PROECT REPORT

ON
“A DETAILED STUDY ON JUST IN TIME PRODUCTION TO
REDUCE INVENTORY LEVEL IN CIPLA LIMITD”

UNDER SUPERVISION OF
VIMLA SHARMA

SUBMITTED BY
NAME: JASDEEP KAUR
ROLL NUMBER: 1408019957
Submitted in Partial fulfilment of the requirements

for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION (MBA) in

OPERATIONS MANAGEMENT

APRIL, 2020

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 BONAFIDE CERTIFICATE

Certify that this project report titled “JUST IN TIME PRODUCTION TO REDUCE
INVENTORY LEVEL IN CIPLA LIMITD” is the bonafide work of “JASDEEP KAUR”
who carried out the project work under my supervision in the partial fulfillment of the
requirements for the award of the MBA (Operations) degree.

VIMLA SHARMA

2
 DECLARATION BY THE STUDENT

I JASDEEP KAUR bearing Reg. No. 1408019957 hereby declare that the Project entitled
“JUST IN TIME PRODUCTION TO REDUCE INVENTORY LEVEL IN CIPLA
LIMITD” has been prepared by me towards the partial fulfillment of requirement of MBA
Degree under the guidance of VIMLA SHARMA

I also declare that this project report is my original work and has not been previously
submitted for the award of any Degree, Diploma, Fellowship, or other similar titles.

PLACE: NEW DELHI

DATE: 11th April 2020

JASDEEP KAUR
1408019957

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 ACKNOWLEDGEMENT

Many persons have contributed to make this project report on “JUST IN TIME
PRODUCTION TO REDUCE INVENTORY LEVEL IN CIPLA LIMITD” a reality. I
would especially like to express my appreciation to VIMLA SHARMA for his unstinted
support, encouragement and his painstakingly and meticulous effort towards developing this
project.

I acknowledge the help and cooperation received from the faculty members of Cipla, Several
colleagues and students have contributed directly and indirectly to the contents of this
project, as they had given me numerous ideas. Their criticism gave me the much-needed
hints about the areas that needed elaboration and amendments and also to present them with
greater clarity.

Finally, I wish to express my sincere thanks to all my family members, especially my Parents
for their constant moral support and Encouragement.
I would Welcome Constructive Suggestions to improve this project report, which can be
implemented in my further attempts.

Thanking you!

JASDEEP KAUR
1408019957

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 CONTENTS

Chapter Title Page No

1 Introduction 08-31

Introduction to the topic 09

10
Characteristics of JIT
Strategic Implications of JIT Systems 22

29
History of JIT
2 Company Profile 32-42

Introduction to Company 33

Key risks 36

Key competitors 36

SWOT Analysis of Cipla 37

Other welfare Activities 41

Directors 42

3 Literature Review 43-48

Conceptual Discussion 44

Statement of problem 45

History of Cipla 45

4 Need, Scope and Objectives of the study 49-52

Objectives 50

Scope 50

Need 50

Benefits 51

5 Research Methodology 53-57

Methodology 54

Sampling 55

Data Collection 54

Nature of research 55

5
 Research tools applied 56

Limitations 57

6 Data Analysis ,Interpretation and Findings 58-72

Data Analysis and Interpretation 59

Findings 72
7 Recommendations and Suggestions 73-75

Suggestions 74

Recommendations 74
8 Conclusions 76-77
9 Bibliography and questionnaire 78-88

Questionnaire 79

Bibliography 87

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EXECUTIVE SUMMARY

In this paper, we are examining the implementation of Just-In-Time methodology in

Ford for its latest small car KA; possibly one of the most interesting manufacturing
revolution where companies involved in the production are integrated not only in their
business processes moreover in their physical plants. The concept has been
successfully developed and implemented in Valencia, Spain and is due to be adopted in
other Ford production plants. The case study clearly shows how companies can work
together in a harmonic and synchronized system meeting probably the most idealistic
manufacturing principles (JIT) to produce the best quality product within the shortest
time frame with minimum/no wastage and cost-effective to all parties. Careful
production planning, cost-benefit analysis, adequate outsourcing plans and customer
orientation are being praises as the key success factors of this amazing Just-In-Time
concept.

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 CHAPTER 1

INTRODUCTION

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INTRODUCTION

JIT is a management philosophy that strives to eliminate sources of manufacturing waste by

producing the right part in the right place at the right time. The Waste results from any
activity that adds cost without adding value, such as moving and storing. The idea of
producing the necessary units in the necessary quantities at the necessary time is described by
the short term Just-in-time.
The implementation of this management philosophy in industries like the automobile
industry can bring about a see saw change in both quality & quantity since in a JIT
system, underutilized (excess) capacity is used instead of buffer inventories to hedge against
problems that may arise.
To gain and maintain a competitive advantage, firms are using the just-in-time (JIT)
philosophy, which is to eliminate waste by cutting unnecessary inventory and removing
delays in operations. The goals are to produce goods and services as needed and to
continuously improve the value-added benefits of operations. A JIT system is the
organization of resources, information flows, and decision rules that can enable an
organization to realize the benefits of the JIT philosophy. Often a crisis (such as being faced
with going out of business or closing a plant) galvanizes management and labor to work
together to change traditional operating practices. Converting from traditional manufacturing
to a just-in-time system brings up not only inventory control issues, but also process
management and scheduling issues. In this chapter we identify the characteristics of JIT
systems, discuss how they can be used for continuous improvement of operations, and
indicate how manufacturing and service operations utilize such systems. We also address the
strategic implications of JIT systems and some of the implementation issues that companies
face. Finally, we discuss the choice of an appropriate production and inventory management
system for a particular environment.

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CHARACTERISTICS OF JUST-IN-TIME SYSTEMS

Just-in-time systems focus on reducing inefficiency and unproductive time in the production
process to improve continuously the process and the quality of the product or service.
Employee involvement and inventory reduction are essential to JIT operations. Just-in-time
systems are known by many different names, including zero inventory, synchronous
manufacturing, lean production, stockless production (Hewlett-Packard), material as needed
(Harley-Davidson), and continuous flow manufacturing (IBM). In this section we discuss the
following characteristics of JIT systems: pull method of material mow, consistently high
quality, small lot sizes, uniform workstation loads, standardized components and work
methods, close supplier ties, flexible work force, line flow strategy, automated production,
and preventive maintenance.

Pull Method of Materials Flow:

Just-in-time systems utilize the pull method of materials flow. However, another popular
method is the push method. To differentiate between these two systems, let's first consider
the production system for a Quarter Pounder at a McDonald's restaurant. There are two
workstations. The burger maker is the person responsible for producing this burger: Burger
patties must be fried; buns must be toasted and then dressed with ketchup, pickles,
mayonnaise lettuce, and cheese; and the patties must be inserted into buns and put on a tray.
The final assembler takes the tray, wraps the burgers in paper, and restocks the inventory.
Inventories must be kept low because any burgers left unsold after seven minutes must be
destroyed.The flow of materials is from the burger maker to the final assembler to the
customer. One way to manage this flow is by using the push method, in which the production
of the item begins in advance of customer needs. With this method, management schedules
the receipt of all raw materials (e.g., meat, buns, and condiments) and authorizes the start of
production, all in advance of Quarter Pounder needs.

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The burger maker starts production of 24 burgers (the capacity of the griddle) and, when they
are completed, pushes them along to the final assembler's station, where they might have to
wait until she is ready for them. The packaged burgers then wait on a warming tray until a
customer purchases one.
The other way to manage the flow among the burger maker, the final assembler, and the
customer is to use the pull method, in which customer demand activates production of the
item. With the pull method, as customers purchase burgers, the final assembler checks the
inventory level of burgers and, when they are almost depleted, orders six more. The burger
maker produces the six burgers and gives the tray to the final assembler, who completes the
assembly and places the burgers in the inventory for sale. The pull method is better for the
production of burgers: The two workers can coordinate the two workstations to keep
inventory low, important because of the seven-minute time limit. The production of burgers
is a highly repetitive process, setup times and process times are low, and the flow of
materials is well defined. There is no need to produce to anticipated needs more than a few
minutes ahead.
Firms that tend to have highly repetitive manufacturing processes and well-defined material
flows use just-in-time systems because the pull method allows closer control of inventory
and production at the workstations. Other firms, such as those producing a large variety of
products in low volumes with low repeatability in the production process, tend to use a push
method such as MRP. In this case a customer order is promised for delivery on some future
date. Production is started at the first workstation and pushed ahead to the next one.
Inventory can accumulate at each workstation because workstations are responsible for
producing many other orders and may be busy at any particular time.

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Consistently High Quality
Just-in-time systems seek to eliminate scrap and rework in order to achieve a uniform flow of
materials. Efficient JIT operations require conformance to product or service specifications
and implementation of the behavioral and statistical methods of total quality management
(TQM). JIT systems control quality at the source, with workers acting as their own quality
inspectors.
For example, a soldering operation at the Texas Instruments antenna department had a defect
rate that varied from zero to 50 percent on a daily basis, averaging about 20 percent. To
compensate, production planners increased the lot sizes, which only increased
inventory levels and did nothing to reduce the number of defective items. Engineers
discovered through experimentation that gas temperature was a critical variable in producing
defect-free items. They devised statistical control charts for the operators to use to monitor
gas temperature and adjust it themselves. Process yields immediately improved and stabilized
at 95 percent, eventually enabling management to implement a JIT system.
Management must realize the enormous responsibility this method places on the workers and
must prepare them properly, as one GM division quickly learned. When Buick City began
using JIT in 1985, management authorized its workers to stop the production line by pulling
a cord if quality problems arose at their stations-a practice the Japanese call andon. GM also
eliminated production-line inspectors and cut the number of supervisors by half. Stopping the
line, however, is a costly action that brings a problem to everyone's attention. The workers
weren't prepared for that responsibility; productivity and quality took a nose-dive. The paint
on Le Sabres wasn't shiny enough. The seams weren't straight. The top of the dashboard had
an unintended wave. Management, labor, and engineering formed a team to correct the
problems. Work methods were changed, and the andon system was modified to include a
yellow warning cord so that workers could call for help without stopping the line.

