A 4

APROJECT REPORT

ON

“MATERIALS MANAGEMENT IN CEMENT MANUFACTURING INDUSTRY”

UNDER TAKEN AT

“PARASAKTI CEMENT INDUSTRIES LIMITED, JETTIPALEM”

IN PARTIAL FULFILENT OF POST GRADUATE DIPLOMA IN MATERIALS MANAGEMENT

MIT SCHOOL OF DISTANCE EDUCATION, PUNE

GUIDED BY

PROF: B.VIJAYKUMAR

SUBMITTED BY

NAGA BRAHMAIAH VENNA

Registration No. 2010001266

MIT SCHOOL OF DISTANCE EDUCATION

PUNE – 411 038

YEAR 2010-2011

DECLARATION

A PROJECT REPORT ON MATERIALS MANAGEMENT IN CEMENT MANUFACTURING INDUSTRY

I hereby declare that this project report entitled “MATERIALS MANAGEMENT

IN CEMENT MANUFACTURING INDUSTRY” is a bonafide record of the project work

carried out by myself during the academic year 2010-2011, in partial fulfillment of the

requirements for the award of POST GRADUATE DIPLOMA IN MATERIALS

MANAGEMENT of MIT School of Distance Education, Pune.

This work has not been undertaken or submitted elsewhere in connection with any

other academic course.

Address NAGA BRAHMAIAH VENNA

V.N.Brahmaiah,Qrt.No.C,Parasakti Nagar,Parasakti Cement Industries LimitedJettipalem Village,Rentachintala Mandal,Guntur District – 522 421.

ACKNOWLEDGEMENT


I would like to take this opportunity to express my sincere thanks and gratitude to Sri.

A.S. Raju, Sr.Manager (Materials) of M/s.Parasakti Cement Industries Limited,

Jettipalem for giving me an opportunity to do my project in the esteem organization and it

has indeed been a great learning and enjoyable experience.

I would like to thank my former employer M/s. Rain Commodities Limited (Priya

Cements) that has induced the thirst in me for education. I would like to express my deep

sense of gratitude and profound thanks to all staff members of M/s. Parasakti Cement

Industries Limited, Jettipalem for their kind support and cooperation which helped me in

gaining lots of knowledge and experience to do my project work successfully.

I would like to acknowledge my sincere gratitude to Head of Department of my

Department Sri.A.S.Raju, M.A.Amrutha Raju,General Manager (Plant) and Professor

B.Vijaykumar, as my Project Guide for helping me in this project.

At last but not least, I am thankful to my Family and Friends for their moral support,

endurance and encouragement during the course of the project.

Jettipalem Naga Brahmaiah Venna

Date:

EXECUTIVE SUMMARY

In Parasakti cements Material Cost is the major component of cost in a Cement manufacturing organization.

Identification of material cost with the individual cost center depends upon the processing production stages in the


movement of material. Parasakti cements identifies these stages as activity based cost centers (ABC Costing) in the movement of material, valuation of various material movements plays a very significant role, because the cost calculations depend upon the valuation of material movements. Valuation of receipts of material does not create much of the problems in reality as there is a purchase order issued will be linked receipt database and also third party document available for the same i.e. invoice given by the supplier. Valuation of issues in case of raw materials, packing materials and Stores & spares is weighted average method is incorporated. The finished product will be on FIFO based delivery. This accounting assumption proposes that the material coming in for the first time is issued for the first time.

Item classification: Items are broadly classified as raw materials, intermediated goods, packing materials, stores & spares and finished goods.

Stores & spares are again classified as Stock items and non-stock items basing on the requirement of the item for the machine. Stock items are again classified and inventory control

procedures are executed on these items.

Fixation of Stock levels

Fixation of various inventory levels facilitates initiating of proper action in respect of the movement of various materials in time so that the various materials may be controlled in a proper way. However, the following propositions should be remembered.

(i) Only the fixation of inventory levels does not facilitate the inventory control. These have to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken in time.

(ii) The various levels fixed are not fixed on a permanent basis and are subject to revision regularly.

The various levels which can be fixed are as below.

1) Maximum level:

It indicates the level above which the actual stock should not exceed. If it exceeds, it may involved unnecessary blocking of funds in inventory while fixing this level, following factors are considered.

i) Maximum usage.ii) Lead time.iii) Storage facilities available cost of storage and insurance etc.iv) Prices for materialv) Availability of funds.vi)Nature of material e.g. If a certain type of material is subject to government regulation in respect of import of goods etc maximum level may be fixed at a higher level.vii) Economic order Quantity.


2) Minimum Level: It indicates the level below which the actual stock notreduces, if it reduces, it may involve the risk of non-availability of materialwhenever it is required. While fixing this level, following factors are considered

i) Lead time. ii) Rate of consumption 3) Re -order level

It indicates that level of material stock at which it is necessary to take the steps for the procurement of further lots of material. This is the level falling in between the two existences of maximum level and minimum level and is fixed in such a way that the requirements of production are met properly till the new lot of material is received.

4). DANGER LEVEL:

This is the level fixed below minimum level. If the stock reaches this level, it indicates the need to take urgent action in respect of getting the supply. At this stage, the company may not be able to make the purchases in the systematic manner but may have to make rush purchases which may involve higher purchase cost.

5. SAFETY STOCK:

Safety stock is kept by inventory controllers to take care of variation in demand, particularly during lead time. This is a must for A as well as B and C category items used in producing an assembled product. The purpose of keeping safety stock is to increase inventory level of items of A, B and C.

From the economy point of view, the safety stock for A and B category items should be kept low. Thus forecast of demand of A and B items should be done. For category C items of which annual usage values are low, such care is not called for.

5. QUANTITY DISCOUNT FACTOR:

Shrewd suppliers offer quantity discount on the purchase of category A items. The inventory controlled should verify through calculation if there is really some pecuniary gain or that the discount is just as eyewash.

6. LAY OUT OF STORES:

Ready accessibility of fast moving items is a virtue of a good lay out. A category items are high cost items, with a fast consumption and categorized under F (fast) as well as H (high) category. A good layout enables tracking and avoids misplacement of such items. Architect and designer adept at factory building design see to it the layout is strategically designed and deployed.

7. STOCK TAKING:


Management by exception should be applied to stock taking also. A item may be checked more often and C items. One of the decisions could be to check A items every month, B items every two months and C items every four months.

8. VALUE ANALYSIS:

It is futile to carry out value analysis for B and C category items. Value analysis is a cost reduction project. To secure maximum benefits, it is essential to select those items for value analysis which offer the highest scope for cost reduction.

VED ANALYSIS:-

VED analysis represents classification of items based on critically. Critically means how a machine is important to production. If the machine stops, how many machines and workstations will come to a halt? In monetary terms, how much loss to production occurs? The analysis classifies the items into three groups called vital, essential and desirable.

Vital category encompasses those items which, if not made available, being the production to a halt, causing heavy losses. Spares stock out cost is very high because it reduces production. And desirable group comprises items which do not cause noticeable loss of production or their stock out entails nominal expenditure and causes minor disruptions.

VED analysis is carried out to identify critical items, usually of maintenance spares and capital machines. An item of which the usage belongs to C category may be critical from the production point of view if its stock out can cause heavy production loss.

Perpetual inventory system:

The purchase of materials is recorded under the perpetual inventory system in Materials Inventory Account rather than in a Purchase of Raw Materials Account. The opening/ beginning materials inventory, if any, is also shown on the debit side of the raw Materials Inventory Account. The material Inventory Account is credited for the cost of materials issued, with a corresponding debit to Work-In-Process Inventory Account. The effect is that the cost of materials issued is charged to production at the time when materials are issued and the balance in the Material Inventory Account shows the cost of materials still available for use/issue. Therefore, both the cost of materials issued and the ending materials inventory can be directly ascertained after each transaction.

The perpetual inventory system is superior to the periodic inventory system. It provides better inventory/materials control and more information than the periodic inventory system.

STOCK TAKING:-

Annual Stock taking:-

Annual stock taking is the process of making a complete count once a year of all materials, finished parts; work in process, finished goods, tools and supplies. The stock verification is generally undertaken at or near the close of the financial year.


Continuous stock taking:-

PCIL Stores will note the physical quantities at the time of issue on issue pass itself and check stock balance while entering in ERP, Continuous stock taking, also called perpetual stock taking, is the process of taking physical counts of a few items daily and thus cover each item in the storeroom at least once a year.

In Parasakti A class items are verified 4 times or even twelve times a year. A more rational approach is to relate the frequency of counts to the usage value classification ABC analysis under which items of high usage value are verified more often than those of low usage value. B Class items twice or thrice in a year and C class items once in a year

Reorder point stock taking:-

This is the process of physical verification of an item when its store falls below the reorder level. The store keeper when with this system has the responsibility of notifying this to the department concerned.

CAREFUL ACCOUNTING:

Detailed records of goods ordered, received, issued and goods on hand should be maintained for A category of items. Tight control and accurate records are also required for scrap, loss and rejection of such items.

Repairs / Returnable’s

The track record of repair items sent for repairs and coming back, and items sent as returnable samples, items sent on loan basis. Follow up action and updating of records is essential timely.

Scrap receiving / disposal

Hi value metals like copper, brass items; bearings etc old will take back at the time of issuing new items and store in separates secured bins. Structural steel, waste lubes and other hazardous scrap also collect and keep in scrap yard in specific location and inform the quantities to purchase department for bidding action and issue sale order / disposal.

TABLE OF CONTENTS

Chapter No. Title Page No.


1.1 Introduction to Cement Industry 9-11

2.1 Parasakti Cement Industries Limited - Profile 12-17

2.2 About Parasakti cements 18-20

2.3 About Materials department 21

2.4 Timeline 22

2.5 SWOT Analysis 23

2.6 Management team 24

2.7 Company product profile 25-29

3.1 Materials Management Objective 30

3.2 Scope of Materials management researcher’s - view 31-33

3.3 Scope of Materials management organization’s - view 34

4 Research Methodology and Limitations 38-60

5 Data Analysis, Interpretation and Presentation 61-76

6 Conclusion and Suggestions 77

7 Annexures 78-85

8 Bibliography 86

List of figures Page No

1.1 Parasakti Cement Industries Limted, Jettipalem site factory view. 101.2 Factory locations. Source: in Google maps 112.1 Parasakti entrance and factory view from entrance 182.2 Parasakti Cements Entrance Main road and greenery plantation road side. 18


2.3 Employee canteen and Factory view from colony road 192.4 Mining Pit and Factory view 192.5 Colony, Coal yard and Lime stone stacker reclaimer. 192.6 Words of Swami Vivekananda 202.7 Stores building and stacking items inside racks. 214.1 receiving section and inspection area 454.2 Stores Flow chart 464.3 Raw materials Gypsum yard, Coal yard 484.4 Row, Rack, Bin system with identification tags 494.5 storing of Hydraulic hoses and lubricants in specific locations 504.6 Storing mill bolts(Hardware) and paints 504.7 Fasteners Rack, row bin locations and storage 504.8 Castings (Drawing items) 514.9 Electrical Motors and Gear boxes etc., 515.1 Satisfaction analyses on inventory questionnaire. 645.2 Parasakti cement inventory as on 31-March- 2011. 685.2 Parasakti cements vs Indian cement industry capacity/production 745.3Parasakti cements performance & Indian cement industry. 755.4 Greenery – plantation in parasati cements 76

List of Tables Page No

5.1 Consumption based ABC Analysis 665.2 Raw material receipts and cement dispatch details 685.3 Activity based stores & spares consumption 695.4 Item group wise stores & spares consumption 715.5 Department wise stores & spares consumption 2009-10 725.5 Department wise stores & spares consumption 2010-11 73

CHAPTER – 1

Introduction:


PARASAKTI CEMENT INDUSTRIES LIMITED

M/s. Parasakti Cement Industries Limited is established in 2004 and located at Jettipalem Village, Rentachintala Mandal, Guntur District; Andhra Pradesh Which is about 125 KM from Guntur. Its Head Office is at S.R Nagar, Hyderabad. It is a Cement manufacturing Industry. The Cement plant functions 24 hours continuously in 3 shifts ever day.

Figure: 1.1 Parasakti Cement Industries Limted, Jettipalem site factory view. Source: www.parasakticement.com

The company is operating Central stores in factory and Purchase department at corporate office, Hyderabad and in the same way Distribution department (for finished product cement) is in site and Central Marketing department at corporate office.


Figure: 1.2 Factory locations. Source: in Google maps

One of the assumptions made in a developing country like India, Materials management means different things to different people. In this organization materials management includes all activities in the flow of materials from the supplier to the end user. Such activities include physical supply, operations planning and control, and physical distribution. Here the centralized stores functions towards profitability of organization by maintaining minimum levels of inventories. The management never accepts sub stores in departmental level since the stocks will be blocked and have the less control on items. The central stores will maintain better control on Spare parts and maintaining min-max levels in case of raw materials and packing materials and general consumables.

CHAPTER – 2


PARASAKTI CEMENT INDUSTRIES LTD- PROFILE

INTRODUCTION TO CEMENT INDUSTRY:

WHAT IS CEMENT?

HISTORY:

Cement is a mixture of limestone, Clay, Silica and Gypsum. It is a fine powder which when mixed with water sets to a hard mass as a result of hydration of the constituent compounds. It is the most commonly used construction material. Cement is manufactured by burning a mixture of Limestone and Clay at high temperatures in a kiln, and then finely grinding the resulting clinker along with Gypsum. The end product thus obtained is called Ordinary Portland Cement (OPC).

Indian Cement Industry is the second largest in the world and provides about 15% employment potential along with the earning of about 30% of total foreign exchange earned. The first Cement Industry mill has started in 1924 by C.N.DEVAR at Mumbai. In 1856, the second mill was started by CHOTELAL at Ahamadabad. The entire machinery was imported from United Kingdom. Later the Cement mills were installed at different parts of India to cater the clothing needs of people.

Mumbai and Ahamdabad became the most important Cement Factories in India due to tremendous development in Cements. Indian Cement Industry is well established with the installation of 31 million spindles, 1,85,300 looms in organized sector.

INVENTION OF CEMENT BY JOSEPH ASPDIN A LEEDS BUILDER AND BRICK –

LAYER

21 ST OCTOBER, 1824-PATENTED AS PORTLAND CEMENT.

1904 – BRITISH AND AMERICAN STANDARDS.

