36421186 ranjana-project-report-on-inventory-management

INTRODUCTION

“Adequate inventories facilitates production activities and help to customers satisfaction by

providing good service.”

The basic financial aim of an enterprise is maximization of its value. At the same time, a large

both theoretical and practical meaning has the research for determinants increasing the firm

value. Most financial literature contains information about numerous factors influencing the

value. Among those factors is the net working capital and elements creating it, such as the level

of cash tied in accounts receivable, inventories and operational cash balances. A large majority

of classic financial models proposals, relating to the optimum current assets management, were

constructed with net profit maximization in view. In order to make these models more suitable

for firms, which want to maximize their value, some of them must be reconstructed. In the

sphere of inventory management, the estimation of the influence of changes in a firm’s decisions

is a compromise between limiting risk by having greater inventory and limiting the costs of

inventory. It is the essential problem of the corporate financial management.

The basic financial inventory management aim is holding the inventory to a

minimally acceptable level in relation to its costs. Holding inventory means using capital to

finance inventory and links with inventory storage, insurance, transport, obsolescence, wasting

and spoilage costs. However, maintaining a low inventory level can, in turn, lead to other

problems with regard to meeting supply demands. The inventory management policy decisions,

create the new inventory level in a firm. It has the influence on the firm value. It is the result of

opportunity costs of money tied in with inventory and generally of costs of inventory managing.

Both the first and the second involve modification of future free cash flows, and in consequence

the firm value changes.

Inventory changes (resulting from changes in inventory management policy of the

firm) affect the net working capital level and the level of operating costs of inventory

management in a firm as well. These operating costs are result of storage, insurance, transport,

obsolescence, wasting and spoilage of inventory.

Maximization of the owners’ wealth is the basic financial goal in enterprise

management. Inventory management techniques must contribute to this goal. The modifications

to both the value-based EOQ model and value-based POQ model may be seen in this article.

Inventory management decisions are complex. Excess cash tied up in inventory burdens the

enterprise with high costs of inventory service and opportunity costs. By contrast, higher

inventory stock helps increase income from sales because customers have greater flexibility in

making purchasing decisions and the firm decrease risk of unplanned break of production.

Although problems connected with optimal economic order quantity and production order

quantity remain, we conclude that value-based modifications implied by these two models will

help managers make better value-creating decisions in inventory management.

INTRODUCTION OF INVENTORY

Inventories constitute the most significant part of current assets of a large majority of companies in

India. On an average, inventories are approximately 60% of current assets in public limited

companies in India. Because of the large size of inventories maintained by firms, a considerable

amount of feuds is required to be committed to them. It is therefore, absolutely imperative to ménage

inventories efficiently and efficiently in order to avoid unnecessary investment. A firm neglecting

the management of inventories will be jeopardizing its long run profitability and may fail ultimately.

It is possible for fore a company to reduce its levels 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 a favourable impact on a

company’s profitability.

MEANING OF INVENTORY:-

Inventory is the physical stoke of goods maintained in an organization for its smooth sunning. In

accounting language it may mean stock of finished goods only. In a manufacturing concern, it

may includes raw materials, work-in-progress and stores etc. In the form of materials or supplies

to be consumed in the production process or in the rendering of services.

In brief, Inventory is unconsumed or unsold goods purchased or manufactured.

NATURE OF INVENTORIES :-

Inventories are stock of the product a company is manufacturing for sale and

components that make up the product. The various forms in which inventory exist in a

manufacturing company are raw materials, work in progress and finished goods.

RAW MATERIALS:-

Raw materials are those inputs that are converted into finished product though

the manufacturing process. Raw materials inventories are those units which have been

purchased and stored for future productions.

WORK IN PROGRESS:-

These inventories are semi manufactured products. They represent products that need

more work before they become finished products for sales.

PACKAGING MATERIAL:-

Packaging material includes those items which are used for packaging of

perfumery product i.e. cap of the bottle, pump, coller,liver, box etc.

FINISHED GOODS:-

Finished goods inventories are those completely manufactured products which

are ready for sale. Stock of raw materials and work in progress facilitate production. While stock

of finished goods is required for smooth marketing operation. Thus, inventories serve as a link

between the production and consumption of goods.

The levels of four kinds of inventories for a firm depend on the nature of its

business. A manufacturing firm will have substantially high levels of all three kinds of

inventories, while a retail or wholesale firm will have a very high and no raw material and work

in progress inventories. Within manufacturing firms, there will be differences. Large heavy

engineering companies produce long production cycle products, therefore they carry large

inventories. On the other hand, inventories of a consumer product company will not be large,

because of short production cycle and fast turn over.

INVENTORY MANAGEMENT

As the cost of logistics increases the manufacturers are looking to inventory management as a

way to control costs. Inventory is a term used to describe unsold goods held for sale or raw

materials awaiting manufacture. These items may be on the shelves of a store, in the backroom

or in a warehouse mile away from the point of sale. In the case of manufacturing, they are

typically kept at the factory. Any goods needed to keep things running beyond the next few

hours are considered inventory.

"Inventory" to many small business owners is one of the more visible and tangible aspects of

doing business. Raw materials, goods in process and finished goods all represent various forms

of inventory. Each type represents money tied up until the inventory leaves the company as

purchased products. Likewise, merchandise stocks in a retail store contribute to profits only

when their sale puts money into the cash register.

In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks

represent a large portion of the business investment and must be well managed in order to

maximize profits. In fact, many small businesses cannot absorb the types of losses arising from

poor inventory management. Unless inventories are controlled, they are unreliable, inefficient

and costly.

Inventory management simply means the methods you use to organize, store and replace

inventory, to keep an adequate supply of goods while minimizing costs. Each location where

goods are kept will require different methods of inventory management. Keeping an inventory,

or stock of goods, is a necessity in retail. Customers often prefer to physically touch what they

are considering purchasing, so you must have items on hand. In addition, most customers prefer

to have it now, rather than wait for something to be ordered from a distributor. Every minute that

is spent down because the supply of raw materials was interrupted costs the company unplanned

expenses

DEFINITIONS OF INVENTORY MANAGEMENT

1. Policies, procedure and techniques employed in maintaining the optimum number or

amount of each inventory item.

2. Systems and processes that identify inventory requirements, set targets, provide

replenishment techniques and report actual and projected inventory status.

3. Handles all functions related to the tracking and management of material. This would

include the monitoring of material moved into and out of stockroom locations and the

reconciling of the inventory balances. Also may include ABC analysis, lot tracking, cycle

counting support etc.

DEFINITIONS OF INVENTORY

1. Inventory”: goods that businesses intend to sell to their customers or raw materials or in-

process items that will be converted into salable goods

2. “Inventory is the stock of idle resources which has economic value and is maintained to

fulfill the present and future needs of an organization”

3. In Manufacturing Organization : Inventory can be as raw materials, spare parts,

components and finished goods etc…

4. In Service Organization : Inventory of any Bank can be broachers, forms, pamphlets

and also can be currency notes and coins. Hospitals can have inventory as syringes,

glucose bottles, medicines etc.

IIMPORTANCEMPORTANCE OFOF INVENTORYINVENTORY

Inventory represents one of the most important assets that most businesses possess, because the

turnover of inventory represents one of the primary sources of revenue generation and

subsequent earnings for the company's shareholders/owners.

The word 'inventory' can refer to both the total amount of goods and the act of counting them.

Many companies take an inventory of their supplies on a regular basis in order to avoid running

out of popular items. Others take an inventory to insure the number of items ordered matches the

actual number of items counted physically. Shortages or overages after an inventory can indicate

a problem with theft or inaccurate accounting practices.

Possessing a high amount of inventory for long periods of time is not usually good for

a business because of inventory storage, obsolescence and spoilage costs. However,

possessing too little inventory isn't good either, because the business runs the risk of losing out

on potential sales and potential market share as well.

OBJECTIVES OF INVENTORY MANAGEMENT

The basic managerial objectives of inventory control are two-fold; first, the avoidance

over-investment or under-investment in inventories; and second, to provide the right quantity

of standard raw material to the production department at the right time. In brief, the

objectives of inventory control may be summarized as follows:

A. Operating Objectives:

(1) Ensuring Availability of Materials: There should be a continuous availability of all

types of raw materials in the factory so that the production may not be help up wants of any

material. A minimum quantity of each material should be held in store to permit production

to move on schedule.

(2) Avoidance of Abnormal Wastage: There should be minimum possible wastage of materials

while these are being stored in the godowns or used in the factory by the workers. Wastage

should be allowed up to a certain level known as normal wastage. To avoid any abnormal

wastage, strict control over the inventory should be exercised. Leakage, theft, embezzlements

of raw material and spoilage of material due to rust, bust should be avoided.

