Traditionally dominated by local players, the industry is seeing a slew of global players planning to set up new units in India. To match this, intense competition domestic glass industry has been forced to expand its capacities and diversify into newer areas.

Though there is a great demand for glass, which is growing at around 12 percent, analysts say, "As far as the glass industry is concerned, the supply will far exceed demand at least till 2015.

The glassware industry is witnessing a boom producing a variety of products ranging from unbreakable to blended ones and doing a business worth $334 million annually. Harnessing the latest technologies, the industry offers a wide range of products from toughened, unbreakable, laminated safety glass, solar control glass to insulating glass which can be used in interiors as well as exteriors of buildings, say industry sources.

Though the glass is mostly imported from countries like China, Germany, Belgium and America, with very few Indian companies involved in the processing business, the industry, with $478 million in investments in the next five years in the processing segment, is likely to witness a three-fold increase by 2015, say players in the industry. In the next five years, the industry will offer a $1 billion market for architectural glassware.

Till recently, the glass segment had been a low involvement commodity as far as the end consumers are concerned and the knowledge levels are very low in the consumer's mind 1

space. The sudden advertising spree has given this industry a new customer face and there is also an enhanced initiative by the companies to create awareness of the new technologies and innovative products and services.

In addition, growing quality consciousness has led to a rapid growth in the float glass segment, in a market which was pre-dominantly a sheet glass market till six years back. Float glass currently has 70 percent market share and is driving the growth in the sector. As per industry estimates, the sector has been growing at 8 percent for the last couple of years and is expected to grow at 10-15 percent in the coming years.

The exports market is also looking up for the glass industry. Average growth of exports is around 37% in glass fiber with 80% of its produce being exported. Given the cheaper cost of production, India could soon emerge as a major export base for these glass makers, as in the case of small car manufacturers like Hyundai. For example, Saint Gobain's plant at Sriperambadur (Chennai) has become the third lowest cost manufacturer among the French multinational's 29 plants across the world, after Poland and Spain. The engineering cost under expansion is pegged at half of what it had cost at the time of original investment. This is because the company now uses Indian engineers, while it had to enlist the services of expatriate engineers earlier.



Samtel Group's journey began in 1973, with a vision to create a world-class organization. Today, Samtel Group is India’s largest integrated manufacturer of a wide range of displays for television, avionics, industrial, medical and professional applications, TV glass, components for displays, machinery and engineering services. The group employs 6000 people in nine world-class factories and has an annual turnover of Rs 12 billion (USD 300M)

Samtel Group has strong design and development skills and is a dependable player with excellent technological capabilities and a long-term commitment to the display industry. Its products are known for ruggedness and reliability and conform to the latest relevant quality standards. The group has excellent relationships with suppliers of key components and the ability to design new products as well as set up hi-tech manufacturing facilities. Samtel has registered many patents for developments in display technology and also developed its own technology for automation.

. For Samtel, the quest for excellence in all its fields of activity has been a primary objective. Samtel has been taken to the Pinnacle, is its commitment to Quality in every sphere that determines its existence. 3

The success of the group can be largely credited to the Samtel Quality Movement (SQM) in which the objective is “to create an environment where people strive from within to achieve customer satisfaction (external & internal) and business excellence with social relevance ". Coupled with its own efforts and determination, Samtel has maintained high standards by virtue of its alliances with world leaders like Mitsubishi Electric Corporation, Japan, Corning Incorporated, USA and Samsung Corning, Korea. The company also lays emphasis on Progressive Human Resource Management, with a strong focus on training and development of personnel. Over the years, the Group has grown to become the largest Indian integrated manufacturer of a wide range of electronic components like Colour and B&W TV picture tubes, monochrome display and industrial tubes, Glass parts, Electron Guns, Heaters, Cathodes and Deflection Yokes.


Samtel's mission is to be globally the best value provider of Video Display & other chosen products, through leveraging technology & competencies. This shall be achieved by creating a culture of self striving with focus on total employee involvement towards customer satisfaction. The approach shall be value based as a responsible member of the society, contributing to its growth & development.



Samtel’s Vision is to build a responsible mega corporation - An institution with business excellence impacting nation building & caring for the environment & society. Here culture will be value driven, self-searching & exploring to develop a mind to their own.









SAMTEL BUSINESS PHILIOSOPHY:Over the years, Samtel has grown to become a world-class manufacturer of a wide range of display devices for avionics, medical and industrial applications. Motivated people have kept spirit of leadership alive – a spirit, which has helped them to capture and sustain a significant share of the market which they operate.

With an eye on future challenges, they have taken initiatives to build their knowledge base. In addition to this, they are also highly focused on the preservation of our environment – a green environment for future generations by setting up extensive environment protection systems.

Excellence is the result of hard work and perseverance. Their unquenchable thirst for excellence has motivated them to set up “The Samtel Quality Movement”. This thirst has also led them into starting a Six Sigma journey, which is helping them to reduce defects to negligible levels. A value their customer’s’ appreciate. To provide value to customers, they deploy customer’s “Quality Requirement Specifications” in the processes. This commitment to quality in every sphere that determines their existence has helped them to journey on the road to success.

At Samtel, customer focus took seed during the early years by existing in the minds of all employees and living through their actions. This resulted in the creation of a pioneering spirit, which placed them at the cutting edge of technological relevance through the


launching of new products repeatedly over time, thus leading to the creation of a wide product range and an ability to maintain regular and timely supplies to customers.

As every day floats away in the mists of time, a new tomorrow is not far away. What they have achieved so far is only a foundation for tomorrow. With every new dawn, fresh challenges will emerge and future will depend on ability of employee to create and harness knowledge efficiently, for the benefit of all mankind.

THE SQM MISSION:The objective of the Samtel Quality Movement is to create an Environment where People strive from within to achieve Customer Satisfaction (external and internal), and Business Excellence with Social Relevance


SAMTEL’S DRIVE TOWORDS SIX SIGMA ENVIROMENT:DEFINATION OF 6 SIGMA: - The Six Sigma process is capable of giving less than
3.4 defects per million opportunities and helps the company to measure the effectiveness of its systems and processes.

