A PROJECT REPORT ON “THIRD PARTY STOCKS RECONCILIATION OF THE SUB-CONTRACTED PARTS” UNDERTAKEN AT, GENERAL MOTORS (I) PVT. LTD, PUNE. UNDER THE GUIDANCE OF: MR.ANAND PRAKASH, INDIRA INSTITUTE OF MANAGEMENT, PUNE SUBMITED BY: ASHOK SHALGAR, OPERATIONS MANAGEMENT - 2011-13, INDIRA INSTITUTE OF MANAGEMENT, PUNE. PUNE UNIVERSITY SEAT NO. - 00547. IN THE PARTIAL FULFILLMENT OF, 1
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Project Report Stocks Reconciliation Ashok Shalgar IIMP FINAL
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A
PROJECT REPORT
ON
“THIRD PARTY STOCKS RECONCILIATION
OF THE SUB-CONTRACTED PARTS”
UNDERTAKEN AT,
GENERAL MOTORS (I) PVT. LTD, PUNE.
UNDER THE GUIDANCE OF:
MR.ANAND PRAKASH,
INDIRA INSTITUTE OF MANAGEMENT, PUNE
SUBMITED BY:
ASHOK SHALGAR,
OPERATIONS MANAGEMENT - 2011-13,
INDIRA INSTITUTE OF MANAGEMENT, PUNE.
PUNE UNIVERSITY SEAT NO. - 00547.
IN THE PARTIAL FULFILLMENT OF,
MASTER OF BUSINESS ADMINISTRATION
(M.B.A.)
1
COMPANY CERTIFICATE
2
COLLEGE CERTIFICATE
TO WHOMSOEVER IT MAY CONCERN
This is to certify that Mr. Ashok Vijay Shalgar, a student of ‘Master of Business
Administration – Production & Materials Management’ from Indira Institute of
Management, Pune has done his/her Summer Internship Project at General
Motors India Pvt. Ltd., Pune from 1st Jun’12 to 1st Aug’12.
The project work entitled,
“Third Party stocks Reconciliation of The Sub-Contracted Parts”,
embodies the original work done by him/her during his/her Summer Internship
Project period.
Date:
Place: Pune
Mr. Anand Prakash,
Professor,
Indira Institute of Management, Pune.
3
ACKNOWLEDGEMENT
I would like to express my deep gratitude and sincere thanks to my project guide Mr. Anand
Prakash (Professor – IIMP) for his valuable guidance and unparallel support during the
progress of this project. Without his encouragement & crucial inputs, this project would not
have been possible.
I acknowledge with pleasure my debt to Mr. Avinash Bagul( HOD – Operations Dept.,
MBA- IIMP), who has provided me with important guidelines & supported in the project
work.
I express my heartiest thanks to Dr. Poornima Tapas (HOD – MBA, IIMP) for her guidance
& Support.
I would like to specially thank Mr. Dhiraj Agrawal (Manager, GSC, Power-Train Plant, GM
India) and Mr. Rajiv Gupta (Head, GPSC, Power-Train plant, GM India) for giving me this
opportunity to learn & work in the dynamic environment of the esteemed organization,
General Motors India.
On a more personal note, I would like to express my special thanks to my parents, all my
friends, who directly or indirectly, contributed to the successful completion of this project.
I sincerely thank everyone who was a part of this and helped me in completing this project
successfully.
