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PRODUCTION DEPARTMENT
Production DepartmentProduction is the process by which, raw
materials and other inputs are converted into finished products. It
involves many functions such as manufacturing process, product and
process design, plant layout, inventory control, plant maintenance,
etc. KRIBHCO has the Production Department in the Plant Premises
and it works in harmony with the Marketing Department and
Transportation Department as well as all other departments. It also
includes Stores and Purchase Department which take care of all the
materials used in the production process. UREA PLANT
UREA- PLANT
Installed Capacity - 2 x 1310 MTPD
Process Licensor- Snamprogetti
Process Technology- Ammonia Stripping
Raw Material- Co2 and Ammonia
Urea Plant-Process DescriptionThe Ammonia and carbon dioxide
produced in Ammonia Plant are again made to react to form first
Ammonium carbamate and then to Urea. The concentration of urea is
progressively increased by the decomposition and separation of
Ammonium carbamate the melt urea of 99.8% concentration is sprayed
in a prilling tower through revolving bucket. The solid particles
of prilled urea are packed in 50 kg polythene lined urea bags. For
recovery of Waste water the following facilities have been
provided.In the waste water treatment section, the urea bearing
waste water containing 0.98 % urea and 4.76 % ammonia is treated in
deep urea hydrolyser with 37 data steam, which recovers carbon
dioxide and ammonia from waste water and recovered materials are
recycled back to the process. This treated water is sent to DM
plant for production of boiler feed water after polishing. One
effluent collection pit has been provided for collection of floor
washings and occasional waste which is treated separately in
Centralized Effluent Treatment Plant. Quality Norms for Urea: The
Fertilizer Control Order (FCO) 1985 of the Government of India
states that any fertilizer, including urea, that does not meet the
quality norms in the FCO cannot be sold for use in agriculture. As
per FCO, besides specifications, urea shall have N content of 46%.
Not less than 90% of the particles should pass through 2.8mm IS
sieve and not less than 80% by weight shall be retained on 1.0 mm
IS sieve, with a tolerance limit of 0.20 unit for N content and 3
units for particle size.Our Urea always meets the quality norms.The
process steps are:CO2 Compression
High Pressure Recovery
Medium Pressure Recovery
Low Pressure Recovery
Urea Purification
Urea Prilling
Waste Water Treatment
Urea Plant -Process Flow Diagram
Urea Plant-Process Flow Diagram
BAGGING PLANT
Bagging Plant
Prilled Urea is sent thorough conveyors to Bagging Section, for
packing in 50 kg HDPE bags. Road-Map of the plant (for reference)
is placed here-below:
Inventory Control TechniquesInventory Control is a term that
refers to control of all factors that affecting the materials. It
starts with obtaining materials and ends with consumption. Material
control is a systematic check over procurement, storage and
consumption of material so as to ensure minimum wastage, wvwn flow
of materials and minimum investment in inventory.To know the
practical use of various inventory control techniques in KRIBHCO.
Following Inventory control techniques were studied and evaluated
are:1. Codification System2. Standardization3. Determination of
inventory level4. Classification of inventory
EXISTING CODIFICATION SYSTEM IN KRIBHCO:KRIBHCO has adopted
Kodak system of codification, which is based on mine group
codification system. First two digits have been used to codify main
group. Remaining seven digits have been used to codify all the
specifications in that group. The main groups have been sub-divided
in the following four categories for easy segregation of
materials.
CATEGORYMAIN GROUP NO.
1. General stores00 TO 49
2. Electrical equipments and spares50 TO 63
3. Instrumentation equipments and spares64 TO 80
4. Electrical equipments & spares 81 TO 99
BASIC STRUCTURES IS GENERALLY IN THE FOLLOWING BASIS:
GENERAL STORES (00TO 49)
DIGITS
IIIIIIIVVVIVIIVIIIIX
MAIN GROUP
SUB GROUP
SPECIFICATION/MATERIAL OFCONSTRCTION/THICKNESS
SIZE OF ITEMS
ELECTRICAL AND INSTRUMENTATION
EQUIPMENT & SPARES 50 TO 63 AND 84 TO 80
DIGITS
IIIIIIIVVVIVIIVIIIIX
MAIN GROUP
MAKE
TYPE
SPECIFICATION
ITEMS
ELECTRICAL EQUIPMENT & SPARED (81 TO 99]
IIIIIIIVVVIVIIVIIIIXDIGITS
MAIN GROUP
PLANT CODE
SPECIFICATION/EQUIPMENT/SIZE/RATING
SUB ASSM / CONSTRUCTION
SPARE PARTS / S. NO.