Drive towards a Six Sigma environment was launched to align output to the needs of customers and through these deliver real improvements to our bottom line. At the operational level, the movement was launched to move the business, product and service attributes at Samtel within the zone of customer specifications and expectations, by improving the business systems and processes in an effort to deliver defect free products and services to customers. This would also considerably reduce rework and waste of both material and human effort and thus reduce cost and improve efficiency.

The Six Sigma movement was launched at Samtel in early 2002. The movement is being implemented in a phased manner across different functions, both technical and commercial. Many of employees have undergone extensive and rigorous training in Six Sigma techniques and this has helped them to drive the movement in the company. Here company has taken up many projects and guided them to successful conclusions.


RESEARCH & TECHNOLOGY:Samtel Color is the only Cathode Ray Tube (CRT) manufacturer in India, to have successfully developed several new display products through an in-house R&D team of highly qualified and experienced engineers and scientists. The CRT development facility is a modern, fully equipped tube technology laboratory with its own dedicated pilot line that has been responsible for the design and launch of a whole range of picture tubes from 14" to 29" sizes, since 1996. The engineers in the laboratory are now working on the development of colour avionics tubes. Samtel Color has also developed a capability to design sophisticated machinery on its own and gained recognition through various awards for indigenization.

To be able to cater to the emerging market for large area flat panel displays, Samtel Color has set up a dedicated team and facility to develop Plasma Display Panels (PDP). The R&D team has been aggressively pursuing development of key technologies relevant to thin films, non-


thermal plasma / gas discharge, microelectronics, power electronics, image processing, video processing, thermal analysis, materials technology and display electronics to accomplish the task of development of plasma display panels. The development work on the panels is at an advanced stage.

Samtel has also invested in the area of emerging technologies for Flat Panel Displays by setting up the "Samtel Centre for Display Technologies" (SCDT), on the campus of the Indian Institute of Technology, Kanpur, for the development of Organic Light Emitting Diodes (OLEDs) for display applications and other generic technologies.

The Samtel Group is also a significant player in the international market for hi-technology displays for professional applications in the avionics, military, medical and industrial sectors. It is working to increase its product offering to customers worldwide by developing color avionics CRTs and ruggedized LCD panels for various demanding applications as well as development of Multi Functional Displays for Avionics. The group is also working to broad base its product portfolio by migrating from the present scenario in which it supplies only components to a scenario where it offers its customers reliable and contemporary systems.

CORPORATE SOCIAL RESPOSIBLITY:The Samtel Group was founded with a vision of building an institution which would achieve business excellence while contributing to nation building by caring for the society and environment. In its desire to play a significant role beyond the boundaries of its factories in


the communities that reside around its plants, the Group founded the Samtel Achrumal Medical Aid Trust (SAMA) in 1988.

Apart from health services, Samtel has been playing an active role in times of calamity in the country. Rs. Twenty lakh was donated to the Gujarat Relief Fund after the major earthquake in the Kutch Region. Medicines worth thousands of rupees were sent to Orissa when that state was hit by a cyclone. SAMA also supports 'Vijaya', an NGO in Orissa, that is involved in health care in the tribal belts of the state besides providing safe drinking water to these areas under the name of 'Project Jeevan Dhara'.

Through SAMA, Samtel has provided three mobile medical vans, with trained medical staff, which are dedicated to providing health care services to the communities around its plants in Ghaziabad, Kota and Parwanoo.

SAMA has held a number of medical camps on maternal and child health, immunization, blood donation and eye care in the last three years because of which over 30,000 people have benefited.

In collaboration with I Care Hospital, NOIDA and Lion's Eye Hospital, Ghaziabad, the trust has been conducting eye camps for the detection and surgery of cataracts in patients. In these camps, patients were also given IOL implants free of cost. In addition to this, SAMA has also arranged First Aid Camps for Kavad Yatris since 2001.

Samtel work continues and their plan to focus their efforts further in the areas of maternal and child health as well as launch vocational training and income generation programs in the areas in which we operate in the coming days.


ORGANISATION STRUCTURE:Satish K. Kaura Chairman & Managing Director Samtel Group

Puneet Kaura DirectorCommercial Samtel Display Systems Limited

D.V. Gupta Executive Vice President Samtel Color Ltd.

Rajesh Kakkar VP Strategic Planning & Business Development Samtel Color Limited

Manvinder S. Kohli Business Head Samtel Machines

D.V. Gupta Executive Vice President Samtel Color Ltd.

Mr. Saurabh Singhal Mixing

Mr. Sanjay Shukla Forming & Mold

Mr. O.P. Chahar CCF PRODUCTION Mr. Jitendra Singh Quality assurance GURVIKRAM SINGH PLANT HEAD SAMTEL GLASS LIMITED Mr. Ashok Chadha E&I & Maintenance

Mr. Vivek Gupta Material & Store ADMINISTRATION Mr. Lokesh Upadhyay Finance Capt. Vinod Kumar Administration & Safety Mr. Vivek Bhatnagar Safety



1st to introduce Digital Color Monitor in India.

1st to launch 12", 14" and 17" Black & White picture tubes in India.

1st to launch 14" and 21" FST tubes in India.

1st to launch Mono Display Tubes in India.

1st to assemble and seal glass shells in India.

1st to offer the largest range of 14", 21" FST and 21" F&FST colour picture tubes in India. 1st to establish itself as the largest regular exporter of tubes.

1st to manufacture specialty tubes for industrial, military and medical applications, from the private sector



Samtel Color Limited, Ghaziabad
Incorporated in 1987 in collaboration with Mitsubishi Electric Corporation Samtel Color Samtel Color, the flagship company of the group manufactures the widest range of Colour TV tubes in India – from 14 inches to 29 inches, and has a capacity of over 10 million picture tubes per annum., it is the largest tube manufacturer and exporter in the country. Its clients include leading domestic and international TV manufacturers.

Teletube Electronics Limited, Ghaziabad
The first privately owned company in India to manufacture B&W picture tubes. Currently producing special purpose Cathode Ray Tubes for healthcare industry and military purposes.

