Supply Chain Management- Inventory Control

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CHAPTER-1

INTRODUCTIONSupply chain management addresses the management of materials and information across the entire chain from suppliers to producers, distributors, retailers, and customer. In the past few decades, scholars gave ample attention about the impact of inventory on Supply Chain Management (SCM).Traditionally; each company performs purchasing, production and marketing activities independently, so that it is difficult to make an optimal plan for the whole chain.

Roughly speaking, research on supply chain management has been mainly focused on three major issues. One is the behavior of information flow; the second issue deals with inventory management; the third issue is orientated to planning and operations management. In this paper the second issue, namely inventory management will be discussed. The author will follow the phases of classifying inventory; Identify cost factors; Assess cost components; Calculate EOQ; Giving suggestion and effect of inventory on supply chain will be discussed. The conclusion is when optimizing the inventory management, both up stream and downstream activities will run effectively.

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There is a Chinese proverb saying, if you want to defeat an army, frustrate the chief first. It is also suitable for business fight. As a recently research shown, inventory cost account for 30% of the total capital cost. As matter of fact, successful inventory management is often the momentous symbol of competition victory and a well run organization. Inventory can range from raw materials, cash, finished goods, etc. Effective inventory management will optimize the supply chain, eliminate cash flow and reduce the possibility of occurrence on inventory shortage caused by variable orders. Consequently, it is of utmost importance to optimize inventory management to satisfy the companys strategy goal.

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CHAPTER- 2

HISTORYBACKGROUNDSupply chain management addresses the management of materials and information across the entire chain from suppliers to producers, distributors, retailers, and customers. Traditionally, each company performs purchasing, production and marketing activities independently, so that it is difficult to make an optimal plan for the whole chain. In recent years, it has been realized that actions taken by one member of the chain can influence all others in the chain (see, for example, T.J.Peters 1982; Riddalls 2002). More and more companies have gradually recognized that each of them serves as part of a supply chain against other supply chains in terms of competition, rather than as a single firm against other individual firms. Since 1990,as the information technology has continuously developed, it is possible to coordinate all organizations and all functions involved in the whole chain. Consequently, supply chain management has been increasingly receiving attention from both academic researchers and practitioners. Roughly speaking, research on supply chain management has been mainly focused on three major issues. One is the behavior of information flow through a supply chain(see, for example, Lee et al., 1997). The second issue deals with inventory management, which regards a supply chain as a multiechelon inventory system (see, for5

example, Axsater, 2000a; Zipkin, 2000, and the cited references in them). The third issue is orientated to planning and operations management of a supply chain based on queuing systems. (See the most related works, for example, Raghavan and Viswanadham, 2001; Song and Yao, 2002).In this paper the second issue, namely inventory management will be discussed. There is a Chinese proverb saying, if you want to defeat an army, frustrate the chieffirst. It is also suitable for business fight. In the past few decades, scholars gave ample attention about the impact of inventory on Supply Chain Management (SCM).As a recently research shown, inventory cost account for 30% of the total capital cost. As matter of fact, successful inventory management is often the momentous symbol of competition victory and a well run organization.

Problem discussionInventory can range from raw materials, cash, finished goods, etc. Effective inventory management will optimize the supply chain, eliminate cash flow and reduce the possibility of occurrence on inventory shortage caused by variable orders. Consequently, it is of utmost importance to optimize inventory management to satisfy the companys strategy goal. Lee et al. (1997) describe a problem frequently encountered in supply chains, called the bullwhip effect: demand variability increases as one move up the supply chain.

Problem presentationA company may save logistics costs and simultaneously improve service levels by redesigning its supply chain network. Unfortunately, because of the many complex logistical issues involved, it is generally difficult to analyze large systems in their entirety. Considering the uncertainty of lead time and demand, firms in practice have to encounter decision making challenges to minimize the effect caused by uncertainty in the most cost saving way. In manufacturing and planning safety stocks and safety lead time is included in the systems. Safety stock is a buffer of6

stock above and beyond that needed to satisfy production and gross requirements. Safety lead time is a procedure whereby purchase orders are released and scheduled to be delivered one or more periods before necessary to satisfy production or customer demand (Vollmann, Berry, Whybark, 1997).If uncertainty of demand and lead time cannot be evaporating, can it be minimized? Reducing lead time will eliminate uncertainty factor as well as more accurate demand forecasting.

Problem formulationWhen the firms improve their inventory management, what is the reaction of other factors on supply chain? How to improve the inventory from cost effective perspective?

Purpose To understand the impact of inventory on supply chain. To get the knowledge about how manufacturing firms deal with the inventory from cost effective view. In a broader point of view, it is a cost reduction procedure that can have an impact on the economies of the company directly and on other department sin directly.

RelevanceThe relevance of this research is shown together with a motivation of why it is important to do research within the area of inventory management. This study is both theoretically and practically relevant because it involves a working procedure of how to be more cost effective within inventory management. According to the optimization of inventory management, production manager can easily coordinate other department so as to improve supply chain to enhance the competition of the firms.7

When it comes to dealing with inventory in your supply chain there is more to it than just straight inventory management and replenishment. To reach the highest service levels with the minimum amounts of inventory requires the use of an advanced technique known as inventory optimization.

What is Inventory Optimization? Starting a number of years ago, this term has begun to emerge in the realm of Supply Chain Management (SCM): So what exactly is Inventory Optimization?. One of the first and simplest definitions of Inventory Optimization is the following: Inventory optimization is an emerging practical approach to balancing investment and service-level goals over a very large assortment of stock-keeping units (SKUs) In contrast to traditional marginal stock level setting, inventory optimization simultaneously determines all SKU stock levels to fulfill total service and investment constraints or objectives.

Delimitations and limitationsThe study will be carried from the supply chain perspective; However the study area will be limited to the upstream of supply chain. The case company has no concrete method to calculate the inventory before. That means lack of information gathering.