Sign. :
Name: Ashok Vijay Shalgar
4
CONTENTS
I. LIST OF FIGURES
II. LIST OF TABLES
1.0 INTRODUCTION…………………………………………………………12
1.1 Motivation
1.2 Objectives
1.3 Scope
1.4 Chapterization
2.0 INDUSTRY PROFILE…………………………………………………….16
2.1 Industry Definition
2.2 Products and Services
2.3 History
2.4 Life Cycle
2.5 Major Players & Segmentation
2.6 Market Statistics & Potential
3.0 COMPANY PROFILE ………………………………………………...….20
3.1 General Motors
3.2 Vision & Strategy
3.3 General Motors in India
3.4 Joint Venture of GMIPL with SAIC
3.5 Products in the Indian Market
3.5.1 GM-Chevrolet Products in India
3.5.2 GM-Power-Train /Engine Products
4.0 LITERATURE REVIEW & NEED/PURPOSE OF THE PROJECT….…26
4.1 Definition: Reconciliation
4.1.1 Reconcile
4.1.2 Reconciliation
4.2 Concept of Reconciliation
5
4.3 Purpose of Reconciliation
4.3.1 Supply chain & Supply Chain Management
4.3.1.1 Supply Chain
4.3.1.2 Supply Chain Management
4.3.2 Sub-contracting
4.3.2.1 The Process of Sub-Contracting the Parts to
Suppliers
4.3.3 Flow of Materials during Sub-Contracting
4.3.4 Purpose of Reconciliation
4.4 Types of Reconciliation Methods & General Procedure of
Stocks Reconciliation
4.4.1 Types of Reconciliation Methods
4.4.2 Types of Inventory Systems:
4.4.3 General Procedure of Stocks Reconciliation
4.5 Global Manufacturing System
4.6 Overview of GPSC Department activities in GM India
4.6.1 Study Of Global Purchasing & Supply chain (GPSC) Process
4.6.2 Study of Roles & Responsibilities of Schedulers
5.0 RESEARCH METHODOLOGY…………...……………………………..41
5.1 Methodology for the Third Party Stocks/ Inventory Reconciliation
Process at General Motors India
5.2 Stocks/ Inventory Reconciliation Conducted in GMI Power- Train
Plant
5.2.1 In Detail Procedure of Reconciliation
5.3 Reconciliation Status of the Sub-Contracted Parts
5.3.1 Steps followed in the Reconciliation Process
General Motors India has many products in its portfolio which are accepted as value for
money by the Indian Market. Following are the Products and their specifications.
3.5.1 GM-Chevrolet Products in India
The GM currently manufactures & sells its Chevrolet brand products in India. Since 2003, it
has launched eleven products in various categories from small car, sedan to SUV.
Some other brands like GM corvette are also launched by the company to attract the premium
segment customers.
Following is the list of various GM Chevrolet brand models and their technical specifications
& Prices which explains the segment, Price range in which GM India operates.
In the near future GM India plans to launch the vehicles in Hatchback, Multi Utility Vehicles
and Notchback segments which will enhance its product portfolio to capture two digit market
share from the current 3.4 % share.
1 Chevrolet CorvetteSpecs ValuesEngine 6.2 L V8Max Torque 424 Nm @ 4600 rpmMax. Power 430 hp @ 5900 rpmTransmission 6-Speed AutomaticFuel Type PetrolPrice 50 Lacs
2 Chevrolet CaptivaEngine 2.2 LMax Torque 320 Nm @ 2000 rpmMax. Power 150 PS @ 4000 rpmTransmission 5 Speed ATFuel Type PetrolPrice 18 -20 Lacs
3 Chevrolet CruzeEngine 1.8L I-4Max Torque 326 Nm @ 2600 rpmMax. Power 138 bhp @ 4400 rpmTransmission 5-Speed ManualFuel Type PetrolPrice 11.25-15.25 Lacs
23
4 Chevrolet Optra MagnumEngine 1.6 L VGISMax Torque 148 Nm @ 4000 rpmMax. Power 104 PS @ 5800 rpmTransmission 5-Speed ManualFuel Type PetrolPrice 7.30-9.99 Lacs
5 Chevrolet TaveraEngine 2.5L Direct Injection Turbo DieselMax Torque 186 Nm @ 1800 rpmMax. Power 80 PS @ 3900 rpmTransmission 5-ManualFuel Type PetrolPrice 6.50-10.15 Lacs
6 Chevrolet Optra SRVEngine 1.6 L VGISMax Torque 140 Nm @ 4500 rpmMax. Power 101 PS @ 5800 rpmTransmission ManualFuel Type PetrolPrice 7.31-7.87 Lacs
7 Chevrolet AveoEngine 1.4LMax Torque 127 Nm @ 3400 rpmMax. Power 94 PS @ 6200 rpmTransmission 5 Speed ManualFuel Type PetrolPrice 5.97-7.42 Lacs
8 Chevrolet Beat DieselEngine 1.0 L Smartech EngineMax Torque 150 Nm @ 1750 rpmMax. Power 58.5 PS @ 4000 rpmTransmission 5- Speed ManualFuel Type DieselPrice 4.29-5.73 Lacs
9 Chevrolet Aveo U-VAEngine 1.2 L I-4Max Torque 110 Nm @ 4400 rpmMax. Power 76 PS @ 5500 rpmTransmission 5 Speed ManualFuel Type PetrolPrice 3.99-5.49 Lacs
( Source : www.carwale.com)
24
10 Chevrolet Beat PetrolEngine 1.0 L S-TEC II 16VMax Torque 108 Nm @ 4400 rpmMax. Power 79 bhp @ 6200 rpmTransmission 5-Speed ManualFuel Type PetrolPrice 3.42-4.92 Lacs
11 Chevrolet SparkEngine 1.0 L Max Torque 90 Nm @ 4200 rpmMax. Power 63 PS @ 5400 rpmTransmission ManualFuel Type PetrolPrice 3.19-4.23 Lacs
3.5.2 GM-Power-Train /Engine Products
The Various engines manufactured in GM – Talegaon plant are:
i. 1.0 L XSDE (Extra Smart Diesel Engine)
ii. 1.2 L Petrol Engine
iii. 1.2 L LPG Engine
iv. 1.3 L Diesel Engine
GM Power-Train division manufactures various engines as shown in the table below for its
cars manufactured at the same facility and for export purpose. By utilizing the cost benefit of
manufacturing engines in India, the company exports the engines to its various car
manufacturing plants across world. The engines are mainly used in its small and medium
sized car models like Beat, Spark, Sail & U-VA.