Samtel India Limited, Bhiwadi
Single Largest manufacturer and exporter of B&W TV picture tubes in India engaged in production since 1981.

Samtel Color Limited (Electron Gun Division), Ghaziabad
The only Indian company to make its own heaters & Cathodes producing 8 million guns per annum and commands 76% of the market.


Samtel Glass Limited, Kota
Incorporated in 1989 as a JV with Corning Incorporated, USA & Samsung Corning, Korea. The company manufactures over 5.5 million B&W glass shells and funnels for color picture tubes.

Samtel Electron Devices, Parwanoo
Samtel Electron Devices( Electron Gun Division ) manufactures electron guns for Black & White picture tubes and market leader in it's domain.

Samtel Color Limited (Deflection Yokes Division), Parwanoo
Started commercial production in July, 1999 enabling the division to manufacture 12.19 lacs nos. of Deflection Yokes.

Samtel Engineering Services, Gurgaon
Samtel’s first step in the KPO (Knowledge Process Outsourcing) industry, Samtel Engineering Services provides engineering outsourcing solutions to several EU & NA headquartered global companies and multinationals, primarily in the Automotive & Machinery segments.


Samtel Electron Devices, GmbH Germany
The company has a large share in the world market for displays for Medical Monitors and also manufactures a variety of displays for Industrial applications. It haS 50 years of experience in the electronics components.

Samtel Machines is a key player in the domain of Industrial Automation and Special Purpose Machines manufacturing in India. Samtel Machines is a consequence of Samtel’s inhouse expertise in internal automation for various inhouse automation requirements, focusing on Automation, Material handling, Special Purpose Machines and Assembly lines, which set the foundation for a full-fledged division catering to Machine building – called Samtel Machines.

Samtel Thales Avionics is a joint venture between Samtel and Thales, and brings Thales' technological expertise to India through Thales' multi-domestic strategy of partnering with leading industry players across the world. The JV will work towards the local development, production, sale and maintenance of Helmets Mounted Sight & Display (HMSD) and other Avionics Systems destined for the Indian market. Samtel Thales Avionics will become the design authority for products and equipment developed and manage them through their entire life cycle.


Samtel HAL Display Systems (SHDS), a joint venture between Hindustan Aeronautics Limited (HAL) and Samtel, was created to address the avionics requirements of HAL, especially cockpit displays of all kinds. SHDS is responsible for system design, development, manufacturing, MRO and obsolescence management of display systems, ATE and IADS for all Indian platforms







Supply Chain Management:

Supply chain management (SCM) is the term used to describe the management of the low of materials, information, and funds across the entire supply chain, from suppliers to component producers to final assemblers to distribution (warehouses and retailers), and ultimately to the consumer. In fact, it often includes after-sales service and returns or recycling In contrast to multiechelon inventory management, which coordinates inventories at multiple locations, SCM typically involves coordination of information and materials among multiple firms.

Supply chain management has generated much interest in recent years for a number of reasons. Many managers now realize that actions taken by one member of the chain can influence the profitability of all others in the chain. Firms are increasingly thinking in terms of competing as part of a supply chain against other supply chains, rather than as a single firm against other individual firms. Also, as firms successfully streamline their own operations, the next opportunity for improvement is through better coordination with their suppliers and customers. The costs of poor coordination can be extremely high.

Supply chain management is an enormous topic covering multiple disciplines and employing many quantitative and qualitative tools. Within the last few years, several textbooks on supply chain have arrived on the market providing both managerial overviews and detailed technical treatments.


The major components of SCM: Location Supply Inventory Production Transportation Information


Location pertains to both qualitative and quantitative aspects of facility location decisions. This includes models of facility location, geographic information systems (GIS), country differences, taxes and duties, transportation costs associated with certain locations, and government incentives. Exchange rate issues fall in this category, as do economies and diseconomies of scale and scope. Decisions at this level set the physical structure of the supply chain and therefore establish constraints for more tactical decisions.

It is the strategic placement of the production plants. Distribution and stocking facilities, understand customer markets, perform locating decisions for production and stocking facilities.

Sourcing and supplier management looks upstream to suppliers. Make/buy decisions fall into this category, as does global sourcing. The location category addresses the location of a firm’s own facilities, while this category pertains to the location of the firm’s suppliers. Supplier relationship management falls into this category as well. Some firms are putting part specifications on the web so that dozens of suppliers can bid on jobs. GE, for instance, has developed a trading process network that allows many more suppliers to bid than was possible before.


The automotive assemblers have developed a similar capability; and independent Internet firms, such as Digital Market, are providing services focused on certain product categories. Determining the number of suppliers and the best way to structure supplier relationships is becoming an important topic in supply chains. It looks the capable suppliers, sourcing decisions relationship management, General procurement.

Inventory includes traditional inventory and forecasting models. Inventory costs are some of the easiest to identify and reduce when attacking supply chain problems. Simple stochastic inventory models can identify the potential cost savings from, for example, sharing information with supply chain partners, but more complex models are required to coordinate multiple locations.

Supply chains, unfortunately, confront the problem of multiple firms, each with its own decision maker and objectives. The concept of an imputed penalty cost, wherein a shortage at a higher echelon generates an additional cost. This cost enables us to decompose the multiechelon system into a series of stages so that, assuming centralized control and the availability of global information, the ordering policies can be optimized, individual

managers that allow for decentralized control (so that each manager makes decisions independently), and in certain instances, local information only. The result is a solution that achieves the same optimal solution as if we assumed centralized control and global information. 23

In this the following decisions are to be taken as how much inventory and where to store, analysis of fluctuations in demand, identifying the optimal storage location and stock levels by location, making inventory ordering policies.

Production: Production deals with design issues for mass customization, delayed differentiation, product. This deals with the decisions related to the

modularity and other issues for

production like how much to produce, for whom to produce, when to produces. With the increasing supply chain demands of product variety and customization. One of the most exciting applications of "supply chain thinking" is the increased use of postponed product differentiation. Traditionally, products destined for world markets would be customized at the factory to suit local market tastes. While a customized product is desirable, managing worldwide inventory is often a nightmare. Using postponement the product is redesigned so that it can be customized for local tastes in the distribution channel. The same generic product is produced at the factory It deals with what customer and market demand, resource management, internal sourcing, outsourcing potential supplier, capacity management , order management, Quality control.

