/

08

806010299 CLIP, MEDIA 41.20 281 - 2813YELLO

W07/Jul/

08

807002199 ENDPLATE, METAL 41.00 39 30 93YELLO

W07/Jul/

08

101016699 CLIP, MEDIA 40.33 984 - 9843YELLO

W07/Jul/

08

101015699 CLIP, MEDIA 40.03 237 - 2373YELLO

W07/Jul/

08


W07/Jul/

08

101361699 CLIP, MEDIA 39.51 810 - 8103YELLO

W07/Jul/

08

806001499 CLIP, MEDIA 39.47 1,061 - 1,0613YELLO

W07/Jul/

08

101072699 CLIP, MEDIA 36.64 1,832 - 1,8323YELLO

W07/Jul/

08

101053699 CLIP, MEDIA 35.29 741 - 7413YELLO

W07/Jul/

08


PASS VALVE 35.27 529 - 5293YELLO

W07/Jul/

08

806002199 CLIP, MEDIA 34.64 133 - 1333YELLO

W07/Jul/

08


W07/Jul/

08

101773199 ENDPLATE, METAL 32.90 97 - 97 4 GREEN07/Jul/

08

101759699 CLIP, MEDIA 32.63 723 - 723 4 GREEN07/Jul/

08


08

101173699 WIREMESH ASY 31.40 3,712 - 3,712 4 GREEN07/Jul/

08

101743699 CLIP, MEDIA 29.73 6,838 - 6,838 4 GREEN07/Jul/

08


08

808004199 ENDPLATE, METAL 29.52 222 600 (378) 4 GREEN07/Jul/

08


08


08


08


08

82


08


08


08


08


08


08


08


08


08


08


08


08


08


08


08

101097199 CLIP, MEDIA 21.11 1,900 2,000 (100) 4 GREEN07/Jul/

08

807001899 ENDPLATE, METAL 20.71 78 30 48 4 GREEN07/Jul/

08


08

804003199 WASHER, METAL 19.50 1,170 - 1,170 4 GREEN07/Jul/

08


PASS VALVE 19.45 1,552 10,348 (8,796) 4 GREEN07/Jul/

08


08


08


08


08806004899 CLIP, MEDIA 16.92 220 - 220 4 GREEN 07/Jul/

83

08


08


08


PASS VALVE 16.42 1,970 6,540 (4,570) 4 GREEN07/Jul/

08


08


08


08


08


08

101027699 CLIP, MEDIA 13.29 1,993 - 1,993 4 GREEN07/Jul/

08


08


08


08


08


08


08


08

101089699 CLIP, MEDIA 10.61 1,591 3,600 (2,009) 4 GREEN07/Jul/

08


08


08


08


08


08


08


08

84


08


08


08


08


08


08

101258699 CLIP, MEDIA 4.26 11 234 (223) 4 GREEN07/Jul/

08TRIGGER:Dear Sir, Kindly find attached the trigger for 07-07-08. Kindly supply the quantities mentioned in TOTAL REQD column. Please acknowledge receipt of this trigger. Supply against this trigger should be done as –

Priority Dispatch Date-------------- -----------------------RED 07-07-08YELLOW 07-07-08GREEN 08-07-08

(If material is ready, you can dispatch the material on same date also) These dates are valid for today’s (07-07-08) trigger ONLY. Kindly note - Now we are getting the material against trigger but we are not getting the full quantity - everyone is giving short quantity against every trigger. This is not acceptable, as based on this our production is planned. PLEASE DELIVER QUANTITY AS PER TRIGGER ONLY (NO EXCESS SUPPLY WILL BE ACCETED) AND MAKE SURE OUR PRODUCTION LINE SHOULD NOT BE AFFECTED DUE TO SHORTAGE OF MATERIAL. If you are having any issues in the trigger - please write to me, so that issues can be taken up with seniors & systems person. If there is no feedback or issues that means you have no issues in the trigger & supplies as per trigger. If our planners asked you to dispatch any material, which is not reflecting in, trigger - PLEASE GET THE REQUIREMENT IN WRITTING, WITHOUT WRITTEN CONFIRMATION DO NOT DESPATCH THE MATERIAL. A CC of communication should mark to me. Thanks & Regards,

Mrs. Ujjwala S. Khaladkar Executive - Stores

85

Fleetguard Filters Private Limited Gat No. 87/1 & 87/2, Village Nandur Taluka Daund, Dist. Pune - 412 202, India Tel: +91 (2119) 242334, Fax: +91 (2119) 212437 Mobile: +91 9922 918442 Web : www.fleetguard-filtrum.com

FINDINGS

Inventory Management & Control procedure is not proper in case of holding

inventory in stores department.

There are number of items which are categorized into different types of sub

inventory. It becomes very difficult to consider the items because of inefficient

codification system used.

The current method of inventory control DBM is outperforming.

The process of movement of raw materials from stores department to

production department is not proper.

No proper procedure followed for ordering material which leads many times

overstocking and wastage.

86

LIMITATIONS

The time period for the project was very limited.

Because of limited time the knowledge received was very less according to the

project.

Busy schedule of staff members.

Due to lack of proper documentary technique, some data was missing and

some was confidential, so hypothetical data is used.

Due to half year closing and excise audit, most of the company staff reluctant

to provide information.

87

CONCLUSION

In the practical experience, while working on the topic of Inventory

Management and Control in the company it is concluded that materials play a very

major and vital role at every step of progress. Materials are required in different forms

in different departments of the organization which helps to bring out our target to

complete the project.

The proper management and control of the inventory minimizes the huge cost

involved in it.

The inventory management and control helps to apply the materials to its

optimum use in the organization.

Optimum utilization of materials minimizes the waste and scrap.

The Inventory Management and Control keeps the overall cycle of

development at the fast speed in totality.

88

The application of Inventory management and control minimizes the lead

times in between the different activities based on completion of earlier

activity.

Proper issue and quantity check should be there for reducing wastage and

losses of materials.

The role of inventory management and control in the purchase cycle is

very important in every step of completion of this process. It maintains the

systematic manner of completion of the purchase cycle.

89

RECOMMENDATIONS

FFPL should use proper codification system such as Alphabetical method for

the identification of materials stored in the stores department.

The current inventory control system is performing very well which should be

continued by the company for the purpose of reducing the red level of the

stock.

Company must take into consideration the material issue procedure which is

very important for the production process as it do not have any systematic

flow from the stores department to the place of production department.

There should be some meaningful flow of materials from stores to production

line with the help of effective and systematic technique for checking of

documents containing material requirement for the production.

FFPL should take into consideration the indenting process of company, the

production planners of the company should be restricted to order the raw

materials directly without confirming to the stores department.

Document process should be system optimized and should utilize generalize

standards and norms to be followed, which will enable proper documentation

and inventory control as well as inventory accounting.

90

BIBLIOGRAPHY

BOOKS:

Financial Management: By I. M. Pandey

Inventory Management: By L. C. Jhamb

Financial Management: By S. M. Inamdar

The Goal (TOC): By Illiyahu Goldratt

WEBSITES:

www.fleetguardfilterspvt.ltd.nandur.com

www.fleetguard-filtrum.com

FFPL SYSTEM:

ERP Oracle System

91

http://www.fleetguard-filtrum.com/

http://www.fleetguardfilterspvt.ltd.nandur.com/

92

Documents

COLLEGE PROJECT