(3) Promotion of Manufacturing Efficiency: If the right type of raw material is available to the

manufacturing departments at the right time, their manufacturing efficiency is also increased.

Their motivation level rises and morale is improved.

(4) Avoidance of Out of Stock Danger: Information about availability of materials should be

made continuously available to the management so that they can do planning for

procurement of raw material. It maintains the inventories at the optimum level keeping in

view the operational requirements. It also avoids the out of stock danger.

(5) Better Service to Customers: Sufficient stock of finished goods must be maintained to

match reasonable demand of the customers for prompt execution of their orders.

(6)Highlighting slow moving and obsolete items of materials.

(7) Designing poorer organization for inventory management: Clear cut accountability should

be fixed at various levels of organization.

B. Financial Objectives:

(1) Economy in purchasing: A proper inventory control brings certain advantages and

economies in purchasing also. Every attempt has to make to effect economy in purchasing

through quantity and taking advantage to favorable markets.

(2) Reasonable Price: While purchasing materials, it is to be seen that right quality of material

is purchased at reasonably low price. Quality is not to be sacrificed at the cost of lower price.

The material purchased should be of the quality alone which is needed.

(3)Optimum Investing and Efficient Use of capital: The basic aim of inventory control from

the financial point of view is the optimum level of investment in inventories. There should be

no excessive investment in stock, etc. Investment in inventories must not tie up funds that

could be used in other activities. The determination of maximum and minimum level of stock

attempt in this direction.

IIMPORTANCEMPORTANCE OFOF INVENTORYINVENTORY MANAGEMENTMANAGEMENT

1. COUNTING CURRENT STOCK

All businesses must know what they have on hand and evaluate stock levels with respect to

current and forecasted demands. You must know what you have in stock to ensure you can meet

the demands of customers and production and to be sure you are ordering enough stock in the

future. Counting is also important because it is the only way you will know if there is a problem

with theft occurring at some point in the supply chain. When you become aware of such

problems you can take steps to eliminate them.

2. CONTROLLING SUPPLY AND DEMAND

Whenever possible, obtain a commitment from a customer for a purchase. In this way, you

ensure that the items you order will not take space in your inventory for long. When this is not

possible, you may be able to share responsibility for the cost of carrying goods with the

salesperson, to ensure that an order placed actually results in a sale. You can also keep a list of

goods that can easily be sold to another party, should a customer cancel. Such goods can be

ordered without prior approval.

Approval procedures should be arranged around several factors. You should set minimum and

maximum quantities which your buyers can order without prior approval. This ensures that you

are maximizing any volume discounts available through your vendors and preventing over-

ordering of stock. It is also important to require pre-approval on goods with a high carrying cost.

3. KEEPING ACCURATE RECORDS

Any time items arrive at or leave a warehouse, accurate paperwork should be kept, itemizing the

goods. When inventory arrives, this is when you will find breakage or loss on the goods you

ordered. Inventory leaving your warehouse must be counted to prevent loss between the

warehouse and the point of sale. Even samples should be recorded, making the salesperson

responsible for the goods until they are returned to the storage facility. Records should be

processed quickly, at least in the same day that the withdrawal of stock occurred.

4. MANAGING EMPLOYEES

Buyers are the employees who make stock purchases for your company. Reward systems should

be set in place that encourage high levels of customer service and return on investment for the

product lines the buyer manages.

Warehouse employees should be educated on the costs of improper inventory management. Be

sure they understand that the lower your profit margin, the more sales must be generated to make

up for the lost goods. Incentive programs can help employees keep this in perspective. When

they see a difference in their paychecks from poor inventory management, they are more likely

to take precautions to prevent shrinkage.

Each stock item in your warehouse or back room should have its own procedures for

replenishing the supply. Find the best suppliers and storage location for each and record this

information in official procedures that can easily be accessed by your employees.

Inventory management should be a part of your overall strategic business plan. As the business

climate evolves towards a green economy, businesses are looking for ways to leverage this trend

as part of the “big picture”. This can mean re-evaluating your supply chain and choosing

products that are environmentally sound. It can also mean putting in place recycling procedures

for packaging or other materials. In this way, inventory management is more than a means to

control costs; it becomes a way to promote your business.

SUCCESSFUL INVENTORY MANAGEMENT

Successful inventory management involves balancing the costs of inventory with the benefits of

inventory. Many small business owners fail to appreciate fully the true costs of carrying

inventory, which include not only direct costs of storage, insurance and taxes, but also the cost of

money tied up in inventory. This fine line between keeping too much inventory and not enough

is not the manager's only concern. Others include:

• Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too

thin;

• Increasing inventory turnover -- but not sacrificing the service level;

• Keeping stock low -- but not sacrificing service or performance.

• Obtaining lower prices by making volume purchases -- but not ending up with slow-

moving inventory; and

• Having an adequate inventory on hand -- but not getting caught with obsolete items.

• The degree of success in addressing these concerns is easier to gauge for some than for

others. For example, computing

ABOUTABOUT I INVENTORYNVENTORY C CONTROLONTROL

Inventory consists of the goods and materials that a retail business holds for sale or a

manufacturer keeps in raw materials for production. Inventory control is a means for maintaining

the right level of supply and reducing loss to goods or materials before they become a finished

product or are sold to the consumer.

Inventory control is one of the greatest factors in a company’s success or failure. This part of the

supply chain has a great impact on the company’s ability to manufacture goods for sale or to

deliver customer satisfaction on orders of finished products. Proper inventory control will

balance the customer’s need to secure products quickly with the business need to control

warehousing costs. To manage inventory effectively, a business must have a firm understanding

of demand, and cost of inventory.

ADVANTAGES OF INVENTORY CONTROL:

(1) Reduction in investment in inventory.

(2) Proper and efficient use of raw materials.

(3)No bottleneck in production.

(4) Improvement in production and sales.

(5) Efficient and optimum use of physical as well as financial resources.

(6)Ordering cost can be reduced if a firm places a few large orders in place of numerous small

orders.

(7)Maintenance of adequate inventories reduces the set-up cost associated with each production

Run.

INVENTORY COSTS

There are three main types of cost in inventory. There are the costs to carry standard inventories

and safety stock. Ordering and setup costs come into play as well. Finally, there are shortfall

costs. A good inventory control system will balance carrying costs against shortfall costs.

SAFETY STOCK

Safety stock is comprised of the goods needed to be kept on hand to satisfy consumer demand.

Because demand is constantly in flux, optimizing the Safety Stock levels is a challenge.

However, demand fluctuations do not wholly dictate a company’s ability to keep the right supply

on hand most of the time. Companies can use statistical calculations to determine probabilities in

demand.

ORDERING COSTS

Ordering costs have to do with placing orders, receiving and stowage. Transportation and invoice

processing are also included. Information technology has proven itself useful in reducing these

costs in many industries. If the business is in manufacturing, then to production setup costs are

considered instead.

THE COST OF SHORTFALLS

Stock out or shortfall costs represent lost sales due to lack of supply for consumers. Sales

departments prefer these numbers be kept low so that an ample stock will always be kept.

Logistics managers prefer to err on the side of caution to reduce warehousing costs.

Shortfall costs are avoided by keeping an ample safety stock on hand. This practice also

increases customer satisfaction. However, this must be balanced with the cost to carry goods.

The best way to manage stockout is to determine the acceptable level of customer service for the

business. One can then balance the need for high satisfaction with the need to reduce inventory

costs. Customer satisfaction must always be considered ahead of storage costs.

CYCLICAL COUNTING

Many companies prefer to count inventory on a cyclical basis to avoid the need for shutting

down operations while stock is counted. This means that a particular section of the warehouse or

plant is counted physically at particular times, rather than counting all inventory at once. While

this method may be less accurate than counting the whole, it is much more cost effective.

Cyclical counting is preferred because it allows for operations to continue while inventory is

taken. If not for this practice, a business would have to shut down while counts were taken, often

requiring the hire of a third party or use of overtime employees. Cyclical counting usually

utilizes the ABC rule, but there are other variations of this method that can be used. The ABC

rule specifies that tracking 20 percent of inventory will control 80 percent of the cost to store the

goods. Therefore, businesses concentrate more on the top 20 percent and counter other goods

less frequently. Items are categorized based on three levels:

• A Category: Top valued 20 percent of goods, whether by economic or demand value

• B Category: Midrange value items

• C Category: Cheaper items, rarely in demand

Warehouse staff can now schedule counting of inventories based on these categories. The “A”

category is counted on a regular basis while “B” and “C” categories are counted only once a

month or once a quarter.