The transportation encompasses all issues related to the flow of goods through the supply chain, including transportation, warehousing, and material handling. This category includes many of the current trends in transportation management including vehicle routing . Also included are topics in warehousing and distribution and materials handling technologies for sorting, storing, and retrieving products Because of globalization 24

and the spread of outsourced logistics, this category has received much attention in recent years. However, we will define a separate category to examine issues specifically related to outsourcing and logistics alliances. Both deterministic (such as linear programming and the traveling salesman problem) and stochastic optimization models (stochastic routing and transportation models with queueing) often are used here, as are spreadsheet models and qualitative analysis. Recent management literature has examined the changes within the logistics functions of many firms as the result of functional integration and the role of logistics in gaining competitive advantage. Transportation is very important in this it supports the inventory decision. Transportation is very important issue it contribute to almost 30% of the production cost.

Mode of Transport
• • • Road Air Sea

Information deals with information flow structure i.e. how the information show be flow within and outside the organization so that the action can be speed up. It is obtaining, linking and leveraging information across the supply chain. It can be done by connecting computers through networks and the internet.


SAP the company was founded in Germany in 1972 by five ex-IBM engineers. SAP stands for Systems, Applications, Products in Data Processing. It is product of company SAP AG. SAP is an acronym for "System Application & Products" which creates a common centralized database for all the applications running in an organization. The application has been assembled in such a versatile way that it handles all the functional department within an organization. Today major companies including Microsoft, IBM, Samtel are using SAP's Products to run their own businesses.

R/2, which ran on a Mainframe architecture, was the first SAP version. Sap's products are generally focused on Enterprise Resource Planning (ERP). Sap's applications are built around R/3 system which provide the functionality to manage product operations, cost accounting, assets, materials and personnel. The R/3 system of SAP runs on majority of platforms including windows 2000 and it uses the client/sever model.

The reasons for implementing SAP:

1. Replacing an out-dated and inefficient IT Architecture: In the beginning, computer systems were developed by individual departments to satisfy the requirements of that particular department. When someone finally realized that benefits could be had by linking these systems together, interface heaven was born. There are some companies today with literally thousands of interfaces, each of which needs to be maintained 26

2. (assuming of course that there is someone around who understands how they work!). Sweeping them away and replacing them with an integrated system such as SAP can save much money in support. Of course, if you have a burning platform as well the question becomes even easier. 3. Enabling business process change – From the start, SAP was built on a foundation of process best practices. Although it sounds absurd, it is probably easier (and less expensive) to change your companies processes to adapt to SAP than the other way around. Many companies have reported good success from combining a SAP implementation with a BPR project. 4. Competitive advantage – The CFO types around have heard this old saying from the CIO types for many years now. The question still has to be asked … can you gain competitive advantage from implementing SAP? The answer, of course, depends on the company. It seems to us, however, that:

being able to accurately provide delivery promise dates for manufactured products (and meet them) doesn’t hurt ... and

being able to consolidate purchase decisions from around the globe and use that leverage when negotiating with vendors has gotta help and being able to place kiosks in stores where individual customers can enter their product specifications and then feed this data directly into it’s production planning process is pretty neat.


Implementing SAP is expensive. No doubt about it. But the potential rewards can dwarf the costs (and have for many existing customers already). One customer reportedly made enough savings on the procurement of a single raw material to pay for the entire enterprise-wide SAP implementation.

The major drivers of the total implementation cost are the Timeframe, Resource Requirements and Hardware.

1. Timeframe - The absolute quickest implementation we have ever heard of is 45 days … but this was for a tiny company with very few users and no changes to the delivered SAP processes. At the other end of the scale you get the multi-nationals who are implementing SAP over 5 to 10 years. These are not necessarily failures … many of them are planned as successive global deployments (which seem to roll around the globe forever). Of course the really expensive ones are those we don’t hear about! For the most part, you should be able to get your (single instance) project completed in a 9 to 18 month period. 2. People – The smallest of SAP implementations can get done on a part-time basis without outside help. The largest swallow up hundreds of people (sometimes over a thousand) and include whole armies of consultants. This adds up fast. Again, get that business case out. The types of people you will need run the range from heavy duty techies to project managers. 3. Hardware – The smallest of SAP implementations probably use only three instances (boxes) … one for the production system, one for test, and one for development. The


largest implementations have well over 100 instances, especially if they involve multiple parallel projects (otherwise known as a program).

Modules of SAP:
1. Sales and Distribution (SD) 2. Financial Accounting (FI) 3. Controlling (CO) 4. Human Resource (HR) 5. Advanced Business Application Programming (ABAP) 6. Business Warehouse (BW) 7. Material Management (MM)

Sales and Distribution( SAP SD): This is the module which is used to manage
customer-focused activities, from selling to delivery, including
• • • • • •

RFQ Sales orders Pricing Picking (and other warehouse processes) Packing Shipping


Some of the main SAP SD transactions are:
• • • • • •

VA01 - Create Customer Order VL01N - Create a Delivery VA03 - Display a Order VL02N - Change Customer Delivery (F20 is to post a good issue) VA05 - List Orders VF01 - Create a Invoice

Financial Accounting (SAP FI): It is the SAP Module where regulatory or statutory
data is tracked and managed. The SAP FI Module has the capability of meeting all the accounting and financial needs of an organization. It is within this SAP FI Module that Financial Managers as well as other Managers within your business can review the financial position of the company in real time as compared to legacy systems which often times require overnight updates before financial statements can be generated and run for management review

Controlling(SAP CO): It is the SAP Module which allows you to perform your
management accounting. The SAP CO (Controlling) Module provides supporting information to Management for the purpose of planning, reporting, as well as monitoring the operations of their business. Management decision-making can be achieved with the level of information provided by this module.