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Small Lot Sizes
Rather than building up a cushion of inventory, users of JIT systems maintain inventory with
lot sizes that are as small as possible. Small lot sizes have three benefits. First, small lot sizes
reduce cycle inventory, the inventory in excess of the safety stock carried between orders
(see the Inventory Management chapter). The average cycle inventory equals one-half the lot
size: As the lot size gets smaller, so does cycle inventory. Reducing cycle inventory reduces
the time and space involved in manufacturing and holding inventory
Second, small lot sizes help cut lead times. A decline in lead-time in turn cuts pipeline
(WIP) inventory because the total processing time at each workstation is greater for large lots
than for small lots. Also, a large lot often has to wait longer to be processed at the next
workstation while that workstation finishes working on another large lot. In addition, if any
defective items are discovered, large lots cause longer delays because the entire lot must be
inspected to find all the items that need rework.
Finally, small lots help achieve a uniform operating system workload. Large lots consume
large chunks of processing time on workstations and therefore complicate scheduling. Small
lots can be juggled more effectively, enabling schedulers to utilize capacities more
efficiently. In addition, small lots allow workstations to accommodate mixed-model
production (more than one item) by reducing waiting line times for production. We return to
this point when we discuss uniform workstation loads.
Although small lot sizes are beneficial to operations, they have the disadvantage of
increased setup frequency. In operations where the setup times are normally low, as in the
McDonald's example, small lots are feasible. However, in fabrication operations with sizable
setup times, increasing the frequency of setups may result in wasting employee and
equipment time. These operations must reduce setup times to realize the benefits of small-lot
production.
Achieving low setup times often requires close cooperation among engineering,
management, and labor. For example, changing dies on large presses to form automobile
parts from sheet metal can take three to four hours.

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At Honda's Marysville, Ohio, plant--where four stamping lines stamp all the exterior and
major interior body panels for Accord production--teams worked on ways to reduce the
changeover time for the massive dies. As a result, a complete change of dies for a giant 2400-
ton press now takes less than eight minutes. The goal of single-digit setup means having
setup times of less than 10 minutes. Some techniques to reduce setup times include using
conveyors for die storage, moving large dies with cranes, simplifying dies, enacting machine
controls, using microcomputers to automatically feed and position work, and preparing for
changeovers while the current job is being processed.

Uniform Workstation Loads:

The JIT system works best if the daily load on individual workstations is relatively uniform.
Uniform loads can be achieved by assembling the same type and number of units each day,
thus creating a uniform daily demand at all workstations. Capacity planning, which
recognizes capacity constraints at critical work stations, and line balancing are used to
develop the monthly master production schedule. For example, at Toyota the aggregate
production plan may call for 4500 minivans per week for the next month. That requires two
full shifts, five days per week, producing 900 minivans each day, or 450 per shift. Three
models of minivans are produced: Camry (C), Avalon (A), and Sienna (S). Suppose that
Toyota needs 200 Camrys, 150 Avalons, and 100 Siennas per shift to satisfy market demand.
To produce 450 units in one shift of 480 minutes, the line must roll out a minivan every
480/450 = 1.067 minutes.
Three ways of devising a master production schedule for the minivans are of interest here.
First, with big-lot production, all daily requirements of a model are produced in one batch
before another model is started. The sequence of 200 C's, 150 As, and 100 S's would be
repeated once per shift. Not only would these big lots increase the average cycle inventory
level, but they also would cause lumpy requirements on all the workstations feeding the
assembly line.

14
The second option uses mixed-model assembly, producing a mix of models in smaller lots.
Note that the production requirements are in the ratio of 4 C's to 3 A's to 2 S's, found by
dividing the model's production requirements by the greatest common divisor, or 50. Thus
the Toyota planner could develop a production cycle consisting of 9 units: 4 C's, 3 As, and 2
S's. The cycle would repeat in 9(1.067)= 9.60 minutes, for a total of 50 times per shift (480
min/9.60 min = 50).
A sequence of C-S-C-A-C-A-C-S-A, repeated 50 times per shift, would achieve the same
total output as the other options. This third option is feasible only if the setup times are very
short. The sequence generates a steady rate of component requirements for the various
models and allows the use of small lot sizes at the feeder workstations. Consequently, the
capacity requirements at those stations are greatly smoothed. These requirements can be
compared to actual capacities during the planning phase, and modifications to the production
cycle, production requirements, or capacities can be made as necessary.

Standardized Components and Work Methods:

The standardization of components, called part commonality or modularity, increases
repeatability. For example, a firm producing 10 products from 1000 different components
could redesign its products so that they consist of only 100 different components with larger
daily requirements. Because the requirements per component increase, so does repeatability;
that is, each worker performs a standardized task or work method more often each day.
Productivity tends to increase because, with increased repetition, workers learn to do the task
more efficiently Standardization of components and work methods aids in achieving the
high-productivity, low-inventory objectives of JIT systems.

Close Supplier Ties

Because JIT systems operate with very low levels of inventory, close relationships with
suppliers are necessary.

15
Stock shipments must be frequent, have short lead times, arrive on schedule, and be of high
quality. A contract might require a supplier to deliver goods to a factory as often as several
times per day. Purchasing managers focus on three areas: reducing the number of suppliers,
using local suppliers, and improving supplier relations.
Typically, one of the first actions undertaken when a JIT system is implemented is to pare
the number of suppliers. Xerox, for example, reduced the number of its suppliers from 5000
to just 300. This approach puts a lot of pressure on these suppliers to deliver high-quality
components on time. To compensate, JIT users extend their contracts with these suppliers
and give them firm advance-order information. In addition, they include their suppliers in the
early phases of product design to avoid problems after production has begun. They also work
with their suppliers' vendors, trying to achieve JIT inventory flows throughout the entire
supply chain.
Manufacturers using JIT systems generally utilize local suppliers. For instance, when GM
located its Saturn complex in Tennessee, many suppliers clustered nearby. Harley-Davidson
reduced the number of its suppliers and gave preference to those close to its plants--for
example, three-fourths of the suppliers for the Milwaukee engine plant are located within a
175-mile radius. Geographic proximity means that the company can reduce the need for
safety stocks. Companies that have no suppliers close by must rely on a finely tuned supplier
delivery system. For example, New United Motor Manufacturing, Incorporated (NUMMI),
the joint venture between GM and Toyota in California, has suppliers in Indiana, Ohio, and
Michigan. Through a carefully coordinated system involving trains and piggyback truck
trailers, suppliers deliver enough parts for exactly one day's production each day.
Users of JIT systems also find that a cooperative orientation with suppliers is essential.
The JIT philosophy is to look for ways to improve efficiency and reduce inventories
throughout the supply chain. Close cooperation between companies and their suppliers can
be a win-win situation for everyone. Better communication of component requirements, for
example, enables more efficient inventory planning and delivery scheduling by suppliers,
thereby improving supplier profit margins.

16
Customers can then negotiate lower component prices. Suppliers also should be included in
the design of new products so that inefficient component designs can be avoided before
production begins. Close supplier relations can't be established and maintained if companies
view their suppliers as adversaries whenever contracts are negotiated. Rather, they should
consider suppliers to be partners in a venture wherein both parties have an interest in
maintaining a long-term, profitable relationship.

Flexible Work Force

Workers in flexible work forces can be trained to perform more than one job. When the skill
levels required to perform most tasks are low--at a McDonald's restaurant, for instance--a
high degree of flexibility in the work force can be achieved with little training. In situations
requiring higher skill levels, such as at the Texas Instruments antenna department, shifting
workers to other jobs may require extensive, costly training. Flexibility can be very
beneficial: Workers can be shifted among workstations to help relieve bottlenecks as they
arise without resorting to inventory buffers--an important aspect of the uniform flow of JIT
systems. Or they can step in and do the job for those on vacation or out sick. Although
assigning workers to tasks they don't usually perform may reduce efficiency, some rotation
relieves boredom and refreshes workers.

Line Flow Strategy

A line flow strategy can reduce the frequency of setups. If volumes of specific products are
large enough, groups of machines and workers can be organized into a product layout to
eliminate setups entirely. If volume is insufficient to keep a line of similar products busy,
group technology can be used to design small production lines that manufacture, in volume,
families of components with common attributes. Changeovers from a component in one
product family to the next component in the same family are minimal.
Another tactic used to reduce or eliminate setups is the one-worker, multiple machines
(OWMM) approach, which essentially is a one-person line.

17
One worker operates several machines, with each machine advancing the process a step at a
time. Because the same product is made repeatedly, setups are eliminated. For example, in a
McDonald's restaurant the person preparing fish sandwiches uses the OWMM approach.
When the signal is given to produce more fish sandwiches, the employee puts the fish patties
into the fish fryer and sets the timer. Then while the fish are frying, he puts the buns into the
steamer. When the buns are finished, he puts them on a tray and dresses them with
condiments. When the fish patties are ready, he inserts them into the buns. He then places the
completed sandwiches on the shelf for the final assembler to package for the customer. The
cycle is repeated throughout the day.