Sr No Engine name Type C.C Drive Vehicle application Models
7.1 SHRINIWAS ENGINEERING AUTO COMPONENT PVT. LTD.
7.2 SHRINIWAS ENGINEERING AUTO COMPONENT PVT. LTD.
5 MEHTA ENTERPRISES
6
Part Type
ENDURANCE SYSTEMS (INDIA) PVT LTD
2 CONTINENTAL ENGINES LIMITED
UFI Filters India pvt Ltd
3 CIKAUTXO TAURUS FLEXIBLES PVT LTD
Table 5.1: List of sub-contracted Parts reconciliated
43
5.2.1 In Detail Procedure of Reconciliation
The Procedure adopted for Reconciliation can be elaborated as given below:
Step I : Obtain Supplier’s statement in a standard format for the Specified Period .
1. The various suppliers are provided with a standard format to maintain the data of all
the receipts& dispatches of sub-contracted parts from GM India.
2. All the Supplier’s maintain the data on daily basis & communicate the same to GMI
monthly.
3. For Reconciliation purpose , a consolidated data for the last six months was invited.
4. The Format of Reconciliation Data are as shown below:
i. The Format of Child Part receipt from GM to Supplier:
Format - Receipt of Child Part from GM to SupplierVendor Code
Vendor NamePart No. Part NameChild Part receipt from GM to Supplier Source : Supplier Data
Sr.No. Inv.No. Date Qty.1
2
3
4
5
6
7
8
9
10
Total
Nomenclature : 1. Inv.No. : GM Invoice number for Child Part dispatch from GM to Vendor 2. Date : Date of Invoice3. Qty. : Quantity of material (Child Parts) Dispatched.
44
- Suppliers maintain the Reconciliation data in the form of Child Part receipt data &
parent part dispatch data.
- The invoice number which is maintained on the above format sheet is important to
reconcile the child parts dispatched from GM to suppliers.
- This invoice number is generated by GM and the same invoice number can be found
in GM child part data.
ii. The format for Parent/Mother part dispatch from Supplier to GM:
Format : Mother Part dispatch from Vendor to GMVendor Cd
Vendor Part No. Part Name
Source : Supplier Data Mother Part dispatch from Vendor to GM
Sr.No. Invoice No. Qty. Date12345678910
Total
Nomenclature : 1. Invoice.No. : Vendor Invoice number for Parent Part dispatch from Vendor to GM 2. Date : Date of Invoice3. Qty. : Quantity of material (Parent/Mother Parts) Dispatched.
Dispatch from Supplier to GM
- As like child part , the suppliers maintain their Parent part dispatch details to GM.
- The invoice number maintained in above format is also recorded in GM records when
this material is received at GM.
45
- This invoice number is cross verified with GM data invoice numbers to reconcile the
parent part details.
Sr. No. RGP RGP DT Inv. No. Qty. Despatch
DateRemark about Mtl.
ReceiptSr. No. Inv. No. Qty. Invoice Date
1 if RGP material if Invoice matrl 12 23 34 45 56 67 78 89 9
10 10
Total Qty Receipt 0
Opening Stock as on 01.01.2012 ATotal Invoice Qty. BTotal Dispatch Qty. CBalance Qty. as per records D D = A + B - C
Total Qty Dispatch
Reciept(Invoice) Details of Child Parts from GMI (PT) to Supplier Dispatch Details of Parent Part from Supplier to GMI (PT)
Child part Number & name: Parent Part Number & Name:
GMIPowertrain
Figure 5.2: Format of Reconciliation data received from Supplier.
Step II : Reconcile: Supplier statement with GMI Database/ERP records for
Mother Parts receipts,Child parts dispatches, Child Part Rejections, if
any.
Step II.I - Collection of Data from GM ERP for the respective part & Supplier .
1. In the similar manner, the data available in GM ERP System is obtained & structured
in a standard format.