Some of the components of the CO(Controlling) Module are as follows: 30


Cost Element Accounting


Cost Center Accounting


Internal Orders


Activity-Based Costing ( ABC)


Product Cost Controlling


Profitability Analysis


Profit Center Accounting

Human Resources(SAP HR): This is the module which helps you optimize your HR
processes to attract, develop and attain the right people including
• • • • •

Employment history Payroll Training Career management Succession planning


Advanced Business Application Programming (SAP ABAP): This is the is the
structured programming language for custom development including reports.

Materials Management(SAP MM ): This is part of SAP Logistics which helps you
manage end-to-end procurement and logistics business processes,

from requisitioning to payment, including

• • • • • • •

Requisitions Purchase orders Goods receipts Accounts payable Inventory management BOM’s Master raw materials, finished goods etc

Some of the main SAP MM transactions are:
• • • •

ME51N - Create Requisition ME21N - Create Purchase Order MIGO - Goods receipt a PO MIRO - Create Invoice


Business Warehouse(SAP BW ): and this is the module which delivers the SAP
enterprise data warehousing solution. From SAP Netweaver 7.0 in fact, SAP BW is now known as SAP BI (or SAP Netweaver Business Intelligence) ... with sub modules Data Mart (BI-D) and Mixed Load (BI-MXL) ... but most people still use the term SAP BW, which includes the following main functions:
• • • •

Data extraction from source systems Some technical and functional transformation of the data Storage of the data in what are called Infoproviders Reporting (which uses Infoproviders





Material Management:
Material management it consist of:
Ø Purchase Management Ø Contract Management Ø Sales Management


Inventory Management


Procurement (In flow) is purchasing the material which is required for in the organization. For this there is a dedicated department which is called purchase department. The main function of purchase department: Material Requirement Planning -Raw material -Packing Material -Stock items

Identification of Suppliers -Yellow Pages -Internet -Magazines -Networking with others

Selection of Suppliers -Auth. Dealers -Stockists -Trials –Sample lot purchase


Ordering -Getting approved from authority -Prepare purchase order 36

Procurement -Follow-up with vendor -Follow up with transporter

Store -Enter of the inflow material -Keeping stock of material.


Material Requirement Planning: In this planning of the material required is done. The decision depends on the demand of the product by the customer or as per the order of the product.

There are there types of the material:

1. Raw material: These are the material which is required on every day basis. These materials are very important for the working of plant if there is no raw material or required amount of material then production will be affected. So, material like these is to be ensured by the company and the vendor that it will be supplied regularly in the required amount. In planning of raw material the important decision to be taken is how much amount of raw material should be stored so that 38

there is no time of criticality. By such planning of raw material will ensure uninterrupted
production. 2. Spares Parts: The purchase of the spare parts depend on the requirement of the user. In this the critical items or parts of the machine are identified which are very important and which are to be stocked so at the time of break down it can be used and plant can be resumed without effect the production very much.

This is very important step because in this decision are taken on the amount of inventory to be stocked if huge amount of material is stocked then much amount of money will be blocked in the material and if small amount of stock is kept then it can affect the production of the plant. So, a tradeoff is to be kept between the quantity and money for uninterrupted production.

Identification of Suppliers: This step deals with the development or searching of new vendor for the purchase of the material. For this various sources are used like internet, yellow pages, reference from some person, magazines. This step is necessary to decrease dependency on any particular vendor, by searching new vendor we can increase the quality of the material which we are buying. Selection of Suppliers: This step deals with selection of the suppliers or vendor. The selection of the vendor depends on various things 1. Is vendor is capable of supplying the required amount of quantity of material.



Material of new vendor is according to the specification and up to the quality required by user.

3. The amount charged by vendor is appropriate or not. Is there any other vendor offering cheaper material of same quality. Negotiation: This is discussion between the supplier and the purchaser. In this they discuss on the terms and conditions, price of the vendor. In this both the persons try to make enforce conditions and maximize there own profits. But in this both has to come with terms and conditions that benefits both. There are following terms and conditions that are discussed: 1. The make(brand) of the products i.e. the products should of the particular brand or company. 2. Discounts on the rate offered. 3. Credit terms i.e. money should be given in 100%advance or 50% advance or on credit. 4. Lead time i.e. in how many days the products will be delivered. 5. Sales tax ,excise duty are included or not. 6. Delivery terms i.e. product will be delivered to our purchaser office or purchaser has to arrange transportation.
7. Guarantee or warranty of the product.


Ordering: When terms and conditions are settled down between both the parties. Then the purchaser party gives the purchase order (PO) to the vendor. In the PO every settled condition are mentioned.

Procurement: When PO is issued to the supplier then a follow up is done to the supplier where it is ensure when material will be delivered and by which means.

Store: When material is received in the company campus first the gate entry is done and goods receive note is issued. Then material is send to the store there physical verification is done to ensure the quantity of the received material and material is passed as ok and send to the quality check and laboratory for final acceptance. If material received find up to the quality then it is accepted and not then it is rejected.



Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing any changes that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creating, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, and international trade.

A contract is a legally binding agreement between the parties identified in the agreement to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that all the parties to the contract accept the terms of the claimed contract.

Contracts can be of many types sales contracts (including leases), purchasing contracts, partnership agreements, trade agreements, and intellectual property agreements.


A sales contract is a contract between a company (the seller) and a customer that where the company agrees to sell products and/or services. The customer in return is obligated to pay for the product/services bought.

A purchasing contract is a contract between a company (the buyer) and a supplier who is promising to sell products and/or services.

A partnership agreement may be a contract which formally establishes the terms of a partnership between two legal entities such that they regard each other as 'partners' in a commercial arrangement. However, that such expressions may be merely a business-expression to reflect the desire of the contracting parties to act 'as if' both are in a partnership with common goals. Therefore, it might not be the common law arrangement of a partnership which by definition creates fiduciary duties and which also has 'joint and several' liabilities.

Areas of Contract Management
The business-standard contract management model, as employed by many organizations in the United States, typically exercises purview over the following business disciplines:
• • • • • •

Authoring and negotiation Baseline management Commitment management Communication management Contract visibility and awareness Document management 44

• • • • •

Growth (for Sales-side contracts) Issue and change management Savings (for Procurement-side contracts) Service level agreement compliance Transaction compliance

Change management
There may be occasions where what is agreed in a contract needs to be changed later on. A number of bases may be used to support a subsequent change, so that the whole contract remains enforceable under the new arrangement.