1912 – INDIAN CEMENT COMPANY LIMITED ESTABLISHED FACTORY AT

PORBANDAR.

1951 – INDIAN STANDARDS.

MAJOR TYPES OF CEMENT :

1. ORDINARY PORTLAND CEMENT (OPC)

33 GRADE - IS 269 (1976)

43 GRADE - IS 8112 (1989)

53 GRADE - IS 12269 (1987)


2. PORTLAND POZZOLANA CEMENT (PPC) - IS 1489 (1976)

3. PORTLAND SLAG CEMENT (PSC) - IS 455 (1989)

4. RAPID HARDENING CEMENT (RHC) - IS 8041 (1988)

5. SULPHATE RESISTING CEMENT (SRC) - IS 12330

6. LOW HEAT PORTLAND CEMENT (LHC) - IS 269

7. HYDROPHOBIC CEMENT - IS 8043

8. WHITE CEMENT (WC) - IS 8042

9. OIL WELL CEMENT (OWC) - IS 8229

10. RAILWAY SLEEPER CEMENT - IRST 40 (1985)

CEMENT VARITIES – DETAILS

1. Ordinary Portland cement (I.S.269)

This is the cement used for normal concrete construction. It has adhesive and cohesive properties so as to render it to form a good bond with other materials. It solidifies when mixed with water. It is the most active binding medium and is perhaps the most scientifically controlled component in concrete. Cement is obtained by burning a mixture of the following in a definite proportion:

i. Siliceous materials (containing lime)ii Argillaceous materials (containing alumina)iii. Calcareous materials (containing lime).

The temperature to which the mixture must be burnt is about 1400 Deg. C. The clinker so obtained is cooled and powdered to the required fineness with gypsum. The product so obtained is called cement. Portland cement is the most important type of cement and is widely used.

Grades of ordinary Portland cement:

Bureau of Indian Standards has classified Ordinary Portland Cement into 3 Grades based on the strength capabilities.

GRADES I.S.SPECIFICATIONThese are 33 Grade IS 269 (1976)

43 Grade IS 8112 (1989)53 Grade IS 12269 (1987)

Compressive strength: (Minimum)3 Days 7 Days 28 Days

33 Grade 160/Kg/CM² 220/Kg/Cm2 330/Kg/Cm2

43 Grade 230/Kg/Cm² 330/Kg/Cm2 430/Kg/Cm2

53 Grade 270/Kg/Cm² 370/Kg/Cm2 530/Kg/Cm2


Parasakti 33, 43 & 53 grade cements provide much higher strength than specified by B.I.S.

Cement is a mixture of chemical compounds, consisting of the following:a) Tricalcium Silicate (CaO)3 Sio 2 denoted by C3S.b) Dicalcium Sillicate (CaO)2 Sio2 denoted by C2S.c) Tricalcium Aluminate (CaO)3 AI2O3 denoted by C3A.d) Tetraclcium Aluminoferrite (CaO)4 AI2O3Fe2O3 denoted by C4AF.

C3S and C2S are responsible for the strength of cement. These compounds provide cement, the property to resist the attacks of acids and alkalis and make the cement durable.

Tri-calcium Silicate has the property of hydrating rapidly and is responsible to provide early strength.

Di-calcium Silicate has the property of hydrating less rapidly and provides the later strength.

Tri-calcium aluminate gets hydrated rapidly and is also responsible to provide early strength but is found to slightly retard the ultimate strength. This compound is susceptible to be attacked by alkalis and salts. A Hydrated Calcium Ferrite does not contribute anything to the strength. The Hydrates of C4 AF shows a comparatively higher resistance to the attack of sulphates than the hydrates of calcium aluminates.

2. Portland – Pozzolana Cement (I.S. 1489)

This cement is made either by intergrinding Portland Cement clinker and Pozzolana with addition of Gypsum or by uniformly blending Portland Cement and fine Pozzolana. Intergrinding does not present any difficulty, whereas, blending tends to produce a non-uniform product. The I.S. code has suggested that the latter method may be confined to factories where intimate blending can be guaranteed through mechanical means.

The pozzolana content varies from 10% to 25% by weight of cement. Possolanic materials do not possess cementing value themselves but have the property of cementing with lime to produce a stable lime (which is readily attacked chemically) is removed, the pozzolana concretes have a greater resistance to chemical agencies. They can also resist attack by sea water better than Ordinary Portland Cement concrete, since the pozzolana cement has a lower heat evolution and is popularly used in mass constructions (Example : Dam).

The pozzolana used in the manufacture of cement in India consists of burnt clay or shale or fly ash. The pozzolana must satisfy very strictly certain requirements in order to use it successfully. The properties of the Portland Pozzolana Cement will obviously depend upon the quantities of pozzolana used.

Thus Portland Pozzolana Cement is generally stated to possess a lower rete of development of strength, compared to Ordinary Portland Cement. When pozzolana is selected carefully and is calcined and well ground with Portland cement clinker under controlled conditions, the 7 days


strenth reached is practically the same as that reached by Ordinary Portland Cement. We also conclude that using Portland Pozzolana Cement will not involve much delay in the removal of shuttering and may be therefore be used for reinforced concrete construction without any difficulty.

3. Portland – Blast Furnace Slag Cement (I.S.455)

This is the cement obtained by intergrinding Portland cement clinker and gypsum with blast furnace slag. The blast furnace slag content shall not exceed 65%. The property of cement is not detracted by the above blending. On the contrary the blending provides some advantages. The granulated slag possesses latent hydraulic properties which are activated to a very great extent when the slag is catalysed and interground with Portland cement clinker. From practical considerations, Portland Blast Furnace Slag Cement may be used in all situations for which Ordinary Portland Cement is used. In addition, due to low heat evolution, it can be used in huge mass concrete structures like dams, retaining walls, foundations and abutments of bridges. This cement has a good sulphate resistance and is very suitable for use in constructions in sea water.

4. Rapid Hardening Portland cement (I.S.8041)

This type of cement is manufactured in a manner similar to that of Ordinary Portland Cement, but it differs in respect of chemical composition, degree of burning and grinding. This contains greater lime content than Ordinary Portland Cement. This requires a better control of burning the ingredients over a longer time. The clinker is ground to a much finer extent than the Ordinary Portland Cement. The quick rate of gain of strength is due to a higher content of Tri-calcium Silicate and finer grinding of clinker. For the same water-cement ratio, it gains strength in 3 days what the ordinary cement gains in 7 days and it gains in 7 days what the ordinary cement gains in 28 days. The biggest advantage in using Rapid Hardening Portland Cement is that the shuttering may be struck considerably earlier, thus saving considerable time any expenses. This cement is particularly satisfactory under conditions of frost. This type of cement can also be used for used for road work, so that the road can be opened to traffic with least delay.

5. Sulphate Resisting Cement (I.S.12330)

This cement is similar to Ordinary Portland Cement, but in this case the cement contains a greater proportion of Tri-calcium Silicate and Di-calcium Silicate and a low content of Tri-calcium Aluminates and Tetra Calcium Alumina ferrite. The Chemical combination of Tri-calcium Aluminates and Tetra calcium Alumina ferrite renders the cement, resistant to sulphate attack. This type of cement is particularly useful in the arid western regions of India where the ground water deposits have a good amount of sulphates in the soil. Hence in these regions sulphate resistant cement can be used with advantage in culverts, siphons, canal-linings etc.

6. Low Heat Portland cement (I.S.269)


During the process of setting and hardening of cement, an appreciable rise of temperature occurs. The heat generated in ordinary cement at the end of 3 days may be of the order of 80 cal. /gram of cement. In massive constructions like abutments retaining walls, dams etc., and the rate at which the heat can be lost at the surface is lower than at which the heat is initially generated. A low heat evolution in achieved by reducing C³S and C³A contents and increasing C2S. The temperature rise is an important factor because the shrinkage which may take place during the cooling process introduces tensile tresses in concrete. This will therefore affect the water tightness of the structure and my lead to deterioration. In the low heat cement the heat evolved is less.

As per the code the heat of hydration of low heat shall not exceed 65 cal. /gm at 7 days, 75 cl./gm at 28 days. The strength of this cement is a little lower than the ordinary cement during the first two or three months but its strength after this period is practically the same as that of ordinary cement. This cement offers a better resistance to chemical deterioration than Ordinary Portland Cement.

7. Hydrophobic Cement (I.S.8043)

This is a special type of cement which is claimed to have the property of repelling water. Hence the cement stored does not get spoiled even during the monsoon. This cement it claimed to remain unaffected when transported during rains also. This cement is made by adding water repellent chemicals to Ordinary Portland Cement clinker in the process of grinding. The chemicals added form a monomolecular coating over every grain of cement and thus prevent any absorption of moisture from air by the cement. In the concreting process, in the mixer, the coating gets removed by abrasion. After this the process of hydration will take place in exactly the same manner as in the case of ordinary Portland cement.

8. White Cement (I.S.8042)

White cement has practically the same composition and has the same strength as Ordinary Portland cement. To obtain the white colour the iron oxide content is considerably reduced (which shall be limited to 1 %). The raw materials of this cement are – Limestone (or chalk), China Clay.

Both the above must have low iron content. Sometimes cryolite (sodium aluminium fluoride) is added as flux to aid in burning. The cement is burnt in a rotary kiln. Oil or gas firing is adopted in place of coal firing.

This cement is generally used as a base for coloured cement. This cement, due to its white colour is mainly used for interior and exterior decorative work like external renderings of building, facing slabs, floorings, ornamental concrete products, path’s of gardens, swimming pools etc.

9. Oil – Well Cement (I.S. 8229)

After the oil wells are dug it is necessary to fill the clearance between the steel lining and the wall of the well. It is necessary to grout the porous strata so that the wall of the well is prevented


from collapse. It is also necessary to keep the ground waters out of the shaft of the well. Oil wells are dug to great depths (1000 to 5000 m) and at high temperatures.

Thus in such conditions the cement adopted for sealing the oil wells must be in such a state, the slurry if pumped into the oil well casting will remain in the fluid state for a few hours before it can harden. For such conditions Oil Well Cement suited for sealing the deep oil Wells at temperatures not exceeding 100º C are manufactured Cement suited for greater depths involving higher temperatures are also manufactured. In such cases, the cement is retarded at the site by adding certain retarders to facilitate satisfactory sealing.

IMPORTANT INDIAN STANDARD CODES

IS : 456 - 1978 Code of Practice for plain and reinforced concrete(Third Revision).

Is : 10262 - 1982 Recommended Guide lines for concrete mix design.IS : 1199 - 1956 Methods of Tests for strength of concrete.

(Reaffirmed 1991).IS : 516 - 1959 Methods of Physical Tests for strength of concrete.IS : 4031 - 1968 Methods of Physical Tests for Hydraulic Cement.IS : 4032 - 1968 Methods of Chemical Analysis of Hydraulic cementIS : 5526 - 1969 Recommendations for detailing of reinforcement in

Reinforced concrete works.IRST : 40 - 1985 Railway Sleeper Cement (Specification of

Ministry of Railways)

TESTING OF CEMENT BY UNRECOGNISED INSTITUTIONS AN EXTRACT FROM HAND OUT ISSUED BY RESEARCH AND CONSULTANCY DIVISION- ACC

STRENGTH

It is quite possible that the consumers might have got cement tested for strength and other properties in recognized institutions, such as CRI (New Delhi), NTH (Calcutta, Bombay, Madras, etc.). We know that these institutions have good facilities for casting and testing of cement. However, there are several institutions, especially engineering colleges and industrial test institutions, which may not have the experience and the expertise for cement testing; results from such laboratories should not be taken cognizance of. There have been instances where such deficiencies are noticed.

Parasakti Cement Industries Limited


Parasakti Cement Industries Limited (0.9 Million Tons Per annum capacity) was established in the year 1998. Parasakti cement completed expansion unit during the year 2007 and increased its capacity for 1.5Million Tons per annum capacity). The brand is available in the Andhra Pradesh, Tamil Nadu, Kerala and Karnataka regions. Parasakti Cement is available in OPC 43 Grade and 53 Grade, PPC and SRC variants. Packaging options include HDPE and Paper. For batching plants we can also provide cement in Bulk Tankers.

.

Figure: 2.1 Parasakti entranceand factory view from entrance.

THE MAJOR CONSUMERS OF PARASAKTI CEMENTS: Real estate companies, Construction companies, Roads & buildings contractors, Residential constructors etc.

KEY CUSTOMERS OF THE COMPANY: Business firms of Pre-stressed Concrete Structures and Precast Concrete requiring high strength, High-rise Buildings, Chimneys, Long span bridges, Flyovers, General Civil Construction Works like Residential, Commercial, Industrial Buildings, Bridges, Flyovers, Culverts etc.

Figure: 2.2 Parasakti Cements Entrance Main road and greenery plantation road side.


Figure: 2.3 Employee canteen and Factory view from colony road

Figure2.4 Mining Pit and Factory view

Figure: 2.5 Colony, Coal yard and Lime stone stacker reclaimer.


CORPORATE VISION: Parasakti Cements is an integrated cement business with a vision to become global leader in good-for - Pre-stressed Concrete Structures and Precast Concrete requiring high strength, High-rise Buildings, Chimneys, Long span bridges, Flyovers, General Civil Construction Works like Residential, Commercial, Industrial Buildings, Bridges, Flyovers, Culverts etc., through innovation, strategic acquisition.

Figure: 2.6 Words of Swami

Vivekananda

STRATEGY:

To become the leading good-cement company in all over india for all types of

construction activities, they are pursuing a clear strategy based on six pillars:

Brands Product Distribution

Strengthening and

extending the

portfolio of brands

with consumer

relevant

differentiations

Building a portfolio of

good-for-your all type of

construction- relevant

strength and wellness,

convenience and

sustainability

Increasing penetration

of company products

portfolio in identified

non-strong hold

markets such as

Bangladesh and Sri

Lanka

People Process Sustainability

Building an

organization with

clear differentiality

with technical

advances &

capabilities

Having a process that

work efficiently to

deliver our strategic

objectives with

innovation as a key

differentiation

Creating competitive

advantage and long-

term value creation

through the

development of a

sustainable business

model


MATERIALS DEPARTMENT

STORES

Figure: 2.7 Stores building and stacking items inside racks.

Parasakti Cement industries Stores layout and construction is well planned for storing various types of items based on the material characters, weight and space are considered. The main stores maintain all the receipt of raw materials and packing materials and consumption is booked from production department daily production report entry. Consumption of maintenance spares (Spare parts inventory), consumables and general items stores is operating the transaction until utilization.