2. Data of all the vendors is collected from the system & structured in the format to
compare the two sets of data for reconciliation purpose.
3. The formats used at GM’s end for structuring the data to be compared with that of
Supplier’s are as shown :
46
i. Format for Child Part dispatch from GM to supplier
Format - Child Part Supply from GM to VendorVendor NameVendor CodePart No. Part Name Child Part Supply from GM to VendorSource of Data : GM ERP session / manual Record.
Sr.No. QUANTITY SHP DATE SHIP NO INVOICE NO12345678910
Total
Nomenclature : 1. Quantity : Qty. of material Dispatched from GM to Vendor2. SHP DATE : Shipment date on which Shipment made to Vendor3. SHIP NO. : Shipper Cut number in ERP for the Shipment4. Invoice No. : The GM System generated Invoice number for the said shipment.
47
ii. Format for Parent /mother Part receipt from Supplier to GM
Format : Mother Part receipt from Vendor to GMVendor Cd
Vendor Part No. Part NameParent Part Receipt from Supplier to GM Source : GM ERP Data
Sr.No. DOC_ID QTY SHIP_DT SID/Inv.No. PO_NBR
1
2
3
4
5
6
7
8
9
10
Total
Nomenclature : 1. DOC_ID : Document ID for the receipt of material2. QTY : Parent parts Quantity received from Vendor 3. SHIP_DT : Shipment date for the Parent parts shipped from Supplier4. SID : Supplier ID ( SID) = Vendor Invoice no. for the shipment5. PO_NBR : Purchase Order NBR for the dispatch of Material
Step II.II – Compare the two sets of Data
1. The Two sets of data collected from GM System & Supplier are compared.
2. A format for this comparison is as shown below.
3. The child part dispatch from GM to Supplier & receipt of those child parts are
compared against Invoice numbers generated by the GM.
4. The Supplier generates the invoices for the Parent parts dispatch which are compared
against the Invoice details maintained by GM. The comparison is made on the basis of
Invoice numbers of the supplier in this case.
48
5. A summary of the two types of data is created with previous opening stock, fresh
receipts of material, fresh Dispatches of material & the available stock at Supplier and
GM end.
6. The formats used for the above mentioned comparisons & Summary are as given :
Child Part Reconciliation _R2Vendor Cd : Vendor : Part No. : Part Name :Reco Period : Source : ERP Records & SHIPPING RECORD Source : Supplier data
Sr.No. QTY SHP DATE SHIP NO INVOICE NO Invoice Check Sr.No. Invoice No. Qty. Date1 w TRUE 1 w2 x TRUE 2 x3 y TRUE 3 y4 z TRUE 4 z
Total 0 Total 0
Figure 5.3: Format showing the Child part cross verification for Reconciliation purpose
Parent Part Reconciliation R2Vendor CdSupplier Part No. Part Name Reco Period :
Source : Supplier Data Source : GM receipt data - ERP records Mother Part
Figure 5.4: Format showing the Parent part cross verification for Reconciliation purpose
7. The above collected data is summarized in the form of a Balances summary with
following contents in it :
i. Opening Balance as on starting date of Reconciliation period
ii. Child Part Supply(in GM Record) or Receipt (in Supplier Record)
49
iii. Parent Part Supply (in Supplier Record) & Receipt (in GM Record).
iv. Closing Balance as on last date of the Reconciliation Period.
v. The Format of Balance Summary is as shown below :
Format : Stocks Balance Summary Sheet for ReconciliationRecocniliation Period : 31st Mar' 12 to 29th Jul'12
Supplier Data GM System Data DifferenceOpening stock(stock with Supplier)as on 31st Mar'12
a1Opening stock in GM System as on 31st Mar'12
a2 = (a2 - a1 )
Child Part Recieved during the period b1Child Part Dispatched during the period
b2 = (b2 - b1)
Parent Part Dispatched during The period c1Parent Part Recieved during The period
c2 = (c2 - c1 )
Closing stock as on 29th Jul'12 ( stock with Supplier)
d1Closing stock as on 29th Jul'12 in GM system
d2 = (d2 - d1)
where d1 = a1 + b1 -c1 where d2 = a2 + b2 -c2
Figure 5.5 Format for Stocks Balance Sheet for Reconciliation
Step II.III Find Discrepancies if any.
The Discrepancies are found in two inter-dependent ways,
II.III.iFinding Discrepancy between Supplier System & Documents Record & GM
System &Documents Record
II.III.ii Finding Discrepancy between Supplier Physical Inventory Declaration & GM
System data
II.III.i Finding Discrepancy between Supplier System & Documents Record and
GM System & Documents Record
1. The first step in finding discrepancies is to find them between Supplier’s
computerized systems & manually maintained Document Records & GM System and
document records.