COMMON INVENTORY VALUATION METHODS

The methods a company uses to value the costs of inventory have a direct effect on the business

balance sheets, income statements and cash flows. Three methods are widely used to value such

costs. They are First-In, First-Out (FIFO), Last-In First-Out (LIFO) and Average Cost. Inventory

can be calculated based on the lesser of cost or market value. It can be applied to each item, each

category or on a total basis.

FIFO

FIFO operates under the assumption that the first product that is put into inventory is also the

first sold. An example of this in action can be made when we assume that a widget seller

acquires 200 units on Monday for Rs.1.00 per unit. The next day, he spots a good deal and gets

500 more for Rs.75 per unit. When valuing inventory under the FIFO method, the sale of 300

units on Wednesday would create a cost of goods sold of Rs.275. That is, 200 units at Rs1.00

each and 100 units at Rs.75 each. In this way, the first 200 units on the income statement were

valued higher. The remaining 400 widgets would be valued at Rs.75 each on the balance sheet in

ending inventory.

LIFO

LIFO assumes instead that the last unit to reach inventory is the first sold. Using the same

example, the income statement and balance sheet would instead show a cost of goods sold of

Rs.225 for the 300 units sold. The ending inventory on the balance sheet would be valued at

Rs.350 in assets. When this method is used on older inventories, the company’s balance sheet

can be greatly skewed. Consider the company that carries a large quantity of merchandise over a

period of 10 years. This accounting method is now using 10-year-old information to value its

assets.

WEIGHTED AVERAGE

Average Cost works out a weighted average for the cost of goods sold. It takes an average cost

for all units available for sale during the accounting period and uses that as a basis for the cost of

goods sold. To site our example again, we would calculate the cost of goods sold at [(200 x Rs.1)

+ (500 x Rs.75)]/700, or Rs.821 each. The remaining 400 units would also be valued at this rate

on the balance sheet in ending inventory.

SPECIFIC IDENTIFICATION

A less commonly used, but important method to valuation is called specific identification. This

method is used for high-end items that are more easily tracked. In some cases, this method can

be used for more common items, but less value is realized from this accounting method is such

cases. This is because powerful and detailed tracking software is required to employ specific

identification on large numbers of goods.

INFLATIONARY EFFECTS ON VALUATION

No matter how you look at it, you are still coming up with 700 widgets that cost you a total of

Rs.575. This would all be well and good if the value of money remained static. However, market

conditions change causing inflationary changes. When this happens, your accounting method can

have a strong impact on how healthy the business looks on income statements and balance

sheets. The affects cash flow when businesses seek credit to pay for ongoing operations.

RISING PRICES

When prices are rising, using FIFO will show a greater value on the balance sheet, thereby

increasing tax liabilities but also improving credit scores and the ability to borrow cash for

ongoing operations. Older inventory is being used to determine the cost of goods sold and newer

inventory is being used to report assets. LIFO decreases the value on the income statement, but

can reduce the level of depreciation you are able to take on assets. This is good for taxes but bad

for borrowing. Industries most likely to adopt LIFO are department stores and food retailers. The

method is rarely used in defences.

NEED OF THE STUDY :-

Inventories are equivalent to cash and they make up an important of the total cost.

It is essential that inventory should be properly safeguarded and correctly accounted.

Proper control of inventory can make a substantial contribution to the efficiency of a

bussiness. The success of a business concern largely depends upon efficient purchasing,

storage, consumption and accounting.

Inventory plays a vital role in study of inventory

management in bulk so I selected the SFP Sons pvt.ltd.

STATEMENT OF PROBLEM

The current system in the company under inventory management system which doesn’t

specify the safety stock which leads to scare for stocks at emergency.

The data are not properly updated at the end of each day’s work. Proper data

security system is not provided. Annual maintenance contract is not provided.

Records are not maintained properly.

INDUSTRY PROFILE

The perfume industry in India has come of age. From a cottage industry it has become full-

fledged industry in the last two decades. The industry is growing at 125 percent annually. The

growth is attributed to an increase in disposable income.

WITH GLOBALIZATION, liberalization and the IT revolution, living standards of the Indians

have increased manifold. The demand for fashionable products has increased too. That is why;

all global players are eyeing the subcontinent for business purpose. The illegal flow of lifestyle

products confirm the great demand for these products in India. The affinity of the Indians for

foreign goods also compels the indigenous manufacturers to tie-up with international brands to

tap this segment of people.

The fragrances industry is big business, very big business. It includes much more than retail sales

of fragrances. Related industries such as chemical companies supply the chemicals and the

fragrances are made from it. Most fragrances chemicals are synthesized from petroleum

products. Some companies formulate fragrances and flavours for other companies. Marketing

and advertising are used to create and promote the image of a fragrance.

The perfume industry, basically, was just a cottage industry some two decades ago. But now, due

to the huge demand among the people, it has blossomed into a full-fledged industry. Recently,

‘Alcome Perfumes and Cosmetics’, declared a plan to set up a Rs. 100 crore green field perfume

plant in and around Noida Special Economic Zone.

The domestic perfume market is estimated to be worth Rs.300 crore and is growing at around

125 percent annually. The forecast is that it may grow at a rate of 200 percent in the coming

years, with fast changing consumer behaviour and habits.

Geneva-base International Fragrance association has estimated that the global perfume market is

worth $ 40 billion, out of which the mass market has a 70 percent share. In this, India, China has

a considerable share.

With the growing demand for fragrance, the Indian perfume companies are planning to change

their strategies by utilizing their resources mainly for the domestic market and a meager portion

for exports. Apart from that these that these companies are also planning a multiple marketing

and distribution strategy to foray into a market with huge potential. The potential is immense as

the middle class is growing rapidly and disposable incomes are increasing.

(History of perfume industry)1.1760

1760 - In 1760, in London, James Henry Creed founded the House of Creed. filtered, all by

hand in the highest tradition of the founder, James Henry Creed. Creed,cologne,designer

perfume, Olivier Creed,Perfume,womens perfume,James Henry Creed,Empress

EugÃƒÂ©nie,discounted perfume,fragrance,Country,French perfume, perfume

industry,Jasmine,womens fragrances,shopping cart,originality,scents,Master Perfumer,the

French.

2.1921

1921 - Coco Chanel revolutionised the perfume industry by being the first to make a mass

market scent for every woman when she launched Chanel No5 in 1921. You can still spritz on

some of that vintage glamour today with your own bottle, £46 for 50ml EDT at House of Fraser

3.1987

Feb 28, 1987 - When perfumed gloves came into fashion in the 16th century, the town

gradually developed a separate perfume industry. ... The Provencal Art and History Museum,

originally the 18th century home of Louise de Mirabeau, houses a fine collection of Provencal

art. The 17th century Fragonard.

4.1988

Nov 25, 1988 - It is one of the 200 fragrance-related art objects currently on view in the

"Scents of Time" exhibit at the Museum of Science and Industry. The exhibit traces the history

and evolution of fragrance, connecting each phase with the social, political and cultural trends of

the time. ...

5. 1991

Feb 17, 1991 - Written in collaboration with Patricia Bayer, the book includes chapters on

Rene Lalique's life, the development of the perfume industry, the history of the Lalique

company, and collecting tips. An appendix provides information on dating bottles by the

signature .

6. 1999

Dec 9, 1999 - of newly fragrances remain on the shelf after a year of launching," says

international director for Antonio PUIG perfumes, Eugeni Majo. cosmetics industry is a dynamic

one. it's competitive and only companies that manage to create an product that differs from the

rest will remain"

7. 2000

Jun 20, 2000 - Halifax's eight-year-old "No Scents" policy is creating a big stink in the

perfume industry. Representatives from the American and Canadian perfume industry were in

Halifax Tuesday to launch a counter attack ad campaign as a way of stopping the campaign from

spreading.

8.2001

Nov 23, 2001 - hitherto unknown insights into the use of perfumes through the ages and

learn that "the history of perfume is often intertwined with the history ... But, it was the Arabs

who linked "the past and present of the perfume industry", says the portal. "The process of

extracting oils from flowers.

9.2002

Apr 11, 2002 - Scented oils and perfumes were stored in elaborate and beautiful pots and

jars throughout Egyptian history. ... "Never before has a series of exhibitions in Egypt and

abroad been devoted to a single industry, which has resulted in such a wide range of artistic and

utilitarian objects,"

10.2004

Sep 22, 2004 - It was a scent that changed the American position in the perfume

industry. Women across this nation began to forsake all of the costly and well- ... She offered her

vast store of perfume knowledge and its history with great generosity.