Stores personnel are well trained in materials handling, accounting procedures and functions to act against every situation. And also the department is trained in handling cost reduction activities and maximum avoid the double handling activities in case of heavy materials. Department is having four sections basing on the work division, they are raw materials & packing materials receipts section, Stores & spares receipt section, Stores & spares issue section, Purchase requisitions scrutinizing and perpetual inventory section etc.,


TIMELINE

It is proposed to classify the entire project in to eight chapters.

“Material management in cement manufacturing industry”, a brief idea about purpose and

importance.

Parasakti cement industry profile

Materials management objective and scope research point of view and organization point of view

Material management Methodology and Limitations.

Data analysis, Interpretation and Presentation.

Conclusion and suggestions

Annexure

Bibilography


SWOT ANALYSIS

STRENGTHS

BACKWARD INTEGRATION- PROVIDES COMPETITIVE EDGE

PCIL is backward its sister concern as it also has a Cement industry fans & shafts and structures manufacturing which is the source of the major machinery equipment for the Cement plant. This helps the company in case of 60% of Critical drawing based items. It also helps the company to major modifications of production improvement and energy cost saving equipments. Materials department is having efficient trained personnel to handle with material and men in plant and purchase. Company having a strength of expertise 35 Sales Executives, 8 manager in 6 branches 4 executives and 1 manager in the Corporate Office located at Plot No.8-3-214/21,S.R.Nagar Hyderabad.

PLANNING TO ESTABLISH ANOTHER UNIT IN NORTHERN STATES

Thrust on industry development and a gradual increase towards higher production within the units and establishing new units in new marketsUSAGE OF MODERN TECHNOLOGY

Materials Department utilizing the ERP software packing for its

accounting transactions so that it will improve the efficiency in all departments in decision making with online information sharing. The company is using the latest German technology in plant commissioning. This will help the company to boost its production and control of pollution.

WEAKNESSES (KEY CONCERNS)

ENERGY COST DUE TO HORIZONTAL MILLS COULD IMPACT NEGATIVELY

The main energy cost saving area in cement industry is vertical Mills but the company commissioned horizontal mills with initial low investment.

OPPORTUNITIES

LARGE CAPEX PLANS- WILL LEAD TO HIGHER PRODUCTION AND EARNINGS

The company has taken major modifications jobs to improve production and quality and energy saving areas which may lead to better earning to the company. Company also implementing Oracle applications E-business to enhance the facilities in supply chain environment more than existing ERP package.

THREATS

GLOBAL SLOWDOWN

The most significant threat that the management perceives is the overall slowdown in the in construction business and increase of Cement production in southern states, global economy.


PARASAKTI CEMENT INDUSTRIES LIMITED

MANAGEMENT TEAM

PRODUCT PROFILE

KEY MANGENT PERSONNEL

P.Munni KrishnaManaging Director

P. Yaswanth KrishnaExecutive Director

General Manager (Projects)K. V. Rao

General Manager (Finance)K. Amaranath Reddy

Chief General Manger (Works)

A.Sambasiva Rao.

General Manager (Plant)

M.A.Amrutha Raju


OPC 53 Grade Cement at PARASAKTI CEMENT is produced to meet the Indian Standards Specifications as per 12269 – 1987

Definition: The cement that is prepared by grinding Portland Cement Clinker and suitable proportions of Gypsum is called as Ordinary Portland cement. Small additions of performance improvers such as Fly ash, Blast furnace slags etc are permitted.

53 grade Ordinary Portland Cement is high strength OPC and provides numerous advantages where ever concrete for special high strength applications is required. The rate of development of strength is faster than 43 grade OPC.

53 Grade OPC is different from Rapid Hardening Portland Cement IS: 8041and their purposes of usage are different.

The Cement mortar that is prepared in 1: 3 proportions using standard sand (as per IS:650) and tested at standard laboratory conditions and gains the compressive strength of not less than 53 MPa after 28 days, then the Cement is said to be 53 Grade Ordinary Portland Cement.

Key Benefits:

Minimum Compressive Strength at

Description IS Requirement Parasakti Results

3 Days (72± 1 hour) Not less than 27 MPa 35 – 38 MPa



Setting Time in Minutes

Initial Setting time Not less than 30 Minutes 130-140 Minutes

Final Setting time Not more than 600

Minutes

230-250 Minutes

Fineness

By Blaine method Not less than 225 M2/Kg 275-295 M2/Kg


Soundness

Le-Chatlier method Not more than 10mm 1-2mm

Autoclave method Not more than 0.80 percent 0.05 – 0.2 %

Applications/ Usage: For special high strength applications

Used for Pre-stressed Concrete Structures and Precast Concrete requiring high strength, High-rise Buildings, Chimneys, Long span bridges, Flyovers, General Civil Construction Works like Residential, Commercial, Industrial Buildings, Bridges, Flyovers, Culverts etc. OPC 43 Grade Cement at PARASAKTI CEMENT is produced to meet the Indian Standards Specifications as per IS : 8112 - 1989Definition: The cement that is prepared by grinding Portland Cement Clinker and suitable proportions of Gypsum is called as Ordinary Portland cement. Small additions of performance improvers such as Fly ash, Blast furnace slag’s etc are permitted. The Cement mortar that is prepared in 1: 3 proportions using standard sand (as per IS : 650) and tested at standard laboratory conditions and gains the compressive strength of not less than 43 MPa after 28 days, then the Cement is said to be 43 Grade Ordinary Portland Cement. Key Benefits:



3 Days (72± 1

hour)

Not less than 23 MPa 32 – 34 MPa

7 Days (168± 2

hour)


28 Days (672± 4

hour)




Final Setting time Not more than 600 Minutes 230-250 Minutes


Fineness


Soundness



Applications/ Usage: Can be used for Pre Stressed Concrete Sleepers, General Civil Construction works like Residential, Commercial, Industrial Buildings, Bridges, Flyovers, Culverts etc. Portland Pozzolana Cement at PARASAKTI CEMENT is produced to meet the Indian Standards Specifications as per IS: 1489 (Part 1) - 1991(Fly ash Based)

Definition:A hydraulic cement prepared by grinding the mixture consisting of an intimately and uniform blend of Portland clinker and pozzolana with the suitable addition of gypsum or an intimate and uniform blending of Ordinary Portland Cement and fine pozzolana material.

The Cement mortar that is prepared in 1: 3 proportions using standard sand (as per IS:650) and tested at standard laboratory conditions and should gain the compressive strength of not less than 33 MPa after 28 days, Produces less heat of hydration and offers resistance to the attack of aggressive waters. Higher fineness Improves the permeability of the concrete and hence durabilityIncreases the resistance to corrosion of reinforcementImproves the pore size distribution & Reduces leaching of calcium hydroxide liberated during cement hydration thus reducing the leaching. Reduces the micro cracks at the transition zones Key Benefits:





7 Days (168± 2

hour)


28 Days (672± 4

hour)





Fineness


Soundness



Drying Shrinkatge Not more than 0.015 percent 0.1%

Applications/ Usage: Used for Hydraulic Structures, Mass concrete structures like Dams, Bridge piers and thick foundation, Marine structures, Sewers and Sewage disposal works etc. Sulphate Resisting Portland Cement at PARASAKTI CEMENT is produced to meet the Indian Standards Specifications as per IS: 12330 – 1988

Definition:

The cement that is prepared by grinding Portland Cement Clinker in which the amount of tri-calcium aluminates is not more than 5% and the sum of twice the Tri-calcium Aluminates and Tetra calcium alumina ferrite is less than 25% and suitable proportions of Gypsum.

Key Benefits:

The SRPC is beneficial in such conditions where the concrete is exposed to the risk of deterioration due to sulphate attack, in contact with soils and ground waters containing excessive amounts of sulphates as well as for concrete in sea waters or exposed directly to sea waters.




3 Days (72± 1

hour)

Not less than 10MPa 28 – 32 MPa

7 Days (168± 2

hour)


28 Days (672± 4

hour)





Fineness


Soundness



Sulphate expansion Not more than 0.045 % at 14

days

0.015%

Applications/ Usage:

Underground and basements structuresWorks in coastal areasPiles and foundationsWater and sewage treatment plantsSugar, chemical, and fertilizers factoriesPetrochemical and food processing industries

CHAPTER - 3

MATERIALS MANAGEMENT IN CEMENT MANUFACTURING INDUSTRY


PRIMARY OBJECTIVES OF THE PROJECT

TO GET A PRACTICAL INDUSTRIAL EXPOSURE IN CEMENT INDUSTRY.

THE TASK IS TO ANALYZE THE INVENTORY MANAGEMENT SYSTEM OF

PARASAKTI CEMENT INDUSTRIES LTD. & TRACE OUT THE DRAWBACK OF

THE CURRENT SYSTEM & GENERATING AN IDEA TO TOUCH HIGHER

LEVEL OF COMPETENCY IN CONTROLLING THE INVENTORY.

TO ANALYZE THE CURRENT ERP SYSTEM IN MANAGING THE

INVENTORY.

TO ANALYZE THE MAJOR PROJECT TO MINIMIZE THE INVENTORIES

AND KEEP SURPLUS & OBSOLETE ITEMS TO MINIMUM AT PCIL.

TO ANALYZE THE INDUSTRIAL SUFFICIENCY IN MANAGING THE

INVENTORY.

TO ANALYZE THE MATERIAL REQUIREMENT PLANNING PROCEDURE.

TO ANALYZE THE CURRENT PROCEDURE OF VENDOR

DEVELOPMENT & RATING.

SECONDARY OBJECTIVES:

1. New materials and products – working closely with design and research departments for development of new materials and products.

2. Economic make-buy—coordinating and assisting other departments in make buy decisions3. Standardization- coordinating with design departments in reducing no of items.4. Product improvement – Contribution towards product improvement by giving appropriate

inputs and assisting design department.5. Inter departmental harmony- success of materials management department depends on the

success of other departments. Hence relations are to be harmonious.

SCOPE OF MATERIALS MANAGEMENT RESEARCH POINT OF VIEW


Materials Management thus can be defined as that function of business that is responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide service to the customer, at a pre-decided level at a minimum cost. And its sub functions are:

Materials planning and control: Materials required for any operation are based on the sales forecasts and production plans. Planning and control is done for the materials taking into account the materials not available for the operation and those in hand or in pipe line. This involves estimating the individual requirements of parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and monitoring the performance in relation to production and sales.

Purchasing: Basically, the job of a materials manager is to provide, to the user departments right material at the right time in right quantity of right quality at right price from the right source.

To meet these objectives the activities undertaken include selection of sources of supply, finalization of terms of purchase, placement of purchase orders, follow up, maintenance of relations with vendors,

approval of payments to vendors, evaluating, rating and developing vendors.

Stores: Once the material is delivered, its physical control, preservation, minimization of obsolescence and damage through timely disposal and efficient handling, maintenance of records, proper locations and stocking is done in Stores.

Inventory control: One of the powerful ways of controlling the materials is through inventory control. It covers aspect such as setting inventory levels, doing various analyses such as ABC,XYZ etc., fixing economic order quantities (EOQ), setting safety stock levels, lead time analysis and reporting.

Materials management can thus also be defined as a joint action of various materials activities directed towards a common goal and that is to achieve an integrated management approach to planning, acquiring, processing and distributing production materials from the raw material state to the finished product state. In its process of managing, materials management has such sub fields as inventory management, value analysis, receiving, stores and management of obsolete, slow moving and non moving items. The various activities represent these four functions:

Planning and control. Purchasing. Value analysis and Physical distribution.

The movement of material may involve the following stages.

(a) Procurement of materials. (b) Storing the material till it is required for consumption. (c) Issue of the material for consumption.


The scope of Materials Management includes the following aspects:S.No

Name of aspect S.No Name of aspect

01 Identification of material 08 Quality control02 Cataloging / coding of

material09 Packaging

03 Standardization 10 Storage04 Need determination 11 Inventory control05 Scheduling 12 Distribution and06 Procurement 13 Disposal07 Inspection

Main group

1st two digit (1 &2)reflects Main equipment/Group

classifiedSub Group Next two (3&4)digit

reflects Sub assembly/group of Main

equipment / GroupSub sub group

Next two(5&6)digit reflects Subsequent classification of

Main equipment/group and Sub

assembly /groupItem serial No

Last (7,8&9) digit reflects Serial number of item

subsequently from elevant main

group, sub & sub subgroup.


MGroup Description Mgroup Description

01 Light vehicles 37 Preheater, Kiln & Cooler

02 Compressors(Mines) 38 *********

03 Heavy vehicles 39 Mechanical(Miscellaneous)

04 Dozers spares 40 Electrical items

05 Dumpers spares 41 Fasteners

06 Excavators spares 42 GI Sheets

07 Engines spares 43 AC Sheets

08 Filters (Mines) 44 Painting materials

09 Loaders spares 45 Construction steel

10 Auto Electrical items 46 Pipes & Fittings

11 JD Spares 47 Civil (Sanitary) items

12 Spares for JRD Drilling machine 48 Wooden materials

13 Gaurage general items 49 Sweeping machine items

14 Explosives 50 Laboratory items

15 Tyres & tubes 51 Grinding media

16 Spares for DG Set 52 Refractories & Castables

17 ****** 53 Process items

18 ****** 54 Grindcat23

19 Bearings 55 Instrumentation items

23 SS Materials 58 Tools & tackles

24 Adhesives & Abrasives 60 Oils & Lubricants

25 Non Ferrous Metals 61 Fuels

26 M.S.Structural steel 64 Welding materials

27 Compressors(Mechanical) 65 Industrial Gas

28 Conveyor Belts 67 Water treatment plant

29 Work shop items 68 Furniture & pictures

30 Mechanical Core items 70 Safety items

31 V Belts & Couplings 71 General consumables

32 Mechanical Pumps spares 72 Horticulture

33 Gear boxes & spares 73 Medicines

34 Packing plant spares 74 Stationery & computer items

35 Castings 85 Major Machinery / parts

36 Rubber packing seal items 90 Repair items


Major Sections basing on Flow of Production Process:

Lime stone raising Clinker burning

Lime stone transport Cement Grinding

Lime stone crushing Packing House

Stacker & Reclaimer Plant auxiliaries’

Raw meal grinding46

PIPES & FITTINGS

47

CIVIL ITEMS

MATERIALS MANAGEMENT SCOPE ORGANIZATION’ S POINT OF VIEW

In Parasakti Cement Industries Limited, a materials management consists of three parts viz.