2. The advantage of finding discrepancies between Supplier Doc. Records & GM system
data is that we can compare the two sets of data in documents & try to eliminate the
discrepancies before the Physical count of inventory. This saves the time of
reconciliation after Physical Inventory count. This is the major tool of finding &
eliminating the discrepancies between the two records.
3. The above explained formats & Method is used for finding the non-matching entries
in the two sets of data. Such entries are separated & evidences are collected for them.
4. The evidences are collected in the form of :
50
i. The Invoice hard/Soft copy.
ii. Goods Receipt Note (GRN) number & hard/soft copy.
iii.Other Proof Of Delivery (POD) from GM to Supplier or Supplier to GM, like LR
( Loading Receipt)
iv. System generated reference number of transaction if any.
5. After Collection of evidences, the discrepancy is shared with the other party & data of
both the parties are updated accordingly. This action eliminates the discrepancy.
6. The discrepancies for which the evidences cannot be collected are discarded with due
intimation of the respective party.
After the discrepancies are eliminated, this data becomes the Final system data
which can be compared with the physical count of the Inventory.
II.III.ii Finding Discrepancies between Supplier Physical Inventory Declaration
&Final System Data
1. Here the actual Physical Inventory count takes place first.
2. As Periodic Inventory system is being followed at GM India, the physical inventory
count is carried out at the end of July 2012.
3. The refined final System data which is agreed between GM and Supplier system will
be compared with the Physical Count figures for discrepancy.
4. There is a possibility of some discrepancies between System Data & Physical count or
no discrepancies between the two sets of data.
III Reconciliation Statement Preparation:
The reconciliation Statement is prepared under two conditions,
1. No discrepancies found
2. Discrepancies found between system data & Physical count
III.I Reconciliation Statement Preparation under no discrepancies found Condition:
1. A reconciliation statement is prepared stating that the system inventory data is
matching with the Physical count of the Inventory which confirms the system
inventory as the true inventory status.
2. After this, the Finance Department of the organization approves the Reconciliation of
stocks along with the authorities of the Supply Chain Group after thorough review of
the statement & related data.
3. This completes the Reconciliation Process in this case.
51
III.II Reconciliation Statement Preparation under condition of discrepancies Found:
1. If there are some discrepancies between system data & physical count of inventory,
the Supplier needs to prepare his version of Reconciliation Statement with thorough
explanation about the discrepancies & valid reasons for the same.
2. The Supplier Reconciliation statement will be reviewed by GM.
3. If the Supplier Reconciliation Statement & the reasons of discrepancies are valid, GM
will consider the discrepancies & prepare a Reconciliation statement accordingly.
There are two actions that can be taken in this case.
I. Making adjustments in the system if the discrepancies are found valid.
II. Preparing a Debit Note to debit the amount of discrepancy on the supplier, if the
discrepancies are not found valid. The Supplier has to take the responsibility of
the discrepancy as it is not explainable by him.
4. Hence the system & the Physical count Inventory Records are brought into
agreement in this manner. This completes the Reconciliation Process under
consideration.
5.3 Reconciliation Status of the Sub-Contracted Parts:
5.3.1 Steps followed in the Reconciliation Process
Following are the various steps followed in the Reconciliation of Inventory during the project
1. Supplier Data Collection for child part receipt & mother part dispatch
2. GM Data Collection child part dispatch & mother part receipt
3. Cross check between the two records
4. Finding Discrepancies, if any
5. Correction about discrepancy in GM Records internally by GM
6. Cross check between two records again
7. Finding Discrepancies , if any
8. Communication about discrepancy, if any, to Vendor
9. Correction of Discrepancy, if any, in Vendor Data by the vendor
10. Agreement about the Discrepancy observed
11. Supplier Physical Stocks declaration at API
12. System data Finalization after API considering Plant Stocks & Rejections
13. Required action for discrepancy (e.g.System Adjustment or Debit on Vendor)
52
5.3.2 Status of Reconciliation Part -1
The status of the reconciliation is as shown in the table below :
Reconciliation – 1 – for the Period up to March 2012.