COMPANY PROFILE

SOMABHAI FULABHAI PATEL (SFP)

SFP Sons (India) Pvt. Ltd established in 1992 is one of the leading manufacturers of

Perfumes and cosmetics in India. SFP is located in Special Economic Zone, Chennai and was

Formerly known as S. F. Patel & Sons (India).SFP manufactures wide range of over 1000+

products under its own brands 'Ahsan', 'Tara', 'Taibah', 'Malaki', 'Salaam', 'Silent Valley' and

'Crazy Moments'. These products are widely available in more than 20 countries. Product

range includes Attars (concentrated perfume oils), Spray Perfumes (EDT, EDP, colognes and

body mists), Perfume Gels, Creams and Gels for Hair and body, Cleansing lotion, Shower

Gels, Shampoos, Hair Oil and Talcum powders.

SFP is a ISO 9001 certified company and is committed to manufacture quality products.

All products manufactured are skin friendly and abide by all international standards laid

down by governing bodies like IFRA, FDA et al.

SFP factory is spread over 100,000 sq. ft area and

employees over 400+ people. It houses a well equipped R & D laboratory and highly

qualified team to develop and manufacture high quality products. It has a sound

infrastructure and modern facilities which helps every activity and product of SFP fulfill its

brand promise and mantra –

“BRINGING FRANGRANCE TO LIFE”

SFP processes are managed and controlled through SAP. The SFP team is skilled, trained and

equipped to meet and deliver all customer expectations.VISION AND MISSION

Company vision becomes a globally leading company in perfumes and cosmetics

industry.

Company mission, delivers the quality product with protection of environment and protect

The health of customer.

SFP aims at attaining, commanding market position in supply of perfumery and

cosmetic product by meeting the needs and expectation of customers and enhancing their

satisfaction.

MANAGEMENT

SFP was started by its present Managing Director Mr. Dinesh S. Patel an entrepreneur with

dream and vision to make SFP a globally leading Company in perfumes and Cosmetics industry.

He believes hard work, commitment and passion combined can enrich every individual's life.

R & D Lab

SFP has well equipped laboratory and research section, equipped to carry out in-house

development and testing required as per laid down standards. Latest GC, refract meters, SG

meter, Ph meters, Viscometers and other Instruments are manned by trained personnel.SFP is

committed to quality through its strict quality control methods. Using latest technology every

component and product are tested as per international standards at all stages of manufacturing to

ensure high quality perfumes and cosmetics.

BLENDING

SFP also blends some of its

Own fragrances. It has 8 nos

of blending tanks of capacity

1 ton with cooling lines.

It has DM Water plant and a

RO water plant. SFP has two

tanks for alcohol storage which can hold 50000 liters.

COSMETIC MANUFACTURING

Cosmetic products manufacturing is done is well

equipped modern facilities. This plant has oil phase

vessel, water phase vessel and a main homogenizing

vessel of capacity 1 ton. SFP also has

50 liter plant to cater to smaller needs

DISTILLATION

SFP also houses a unique and traditional perfume oil

extraction unit from natural

ingredients. Here by distillation oils are extracted

which are used in fragrance blends.

FILLING AND PACKING

Production facilities are well laid down with

separate buildings for Attars, Sprays, Creams and

Gels, Hair oils and Talcum powder. A total of 12

production lines have a capacity to fill and pack

120,000 units every day per shift.

WAREHOUSE

The newly constructed ware house has area of over

20000 sq. ft and is well arranged to monitor and

move material with ease. All products are bar-coded

for efficient identification. SFP is well connected by

road, sea and air to have excellent supply chain.

TRAINING

SFP Training Centre provides trainings to all its employees on regular basis. The training is

totally based on skill and personality development to drive individuals and the company forward.

SHOWROOM

The showroom within the factory premises

displays a range of products. It also displays

packaging material components. Here customers

can select items of their choice for their markets.

QUALITY OBJECTIVES OF SFP

• On-time delivery of final product to customer.

• Zero level of non-conformity at In-process and final stage of the product.

• Zero level of customer complaint to enhance customer satisfaction.

QUALITY POLICY OF SFP

SFP committed to the aim and objectives of the company to manufacture products that are satisfy customer’s needs and expectations.

SFP shall implement the quality management system to meet agreed requirements to enhance customer satisfaction and improve its effectiveness continually.

SFP commit to highest levels of integrity and professionalism in all aspect of our business.

Credentials of SFP

➢ Raad voor accreditatie, Netherland has licensed SFP Sons (India) Pvt. Ltd and listed

in the bureau’s register of licensees of Quality management system certification in

respect of the products and services in accordance with ISO 9001:2008 and also ISO

14001: 2004 for Environment management system.

➢ SFP is a member of export promotion council.

➢ SFP has been recognized as one star export house having the certificate issued by the

ministry of commerce & industry, government of India.

➢ In 2007 RAJIV GANDHI national quality award panel has awarded SFP with a

➢ Commendation certificate for quality standard of the company at all India level.

➢ SFP is a member with Essential oil association of India.

➢ SFP is register with IFRA and FDA.

FACILITIES AND TECHNOLOGY OF SFP

ℵ Well planned perfume blending set up with the required vessels, tanks and all relevant

accessories.

ℵ Traditional fragrance extraction set up for manufacturing special attars.

ℵ Well-equipped cosmetics manufacturing unit with boiler etc.

ℵ D.M. water plant

ℵ R.O. water plant.

ℵ Well-equipped packaging section having bottles and tubes filing and wrapping machines.

ℵ Well-equipped talc manufacturing unit.

ℵ Hair oil unit with automatic filling, capping machines, shrink wrapping and labeling

machine.

ℵ Alcohol(perfumery grade) storage tanks

ℵ Quality control laboratory with advanced GC machine and relevant testing

apparatuses.

ℵ Well-equipped in built R&D centre.

ℵ Design and development department which consistently create packaging design

which customers’ purpose and also innovates new designs and present to them.

ℵ The company has warehouse having a large space and materials handling equipments

and forklift.

ℵ The plant has 12 filling lines and a capacity of 1, 20,000 bottles per shift.

ℵ All the activities of company are done in the world class software SAP business 1.

.HUMAN RESOURCE

Competence, awareness, training

Available competence level of each employee on the basis of his education skill and

experience is assessed and accordingly training needs are identified and provided competence

map is done for all those who are directly connected to the performance of conformity to

product required directly (or) indirectly.

Beside training communication system is established providing relevant information

to enhance the awareness level of personnel in relation to SFP performance required.

Effectiveness of the action taken is evaluated organist requirement and corrective

actions/ further improvement oriented actions are taken as on-going exercise.

While implementing the above activities it is ensured that personnel are made aware

of the relevance and important of their activities considering this an integral requirement for

their contribution towards achievement of quality objectives.

Records of education, training, skill & experience are maintained as long as the

employee is in service roll in SFP.

Manpower in SFP

Every department has a highly experienced and qualified team. Company has around 250

skilled workers. The company has 120 experienced hands in the line of sales and marketing

team. The company has a fully equipped training hall which accommodates 50 persons at a

time and regular training programs are held at different levels. The training is totally based on

skill and personality development to drive individuals and the company forward

ORGANISATIONAL CHART

DESCRIPTION OF PRODUCTION PROCESS

PERFUMERY AND COSMETIC PRODUCTS:

Material used:

Perfumery compounds, aroma chemical solvents. Cosmetics ingredients, coloring

materials procured are the raw materials,

Stage 1

Procured material as above is subjected to inspection and testing to confirm their meeting

specified equipment.

Stage 2

Compounds either as they are with colouring material or a formulated combined of more

than one compound with or without colouring material after subjected to process. Inspection and

testing are send for filling & packaging.

Stage 3

Product are then filling in convenient sizes and packaging i9n cartons as per customer’s

requirements.

During filling operation the containers and the associated accessories are subjected to in

process inspection to ensure state of conformance to specified requirements.

Stage 4

Packaged products undergo final inspection before effecting delivery.

MARKETING

➢ SFP has organized tie-up in Dubai to fee the market in U.A.E. and distribution of the

premium attars to African countries like, Sudan, Egypt,

Somalia, Nigeria, Ghana, Uganda, Zambia, South Africa, Libya, Algeria, Mauritania,

morocco, Chad, and Cameroon.

➢ In Saudi Arabia the company is having distribution tie-ups in Jeddah, Riyadh, Mecca,

Medina, etc.

➢ Also the company is having distribution outlets in Kuwait, Muscat, Bahrain, Doha-Qatar,

Lebanon, Jordan, Syria, Iran, Iraq, and Afghanistan.

➢ The company is also having export market in Sri Lanka, Singapore, Malaysia, Indonesia,

Thailand, Myanmar and Bangladesh.

➢ In the west the company is having market in Atlanta, New York, New Jersey, Chicago,

Las Angeles, London, Spain, and France.