Distributing them for sale. In Parasakti cements Materials department (Raw materials, Stores & spares & Packing materials) where as the finished product is look after by Distribution department. Our raw materials are Lime stone from our mines, Dolomite, Laterite, Iron ore, Gypsum and Fly ash which are procuring from outside resources. All these are stored in separate covered yard locations and consume in production process. All Maintenance spares and consumables are stored in a bonded warehouse and stores are using Oracle applications (Oracle E-business) for transactions accounting. At the beginning itself we gone for a customized ERP and now we gone for latest Oracle E-Business. Purchasing function, in a business environment, is one of the most critical functions as it provides the input for the organization to convert into output. Materials today are lifeblood of industry. They must be available at the proper time, in the proper quantity, at the proper place, and


the proper price. Company costs and company profits are greatly affected by them as normally, a manufacturing cement industry spends nearly 50% of its revenue in purchasing.

Objectives of Purchasing:

The classical definition of objectives of purchasing is to buy materials and services of the right quality, in the right quantity, at the right place, from the right source and at the right time. However , in general management parlance the objectives of purchasing are:

* To support company operations with an uninterrupted flow of materials and services.* To buy competitively and wisely* To help keep a minimum Inventory* To develop reliable alternate sources of supply* To develop good vendor relationship and a good continuing supplier relationship* To achieve maximum integration with the other departments of the firm* To train and develop highly competent personnel* Who are motivated to make the firm as well as their department succeed* To develop policies and procedures which permit accomplishment of the proceeding seven objectives at the lowest reasonable operating cost?

The basic objective, in pure practical terms is, of course, to derive the maximum value for each unit of currency spent in buying. Purchasing is no doubt a vast subject and as the competition among the firms grows this function of business is expected to see a lot of evolution.

PCIL purchase department in a COMPANY has the major responsibility for locating suitable sources of supply and for negotiating prices. Choosing the right material requires input from the marketing, engineering and manufacturing departments. Proper planning is necessary to procure CG/Consumables/Others so that they reach on time for the required activity to start. The objectives of purchasing can be divided in to four categories:

1. Obtaining goods and services of the required quantity and quality2. Obtaining goods and services at the lowest cost3. Ensuring the best possible service and prompt delivery by the supplier4. Developing and maintaining good supplier relations and developing potential suppliers.

Role of Purchase Department

The Purchase department at Hyderabad handles all the purchase requirements of PCIL. All Purchase requisitions or Purchase Indents are sent to the Purchase department. After receiving and analysing the requisitions, supplier(s) for the item(s) are identified and accordingly enquiries are floated to respective supplier(s). Once quotations are received from the vendors, they are analysed, negotiated and compared to select the right supplier based on the following parameters:

1. Competitive Price2. Quality3. Delivery Time4. Availability

Then the purchase department issues purchase orders to the suppliers and follows up with


the suppliers to ensure delivery on time. Lead-time is maintained with respect to item-vendor link. After the goods are received at the location (By generating Good Receive Note), and it is passed through QC or Physical Inspection as per the need. Approved GRN(s) are sent to finance for bill passing.

Purchasing Cycle

The Purchasing cycle consists of the following steps:1. Receiving and analysing purchase requisitions.2. Selecting suppliers, finding potential suppliers, issuing requests for quotations, receiving and

analysing quotations, and selecting the right suppliers.3. Determining the right price.4. Issuing Purchase orders.5. Following up to ensure delivery dates are met.6. Receiving and accepting goods.7. Approving suppliers invoice for payment.

Receiving and analysing purchase requisition: Purchase requisitions start with the department or person who will be ultimate user. In the material requirements planning environment, the planner releases a planned order authorizing the purchase department to go ahead a process a purchase order All these process is being done at factory level department users through Stores department and stores will forward the approved purchase requisition to purchase department which is at corporate office. Electronic requisition system is in practice in Parasakti cements through ERP software. Approval levels are fixed. The Purchase requisition prepared by the end user and with user department head approval it will be forwarded to Stores department where the details of the item will be checked and approved by stores head and forward to General Manager (Plant) and Chief General Manager (Works) and after their approval the Purchase requisition will appear in Corporate office for further proceedings.Figure: 5.1 Purchase requisition format used in Parasakti cements.At a minimum, the purchase requisition contains the following information:

Identity of originator, signed approval and account to which cost center is assigned. Material specification. Quantity and unit of measure. On hand stock Pipe line quantity (Pending Purchase requisition quantity and pending purchase order

quantity) Required delivery date and place Previous purchase details – unit price, Supplier name and Purchase order number Previous two years annual consumption of the item.

Selecting suppliers: After all the approval levels are completed the requisition will be appear in Corporate office purchase department with notification to purchase. Identifying and selecting suppliers are important responsibility of purchase department. They will search the suppliers for new items and select from the approved list of suppliers for previously purchased items.

Requesting quotations: For major items, it is usually desirable to issue a request for quotation. This is a written / Email inquiry that is sent to enough suppliers to be sure competitive and reliable


quotations is received. After the suppliers have completed and retuned the quotations to the buyer, the quotations are analyzed for price, compliance to specifications, terms and conditions of sale, delivery and payment terms. For items where specifications can be accurately written, the choice is probably made on price, delivery, and terms of sale. For items where specifications cannot be accurately written, the items quoted will vary. The quotations must be evaluated for technical suitability. The final choice is a compromise between technical factors and price. Usually both the issuing and purchasing departments are involved in the decision.The Purchase Module comprises the following functionalities in ERP

- Purchase Indent - Enquiry raised to Supplier- Quotation Entry - Comparative Chart- Purchase Order (Finalization /Cancellation/Amendment/Repeat Order/Short Close)

Determining the right price: Determining the right price: This is the responsibility of the Purchase department and is closely tied to the selection of suppliers. The purchasing department is also responsible for price negotiation and will try to obtain the best price from the supplier.

Issuing a Purchase order: A purchase order is a legal offer to purchase. Once accepted by the supplier, it becomes a legal contract for delivery of the goods according to the terms and conditions specified in the purchase agreement. The purchase order is prepared from the purchase requisition or the quotations and from any others additional information needed. A copy is sent to the supplier; copies are retained by the purchasing and are also sent to other departments such as accounting, the originating department and stores.

Following up and delivery: The supplier is responsible for delivering the items ordered on time. The purchasing department is responsible for ensuring that suppliers do deliver on time. If there is doubt that delivery dates can be met, purchasing must find out in time to take corrective action. This might involve expediting transportation, alternate sources of supply, working with the supplier to solve its problems.

Receiving and accepting goods: Corporate office purchase department receive the goods in packed condition hence here only physical condition of packages will be checked and forward the materials to site stores department for receiving and accepting the same with indented departments. A copy of receiving report is sent to purchase department noting any variance or discrepancy against supplier’s delivery document / purchase order with physical receiving.

Approving suppliers invoice for payment: When the suppliers invoice is received, the purchase department check the same with Purchase order for price, quantity, discount and receiving and inspection report form factory (Material receipt voucher against the particular supplier) for quantities accepted, receipt of Duplicate cenvat copy to claim cenvat tax credit and User department remarks if any and then approve for payment through accounts department.


CHAPTER -4

MATERIALS MANAGEMENT

METHODOLOGY

INTRODUCTIN:

The wealth of a country is measured by its gross national product- the output of goods and services produced by the nation in a given time. Goods are physical objects, something we can touch, feel, or see. Services are the performance of some useful function such as banking, medical care, restaurants, clothing stores, or social services.

What is Materials Management?

The concept of having materials department responsible for the flow of materials, from supplier through production to consumer, is relatively new.

The name usually given to this function is materials management. Other names include distribution planning and control and logistics management, but the one used in this report is materials management. Materials management is a coordinating function responsible for planning controlling materials flow. Its Objectives are as follows:


Maximize the use of firm’s resources. Provide the required level of customer service.

OPERATING ENVIRONMENT:

Operations management works in a complex environment affected by many factors. Where in the most important are government regulation, the economy, competition, customer expectations, and quality.

THE SUPPLY CHAIN CONCEPT:

There are three phases to the flow of materials in M/s.Parasakti Cement industries Limted. Raw materials flow into a manufacturing process from a physical supply system, they are processed by manufacturing, and finally Finished Cement Products are distributed to end consumers through a physical distribution system.

The fundamental objectives of the Parasakti Cement Industries Limited, Materials management function are acquisition of materials and services, often called the famous 5 R’s of Materials management:

Of the right quality In the right quantity At the right time From the right source At the right price

From the management point of view, the key objectives of Materials Management are:

To buy at the lowest price, consistent with desired quality and service.To maintain in a high inventory turnover, by reducing excess storage, carrying costs and inventory losses occurring due to deteriorations, obsolescence and pilferage.To maintain continuity of supply, preventing interruption of the flow of materials and services to users.To maintain the specified material quality level and a consistency of quality this permits efficient and effective operation.To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and pricing.To minimize the overall cost of acquisition by improving the efficiency of operations and procedures.To hire, develop, motivate and train personnel and to provide a reservoir of talent.To develop and maintain good supplier relationships in order to create supplier attitude and desire furnish the organization with new ideas, products and better prices service.To achieve a high degree of cooperation and coordination with user departments.To maintain good records and control that provides an audit trail and ensures efficiency and honesty.To participate in Make or Buy decisions.


PRODUCTION PLANNING SYSTEM

Production planning is the first step in a manufacturing planning and control system. The planning horizon usually extends for a year. The minimum horizon depends on the lead times to purchase materials and make the product. The level of detail is not high. Usually, the plan is made for families of products based on the similarity of manufacturing process or on some common unit. The production plan is part of the Sales and Operations planning process. Which is an executive-level planning process involving trade-offs across departments or functions in the company.

Three basic strategies can be used to develop a production plan: chase, leveling production or subcontracting. Each has its operational and cost advantages and disadvantages. It is the responsibility of manufacturing management to select the best combination of these basic plans so total costs are minimized and customer services levels are maintained.

A make-to-stock production plan determines how much to produce in each period to meet the following objectives:

Achieve the forecast. Maintain the required inventory levels.

PRODUCTION PLAN PRINICIPLES

1. It should go as far out into the future as needed to obtain the resources necessary to meet the requirements of the S&OP.

2. The planning horizon is usually 12 or more calendar months. 3. The buckets of time are usually monthly. 4. It is established for product families based on the similarity of the manufacturing process. 5. It is used to satisfy a variety of management objectives. 6. At the end of the production plan process, supply and demand should be in balance. The

process iteration continues until they are. 7. All of the internal supply-chain links must be in agreement on the numbers represented in

the production plan. It is literally a contract between all links in the supply chain. 8. The production plan drives all subsequent planning processes. 9. The production plan should not be over /understated. It must be realistic and achievable. 10. Actual production plan results must be documented and communicated to all supply-

chain links.

INVENTORY CONTROL

Inventory control is concerned with minimizing the total cost of inventory.

The three main factors:The cost of holding the stock.The cost of placing an order.The cost of shortage.


MATERIAL COST MANAGEMENT

Materials management is responsible for planning and controlling inventory from the raw material stage to the customer. Inventory must be considered at each of the planning levels and is thus part of production planning, master production scheduling, and material requirements planning. Production planning is concerned with over all inventories, master planning with end items, and material requirements planning with component parts and raw material.

AGGREGATE INVENTORY MANAGEMENT: It deals with managing inventories according to their classification (raw materials, work-in-process, and finished goods) and the function they perform rather than at the individual item level. As such aggregate inventory management involves:

INVENTORY COST: Material cost is basically two types ie Direct material cost and Indirect material cost. Direct materials are Raw materials like Lime stone, Dolamite, Laterite, Iron ore, Gypsum and Fly ash and Fuel is Coal. Indirect materials are Maintenance spares, consumables, Lubricants etc., The following costs are used for inventory management decisions:

Item cost, Carrying costs, Ordering costs, Stock out costs, Capacity associated costs.

Item cost: Item cost is the price paid for a purchased item, which consists of costs associated in getting the item into the plant. It may include transportation, packaging, taxes etc., finally it may be called as item landed price.Carrying costs: It includes all expenses incurred by the company because of inventory carried. As inventory increases, so do these costs. They can be broken down into three categories \:

1. Capital cost: Money invested in inventory is not available for other uses and as such represents a lost opportunity cost. The minimum cost would be interest in this case.

2. Storage costs: Storing inventory requires space, workers, and equipment. As inventory increases, so do these costs.

3. Risk costs: The risks in carrying inventory are:a. Obsolescence: loss of product value resulting from a model or equipment change or

technology development.b. Damage: inventory damaged while being held or moved.c. Pilferage: goods lost, strayed or stolen.d. Deterioration: inventory that rots or dissipates in storage or whose shelf life is limited.

Ordering costs: Ordering costs are costs associated while placing an order either with factory or a supplier. However the annual cost of ordering depends upon the number of orders placed in a year. Ordering costs include the following:

Production control costs: The annual cost and effort expended in production control depends on the number of orders placed, not on the quantity ordered. The fewer orders for year, the less cost. The costs incurred are those of issuing and closing orders, scheduling, loading, dispatching, and expediting.

Setup and teardown costs: Every time an order is issued, work centers have to setup to run the order and tear down the setup at the end of the run. These costs do not depend upon the quantity ordered but on the number of orders placed per year.


Lost capacity cost: Every time an order is placed at a work center, the time taken to set up is lost as productive output time. This represents a loss of capacity and is directly related to the number of orders placed.

Stock out costs: If demand during the lead-time exceeds forecast, can expect a stock out. Stock outs can be reduced by carrying extra inventory to protect against those times when the demand during lead time is greater than forecast.Capacity-Associated costs: These are the associated extra cost during the times of extra shifts, overtime, hiring, and layoffs. Parasakti cements avoid this type of costs by leveling production that is by producing cement in slack periods for sale in peak (Season) period.

TECHNIQUES OF INVENTORY CONTROL:USED AT PCIL

Min-Max Plan. Ordercycling system. Fixation of various levels. The ABC Analysis. Review of slow and non moving items.

ABC costing method (Activity based costing) is using in M/s.Parasakti Cement Industries Limited as information management report for further directions / actions from management. A preview of report is hereunder furnished.