Status - Third Party Stocks Reconciliation -I (upto 31st Mar'12)
Sr. No. Step DescriptionMehta
EntMagneti Marelli
EnduranceCIKAUTXO
TAURUSContinen
talUFI
FiltersShrinivas -
SEACOMark IV
1Supplier Data Collection for child part receipt & mother part dispatch
G G G G G G G G
2GM Data Collection child part dispatch & mother part receipt
G G G G G G G G
3 Cross check between the two records G G G G G G G G
4 Finding Discrepancies , if any G G G G G G G G
5Correction about discrepancy in GM Records internally by GM
G G G G G G G G
6 Cross check between two records again G G G G G G G G
7 Finding Discrepancies , if any G G G G G G G G
8Communication about discrepancy, if any, to Vendor
G G G G G G G G
9Correction of Discrepancy,if any, in Vendor Data by the vendor
G G G G G G G G
10 Agreement about the Discrepancy observed G G G G G G G G
11 Supplier Physical Stocks declaration at API G G G G G G G G
12Discrepancy finalization after API considering Plant stocks & Rejections
G R G G G R G G
13Required action for discrepancy (e.g.System Adjustment or Debit on Vendor)
R R R R R R R R
Figure 5.6 Status – Third Party Stocks Reconciliation-1
In this status, the final action about discrepancies is to be taken based on the Physical
Inventory conducted atthe end of July 2012 as there was no physical inventory conducted at
the March end and no Physical inventory data is available for Reconciliation Purpose.
53
5.3.3 Status of Reconciliation Part -2
Reconciliation – 2 – for the Period from March 2012 to July 2012.
Status - Third Party Stocks Reconciliation -I (31st Mar'12 to 29th Jul'12)
Sr. No. Step DescriptionMehta
EntMagneti Marelli
EnduranceCIKAUTXO
TAURUSContinen
talUFI
FiltersShrinivas -
SEACOMark IV
1Supplier Data Collection for child part receipt & mother part dispatch
G G G G G G G G
2GM Data Collection child part dispatch & mother part receipt
G G G G G G G G
3 Cross check between the two records G G G G G G G G
4 Finding Discrepancies , if any G G G G G G G G
5Correction about discrepancy in GM Records internally by GM
G G G G G G G G
6 Cross check between two records again G G G G G G G G
7 Finding Discrepancies , if any G G G G G G G G
8Communication about discrepancy, if any, to Vendor
G G G G G G G G
9Correction of Discrepancy,if any, in Vendor Data by the vendor
G R R R R R R R
10 Agreement about the Discrepancy observed G R R R R R R R
11 Supplier Physical Stocks declaration at API G G G G G R G G
12Discrepancy finalization after API considering Plant stocks & Rejections
R R R R R R R R
13Required action for discrepancy (e.g.System Adjustment or Debit on Vendor)
R R R R R R R R
Figure 5.7 Status – Third Party Stocks Reconciliation-2
In the above chart, it shows that the Physical stocks have been declared by the suppliers but
the agreement about the discrepancies is to be finalized. This can happen because the two
steps are not completely inter-related.
54
6.0 RECONCILIATION DISCREPANCY ANALYSIS
6.1 Reconciliation – Part 1 Discrepancy Analysis:
The complete discrepancy analysis is done for Reconciliation – Part 1 only as it is carried out
during the Project duration. The Reconciliation - Part 2 is partially completed during the
project period. So, the complete data of reconciliation part-2 is not available for analysis.
6.1.1Data for Reconciliation Discrepancy Analysis& Reconciliation
discrepancies Chart:
Out of the total data used during reconciliation, the data where the particular discrepancies
are observed is shown in APPENDIX A. The discrepancy analysis chart is shown for the
whole data in APPENDIX-B where it shows the explanation of various types of
Discrepancies & reasons for them and how they are handled.
.The analysis of the same data is shown in subsequent part. The complete reconciliation data
could not be disclosed as a part of company policy.
6.2 Reconciliation Discrepancies Analysis:
During the Discrepancy finding process, various types of discrepancies were found.
The chart below explains the consolidated analysis ofmajor type of discrepancies observed.
55
Sr.No. Discrepancy Discreption Reason
1Invoice number against shipper cut no.not maintained in the ERP system.
GM System data not updated timely
2Entry was missing in Supplier Child Part data. Manual error.
Data Not maintained by supplier accurately
3Supplier unable to provide record. Entry proved invalid. Manual Error.
Data Not maintained by supplier accurately
4Material with Same part number sent to two different suppliers. GM Data collection was not done Supplier-wise.
GM Reconciliation Data collection error
5Entry was missing in GM record. Not updated in ERP record.
GM System data not updated timely
6Material with Same part number sent to two different suppliers. Data collection was not done Supplier-wise.
Data collection error
7 The qty. was missing due to incorrect, damaged packaging.
Transportation issue
8Material Dispatched to other customer than GM India. Incorrect entry made by supplier.
