Project on Inventory Management

Presentation on Summer Training

Presented by :Bhagat Harman Deep

MBA 2(A)

Indian Textile Industry

Textile is one of India’s oldest industry.

It is the second largest employment generator .

The industry uses a wide variety of fibers .

India contributes to around 12 percent of the world's production of cotton yarn and textiles

• India covers 22 percent of the global market.

• India is known to be the third largest manufacturer of cotton across the globe.

• India claims to be the second largest manufacturer of yarn and textiles in the world.

SPORTKING INDIA LTD.

HISTORY

Sportking India Ltd. Was Incorporated on

15-02-1989 by Sh. Raj Kumar Avasthi &

his family members.

Other Companies of Sportking Group

M/s. Sportking Knitwear’sClassis Wears Pvt. Ltd.M/s. Aradhan Knitwear’sM/s. Sportking ExportsNamokar Capital Services Pvt. Ltd.

Markets

USA: Target Stores, JC Penny, Hagger, Li and Fung, Mother Works, Costoc, Urban Outfitters, C.A.G., HMX Sportswear and Walt Disney.

EUROPE: George and Tom Tailor.

Conti….

Domestic : Pantaloon, Shopper’s Stop, Lifestyle, Pepe Jeans, Max (Dubai and India), Pyramid, Big Bazaar, Westside. They also have a license for the manufacturer of Walt Disney branded garments for India.

Classic Wears Pvt. Ltd.

Classic Wear Ltd. was established in the year 1987 in Noida.

Shifted from Noida to Ludhiana in the year 1988 having a change in name “Classis Wears Private Limited”. Presently it is situated at Village Meharban, Rahon Road, Ludhiana.

Presently Classic Wears is a leading manufacturer of Knitwear for gents, ladies and kids in Northern India

Production capacity of 1, 50,000 pcs.

Business Philosophy

‘TO GROW’

Quality policy is:

“TO MEET THE COMMON PEOPLE NEEDS”

ORGANISATIONAL CHART

SWOT Analysis

Strengths Established brand Name ‘Sportking’. One of the oldest known fabric manufacturers.Most experienced technical manpower.Own dyeing and spinning units

Weaknesses

•Fabric & Design development are not fully exploited•Do not have enough retail outlets. •Employees are not well educated

•Better utilization can be made with new machines.•Can increase market share with wide range•Improvement in distribution chain-number of dealers and retail shops in the urban and semi urban areas•Can make more links for export

Opportunities

Threats

•The concern is facing competition from existing and upcoming units in the industry.•Fluctuations in the prices of raw materials.

Ratio Analysis

Particulars 2005-06 2006-07 2007-08 2008-09

total current

assets 12,17,58,860.6 16,28,16,243.2 22,53,15,071.9 21,76,30,571

Current

Liabilities 4,23,07,975.99 6,31,81,759.48 10,23,06,548.8 9,34,23,704.73

Current Ratio 2.87 2.57 2.20 2.32

Particulars 2005-06 2006-07 2007-08 2008-09

total quick

assets 7,27,98,255.82 10,83,38,595.6 13,26,65,360.7 9,64,67,747.68

Current

Liabilities 4,23,07,975.99 6,31,81,759.48 10,23,06,548.8 9,34,23,704.73

Quick ratio 1.72 1.71 1.29 1.03

Particulars 2005-06 2006-07 2007-08 2008-09

cash & bank 24,23,918.37 47,56,425.17 1,45,90,577.15 1,04,50,533.83

Current

Liabilities 4,23,07,975.99 6,31,81,759.48 10,23,06,548.8 9,34,23,704.73

Cash ratio 0.05 0.07 0.14 0.11

Particulars 2005-06 2006-07 2007-08 2008-09

avg. debtor 6,72,55,651.59 7,80,47,244.66 10,05,96,472.4 9,19,85,740.16

net credit

annual sale 22,16,68,959.8 30,83,15,530.6 34,04,97,591.2 29,56,98,586

D.T.R. 3.29 3.95 3.38 3.21

DEBTOR TURNOVER RATIO =Total Credit sales

Avg. Debtors

Particulars 2005-06 2006-07 2007-08 2008-09

avg. creditor 2,98,03,839.41 3,71,95,451.34 6,96,06,435.68 8,70,84,096.41

net credit

purchase 15,11,76,819.2 20,75,10,325.7 23,43,87,408.2 18,09,35,723.4

C.T.R. 5.07 5.57 3.36 2.07

CREDITOR TURNOVER RATIO =Total Credit Purchase

Avg. Creditors

Particulars 2005-06 2006-07 2007-08 2008-09

avg.