ABC Classification / Analysis of Inventory in our Plant:

The ABC classification process is an analysis of a range of objects, such as finished products, items lying in inventory or customers into three categories. It's a system of categorization, with similarities to Pareto analysis, and the method usually categorizes inventory into three classes with each class having a different management control associated:

A - Outstandingly important; B - of average importance; C - relatively unimportant as a basis for a control scheme.

Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and still less to C.

Popularly known as the "80/20" rule. ABC concept is applied to inventory management as a rule-of-thumb. It says that about 80% of the

Rupee value, consumption wise, of an inventory remains in about 20% of the items.

This rule, in general, applies well and is frequently used by inventory managers to put their efforts where greatest benefits, in terms of cost reduction as well as maintaining a smooth availability of stock, are attained.

The ABC concept is derived from the Pareto's 80/20 rule curve. It is also known as the 80-20 concept. Here, Rupee / Dollar value of each individual inventory item is calculated on annual consumption basis.

Thus, applied in the context of inventory, it's a determination of the relative ratios between the number of items and the currency value of the items purchased / consumed on a repetitive basis.

* 10-20% of the items ('A' class) account for 70-80% of the consumption


* The next 15-25% ('B' class) account for 10-20% of the consumption and

* The balance 65-75% ('C' class) account for 5-10% of the consumption


'A' class items are closely monitored because of the value involved (70-80%!). High value (A), Low value (C) , intermediary value (B)

20% of the items account for 80% of total inventory consumption value (Qty consumed X unit rate)

Specific items on which efforts can be concentrated profitably Provides a sound basis on which to allocate funds and time A,B & C , all have a purchasing / storage policy - "A", most critically reviewed , "B" little

less while "C" still less with greater results.

ABC Analysis is the basis for material management processes and helps define how stock is

managed. It can form the basis of various activity including leading plans on alternative stocking arrangements (consignment stock), reorder calculations and can help determine at what intervals inventory checks are carried out (for example A class items may be required to be checked more frequently than c class stores.


Inventory Control Application: The ABC classification system is to grouping items according to annual issue value, (in terms of money), in an attempt to identify the small number of items that will account for most of the issue value and that are the most important ones to control for effective inventory management. The emphasis is on putting effort where it will have the most effect.

All the items of inventories are put in three categories, as below:

A Items : These Items are seen to be of high Rupee consumption volume. "A" items usually include 10-20% of all inventory items, and account for 50-60% of the total Rupee consumption volume.

B Items : "B" items are those that are 30-40% of all inventory items, and account for 30-40% of the total Rupee consumption volume of the inventory. These are important, but not critical, and don't pose sourcing difficulties.

C Items : "C" items account for 40-50% of all inventory items, but only 5-10% of the total Rupee consumption volume. Characteristically, these are standard, low-cost and readily available items. ABC classifications allow the inventory manager to assign priorities for inventory control. Strict control needs to be kept on A and B items, with preferably low safety stock level. Taking a lenient view, the C class items can be maintained with looser control and with high safety stock level. The ABC concept puts emphasis on the fact that every item of inventory is critical and has the potential of affecting, adversely, production, or sales to a customer or operations. The categorization helps in better control on A and B items.

In addition to other management procedures, ABC classifications can be used to design cycle counting schemes. For example, A items may be counted 3 times per year, B items 1 to 2 times, and C items only once, or not at all.

Suggested policy guidelines for A, B & C classes of items

A Class items B Class items C Class itemsHigh consumption value Moderate consumption value Low consumption valueVery strict consumption control Moderate control General controlVery low safety stock Low safety stock High safety stockPhased delivery Once in three months Once in 6 monthsWeekly control report Monthly control report Quarterly reportMaximum follow up Periodic follow up ExceptionalAs many sources as possible Two or more reliable Two reliableAccurate forecasts Estimates on past data Rough estimateCentral Purchasing /storage Combination purchasing DecentralizedMaximum efforts to control LT Moderate Minimum clerical

efforts.To be handled by Senior officers

Middle level Can be delegated


Inventory Management / Control basics

SELECTIVE CONTROLS

WHY SELECTIVE CONTROL?

Literally thousands of items are kept in inventory by various organizations. Periodic reviews of inventories of these items have to be under taken for effective inventory control. The under-lying idea of such reviews is to keep stocks at a low level bye at the same time keep the service percentage high.

The problem is how to review such a large number of items. Is it necessary to have the same type of control for each and every item? An equally critical analysis of all items is very expensive and time consuming. Selective control of items with reference to particular function under examination is the solution. Items should, there be classified so that the more important amongst them receive greater attention.

CLASSIFICATION METHODS

Various methods of classification are adopted as shown below:-

S.No Name of selective control method

Basic function

01 ABC analysis Annual consumption value of items

02 XYZ analysis Annual Inventory holding value of items

03 HML (High, Medium, Low Unit prices of items

04 VED (Vital, Essential, Desirable)

Criticality of item(spare parts) availability in time

05 FSN analysis Fast moving, Slow Moving & Non-Moving (Consumption pattern of the items)

06 SDE Analysis Scare, Difficult, Easy (Problems in procurement or produce

07 SOS(Seasonal, Off seasonal) Availability in particular season or in all seasons


08 GOLF Government, Ordinary, Source of availability Local or Foreign

09 Age analysis Self life items (Items which are expire, Life validity)

PHYSICAL INVENTORY AND STORES / WARE HOUSE MANAGEMENT

In Parasakti Cements factory “Stores” perform the functions as warehouse and contain raw materials, work in process, packing materials, Machinery Maintenance spare parts and consumables.

Functions of Stores department in PCIL

All the transactions are entered in stores ERP environment and manual records are very less in other wards stores is maintaining Paperless office to the extent of 50% at present situation. To have effective control and proper accounting of materials, a professionally managed Store has the following main functions:

Receiving: Materials Status at Receiving: Materials are kept in receiving section department wise for easy access of inspection of items by users.

Awaiting inspection: This category consists of material that has been received and is awaiting inspection before being moved into stock.

Acceptance upon certification – This category consists of material that may be accepted pending certification (General Consumables’, Lubricants etc)

Rework: In this category are materials that are defective and must be reworked.

Return (Rejected): This category contains materials that are defective and will be returned to the supplier.

Materials to be tested: This category consists of materials which have been received and are awaiting delivery to the using/testing department.


Figure: 4.1 receiving section and inspection area

Figure: 4.2 Stores Flow chart

No

Material Issue Requisition

Material

Available?

STORES DEPARTMENT

Material Issue Note

Purchase IndentPURCHASE

DEPARTMENT

Purchase OrderSTORES DEPARTMENT

1. Update Stock

2. Update Excise records

Records

USER DEPARTMENTS


Once the material is verified and accepted, a Material Receipt voucher is made. A Material receipt voucher (MRV) should have a Material Inward Note Number as a reference

document. Inward Quantity and the accepted quantity (From Material Intimation Note / Material Inward Note) will be consolidated in the MRV and the stores department can allocate the material to respective storage locations.

MRV’s approved by the stores department are taken as the source documents to make a Purchase Voucher in the Finance & accounts which also computerized generation voucher. The stock ledger and relevant excise records are automatically updated.

A Material receipt voucher is made by the stores department based on the Inward Note Entry. The Material Inward Number is the reference for a MRV. Without a Inward number, MRV can’t be raised. When the PO number for which a MRV has to be made is entered, all the items in the PO entry will automatically appear in MRV. The accepted quantity will be manually entered by the user. Item Wise accepted quantities can then be allocated to different storage areas (Stock Updation). The effect of this allocation is as given below:

1. Stock is Updated2. RG 23 A/C Part 1 Register is updated3. RG 23 A/C Part 11 Register is updated The source documents will be updated with quantity received. PO will be closed if all the

items are received.

Business Validations1. Cenvat can be claimed only if the supplier’s excise invoice number and date are entered in Inward Register or MRV.

2. Cenvat can be claimed for received qty if accepted quantity is greater than zero.

3. Cenvat amount will be calculated based on the Cenvat percentage mentioned in PO, However user can change the Cenvat amount while preparing the GRN.

No

Y

Material Inspection

Inward Register

Material receipt voucher

1. Update Stock

2. Update Excise

records


4. While preparing MRV for Capital items, Credit will be taken 50 % of Cenvat amount for the current financial year and the remaining 50 % amount will be credited automatically into the next financial year.

5. MRV serial number will be based on inward serial number. For each different series in Inward, the same will be maintained in MRVRaw Material receipts:

In case of Raw material inward entry / Material inward note will be entered at Security whenever the trucks are received on shift basis. Verification of inward data will be done in stores and Material receipt vouchers are prepared by stores and stock will be dated with MRV document.Issue of Materials from Stores

Raw Material Issues

All Raw Material consumed in the various processes will be automatically updated in the stock ledger based on the Daily Production Report entry which is made in production module/Manufacturing module.

Apart from this the Fuel and Lubricants consumed are accounted in the Material Consumption Note.

General IssuesThe user departments will request for

items using a MIR (Material Issue Request). The MIR should not generate for the items stock not available. The MIR will contain details like the items required, qty, date of requirement, requesting department, Cost Centre Code. If the requested items are available then stores department will issue the items with a MIN (Material Issue Voucher). (MIR converted into MIV). Generation of MIV number automatically update stock ledger.

PHYSICAL LOCATION AND CONTROL OF INVENTORY

In PCIL Stores department is maintaining the overall locator system used throughout the facility to sustain inventory accuracy on an ongoing basis. A good control on physical location and a record keeping standpoint is there on inventory. All the raw materials are stored in fixed locations.


Figure 4.3 Raw materials Gypsum yard, Coal yard

Common Locator Systems

The purpose of a material locator system is to create procedures that allow you to track product movement throughout the facility. Although going by many names, the most common “pure”

Systems are memory, fixed, and random. A type of fixed system is the zone system. The combination approach is a common mixture of the fixed and random systems. In considering which locator system will

work best, PCIL attempt best to maximize:-

• Use of space• Use of equipment• Use of labor• Accessibility to all items• Protection from damage• Ability to locate an item• Flexibility• The reduction of administrative costs maximizing all of these considerations at the same time is

Make possible through proper location management.

Often each of these concerns creates conflicts with one or more of the others. For example to store all cylinders together in order to handle them or locate them together for ease of getting to and retrieving them. Besides cylinders we cannot keep lubricants are any inflammable items due to safety precautions.

Storing procedures are also conflict based on type of materials. Lubricants oil barrels always keep in horizontal position where as grease barrels in vertical position. Industrial cutting gas cylinders should keep in vertical position and oxygen cylinders in horizontal position and these welding gas cylinders should be kept in separate location on safety point.


Figure: 4.4 Row, Rack, Bin system with identification tags

Storing items in pre-defined locations with identifications tag (which contains item code, description, lot receipt qty, receipt document no & date, rate etc,)

Valid Storage Considerations:

• Scenario One - Accessibility versus Space: PCIL assign a specific location for items appearing on all of its identification tags and the locations are computerized in item master. Two three types of items are kept in same location lacked sufficient space in its facility to have a specific position for every item it carried. See figure 3.2

• Scenario Two - Use of Labor Versus Protection from Damage: PCIL wishes to reduce labor hours by putting into place efficient product handling procedures. Its intent is to develop standard operating procedures so that workers will only handle SKUs three times: once when it is received, once when stored, once when the stock keeper issues the item to the end user. Item keeping positions will taken care prescribed on the pack or on the basis of material. Pallet trolley is used inside the store for better operation against handling damages.

Figure: 4.5 storing of Hydraulic hoses and lubricants in specific locations


Figure: 4.6 Storing mill bolts(Hardware) and paints

Figure: 4.7 Fastners Rack, row bin locations and storage

Figure: 4.8 Castings (Drawing items)

• Scenario Three -Ability to Locate an Item Versus Space Utilization: PCIL wants to assign specific Safety locations to each of its products for inventory control purposes. However, it has a Good stores building and medium stock yards. PCIL realizes that if it uses a fixed storage location approach it must assign sufficient space to store the maximum amount of any one of its SKUs that will ever be on hand at one time in that location. If it uses a


random location approach where items can be placed one on top of another or behind one another, then it will maximize its use of space. PCIL decides using its limited space and have the track through ERP.

Figure: 4.9 Electrical Motors and Gear boxes etc.,


PCIL Considerations to select a location system

• Space available • Location system • Dimensions of product or raw materials stored• Shape of items • Weight of items • Product characteristics, such as stackable, toxic, liquid, crushable• Storage methods, such as floor stacked, racks, shelving • Labor availability• Equipment, including special attachments available • Information systems support

The company has a limited amount of space available for stock storage. Some locator systems use space more effectively than do others. PCIL practice of locator systems

Fixed Location Systems

Impact on Physical Space—Fixed Location Systems: If quantities of any given SKU are large, then its “home” may consist of two or more storage positions. However, collectively all of these positions are the only places where this raw material may exist within the facility, and no other items may reside there.

Random Location Systems

Basic Concept—Random Location Systems: For Structural steel items Random system nothing has a home (Open yard), but know where everything is. Pure random location systems allow for the maximization of space since no item has a fixed home and may be placed wherever there is space. This allows SKUs to be placed above or in front of one another and for multiple items to occupy a single area. The location is specified as Steel yard and all items stores are visually identified since these general & regular items by stores & user department personnel.

Impact on Physical Space—Random Location Systems

Because items may be placed wherever there is space for them, random locator systems provide us with the best use of space and maximum flexibility while still allowing control over where those items can be found. Big Castings also stored in yards for easy handling.

Pros-Random Location Systems

• Maximization of space.• Control of where all items are at any given time.Cons-Random Location Systems• Constant updating of information is necessary to track where each item is at any given time. Updating through data entry - intensive updating. • May be unnecessarily complicated if your organization has a small number of SKUs.Basically, random location systems force a tradeoff between maximization of space and minimization of administration.

Combination Systems


Basic Concept - Combination Systems: Combination systems enable to assign specific locations to those items requiring special consideration, while the bulk of the product mix will be randomly located. Very few systems are purely fixed or purely random. Conceptually PCIL is trying to enjoy the best features of the fixed and random systems. To achieve this by assigning only selected items to fixed homes -but not all items. Therefore, PCIL only have to plan around the maximum space required by the selected items instead of that required by all items. For the items not in fixed homes, company can plan around the average quantities you expect to have on a daily, ongoing basis. So, the fixed system is used for the selected items and the random system for everything else. A common application of the combination system approach is where certain items are an organization’s primary product or raw materials line and must be placed as close as possible to a packing /shipping area or to a manufacturing work station. Those items are assigned a fixed position, while the remainder of the product line is randomly positioned elsewhere.