Automated Production:
Automation plays a big role in JIT systems and is a key to low-cost production. Sakichi
Toyoda, the founder of Toyota, once said, "Whenever there is money, invest it into
machinery. " Money freed up because of JIT inventory reductions can be invested in
automation to reduce costs. The benefits, of course, are greater profits, greater market share
(because prices can be cut), or both. Automation should be planned carefully, however.
Many managers believe that if some automation is good, more is better. That isn't always the
case. When GM initiated Buick City, for example, it installed 250 robots, some with vision
systems for mounting windshields. Unfortunately, the robots skipped black cars because they
couldn't "see" them. New software eventually solved the problem; however, GM
management found that humans could do some jobs better than robots and replaced 30 robots
with humans. That lesson carried over to GM's Opel plant in Eisenach, Germany, where
radiators and windshields are now installed by hand.

Preventive Maintenance:
Because JIT emphasizes finely tuned mows of materials and little buffer inventory between
workstations, unplanned machine downtime can be disruptive. Preventive maintenance can
reduce the frequency and duration of machine downtime.

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After performing routine maintenance activities, the technician can test other parts that might
need to be replaced. Replacement during regularly scheduled maintenance periods is easier
and quicker than dealing with machine failures during production. Maintenance is done on a
schedule that balances the cost of the preventive maintenance program against the risks and
costs of machine failure.
Another tactic is to make workers responsible for routinely maintaining their own
equipment and develop employee pride in keeping their machines in top condition. This
tactic, however, typically is limited to general housekeeping chores, minor lubrication, and
adjustments. Maintenance of high-tech machines needs trained specialists. Doing even
simple maintenance tasks goes a long way toward improving machine performance, though.

CONTINUOUS IMPROVEMENT WITH JUST-IN-TIME SYSTEMS

By spotlighting areas that need improvement, JIT systems lead to continuous improvement in
quality and productivity. In manufacturing, eliminating the problem of too much scrap might
require improving work methods, employee quality training, and supplier quality. The desire
to eliminate capacity imbalances might focus attention on the master production schedule and
work force flexibility. Reducing unreliable deliveries calls for cooperating better with
suppliers or replacing suppliers. Maintaining low inventories, periodically stressing the
system to identify problems, and focusing on the elements of the JIT system lie at the heart of
continuous improvement. For example, the Kawasaki plant in Nebraska periodically cuts
safety stocks almost to zero. Problems are exposed, recorded, and later assigned as
improvement projects. After the improvements have been made, inventories are permanently
cut to the new level. The Japanese have used this trial-and-error process to develop more
efficient manufacturing operations.
Service operations that are integral to both manufacturing and service organizations,
including scheduling, billing, order taking, accounting, and financial tasks, also can be
improved with JIT systems. As in manufacturing, continuous improvement means that
employees and managers continue to seek ways to improve operations. However, the
mechanics of highlighting the areas needing improvement are different.

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In service operations, a common approach used by managers to place stress on the system is
to reduce the number of employees doing a particular operation or series of operations until
the process begins to slow or come to a halt. The problems can be identified, and ways for
overcoming them can be explored.

JUST-IN-TIME IN SERVICES:
The just-in-time philosophy also can be applied to the production of services. We have
already discussed some of the elements of the JIT system used in a McDonald's restaurant. In
general, service environments may benefit from JIT systems if their operations are repetitive,
have reasonably high volumes, and deal with tangible items such as sandwiches, mail,
checks, or bills. In other words, the services must involve "manufacturing-like'' operations.
Other services involving a high degree of customization, such as haircutting, can also make
use of JIT systems but to a lesser degree--basically utilizing elements of JIT systems in their
operations.
The focus of JIT systems is on improving the process; therefore some of the JIT concepts
useful for manufacturers are also useful for service providers. These concepts include the
following.

 Consistently high quality: Benchmarking, service design, and quality function

deployment can be used successfully in service operations. Service employees can be
taught the value of providing defect-free services
 Uniform facility loads: Reservation systems and differential pricing are two ways in
which service providers can level the loads on their facilities.
 Standardized work methods: In highly repetitive service operations, great
efficiencies can be gained by analyzing work methods and standardizing
improvements for all employees to use. For example, UPS consistently monitors
work methods and revises them as necessary to improve service.

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 Close supplier ties: Volume services such as fast-food restaurants and mass
merchandisers such as Wal-Mart and Kmart require close supplier contacts to ensure
frequent, short lead-time and high-quality shipments of supplies.
 Flexible work force: The more customized the service, the greater is the need for a
multi-skilled work force. For example, stereo component repair shops require broadly
trained personnel who can identify a wide variety of problems and then repair the
defective unit. The employees at a sectional center post office have more narrowly
defined jobs because of the repetitive nature of the tasks they must perform, and thus
they do not have to acquire many alternative skills.
 Automation: Automation can play a big role in providing just-in-time services. For
example, banks offer ATMs that provide various bank services on demand 24 hours a
day.
 Preventive maintenance: Services that are highly dependent on machinery can
make good use of routine preventive maintenance. For example, entertainment
services such as Walt Disney World must have dependable people-moving apparatus
to accommodate large volumes of customers.
 Pull method of material flows: Service operations where tangible items are
processed, such as fast-food restaurants, can utilize the pull method.
 Line flow strategy: Managers of service operations can organize their employees
and equipment to provide uniform flows through the system and eliminate wasted
employee time. Banks use this strategy in their check processing operations, as does
UPS in its parcel-sorting process.

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STRATEGIC IMPLICATIONS OF JUST-IN-TIME SYSTEMS

When corporate strategy centers on dramatic improvements in inventory turnover and labor
productivity, a just-in-time philosophy can be the solution. Just-in-time systems form an
integral part of corporate strategies emphasizing time-based competition because they focus
on cutting cycle times, improving inventory turnover, and increasing labor productivity. In
this section we consider competitive priorities and flow strategy, as well as the overall
benefits of JIT systems.

Competitive Priorities:
Low cost and consistent quality are the priorities emphasized most often in JIT systems.
Superior features and volume flexibility are emphasized less often. The ability to provide
product variety depends on the degree of flexibility designed into the production system.
Such is the case with firms using an assemble-to-order strategy. For example, mixed-model
automobile assembly lines allow variety in output in terms of color, options, and even body
style. Production to customized, individual orders, however, usually isn't attempted with a
JIT system. Generally, items produced with a JIT system are standards rather than specials,
produced to support a shipping schedule. The erratic demand and last-minute rush jobs of
customized orders in a make-to-order environment don't link well with a system designed to
produce at a constant daily rate utilizing low inventory buffers.

Flow Strategy
A JIT system involves a line flow strategy to achieve high-volume, low-cost production.
Workers and machines are organized around product flows and arranged to conform to the
sequence of work operations. With line flows, a unit finished at one station goes almost
immediately to the next station, thereby reducing manufacturing lead-time and inventory.
Process repetition makes opportunities for methods improvement more visible.

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Operational Benefits Just-in-time systems have many operational benefits. They
 reduce space requirements;
 reduce inventory investment in purchased parts, raw materials, work in process, and
finished goods;
 reduce manufacturing lead times;
 increase the productivity of direct labor employees, indirect support employees, and
clerical staff;
 increase equipment utilization;
 reduce paperwork and require only simple planning systems;
 set valid priorities for production scheduling;
 encourage participation by the work force; and
 increase product quality.

One goal is to drive setup times so low that a production size of one end unit or part becomes
economical. Although this goal is rarely achieved, the focus still is on small-lot production.
In addition, constant attention is given to cutting safety stock and WIP inventory between
manufacturing processes. The result is less need for storage space and inventory investment.
Smaller lot sizes and smoothed flows of materials help reduce manufacturing lead times,
increase work-force productivity, and improve equipment utilization.
A primary operational benefit is the simplicity of the system: Product mix or volume
changes planned by the MPS can be accomplished by adjusting the number of kanbans in the
system. The priority of each production order is reflected in the sequence of the kanbans on
the post. Production orders for parts that are running low are placed before those for parts
that have more supply.
Just-in-time systems also involve a considerable amount of work-force participation on the
shop floor. Small-group interaction sessions encourage worker participation and have
resulted in improvements in many aspects of manufacturing, not the least of which is product
quality.

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Overall, the advantages of JIT systems have caused many managers to reevaluate their own
systems and consider adapting operations to the JIT philosophy.

IMPLEMENTATION ISSUES

The benefits of JIT systems seem to be outstanding, yet problems can arise even after a JIT
system has long been operational. Even the Japanese, who pioneered JIT practices in the
automobile industry, aren't immune from problems: Tokyo is experiencing monumental
traffic jams owing in large measure to truck deliveries to JIT manufacturers--small trucks
make up 47 percent of Tokyo's traffic. In this section we address some of the issues managers
should be aware of when implementing a JIT system.

Organizational Considerations
Implementing a JIT system requires management to consider issues of worker stress,
cooperation and trust among workers and management, and reward systems and labor
classifications.
Human Costs of JIT Systems: Just-in-time systems can be coupled with statistical process
control (SPC) to reduce variations in production. However, this combination requires a high
degree of regimentation and sometimes causes stress in the work force. In a JIT system,
workers must meet specified cycle times, and with SPC they must follow prescribed
problem-solving methods. Such systems might make workers feel pushed and stressed,
causing productivity losses or quality reductions. In addition, workers might feel that they
have lost some autonomy because of the close linkages in materials flows between stations
with little or no safety stocks. Managers can mitigate some of these effects by allowing slack
in the system through the judicious use of safety stock inventories and by emphasizing
materials flows instead of worker pace. Managers also can promote the use of work teams
and allow them to determine their task assignments or rotations within the team's domain of
responsibility.