➢ In India there are 750 distributors throughout the country.

PRODUCT PROFILE

Different Brands Manufactured by SFP :

OBJECTIVE OF STUDY :-

Primary objective:-

To analyze that the existing inventory management system in SFP

SONS India pvt.ltd.

Secondary objective:-

1. To verify the mismatch between the order and receipt of mate

2. To find out the impact of inventory on working capital.

3. To find out minimum stock level, how much stock should be order.

LITERATURE REVIEW

Success of any industrial undertaking depends upon the 6 m’s 1) Money

2) Manpower 3) Machine 4) Market 5) Material 6) Management

Materials are pivotal importance not less than any

other M’s. Problems have their root in material affects the efficiency of all men, machine,

money & marketing decisions of the firms and thus become the grave concern of

management at all levels. If there were too much of material problems like ideal funds

lied up in excessive inventory storage and obsolesces difficulties market pressure would

arise. Thus the importance of inventory management is realized.

A number of studies have been done in the

field of inventory management by various researchers. Some of them are given below;

1. Author:- Bern at de William year 2008

This study tells that the main focus of inventory management is on

transportation and warehousing. The decision taken by management depend s on the

traditional method of inventory control models. The traditional method of inventory

management is how much useful in these days the author tell about it. He is also saying

that the traditional method is not a cost reducing, it is so much expensive. But the

managing the inventory is most important work for any manufacturing unit.

2. Author: - Jon Schreibfeder 1992

He said that it is easy to turn cash into inventory, the challenge is to

turn inventory back into cash. In early 1990’s many distributor recognize that they

needed help controlling and managing their largest asset inventory. In response to this

need several companies developed comprehensive inventory management modules and

systems. These new package include many new features designed to help distributors

effectively managed warehouse stock. But after implementing this many distributors do

not feel that they have gained control of their inventory.

3. Author:-Wolf Bagby, Managing inventory

In this study Mr. W.Bagby explains that by managing the inventory it

becomes easier for the organization to meet the profit goals, shorter the cash cycle, avoid

inventory shortage, avoid excessive carrying costs for unused inventory, and improve

profitability by decreasing cash conversion and adopt JIT system. According to this study

companies need to get smart about inventory.

Boosting financial performance is another benefit that comes from

better inventory management. Infect large number of manufacturers enjoy savings and

better performance by choosing the approach of inventory reduction.

For this company needs to maximize the cash flow and profitability

and this includes keeping a watchful discerning eye on charge in supply and demand

4. Author: - Asfaque Ahmed October 12, 2004

(Article from master requirement planning and master production scheduling)

He said that most of the manufacturing company vendors have planning

and scheduling product which assume either infinite production capacity for calculating

quantities of row material and work in progress (WIP) requirements or infinite

quantities of raw material and WIP materials for calculating production capacity. There

are many problems with this approach and how to avoid these by making sure that the

product you are buying indeed takes into account finite quantities of required materials as

well as finite capacities of work centers in your manufacturing facilities.

5. Author:- D.Hoopman April 7, 2003(Article from inventory planning and optimization)

In this article he said that inventory optimization recognize that

different industry have different inventory profiles and requirements. Research has

indicated that solutions are priced in a large range from tens of thousands of dollars to

millions of dollars. In this niche market sector price is definitely not an indicator of

the quality of solution, ROI and usability are paramount.

6. Author:-Silver, Edward A Dec22, 2002 (Article from production and inventory management journal)

This article considers the context of a population of items for

which the assumption underlying the EOQ derivation holds reasonably well.

However as is frequently the cash in practices there is an aggregate constraint that

applies to the population as a whole. Two common forms of constraints are:

1) the existence of budget to be allocated among the stocks of the items and2) a purchasing production facility having the capability to process at most a certain

number of replenishment per year. Because of the constraint the individual

replenishment quantities cannot be selected independently.

5. Author:- Charles Atkinson (A study on inventory management)

In the study by Mr. Charles Atkinson, he explained the inventory

management and assessment of inventory levels. As per this study inventory management

need to address two issue

Part I. How to optimize average inventory levels.

Part II. How to assess (evaluate) inventory levels.

This study tells about what the manager should do and not to do, and

how much amount should be order in one placed orders. Average inventory can be

calculated by simplistic method.

Average inventory = beginning inventory +end inv./2

8. Author:-Delaunay C , Sahin E, 2007.

A lots of work has been done but now if we want to go ahead we

must have good visibility upon this field of research. That is why we are focused on

frame work for an exhaustive review on the problem of supply chain management with

inventory inaccuracies . The author said that their aim in this work is also to present the

most important criterion that allow a distinction between the different type of

managing the inventory.

RESEARCH METHODOGY

Research methodology is the way to systematically solve the research problem.

Objective of research study is to analysis of inventory of SFP Sons and analyzing of

inventory, we determining following inventories-

1. Raw materials inventory,

2. Work in progress inventory,

3. Packaging material inventory &

4. Finished goods inventory

In this section of inventories, we should analyze the annual investment in inventories,

Valuation of inventory after closing balance of items in inventory. In this manner, we

calculate reorder point, safety stock levels, minimum & maximum levels of inventory.

Working hypothesis of the objective is that inventories are the stock piles of goods in an

organization. SFP invests about 40% of total assets inventory should be analyzed their

records.

The analysis of inventory according to their data is available in the company. The data

collection of inventory for analysis is by the direct store department. I went to the all inventories

as raw material, work in progress inventory, finished goods inventory by the proper observation

of data’s of the company.

The particular method for data collection used direct interview with assistants and

telephone interview with friends to known about annual investment of inventories and other

important data.

PERIOD OF STUDY :

The study was conducted in a period between January 2010 to April 2010 during which the researcher studied the company’s relationship with dealers and distributors and obtained their view.

Method of data collection :

In analysis of inventory of SFP, We collect the data by the different sources. We collect the

primary and secondary data.

SECONDARY DATA –

The secondary data are those data that are already in presence for specific

purpose, we use the secondary data about inventory to look old records of the company .For

the daily information about the items are show the MRN, ledger register and daily issue slip

of materials, the purchase register and other documentary evidence used for the findings.

In the analysis of inventory, the secondary data provided is not sufficient then we collected

primary data.

PRIMARY DATA –

Primary data or fresh data are those data that are originated very first time

with the help of primary data we formulated the research objectives. Primary data are the

accurate, attainable, reliable and useful data.

1. Inventory control techniques used by the company

2. Inventory systems as perpetual and periodic systems.

3. Stock levels etc.

4. Company’s website

INVENTORY MANAGEMENT TECHNIQUES

In managing inventories, the firm’s objective should be in consonance with the wealth

maximization principle. To achieve this, the firm should determine the optimum level of

investment in inventory. To deal with the problems of inventory management effectively, it

becomes necessary to be conversant with the different techniques of inventory control.

Although the concepts involved in inventory management are production-oriented and are

not strictly financial it is important that the financial manager understand them since they

have certain built-in financial costs. The different techniques of inventory control may be

summarized as follows:

(1) Inventory level Technique

The main objective of stock control is to determine and maintain the optimum level of stock

so that there is neither shortage of any material nor unnecessary investment in inventory. For

this purpose, determination of maximum and minimum limits of inventory and ordering level

is necessary.

(2) Maximum stock Limit: This represents the quantity of inventory above which it should not

be allowed to be kept. The main object of fixing this limit is to ensure that unnecessary

working capital is not blocked in stores. The quantity is fixed keeping in view the

disadvantages of overstocking.

RE-ORDERING LEVEL (ORDERING LEVEL)

It is the point at which if the stock of the material in stores reaches, the storekeeper should

initiate the purchase requisition for fresh supply of material. This level is fixed somewhere

between maximum and minimum level is such a way that the difference of quantity of the

material between the reordering level and the minimum level will be sufficient to meet

requirements of production up to the time of fresh supply of the material. It is fixed after

taking into consideration the following factors:

ABC ANALYSIS:

ABC Analysis is a basic analytical management tool which enables top

management to place the effort where the result will be greatest. This technique,

popularly known as always better control or the alphabetical approach, has universal

applications in many areas of managing the inventory.

The technique tries to analyze the distribution of any characteristic by

money value of importance in order to determine its priority.

The annual consumption analysis of any organization would indicate that a handful of

top high value items less than 10% of total number will account for a substantial portion

of about 75% of the total consumption value and these few vital item are called A class items

which need careful attention of the materials manager. Similarly a large number of bottom

items over 70% of total number called the trival many account only for about 10% of the

consumption value and are known as the ‘C’ class. The items that lie between the top and

bottom are called the ‘B’ category item.