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CHAPTER-3

COMPANY PROFILE

HISTORY

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MISSION STATEMENT:Endeavour to be the best and most efficient state of the art generating utility in the country producing reliable and adequate power at competitive and affordable rates

Koradi Thermal Power Station (KTPS) is located at Koradi near Nagpur, Maharashtra. The power plant is one of the four major power plants in Vidarbha a power surplus region of India. The power station began operations in 1974 and is one of the nine active power stations operated by Maharashtra State Power Generation Company Limited (MahaGenco), a subsidiary of Government of Maharashtra owned Maharashtra State Electricity Board (MSEB). The plant operates 7 units. 4 x 105 MW, 1 x 200 MW & 2 x 210 MW respectively and has a total power generation capacity of 1080 MW. First Unit commissioned on 03-06-1974 and Unit No.7 on 13-01-1983. The station was commissioned in early 70s under the National Policy of Govt. of

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India and has been functioning since then under various statutory obligations and guidelines of MoP, MoI, MoEF, CEA, and MERC. A proposed 440 kilovolt high power transmission line from Koradi to Bhusawal would join Nagpur with Mumbai. KTPS campus also contains training institute of MahaGenco for middle and senior level engineers, technicians and other staff. KTPS is located on the northern side of Nagpur and is spread across an area of 30,337 km2. Koradi Thermal Power Station engaged in the business of generation of electricity through coal based thermal process, is situated at about 11 Km North of Nagpur on the N.H. No. 69. Coal for KTPS comes from various nearby collieries of Western Coal Fields, Nagpur (WCL) located at Silewara, Pipla, Patansaongi, Kamptee, Inder, Walni, Gondegaon and Saoner. These are at an average distance of 10 kilometers (6 mi) away. The plant approximately requires 16,000 to 17,000 tonnes of coal per day. The station is well equipped with modern days high end machinery, high precision equipments for monitoring and measurements, auxiliaries, well equipped software and hardware enabled services, digital control systems, fire fighting systems, sophisticated pollution control systems, safety gadgets, fire monitoring & prevention system, security services. The station also renders services for its employees in way of residential premises, drinking water facilities, educational facilities, library, recreational facilities and medical services at large. Also facilities of canteen, guest house, and transport services are extended to the visitors. Other curricular activities like drama competitions, sports activities, external trainings, Environment day, Safety Day are carried out enthusiastically and to enhance motivation among the employees. The power generated by the station is transmitted over 400 KV & 220 KV transmission lines to meet the power demand of the Parent State States. and neighboring

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Based on its overall performance, the station has bagged the meritorious National Awards viz. Improvement in Generation of the Station for the years 1989, 1990, 1991 & 1995-96, Reduction in furnace oil consumption for the Years 1993, 1994, 1995, 1996, 1997, 1998, 1999 & 2000. The station has to its credit Environmental Excellence Award for the consecutive 4 years since 2004. The station has participated in various states/National level seminars of Quality Forum of India, Hyderabad and bagged National recognition as well as International recognition at Singapore in ITEX.

Formation of companyMaharashtra State Power Generation Co Ltd. (hereinafter referred to as The Company) has been incorporated under Indian Companies Act 1956 pursuant to decision of Govt. of Maharashtra to reorganize Erstwhile Maharashtra State Electricity Board (herein after referred to as MSEB). The said reorganization of the MSEB has been done by Govt. of Maharashtra pursuant to Part XIII read with section 131 of The Electricity Act 2003. MahaGenco has been incorporated on 31.5.2005 with The Registrar of Companies, Maharashtra, and Mumbai and has obtained Certificate of Commencement of Business on 15.09.2005. Mahagenco is engaged in the business of generation and supply of Electricity and has been vested with generation assets, interest in property, rights and liabilities of MSEB as per Gazette Notification dated 4th June 2005 issued by Industry, Energy and Labour Dept of Govt. of Maharashtra pursuant to section 131 of Electricity Act 2003.

VISION

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GENERATING FOR GENERATIONS * Endeavour to fully meet the future energy needs of the State and also create sufficient spinning reserves through Organic Value enhancing growth initiatives; * Diversify the energy portfolio to include solar, wind, gas, hydroelectric and responsible fossil generation directed towards shrinking our carbon footprints; * Commit to affordable energy rates through cost minimization and consistent Operational excellence and energy efficiency; * Value enhancement to the stakeholders by being nimble and resourceful in the economic environment, increase our business scope and scale to succeed throughout the economic cycles and adapting our business and portfolio to the dynamic energy market place; * Strive to improve the quality of life for the people who live and work in our operational territory and power plants vicinity.

TOTAL GENERATING CAPACITY OF MAHAGENCOSr. No. 1 Koradi TPS Thermal Power Stations 4 * 105 1 2 3 Nashik TPS Bhusawal TPS * 200 210 125 210 55 210 880 475 2 * 2 * 3 * 1 * 2 * 1040 Power Station Units & MW Total MW

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4 5

Paras TPS Parli TPS

1

*

55 250 20 210 250 210 210

305 920

1 * 2 * 3 * 1 * 4 * 4 *

6 7

Khaparkheda TPS Chandrapur TPS

840 2340

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3 * 500 Hydro power StationS Koyna Hydro Power Station 4 * 70 8 4 * * 80 250

1920

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Small Hydro Power Stations Gas Based power Station Uran G. T. 3 * 60 4 * Waste Heat Recovery (WHR) 2 * Total Installed Capacity of MSPGCL 108 120

424 612 240 9996

HIGHLIGHTS AND STRENGTHS

Large number of trained manpower. over an area of 1265 hectares Other supporting QA equipments. Efficient power backup for non stop working. Infrastructure ready for expansion. A good set up for all kind of tool room machines for in house An IMS certified company.

development of jigs and fixtures.

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PLANT IN OPERATING CONDITION

A proposed 440 kilovolt high power transmission line from Koradi to Bhusawal would join Nagpur with Mumbai.

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CHAPTER-4 18

RESEARCH METHODOLOGYIt is the systematic and objective analysis and recording of controlled observation that may lead to the development of generalizations, principle or theories resulting in prediction and possibly ultimate control of events. In a laymans term, research is an endeavor to find solutions / answers to problems intellectual and practical, through the use of scientific methods.

DATA COLLECTIONIn any report data is very important since it provides the information needed for analysis and interpretation. For this report two kinds of data are being used. They are:

Primary data:

Primary data are original data which are collected for first time for a specific purpose. Primary data were collected from the most prominent category of participants related to commodity market. Personal interview and telephonic interview were also taken. To maintain the consistency they were asked similar set of questions and responses have been collected.

Secondary Data:The methodology used in this project is detailed analysis of published financials by the company that is the Annual Report of the company. All the published data has used to extract the effect of inventory level on the profitability of the company, the source of data used in this study is secondary data. Books and Journals

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Industry Reports Internet

METHOD APPROACHESMethod can be approached in the following ways :

ABC ANALYSISThe ABC analysis follows the general principle of pareto analysis (Wilfredo Italy, 1896) which states that if any series of elements to be controlled, then a small portion of that series in terms of numbers will result in large portion in terms of effect.

