BIRLA INSTITUTE OF TECHNOLOGY

Kolkata Extension Centre

Name : Amit Murmu Roll No:BBA/3519/07 Semester: Vth Course: BBA Subject: Project-I (BBA 620)

1

A Project Report On

“Inventory Analysis”

External Project Guide

Mr. Suhas Mahadeokar Manager– Purchasing Process & IT Projects
Internal Project Guide By:

Mrs. Sraboni Dutta
Amit Murmu
2

BBA/3519/07

Table of Contents
1. Acknowledgment 2. Executive Summary 3. Introduction 4. Certificate 5. Scope & Objective 6. Brief Review of Plants 7. Vision 8. Lafarge Products 9. Important Definitions 10. Item Master & Supplier Master 11. Approach 12. Working at Eastern Operation Office, Kolkata 13. Evaluation on Jojobera Cement Plant 14. Recommendations 15. Suggestions

Page no
4 5 6 6 8 11 15 16 17 19 20 21 22 28 29

3

16. Key Learning 17. Conclusion

30 31

Acknowledgement

I am thankful to Mr. R T Goswami , Faculty In charge BIT

Mesra

Kolkata

Extension

Centre

and

Mr.

Mohit for

Kapoor,V.P. Logistics Lafrge Cement EOO kolkata Ltd. My sincere thanks to

giving me an opportunity to work for Lafarge India Pvt.

Mr Suhas Mahadeokar Manager–

Purchasing Process & IT Projects for extending his full support and valuable guidance throughout my project duration. I am also thankful to respective HODs and Users of Lafarge for extending their cooperation towards the successful completion of my project. My sincere thanks to my Internal Guide Mrs. Sraboni Dutta, Lecturer BIT Mesra Kolkata extension Centre for extending all the support and for her ideas and knowledge which acted as preliminary information for all the project work. Finally, I would thank my faculty and friends for their valuable suggestions and inputs that proved to be of invaluable assistance, and constantly motivated me to learn as much as possible.
4

Amit Murmu BBA/3519/07

Executive Summary

The main aim of this project is to identify movable and immovable items , slow moving items and the inventory currently in use and identifying obsolete items. The Summary Report includes positive comments about the Lafarge cement industry and the evaluation of jojobera cement plant inventories .The observation also includes the areas where the company would like to see improvement. There are areas where the industry has to look upon its inventories and its different plants have to, share similar perspectives. There are also a number of areas where Industry differ by quality, quantity i.e. stock, and or rank i.e. proper use of stocks., given that Lafarge cement Industry has experience both on market performance, position an gaining customer loyalty. The project summarizes the work and experience gained at Lafarge Eastern Operation Office and a brief overview of different items (moving, non5

moving, disposable ) ,and a evaluation on jojobera plant has also been done.

INTRODUCTION In line with its strategy to develop its Aggregates & Concrete business in emerging markets, Lafarge acquires 66 highly efficient concrete plants located across India. It has key markets in Delhi, Kolkata, Mumbai and Bangalore, with total estimated volumes of 4.1Mm3 in 2008 and a market share of approximately 25%. Lafarge has established itself as the leader in the Indian ready-mix concrete market.

The ready-mix concrete market is still in an early stage of its development in India, but offers
6

strong growth and value creation potential. The Indian construction market is developing to meet significant demand for new housing, urbanization and infrastructure.

India offers strong potential for introducing innovative products. Lafarge boasts the world's leading research facility in building materials and has developed innovative, value-added concrete products over the last ten years which contribute to improving construction methods and working conditions on building sites. One of Lafarge's key strategic focuses today is innovation in concrete, which translates into an accelerated roll-out of value-added concrete products in both developed and emerging markets. Lafarge will be aiming to offer the Indian market its most advanced and value creative solutions for construction. "Lafarge was the first in its industry to move into Aggregates and Concrete in a significant way, over 10 years ago, and to develop a unique expertise in creating value in the Concrete business." The recent start-up of operations at Lafarge's first Greenfield ready-mix concrete plant in Raipur, in the state of Chhattisgarh and marks a decisive step in Lafarge's strategy to grow its presence in the Indian ready-mix market. Lafarge is already present in India in its other businesses and is investing to develop its Indian
7

operations, in order to accompany market growth. In cement, Lafarge has emerged as a major player in the eastern region of India, with a cement production capacity of 5.5 million tons and a strategic plan to more than double its presence in the next five years through Greenfield projects in several regions. In Gypsum, Lafarge is already supplying the Indian market and is currently building a plasterboard plant near New Delhi, Rajasthan, with an annual capacity of around 10 million m². Lafarge Cement currently holds the leadership position in Eastern Indian markets, producing high performance blended cements in Portland Slag Cement (PSC) and Portland Pozzolona Cement (PPC) variants. Lafarge enjoys high brand equity through its different brands; Lafarge Concreto, Lafarge Duragard and Lafarge Cement.

8

Scope & Objective

The objective of this study is to identify items which can be declared as disposable items. This will help in improving working capital, reducing the storage, handling costs and various indirect costs being incurred by Lafarge in maintaining such non-usable Items. The project here by helps to understand the inventory’s maintained by Lafarge cement and categorising them as movable and non movable items. It also helps to understand the valuation of items, how much the stock of inventories Lafarge cement maintains and how it uses them.