The codification system has been introduced in KRIBHCO from 22nd
December 1984 only. The detailed catalogue against each main group
is still under preparation and is to be circulated on its
operation. The existing codification system has the following
advantages.Avoidance of supplication due to multiple names, long
description of the items and storing of the same items under
different names is avoided. Easy to identify. Reduction in clerical
work.The objective of any inventory control system is to determine
total number of item to be stocked, keeping necessary records,
finding out of selected items & trying to obtain a specific
answer as to When to order? & How to order? is answered in item
of fixed order quantity known as economic order quantity.
Standardization
A standard is a norm or a model or a general agreement of a rule
established by authority, Consensus or custom, created and use by
various level of interest. The object of stander is to bring about
uniformity in a certain sphere to crate a certain habit, pattern,
system or rule. Standardization is the process of defining as to
what would be the norm. One of the reasons for high inventory in a
large number of organizations is that they keep large number of
item under stock having very little variation in dimension, quality
or functional effectiveness. It, therefore becomes necessary for
the organization to resort to standardization thereby reducing
varieties without much affecting the performance and thereby
reduction in inventory.
The process of standardization logically leads to simplification
or variety reduction which implies reducing unnecessary verities
and standardizing the most economical sizes, shapes, colors, types
and so on. Fever the items to be controlled, the simpler and more
efficient is the materials management process.One of the main
advantages that accrue from codifying materials in stock is that
once immediately notices a large variety of material to one other.
Standard parts are those, which can be used, in different product.
Examples of stander parts should be used as they are more readily
available and are usually cheaper.
DETERMINATION OF INVENTORY LEVELS:The Inventory level concept
considers store keeping as profit intensive service to production.
Store keeping should contribute directly to profitability and be
concerned with such matter as flow, lead time storage cost,
acquisition cost, material handling, preservation, packaging and
dispatches.In the same way that specification is related to
technical needs, so, general level of stock should be related to
the sales and production policies of the company.There are various
levels of stock, which are established by the KRIBHCO, is as
follows MINIMUM STOCK LEVEL:This is the level at which any further
demands upon the bill will necessary withdrawals from the reserve
stock. The minimum stock is converted to meet exceptional
conditions of demand.Two months usage (consumption) of material
(stocks) taken into consideration by the KRIBHCO as a minimum stock
level. MAXIMUM LEVEL:This is the level above which the stock should
not be permitted to raise. Eighteen months consumption of stocks
(material) taken into consideration by the KRIBHCO as a maximum
stock level. RE ORDER LEVEL:The point of which the order has to be
placed. The reorder level may not always be numerically equal to
the economic order quantity. It should be regularly reviewed for
paid moving items. For fast factors as change in demand, delivery
times or variation in trend.Eight months consumption of stocks
(material) taken into consideration by the KRIBHCO as a reorder
level.To justify these different kinds of level in December 1985
with the codification system, KRIBHCO established Inventory cells.
KRIBHCO also appointed four export of the USAGE OF MATERIAL STOCK
IN THE USER DEPARTMENT. Based on their experience and consumption
of material stock within the four years, from the year 1989 these
different types of stock levels are established. EXISTING
CLASSIFICATION OF INVENTORY
The existing classification system is based on its use, i.e.
inventories classified as stock items and non-stock items.The list
and amounts of stock and non stock items is described in
Annexure-The existing system keeps strict control on the item that
are of recurring nature. It takes in to consideration only the
amount use of quantity not in value. While for non-stock item low
control is being kept. This system has following shortcomings.The
classification gives importance to only those items, which are of
recurring natures. It excludes from the control point of view the
items that are high value in stock.It considers the quantity used
not the money value of the material used.
Control kept on stock items a give equal weight age to all
items, which neglects the benefit of selective control
technique.
Considering the practical use of classification techniques, two
important methods are suggested as follow.