A change may be based on:

A mutual agreement of both parties to vary the contract, outside the framework of the existing contract. This would be an independent basis for changing the contract.

A unilateral decision to vary the contract, contemplated and allowed for by the existing contract. This would normally have notice periods for fairness and often the right of the other, especially in consumer contracts, to cease the contractual relationship. Be careful that any one-way imposition of change is contractually justified, otherwise it may be interpreted as a repudiation of the original contract, enabling the other party to terminate the contract and seek damages.


A bilateral decision to vary the contract, within the variation or change control process outlined in the existing contract. These are often called change control provisions.

Business Contract Items
A business contract should be labeled "contract" or "agreement" at the top. These are some items it can include:
• • • • •

Date of contract Names of parties involved Details of services that your company will provide or receive Payment amounts Payment due dates. Note that payments do not need to be made in a lump sum at the end of the project. You can make or receive incremental payments for specific services rendered once they are completed.

• •

Interest on late payments Deadlines for services due. This is also called a "time is of the essence" clause. You will probably want to use this phrase in your contract if you have a timeline for a project.

• • •

Expiration dates for the contract, such as a lease expiry Renewal terms, if applicable Damages for breach of contract. Also called "liquidated damages," this clause can specify amounts to be paid if services are incomplete or deadlines are missed. A court 46

can also award damages if a contract is breached, even if damages and amounts were not included in the agreement.
• •

Termination conditions Signatures


While procurement is a critical business function for every company, senior management often misunderstands it. In general, procurement is usually viewed as a cost center, which can only be marginally improved through the application of information technology. The primary function of the procurement professional is to evaluate and select suppliers based on availability, reliability and price in order to obtain the highest quality products (or services) at the best possible price. In order to achieve this goal, purchasing personnel need to have expertise in administration, accounting, management, planning, and psychology and contract law. They also need to be able to access and interpret large amounts of data in a relatively short amount of time. Companies taking groundbreaking attempts at employing technology in procurement have achieved important benefits, including improvement of the procurement function. The vast majority of these early adopters have focused on ways to automate the procurement process itself, such as in the areas of high volume-low value purchases, online catalog access, and internal purchasing approvals. But in reality, improving these processes was the easy part. These systems have not helped the procurement professional manage suppliers, which is the heart of the job. Many companies still must deal with numerous problems related to the procurement function — problems that until recently had no easy solution. The most common issues that procurement professionals must face today are: • The length of time it takes to identify the right supplier; • The belief that it is not worth the effort to create a contract when executing a spot buy; • The inability to locate pricing agreements for specific suppliers;


Lack of easy access to contract information; • Lack of visibility into supplier performance based on contract terms; • The time required to correct problems that occur when a supplier is not in compliance with the contract.

Process Management Optimization

Improved access to certified/approved suppliers A comprehensive contract data repository should be created that allows the procurement professional to identify the right supplier for the right purchasing need quickly and easily. This leads to increased procurement efficiency and a reduction in time spent on sourcing a supplier. It also improves the operation of the company's supply chain as delays associated with identifying a supplier are reduced or eliminated.

Identify needs for new contracts quickly A system that identifies off-contract purchasing requests quickly and automates the establishment of new contracts for spot purchases should be created. This reduces the costs associated with off-contract spot buys and give the company leverage in case of disputes that may arise regarding the price or material supplied. Identify sources of alternative supply quickly. A comprehensive contract data repository and an analytical system should be developed in order to quickly identify suppliers of material in case of an unanticipated shortage. This leads to the reduction of both costs and time invested in identifying alternative sources of supply, as well as improving the operation of the 49

company's supply chain as delays associated with identifying a supplier are reduced or eliminated.

Easy procurement processes By creating a repository with all contract information stored in digital format and the tools to quickly sort and search this data, the procurement department will no longer have to conduct time-consuming and inefficient manual searches for information regarding suppliers or current contracts. This improves the department's efficiency and effectiveness as well as reduces procurement related costs.

Enhanced Supplier Performance Visibility Direct enterprise purchasing activities based on dynamic supplier performance metrics By continually measuring supplier compliance to the terms of contracts, companies can identify problems at an early stage. This gives the procurement department the ability to correct problems before they become significant, as well as shift purchasing activity to suppliers that perform well, thus optimizing return on capital. By focusing on suppliers that perform best to contract, the company reduces the cost of multi-supplier.

Dynamically check that suppliers are performing to contract By creating a repository with all contract information, the procurement department can monitor contract compliance at the transaction level. Adherence to contract terms such as pricing breakpoints can be continuously monitored. This minimizes the costs associated with missed contract breaks. 50

Rationalize supplier base By using supplier execution data generated through procurement activities and comparing this to contract data, the company can make quantitative supplier performance comparisons. As a result, these comparisons lead to lower costs by enabling companies to maintain relationships with fewer, yet higher performing suppliers. Optimize repetitive purchase compliance by automating contract compliance checking for frequent low to mid-value purchases, the procurement department can devote resources to more strategic activities. This helps the company realize a better return on investment in procurement and improved.

Contract Management in SAP
“Contract Management for SAP” is a robust and scalable enterprise contract management solution. The high level of integration and interaction with existing building blocks make this SAP centric solution unique. “Contract management for SAP” enables organizations to eff ectively manage contracts, reduce contract management costs, streamline the workfl ow and guarantee proper assignment of internal responsibilities and costs. In addition, it becomes the corner stone for any zero based budgeting activities. It seamlessly integrates as add-on into your existing SAP landscape. Existing SAP elements such as User Authorizations, Archive Link interface, Organizational Model and existing controlling and logistics objects (internal orders, cost centers, purchase orders etc.) are reused and tightly integrated.


Trained SAP users will notice some additional transactions and naturally start working with them. The contract management platform can be extended with user-fi elds and is built to handle the load of an enterprise-wide contract management approach.