The main idea behind the pareto analysis is that by doing 20% of work we can generate 80% of the advantage of the entire job. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%). This technique helps the individual to identify the top 20% of causes that needs to be addressed to resolve the 80% of the problems. The application of the Pareto analysis in risk management allows management to focus on the 20% of the risks that have the most impact on the project.(source : http://en.wikipedia.org/wiki/Pareto_analysis, 28 / 05 / 10)

ABC analysis can be defined as the analysis through which the materials can be classified as per the annual usage value of the material under group A, B and C. The group A consists of a very small portion of total number of items where as it consists of a large value of the total stock. The group B consists of a very large portion of total number of items and it consists of a very small value of the stock. The group B items lies between group A items and group B items. The A group20

items needs careful attention by the material managerial while the C group items require less attention by the material manager and the B group items lies under A group items and B group items.

Advantages of ABC analysis : This analysis helps or guides the materialmanager or the concerned person for the selective control due to which he / she can concentrate on the few items instead of being concentrating on lakhs of material. By concentrating on A class items only the material manager is able to show excellent results in a very short span of time. By controlling the A group items only and by doing proper inventory analysis, obsolete and surplus stocks are pinpointed. Many managers and officers from various organizations had claimed that ABC analysis not only helped in reducing the clerical work but also resulted in better planning and improved inventory turnover.

Limitations of ABC analysis : For the full and complete effect of ABC analysisit should be carried out with standardization ad codification which is based on the grading the items according to the importance of the performance of the item, that is by VED (vital, essential and desirable) analysis.

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ECONOMIC ORDER QUANTITY (EOQ)Economic Order Quantity is the calculating method used to determine the best level of inventory for production while being the most cost effective for holding and ordering. EOQ, as it is referred to, has been around since the rise of modern manufacturing processes back in the early 20th century. The first model for calculating EOQ was designed in 1913 by F.W. Harris. What EOQ basically does is determine the best point where the costs for inventory holding and ordering are at the lowest. This helps to determine the number of units of stock to order to re-supply inventory without spending too much money on overstock.

How Does EOQ Works?EOQ is not used in every type of business and industry. Most companies that deal with large volumes of stock use a form of EOQ. It is common in manufacturing where the ordering of stock is constant and repetitive. EOQ is primarily used for purchase-to-stock distributors and make-to-stock manufacturers. These are businesses that have multiple orders, release dates for their products, and have to plan for their components. Another type of business that uses EOQ are those that have maintenance, repair, and operating inventory (or MRO). Businesses that have a steady demand for stock are the most suitable for EOQ applications but some seasonal items can benefit from the method, too.

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How to Calculate EOQ?Economic Order Quantity must be calculated using a mathematical equation. By using a set of numbers for production, demand, and a few other variables, a companys inventory costs can be minimizes. Here is the equation for EOQ:

EOQ =

2DCo/Cc

Total cost = Unit cost of product* D + Co (D / EOQ) + Cc (EOQ / 2) The sub-components that make up the equation are as follows: Annual Usage This part is pretty self-explanatory. Based on units, a company simply enters the predicted annual usage amount. Order Cost This component is the sum of the fixed costs that occur every time an item is ordered. They are not associated with the quantity ordered, only with the actual physical act required to process the order. Also known as purchase cost or set up cost. Carrying Cost This part is the financial costs of carrying and storing inventory at or near the business. The amount is mostly made up of the costs associated with physically storing the inventory and the financial investment for the inventory. It is also referred to as holding cost.

CAUSE AND EFFECT DIAGRAMThe cause & effect diagram is the brainchild of Kaoru Ishikawa, who pioneered quality management processes in the Kawasaki shipyards, and in the process became one of the founding fathers of modern management. The cause and effect diagram is used to explore all the potential or real causes (or inputs) that result in a

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single effect (or output). Causes are arranged according to their level of importance or detail, resulting in a depiction of relationships and hierarchy of events. This can help you search for root causes, identify areas where there may be problems, and compare the relative importance of different causes. Causes in a cause & effect diagram are frequently arranged into four major categories. While these categories can be anything, you will often see:

manpower, methods, materials, and machinery (recommended for manufacturing) equipment, policies, procedures, and people (recommended for

administration and service). These guidelines can be helpful but should not be used if they limit the diagram or are inappropriate. The categories you use should suit your needs. At SkyMark, we often create the branches of the cause and effect tree from the titles of the affinity sets in a preceding affinity diagram. The C&E diagram is also known as the fishbone diagram because it was drawn to resemble the skeleton of a fish, with the main causal categories drawn as "bones" attached to the spine of the fish, as shown below.

Cause & effect diagrams can also be drawn as tree diagrams, resembling a tree turned on its side. From a single outcome or trunk, branches extend that represent major categories of inputs or causes that create that single outcome. These large24

branches then lead to smaller and smaller branches of causes all the way down to twigs at the ends. The tree structure has an advantage over the fishbone-style diagram. As a fishbone diagram becomes more and more complex, it becomes difficult to find and compare items that are the same distance from the effect because they are dispersed over the diagram. With the tree structure, all items on the same causal level are aligned vertically.

o To successfully build a cause and effect diagram: 1. Be sure everyone agrees on the effect or problem statement before beginning. 2. Be succinct. 3. For each node, think what could be its causes. Add them to the tree. 4. Pursue each line of causality back to its root cause. 5. Consider grafting relatively empty branches onto others. 6. Consider splitting up overcrowded branches.7. Consider which root causes are most likely to merit further investigation.

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MRP (MATERIAL REQUIREMENT PLANNING)

Material requirements planning (MRP) is the process of managing the manufacturing process by properly planning the production and controlling the inventory including sales forecast, sales of order and bills of material. Most of the MRP systems are software based while MRP can be conducted by hand also. It is a material planning methodology developed in the 1970's by making use of computer technology. This MRP is now evolved to ERP(Enterprise Resource Planning) An MRP system is intended to simultaneously meet three objectives:

Ensure materials and products are available for production and delivery to customers. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and purchasing activities.

MRP uses the following elements to plan optimal inventory levels, purchases, production schedules and more: a) Master Production schedule (MPS) :

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b) Bill of Materials (BOM) c) Quantity on Hand (QOH) d) Part lead Times e) Sales order Quantities / due dates f) Purchase Order Quantities / Due dates g) Scrap rates Benefits : By implementing the MRP can provide the following benefits.

Better competitive position Reduced overtime Reduction in excess inventory Reduced freight cost Improved plant efficiency High production quality Reduced lead time Reduced manufacturing cost Reduced purchasing cost Less scrap and rework

Scope of MRP in Manufacturing :Many of the manufacturing organizations facing the same problem day to day that the customer requires the product in a shorter period than the period actually takes to manufacture it which means that some sort of a good planning is required. Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. Making a bad decision in any of these areas will make the company lose money.