Common Item Placement Theories

Locator systems provide a broad overview of where SKUs will be found within a facility. Physical control of inventory is enhanced by narrowing the focus of how product should be laid out within any particular location system. As with locator systems, item placement theories (where a particular item or category of items should be physically positioned) go by many different names in textual as well as in trade literature. By whatever name, most approaches fall into one of three concepts: inventory stratification, family grouping, and special considerations.

Inventory Stratification

Inventory stratification consists of two parts:

• A-B-C categorization of SKUs.

• Utilizing an SKU’s unloading/loading ratio. Stock both special order and standard stock items, during a production cycle around the appropriate workstations. Where working stock would consume too much space around a work area, working reserve stock is placed in zone locations close to the workstations. Regular, general use of items, such as raw materials.

A-B-C Categorization- Locating.

SKUs are separated into A-B-C categories, with “A” representing the most popular, fastest moving items (the “vital few”), “B” representing the next most active, and “C” the slow-movers.

Family Grouping

An alternative to the A-B-C approach is the family grouping/ like product approach. This approach to item placement positions items with similar characteristics together. Theoretically, similar characteristics will lead to a natural grouping of items, which will be received/stored/picked/shipped together.

Groupings can be based on:


• Department based• Equipment based• Weight based and item character based.

Pros—Family Grouping• Ease of storage and retrieval using similar techniques and equipment.• Ease of recognition of product groupings.• Ease of using zoning location systems.Cons—Family Grouping• Some items are so similar they become substituted one for the other such as common parts.

• Danger of properly positioning an active item close to its point-of-use but consuming valuable space close to that area by housing far less active “family member” items with their popular relative.

• Danger of housing an active product with its inactive relatives far from the popular SKU’s point-of-use, all for the sake of keeping like items together.

• An item can be used in more than one family.

In such cases such items are considering to a special common group in codification itself so that such type of problem is mostly ratified in PCIL

A product’s characteristics may force us to receive/store/ pick/ship it in a particular manner. The product may be extremely heavy or light, toxic or flammable, frozen, odd in shape, and so on. Even with items requiring special handling or storage such as frozen food stored in a freezer, the inventory stratification and family grouping concepts can and should be employed to ensure efficient inventory layout.

Location Addresses and SKU Identifiers

Significance

Major contributing factors to the success of inventory systems are:

• Adequate, appropriate identification markings on SKUs, including both SKU number and stock keeping unit of measure. These markings allow a worker to quickly and easily identify an item without having to read and translate product descriptions and confusing pack size designations.

• Adequate, appropriate identification markings on bin/ slot/floor/rack/drawer/shelf locations.

• A system for tracking items, on a timely basis, as they change locations. Whatever “change of address” will be updated in ERP package and processed quickly.

• Decreased labor costs associated with searching for appropriate storage locations.


• Elimination of the unnecessary purchase of items that are already in the facility but are undiscovered when needed.

Protecting InventoryThe objective of this topic is what would the department managers, supervisors, and team leaders of PCIL actually do within the first thirty minutes of any of the following emergencies?

• Area wide power outage• Significant workplace violence incident• Major theft incident• Earthquake• Cyclones• Major fire within your space

What would everyone do? What incremental steps, policies, procedures, and internal training presently exist within Parasakti cement industries limited to prevent or mitigate these types of major disruptions?

General Statistics:

• Most businesses do not have an emergency or recovery plan.

• Forty-seven percent of businesses that experience fire or major theft go out of business within two years.

• Forty-four percent of companies that lose records in a disaster never resume business.

• Ninety-three percent of companies that experience a significant data loss are out of business within five years.

• Most businesses spend less than three percent of their total budget on business recovery planning.

Organizations that do have some form of plan unfortunately only concentrate on protecting data files with no consideration being given to other aspects of the business. A disaster plan is more than having daily data file backups taken offsite. Offsite data doesn’t do much good if there is no recovery site from which to operate and no equipment or application software to run it on. Another example of the broad range of topic areas we must consider when assessing the impact of a crisis is: Assume that other than serial number and descriptive information contained in its data files, your company has no offsite records related to powered industrial trucks or other equipment used in your stock keeping operations. There is an area wide disaster, a cyclone, and our building and its contents are lost. Our insurance company states that it cannot process a claim on the equipment unless you can provide not only descriptions and serial numbers of lost equipment but also copies of the relevant purchase orders. It’s simply too late to think about critical records retention after a cyclone / tornado has destroyed the building.

Legal Duties

Under the Uniform Commercial Code, as well as the common law, if we are storing goods for a third party the degree of care we must show toward the items is that of a reasonably prudent owner. Organization becomes legally liable for their loss.

The Plan in PCIL


There are three sections that make up an emergency/disaster and business continuation plan (the Plan): preparation—including steps toward disaster avoidance and mitigation; execution—including handling the crisis as it unfolds; and recovery—initiating business continuation.

Preparation

The first step toward protecting the product is assessing company’s vulnerability to natural, technological, or incited emergencies.

Natural Emergencies • Earthquakes • Coastal Erosion • Storm Surges • Wildfires • Droughts • Landslides • Hailstorms • Windstorms • Extreme Heat • Freezing • Severe Winter Storms • Severe Thunder and Lightning • Flooding • Tsunamis etc.,

Technological Emergencies• Power Outage • Power Surge or Spike Internal Sewage Systems • Hardware Error • Loss of Waste Water Treatment • Software Error Services • Software Virus • Fire Alarms• Loss of Natural Gas • Security Alarms • Loss of Water • Loss of Communications • Manufacturing Equipment Failure • Loss of Compressed Air

Incited Emergencies• Workplace Violence t• Internal Theft • Area-wide Terrorism Incident• Mass Theft • Labor Stoppage (strike)

Planning Team

Although the objective of this Team is to focus on that portion of the organization charged with protecting inventory, any planning team formed to assess vulnerabilities should include individuals from several departments. Contingency planning is a business issue and not just an inventory or information technology or accounting issue. Each department is dependent on the others: operations support sales, the computer department supports many functions, the facility manager supports the computer department, and so forth. A multi-functional contingency planning team allows:• A comprehensive understanding of the total company effort; broad-based commitment to the effort; a definition of recovery requirements from the perspective of the business units being impacted; A definition of each department’s “pain threshold”. One department may be devastated by a 24-hour event, while another department may only be inconvenienced; and, for a plan comprehensible to each impacted group.

Assessment

The team assess each type of risk—natural, technological, and incited—and determine the probability of each event occurring and its potential impact on each department if it did happen.

Potential threats should be broken down into two groupings:1. Threats likely to occur within the facility2. Threats likely to occur in the surrounding area

Probability should be based on such factors as:


• Historical—what types of emergencies have occurred at this facility, this community, this region?• Geographical—is the facility close to a flood plain; • Technological—what could result from a process or systems failure caused by fire, explosion, release of toxic fumes, loss of communications, or power failure?• Human Error—what could result from poor training, poor maintenance, poor safety practices, misconduct, substance abuse, or fatigue?• Physical—what is the building made of? What and how much is stored in the facility?• Regulatory—what emergencies or hazards (such as hazardous material spills) is team regulated to deal with?

Break down assessment of impact in the following areas:• Human Impact—death or injury• Property Impact—cost to replace, cost of temporary arrangements, cost to repair• Business Impact—interruption, loss of customers, employees unable to report to work, violations of contractual arrangements, fines and penalties. Whenever possible, the team should be assisted in its efforts through the use of worksheets, checklists, and other job aids. An example of an assessment worksheet is contained in

The assessment should allow to (a)develop plans for preventing or mitigating the threat, (b) assign duties to be carried out during and immediately after an emergency, and (c) plan for business continuity.

Theft

A particular danger of inventory loss comes from theft. All too often a stock keeper almost invites the problem.

Types of Theft Threats

Generally stockroom or warehouse thefts fall into the categories of mass theft and pilferage.

Mass theft would involve a major break-in and removal of significant amounts of product or the hijacking of a truck or trailer. Pilferage covers a wide range of activities from the removal of small amounts of material on a continuous basis resulting in significant losses.

Assessing the Threat

Just as did in preparing to counter a natural or technological emergency, to prevent or mitigate a theft we must first assess the probability of a loss occurring and its expected impact if it did happen. To accomplish this, do a crime pattern analysis:1. Write down each activity engaged in as part of your direct stock keeping operation. For example:2. Write down the sequential steps involved in each activity.3. Review the physical layout of your facility.

Receiving Activities• Check-in loads against Delivery challans, purchase orders, or packing slips

- -inspect goods - Count items - Check count against paperwork -if items are damaged• Stop unpacking • Alert driver • Make appropriate notations on paperwork • Photograph• Notify purchase department for claims


Crime pattern analysis:

• Type of crime- what type of crime could occur during any of the activities or sequential steps you listed? What type of crime could occur because of your physical layout?

• Attack methods—given the type of crime identified, what methods would an attacker use to “pull it off”?

• Times of Attack - Given the type of crime identified and attack methods likely to be used, what time periods (seasons of the year, particular days of the week, particular hours of the day) seem the most logical for the attack to occur?

• Suspect Characteristics- Who is most likely to engage in the particular crime we have identified? Is a worker acting alone the danger? Are two workers acting in concert? the danger?

• Typical Types and Amounts of Loss or Injuries Suffered- The amount of money, time, and effort you will use to deter one type of loss will certainly be different from the resources devoted to a different, lesser danger.

PCIL countering methods against the Threats

Countering theft threats involves developing physical barriers and deterrents such as lighting, fences, security cameras, intrusion sensors and alarms, as well as thoroughly checking the background of people they hire.

Crime Prevention through Environmental Design (CPTED)

CPTED is a modern approach to crime prevention that seeks to balance a facility’s layout (design) with the processes (human circulation, product flow, and information flow) taking place within it. This concept employ strategy of access control, natural surveillance,(“Why are they in this part of the building?”), management, and maintenance to support legitimate activity. It strives to create an environment where:• Suspicious behavior will be observed, caught, and punished.• It takes a lot of extra effort to commit a crime.• There is a reduction in the reward for attempting the crime: target items are sheltered, distanced, reduced in quantity.• There is a removal of excuses for improper behavior through clear work rules and policies, signage, and border definition.

Suggested vulnerabilities: No security cameras, No security lighting, No fencing or other perimeter barriers, anyone can drive a vehicle up to dock door, personnel door steps, or trash dumpster.

Positioning of dumpster by personnel door allows anyone to carry out items in small batches during the day and retrieve them with a vehicle at night. Parking area allows anyone to hide a vehicle by side of building out of view of street.

Collusion Theft


Collusion theft occurring through the partnership of a truck driver and a warehouse worker is difficult to actually “catch.” However, there are effective techniques aimed toward prevention through increasing the possibility of detection. PCIL is considering the following:

• Random, detailed checking of loads on outbound trucks at the yard.

• Regular checking of truck loads at Security main gate.

• Receiving by appointment coupled with random detailed checking of incoming loads.

• Using cycle counting. Once employees understand that there is an ongoing effort to discover and hunt down the causes of inventory discrepancies, they will also understand that management is watching.-

Suggested vulnerabilities:

The lights on the building are not security lights—they are decorative “wall washers” that merely bath the wall below them with a soft light Nothing prevents an attacker from hiding under the steps. The construction of the building, with its supports sticking out, will cause whatever light is thrown off by the wall washers to be veiled. Anyone standing against the wall at night in dark clothing would not be seen—until it was too late

Pre-cautionary -Background Checks

No discussion of deterring crime would be complete without considering that the most effective method of avoiding both pilferage and collusion theft is to hire honest people. Since many people misrepresent their history, a background check is a must. A reasonable background check will help hire qualified workers, avoid hiring the dishonest, and assist in avoiding claims for negligent hiring if a worker commits a crime against a customer, the public, or another employee.

However, since company may personally be involved in reference checking, it is important to use techniques calculated to encourage former employers and others to actually provide you with useful information.

An unfortunate fact of life is that many employers will either provide us with no information or will limit it to the following:• They will confirm or deny that an individual worked for them.• They will confirm or deny a length of employment.• They will confirm or deny a job title or brief job description of their former employee.• They will confirm or deny what you tell them the former employee says she was compensated.

When we follow-up with questions such as, “Would you rehire the worker?” a former employer’s response could well be, “Sorry, I’ve given you all of the information I can. Don’t take my lack of information as either a positive or negative recommendation. I hope I’ve helped. Good bye.”

CPTED-Related Action Items


• Control facility parking

Fencing – Gates - Card activated gates or barrier arms - Signage

• Control adjacent parking

• Provide a waiting area for outside supplier truck drivers. These areas may include vending machines, pay telephones, and restrooms. Remove reasons for a driver to leave the waiting area. Restrict access. Do not let outside drivers wander around.

• 24-hour CCTV surveillance and recording of all desired locations

Parking lots – Doorways - Valuable stock areas - -Docks - Infrared LED lighting with low light cameras to observe dark areas either within or outside of the facility

• Lighting with emergency backup

Security lighting should be overlapping with tamperproof housings

To overcome the fear of liability and litigation that many organizations have in providing background information regarding a job applicant, Company using release forms.

• Extended the physical perimeter with barriers

• Receiving and shipping procedures should be thoroughly examined for vulnerabilities to theft

- Employees responsible for ordering items should not be the same individuals responsible for receiving them or paying for them• Trash removal containers and procedures should be reviewed for vulnerabilities to theft• Determined security guard requirements• Considered undercover detectives periodically working within the workforce• Install intrusion detection equipment and monitoring• Provided employee and visitor identification systems• Display employee identification at all times• Prevention of unauthorized access to utility areas• Install Mylar film on all exterior windows for shatter protection• Control keys

- Issue as few keys as possible- Establish specific rules regarding “loaning out” keys- Have keys stamped “Do Not Duplicate”- Control who can make duplicate keys- Periodically inventory keys- Instituted an electronic access card system

Limitations:


Broadly speaking the Material management Analysis can be done with various tools and techniques like

Comparative statement Analysis, common size statements Analysis, trend Analysis, Cost analyses and

cash Analysis. But research restricted study to the Ratio Analysis because of time constant.

