Upload
preet-sohi
View
216
Download
0
Embed Size (px)
Citation preview
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
1/27
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
2/27
It Was Established in 1954, Goetze (India) Limited
(GIL) is joint venture between the Anil Nanda group
and Federal Mogul, a global supplier of quality
products and solutions to automotive industry. Goetze(India) Limited was established in 1954 as a joint
venture with Goetze-Werke of Germany.
Goetze-Werke of Germany is now owned by Federal-
Mogul Corporation, a $6.3 billion global companyand one of the leading manufacturers of automotive
components in the world.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
3/27
Manufacturer of pistons and piston rings in India.
Federal-Mogul has been creating value through
innovation and leading technology for more than
100 years. Today, the company is a key player inthe global marketplace, serving industries that
range from automotive and commercial vehicles
to railroad and aerospace. Customers know they
can rely on Federal-Moguls quality excellence inproducts, trusted brands and creative solutions.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
4/27
This company started with a bold idea and over time
grew into a FORTUNE500 company with a global
workforce thousands strong. The Federal-Mogul team
has celebrated countless victories and worked hard toovercome the inevitable challenges.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
5/27
Inventory management- Every enterprise needs
inventory for smooth running of its activities. it
serves as a link between production and distribution
processes. there is generally a time lag between therecognition of need and its fulfillment. the greater
the time lag, the higher the requirement for inventory.
the unforeseen fluctuations in demand and supply of
goods also necessitate the need for inventory.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
6/27
The Transaction motive
The Precautionary motive
The Speculative motive
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
7/27
Four kinds of inventories may be identified:
Raw material
Work in process
Stores and spares Finished goods
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
8/27
Category A - items contain high value items andimportant material directly linked with production. Itincludes one product i.e. CIMSTAR MB62C.
Category B- It includes items, which are directly linkedwith production but are having less value than items. Itincludes three products i.e. SERVO SYSTEM 68,HYPSIN EP-68, Cutting oil, Arc light.
Category CIt includes items products such as ,kerosene oil, power oil, servo system 121, servo CUS,quenching oil, preventing oil etc.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
9/27
In stores computers are being used to store maximum, minimum, re-order levels of each item. Recently the firm has started using JITtechnique.
The purchases of FMGIL are centralized and authority lies with the
purchase department. No body is allowed to make purchase himself,directly. For purchasing purpose a meeting is held at held office inwhich planning is done on basis of last years consumption. Majorpurchase is done by head office but local purchase is also for certainitems. Procedure of acquiring inventories starts with the receipt ofmaterial. When the material reaches the main gate it needs to be
inspected and only after inspection of invoices materials is sent tothe store department. Then the material is inspected and is approvedor rejected as the case may be.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
10/27
ABC CLASSIFICATION
SDE CLASSIFICATION
GOLF CLASSIFICATION
FSN CLASSIFICATION
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
11/27
51.RAW MATERIAL 42.FOUNDARY FLUXES, OILS AND LUBRICANTS 63.PACKING MATERIALS 54.GRINDING 55.DRILL 76.CUTTER 57.CARBIDE TOOLS 60.BEARING 62.CIVIL AND PIPE FITTING MATERIAL
83 RUBBER PRODUCTS 64.NUTS, BOLTS, WASHERS & SPACERS 65.HAND/INSPECTION TOOLS 66.WELDING AND FIRE FIGHTING MATERIAL
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
12/27
Determination of stock level
1.minimum level of stock
2.Re ordering level
3.Maximum level4.Danger level
Economic order quantity
Inventory turnover ratio
JIT inventory control system
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
13/27
INVENTORY TURNOVER RATIOInventory turnover ratio also known as stock velocity isnormally calculated as sales/average inventory or costof goods sold/average inventory. It would indicate
whether inventory has been efficiently used or not. Thepurpose is to see whether only the required minimumfunds have been locked up in inventory. Inventoryturnover ratio indicates the number of times the stock
has been turned over during the period and evaluatesthe efficiency with which a firm is able to manage itsinventory.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
14/27
Inventory turnover ratio = cost of goods soldAverage inventory
Cost of goodssold
72,331.21 85,828.60 1,06,045.58
AverageInventory
10,033.13+9,135.37/2
9,135.37+10,564.05/2
10,564.05+13,920.16/2
Inventoryturnover ratio 7.5 times 8.7 times 8.6 times
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
15/27
The inventory turnover ratio is quite good andimproving.
The ratio increased from 7.5 to 8.6 times which
indicates efficient management of inventory.
More frequently the stocks are sold.
Lesser amount of money is required to finance the
inventory.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
16/27
The following methods can be adopted to value the raw material: First-In-First-Out (FIFO):When a firm adopts the FIFO method
to price its raw material, the issue of material from the storeswill be in the order which it was received. Thus the pricingwill be based on the cost of material that was obtained first.
Last-In-First-Out (LIFO): In the LIFO method, the materialissued will be priced based on the material that has beenpurchased recently.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
17/27
Inventory conversion period indicates time taken for clearing the stock as itmeasures the velocity of conversion of stock management of inventory
because more frequent the stocks are sold the less amount of money is
required to finance the inventory and vice-versa.
Inventory Conversion Period =
Number of working days
Inventory turnover ratio
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
18/27
No ofworking days
365 365 365
Inventoryturnover
ratio
7.5 times 8.7 times 8.6 times
Inventoryconversionperiod
48 days 41 days 42 days
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
19/27
1. Less inventory conversion period is better because morefastly, we will convert our inventory into sales, there will be
less chance of obsolescence and paying of over-stocking
cost.
2. Inventory conversion period is the part of cash conversioncycle. If this period is very high, it will increase the time to
complete the cash conversion cycle. It means, there will be
more liquidity risk in that level of inventory.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
20/27
1.To know the functioning of the inventories and
understand the system of procurement of
material , its receipt , inspection and its issuing.2. To analyze the inventory control techniques used by
company.
3 .To understand the accounting and valuation of raw
material
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
21/27
Secondary data-It is mainly based upon annual
reports , magazines , office reports, and variouspublished documents of Federal mogul goetze India
ltd.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
22/27
1. MIS reports prepared on regular basis by
Finance Department to manage inventory leveland review of slow and non moving items by all
concerned agencies
2.Mostly all work done with sap software. anyother software is not used by federal employers.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
23/27
3. The various items in raw material are stored atdifferent locations instead of one central location
according to suitability of their use near to the
respective departments. But same are controlled (i.e.
received, recorded ) from one central location that is
from main gernal store.
4.The contract with suppliers for supply of raw
material is decided in advance at the beginning of theyear & factory receives material at that very price all
throughout the year.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
24/27
Earlier company was using wood boxes for packingfinished goods, which were quite safe, and a proper
transportation. But now the company is using
cardboard boxes for packing yet company has reduced
the weight of packing material per box. But quantity of
rejected finished material in inventory has increased.
So company should give attention to improve packing
material to maintain its reputation and reducing cost of
inventory.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
25/27
The company should have independent materialengineering department or material-planning
department, which should plan about material
requirement, purchases, planning of production.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
26/27
Limited time.
Lack of comparative data for interfirm comparison.
7/31/2019 Inventory Mgt Ppt Final Aman Seminar (3)
27/27