Problems with MRP system : One of the main problem in the MRP system isthe integrity of the data i.e the link between each data i.e if there is any error in inventory then the bill of material(BOM) data, production schedule and outputted data(GIGO : Garbage in garbage will also be incorrect.

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Second problem is that the time taken by a company to manufacture the product as per user specifies that the customer requires the product in a shorter period than the period actually takes to manufacture it.

JUST IN TIME (JIT)JIT is first developed and implemented by Japanese companies to produce a very high quality in the minimum time possible. This is a very different manufacturing philosophy than the traditional which the other countries generally used to follow. The main purpose behind this process is that to eliminate the wastage not only the conventional form of waste such as obsolete materials, surplus waste , rework and equipment downtime but also the waste like excess lead time, over production and improper utilization of space. The basic principle of this philosophy is to produce the necessary products at the necessary time by using the necessary quantity and necessary space at each manufacturing stage. In warehousing JIT can be implemented because it is very easy to use. The items can be split into two types :

Those using JIT. Those controlled conventionally.

The major items will be controlled by JIT as we earlier discussed the A group items under ABC classification with the high usage, more consistant demand patterns and significant benefits from inventory reduction. The cost savings produced by JIT are discussed below : 1. Smaller delivery quantity means small transport which costs considerably less, since the operating costs are reduced. 2. Frequant fixed route deliveries due to which regular plannig and management is not required.

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3. Discount on contracts can be very significant. 4. Careful planning so that delivery schedule is not altered in the last minute. There are many problems that the majority of Indian industry are currently facing and that problems to be tackled to implement JIT. Some of the problems are : 1. Reduction of set-up times. 2. Kanban System. 3. Delivery of exact quantity as per exact schedule. 4. Preventive maintenance. 5. Group technology.

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BULLWHIP EFFECTThe supply chain is a complex group of companies that move goods from raw materials suppliers to finished goods retailers. These companies work together when meeting consumer demand for a product; supply chains allow companies to focus on their specific processes to maintain maximum probability. Unfortunately, supply chains may stumble when market conditions change and consumer demand shifts.

DefinitionThe bullwhip effect on the supply chain occurs when changes in consumer demand causes the companies in a supply chain to order more goods to meet the new demand. The bullwhip effect usually flows up the supply chain, starting with the retailer, wholesaler, distributor, manufacturer and then the raw materials supplier. This effect can be observed through most supply chains across several industries; it occurs because the demand for goods is based on demand forecasts from companies, rather than actual consumer demand.

o Forecasting ErrorsWhen companies enter new products into the marketplace, they estimate the demand of the good based on current market conditions. Most companies in the supply order more than they can sell, attempting to prevent shortages and lost sales of goods. This "extra" inventory begins to increase or decrease during the normal market fluctuations of supply and demand. When demand increases, the companies closest to the consumer will increase inventory to meet the consumer demand. When the demand falls, the front-end of the supply chain will decrease inventory, amplifying the extra inventory on each company up the supply chain.

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o Behavioral CausesOne cause of the bullwhip effect is normally driven by management behavior at the front-end companies of the supply chain. Retail management never wants to have a stock-out on a popular good, leading to higher orders from the wholesalers. This eventually squeezes each company in the supply chain and creates decreases in inventory. Another major behavioral effect is the ordering of too much inventory when consumer demand has fallen for an item. Retailers may have raised their inventory levels to avoid a stock-out but are now met with goods that cannot be sold quickly. This creates overstock of inventory for each supply chain company.

o Operational CausesThe main operational cause of the bullwhip effect comes from individual demand forecasts from each company in the supply chain. This causes an increase in demand from companies in the supply chain, but not the actual consumers who will purchase the goods. A lack of communication is also prevalent during operational causes; companies may not supply information up the supply chain regarding current market conditions, causing improper levels of inventory.

o Corrective MeasuresTo properly manage the fluctuations in consumer demand, implementing a pointof sale (POS) system with a just-in-time (JIT) inventory system. This allows each company in the supply chain to process information electronically regarding individual goods. Understanding consumer demand can then be evaluated based on the order information from the POS system and allow managers to order more goods if needed.Other uses for the Cause and Effect tool include the organization diagramming, parts hierarchies, project planning, tree diagrams, and the 5 Why's.

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CHAPTER-5

INVENTORY MANAGEMENTDEFINATION AND PURPOSE OF INVENTORYInventory is the stock of any item or resource used in an organization. An inventory system is the set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be. All firms (including JIT operations) keep a supply of inventory for the following reasons: To maintain independence of operations: A supply of materials at a work center allows that center flexibility in operation. For example, because there are costs for making each new production setup, this inventory allows management to reduce the number of setups. Independence of workstations is desirable on assembly lines as well. The time that it takes to do identical operations will naturally vary from one unit to the next. Therefore, it is desirable to have a cushion of several parts within the workstation so that shorter performance times can compensate for longer performance times. This way the average output can be fairly stable. To meet variation in product demand: If the demand for the product is known precisely, it may be possible to produce the product to exactly meet the demand. Usually, however, demand is not completely known, and a safety or buffer stock must be maintained to absorb variation. To allow flexibility in production scheduling: A stock of inventory relieves the pressure on the production system to get the goods out. This causes longer lead times, which permit production planning for smoother flow and lower cost operation through larger lot size production. High setup costs, for example, favor producing a larger number of units once the setup has been made.

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To provide a safeguard for variation in raw material delivery time: When material in ordered from a vendor, delays can occur for a variety of reasons: a normal variation in shipping time, a shortage of material at the vendors plant causing backlogs, an unexpected strike at the vendors plant or at one of the shipping companies, a lost order, or a shipment of incorrect or defective material. To take advantage of economic purchase order size: There are costs to place an order: labor, phone calls, typing, postage, and so on. Therefore, the larger each order is, the fewer the orders that need be written. Also, shipping costs favor larger orders the larger the shipment, the lower the per unit cost. For each of the preceding reasons (especially for items 3, 4, and 5), be aware that inventory is costly and large amounts are generally undesirable. Long cycle times are caused by large amounts of inventory and are undesirable as well.

INVENTORY COSTSInventory costs are important for three major reasons. First, inventory costs represent a significant component of total logistics costs in many companies. Second, the inventory levels that a firm maintains at points in its logistics system will affect the level of service the firm can provide to its customers. Third, cost tradeoff decisions in logistics frequently depend upon and ultimately affect inventory carrying costs.