Data Not maintained by supplier accurately
9GRN Record not maintained in GM ERP System . Reason to be further investigated.
GM System data not updated timely
10 Entry not maintained in Supplier record. Manual Error. Data Not maintained by supplier accurately11 Shipment cancelled & not reversed. GM System data not updated timely
12
The entries were made at a time when Shipper Cut system was not in use in GM. Instead material was transacted on RGP. So no Shipper cut entries maintained in ERP system.
GM System data not updated timely
Table 6.1: Reconciliation Discrepancies Reasons
Following is the chart showing the major reasons of discrepancies and their frequency.
Figure 6.1: Discrepancies reasons Frequency Bar Chart
The four major categories of reasons for the discrepancy are :
1. GM System data not updated timely
2. Data Not maintained by supplier accurately
3. Material damage during Transportation
56
4. GM Reconciliation Data collection error
The Action suggested to avoid the above found reasons of discrepancies are :
1. To update & refine the GM system data of Sub-contracted parts on periodic basis i.e.
monthly.
2. The Suppliers need to maintain the data accurately. Incorrect Entries or additional
entries can be rectified by monthly review of the Reconciliation data provided by the
Suppliers.
3. The damage of material is one of the case as there is sufficient care taken to avoid it.
4. The GM Reconciliation data was collected part number- wise as it can be collected in
that manner only in the existing system. It should be tried to or a provision should be
made in the system to maintain the dispatch & receipt data Supplier wise.
6.3 Savings & Treatment of the Discrepancies:
Table in APPENDIX- E shows the saving affected for the organization by completion of this
project. The summary of saving is as shown below.
Third Party Stocks Reconciliation - Savings Summary
1,14,998.88
ERP System
NA
Invoice Value
1,59,576.71
1,511.70
75,855.03
6,84,482.92
7,792.44
3,76,830.05
1,40,29,922.52
10.15
7.41
NA
Remarks
Debit on supplier
ERP System
Debit on supplier
ERP System
Debit on supplierDebit on supplier
saving %
15.46
NA
2.79
NA
18.51
6 UFI Filters India pvt Ltd
7 SHRINIWAS ENGINEERING AUTO COMPONENT PVT. LTD.
8 MARK IV
3 CIKAUTXO TAURUS FLEXIBLES PVT LTD
4 Magneti Marelli Motherson Auto Systems
5 MEHTA ENTERPRISES
Sr. No
Vendor Name
1 ENDURANCE SYSTEMS (INDIA) PVT LTD
2 CONTINENTAL ENGINES LIMITED
Table 6.2: Savings Summary – Third Party Stocks Reconciliation
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The discrepancies are treated in following manner:
1. The discrepancies found are either positive or negative.
2. Positive discrepancies are scrutinized & after finalization of such discrepancies, the
ERP system adjustments are done to reconcile the stocks records.
3. Negative discrepancies are scrutinized & negotiated with vendor for debit on the
supplier for the negative inventory with supplier.
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7.0 SUGGESTIONS & FUTURE SCOPE
This section addresses the improvements that can be done in the existing practices of
Stocks/Inventory Reconciliation as a part of Continuous Improvement (which is an
element of GMS).
Following are the suggestions that can be considered for implementation in near
future:
1. Monthly Reconciliation:
i. The reconciliation Process part-1 & part-2 of the Proposed Sub- Contracted parts was
carried out under the timeline of two months. Collecting the data and resolving
discrepancies after a long time period of 6 to 10 months was a time consuming &
complicated process.
ii. Reconciliation of all the parts can be less complicated if it is an ongoing activity
conducted after every month. Hence, the Reconciliation of sub-Contracted parts is
proposed to be done every month after the month end.
iii. This will need a good support from the Suppliers as well. Intimating the same to the
suppliers & getting the activity done will make this process stronger.
2. Format Improvement:
i. In the Reconciliation Format , provided to the suppliers, as shown below , there can
be an additional information collected which is the Proof of Delivery for the material
Delivered to and from the Suppliers.
ii. In the ‘In-use’ format, there is no confirmation of delivery of material taken from
Supplier in case of child parts & the GM in case of Parent parts.
iii. So this becomes a individual and bigger task in the reconciliation process to confirm
the data of supply & receipt of material.
iv. If a GRN proof is included in this format in the form of GRN No. of Supplier & GM
respectively for child & Parent part, it will become a Self-Confirming format of
reconciliation.
v. A demand should be made to the suppliers to strictly complete the proposed
Reconciliation format before submission at the end of each month.