The following facts need to be noted with regard to ABC Analysis:

1. Through usually the inventory items are classified into three categories viz AB andC only,

but nothing prohihibits a firm to undertake the analysis on the basis of a larger

catagorisization.

2.It is necessary for an effective ABC analysis that all the items should be included for the

Classification.

3.Through according to ABC Analysis category C gets only a simple attention, the

management should nevertheless have to be vigilant in its approach. For example an items

may be of small value but may be critical in the sense that its non-availability hampers the

production process and its supply is irregular. The management has to be extra careful about

its inventory, even though the items figures in the category C. Thus the ABC analysis not the

ultimate exercise in inventory management, it needs supplementing with detailed knowledge

and monitoring.

4.Price of the items and their physical quantities shouldn’t be made the basis of ABC

analysis. It is rather the usage value of the items which must be used for the purpose of

classification.

ECONOMIC ORDER QUANTITY TECHNIQUE

One of the major inventory management problems to be resolved is how much inventory should be

added when inventory is replenished. If the firm is buying raw materials, it has to decide lost in

which it has to be purchased on replenishment. If the firm is planning a production run, the issue is

how much production to schedule (or how much to make). These problems are called order

quantity problems, and the task of the firm is to determine the optimum or economic order quantity

(or economic lot size). Determining an optimum inventory level involves two type of costs: (a)

ordering costs and (b) carrying costs: The economic order quantity is that inventory level that

minimize the total of ordering and carrying costs.

EOQ = √2(annual usage in unit)(order cost)

Annual carrying cost per unit

VED ANALYSIS:

The VED analysis is used generally for spare parts. The requirement and urgency of spare parts is

different from that of materials. A-B-C analysis may not be properly used for spare parts. The

demand for spares depends upon the performance of the plant and machinery. Spare parts are

classified as: Vital (V), Essential (E) and Desirable (D). The vital spares are a must for running the

concern smoothly and these must be stored adequately. The non-availability of vital spares will

cause havoc in the concern. The E types of spares are also necessary but their stocks may be kept at

low figures. The stocking of D types of spares may be avoided at times. If the lead time of these

spares is less, then stocking of these spares can be avoided.

The classification of spares under three categories is an important decision. A wrong classification of

any spare will create difficulties for production department. The classification of spares should be

left to the technical staff because they know the need, urgency and use of these spares.

JUST-IN-TIME (JIT) SYSTEM :

Japanese firms popularized the just-in-time (JIT) system in the

world. In a JIT system material or the manufactured components and part arrive to the

manufacturing sites or stores just few hours before they are put to use. The delivery of material is

synchronized with the manufacturing cycle and speed. JIT system eliminates the necessity of

carrying large inventories, and thus, saves carrying and other related costs of manufacturer. The

system requires perfect understanding and coordination between the manufacturer and supplier

in terms of the timing of delivery and quality of the material. Poor quality material or

complements could halt the production. The JIT inventory system complements the total quality

management (TQM). The success of the system depends on how well a company manages its

suppliers. The system puts tremendous pressure on suppliers. They will have to develop adequate

system and procedures to satisfactory meet the needs of manufacturers

INVENTORY TURNOVER RATIO : (ITR)

In accounting, the Inventory turnover is an equation that measures the number of times

inventory is sold or used over in a period such as a year. The equation equals the cost of

goods sold divided by the average inventory. Inventory turnover is also known as

inventory turns, stock turn, stock turns, turns, and stock turnover.

ITR = Cost of goods sold

Average inventory

INVENTORY MANAGEMENT SYSTEM IN SFP SONS INDIA PVT.LTD.

The procurement of inventory is totally depends on order/demand. In first step they get

the order from customer then they write a form that form called indent form by hand writing.

After getting order they will send the order to purchase department for buying of Raw

Material and Packaging material. Every time that causes the delay of delivery of goods to the

customer. After receiving the raw materials from supplier they check the quality, because quality

is more important for them. In whole production process 4-5 times they will check the quality

and after that quality check seal on product.

They are using FIFO method for delivery of good to the customers. First In First Out

(FIFO) means first order should deliver first and after that continue process. It is good way of

delivery that make the customer satisfied. Every inspection about available stock is on SAP

every one can know how much stock is available, and how much order should be placed. For

every order they keep the numbers for identification.

Warehouse arrangement

There is separate warehouse for keeping the different types of inventory like

Raw material, packaging material, semi finished good and finished good. Raw materials

includes the perfumery liquid, arranging of these things they have rack and rack numbers, and

unique code number for each and every liquid for identification. For talcum powder raw material

are the talc powder which they kept in plastic bags in production unit itself.

Packaging material include box, cap color, neck etc. which require after

filling the product in bottles. Finished goods and packaging material they are keeping in same

warehouse left side finished good and right side packaging material. Finished good order wise

and packaging material how to find easily.

Each and every data maintained in systems so it is very easy to get the information.

SCOPE OF STUDY

The scope is to drive meaningful application of theory for actual implementation. As

the study is focusing on identifying the present potential of the company’s inventory methods

and aims, we identify best set of inventory method to be carried to improve the company’s policy

to determine their inventory.

This study provides insight to the management of high value item and

low value items. This study also gives the idea about industrial focus and addressal towards

maintaining inventory.

.

LIMITATION OF STUDY

It consumes more time and requires lots of expenditure. More time is needed to do

this study.

Study is based on secondary data only.

The quality of inventory is not compared in analysis.

The analysis is based on figures present in the internal records only.

The study is based on two year reports given by marketing and finance

department that has its own limitation.

Working environment didn’t permit more involved way of collecting data.

Table 5.1 Economic order quantity

Year EOQ(in units)

2010 320.76

2009 109.53

Interpretation:

It is infer that the Economic order quantity for the year2009 is 109.53 and 2010 is

320.76. Year 2010 EOQ is 2.9 times more than 2009 EOQ.

Chart no.5.1

INVENTORY TURNOVER RATIO

TABLE NO.5.2

Interpretation:

It shows that the ratio of sales and inventory for the year 2009 is 2.4 and for the

year 2010 3.08. It shows that the inventory sales ratio of year 2009 is higher than year 2010.

Year Sales (X) Inventory(Y) Ratio (X/Y)

2010 63130829.65 26297835.5 2.40

2009 81132216 26336975 3.08

Chart no. 5.2

Table 5.3 total inventory in quantity

Table 5.4 Total inventory in value(in lacks)

Year Raw material Semi finished good

Packaging material

Finished good Total inventory

2010 5182325 1275634 9170450 10630287 26258696

2009 6305141 1086692 9889368 9055774 26336975

Year Raw material Semi finished good

Packaging material

Finished good Total inventory

2010 7403(in kg) 51026 458522 342912 859863

2009 8406(in kg) 43467 549409 301860 903142

Chart no.5.3

Table no.5.5 Percentage of inventory from total inventory

Year R M P M S M F G Total inventory

2009 23.94% 37.54% 4.13% 34.38% 100%

2010 19.73% 34.92% 4.86% 40.48% 100%

Chart no.5.4

Table no.5.6 percentage of raw material from total inventory

Year Raw material Total inventory Percentage

2009 63,05,141 2,63,36,975 23.94%

2010 51,82,325 2,62,58,696 19.73%

Chart no.5.6

Table no.5.7 percentage of semi finished good from total inventory

Year Semi finished good Total inventory Percentage

2009 1086692 26336978 4.13%

2010 1275634 26258696 4.86%

Chart no.5.7

Table no.5.8 Percentage of Packaging material from total Inventory.