9

Company Overview

Lafarge India is a subsidiary of the French Building Materials major Lafarge. Lafarge is the world leader in building materials, with topranking positions in all of its businesses: Cement, Aggregates & Concrete and Gypsum. Lafarge entered the Indian market in 1999, with the acquisition of the cement business of Tata Steel. This acquisition was followed by the purchase of the Raymond Cement facility in 2001.

10

Lafarge currently has four cement plants in India: two integrated plants in the state of Chhattisgarh , one grinding station each in Jharkhand & West Bengal. Total cement production capacity of Lafarge in the Indian market currently stands at around 6.5 million tons. Lafarge India produces different types cements like Portland Slag Cement, Portland Pozzolana Cement. Lafarge Cement is famous all over the world for its premium quality and has been used to build many landmark buildings,structures globally. The company is a leading cement player in Eastern India. It’s brands Lafarge Cement and Lafarge Concreto Cement enjoy high brand equity here and are amongst the highest priced brands. Lafarge is committed to the Indian market and has firm plans to expand its capacity in India. Lafarge cement is available through a large dealer network, throughout eastern India- in the states of West Bengal, Jharkhand, Bihar, Chattisgarh, Orissa and North-East States.
11

Lafarge Cement is also available in parts of Madhya Pradesh and Maharashtra (Vidarbha region), Part of Uttar pradesh , Andhra Pradesh & National Capital Region.

Brief Review of Plants
Lafarge India's current cement operation comprises a modern split location cement facility
12

located at Sonadih (District Raipur, Chhattisgarh) , at Jojobera (District Singhbhum, Jharkhand), at Mejia(District Bankura,West Bengal) and an integrated cement facility located at Arasmeta (District Janjgir-Champa, Chhattisgarh).

All plants are ISO 9001 and 14001 certified.

The plants at Sonadih, Jojobera,Mejia and Arasmeta are based on the dry process technology and use energy efficient processes. The thermal energy of the kiln is optimized by the use of a multistage pre-heater with in-line precalciner. Lafarge worldwide places a very high emphasis on protection of the environment. In all its Indian
13

plants, bag filters and electrostatic precipitators are used to reduce pollution and ensure environment friendly plant operations.

Lafarge India has adopted stringent quality control measures to ensure the highest quality cement .The plants have the benefit of the strong technical and R&D set-up of Lafarge group called DPC which is supported by CTI & CTEO - at Lyon in France, CTS - at Montreal in Canada, ATC - at Kuala Lumpur in Malaysia and CTEC - in Austria.

Lafarge Group employs more than 500 scientists and spends more than 100 million euros annually
14

in developing leading technologies in the area of building materials and construction technology. The regular exchange of knowledge and technological improvements between the technical centre and the Indian operations has enabled Lafarge India to improve operational efficiencies on a continuous basis.

Location

Facilities Clinkerisation unit

Rated Capacities (as of 2009) 1.4 MTPA of clinker 0.5 5MTPA of Ordinary

Sonadih

Cement Grinding unit

Portland Cement (OPC) 43 grade

Jojobera

Cement Grinding unit with separate circuits for clinker and slag grinding

3.4 MTPA of Portland Slag Cement (PSC) & Portland Pozzolana Cement (PPC) 1.6 MTPA of clinker 1.6 MTPA of Portland Pozzolana Cement (PPC) 1.0 MTPA of Cement

Arasmeta Clinkerisation unit Cement Grinding unit

Mejia

Cement Grinding Unit

Portland Pozzolana Cement (PPC)

15

16

Vision

To be a leading cement company in India. • Sustained growth that creates value for our shareholders and doubles our turnover every 4 years. • Building strong brands that meet consumer needs and aspirations. • Embracing safety as a way of life. • Being a responsible development.

citizen

and

ensuring

sustainable

Being committed to the highest standards of corporate governance by conducting the business with integrity, honesty and transparency. Fostering a performance culture in an environment of learning that encourages mutual trust and respect, teamwork, customer orientation and sharing of best practices .

LAFARGE PRODUCTS
17

World leader in building materials, Lafarge holds top-ranking positions in all of its businesses: Cement, Aggregates & Concrete and Gypsum , plaster primer named “ASTARTEK”.

Important Definitions
18

Inventory - Inventory is the total amount of goods / materials contained in a store or a factory at a given time.

Non Moving Items – The items lying in the inventory of Lafarge’s Plants which have not moved since Oct. 2004

Slow Moving Items – The items lying in the inventory of Lafarge’s Plants which have not moved since July,2006.

Insurance Spares – The spares which have a book value greater than Rs. 1.6 crores are insurance spares.

Critical Spares – The spares which are essential for continuous operation of the plant i.e. the plant cannot continue production if the major equipment running through these spares are not available at the time of breakdown.

Non Productive Items – Items lying in Lafarge’s inventory which are fast moving and consumable but are of no economic importance to Lafarge. Such Items included Stationary, Printed Stationary , Printer Cartridges etc.