1. ABC classification 2. VED classification3. Just-In-Time
Inventor
1. ABC ANALYSIS:In KRIBHCO inventory has been classified in to
three groups. The classification is based on annual consumption
value.A (High Value above 50000 Rs.) class like a heavy bearings,
heavy pickings, tor steel, metals, heavy electrical spares, empty
bags etc..The expected future consumption should be estimated in
advance and procurement be on planned basis.B (Medium Value up to
10000 to 49999 Rs.) class item general bearings, general packing,
chemicals, resins fire and safety items etc..Order Quantity ROL and
safety stock should be fixed with consumption review once or twice
in a year. Review should be less frequent as compared to a class
item and be at the middle level.C (Law Value below 10000 Rs.)
general items... Stock may be maintained for 12 month or more
advantage of quantity purchase should be obtained for such low
value items. Review should be after large interval and control at
the lower levels.A CLASS ITEMS10% items of total inventory70%
consumption of vale of total inventories
B CLASS ITEMS20% items of total inventory20% consumption of vale
of total inventories
C CLASS ITEMS70% items of total inventory10% consumption of vale
of total inventories
As per the ABC ANALYSIS inventory in KRIBHCO on the year of
2009-010 as below:CLASSTOTAL ITEMSVALUE
A Class Items (2 month inv.)220 ITEMS3874180.06 Rs.
B Class Items (4 month inv.)412 ITEMS1439054.80 Rs.
C Class Items (6 month inv.)915 ITEMS 834532.22 Rs
Minimum inventory considering the levels and also stock out
looses in the company, however as per the FICC norms company can
have 04 months inventory. However the level shall be review
considering the consumption pattern. 2. VED ANALYSIS:
VITAL ITEMSLED TIME: FEW MONTHSItem of proprietary Nature.Only
single manufacture. Its substitute is not available.Tailor made
items/ capital goods.Imported items and Insures spares.Probability
of years rare ONCE IN LIFEProbability of high consequential
looses.Usually, high cost of item. Probability of obsolesces very
real. If the materials not available, than total production stopped
at the time.
ESSENTIAL ITEMS LED TIME: FEW DAYSItem of regular production and
easily available with manufacturer.Chemicals, general bearings,
fasteners, valve, pipe fittings, welding materials, paints,
refectories etc.If the materials not available than same may be
production affected in future
DESIRABLE ITEMSLED TIME: FEW HOURSFor the sales available from
ready stock. Ready available in local market.Continues/ frequent
requirement consumables, expendables.Small nuts bolt, emery papers,
GI fittings, lubes, lab ware, general stationeries, hand gloves,
marketing cloths etc..If the materials not available, than same may
production affected in future after long time. The following
measures are suggested to reduce the inventory holdings by
society:i. Quantity disciplineii. Time disciplineiii. Stock
available at the time of intendingiv. Utilization of
alternatives
3. Just-In-Time Inventory:JIT, Just-In-Time is a term usually
thought of as describing inventory arriving or being produced just
in time for the shipment or next process. JIT is a process for
optimizing manufacturing processes byeliminating all process waste
including wasted steps, wasted material, and excess inventory. The
term also describes lean manufacturing that is dependent upon JIT
inventory systems (Term=JIT). The term is commonly referred to the
concepts of Taiichi Ohno from the Toyota Motor Company in Japan
regarding production. Just-In-Time inventory systems depend upon
logistics that include: transportation, warehousing and several
strategies for handling the potential supply chain uncertainties.
Just-in-time is easy to grasp conceptually, everything happens
just-in-time. Conceptually there is no problem about this; however
achieving it in practice is likely to be difficult.
CLASSIFICATION OF INVENTORIES:Inventories can be classified in
terms of its different uses, which will enable one to appreciate
the peculiarities and problems in its uses. Secondly the
differentiation based on uses of inventories will enable one to
adopt control techniques to suit the needs.
Inventories are classified according to uses and point of entry
in the alteration is as follows: Raw Material Stores, Spares and
Consumables Work in Process Goods and Finished Goods
1. RAW MATERIALS: Raw materials are those basic input materials
that are converted into finished product through manufacturing
process. The importance of raw materials can be easily visualized
when any break in its supply will keep the production lines ideal.
There are two important factors, which determine the size of raw
materials Inventory.i. Consumption rate and ii. Importance of
item.Under the head of the raw material maintained in fertilizer
company KRIBHCO are Carbon Di Oxide, Ammonia, etc.
2. STORES AND CONSUMABLES:Consumables:There are the materials
which at as catalysis in the production process and are not
directly found in the output. This enables the production process
to function smoothly. Fuel, oil etc are the example
consumables.Spares:Spares are an importance class of inventories by
themselves. Then consumption pattern defers from that of raw
materials, consumables and finished goods, consequently the
stocking polices are different necessitating special methods for
solving their peculiar Inventory problems.Spare parts can be
classified as routable spares, insurance spares, capital spares,
maintenance spares and over handling spares etc.