Inventory carrying costFour major components of inventory carrying cost: capital cost, storage space cost, inventory service cost, and inventory risk cost. Capital Cost. Sometimes called the interest or opportunity cost, this cost type focuses upon what having capital tied up in inventory. The capital cost is frequently the largest component of inventory carrying cost. A company usually expresses it as a percentage of the value of the inventory the company holds. Virtually all companies seek to reduce inventory because management recognizes34

that holding excessive inventory provides no value added to the firm. The company must consider what rate of return it is sacrificing on the cash invested in inventory. Storage Space Cost. This category includes handling costs associated with moving products into and out of inventory, and storage costs such as rent, heating, and lighting. Such costs may vary considerably from one circumstance to the next. For example, firms can often unload raw materials directly from railcars and store them outside, whereas finished goods typically require safer handling and more sophisticated storage facilities. Inventory Service Cost. Another component of inventory carrying cost includes insurance and taxes. Depending upon the product value and type, the risk of loss or damage may require high insurance premiums. In most cases, there will be few, if any, significant changes from year to year in the tax and insurance components of the inventory carrying cost.

Order/Setup CostA second cost affecting total inventory cost is ordering cost or setup cost. Ordering cost refers to the expense of placing an order for additional inventory, and does not include the cost or expense of the product itself. Setup cost refers more specifically to the expense of changing or modifying a production or assembly process to facilitate product line changeovers. Order cost. The costs associated with ordering or acquiring inventory have both fixed and variable components . The fixed element may refer to the cost of the information system, facilities, and technology available to facilitate order placement activities. This fixed remains constant in relation to the number of orders placed. There are also a number of costs that vary in relation to the number of orders that are placed for more inventories. Some of the types of activities that may be responsible for these costs include (1) reviewing inventory stock levels; (2) preparing and processing order requisitions or purchase orders; (3) preparing35

and processing receiving reports; (4) checking and inspecting stock prior to placement in inventory; (5) preparing and processing payment. Setup Cost. Production setup costs may be more obvious than ordering or acquisition costs. Setup costs are expenses incurred each time a firm modifies a production line to produce a different item for inventory. The fixed portion of setup cost might include use of the capital equipment needed to change over production facilities, while the variable expense might include the personnel costs incurred in the process of modifying or changing the production line.

DEMAND MANAGEMENTDemand generates forecasts based on sales history, currently scheduled orders, scheduled marketing activities and customer information (Veinott 1966). Ideally, demand management works collaboratively and interactively both internally across the firms functional components and externally with supply chain partners to develop a common and consistent forecast for each item period, location and item. The forecast must also incorporate feedback from customers to integrate the influence of combined demand generation activities such as advertising and promotion. Practically, demand management and forecasting are closely related, and forecasting is an extensive topic in itself (Bowersox at al., 2002). Demand forecasting is a critical tool in the management toolbox. Because the mostly widely cited reasons for forecasting include: Increase customer satisfaction Reduce stock out Scheduling production more efficiently Lowering safety stock requirements Reducing product obsolescence costs Managing shipping better

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Improving pricing and promotion management Making more informed pricing decisions And above reasons are essential to management decision making. The forecasting time frames are: (1) long term forecasts, usually cover more than three years and are used for long rang planning and strategic issues. (2) Midrange forecasts usually range from one to three years and address budgeting issues and sales plans. (3) Short term forecasts are most important for the operational logistics planning process. They project demand into the next several months and, in some cases, more than a year ahead (Chien 1989).

TRANSPORTATIONA major focus in logistics is upon the physical movement or flow of goods, or upon the network that moves the product. The logistics manager is responsible for selecting the mode or modes of transportation used in moving the raw materials or for developing private transportation as an alternative. A direct relationship exists between transportation and the level of inventory and number of warehouses required (Aghezzaf 2001). For example, if firms use a relatively slow means of transport, they usually have to keep higher inventory levels and usually have more warehousing space for this inventory. They may examine the possibility of using faster transport to eliminate some of theses warehouses and the inventory stored therein. One reason companies may accumulate inventories of finished or semifinished product is similar to a reason for accumulating raw materials: transportation economies (Jaillet 1997). By shipping in carloads or truckload quantities rather than less than carloads

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or less than truckload quantities, a company may experience lower per unit transportation rates. As long as the transportation cost savings exceed any expenses associated with warehousing the additional volumes of product, it will be advantageous to ship in the larger quantities. Also, shipments in large volumes may experience better service, such as faster transit times and more reliable and consistent service. These results will help to reduce other costs such as in transit inventory carrying cost and potential costs of lost sales due to product unavailability at point of sale or use. WAREHOUSING AND STORAGE Warehousing is an integral part of every logistics system. We can define warehousing as that part of a firms logistics system that stores products (raw materials, parts, goods in process, finished goods) at and between point of origin and point of consumption of items being stored (Richard 1995). The term distribution centre (DC) is sometimes used, but the terms are not identical. Warehouse is the more generic term. With an increasing interest in improving inventory turns and reducing time to market, the role of distribution increasingly focuses on filling orders rapidly and efficiently.

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39

CHAPTER-6

FACTS AND FINDINGSINVENTORY MANAGEMENT

Inventories are any resources which is having an economic value like the inventory which consists of raw materials, work-in-progress, finished goods consumables and stores. Thus, inventory management is all about the process of planning , maintaining an controlling the available resources. The inventory process is used in the various stages of the operation system of the organization. Materials, manufacturing and marketing departments are the three operating subsystems while Finance and Human Resource departments are the non operating subsystems. The material subsystem deals with the procurement of raw materials, manufacturing subsystems converts the raw materials into final finished product and finally the marketing subsystem sells the finished product and Finance an Human Resource departments are the need of these three operating subsystems