24
Cooperation and Trust: In a JIT system workers and first-line supervisors must take on
responsibilities formerly assigned to middle managers and support staff. Activities such as
scheduling, expediting, and improving productivity become part of the duties of lower level
personnel. Consequently, organizational relationships must be reoriented to build close
cooperation and mutual trust between the work force and management. Such cooperation and
trust may be difficult to achieve, particularly in light of the typical adversarial positions taken
by labor and management in the past. For example, the Mazda plant in Flat Rock, Michigan,
was experiencing quality problems in August 1988. Greater absenteeism than the Japanese
expected and inexperience of the work force were cited as major contributors. Some people
felt that the real problem was a lack of understanding of the American culture by Japanese
managers. As the president of UAW Local 3000 put it, "To the Japanese, work is the most
important part of life, and they expect everybody to be as dedicated as they are. But to
Americans, the job is there to support your life on the outside."

Reward Systems and Labor Classifications: In some instances the reward system must be
revamped when a JIT system is implemented. At General Motors, for example, a plan to
reduce stock at one plant ran into trouble because the production superintendent refused to
cut back production of unneeded parts; his salary was based on his plant's production
volume.
The realignment of reward systems isn't the only hurdle. Labor contracts traditionally have
reduced management's flexibility in reassigning workers as the need arises. A typical
automobile plant in the United States has several unions and dozens of labor classifications.
To gain more flexibility, management in some cases has obtained union concessions by
granting other types of benefits. In other cases management has relocated plants to take
advantage of nonunion or foreign labor. In contrast, at Toyota management deals with only
one company union, and there are only eight different labor classifications in a typical plant.

25
Process Considerations:
Firms using J1T systems typically have some dominant materials flows. To take advantage of
JIT practices, firms might have to change their existing layouts. Certain workstations might
have to be moved closer together, and cells of machines devoted to particular families of
components. The single most important factor in successful implementation is changing
product flows and layout to a cellular design. However, rearranging a plant to conform to JIT
practices can be costly. For example, whereas many plants now receive raw materials and
purchased parts by rail, to facilitate smaller, more frequent JIT shipments, truck deliveries
would be preferable. Loading docks might have to be reconstructed or expanded and certain
operations relocated to accommodate the change in transportation mode and quantities of
arriving materials.

Inventory and Scheduling:

Firms need to have stable master production schedules, short setups, and frequent, reliable
supplies of materials and components to achieve the full potential of the JIT concept.

MPS Stability: Daily production schedules in high-volume, make-to-stock environments

must be stable for extended periods. At Toyota the master production schedule is stated in
fractions of days over a three-month period and is revised only once a month. The first month
of the schedule is frozen to avoid disruptive changes in the daily production schedule for
each workstation; that is, the workstations execute the same work schedule each day of the
month. At the beginning of each month, kanbans are reissued for the new daily production
rate. Stable schedules are needed so that production lines can be balanced and new
assignments found for employees who otherwise would be underutilized. Just-in-time
systems used in high-volume, make-to-stock environments can't respond quickly to
scheduling changes because little slack inventory or capacity is available to absorb these
changes.

26
Setups: If the inventory advantages of a JIT system are to be realized, small lot sizes must
be used. However, because small lots require a large number of setups, companies must
significantly reduce setup times. Some companies haven't been able to achieve short setup
times and therefore have to use large-lot production, negating some of the advantages of JIT
practices. Also, JIT systems are vulnerable to lengthy changeovers to new products because
the low levels of finished goods inventory will be insufficient to cover demand while the
system is down. For example, Ford and GM are at a competitive disadvantage because of the
time they need to change from one year's model to the next. GM required 87 days to change
from the 1994 Chevrolet Lumina to the 1995 model, and Ford required 60 days to change
from the 1994 Tempo to the Mystique, its 1995 replacement. In contrast, Toyota changed
from the 1991 Camry to the 1992 version in 18 days, and Honda switched from the 1993
According to the 1994 model in only 3 days. Every month that a plant is shut down costs
between $65 million and $85 million in pretax profits.

Purchasing and Logistics: If frequent, small shipments of purchased items cannot be

arranged with suppliers, large inventory savings for these items can't be realized. In the
United States such arrangements may prove difficult because of the geographic dispersion of
suppliers.
The shipments of raw materials and components must be reliable because of the low
inventory levels in JIT systems. A plant can be shut down because of a lack of materials. For
example, in 1992, a strike at the GM plant in Lords town, Ohio, caused the Saturn plant in
Spring Hill, Tennessee, to shut down, losing the production of 1000 cars per day. Lords town
supplies parts to Saturn, which doesn't stockpile the parts because of JIT practices.

MRP VERSUS JIT

Is a choice between a push system and a pull system necessary? Actually, these methods
aren't mutually exclusive, and the best solution often is a hybrid of the strengths of both
approaches.

27
MRP II systems are good at overall materials planning and data management and can be used
to support the informational needs of various functional areas in the firm.
MRP systems can be used effectively to understand the implications of lot-sizing decisions
and master scheduling changes on overall inventories and capacity. In contrast, JIT systems
are a less expensive, more effective way to control materials flows on the shop floor. A JIT
system can be used to maintain low levels of inventory and to adjust production rates over
time. The nature of the production process determines the appropriate system. For line flows,
order releases don't change from week to week, so a rate-based system such as JIT works
well.
Although MRP is an effective technique for scheduling production on a weekly basis,
scheduling of daily requirements within each specific week is left to production supervisors.
At this level, the shop floor level, a pull system is more useful than MRP In a repetitive
manufacturing environment with reasonably stable but varying schedules, a hybrid system
may be appropriate. MRP could be used for order release, as schedules change, or for
coordinating with suppliers on long-lead-time items. Pull methods could be used for actual
materials mows on the shop floor. Names such as synchro-MRP, rate-based MRP II, and
JITMRP have been used to describe these hybrid systems.
In environments where materials flows are complex and demands are highly variable, MRP
is the system of choice. The materials flows are too complex for a JIT system, and pull
techniques can't cope with the demand and lead time variability. In addition, the shop floor
requires sophisticated tracking and scheduling capability.

28
HISTORY OF JUST IN TIME:

Just-In-Time is a Japanese manufacturing management method developed in 1970s. It was

first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at that time
was to meet consumer demands. Because of the success of JIT management, Taiichi Ohno
was named the Father of JIT.
After the first introduction of JIT by Toyota, many companies followed up and around
mid1970s‟, it gained extended support and widely used by many companies. One motivated
reason for developing JIT and some other better production techniques was that after World
War II, Japanese people had a very strong incentive to develop a good manufacturing
technique to help them rebuilding the economy. They also had a strong working ethnic which
was concentrated on work rather than leisure, seeked continuous improvement, life
commitment to work, group conscious rather than individualism and achieved common goal.
This kind of motivation had driven Japanese economy to succeed. Because of the natural
constraints and the economy constraints after World War II, Japanese Manufacturers looked
for a way to gain the most efficient use of limited resources. They worked on "optimal
cost/quality relationship".
Before the introduction of JIT, there were a lot of manufacturing defects for the existing
system at that time. According to Hirano, this included inventory problem, product defects,
risen cost, large lot production and delivery delays. The inventory problems included the
unused accumulated inventory that was not only unproductive, but also required a lot of
effort in storing and managing them. Other implied problems such as parts storage,
equipment breakdowns, and uneven production levels. For the product defects,
manufacturers knew that only one single product defects can destroy the producer’s
creditability. They must create a "defect-free" process. Instead of large lot production -
producing one type of products, they awaked that they should produce more diversified
goods. There was also a problem of rising cost, the existing system could not reduce cost any
further but remember improvement always leads to cost reduction.

29
Lastly, the existing system did not manage well for fast delivery request, so, there was a need
to have a faster and reliable delivery system in order to handle customers‟ needs. Thus, JIT
manufacturing management was developed based on these problems.

Focus of JIT?
Mainly JIT focuses to eliminate the waste or the non-value added. Thus there are several
types of wastes categorized. JIT usually identifies seven prominent types of waste to be
eliminated:
 Waste from Overproduction
 Transportation Waste
 Processing Waste

JUST IN TIME PRODUCTION

 Waste from Product Defects
 Waste of waiting/idle time
 Inventory Waste

Goal of Just in Time

According to Cheng in Just-In-Time Manufacturing – An Introduction, he explains the
objectives of JIT. There are three main objectives:

1. Increasing the organization’s ability to compete with others and remain competitive
over the long run. The competitiveness of the firms is increased by the use of JIT
manufacturing process as they can develop a more optimal process for their firms.
2. Increasing efficiency within the production process. Efficiency is obtained through
the increase of productivity and decrease of cost.
3. Reducing wasted materials, time and effort. It can help to reduce the costs.

30
Other short-term and long-term objectives are:-

1. Identify and response to consumer’s needs. Customers‟ needs and wants seem to be
the major focus for business now, this objective will help the firm on what is
demanded from customers, and what is required of production.
2. Optimal quality/cost relationship. The organization should focus on zero-defect
production process. Although it seems to be unrealistic, in the long run, it will
eliminate a huge amount of resources and effort in inspecting, reworking and the
production of defected goods.
3. Reduce unwanted wastes. Wastes that do not add value to the products itself
should be eliminated.
4. Develop a reliable relationship between the suppliers. A good and long-term
relationship between organization and its suppliers helps to manage a more efficient
process in inventory management, material management and delivery system. It will
also assure that the supply is stable and available when needed.
5. Plant design for maximizing efficiency. The design of plant is essential in terms of
manufacturing efficiency and utility of resources.
6. Adopt the work ethnic of Japanese workers for continuous improvement.