3. WORK IN PROCESS GOODS: They represent products that need more
work before they become finished products for sale. Work in process
goods acts as a buffers within the manufacturing sub-system, which
may consist of group of machines and assembly lines, i.e. work
centers. The greater the period of process, there will be more
amounts of manufacturing activities.
4. FINISHED GOODS: Finished Goods Is the Final or Stable
Product. Which act as a buffer between the production department
marketing dept. the level of inventory depends on the production
and behavior of the market. Normally these Inventories are
controlled by the Marketing Dept. Urea Is the Final Product of
KRIBHCO.
Receipt ProceduresAll incoming goods must be received in receipt
section and after making necessary documentation and paper work
goods should be delivered for its custody or other destination.
During that period same shall be identified and kept in separate
specified place to prevent any misplacement/pilferage or mix
up.
1. Verification of QuantityPacked materials are opened and
verified with challan or bills accompanied with the lost and the
same is matched with P.O. and also P.O is progressed
simultaneously.
2. Daily Receipt ReportA report indicating `SRV reference of all
the individual consignments on daily basis are being circulated to
the purchase section/indenter/user for management information of
its arrival and arranging inspection of the same.
3. Inspection and Discrepancy ReportIn order to ensure quality
for all the incoming material with the help of skill, personnel,
material is offered for inspection. The normal methods used are by
visual, by touch, by smell, by comparison, by actual testing,
Laboratory methods - ISI test etc. This is to determine the
acceptability of the article received. Item rejected in inspection
and observation regarding any deviation in quantity/condition is
recorded separately in a register called MATERIALS EXCEPTION
REGISTER, all these information also simultaneously sent to the
purchase indenters and the supplier through a report. It is called
MATERIAL EXCEPTION REPORT. The custody of rejected items remains
with receipt section till it is disposed of as per the instruction
of purchaser, indenters and looking to its status of payment
respectively. The action for disposal may be one out of the details
as under:
a)Items to be returned to the supplier/Insurance company.b)Items
accepted later with some deviation and or reduction in price with
or without rectification. c)Item is scraped and or destroyed.4.
Claim for Loss/damage to the Material in TransitThe losses are
liable for recovery either from the insurance company or from the
vendor or from the carrier and to materialize of the same claim are
lodged on the carrier/vendor, whosoever handled/brought or
dispatched the material with the supporting documents. In our case
Open Marine Policy theyre with insurance company. All incoming
materials consigned to KRIBHCO is covered under the policy and
claim may be lodged on the merit i.e. as per terms and conditions
stipulated in the purchase order. The claim is then followed up
till recovery of the loss is made from the defaulter. Centralized
Claim Register is maintained for the purpose. 5. Legal
ActionWhenever Kribhcos claims are pending i.e. on the event of
carrier/vendor not settling the claim under stipulated or
reasonable time period, a suit against them may be filed in
consultation with legal advisor and with the managements
consent.
Procedure for Material Issue:The issue system relates to
function of issue card and inventory control section of stores. It
covers all material stocked by the KRIBHCO stores and raw materials
directly stored by the users. It begins with the preparation of
issue voucher and with their submission to accounts departments.1.
Materials are issued against SIV, Foemat signed by authorized
persons.2. SIV and type of transaction will be checked.3. Quantity
on hand and location of the items will be noted on the SIV for
respective item.4. Quantity to be issued is decided based on type
of material require.(a) If require material is stock Item, then
quantity is issued is depending on stock available.(b) If require
material is Non-Stock item, it can be issued fully.(c) If require
material is of Reserved material category then entire reserved
material can be issued to that particular department.
Existing Purchase Procedure in KRIBHCOTo study the existing
purchase system, the purchase procedure followed by the purchase
department have been analyzed and evaluated on the basis of
observation and discussions with concerned personnel of KRIBHCO is
as follows:
1. Responsibilities of the purchase functions are,The purchase
department issues the material manager purchase orders/ contract
after the approval of the competent authority. The purchase
function in other offices (like head office at NEW DELHI and its
various branch offices) is headed by the single officer designated
for that purpose. The indenters from various departments are
issuing inquiries, inviting bids, entering into correspondence or
negotiation with vendors / contractors. All requisition for purpose
is duly processed in accordance with procedure laid down, which is
forwarded to purchase department for necessary action.