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For the good performance of business activities of any Organization, the capital raised by the firm is invested in current assets as well as in fixed assets. The portion of the Capital invested in current assets is known as Working Capital and a large amount of this working capital is included by Inventories. The 80% of working capital are the inventories are like raw materials, work-in-progress, components, stores, spares etc. To maintain a good financial management in the company it must have a very good inventory management. when you need money, look at your inventories before you look to your bankers". This can be achieved with the given amount of capital either by maximizing the output or by maximizing the margin of profit or by the combination of both. It is also difficult to raise the profit margin to a very a high limit due to excessive competition. Thus the overall capital and the productivity of capital does not match. Several special and modern techniques are developed and used by the managers. Among these methods the most unique and the best one is the inventory management. One of the analytical aspects of the management is the concepts of the inventory management. The inventory management involves optimization of available resources along with the holding of stocks. Lack of inventory can lead to to stoppage of the production process and excess of inventory can cause a very high cost of production which is because of high inventory carrying cost. Thus, optimization of inventory should ensure that the available stocks are neither too high nor too low. This project is aimed to show how good inventory control can be used in practice. It will cover the working of the engine which means that how inventory control techniques will work, how to use this inventory control techniques and how and how to get the best out of the inventory control techniques vehicle i.e how to optimize the available resources. This project may develop a solutions for lowering the inventory overhead, nourishing the present customer relationship and41

increasing the productivity and performance level of the company. These techniques are under usage as per the requirement of stores operations of , which can be applied to a number of situations, from manufacturing and distribution to warehousing, consumable stores, and spares and service. Continuing with this process of best practices of inventory management, includes cutting-edge strategies, Pareto analysis, Just in Time (JIT), Total quality management(TQM), Supply relationship management(SRM), Customer relationship management(CRM), Material Requirements Planning (MRP).

DEMAND MANAGEMENT:Demand generates forecasts based on sales history, currently scheduled orders, scheduled marketing activities and customer information (Veinott 1966). Ideally, demand management works collaboratively and interactively both internally across the firms functional components and externally with supply chain partners to develop a common and consistent forecast for each item period, location and item. The current purchasing policy that the Koradi Thermal Power Station (KTPS) is following is that of forecasting policy. This forecasting policy is based on the past and the previous records and history. Every year there is a annual meeting between the management, production department, purchase department and sales department for the production, where the plant people used to set a annual target of electricity production. On the basis of this target the purchase department used to plan the further activities for the procurement of raw materials. The purchase people used to divide the annual target into 4 small targets of 3 months each i.e into quarters and then they procure the material according to the requirement in the quarter.

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LOGISTICS SYSTEM:KTPS does not have any critical margins because if the company went out of stock would the production not going on. When there is time for budget proposition, the company looks if the stock of raw material is enough for the planned activity. If the stock is not enough then they have to order the raw materials which time of delivery is very long and for the raw material which requires less time will be ordered according to the need. The time that the finished product or the double rolling bale press takes for it to reach the company it is depending on the which transportation mode is being used. KTPS uses the different modes of transportation according to the destination of the delivery of the finished product.

Logistics Model:

Inbound Logistics

Outbound Logistics

Suppliers

Company

Customer

Reverse Logistics

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PROCUREMENT:Rates Comparison for Purchasing : The way of purchasing a particular material can be improved by comparing the rate of this material of one company with the rate of the same material with other company i.e the company will get to know the complete and precise information of the material through which better decisions for purchasing the material can be established which results an effective management of the raw materials. Rate comparison of single product: SR.NO. PARTICULARS1 2 3 4 5 6 7 8 9 10 11

MAHARASHTRA BERING BEARING 51240 40001206 ZKL 11000 -0 0 440 0 0 11440

NEWAGE BERING BEARING 51240 40001206 ZKL 12500 5.0 % 0 0 499.8 0.25 0 12500.25

ITEM NUMBER SAP CODE MAKE BASIC RATE (Rs.) DISCOUNT (%) P & F (%) EXCISE DUTY VAT/CST FREIGHT OTHER CHARGES TOTAL COST

The above table shows the comparison of a single product of BEARING 51240 of two companies Maharashtra bearing and Newage bearing. This comparison gives the detailed information to the purchase department that what sort of decisions they have to take and in which company's material they have to invest the money. As it is shown in the above table, first it is compared with its basic rates i.e the rate which is fixed by the company to sell. The basic rate of Bearing 51240 of44

Maharashtra Bearing Company is Rs 11,000 where as the basic rates of Bearing 51240 of Newage Bearing is Rs 12,500. so in the first step itself the company gets to know that the Bearing 51240 manufactured by Newage Bearing Company is much expensive than the Bearing manufactured by Maharashtra Bearing company. Now secondly it is observed that whether the company is providing any discount or not and if the company is providing any discount then the discounted value is formed from the basic rate, for example : the Maharashtra Bearing is not providing any discount while the Newage company is providing 5% discount. Finally the companies are compared with the other parameters like Packaging and Forwarding(P&F)(%), Excise duty, VAT/CAST, Freight charges and Other Charges. Bajaj steel ind. ltd. uses no. of suppliers when it comes to raw material deliveries, and the most important selection criteria they use are the cheapest suppliers gets the delivery and BSIL have an independent controller to check every delivery that arrives to the company. BSIL has some quality requirements. To secure the delivery to BSIL they use suppliers from the local market or from the outside state and sometimes import the raw material. They also have a system where the spread the contract period for all the suppliers so the dont need to negotiate with all the suppliers at the same time. With this system the always have contracted suppliers that are committed to deliver raw material. The main role of Purchasing process is to make sure about the continuous supply of raw materials such that there is no hurdle in the production process and the procurement of raw materials at the lowest cost possible. A good purchasing policy not only deals with the good procurement policy but it also ensures the cost of finished goods i.e the cost of final products at the lowest cost possible. For ensuring this policies it deals with a large number of parameters as : right price, right quality, right time, right contracts, right source , right material , right place , right mode of transportation, right quantity and right attitude.

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Good purchasing depends upon how better the inventory is controlled, a statement of inventory control in the form of example is shown above . Here a group of mechanical materials are mentioned in the statement with specifications along with the sap codes, quantity as per requirement 15, 20, 10, 30 and planning as per the different models of the machines as : 10BP, 15BP, 20BP 32BP, total requirement of material, usage per month, usage per week, minimum inventory, maximum inventory, lead time, category, stock, order quantity, intimation.