31
 CHAPTER 2

COMPANY PROFILE

32
 INTRODCTION TO COMPANY

Cipla was registered as a public company with an authorized Capital of Rs 6 lakhs on August
1935. This was started as a small drug and medicines manufacturer under the name “The
Chemical, Industrial and Pharmaceutical Laboratories”, which came too popularly called as
Cipla. Cipla was officially opened on September 22, 1937 when the first products were ready
for the market.

Khwaja Abdul Hamied founded Cipla. In college, he found Chemistry fascinating. He set sail
for Europe in 1924 and got admission in Berlin University as a research student of “The
Technology of   Barium Compounds". He earned his doctorate three years later. He gave the
company all his patent and   proprietary formulas for several drugs and medicines, without
charging any royalty.

Cipla Ltd. has displayed remarkable understanding to grow both vertically and horizontally.
Since its formation, Cipla has repeatedly scored success in its industrial ventures by tapping
opportunities in the market, even in a fierce competition in the international environment.

Today, the company is under the chairmanship of Sh.  Yusuf Hamied the Company's
principal activities are to manufacture chemicals and pharmaceutical products. The company
has more than 1,000 products in the domestic market including generic AIDS drugs,
antibiotics, anti-asthmatics, anti-cancer, anti-inflammatory, anti-depressant and other drugs.
It produces its products at 10 manufacturing plants located throughout the country. Cipla is
the leader in the domestic retail pharmaceutical market, ahead of GlaxoSmithKline. The
products of the Company are sold in India, Africa, Middle East, Europe, Americas, Asia and
Australia. It also exports raw materials, intermediates, prescription drugs, over- the-counter
products, and veterinary products to more than 160 countries around the world. A strong
financial base and marketing standing are the main reasons of company’s consistent and
rapid growth that sustained even more than four decades.

33
Research and Development continues to play a vital role in the achievement of company’s
goals. It perfectly compliments with company’s goals of leadership, quality and growth.
From product to productivity, from quality control to cost reduction, Research and
Development is helping Cipla.

Human resource development is recognized as the assets of any organization at all ranks. It
is for the reason that considerable attention is given to Human Resource Development. The
development programmers aimed at motivation and enhancing efficiency at all levels. Cipla
supplies its cheap anti-AIDS drug to more than 35 countries, mainly in Africa. In March it
was named by World Health Organization as one of the preferred suppliers of Anti- AIDS
drugs. Cipla is aggressively expanding its therapeutic reach in high margin segment of
cardiovascular, diabetic, anti-asthma inhalers and central nervous system to boost domestic
sales. With marketing joint ventures in all major markets of Europe, Australia, Africa, South
East Asia, China and US. The company comes with modern drugs at a comparatively lower
price in the domestic market.

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian pharmaceutical industry grew by 4.2% during the year 2004-05. The introduction
of the patents (Amendment) act, 2005, early this year brought in the product patent regime,
which came in to force on 1st January 2005. The domestic industry will need a gear itself to
meet the challenges of this new scenario and a spate of strategic realignment and
consolidation activity within the industry in anticipated.

PERFORMANCE REVIEW

Sales for the year crossed Rs. 23,250 million recording an impressive 18% growth over the
previous year. This was achieved despite depressed sales in 4th q., mainly on account of

34
confusion related to the implementation of value added tax and the heavy of excise duty on
the MRP of formulation.

Cipla maintained its leadership in the domestic market, retaining its no.1 rank in the ORG
IMS rating (Retail store audit MAT March, 2005).Exports grew by 30%, exceeding Rs.
10,500 million. Both active pharmaceutical ingredients (APIs) and formulations contributed
to the growth in business in the international market. Overseas business now forms 45% Of
the Company’s total turnover.

The company received the express pharmacy pulse award for overall performance and jointly
the best exporter award. The Company’s strategic alliances with its international marketing
partners progressed as envisioned. The overall net profit of the company at Rs 4096 million
grew by 33%. This was mainly on account of improved product mix, optimization of
resources and higher non-operating income.

INVESTMENT STRATEGY

 Low Risk global strategy- Cipla's strategy for its generics business is to enter into bulk
drug supply arrangements with companies well entrenched in the generic markets. Cipla
has entered into partnerships for 125 products with 8 companies in the US and a strategic
alliance to develop over 50 generic products for the generics major Teva/Ivax. The
company thus, intends to enter specialty segments with a low-risk return approach
ensuring relatively stable earnings flow.
 Anti-asthma and anti-HIV focus to augur well: Cipla enjoys a near dominant position
in the asthma segment (about 20% of sales). It is one of the few companies globally
having the required technology to manufacture CFC-free inhalers. With CFC inhalers to
be compulsorily phased out by 2010, this segment is expected to see growth in the future
 Debt to equity and coverage ratios is favorable to minority equity investors

35
KEY RISKS

 An unfavourable court ruling in an ongoing litigation between the Government of India

and Cipla regarding alleged overcharging of certain drugs could potentially pressurize the
Company’s bottom line.
 If the cost of raw material keep on increasing due to increased pressure on Chinese
companies to move to higher level drugs, companies margin will be hit drastically.

The key competitors of the company are:

1. Dr. Reddy’s Labs

2. Lupin
3. Sun Pharma
4. Glaxosmithkline

RECENT DEVELOPMENTS

 On19h August , 2009 the Delhi High court allowed it to see the generic version of
Bayer’s cancer drug.
 During April 2009, the USFDA raised 9 deviations in the manufacturing process
during inspection of the company’s Bangalore unit. The company has stated that it
would submit it response to the Regulator within the stipulated time period. On the
Adcock Ingram-Cipla Med pro issue in South Africa, the company has stated that it
would support its partner (Cipla Med pro) in case of any hostile takeover by Adcock.
Cipla Med pro currently contributes around 7% of the company’s Total Exports and
there can be risks to this contribution in case of any hostile takeover by Adcock

36
  July 2009: Recently ,the Delhi High Court allowed Cipla to manufacture and sell
generic version of patented lung cancer drug 'Erlotinid' invented by Swiss Pharma
company Hoffman La Roche Ltd
 Aug 2009: It also lost Indian government order for Tami flu to Hetero.

SWOT ANALYSIS

STRENGTHS
 Ranks #2 in the retail prescription market in India
 18 brands that feature among the top-300 brands
 Large basket of 1,500 formulations and Partnered 8 leading generics companies in the
US for nearly 125 projects.
 Cipla has a voluminous product portfolio containing more than 200brands some of
which are the leading brands in their respective category
 The company has excellent process R&D skills which are considered to be one of the
best in the country
 The Company has excellent distribution network.

WEAKNESSES
 Impact of IPR regime.
 It is not present in CRAMS and Bio Pharmaceutical segment which are the best
projected segment in the industry.

OPPORTUNITIES
 Bio therapeutics – A new and promising area
 Agreement with Avesthagen

37
  Venturing towards areas of cardiology and anti-cancer.

THREATS

 Partnership related; and

 Potential de-rating.

NEW PRODUCTS

The company yet again took a head in the introduction of many new products and APIs in the
country. Some of the formulation has unique distinction of being the first in the world in their
respective therapeutic class. These were;

 Dove (titropium and formoterol inhaler and rotacaps) – long lasting combination
bronchodilator for COPD.
 Douvir E kit (lumivudine, zidovudine and efavirenz tablets) – Noval triple drug fixed
dose combination kit for HIV/AIDS.
 Duonase (azelastine and fluticasone nasal spray) – New steroid-decongestant
combination spray for allergic rhinitis.
 Levovil (levosalbutamol inhaler, rotacaps, tablets and syrup) – The first chiral
salbutamol bronchodilator for asthma in these dosage forms.
 Mucinac (n-acetylcysteine affervascent tablets) – Mucolytic antioxident.
 Seroflo Multi-Haler ( salmeterol and fluticasone). The first single action multi-dose
dry powder inhaler (DPT) for asthma and COPD.
 Voltanec (aceclofenac and beta-cyclodextrin tablets) – Fast acting non-sterodial anti-
inflammatory drug.

38
MANUFACTURING FACILITIES

The first phase of the new formulation plant in Baddi, Himachal Pradesh for the manufacture
of Tablets and Capsules was completed and the unit commenced commercial production in
April 2005. Facilities for manufacture of aerosols at this site are expected to be completed by
December 2005. In addition, the company expanded its Goa facilities and also set up new
export oriented unit (EOUs) at Kurkumbh and Bangalore.

REGULATORY APPROVALS

A number of dosage forms and APIs manufactured in the company’s various plants continue
to enjoy the approval of most major international regulatory agencies. These include the US
FDA, MHRA UK, PIC Germany, MCC South Africa, TGA Australia, the WTO Geneva,
Department of Health Canada, ANVISA Brazil and SIDC Slovak Republic.

SAFETY AND ENVIRONMENT CARE

As always, the company maintained high standards of safety and environment preservation at
all units. During the year, Cipla’s Patalganga unit was awarded the ‘five star’ rating for the
third consecutive year, while the Kurkumbh unit was awarded the coveted ‘Sword of
Honour’ bt he British Safety Council.

INTERNAL CONTROL SYSTEMS

The company’s internal control procedures are designed to keep pace with the organization’s
growth in size and complexity of operations. These measures ensure compliance with various
policies, practices and status. Cipla’s internal audit team carry out extensive audits accords

39
across all functional areas, throughout the year and submit their reports of the Audit
committees of the Board of Directors.