2. Registration / Selection of Suitable Vender:Purchase
department is responsible for developing a list of approved vendors
for various types of materials and service as per procedure. An
advertisement is issued in all the leading news papers inviting
applications in the prescribed Performa for registration of
suppliers and contractors for listing out of various types of
purchase and service that are likely to be made during the next
three to five years. The application received are scrutinized by a
committee consisting of a representative from technical, finance
and purchase department nominated by General Manager and
ascertained the resources, capacity and quality of workmanship of
the vendor. The committee also calls the vendors and contractors
for personnel discussion and clarifies the applications and obtains
such other information as may be considered necessary by the
committee.The list of approved vendors and contractors as to be up
dated at least every five years by issuing a press advertisement.3.
Requisition to Purchase: The indenters from various departments are
raising a requisition called the Material Purchase Requisition
(MPR) for purchase in the prescribed Performa. It should be ensured
that the requisition for purchase is completed in all respect with
regard to.(a) Description of the material / equipment / scope of
work.(b) Material of construction / specification.(c) Temperature /
pressure / standard if anywhere applicable.(d) Quality and chit of
measurement.(e) Date when delivery of material / service is
required.(f) Estimated value and budget head.(g) Whether item is a
stock item / non - stock item and fast moving / slow moving.The
requisition for purchase of stock items is raised by the stores
department after the quality in stock-.has reached the re-order
level as determined for the respective items. Such requisition
amongst other-particular also indicates the minimum, maximum and
reorder level, the date on which last supply was received and
average consumption per month since last purchase.The requisition
for purchase of non-stock items is invariably routed through the
stores department which indorses on the requisition the
availability / non-availability.In case item is available the
quantity thereof is indicated on the purchase requisition and the
quality to be purchased is adjusted by the materials manager in
consultation with the indenter.All requisitions for purchase of
materials or for award of work is raised by respective departments.
The department manager ensures the following particulars in the
purchase requisitions.(a) The budget provisions.(b) The amount
utilized up to the previous requisition.(c) The estimated value of
the present requisition and(d) The balance available under the
budged head after booking the present requisition.The requisition
is submitted to the competent authority for approval of purchase
after filling the above information. After the approval of
requisition, the same is passed on to the purchase department for
inviting bids.
4. Purchase Function after Receipt of MPR:To enter requisition
in indent register, the requisitions are checked for specification,
quality, code numbers, budget heads etc. This number is entered on
all the four copies of indent, one copy is for action by purchase
department, second copy is sent to Finance department, third copy
is returned to indenter, and fourth copy is retained in the
purchase department's master file.5. Floating Inquiries:Purchase
department issue inquires to approved vendor or press advertisement
depending upon value of purchase which is followed as per the
following guideline.
Estimated value of purchase order / work order/contractMinimum
of vendors to whom inquiry to be issuedMinimum No. of bids to
be
obtained.
UptoRs.20,00,000/-53
Exceeding Rs 20 ,00,000/`All suppliers on the approved list3
This has been prescribed by the KRIBHCO so that a healthy
competition amongst bidder to procure materials at the most
economical price.Quotation Comparison Statement:At this stage a
statement called Quotation Comparison Statement (QCS) is prepared
by the purchase department.Then after the bids lowest in value is
rated in the QCS as lowest (L1), second lowest (L2), Third lowest
(L3), etc.The purchase department sends the QCS to the indenters
and tender committee for review and recommendations.6. Purchase
Order / Work Order:The recommendation of the tender committee is
routed though the finance department to enable them to record the
value of commitment in the budget records confirms availability of
funds under the approved budget and also record financial
concurrence.As soon as the recommendation of tender committee is
approved by competent authority, the purchase department issues
purchase/work order to the recommended successful bidder.The
purchase department is responsible for following up of the purchase
order/contracts with vendors and transporters until the material is
reached and accepted at the plant/stores.On receipt of materials at
plant site/stores, the stores department will fill up the store
receipt voucher and arrange the inspection from the inspection
department or indenters, as the case may be necessary.
7. Terms & Conditions:The existing purchase procedure gives
fair chances of competition to all the vendors. It leaves no room
for malpractice of favoritism of employee. In time of urgency of
requirement, necessary deviations are approved by competent
authority so as to avoid stoppage of work. The procedure is based
on democratic way of working. Good suggestions to improve
efficiency are always considered. Various annual rate contract,
running contracts are entered for regular consumable items, like
oil and lubricants, stationary, chemicals, medicines, printing job
etc. This is reducing the repetitive job times and money of
company.