CHAPTER – 5

DATA ANALYSIS, INTERPRETATION AND PRESENTATION

Satisfaction Analysis:

Parasakti Cement Industries Limited,Jettipalem.

Questionnaire (Inventory)

“Satisfaction Analysis”

Personal Information of the respondents: 2

1.Name: V.Ganapti.Raju, Deputy Manager (Mechanical)Age: 40Gender: Male Occupation: EmployeeQualification: B.TechContact Number:9701000577

Address: A-1-5, Parasaktinagar, Parasakticement industries limited, Jettipalem village & Post, Rentachintala Mandal, Guntur District, Andhrapradesh -522421.


2.Name: T.S.Vijayan, Asst.Manager (Electrical)Age: 47Gender: Male Occupation: EmployeeQualification: B.TechContact Number:9701000577

Address: A-1-5, Parasaktinagar, Parasakticement industries limited, Jettipalem village & Post, Rentachintala Mandal, Guntur District, Andhrapradesh -522421.

Note: Also taken responses from other employees total involved are 20

QUESTIONAIRE ON INVENTORY

Questions Answers /responses

1. OEM spares having no alternative sources - Yes2. Factor K is safety factor and it is same for all items – No, depend upon criticality of item

and its application3. Excess inventory is value adding activity- No, Blacking of money4. Better planning of procurement would lead to higher inventory – No, less inventory5. Greater lead time means lower inventory – No, Higher inventory6. Inventory is kept to avoid unforeseen breakdowns - Yes7. Total lead time is equal to internal lead time – No, Internal lead time + External

lead time8. High lead time is equal to 3 months – No,>3 months9. VED analysis is done on the basis of consumption – No vitality of item10. MIS Stands for material identifying system – No, Management information system11. What is lead time – Time between feeling of requirement

to materials receipt in store12. Store stock and inventory terms meaning the same thing - Yes13. An organization need not hold inventories : NO – HOLD FOR UNFORESEEN

BREAK DOWN & LEAD TIME CONSUMPTIN14. Building up of big inventories is profitable - No15. Longer the lead time larger will be inventory - Yes16. The wages paid to the store staff is part of inventory carrying cost - Yes


17. Safety stock is minimum inventory a store must hold at all time - YES18. Low price item cannot be Cat ‘A Item – NO IT DEPENDS UPON

CONSUMPTION VALUE OF ITEM19. High value items lying in store since last 4 years is Cat ‘A’ Items – NO X ITEMS20. Inventory turnover ratio should be high - Yes

Subjective questions Answer

a. What is inventory? - :Idle items in store having economic valueb. What is mean by control – :Regulate , checkc. Write full form of ROL / ROQ? – :RE-ORDERING LEVEL, RE-ORDERING QUANTITYd. What is factor K – : K is safety factor inventory required for plant operations.

Objective type questions responses?

a. Correct

b. In correct

S.No Options Number or responders % Of responders

1 Correct 19 95

2 In correct 1 5


Total 20 100

Analysis:

From the above table we can say that 95% (19) respondents’ are aware of inventory procedures and

knowledge and 5 %( 1) respondent is not aware of Inventory practices of their organization. Objective

type questions are given to middle level executives in technical departments and got the answers.

Respondants0

2

4

6

8

10

12

14

16

18

20

19

1

CorrectIncorrect

Figure: 5.1 Satisfaction analyses on inventory questionnaire.

In subjective questioned we have given to executive level and they

have given correct responses.


INTERPRETATION AND PRESENTATION

Profitability ratios related to inventory.

Inventory turns (Period Average) is used to appraise accounts receivable (AR). This ratio measures the length of time takes to convert your average sales into cash. This measurement defines the relationship between accounts receivable and cash flow. A longer average collection period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying bills (comparing the two COLLECTION PERIOD ratios Period Average and Period End) suggests the direction in which AR collections are moving, thereby giving an indication as to potential impacts to cash flow).

Inventory Turns (Period End) measures the average efficiency of the firm in managing and selling inventories during the last period, i.e., how many inventory turns the company has per period and whether that is getting better or worse. It is imperative to compare a company’s inventory turns to the industry average. A company turning their inventory much slower than the industry average might be an indication that there is excessive old inventory on hand which would tie up their assets. However, if the company is in financial trouble, on the verge of bankruptcy, a sudden increase in inventory turns might indicate they are not able to get product from their supplier, i.e., they are not carrying the correct level of inventory and may not have the product on hand to make their sales. If looking at a quarterly statement, i.e., their inventory levels will be higher just before the managing their inventory and differently; the ratio is just skewed because of seasonality. Comparing the two INVENTORY TURNS (period average and period end) suggests the direction in which inventories are moving, thereby allowing an analysis of efficiency improvements and / or potential burgeoning inventory problems.

Days inventory shows the average length of time items are in inventory, i.e., how many days a business could continue selling using only its existing inventory. The goal, in most cases, is to demonstrate efficiency through having a high turnover rate and therefore a low days’ inventory. However, realize that this ratio can be unfavorable if either too high or too low. A company must


balance the cost of carrying inventory with its unit and acquisition costs. The cost of carrying inventory can be 25% to 35%. These costs include warehousing, material handling, taxes, insurance, depreciation, interest and obsolescence.

Days inventory = Average inventory * 360 / cost of goods sold (or)

Days inventory = 360 / inventory turnover

Description 2008-09 2009-10 2010-11Sales (Values in Rs.Crores) 257 387 368Raw material inventory (Values in Rs.Crores) 10 7.64 6.07Stores &spares inventory (Values in Rs.Crores) 5.4 11.50 10.04Packing materials inventory (Values in Rs.Lakhs) 49 83 45Finished Cement (Values in Rs.Crores) 2.71 6.28 7.58

CONSUMPTION BASED ABC ANALYSIS

ABC analysis as example we have taken only one month consumption Consumption value %Items %

Parasakti Cement Industries Limited P C I L - JETTIPALEMCumulative % upto 01 - 75% - A Class items 36 6.11

Stock Ledger Summary For Other Than Raw Material From

01-Jan-2009 To 31-Jan-2009

Cumulative % upto 75 - 90% - B Class items 76

12.90

IssuesCumulative % upto 90 -100% -C Class items 477

80.98

Item Code & DescriptionUOM

Qty Value Cumulative Value %

Cumulative % 589

710302120 MYK GRIND CAT - 23 KGS 10000.00 746600.00 746600.00

14.03 14.03 1

900107001ENGINE OVERHAULING WITH SPARES

NOS 1.00 308349.96 1054949.96 5.79 19.82 2

470102001 RED BRICK NOS 90000.00 261000.00 1315949.96 4.90 24.72 3

600201001FUCHS CEPLATTYN KG 10 HMF GREASE

KGS 760.00 252586.00 1568535.96 4.75 29.47 4

300106018CRUSHER JACK SHAFT SECONDARY

NOS 1.00 248175.00 1816710.96 4.66 34.13 5

140101001 BOOSTER,83 MM KGS 5666.00 239048.54 2055759.50 4.49 38.62 6

510101004HI-CHROME GRINDING MEDIA BALL SIZE 30 MM DIAMETER

MTS 2.10 158201.57 2213961.07 2.97 41.59 7

300101001

HAMMER GRADE-4 IS-276 FOR TERRITARY CRUSHER (SET OF 15 NOS),DRG. NO:PC/IMP/004:REV-A

SETS

1.00 148532.27

2362493.34 2.79 44.38 8

301103002CHAIN LINKS DIA 30 X PITCH 105 MM X 5LINKS FOR 800 MM B.E AS PER DIN 764 FOR

NOS 76.00 140898.68 2503392.02 2.65 47.03 9


250TPH&150TPH

Table: 5.1 Consumption based ABC Analysis

The Industry is Capable of Scaling even greater heights of National Achievements for better and enlarged Service to the Society with support from the Government on following fronts:

Availability of indigenous coal at rational price through traditional linkage.

Adequate and assured logistics support, particularly Railways, the economical mode for transport of Cement and other Inputs.

Rationalization of Taxes and levies to make Indian Cement Industry more competitive both in Domestic and also in International markets.

Raw materials receipts values in Metric tons.DESCRIPTION 2009-10 2010-11

LIME STONE1485000.00

0 1225000.000IRON ORE 34545.410 12472.740LATERITE 65632.540 43097.780DOLOMITE 14635.030 17399.560GYPSUM 52053.720 39817.940FLY ASH 88968.930 63607.080COAL (L) 132504.800 97029.950COAL (I) 30463.640 33226.260COAL (P) 45823.490 40303.420

Finished Product production values in Metric tonsDESCRIPTION 2009-10 2010-11CEMENT -Line-1 486054.090 395490.370CEMENT -Line-2 539622.550 538606.610

Total1025676.64

0 934096.980

Sale of Final product values in Metric tonsDESCRIPTION 2009-10 2010-11


CEMENT -Line-1 486143.860 397594.800CEMENT -Line-2 531411.430 538687.530

Total1017555.29

0 936282.330

Table: 5.2 Raw material receipts and cement dispatch details

PARASAKTI CEMENTS INVENTORY 2011

Stores & SparesPacking MaterialRaw materialCement

Figure: 5.2 Parasakti cement inventory as on 31-March- 2011.


Activity based costing (ABC) is a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore fixed cost. Parasakti cements divided the activities based on production process to have the control. An example report of consumption for the year 2009-10 is given below.

Activity based Stores& spares Consumption from April'09 to March'2010 Particulars April'09 May'09 June'09 July'09 August'09 Sept'09 Oct'09 L.S.Raising 3751192.73 2788080.58 2812157.38 3611401.05 3486918.22 3711059.96 3547662.06 L.S.Crushing 202320.61 1102317.23 111055.06 310329.72 703931.52 371719.74 143335.85 Rawmeal 335930.45 874819.14 616280.56 1155007.90 502144.58 461954.20 1023300.43 Clinker 2026430.97 1563657.72 6668946.77 3225140.36 1659330.26 5550870.39 4629945.96 Cement Grinding 1622493.11 2078245.10 3208476.14 2801171.99 2685643.42 1267252.67 2114294.85 Packing 362204.84 156601.05 504359.67 224030.97 326279.47 302150.87 212387.72 Others 1066000.90 727736.37 1112123.09 1224141.79 1450730.00 1132491.40 1256691.01 Total 9366573.61 9291457.19 15033398.67 12551223.79 10814977.47 12797499.23 12927617.87

Capital 822120.92 1567420.93 5239688.39 3999162.90 3280675.61 7204856.73 3540133.89 Grand Total 10188694.52 10858878.12 20273087.06 16550386.68 14095653.08 20002355.96 16467751.76

Particulars Nov'09 Dec'09 Jan'10 Feb'10 March'10 Total L.S.Raising 4353414.25 4616308.13 3928324.86 4787482.72 5164958.05 46558959.98 L.S.Crushing 837457.10 120151.11 536404.43 1059450.30 393791.93 5892264.60 Rawmeal 680219.19 2301375.49 915905.18 581935.30 543523.98 9992396.40


Clinker 2886134.89 4235307.12 2424609.49 2611653.57 8221033.22 45703060.72 Cement Grinding 2906174.92 2111461.77 2628603.84 2726735.05 7645677.33 33796230.19 Packing 184661.05 485292.63 480425.83 297669.12 877363.40 4413426.62 Others 1861342.01 1033993.52 1890005.09 1114242.75 1693491.18 15562989.11 Total 13709403.41 14903889.77 12804278.72 13179168.80 24539839.09 161919327.62

Capital 11732456.05 2935818.29 732452.44 11225898.96 14758166.59 67038851.69

Grand Total 25441859.47 17839708.06 13536731.16 24405067.76 39298005.67 228958179.31

Table: 5.3 Activity based stores & spares consumption

YEAR WISE GROUP WISE CONSUMPTION COMARISION

Group Group Description

2006-07 2007-08 2008-09 2009-10 2010-11

01LIGHT VEHICLES

1240.00 63690.00 32741.00 87439.92 206498.96

02COMPRESSORS(MINES)

1255171.90 16258.74 98726.49 26308.66 111688.92

03HEAVY VEHICLES

641273.78 60160.98 21742.07 588482.79 514319.39

04DOZER SPARES

61806.10 198831.45 603307.42 96215.51 220870.84

05DUMPER SPARES.