HUMAN RESOURCES

In keeping with its policy of enhancing the individual’s growth potential within the
framework of corporate goals, training of technical and marketing personnel continued to
receive maximum attention. The Director records their appreciation of the support and
contribution of all employees towards the growth of the company.

Particulars of employees required to be furnished under Section 217(2A) of the Companies

Act, 1956 from past of this report. Any shareholder interested in obtaining a copy may write
to the company secretary at the Registered office of the company.

OPPORTUNITIES

INTERNATIONAL MARKETS

Exports will be the thrust area for growth in the near future. The company is well geared to
meet this objective with its state-of-the-art. Manufacturing facilities at Goa, Kurkumbh,
Patalganga and now of Baddi. Cipla’s products are registered in over 150 countries. Strategic
alliances with various partners in the regulated and other market will contribute to future
growth.

RESEARCH AND DEVELOPMENT

The company has entered into a research alliance with Avesthagen, a Bangalore-based
biotech company, to develop biotherapeutic products. Cipla’s R & D Division retains its
focus on the development of new products and new drug delivery systems across a range of
therapies. A number of patients, local as well as international, were filed during the year.

40
TECHNOLOGICAL STRENGTHS

Sound technical expertise and state-of-the-art manufacturing facilities will remain the pillars
of the company to consolidate its standing in India and other countries.

Strategic alliances for research, manufacturing and marketing will acquire greater importance
in the changing international business environment.

As Cipla turns 70, the company is confident of maintaining its leading position and
sustaining its growth with new vigour in the year to come.

MISSION AGAINST AIDS, MALARIA AND OTHER NEGLECTED DISEASES

Cipla continues its fight against the AIDS pandemic. Its medicines are helping to treat over
2.00.000 patients worldwide. These are several initiatives to make available new anti-
retroviral drug too HIV patients, in India and other countries, at reasonable prices and Cipla
will do its very best in this humanitarian effort. In this matter, the company has co-operated
with the international communities in every way possible.

Cipla has also been among the major suppliers of anti-malarial drugs and drugs for neglected
diseases such as schistosomiasis to international markets.

OTHER WELFARE ACTIVITIES

The Company also continued to support education and community welfare, directly and
through its charitable trusts. The Company provided medicines to treat over a million poor,
aged patients in slums and villages through Helpage India as part of its social responsibility
initiative. The Company also provided free medicines to the tsunami-affected in India and Sri
Lanka.

SHARE CAPITAL

Pursuant to the Scheme of Arrangement sanctioned by the Bombay High Court vide its Order
dated 11th June 2004 and consequent to the approval already granted by the members under

41
Section 81(1A) of the Companies Act, 1956 the Company has allotted 8488 Equity Shares of
Rs.2 each on 10th September 2004. These shares have been listed on The Stock Exchange,
Mumbai (BSE) and National Stock Exchange of India Limited (NSE).

DIRECTORS

In recognition of his achievements, the President of India conferred the coveted Padma
Bhushan Award to Dr. Y.K. Hamied on 26th January 2005. Dr. M.K. Gurjar and Mr. M.R.
Raghavan retire by rotation and being eligible offer themselves for reappointment.

42
  Founder
Dr. K.A. Hamied
(1898-1972)

 Chairman & Managing Director

Dr. Y.K. Hamied

 Joint Managing Directors

Mr. M.K. Hamied

Mr. Amar Lulla

 Non-Executive Directors
Mr. V.C. Kotwal
Dr. H.R. Manchanda
Mr. S.A.A. Pinto
Mr. M.R. Raghavan
Mr. Ramesh Shroff
Mr. Pankaj Patel

43
 CHAPTER 3

LITERATURE REVIEW

LITERATURE REIEW

Many researchers have carried out significant work in the area of JIT. The literature related
to the present work was reviewed. Inmam and Mehra (1990) stressed upon the applicability
of JIT in service environments, including service part of manufacturing line. Some benefits
of JIT were reported as improved communication, elimination of warehouses, reduced
supplier base, improved vendor performance, improved quality, improved service, lower
44
price levels, quick response time etc. Benson (1996) reported that diverse service
organizations from bank cheque processing centers to hospital operating rooms are now
applying JIT philosophy to the special problem of service production. It was hoped that
service industries will continue to investigate the potential advantages of JIT and soon the list
of successful case histories will include hotels, educational facilities and leisure
establishments Garg et al. (1996) analyzed some vital issues in JIT purchasing in an Indian
context on the basis of a questionnaire (n=28) sent to 80 different Indian Industries.

The issues include the importance of JIT attributes, problems in implementing JIT, and
expected benefits from JIT purchasing implementation. Some research directions were also
identified for future work. Garg and Deshmukh (1999) said that JIT have great importance in
Indian context due to its wide range of benefits. Although, the success stories of these
management philosophies are limited in India yet, several Indian Industries are implementing
basic principles of JIT. Yasin and Small (1994) concluded on the basis of investigation of 86
organizations of US public sector, that JIT is a form of “managerialism”, has the potential to
increase the operational efficiency, service quality and organizational effectiveness of public
sector organizations. Sharma and Singh (2005) conducted a case study on two Indian
agricultural equipment-manufacturing companies, which have implemented JIT. In one case
the profits of the company were found to have increased by 10%. While in the second case
the company was successful in reducing the level of inventory by over 20% .

STATEMENT OF THE PROBLEM

Since the inventory requirement are blocking huge capital & space at the company, JIT
production is supposed to reduce inventory costs. So I have tried to implement JIT
technology in my company to solve the problem of high inventory costs. Just in Time is a
production strategy that strives to improve a business return on investment by reducing in
process inventory and associated carrying cost. Just in Time is a type of operations
management approach which originated in Japan in the 1950s. It was adopted by Toyota and
45
other Japanese manufacturing firms, with excellent results. JIT inventory systems expose
hidden cost of keeping inventory, and are therefore not a simple solution for a company to
adopt. The company must follow an array of new methods to manage the consequences of
the change.

HISTORY OF CIPLA

Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1898. The fire of
nationalism was kindled in him when he was 15 as he witnessed a wanton act of colonial
highhandedness. The fire was to blaze within him right through his life. In college, he found
Chemistry fascinating. He set sail for Europe in 1924 and got admission in Berlin University
as a research student of "The Technology of Barium Compounds". He earned his doctorate
three years later.
In October 1927, during the long voyage from Europe to India, he drew up great plans for the
future. He wrote: "No modern industry could have been possible without the help of such
centres of research work where men are engaged in compelling nature to yield her secrets to
the ruthless search of an investigating chemist." His plan found many supporters but no
financiers. However, Dr Hamied was determined to being "a small wheel, no matter how
small, than be a cog in a big wheel.

BORN OF CIPLA
In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to
be popularly known as Cipla. He gave the company all his patent and proprietary formulas
for several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla
was registered as a public limited company with an authorised capital of Rs 6 lakhs.
The search for suitable premises ended at 289, Bellasis Road (the present corporate office)
where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a
month.
46
Cipla was officially opened on September 22, 1937 when the first products were ready for
the market. The Sunday Standard wrote: "The birth of Cipla which was launched into the
world by Dr K A Hamied will be a red letter day in the annals of Bombay Industries. The
first city in India can now boast of a concern, which will supersede all existing firms in the
magnitude of its operations.
India has lagged behind in the march of science but she is now awakening from her lethargy.
The new company has mapped out an ambitious programme and with intelligent direction
and skillful production bids fair to establish a great reputation in the East. "

JUST IN TIME PRODUCTION

July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi,
honoured the factory with a visit. He was "delighted to visit this Indian enterprise", he noted
later. From the time Cipla came to the aid of the nation gasping for essential medicines
during the Second World War, the company has been among the leaders in the
pharmaceutical industry in India.

VISITED BY MAHATMA GANDHI

July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation, Mahatma Gandhi,
honoured the factory with a visit. He was "delighted to visit this Indian enterprise", he noted
later. From the time Cipla came to the aid of the nation gasping for essential medicines
during the Second World War, the company has been among the leaders in the
pharmaceutical industry in India.

On October 31, 1939, the books showed an all the time high loss of Rs 67,935. That was the
last time the company ever recorded a deficit.
In 1942, Dr Hamied's blueprint for a technical industrial research institute was accepted by
the government and led to the birth of the Council of Scientific and Industrial Research
(CSIR), which is today the apex research body in the country.

47
In 1944, the company bought the premises at Bombay Central and decided to put up a "first
class modern pharmaceutical works and laboratory." It was also decided to acquire land and
buildings at Vikhroli. With severe import restrictions hampering production,

the company decided to commence manufacturing the basic chemicals required for
pharmaceuticals.
In 1946, Cipla's product for hypertension, Serpinoid , was exported to the American Roland
Corporation, to the tune of Rs 8 lakhs. Five years later, the company entered into an
agreement with a Swiss firm for manufacturing foromycene. Dr Yusuf Hamied, the founder's
son, returned with a doctorate in chemistry from Cambridge and joined Cipla as an officer in
charge of research and development in 1960.
In 1961, the Vikhroli factory started manufacturing diosgenin. This heralded the manufacture
of several steroids and hormones derived from diosgenin

Global Presence
Exports for the financial year ended March 31, 2009 amounted to more than Rs. 27,500
million. Cipla exports raw materials, intermediates, prescription drugs, OTC products and
veterinary products. Cipla also offers technology for products and processes. Technical
know-how/fees received during the year 2008-09 amounted to about Rs. 2200 million
Cipla's manufacturing facilities have been approved by the following regulatory authorities

Food and Drug Administration (FDA), USA Medicines and Healthcare products Regulatory
Agency (MHRA), UK
Therapeutic Goods Administration (TGA), Australia Medicines Control Council (MCC),
South Africa National Institute of Pharmacy (NIP), Hungary Pharamaceutical Inspection
Convention (PIC), Germany World Health Organisation (WHO) Department of Health,
Canada

State Institute for the Control of Drugs, Slovak Republic ANVISA, Brazil

48
49
 CHAPTER 4

NEED, SCOPE AND OBECTIVES OF THE STUDY

OBJECTIVES

1. To producing quality products as per the requirements of the customers.

2. To increasing machine efficiency by eliminating the extra load and express problems
and bottlenecks.

50
 3. To reducing lead time, batch size and inventory levels and ensuring high process
reliability.
4. To reducing set up time by maintaining consistency in production and elimination
wastes.
5. To reducing the idle time of labor and machine and achieving zero level of inventory.