19

S- Tagged Items – The items which are live in nature i.e. they are suitable to use in there present condition

U- Tagged Items – The items classified as U tagged were those items which are declared as Obsolete and are not more suitable to use in plant or the major equipment is not running due to technological advances.

O– Tagged Items – This category of items represents the dead items.

M – Tagged Items – This category includes those items, which are required to be maintained in the inventory within a minimum permissible limit. The quantity level of such items should never reach below the allowed minimum permissible limits. Responsibility to maintain inventory/ availability of such items is of Plant Inventory Team.

Item Master & Supplier Master

20

• Item Master – Item Master gives all the details about the item that has been procured such as item description, item code etc.

• Supplier Master – Supplier Master deals with all the details of the suppliers. • Generation of Codes Any item in the inventory is given a particular code which is comprised of 9 digits. Consider the following example: Suppose a Item Code is 220104A01 The logic behind generation of this code is shown below: 22 represent the class, standard item. 2201 represent the family, bearing. 220104 represent the sub family, ball bearing. A01 represent the serial number of the particular item. Similarly, codes are generated for suppliers which comprises of 8 digits.

Approach
21

• Focused on Items, which have not moved since last one year, which also included Slow Moving and Non Moving Items.

• Segregation of Items Department wise

Meeting with Respective Department Heads & Users.

Working at Eastern Operation Office Kolkata
22

• Segregated Items Department wise, Class wise and Family wise.

• Analysis of Non Moving Items.

Analysis of Top Items.

• Analysis of Non Productive Items.

• Classified Items on the basis of Equipment type.

Learned Use of stocks.

Valuation of Jojobera Cement Plant

23

Total Inventory* Non Moving Items (MINR) (MINR) (Not Moved since Oct Jul 2009 2004) No. of Items Total Value 9102 1989

Slow Moving Items (MINR) (Not Moved since July 2006)

Moving Items (MINR) July 2009 5688

3414

250.95

8.51

25.76

225.19

Top Items

Departments

Value (MINR) July 2009
24

Mechanical Electrical Electrical & Instrumentation Mines Production Instrumentation Total

58.52 10.64 9.71 14.26 35.73 8.18 137.04

Non Moving Spares, appearing in inventory, for the following main equipments:

Equipment

Value (MINR) July 2009

25

Coles Crane Dozer D155 Dumper BH40 Dumper LW 35 IR HP 450 SCU Compressor Others Total

0.16 0.16 0.22 0.17 0.10 1.59 2.40

Non Productive Items

Category A B C Total

No. of Items 3 142 4 149

Value 0.04 0.88 0.03 0.95
26

CATEGORY INCLUDES: A INVENTORY OF CONSUMABLE ITEMS INVENTORY ITEMS RELATED TO : B IT,ELECTRONICS,CONSUMABLES,GENERAL ITEMS,STATIONARY & PRINTED STATIONARY C INVENTORY OF ELECTRONIC ITEMS WHERE THE MAIN EQUIPMENT/METHOD IS OUT DATED.

Observations

• There were some rubber items laying in inventory which were not moved since 2004, which required physical verification.

• Similarly, there were couplings and bearings which also required physical inspection after not having moved for so many years.

27

• Many non-productive items are part of Inventory. Maintaining inventory of such items may have impact on carrying / handling cost. Ex. stationary, printing stationery, IT related products such as Printer Cartridges, RAM & Hard Disk etc.

Evaluation on Jojobera Cement Plant

Worked on Inventory as on 11th July, 2009.

• Modified our strategy by working on last year non moves items

• Held a detailed discussion regarding non moving items.

Summary of Disposable Items

28

Department MINES PRODUCTION CIVIL, DG, ELECTRICAL AND INSTRUMENTATION INFORMATION TECHNOLOGY DISPATCH TOTAL

No. of Items Value(INR) 307 4 52 21 2 386 15,61,407.70 4,09,406.21 2,93,818.37 1,51,197.80 8,014.66 24,23,844.74

Recommendations

• Maintaining healthy relations with suppliers.

• Working on Zero Inventory Basis.

29

• Reduce the Purchase Procedure Timing.

• Formation of a Centralized Core Committee which will visualize procurement of materials for all the plants.

Suggestions

• If predictions made by Inspectors can provide specific details about failure of equipments, it can help in reducing inventory by working according to the time limit given by them.

30

Some Items are doubly coded which results in non- moving items.

Key Learning’s

31

The

logic behind generation of codes for various Items.

• How are inventories classified and maintained in stores

• Purchasing Process

• Organizational Structure

• Organizational Approach

• Art of Management

Conclusion

32

Lafarge is maintaining a huge stock pile of inventories which causes a great impact on storage costs, handling costs and other indirect costs. In order to restore the order of inventory, Lafarge must redefine the criticality of the components and must revise the ordering and purchasing process so that the items are procured in right manner and in right quantity and at right time. A total reduction of Rs. 27 Lacs of inventory was made in Jojobera Cement Plant. Such analysis should be carried out on a regular basis to ensure a constant check on the levels of inventory.

33

Sign up to vote on this title
UsefulNot useful