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CHAPTER-7

ANALYSIS & INTERPRETATIONIn this project first we classify these raw materials by ABC analysis i.e assigning the given materials into class A, class B and class C as per the priority of the annual usage value of the material. Example : The ABC analysis of miscellaneous items from the raw materials of Electrical maintenance section of stage 1,koradi thermal power station . Materials required for Turbo Generator site:c a t e g o r y

Sr. No

Item Code PPMS/Local

E-Tendering Item Code

Item Description For PPMS / Local Code

1 2 3 4 5 6

17561204 0 19021039 0 81000302 6 81000302 7 86003991 5 61302832 5 61302832 6 61501050 6211101 06150105 0 06251140 1

C 059-01-001-0060001 40 WATT FLOURESCENT TUBE ,230V,50 HZ. LIGHTING ARRESTORS RATING 198 KV, 10 KA ARM A ARM B 022-05-001-0010001 022-05-001-0010001 078-02-001-0010010 078-01-001-0050014 078-01-001-0040010 078-01-001-0020017 COOLING FANS FOR L T MOTORS 120 MW GENERATER EXCITER CARBON BRUSH( LHS) SIZE 57 X 31.75 X 9.5 mm.GRADE E-49(I). 120 MW GENERATOR EXCITER CARBON BRUSH( RHS) SIZE 57 X 31.75 X 9.5 mm.GRADE E-49(I). Acetone AR grade in 500 ml C Araldite 180 gms set B Adhesive Dentrite in 500 ml Tin B M seal 1 KG PACK A A C A A

7 8 9 10 11

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12 13 14 15 16 17 18 19 20 21

06151205 0 25253005 0 38500200 2 38500200 4 16705302 0 16705303 0 29710420 8 29710421 0 86003902 7 86003902 8

078-02-020-0010001 001-04-003-0030001 027-10-001-600-01 027-10-001-0080001 027-08-001-0050001 027-08-001-0060001 114-19-006-0010020 114-19-006-0010001

C Liquid Soap in 500 ml pack Emery Paper Cloth Roll (Fine) Size 50mm x 50 Mtrs NEOPRENE RUBBER SHEET 2MM THICK C NEOPRENE RUBBER SHEET 4 MM THICK.. B CORK SHEET SIZE : 900 x 600 x 2 mm B CORK SHEET SIZE : 900 x 600 x 3 mm A Washer (Thickness 1.5 to 2 mm,size 8 mm) Washer (Thickness 1.5 to 2 mm,size 10 mm) D.C. SEAL OIL PUMP MOTOR ,5 KW D.C. LUB.OIL PUMP MOTOR FOR U-1 & U-2, 17 KW. A C C C C

IDENTIFY COST FACTORS:Inventory cost can be divided into carrying cost and order cost. In order to give a holistic view of the factors and elements of carrying cost, a Cause-Effect diagram is used as following:

Capital cost cccost storage

salary equipment

personnel Inventory cost

power rent Carrying cost increase

taxes insurance damage

Inventory risk spoilage 49

security

relocation Inventory review

obsolescence

Figure: Cause-effect diagram of carrying cost factor

ASSESS COST COMPONENTSFor the identified cost elements, the next step involved calculation and assessment of each item.

Ordering cost factor:Transportation cost: Obviously, this factor refers to costs for external transportation from supplier to BSILs plant. From the number of raw materials I have chosen hydraulic. The firm has no special large truck for transport this kind of material. It is therefore that all transportation for raw material is included in the raw material price. No deliver terms are stated in the purchasing order. Thus, there is no cost for transportation to consider. Procurement: As mentioned in theory part, production should be ensured with continuous material supply. The company uses 6-8 suppliers when it comes to hydraulic deliveries; hence, the supplier resources never short. They sign contract with supplier for a period of 1-3 years. Material handing: Material handling of raw material from the loading truck to the storage space required to keep the material at proper place at warehouse.

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Carrying cost factor: Capital cost: The company had a mean inventory value of 111417903.46 crore in raw material. Storage space cost: The cost of salary for the storage personnel is also included in the carrying cost. Personnel costs for facility maintenance, inventory review, and internal transportation are though already considered. Inventory risk cost: First, there is no obsolescence concept for the BSIL. It is of no necessary to consider about this part.

APPLICATION OF EOQ:EOQ only applies where the demand for a product is constant over the year and that each new order is delivered in full when the inventory reaches zero. There is a fixed cost charged for each order placed, regardless of the number of units ordered. There is also a holding or storage cost for each unit held in storage (sometimes expressed as a percentage of the purchase cost of the item). We want to determine the optimal number of units of the product to order so that we minimize the total cost associated with the purchase, delivery and storage of the product. The required parameters to the solution are the total demand for the year, the purchase cost for each item, the fixed cost to place the order and the storage cost for each item per year. Note that the number of times an order is placed will also

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affect the total cost, however, this number can be determined from the other parameters.

Calculations:1) Here we take the example of one of raw material i.e. Carbon brush

Annual demand, D = 4800 Units per year Unit cost of product = Rs 400 Carrying cost, Cc = 20% of unit cost = Rs 80 Ordering cost, Co = Rs200 Now, EOQ = 2DCo/Cc

EOQ = 155 (APPROX.)2) Time between two consecutive orders = EOQ/D = 155/4800 years = 155*12/4800 months = 0.38 months 3) No of orders per year = D/EOQ = 4800/155 = 31 (approx.) 4) Total cost = Unit cost of product* D + Co (D / EOQ) + Cc (EOQ / 2) = 400*4800 + 200 (4800/155) + 80 (155/2) = Rs 1932393 (approx.) If we check the total cost for any order quantity other than 155(=EOQ), we will see that the cost is higher. For instance, supposing 200 units per order, then Total cost

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= 400*4800 + 200 (4800/200) + 80 (200/2) = Rs 1932800 (approx.) Similarly, if we choose 100 for the order quantity then Total cost = 400*4800 + 200 (4800/100) + 80 (100/2) = Rs 1933600 (approx.) This illustrates that the Economic Order Quantity is always in the best interests of the entity.

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CHAPTER-8

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RESULTThe current ordering time of carbon brush in Electrical maintenance of KTPS is 40-45 times according to the requirement from the production department. Annual demand, D = 4800 Units per year Then no of units ordered per time per year = D/Ordering time =4800/40 = 120 (approx.) If we check the total cost for any order quantity other than 155(=EOQ), we will see that the cost is higher. For instance, supposing 120 units per order, then Total cost = Unit cost of product* D + Co (D / EOQ) + Cc (EOQ / 2) = 400*4800 + 200 (4800/120) + 80 (120/2) = Rs 1932800 (approx.) If we compare the total cost of current ordering units with total cost of EOQ, then it is found that the total cost of current ordering units(Rs 1932800) is more than the total cost of EOQ(Rs 1932393). Here we decrease the ordering time by increasing the quantity of raw material by calculating the economic order quantity with the optimal cost associated with it. The optimization of inventory control drives the supply chain cost effectively. According to raising the quantities of each ordering time, the company can hold more inventories during a period of two reorder points. Now maybe someone is doubtful of the problem of storage space. But the variability figure of inventory after optimization just swing at a low level. The company is easily going to deal with it. By using the method of decreasing ordering times and rising quantities, the company may optimize their whole supply chain. Firstly, cost of procurement and55

inventory review go down. The situations of using safety stock correspondingly eliminate. Then the production line can run smoothly. Also, by keeping some excess inventory in field warehouse locations, companies can respond quickly to meet unexpected demand. DISCUSS THE MANAGEMENT: Quite a few factors in the supply chain, namely procurement, transportation, warehousing and storage and customer service level will be identified under the circumstance of inventory optimization. Procurement By optimizing inventory management, the following advantages of procurement will achieve: Increase customer satisfaction Reduce stock out Scheduling production more efficiently Managing shipping better Improving pricing and promotion management Making more informed pricing decisions Decreasing the ordering times and enhancing the quantities of each time will dramatically reduce stock out. And it also can make scheduling production more efficiently and accurately. Meanwhile, the company helps the suppliers decrease the transportation cost. This will give the company more bargain space. Transportation By shipping in carloads or truckload quantities rather than less than car loads or less than truck load quantities, a company may experience lower per unit transportation rates. As long as the transportation cost savings exceed any expenses associated with warehousing the additional volumes of product, it will be56