SCOPE:
JIT inventory systems have several advantages over traditional models. Production runs are
short, which means that manufacturers can quickly move from one product to another. This
method reduces costs by minimizing warehouse needs. Companies also spend less money on
raw materials because they buy just enough resources to make the ordered products and no
more.

NEED:
Planning Advantages
The JIT approach requires a good forecast to determine the market needs for the product.
This requirement works to your company’s advantage because it forces you to proactively
study market fluctuations. This knowledge can help not just with managing inventory, but
also with other types of planning such as personnel scheduling and cash flow. Based on sales
forecast, your company can develop a purchasing schedule that keeps flow going.
To keep the flow of inventory consistent, you company will also need reliable vendors that
provide parts with a consistent lead time, dependable equipment that does not break down
and easy equipment setup to prevent a bottleneck queue.

Waste Reduction Advantages

JIT is designed to reduce waste. Components or finished goods sitting in inventory are
wasteful because the capital you have invested in them is tied up in items that are just sitting
on the shelf, and this money isn't available for other expenses you company may have to
cover such as rent and payroll. Ideally, production would be a steady flow of incoming parts
and outgoing finished goods without parts ever sitting in a queue waiting to be used.
51
The implementation of JIT creates what is known as a “pull system,” so called because each
sub process pulls from the preceding sub process when it is needed. JIT also reduces waste
by eliminating fluctuations in schedule and quality, which can be expensive because they
force you to backtrack and reorganize.

BENEFITS
As most companies use an inventory system best suited for their company, the Just-In-Time
Inventory System (JIT) can have many benefits resulting from it. The main benefits of JIT
are listed below.
1. Set up times are significantly reduced in the factory. Cutting down the set up time to
be more productive will allow the company to improve their bottom line to look more
efficient and focus time spent on other areas that may need improvement. This allows
the reduction or elimination of the inventory held to cover the "changeover" time, the
tool used here is SMED.
2. The flows of goods from warehouse to shelves are improved. Having employees
focused on specific areas of the system will allow them to process goods faster
instead of having them vulnerable to fatigue from doing too many jobs at once and
simplifies the tasks at hand. Small or individual piece lot sizes reduce lot delay
inventories which simplifies inventory flow and its management.
3. Employees who possess multiple skills are utilized more efficiently. Having
employees trained to work on different parts of the inventory cycle system will allow
companies to use workers in situations where they are needed when there is a
shortage of workers and a high demand for a particular product.
4. Better consistency of scheduling and consistency of employee work hours. If there is
no demand for a product at the time, workers don’t have to be working. This can save
the company money by not having to pay workers for a job not completed or could
have them focus on other jobs around the warehouse that would not necessarily be
done on a normal day.
5. Increased emphasis on supplier relationships. No company wants a break in their
inventory system that would create a shortage of supplies while not having inventory
sit on shelves. Having a trusting supplier relationship means that you can rely on
52
 goods being there when you need them in order to satisfy the company and keep the
company name in good standing with the public.
6. Supplies continue around the clock keeping workers productive and businesses
focused on turnover. Having management focused on meeting deadlines will make
employees work hard to meet the company goals to see benefits in terms of job
satisfaction, promotion or even higher pay.

53
 CHAPTER 5

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY:
Research methodology is a way to solve the research problem in a systematic manner. It may
understand as a science of studying how the research is done significantly. The methodology

54
may differ from problem to problem, yet the basic approach towards the research remains the
same. The sequence or steps followed have been explained as under: 

DATA COLLECTION
The collection of information is done through two principal sources, viz.
 Primary Data:
a) Observation
b) Personal Interviews
Interview and questionnaire have been used to conduct the study. A structured
questionnaire consisting close-ended questions have been made, which is filled by the
trainee during direct interaction with the respondents.
It is the information that will be collected directly without any reference in this study
it is to gather through interviews with concerned officers and staffs either individually
or collectively some of the information will be verify and supplement through
personal observation.

 Secondary Data: The secondary data will be collected from already published
sources such as pamphlets of annual reports, internal records, books, journals,
magazines, and websites.

NATURE OF RESEARCH

55
This is a descriptive research as it will be clarified the doubts about online marketing. It
would give us a clear picture on the effectiveness and reliability of online marketing
compared to the offline form of marketing.

Sample universe
 Basis of sampling: Sample should be a user of internet or should have knowledge
about internet and 50 numbers in all
 Sampling Method: Judgmental Non Probability sampling is used to select the
individual units for better productivity of the questionnaire. A well educated person
may be able to reason out the questions in the better way. Sampling method refers to
the rules and procedures by which some elements of the population are included in
the sample. Some common sampling methods are simple random sampling, stratified
sampling, and cluster sampling.
 Population:
The total element of the universe from which sample is selected for the purpose of
study is known as population, the population of my research is the employee of
CIPLA Limited.
 Area of research: New Delhi
 Number of respondents: 50

RESEARCH TOOL APPLIED

56
Research Design: The research design refers to the overall strategy that you choose to
integrate the different components of the study in a coherent and logical way, thereby,
ensuring you will be effectively address the research problem; it constitutes the blueprint for
the collection, measurement, and analysis of data.

Nature of research
The research design used for this study is of the descriptive type. Descriptive research studies
are those studies which are concerned with describing of a particular individual or a group.

Data analysis stage

Data collected through primary & secondary sources will be tabulated and summarized so as
to draw logical conclusions.

Method used to classify data:

Interview and questionnaire have been used to conduct the study. A structured questionnaire
consisting close-ended questions have been made, which is filled by the trainee during direct
interaction with the respondents.

Method used to present the data:

The data collected form questionnaire is edited, tabulated and analyzed. Various graphical
techniques have been used to present the data in more meaningful way.

LIMITATIONS
57
Every scientific study has certain limitations and the present study is no more exception.
These are:
 The time constraint may be one of the major problems.
 The lack of information sources for the analysis part.
 Selection of the people who are under consideration as sample for the study may not
be the best sample selected.
 Sample size will be limited due to the limited period allocated for the survey.
 Getting accurate responses from the respondents due to their inherent Problems,
personality traits, and mood fluctuations will be a very difficult task.
 Some respondents had to be re-contacted as per their convenience of time.
 Some data of customer is not proper. Like their contact number & address.

58
 CHAPTER 6

DATA ANALYSIS, INTERPRETATION AND FINDINGS OF

THE STUDY

Raw material turnover ratio:

59
 Raw material turnover ratio is velocity at which raw material converted into goods
ready for sale. If raw material turnover ratio is high then company is efficiency converting
into finished goods.

Formula: Material consumed / Average raw material

Raw Material Turnover Ratio

Year Raw material consumed (Rs) Avg R.M Ratio
2008 576,484,922 53,608,082 10.75
2007 371,223,873 36,137,266 10.27
2006 230,779,236 132,002,490 1.74

Ratio

12
10
8
6 Ratio
4
2
0
2008 2007 2006
Years

Form above graph we come know that raw material turnover ratio is increased rapidly in
2007 from 1.74 in 2006 to 10.27 for 2007. Indicates that company is converting raw material
into finished or semi-finished goods very quickly

Holding period of raw material:

60
It refers to the number of days taken for the production unit to convert raw material to finish
goods.
Formula: 360 /Raw material turnover ratio

Holding period of raw material

Year Total Days Ratio Days
2008 360 10.75 33
2007 360 10.27 35
2006 360 1.74 206

Raw material holding Period

250

200

150
RHP
100
D
A
Y
S

50

0
2008 2007 2006
Years

As the raw material turnover ratio is increasing form to 10.27 for 2007 it indicates that firm is
taking less days for conversion as compared to 2006. In 2006 conversion period was 206
days but in decreased to 35 days for 2007. This is shown in above graph.
Before 2007 there was no production process they were converting semi finished
goods into finished products hence to start their own production process they hold the raw
material in 2006

Work in Process Turnover ratio:

61
 Work in process turnover ratio is velocity at which W.I.P converted into goods ready
for sale. If W.I.P turnover ratio is high then company is efficiency converting into finished
goods.
Formula:
Cost of production
Average W.I.P

W.I.P turnover ratio

Year Cost of production Avg W.I.P Ratio
2008 849,054,442 36,720,702 23.12
2007 555,094,500 15,010,347 36.98
2006 361,110,197 9,755,839 37.01

Work in Process Turnover ratio

40
35
30
25
20 Ratio
15
D
A
Y
S

10
5
0
2008 2007 2006
Years

Form above graph we came to know that Work in process turnover ratio is decreasing from
37.01 in 2006 to 23.12 2008. The ratio was high in 2006 as compared to 2007 and 2008. The
ratio was 37.01. Indicates that company is converting semi-finished into finished goods
quickly