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vi. Further there is a scope to maintain the Rejection data& treat it accordingly in
monthly Reconciliation data which is not completely followed in the ongoing
Reconciliation by the Suppliers in the format being used.
Sr. No. RGP RGP DT Inv. No. Qty. Despatch
DateRemark about Mtl.
ReceiptSr. No. Inv. No. Qty. Invoice Date
1 if RGP material if Invoice matrl 12 23 34 45 56 67 78 89 9
10 10
Total Qty Receipt 0
Opening Stock as on 01.01.2012 ATotal Invoice Qty. BTotal Dispatch Qty. CBalance Qty. as per records D D = A + B - C
Total Qty Dispatch
Reciept(Invoice) Details of Child Parts from GMI (PT) to Supplier Dispatch Details of Parent Part from Supplier to GMI (PT)
Child part Number & name: Parent Part Number & Name:
GMIPowertrain
Figure 7.1: Reconciliation Format ‘in use’
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Sr. No. RGP RGP DT Inv. No. Qty. Despatch
DateRemark about Mtl. Receipt
Supplier GRN Details
Sr. No. Inv. No. Qty. Invoice
DateGM GRN Details
1 if RGP if Invoice 12 material matrl 23 34 45 56 67 78 89 9
10 10
Total Qty Receipt 0
Opening Stock as on 01.01.2012 ATotal Invoice Qty. BTotal Dispatch Qty. CBalance Qty. as per records D D = A + B - C
Total Qty Dispatch
Parent Part Number & Name:
Dispatch Details of Parent Part from Supplier to GMI (PT)
Reciept(Invoice) Details of Child Parts from GMI (PT) to Supplier
Child part Number & name:
GMIPowertrain
Figure 7.2: Proposed Reconciliation format
3. Partial adoption of Perpetual Inventory System:
i. Adopting Perpetual Inventory System will provide up to date information with live
updates as and when new material flow takes place & continuous reconciliation.
ii. In a Perpetual inventory method, each purchase, sale or adjustment is recorded and
reconciled with the General Ledger Account maintained in the system.
iii. Though it is applicable for companies with unique & individual inventory products, in
an automobile Industry with large number of parts being handled in inventory, this
system can be adopted up to a large extent by making continuous updates in material
inventory and reconciling it to the accounting data of the system.
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8.0 OTHER AGGIGNMENTS
8.1 Short Lead Time (GMS- SLT) audit:
The short Lead Time is one of the Principles of Global Manufacturing System (GMS), the
lean manufacturing system developed & used by GM. The Power-Train Plant at Talegaon,
Pune had implemented the GMS from its beginning of Operations in November 2010. As a
part of periodic Audit of the GMS implementation, an External Audit was planned in the
month of August 2012 in Power-train plant.Before the external Audit, an Internal Audit was
carried out in the month of July 2012.
8.1.1 Internal Audit for GMS –SLT implementation:
For conducting the External Audit for GMS (SLT element) implementation following steps
were followed:
i. The GMS document provides overall guidelines for implementation & continuous
operation of each element like SLT.
ii. The entire SLT guidelines under GMS have 32 elements as requirements for complete
implementation of SLT.
iii. The 32 elements are divided into sub-elements in the form of actions to be taken to
address the requirements.
iv. The owners of the actions are identified as per the department responsible for the
Processes i.e. Supply Chain, Stores, Production line, logistics etc.
v. The required actions are documented in-detail after a thorough discussion with the
owners of various actions.
vi. The expected target dates are decided for the completion of various actions.
vii. The Daily-Audit was conducted to ensure completion of actions at their target dates.
viii. The incomplete actions on their target dates were reviewed & if required New target
dates & required action plan was decided.
ix. After the completion of each action an evidence is maintained.
x. After completion of Internal Audit, it is ensured that the procedures are followed
regularly by Daily Audit.
xi. After continuous monitoring of the SLT actions being followed, the Final audit is
conducted on the pre-planned time.
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8.1.2 Action Plan for GMS –SLT implementation:
The requirements of the GMS-SLT are shown in APPENDIX- C.
The action plan used for Internal as well as External GMS –SLT Audit is shown in
APPENDIX – D.
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APPENDICES
I. APPENDIX – A
Data used for Reconciliation Analysis
II. APPENDIX –B
Stocks Reconciliation Discrepancy Analysis Chart
III. APPENDIX – C
GMS-SLT Requirements
IV. APPENDIX –D
GMS – SLT Action Plan
V. APPENDIX – E
GMS – SLT Savings Chart
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REFERENCES
Books:
Supply Chain Logistics Management - Bowersox, Gloss & Cooper
Logistics Management – The Supply Chain Imperative – V.Sople