583447.22 623704.63 3251918.61 1586515.14 3044360.00


06EXCAVATOR SPARES

5007404.22 492133.84 2893851.23 1444739.13 671169.23

07ENGINE SPARES(MINES)

237036.57 192258.88 1099422.85 293010.28 271946.98

08FILTERS(MINES)

42065.00 133065.65 262675.01 453256.40 352808.62

09LOADER SPARES

2930671.33 237179.18 662500.58 3221152.78 3063676.14

10AUTO ELECTRICAL SPARES

109278.84 103357.49 291230.34 410943.59 365740.72

11JD SPARES

538678.45 95971.95 166283.69 235014.47 457764.11

12SPARES FOR DRILLING M/C

265271.04 351309.67 382830.95 508194.51 337912.42

13GAURAGE ITEMS

69088.33 67351.36 151388.32 328510.79 86629.82

14BLASTING MATERIAL

4524546.34 4382170.73 4439261.90 7280468.07 5791826.86

15TYRES & TUBES

719214.44 628766.75 1185163.48 1933878.80 1519634.93

16SPARES FOR DG SET

4380.55 756.00 581.08 10878.00 262166.62

19BEARINGS

487389.68 609429.52 444501.50 639290.68 914323.08

23STAINLESS STEEL

11157.30 43014.29 116872.22 16500.03 450043.01

24ADHESIVES & ABRASIVES

13962.50 8928.33 42752.45 17036.62 14068.80

25NON FERROUS METALS

1228.50 11315.04 112463.01 15555.96 25491.94

26STRUCTURAL STEEL

13728612.68 6142599.19 13619368.61 30564531.63 17032752.79

27COMPRESSORS(MECH)

1611981.27 1152761.26 74026.92 1307117.75 1112273.20


28CONVEYOR BELTS

1187955.12 1168672.99 1518465.04 3863736.79 2714625.78

29WORK SHOP ITEMS

25663.20 19103.99 52541.88 34847.92 33081.66

30MECHANICAL

11282816.75 5230517.83 6038675.79 9550378.23 11383364.39

31V BELTS & COUPLINGS

203920.15 240464.07 342313.47 600315.96 437078.50

32MECHANICAL PUMPS SPARES

240889.72 286001.55 417535.01 737440.59 445047.36

33GEAR BOXES & SPARES

763744.62 71549.28 280888.78 1152477.87 487949.50

34PACKING PLANT SPARES

993284.59 175361.62 185930.84 468063.89 200952.43

35CASTINGS

2930657.78 1734454.95 6667306.57 2528537.10 7151178.36

36RUBBER PACKING SEAL ITEMS

7865.43 14009.37 15458.26 24463.87 35191.56

37PREHEATER,KILN & COOLER

1905694.18 3991712.49 1140187.08 4017220.15 3301054.29

39MECHANICAL(MISCELANIOUS)

331818.58 344363.74 460600.98 470044.98 533423.26

40ELECTRICAL ITEMS

8532782.53 4631829.00 4591931.12 13019625.90 8018485.17

41FASTNERS

325763.62 228260.78 383800.99 567201.10 344429.12

42GI SHEETS

2028212.35 492169.55 0.00 2134035.08 1000490.37

43AC SHEETS

214854.75 277469.09 11297.50 381125.00 150786.00

44 PAINTING MATERIALS 825207.60 800362.69 671170.05 1175139.65

556102.40


45CONSTRUCTIONAL STEEL

2679702.63 36909.60 0.00 10221897.14 1012877.90

46PIPES & FITTINGS

5088532.84 2178385.32 2621767.27 5282151.60 2625024.76

47CIVIL ITEMS

7355212.14 4744893.79 5285366.70 13559707.29 5500025.56

48WOODEN MATERIALS

128044.63 62427.32 129094.19 143788.53 58954.72

50LABORATORY ITEMS

1277595.52 1129973.23 1142747.80 1661097.08 667246.79

51GRINDING MEDIA

4874914.62 3202999.75 5189676.59 6600748.32 8553956.25

52REFRACTORIES & CASTABLES

2105445.02 2433128.46 4112169.11 7491948.23 12422336.73

53PROCESS ITEMS

558878.01 405811.60 665156.10 958130.74 771255.33

54GRINDING AID

0.00 0.00 0.00 4823561.70 2098295.00

55INSTRUMENTATION ITEMS

3825678.85 2331602.86 1178667.65 3476521.97 5322484.37

58TOOLS & TACKLES

512234.35 625462.65 1448089.52 2322950.79 733669.69

60OILS & LUBRICANTS

5422443.58 5862977.99 7476552.64 11389488.48 8817913.21

61FUELS

18350436.80 20272013.95 28439699.07 36510738.17 34811544.53

64WELDING MATERIALS

1829894.61 1836032.01 2613854.65 2475091.52 1704642.36

65INDUSTRIAL GAS

915552.44 569605.66 1101733.76 1284006.66 843258.69

67WATER TREATMENT PLANT

172394.60 19791.00 1004483.72 463789.12 114493.98

68FURNITURE & PICTURES

260797.67 207119.45 273211.84 432047.80 258303.87


70SAFETY ITEMS

513374.81 431971.48 635220.58 889181.14 862167.60

71GENERAL CONSUMABLES

1649484.05 1250096.64 6753828.39 3867075.89 549788.82

72HORTICULTURE

17060.00 31510.00 242680.84 45079.40 31340.00

73MEDICINES

240739.95 439574.43 832131.02 561266.75 632875.52

74STATIONERY &COMPUTER

637838.95 890613.31 857658.06 938816.10 770779.95

85MACHINERY / PARTS

1836178.00 11714517.75 16987987.17 4224005.94

88 INSTRUMENTATION 149367.51 19530.00 0.00 18300.00 0.00

90REPAIR ITEMS

1043075.36 1038444.07 2694991.62 4750645.33 2531702.14

GRAND TOTAL124254735.93 87178370.50 139145011.94 228945712.49

169540151.25

Table: 5.4 Item group wise stores & spares consumption

Stores & spares Department wise consumptions during the year 2009-20102 0 0 9 - 2 0 1 0 DEPARTMENT WISE MONTH WISE CONSUMPTION

Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09

Admin 182322.36 123367.68 389587.54 471529.17 265349.47 224682.92 217862.93Civil 647102.90 1141644.25 1162314.35 1779742.36 3164238.67 5486792.57 3071848.84Electrical 775701.92 462097.79 1125147.07 1460035.75 567926.28 914046.03 828689.38Finance 20041.91 119.34 388.60 7552.85 42053.80 19.99 112945.84Instrumentation 546799.61 86797.59 193308.12 110380.65 145992.89 550979.45 164270.36Distribution 59821.93 3083.86 34516.52 24023.19 221027.23 14390.86 18128.52Mechanical 2261670.27 4232644.80 7531583.04 5237099.21 3745401.32 4234167.98 4637426.71


Mines 4242283.63 3477304.27 5947887.03 4598869.22 4278290.88 4244363.03 4079638.84Production 1442976.38 1321395.52 3850345.37 2853345.38 1653795.42 4327977.91 3334219.00Stores 9973.56 10423.01 38009.10 7808.75 11576.68 4934.55 2721.31

10188694.47

10858878.11 20273086.74 16550386.53 14095652.64 20002355.29 16467751.73

Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Total

Admin 177344.80 201190.01 160452.48 273814.86 237191.84 0.00Civil 1677623.41 1027194.63 425940.58 3832676.23 2528746.33 1874702.07Electrical 1350940.88 2091943.23 583826.55 1849521.60 6020170.16 16453683.94Finance 17028.88 2304.20 6576.32 32975.51 166074.00 6133644.22Instrumentation 1265687.10 243425.53 122598.14 30474.50 1637416.15 183122.33Distribution 11814.30 17186.67 20404.02 20443.03 8600.96 1798528.67

Mechanical14824616.1

5 4094442.00 6147149.93 8653694.58 18438656.97 374992.11Mines 4753414.05 7550910.51 4898370.74 8182950.56 7869523.99 31879993.33Production 1349569.48 2605695.48 1153986.61 1517282.56 2386901.27 30868636.90Stores 13820.08 5373.95 4055.24 11101.37 4723.99 18784054.98

25441859.13 17839666.21 13523360.61 24404934.80 39298005.66 108351358.55

Table: 5.5 Department wise stores & spares consumption 2009-10

Stores & spares Department wise consumptions during the year 2010-2011

2 0 1 0 - 2 0 1 1 DEPARTMENT WISE MONTH WISE CONSUMPTIONApr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10

Admin 364792.72 269355.39 216598.32 403589.16 230084.71 125193.66 231468.17Civil 473724.94 1292236.93 585477.78 1356989.81 227490.52 316436.91 292425.28Electrical 1080002.74 988349.20 704390.60 1983413.02 794886.95 342431.80 600331.23


Finance 54399.63 38499.28 1963.68 57134.57 48737.70 34703.29 10638.80Instrumentation 333147.70 1031001.93 272150.71 2343237.85 111044.69 182794.54 147158.08Distribution 15675.17 22378.93 52710.53 19784.00 19729.49 10068.82 11147.09Mechanical 9108485.76 9078328.88 5926542.13 3940878.20 6036209.78 1559887.12 4776232.85Mines 5015402.36 8426379.32 4684686.70 7150335.59 4302292.54 5551475.62 3465504.28Production 6385664.04 1361643.05 2449112.95 1616447.46 3866122.85 1701591.25 997284.45Stores 22713.68 34027.12 1775.84 4849.97 28488.30 5475.91 6650.88

22542200.03 14895409.24 18876659.63 15665087.53 9830058.92 10538841.11

Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Total

Admin 264538.21 236033.96 310081.92 192646.13 268368.92 3112751.27Civil 152369.40 527263.19 496650.75 2021401.28 322482.61 8064949.40Electrical 429063.50 564915.59 384737.73 185364.27 556955.72 8614842.35Finance 61717.70 14184.99 60602.91 9555.00 25252.01 417389.56Instrumentation 54041.97 176834.91 86695.78 169858.94 1009512.77 5917479.87Distribution 14250.48 19143.57 9684.60 10660.57 231530.86 436764.11Mechanical 1338044.32 5419318.51 2704506.38 2486215.15 5286395.93 57661045.01Mines 2443461.53 3266033.51 4309828.67 4783636.69 4636006.45 58035043.26Production 1476742.83 843032.35 5017566.12 349204.76 1083252.35 27147664.46Stores 2370.06 1788.98 8798.29 1686.26 4869.85 123495.14

6236600.00 11068549.56 13389153.15 10210229.05 13424627.47 169531424.43

Table: 5.5 Department wise stores & spares consumption 2010-11

THE COMPETITORS

Indian Cement Industry ranks the second largest amongst cement producing countries in the World.

Produces Cements following mandatory international standards and matches the World’s best in Quality.

Added a Capacity of 37 million ton in 2009 -10 financial year (April – March). - Highest ever added in any single year.

Set up Capacities abroad – West Asia, China.

Average annual kiln capacity of +2860 tpd is the Second highest in the World after Japan (3370 tpd).

Achieved World Class Energy Efficiency.

Best


India’s Best World’s Best

Electric Energy – kwh / ton of Cement 63 65

Thermal Energy – Kcal units/ kg. 665 650

Particulate Emission levels meet stringent International standards of 50 mg/Nm3. - In some cases even lower: 15 – 20 mg/Nm3.

Parasakti Cements Emission levels meeting the International standard: 15- 18 mg/Nm3.

The Cement Industry is Country’s largest consumer of hazardous wastes viz. Fly Ash and Blast Furnace Slag as part of its environmental concerns.

CapacityProduction

0

0.5

1

1.5

200920102011

CapacityProduction

050

100150200250

20092010

Figure: 5.3 Parasakti cements vs Indian cement industry capacity/production

Cement sale

0

0.2

0.4

0.6

0.8

1

1.2

0.600000000000001

1.02 0.940000000000001

2009 2010 2011

Cement sale

130

140

150

160

Indian cement industry per-formance

2009 2010


Figure: 5.4Parasakti cements performance & Indian cement industry.

Sale of Final product values in Metric tonsDESCRIPTION 2009-10 2010-11CEMENT -Line-1 486143.860 397594.800CEMENT -Line-2 531411.430 538687.530

Total1017555.29

0 936282.330

As a part of Corporate Social Responsibility (CSR), the Cement Industry is intensely involved in environmental protection through creation of large expanses of social forestry, extensive water bodies,voluntary adoption of neighboring villages in providing free Water, Electricity and facilities for Education, Healthcare etc.

Parasakti cements incurred a huge amount of around Rs.20 millions on plantation development in plant,

colony and companies vacant lands. Company adopted nearby village jettipalem and providing free

water, education and healthcare.


Figure: 5.5 Greenery - plantation in parasati cements

CHAPTER - 6

CONCLUSION AND SUGGESTIONS

INVENTORIES CONSTITUTE THE MOST SIGNIFICANT PART OF CURRENTASSETS OF A

LARGE MAJORITY OF COMPANIES IN INDIA.ON AN AVERAGE INVENTORIES ARE

APPROXIMATELY 30% OF CURRENT ASSETS IN PRIVATE LIMITED COMPANIES IN INDIA. IT IS

POSSIBLE FOR A COMPANY TO REDUCE ITS LEVEL OF INVENTORIES TO A CONSIDERABLE

DEGREE e.g. 10 TO 20%WITHOUT ANY ADVERSE EFFECT ON PRODUCTION AND SALES.


THE PARASAKTI CEMENT INDUSTRIES LIMITED OFFERS INDIA A CHANGE TO LEAP

FROGFROM ABOVE DEPRESSION TO AREA OF GLOBAL COMPETITIVENESS AND

PROSPERITY AND REGAIN INDIA’S COMMERCIAL VALUE. IN THE LIGHT OF THESE FACT

THE STORES OF PARASAKTI CEMENT IS MAINTAINING INVENTORY OF NEARLY 15,000 ITEMS.

THE STORES HAS BEEN DONE REMARKABLE JOB SO FAR RELATING TO INVENTORY

CONTROL FUNCTION BUT WITH THE CHANGING SCENARIOS THE IMPORTANCE OF

INVENTORY MANAGEMENT HAS ACQUIRED ENORMOUS DIMENSIONS. DESPITE OF THE

FACT THAT INVENTORY MANAGEMENT SYSTEM BEING FOLLOWED IN THE COMPANY HAS

STRONG STRUCTURE, WITH INTEGRATED ERP AND SOPHISTICATED TECHNIQUES. IN NEAR

FUTURE ADVANCED ORACLE FUSION E BUSINESS IS PLANNING TO IMPLEMENT FOR

BETTER INTEGRATED CONTROLS.

CHAPTER – 7


ANNEXUREP

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04Annexure: 7.5 Material Gate pass Returnable / Non-returnable


Annexure: 7.6 Purchase indent format.

Annexure: 7.8 Activity based cost analysis report format (Below page)



CHAPTER .8

BIBILOGRAPHY

1. STORES & MATERIALS MANAGEMENT - MITSDE – MIT SCHOOL OF DISTANCE

EDUCATION, PUNE 2010,WEBSITE:WWW.MITSDE.COM

2. INTRODUCTION TO MATERIALS MANAGEMENT – ARNOLD CHAMPION CLIVE;

DORLING KINDERSLEY (INDIA) PVT LTD, 2010.

3. ESSENTIALS OF INVENTORY MANAGEMENT – MAX MULLER, AMACOM, A DIVISION OF AMERICAN MANAGEMENT ASSOCIATION 2003.

4. WWW.PARASAKTICEMENT.COM , LAST ACCESSED 21-08-2011.

5. WWW.MATERIALSMANAGEMENT.INFO . LAST ACCESSED 21-08-2011

6. MAPS.GOOGLE.CO.IN/MAPS?hl=en&tab=wl. LAST ACCESSED 20-08-2011

7. http://www.mu.ac.in/arts/social_science/eco/pdfs/depart/dwp1.pdf

8. http://www.cmaindia.org/portal/whatsnew/newsDigestView.aspx?NID=120

9. http://www.cmaindia.org/portal/static/AnnualReport2009-10.pdf

http://www.cmaindia.org/portal/static/AnnualReport2009-10.pdf

http://www.cmaindia.org/portal/whatsnew/newsDigestView.aspx?NID=120

http://www.mu.ac.in/arts/social_science/eco/pdfs/depart/dwp1.pdf

http://WWW.MATERIALSMANAGEMENT.INFO/

http://WWW.PARASAKTICEMENT.COM/

A 4

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