In the R/3 System, an “outline agreement” is a longer-term purchase arrangement with a vendor concerning the supply of materials or the performance of services according to predetermined conditions. These are valid for a certain period of time and cover a predefined total purchase quantity or value. In Specific dates or quantities for individual deliveries are not set out in the outline agreement. This information is provided separately in release orders or rolling delivery


schedules (comprising a number of individual schedule lines), depending on the type of agreement. An outline agreement can be a contract or a scheduling agreement. There are two types of contracts: Quantity contract – this type of contract is regarded as fulfilled when the agreed total quantity has been supplied on the basis of individual release orders issued against the contract. Value contract – this type of contract is regarded as fulfilled when the agreed total value has been supplied on the basis of individual release orders issued against the contract.


The ð items of a contract can relate to a single plant or all the plants covered by a purchasing

organization (centrally agreed contract).
• Distributed contracts are centrally agreed contracts that are made available to other R/3 Systems for the purpose of issuing release orders against them. • Contracts are outline agreements. They do not contain details of the delivery dates for each of the items. • To inform vendors of which quantities you need for which date, you enter contract release orders for a contract. A release order is a purchase order that references a contract. • If an info record with conditions exists for the material and the vendor, the system automatically suggests the net price according to these conditions when you create the contract item. • A contract is a long-term agreement with a vendor concerning the supply of material or performance of services. • You can create contracts manually. When doing so, you can reference other contracts, purchase requisitions, and RFQs or quotations. • One of the things you define in the contract header is the validity period.


Sale (out flow) of material is the delivery of the product manufactured in the plant. For this there is a dedicated department called sale and logistic department. The main function of this department is:


Quality Check



Sales invoice



Inventory to many business is one of the more visible and tangible aspects of doing business. Raw materials, goods in process and finished goods all represent various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a retail store contribute to profits only when their sale puts money into the cash register. In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profits. In fact, many small businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled, they are unreliable, inefficient and costly.

INVENTORY MANAGEMENT Inventory management involves balancing the costs of inventory with the benefits of inventory. Many small business owners fail to appreciate fully the true costs of carrying inventory, which include not only direct costs of storage, insurance and taxes, but also the cost of money tied up in inventory. This fine line between keeping too much inventory and not enough is not the manager's only concern. Others include: ! Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too. ! Increasing inventory turnover -- but not sacrificing the service level; ! Keeping stock low -- but not sacrificing service or performance.


! Obtaining lower prices by making volume purchases -- but not ending up with slow-moving inventory; and ! Having an adequate inventory on hand -- but not getting caught with obsolete items. The degree of success in addressing these concerns is easier to gauge for some than for others. For example, computing the inventory turnover ratio is a simple measure of managerial performance. This value gives a rough guideline by which managers can set goals and evaluate performance, but it must be realized that the turnover rate varies with the function of inventory, the type of business and how the ratio is calculated (whether on sales or cost of goods sold). Average inventory turnover ratios for individual industries can be obtained from trade associations.


One of the most important feature of inventory control is to have the items in stock at the moment they are needed. This includes going into the market to buy the goods early enough to ensure delivery at the proper time. Thus, buying requires advance planning to determine inventory needs for each time period and then making the commitments without procrastination. For retailers, planning ahead is very crucial. Since they offer new items for sale months before the actual calendar date for the beginning of the new season, it is imperative that buying plans be formulated early enough to allow for intelligent buying without any last minute panic purchases. The main reason for this early offering for sale of new items is that


the retailer regards the calendar date for the beginning of the new season as the merchandise date for the end of the old season. For example, many retailers view March 21 as the end of the spring season, June 21 as the end of summer and December 21 as the end of winter.

Part of your purchasing plan must include accounting for the depletion of the inventory. Before a decision can be made as to the level of inventory to order, you must determine how long the inventory you have in stock will last. For instance, a retail firm must formulate a plan to ensure the sale of the greatest number of units. Likewise, a manufacturing business must formulate a plan to ensure enough inventory is on hand for production of a finished product. In summary, the purchasing plan details: ! When commitments should be placed; ! When the first delivery should be received; ! When the inventory should be peaked; ! When reorders should no longer be placed; and ! When the item should no longer be in stock. Well planned purchases affect the price, delivery and availability of products for sale.



To maintain an in-stock position of wanted items and to dispose of unwanted items, it is necessary to establish adequate controls over inventory on order and inventory in stock. There are several proven methods for inventory control. They are listed below, from simplest to most complex. ! Visual control enables the manager to examine the inventory visually to determine if additional inventory is required. In very small businesses where this method is used, records may not be needed at all or only for slow moving or expensive items.

! Tickler control enables the manager to physically count a small portion of the inventory each day so that each segment of the inventory is counted every so many days on a regular basis. ! Click sheet control enables the manager to record the item as it is used on a sheet of paper. Such information is then used for reorder purposes. ! Stub control (used by retailers) enables the manager to retain a portion of the price ticket when the item is sold. The manager can then use the stub to record the item that was sold. As a business grows, it may find a need for a more sophisticated and technical form of inventory control. Today, the use of computer systems to control inventory is far more feasible for small business than ever before, both through the widespread existence of


computer service organizations and the decreasing cost of small-sized computers. Often the justification for such a computer-based system is enhanced by the fact that company accounting and billing procedures can also be handled on the computer. ! Point-of-sale terminals relay information on each item used or sold. The manager receives information printouts at regular intervals for review and action. ! Off-line point-of-sale terminals relay information directly to the supplier's computer who uses the information to ship additional items automatically to the buyer/inventory manager. The final method for inventory control is done by an outside agency. A manufacturer's representative visits the large retailer on a scheduled basis, takes the stock count and writes the reorder. Unwanted merchandise is removed from stock and returned to the manufacturer through a predetermined, authorized procedure.

A principal goal for many of the methods described above is to determine the minimum possible annual cost of ordering and stocking each item. Two major control values are used: 1) The order quantity, that is, the size and frequency of orders 2) The reorder point, that is, the minimum stock level at which additional quantities are ordered. The Economic Order Quantity (EOQ) formula is one widely used method of computing the minimum annual cost for ordering and stocking each item. The EOQ computation takes into account the cost of placing an order, the annual sales rate, the unit cost, and the cost of carrying inventory.