Inventory 4,48,64,093.41 5,17,19,125.78 7,35,63,679.36 10,69,06,267.3

sale 22,16,68,959.8 30,83,15,530.6 34,04,97,591.2 29,56,98,586

Ratio 4.940899122 5.961344588 4.628610126 2.765961188

INVENTORY TURNOVER RATIO =Sale

Avg. Inventories

Particulars 2005-06 2006-07 2007-08 2008-09

outsiders fund 4,80,81,483.64 9,51,08,044.52 12,25,51,415.2 15,57,56,401.5

Shareholder

fund 7,72,64,900 6,79,35,265.29 8,76,75,610.73 8,59,92,405.54

Debt equity

ratio 0.622293999 1.399980468 1.397782282 1.811280897

DEBT EQUITY RATIO =Outsider’s Fund

Shareholder’s Fund

Particulars 2005-06 2006-07 2007-08 2008-09

sale 22,16,68,959.8 30,83,15,530.6 34,04,97,591.2 29,56,98,586

Profits 50,29,940.77 58,98,563.68 74,63,528.44 54,55,636.81

Ratio % 2.26 1.91 2.19 1.84

NET PROFITABILITY RATIO=Net Profit

Sales

MEANING OF INVENTORY Inventory is the physical stock of goods maintained in an organization for its smooth running.

Raw Material

Work in Progress

Finished Goods

Spare Parts

OBJECTIVES OF INVENTORY MANAGEMENT

•Ensuring Availability of Materials•Avoidance of Abnormal Wastage•Avoidance of Out of Stock Danger•Economy in purchasing•Optimum Investing and Efficient use of capital

Risk Associated with Inventories•Price decline

•Product deterioration:

•Obsolescence

Cost Associated with Inventories•Material Cost

•Ordering Cost

•Carrying Cost

ESSENTIALS OF INVENTORY CONTROL SYSTEM

•Classification and Identification of inventories

•Adequate storage Facilities

•Adequate Reports and Records

•Intelligent and Experienced Personnel

•Coordination

TECHNIQUES OF INVENTORY CONTROL

•Safety Or Buffer Stock

•Economic Order Quantity Technique

•VED Analysis

•ABC System

•Just-in-time

RESEARCH METHODOLOGY

•To study the method of inventory management & control in Classic Wears Pvt. Ltd.

•To study the problems in inventory management & control in Classic Wears Pvt. Ltd.

OBJECTIVES OF STUDY

Research design For this research descriptive research design is used

Size of Population

All the employees who directly or indirectly related to the inventory in Classic Wears Pvt. Ltd., Ludhiana.

Sample size Six employees working in Finance, Store, Production Departments of Classic Wears Pvt. Ltd., Ludhiana.

Sample unit:One employee who directly or indirectly related to the inventory in Classic Wears Pvt. Ltd., Ludhiana.

Sources of DataPrimary Data: - Structured direct Interviews with the concerned persons of Finance & Stores Department

Secondary Data: - Annual Report, Store Records & various books

•. They refused to fill questionnaire

•Store department employees are not well educated.

LIMITATIONS OF THE STUDY:

Inventory Management in Classic Wear Pvt. Ltd.

Raw Material consists:

•Yarn

•Accessories like buttons, zips, tags, patches etc.

Work in process: Garments which are in manufacturing

process.

Finished goods : Garments which are ready to

sale in the market.

Spare Parts : Needles, Screw

Prod. deptt. issue store inspect receive supplier

Demand

Place

Orders

Purchase

dept.

Net order issue receive tender

Quantity tenders quotation evaluations

Inventory Cycle

Factors

Ran

k

Factor Effecting the Purchase Order

Factors

Ran

k

Factor Effecting Inventory Policies

Factors

Ran

k

Problems in Inventory Management

Need of Inventory System

Factors

Ran

k

•There is a lot of old stock which has not any use.

•At the time of issue they have to domany entries as they have not computerized system in store.

•One the time of issue store-keeper issues some quantity from old stock & some from new stock. In this way they use the old stock.

•No exact idea that how much quantity of yarn is required.

•There is a lot of wastage. Store-keeper said that after the completion of production the excess material which is remained unused that is not returned to the store-keeper.

•If there is any defected piece, then they have to find again the matching yarn.

•Workers don’t use material properly; there is a lot of wastage. The reels, lace couldn’t be used again due to that.

•For valuation of the stock they use Average method.

•They resale the waste material in the market.

•They purchase the material from their own subsidiaries & from local market.

•The main motive behind inventory management system is smoothen operation of factory.

SUGESSTIONS

•No doubt lead time is important but other factor like availability is also important. So they should also give proper consideration to this.

•They follow safety & bulk purchases for cost reducing. But they should follow the JIT system. As they are in fashion industry so this is the best method. As they will purchase the goods according to the order, so there will no stock obsolescence.

•According to the store-keeper there is lack of space. The boxes of yarn & other material are not properly stored. So there should be proper racks for the boxes.

•The store department should be computerized so that the recording can be easy. The issuing of yarn is recorded manually.

•Wastage should be controlled. The remaining material, after the completion of production, should returned to the yarn store. Production manager should take care of this.