Year Packaging material Total inventory Percentage

2009 9889368

26336978 37.54%

2010 9170450 26258696 34.92%

Chart no.5.8

Table no.5.9 Percentage of Finished goods from total inventory

Year Finished good Total inventory Percentage

2009 9055774 26336978 34.38%

2010 10630287 26258696 40.48%

Chart no. 5.9

Table no.5.10 ABC classification

Grade No. of items Percentage

A 57 31.66%

B 65 36.12%

C 58 32.22%

Total 180 100%

Chart no.5.10

ABC Analysis 2008-2009

April 2008

BRAND NAME CONSUMPTION VALUES IN RS GRADING

Apr-2008 - Quantity Apr-2008 - Amount

AHSAN

Perfume Oils 1,02,024 1377038.87 C

Eau De Perfume 59,544 2301839.13 A

Eau De Toilette 10,176 362407.12 B

Total 1,71,744 4041285.12

TARA

Item Group

Eau De Perfume 2,080 51452.12 B

Hair Oil 59,370 366167.65 C

Talcum Powder 3,24,528 2219257.5 A

Eau De Toilette

Total 3,85,978 2636877.27

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 2,664 130340.94 B

Hair Cream

Shampoo

Lotions 192 9403.66 B

Total 2856 139744.6

May 2008


May-2008- Quantity May-2008- Amount

AHSAN

Perfume Oils 1,57,224 1588658.94 C

Eau De Perfume 19,524 956069.47 B

Eau De Toilette 4,320 157183.01 A

Total 1,81,068 2701911.42

TARA

Item Group

Eau De Perfume 3,200 79157.11 C

Hair Oil 8,856 149517.32 B

Talcum Powder 1,60,344 781462.82 A

Eau De Toilette

Total 1,72,400 1010137.25

SILENT VELLY

Item Group

Hair Oil 480 30100.41 B

Shower Gel 144 10593.68 A

Hair Gel 144 5535.82 C

Body Splash 504 24659.1 C

Hair Cream

Shampoo 336 26603.93 A

Lotions 240 13576.62 B

Total 1848 111069.56

June 2008


June-2008- Quantity June-2008- Amount

AHSAN

Perfume Oils 1,17,576 1318419.85 B

Eau De Perfume 27,464 1130428.47 A

Eau De Toilette 2,784 104890.69 C

Total 1,47,824 2553739.01

TARA

Item Group

Eau De Perfume 480 11873.57 B

Hair Oil 5,496 154637.41 A

Talcum Powder 47,232 497530.23 C

Eau De Toilette 72 6098.84 B

Total 53280 670140.05

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel 432 16607.46 C

Body Splash 3,600 176136.4 C

Hair Cream

Shampoo 144 11401.69 A

Lotions 840 62980.09 B

Total 5016 267125.64

July 2008


July-2008- Quantity July-2008 -Amount

AHSAN

Perfume Oils 97,488 1136365.16 C

Eau De Perfume 17,448 789353.05 A


Total 1,17,144 2030107.41

TARA

Item Group


Hair Oil 180 6860.69 B


Eau De Toilette 144 12197.68 A

Total 33860 423136.19

SILENT VELLY

Item Group

Hair Oil 96 6020.08 B

Shower Gel

Hair Gel

Body Splash

Hair Cream 144 13190.38 A

Shampoo

Lotions 72 2582.85 C

Total 312 21793.31

August 2008


Aug-2008- Quantity Aug2008-Amt

AHSAN

Perfume Oils 1,87,056 2232981 C

Eau De Perfume 30,752 1351294.97 A


Total 2,18,000 3595056.99

TARA

Item Group

Eau De Perfume 1,600 39578.56 A

Hair Oil 1,416 31693.94 B



Total 67,120 975405.02

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 1,296 63409.11 A

Hair Cream

Shampoo

Lotions 360 16284.34 C

Total 1656 79693.45

September 2008


Sep-2008-Quantity Sep2008-Amt.