EFFECT OF INVENTORY ON

SUPPLY CHAIN

advantageous to ship in the larger quantities. Also, shipments in large volumes may experience better service, such as faster transit times and more reliable and consistent service. It is of a main element as to the company. These results will help to reduce other costs such as intransit inventory carrying cost and potential costs of lost sales due to product unavailability at point of sale or use. Warehousing and storage If the company uses the method of reducing the ordering times, it will affect the warehousing and storage somewhat. But the trend of the number of customer sin creases obviously. Customer service polices, such as a 24hourdelivery standard, may require a number of field warehouses in order to minimize total costs while achieving the standard. By keeping some excess inventory in field warehouse locations, companies can respond quickly to meet unexpected demand. In addition, excess inventory allows manufacturers to fill customer orders when shipments to restock the field warehouses arrive late.

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58

CHAPTER-9

RECOMMENDATIONBy and large, the company has a good leader of the inventory control. But it is better to help other assistant involving this activity. Following tips may give inspiration to the case company:

INVENTORY CONTROL:The company can adjust the inventory level properly. When calculating the cost, it is better to use unification units. For example, units of material handling and payment cost calculation are trucks. And the unit of material demand is tons. Sometimes it will cause inaccurate of the cost calculation.

ATTITUDE:Maintaining inventory accuracy must be an integral part of the attitude of the organization. Like quality, customer service, and plant safety, accuracy must be promoted throughout the organization as everyone's responsibility. This attitude must start at the top levels.

DEDICATE POSITIONS FOR MANAGING INVENTORY:Make sure you have control of which employees are affecting your inventory. This is especially true in manufacturing operations where the priorities of machine operators and production supervisors are meeting the production schedule, keeping the machines running, and ensuring the quality of the product being produced. Inventory accuracy will never be a primary responsibility of these types of positions. Once you come to this realization it is easy to see the benefits of putting your inventory and material handling responsibilities in the hands of people whose primary responsibility is inventory.

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STORAGE AREAS:How you store your product will also affect accuracy. Crowded unorganized areas become "black holes" for missing product. Crowded areas also cause increase damage to product that is often disposed of without inventory corrections being made. High density storage makes it very difficult to accurately count the product. Tidying up locations of materials are necessary.

KNOW YOUR INVENTORY SYSTEM:The more you know about how your specific inventory system works, the more successful you'll be in optimizing its features. Computer systems are regularly blamed for things that are usually turn out to be human error, however, occasionally your computer system can be the source of the problem. The only way to determine the source and correct these problems is to have a thorough understanding of how your system is set up and how the specific programs process the information.

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61

CHAPTER-10

CONCLUSION The problem formulation for this study was: When the firms improve their inventory management, what is the reaction of Other factors on supply chain? Due to the effective inventory management, procurement goal can be achieve quickly. As we know, inventory is the joint of the whole supply chain. When optimize the inventory management, up stream activities will run effectively meanwhile down stream activities will go ahead without any stoppage. Proper supply chain and transportation management are being processed in the organization which increase the overall efficiency of the business.

Electrical maintenance section of KTPS deals with the inventory from costeffective view with the application of the economic order quantity (EOQ).

In a broader point of view, it is a cost reduction procedure that can have an impact on the economies of the company directly and on other department indirectly.

Supply chain management has led to the increase in customer relationship and has built trust among customers as it satisfies their demand in time with effectiveness.62

BIBLIOGRAPHY63

BOOKS1) Bowersox, D. J., Closs, D. J., Cooper, M. B. (2002). Supply Chain

Logistics Management. NY: McGrawHill 2) Zipkin, P., 2000. Foundations of Inventory Management. McGrawHill. 3) Material management by Gopalakrishnan 4) Inventory Management by D.Chandra Bose

WEBSITES1) http://www.entrepreneur.com 2) www.google.com 3) www.wikipedia.com 4) http://as.wiley.com/WileyCDA/WileyTitle/productCd-0471253413.html 5) http://www.cmu.edu/policies/documents/Purchasing.html 6) http://books.google.co.in/books?

id=QseYtErYgBoC&lpg=PA56&dq=project%20report%20on %20inventory%20management%20best %20practices&pg=PP1#v=onepage&q&f=false7) http://www.greentree.com/Product_sheets/manufacturing_mrp_and_forecas

ting.pdf8) http://www.inventorysolutions.org/def_mrp.htm 9) http://www.mirrorservice.org/sites/home.ubalt.edu/ntsbarsh/Business-

stat/otherapplets/Inventory.htm

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ANNEXUREQUESTIONNAIRE FOR COMPANY1. Has any previous research carried out on this topic by the company?

a) Yes

b) No

2. How do you manage your supply chain? a) JIT supply c) Subcontracting e) Benchmarking g) Use external consultants h) Other (specify) _____________________________________3. How successful do you think is your company in managing its supply chain

b) e-procurement d) Plan strategies f) Many suppliers

in general? a) Not successful at all c) Somewhat successful b) Not successful d) Very successful

4. Do you have any separate transport (logistic) department? a) YES b) NO

5. Does your company have a clear transportation Strategic plan? a) YES b) NO

6. Are your customer satisfied with the product delivery and scheduling? a) Very much satisfied c) Not satisfied b) Satisfied d) Not at all satisfied

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7. How many customers are satisfied with your product transportation services in this year? (2010)? a) Below 30 % c) 50% - 80% b) 30% to 50% d) Above 80%

8. According to you, who is playing an important role in your supply chain? a) Manufacturers c) Suppliers b) Distributors d) Other

9. Any Comment for your Supply Chain Management system? _____________________________________________________________ 10. Any suggestion to improve supply chain management?

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