ü Inventory Management deals with the management of material stocks on a quantity and value basis, as well as the planning, entering, and proof of goods movements. It is part of the MM Materials Management module and is therefore integrated in Logistics. ü Based on the requirements determined by Materials Planning, a material can be procured either externally or internally. The delivery is entered in Inventory Management as a goods receipt, and material is stored until it is delivered to the customer or used for internal purposes. ü Inventory Management is directly linked with Materials Planning, Purchasing, and Invoice Verification. ü In the standard procurement process, you purchase a material from a vendor and it is then delivered to you. Once they have been delivered, the goods belong to the customer, i.e. your company. In special procurement, goods do not necessarily flow from the vendor to the customer. The R/3 System supports various forms of special procurement, such as, consignment, subcontracting, and pipeling handling. ü If you have created a purchase order to procure a material, it is important for all departments concerned that the goods receipt references this purchase order. The system can check, for example, whether the material delivered is the same as the material ordered, whether the purchase order quantity corresponds to the goods receipt quantity or whether the shelf life is still guaranteed for highly perishable goods (when the shelf life expiration date check is active for the associated material).


ü The purchase order history for a purchasing document item is also updated when a goods receipt is posted with reference to a purchase order. This enables the buyer to send the vendor a reminder about outstanding deliveries, for example. ü Several goods receipt items can be entered for a purchase order item in one operation. This is advisable if, for example, the material is delivered in batches or is

distributed between several storage locations. You enter the goods receipt data in a single material document. ü If the delivery note accompanying the goods receipt does not contain a purchase order number, you can, for example, use the material number or the vendor number to search for the corresponding purchase order number.


ü The movement type is a three-digit key to differentiate between goods movements in the R/3 System. Examples of these goods movements are goods receipts, goods issues or transfer postings.

ü The movement type takes over important control functions in Inventory Management. It plays a central role in automatic account determination in the R/3 System. Together with other influencing factors, the movement type determines, among other things, which stock or consumption accounts are updated in Financial


Accounting. The movement type also determines the structure of the screen when you enter documents and the updating of the quantity fields.

Overview: Main Business Scenario

ü The document principle also applies in IT-based Inventory Management. A document is the proof that a transaction involving stock changes has taken pla ce. Documents are stored in the system. ü A material document is created in the R/3 System as proof of a transaction involving stock changes.

ü If internal or external accounting are affected by the material movement, then at least one accounting document is created in addition to the material document.


ü As soon as a goods movement is posted, the quantities, material, movement type and organization level can no longer be changed. You can only change the text. If you want to correct errors, you must create a new document. You can reverse or cancel the incorrect document.





Firstly a project on the material management with reference to Samtel Glass Ltd. was assigned me as a trainee. I have completed my project by going through the following research methodology:

1. Firstly keeping the research objectives mentioned I contacted different managers working in Samtel Glass Ltd. in different department.


Primary data
Ø Personal interview with manager and officers

Secondary data
Ø Books Ø Internet Ø Manuals


LIMITATIONS:• Some confidential Data are removed as per the company polices like agreement with transporters, custom house agent (CHA), agreements with vendors.

Global glass market trend presently show that the demand supply gap has shrunk due to shut down major glass plants all over the world. The decline in global CRE market has now stabilised at the level of 112 million in 2005 to 14 million 2009. Samtel Glass team under the leadership of Mr. Uttam Bose able to grab the opportunities available in external market by drawing on its internal strength to swiftly adopt itself to meet the fresh challenges in the market. The need for conceiving & pursuing a turnaround strategy was focused on both the enhancement of value & production volume. In an environment in which the price of major inputs


STRENGTH:v Largest manufacturer of TV glass in India. v Increasing trend in volume. v Redesigning of glass chemistry.


WEAKNESS:v Marginal profits. v Continues decrease in pricing. v Increasing trend in price of major raw material like Litharge, neck tubing.

OPPORTUNITIES:v Introduction of new market of both export & domestic. v Shutting down trend of TV glass furnace worldwide. v Continues focus in cost reduction. v Continues focus on process establishment ‘system’ by using 6 sigma methodologies.

THREATS:v Continues reduction in price. v Dependency on Samtel color (sell more than 95% of funnel to Samtel color. v Continues import of picture tube.





FINDINGS:Ø The planning of the material ü Depend on the Fund ü Depend on period of material requirement i.e. in how frequently it is required. ü Whether imported or local purchase Ø The amount of material depends on the requirement of the user and store. Ø Vendors are selected on the basis of ü Quality of material ü Quantity of material ü lead time taken by supplier ü Payment terms ü Price of material ü Major client of the vendor Ø Relation with the vendors are maintain by ü Timely payment to vendor ü Transparency in the deal and communication ü Visits to vendor if possible Ø Reasons for delay in purchasing of material ü Specifications of the material is not properly mention by the user ü Unavailability of material with the supplier ü Unavailability of funds


Ø Accept raw material, material are not stocked for more than two days Ø The means of transportation of material depends on the ü Urgency of material ü Money required in the transportation

SUGGESTIONS:Ø The work in purchase department should be divided on the basis of the work like making PO, follow up the vendor and transporter. Ø User should interact with only one person in purchase department which will ensure the proper working of purchase officer.





1. What is your name? 2. What us your age? 3. What is your department? 4. What is your destination? 5. How do you decide to purchase materials? 6. How you decide the quantity of the material to be purchased? 7. How you search the vendor for your purchase of materials? 8. How do you decide from which vendor material should be purchased? 9. How you determine the capability of the vendor? 10. How you maintain relationship with your vendor? 11. What are the reasons for delay in purchasing process? 12. What is ROL? 13. How determine the ROL quantity?


1. Supply Chain Management: Concepts, Techniques and Practices by Ling Li, PhD,

CFPIM Old Dominion University, USA
Study material provided by the SAP R/3 System TAMM40 Materials Management

Release 4.6B, April 2000

3. 4.
5. problems

6. 7.


Sign up to vote on this title
UsefulNot useful