AHSAN

Perfume Oils 2,80,656 3643082.56 C

Eau De Perfume 57,548 2586300.76 A


Total 3,43,580 6413696.67

TARA

Item Group


Hair Oil 2,232 77912.2 A


Eau De Toilette

Total 56,224 524770.28

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 504 24659.07 A

Hair Cream

Shampoo

Lotions

Total 504 24659.07

October 2008


Oct2008-Quantity Oct-2008-Amt

AHSAN

Perfume Oils 1,09,836 1225240.16 C

Eau De Perfume 31,020 1152276.45 A


Total 1,41,528 2402188.5

TARA

Item Group

Eau De Perfume

Hair Oil 4,200 96434.71 A

Talcum Powder 1,16,088 562889.2 C

Eau De Toilette

Total 120288 659323.91

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 1,224 59886.38 A

Hair Cream

Shampoo

Lotions

Total 1224 59886.38

November 2008


Nov-2008-Quantity Nov-2008-Amount

AHSAN

Perfume Oils 65,520 759450.53 C

Eau De Perfume 40,324 1509870.84 A


Total 1,10,596 2461046.93

TARA

Item Group

Eau De Perfume 800 19789.28 A

Hair Oil 1,200 25847.91 B


Eau De Toilette

Total 58976 307181.47

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash

Hair Cream

Shampoo

Lotions

Total

December 2008


Dec-2008-Quantity Dec-2008-Amt

AHSAN

Perfume Oils 1,44,264 1843142.24 C

Eau De Perfume 29,584 1231266.38 A


Total 1,80,520 3310646.04

TARA

Item Group


Hair Oil 2,856 75511.28 A

Talcum Powder 1,35,480 692142.97 C

Eau De Toilette

Total 139296 790604.41

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel


Hair Cream

Shampoo

Lotions

Total 360 17025.11

January 2008


Jan2009-Quantity Jan-2009-Amount

AHSAN

Perfume Oils 1,01,376 1115789.03 C

Eau De Perfume 22,288 865498.76 A


Total 1,29,568 2205398.78

TARA

Item Group


Hair Oil 1,800 42702.46 A

Talcum Powder 1,12,656 539000.02 C


Total 115488 609338.39

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel


Hair Cream

Shampoo

Lotions

Total 144 6439.27

Feb 2009


Feb-2009-Quantity Feb-2009-Amount

AHSAN

Perfume Oils 60,408 727184.84 C

Eau De Perfume 25,176 1003806.8 B

Eau De Toilette 2,064 121175.39 A

Total 87,648 1852167.03

TARA

Item Group

Eau De Perfume

Hair Oil 2,400 49233.18 A



Total 77400 727874.52

SILENT VELLY

Item Group

Hair Oil 240 14229.32 A

Shower Gel

Hair Gel


Hair Cream

Shampoo

Lotions

Total 672 33547.12

March 2009


Mar-2009-Quantity Mar-2009-Amount

AHSAN

Perfume Oils 84,624 955170.08 C

Eau De Perfume 19,708 719760.18 A


Total 1,04,812 1702733.22

TARA

Item Group

Eau De Perfume

Hair Oil 4,320 95732.99 A


Eau De Toilette

Total 24432 329215.54

SILENT VELLY

Item Group

Hair Oil 120 6909.44 B

Shower Gel

Hair Gel


Hair Cream

Shampoo 96 6748.67 A

Lotions 48 3669.66 A

Total 480 26532.03

Financial year 2009-2010

April 2009


Apr-2009-Quantity Apr-2009-Amt

AHSAN

Perfume Oils 2,02,992 2388126.24 C

Eau De Perfume 55,416 2451502.23 A


Total 2,69,736 5224728.74

TARA

Item Group

Eau De Perfume 480 10642.24 C

Hair Oil 3,600 96400.8 B

Talcum Powder 1,18,968 791687.35 A

Eau De Toilette

Total 123048 898730.39

SILENT VELLY

Item Group

Hair Oil 96 5527.68 B

Shower Gel

Hair Gel

Body Splash 2,664 113513.37 C

Hair Cream

Shampoo 192 13497.6 A

Lotions 288 20644.29 B

Total 3240 153182.94

May 2009


May (2009) - Quantity May-2009-Amount

AHSAN

Perfume Oils 1,47,312 1876017.9 A

Eau De Perfume 39,480 1511140.04 B

Eau De Toilette 1,536 49854.72 C

Total 1,88,328 3437012.66

TARA

Item Group

Eau De Perfume 960 21283.2 C

Hair Oil 7,620 170453.77 B

Talcum Powder 71,628 418572.12 A

Eau De Toilette

Total 80208 610309.09

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash

Hair Cream

Shampoo

Lotions

Total

June 2009


June-2009-Qnty June2009-Amt

AHSAN

Perfume Oils 1,28,928 1338309.12 C

Eau De Parfum 6,456 269641.68 A


Total 1,36,872 1661261.04

TARA

Item Group

Eau De Parfum

Hair Oil 8,880 143501.2 A


Eau De Toilette

Total 79200 661596.98

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 1,944 82812.7 A

Hair Cream

Shampoo

Lotions

Total 1944 82812.7

July 2009


July-2009-Qnty July-2009-Amt

AHSAN

Perfume Oils 3,44,772 4730478.96 C

Eau De Perfume 39,816 1629457.42 A


Total 3,89,964 6557144.86

TARA

Item Group

Eau De Perfume 4,800 107232 A

Hair Oil 9,972 215067.96 B

Talcum Powder 1,71,120 1370713.79 C

Eau De Toilette

Total 1,85,892 1693013.75

SILENT VELLY

Item Group

Hair Oil 96 5559.36 B

Shower Gel

Hair Gel

Body Splash 1,440 61948.8 C

Hair Cream

Shampoo 96 6803.52 B

Lotions 144 10444.32 A

Total 1776 84756

August 2009


Aug-2009-Qnty Aug-2009-Amt

AHSAN

Perfume Oils 3,08,381 3675631.15 C

Eau De Perfume 46,008 1924019.52 A


Total 3,62,741 5880394.03

TARA

Item Group


Hair Oil 3,300 82202.92 A


Eau De Toilette

Total 88,284 876288.63

SILENT VELLY

Item Group

Hair Oil 144 8339.04 B

Shower Gel

Hair Gel

Body Splash 3,240 139384.8 C

Hair Cream

Shampoo 96 6803.52 A

Lotions

Total 3480 154527.36

September 2009


Sept-2009-Qnty Sept-2009-Amt

AHSAN

Perfume Oils 1,81,512 2257750.08 C

Eau De Perfume 38,064 1300500.57 A


Total 2,25,000 3738718.17

TARA

Item Group

Eau De Perfume

Hair Oil 948 29043.51 A


Eau De Toilette

Total 58548 351002.09

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 3,672 157969.44 A

Hair Cream

Shampoo

Lotions

Total 3672 157969.44

October2009


Oct-2009-Qnty Oct-2009-Amt

AHSAN

Perfume Oils 1,74,588 2064442.37 C

Eau De Parfum 52,320 1842301.85 A


Total 2,33,100 4091141.98

TARA

Item Group

Eau De Parfum

Hair Oil 3,888 96082.56 B

Talcum Powder 1,09,200 622351.11 C

Eau De Toilette 288 21205.44 A

Total 113376 739639.11

SILENT VELLY

Item Group

Hair Oil 240 13898.4 C

Shower Gel 192 12706.56 A

Hair Gel

Body Splash

Hair Cream

Shampoo

Lotions

Total 432 26604.96

November 2009


Nov-2009-Qnty Nov-2009-Amt

AHSAN

Perfume Oils 1,15,104 1394237.39 C

Eau De Parfum 26,496 1147129.2 A


Total 1,43,472 2597114.75

TARA

Item Group

Eau De Parfum 500 13160 B

Hair Oil 1,680 45901.54 A


Eau De Toilette

Total 31364 370020.33

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel 360 12110.4 C

Body Splash 144 6194.88 B

Hair Cream

Shampoo 192 13607.04 A

Lotions 144 4368.96 C

Total 840 36281.28

December 2009


Dec-2009-Qnty Dec-2009-Amt

AHSAN

Perfume Oils 1,72,064 1907591.01 C

Eau De Perfume 55,660 2106838.02 A


Total 2,34,588 4251798.63

TARA

Item Group

Eau De Perfume 5,040 234864 A

Hair Oil 5,184 147699.05 B


Eau De Toilette

Total 28,224 663177.55

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 2,592 111442.03 A

Hair Cream

Shampoo

Lotions

Total 2592 111442.03

January 2010


Jan-2010-Qnty Jan-2010-Amt

AHSAN

Perfume Oils 1,08,288 1063524.96 C

Eau De Perfume 27,044 1055093.44 A


Total 1,38,884 2233862.56

TARA

Item Group

Eau De Parfum 6,240 290784 A

Hair Oil 4,560 107697.73 B


Eau De Toilette

Total 89,400 1185517.26

SILENT VELLY

Item Group

Hair Oil

Shower Gel

Hair Gel

Body Splash 1,944 83671.21 A

Hair Cream

Shampoo

Lotions 2,160 68673.41 C

Total 4104 152344.62

FINDINGS

Company is maintaining zero safety stock it cause production loss.

The inventory turnover is in decreasing order in 2008-09 it is 3, but in 2009-2010 it is

2.4.

By ABC Analysis we can say that there is a little difference between A B & C class items

so every product is important for company.

There is positive correlation between sales to inventory.

The percentage of raw material from total inventory is 23.94% in 2009 and 19.73% at

2010.

The percentage of finished goods, semi finished good, packaging material from total

inventory is 34% ,5%,37% in 2009 but in 2010 40%, 4%, 34%.

Company’s aim to achieve more sale it may require huge amount of inventory in future.

Company is concentrating on domestic market and first time they achieve the target of 10

crore, that is good sign of establishment of domestic market.

Economic order quantity (EOQ) in year 2009 is 109.526 units EOQ for year 2010 is 320.76 units, it shows that company can place more orders at one time.

There is good relationship between company and their distributors, vendors and sales

executives.

SUGGESTION S

• There can be a system where in periodical review (twice in a month) of inventory could

be carried out so that the inventory can be kept under control.

• There should be periodical review of movement of items so that any non moving

items can be identified and suitable action can be done.

• At present the company is maintaining zero safety stock for all items, if the safety

stock is maintained for important items, delay in production can be eliminated and orders

can be supplied in time which will result in a better credibility in both international and

domestic market.

• It has been predicted that if company is planning to achieve more sale it may require huge

amount of inventory in future. So the company has to arrange capital to meet future

requirement.

• It is suggested that they can have close monitoring of receipts and issue for A

class items in order to have control of inventory.

• To increase the inventory turnover ratio by increasing the sales level and maintaining

the required level of inventory.

• To maintain the Re-order level, Min-stock level and Economic order quantity

company should consider the demand of the product.

• There should be proper communication between purchase and production

department.

• There is no communication from dispatch section to store department, about

quantity wasted. Feedback about the quantity wasted will help the store department to

forecast future requirements and to focus on minimum possible waste.

• Improve the minimum value of product C up to 5%-8% in total sale value by

increasing market level of these products. It helps to get min return on investment in

these products as soon as possible.

• There is one warehouse for keeping the finished good and packaging material and

packaging material are not arranged in good manner so it should be in order wise.

CONCLUSION

“Inventory control is exercise when you order an item. If you do a poor job then everything after

is inventory correction”

GORDON GRAHAM

Inventory is the physical asset of a company that can create problem if there is shortage, while in

production and also if it’s in excess even after production. Inventory is constantly changing as

quantities are sold and replenished.

Hence it can be understood that efficient inventory management can take the company to new

heights and inefficient inventory management can ruin the company.

Company is highly concentrated on domestic market, it increase the market level of company

because trend of domestic market is changing.

The study on Inventory management in SFP Sons (India) Pvt. Ltd about A BC analysis for items

is predicting future inventory requirements etc.

From the study it is predicted that future sales have to be achieved and inventory level have to be

maintained.

ABC Analysis was carried out to identify the fast moving and important items.

The company has to periodically review the inventory to avoid production loss.

The results of the study can be further extended for future research.

BIBLIOGRAPHY

ϕ Financial Management- Theory And Practice- Prasanna Chandra

ϕ Management Accounting- R.K. Sharma and Sashi. K. Guptaϕ Financial Management – I. M. Pandey Ninths Edition ϕ Financial Management –S.C.Kuchhalϕ MATERIAL MANAGEMENT BOOK – BY RAJENDRA MISHRA

ϕ OPERATION AND PRODUCTION PLANNING BOOK

ϕ LOGISTICS MANAGEMENT – BY K. SHRIDHARA BHAT

ϕ MATERIAL MANAGEMENT – BY S. D. APHALE

ϕ PRODUCTION ANDPRODUCTION AND MATERIALMATERIAL MANAGEMENTMANAGEMENT- - PP. . SARVANAVELSARVANAVEL , ,SS. . SUMATHISUMATHI

• WWW.INVENTORY .COM

• WWW.INVESTOPEDIA.COM

• WWW.WISEGEEK.COM

• www.mbaguys.net

Rajeev Gandhi quality award

http://www.inventory/

http://www.askdeb.com/

Product Profile

Different Brands Manufactured by SFP :

• Pour Homme

• Pour Femme

• Magic

Night

• Body Mist

○ Clean Effect

○ In Control

○ Podium

○ Urban Colours

○ Stressed Out

○ Wake Up

○ Fresh Up

○ Dazzling

○ Nutritious

• Lotion

○ Energizing Rose

○ Firming Olive

○ Relaxing Aloe Vera

○ Revitalizing Almond

○ Slimming Multi Vitamin

Toning Musk

Almond

Rose

• Cleansing Lotion

• Creams

○ Antidandruff

○ Coconut

○ Herbal

○ Dazzling

• Hair Gels

○ Extra Hold

○ Mega Hold

○ Regular Hold

○ Styling

○ Wet Look

• Shower Gels

○ Aleo Vera

○ Lemon

○ Rose

○ Herbal

• Shampoos

○ Aloe Vera

○ Anti Dandruff

○ Herbal

○ Lemon

• Hair Oils

○ Jasmine

http://www.sfpsons.com/index.php?option=com_content&view=article&id=33&Itemid=134




































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36421186 ranjana-project-report-on-inventory-management

Economy & Finance

inventory changes

greater inventory

inventory storage

spoilage of inventory

excessive inventory

inventory management

new inventory level

low inventory level