Holding period of W.I.P:

It refers to the number of days taken for the production unit to convert semi-finished goods
into finish goods.
62
Formula:
360
W.I.P turnover ratio

Holding period of W.I.P

Year Total Days Ratio Days
2008 360 23.12 15.57
2007 360 36.98 9.73
2006 360 37.01 9.72

Holding period of W I P

18
16
14
12
10
Ratio
8
6
D
A
Y
S

4
2
0
2008 2007 2006
Years

As the work in process turnover ratio is increasing form 9.72 in 2006 To 15.57 for 2008 it
indicates that firm is taking less days for conversion. Which shown in above graph

Finished goods turnover ratio:

Finished goods turnover ratio is velocity at which finished goods converted into for
sale. If finished goods turnover ratio is high then company is efficient.
63
Formula:
Cost of goods sold
Average finished goods

Finished goods turnover ratio

Year cost of goods sold Avg F.G Ratio
2008 849,054,442 26,243,339 32.35
2007 555,094,500 19,858,482 27.95
2006 361,110,197 10,940,008 33.01

Finished Goods Turnover Ratio

34
33
32
31
30
Ratio
29
28
D
A
Y
S

27
26
25
2008 2007 2006
Years

Form above graph we came know that finished goods turnover ratio is decreasing from 33.01
in 2006 to 27.95 for 2007. Indicates that company is selling goods little slowly as compared
to 2006 but it is bit fast as compared to 2008. Where the ratio for that particular period was
32.35 decreased to 11.20 for 2008 it is satisfactory. Which shown in above graph.

Inventory to capital employed:

This ratio indicates the relationship between the total capitals employed and
inventories it shows how much capital utilized to invest in the inventories other than the
64
other assets. The normal manufacturing firms have low ratio of inventory total capital
employed in the organization.
Formula: Inventory / Total capital employed

Inventory to capital employed

Total capital
Year Inventory employed Percentage
2008 197,465,069 301,443,215 65.50
2007 121,558,000 145,492,599 83.54
2006 67,994,623 98,333,324 69.14

Inventory to capital employed

90
80
70
60
50
ICE
40
30
20
10
G
R
C

A
P
E

E
T

0
2008 2007 2006
Years

By observing above graph we can say that the firm investing huge amount in inventories
compared to other assets. It invested 83.54% of its capital in inventory in 2007 where as it
reduced to 65.50% in 2008

Inventory to current asset ratio:

65
This ratio indicates the relationship between the inventory and current assets. It shows the
percentage of inventory to current assets, which helps the organizations in deciding the
current assets policy which also affect the liquidity position of the organization.
Formula: Inventory / Current assets

Inventory to current asset ratio

Year Inventory current assets Percentage
2008 197,465,069 331,314,504 59.60
2007 121,558,000 237,687,684 51.14
2006 67,994,623 117,022,625 58.10

Inventory to current asset ratio

62
60
58
56
54 Ratio
52
50
48
G
R
C

A
P
E

E
T

46
2008 2007 2006
Years

The inventory to current assets ratio in the year 2006 was 58.10% and it decreased to 51.14%
in the year 2007 but again it increased to 59.60% in 2008. It shows that the firm investing
59.60% of its investment is for inventory only.

Inventory to total assets:

66
This ratio indicates the relationship between the inventory and total assets. The significance
of this ratio is it reflects the portion the inventory as a percentage of the total assets, which
helps the management deciding the utilization remaining resources profitably, since the
inventory will lock up the huge funds and reduces the profitability of the organization
Formula: Inventory / Total assets

Inventory to total assets

Year Inventory Total assets Percentage
2008 197,465,069 990,329,087 19.93
2007 121,558,000 540,916,088 22.47
2006 67,994,623 414,901,234 16.38

Inventory to total assets

25

20

15
Ratio
10

5
G
R
C

A
P
E

E
T

0
2008 2007 2006
Years

During the year 2006 the rate of inventory to total assets was 16.38% it increased to 22.47%
in 2007. But again it reduced to 19.93% in 2008. It indicates that firm investing only 19.93%
in inventory out of total assets.

Inventory to working capital:

67
 This ratio indicates the relationship between inventory to working capital and
it also indicates the amount to inventory tied up in the working capital and it also shows the
efficiency of inventory management.
Formula: Inventory
Working capital

Inventory to working capital

Year Inventory Working capital Percentage
2008 197,465,069 199,345,123 99.05
2007 121,558,000 146,097,210 83.20
2006 67,994,623 46,338,277 146.45

Inventory to working capital

160
140
120
100
80 Ratio
60
40
20
G
R
C

A
P
E

E
T

0
2008 2007 2006
Years

In the year the ratio was 146.45% in 2006. It decreased to 83.20% for 2007 but it increased it
to 99.05% in 2008. It indicates that firm investing huge amount in inventory

68
Inventory Techniques Followed by the Company

 FSN Analysis:-
In FSN Analysis, items are classified according to their rate of consumption. The
items are proudly classified into 3 groups: F means fast moving, S means slow
moving, N means non-moving. The FSN analysis is conducted generally on the basis
last date of receipt of the items or the last date of the issue of items, whichever is later is
taken into account and the time period is usually calculated in terms of months or
number of days and it pertains to the time elapsed since the last movement was recorded.
The FSN Analysis helps company in identification of the items considered to be “active”
may be reviewed regularly on more frequent basis. Items who stock at hand are higher as
compared to their rate of consumption .Non-moving items whose consumption is “zero”
or almost in significant.

Fast Moving:
SL No. Commodity Rank
1 Potassium Chloride 1

Non-Moving:

SL No. Commodity Rank

1 Sodium Chloride 2
2 Magnesium Chloride 3
3 Sodium Acetate 4
4 Calcium Chloride 5
5 Caustic Soda 6
6 Citric Acid 7

69
Statement showing FSN Analysis

Moving Method Commodity

Fast Moving Sodium Chloride

Non Moving Magnesium Chloride

Sodium Acetate

Calcium Chloride
Caustic Soda

Citric Acid

Interpretation:

The chemical potassium chloride is one and only material produced by the industry
and the information collected that the company stopped producing rest of the materials.

70
HML Analysis:

HML Analysis is classified based on their unit prices. Here cost / unit criteria is used
they are categories in 3 groups, where H means high price item, L means low price
items .Objectives of HML analysis is to determine the frequency of stock verification
to keep control over the consumption at the department level, considering buying policy
and delegation of authority.

High Value:
SL No Commodity Rank

1 Potassium Chloride 1

Medium Value:

SL No Commodity Rank

1 Sodium Chloride 2

2 Magnesium Chloride 3

Low Value:

SL No. Commodity Rank

1 Sodium Acetate 4

71
Statement showing HML Analysis

Value Product Rank

High Potassium Chloride 1

Medium Sodium Chloride 2

Medium Magnesium Chloride 3

Low Sodium Acetate 4

Interpretation:
The chemical potassium chloride is considered as a high value material in the industry and
heads the first rank and sodium chloride and magnesium chloride heads the medium value
and it’s rank will be respectively second and third and the chemical sodium acetate is
considered as a low value material and heads the fourth rank.

FINDINGS OF THE STUDY

72
 Raw material turnover ratio is increased rapidly in 2007 from 1.74 in 2006 to 10.27
for 2007.
 As the raw material turnover ratio is increasing form to 10.27 for 2007 it indicates
that firm is taking less days for conversion as compared to 2006.
 Work in process turnover ratio is decreasing from 37.01 in 2006 to 23.12 2008.
The ratio was high in 2006 as compared to 2007 and 2008.
 As the work in process turnover ratio is increasing form 9.72. in 2006 To 15.57 for
2008 it indicates that firm is taking less days for conversion
 Finished goods turnover ratio is decreasing from 33.01 in 2006 to 27.95 for 2007.
Indicates that company is selling goods little slowly as compared to 2006 but it is
bit fast as compared to 2008.
 Company is selling goods little slowly as compared to 2006 but it is bit fast as
compared to 2008. Where the ratio for that particular period was 32.35.
 The inventory to current assets ratio in the year 2007 was 58.10% and it decreased
to 51.14% in the year 2008 but again it increased to 59.60% in 2008. It shows that
the firm investing 59.60% of its investment is for inventory only.
 During the year 2007 the rate of inventory to total assets was 16.38% it increased
to 22.47% in 2008. But again it reduced to 19.93% in 2009. It indicates that firm
investing only 19.93% in inventory out of total assets.
 In the year the ratio was 146.45% in 2006. It decreased to 83.20% for 2007 but it
increased it to 99.05% in 2008. It indicates that firm investing huge amount in
inventory.
 As the finished goods turnover ratio is increasing form 10.87 in 2007 to 12.86 for
2008 it indicates that firm is taking less days for sale. In 2008 conversion period
was 12.86 days but in decreased to 11.20 for 2008 it is satisfactory.

73
 CHAPTER 7

RECOMMANDATIONS AND SUGGESTIONS

74
RECOMMENDATIONS

a) From the findings it is came to know that in the year 2006 the number of days for
holding Raw material is more, it is not good for the company because it eats unnecessary
investment. To avoid this problem the following points will help.
 Purchase Raw Materials at the time when the stock reaches the minimum level.
 The purchases should not cross the Maximum limit otherwise the stock kept in stores
idle.
 Quantity should be ordered as per the demand. We can assume the demand for the
goods from past experience.
 We can have more Raw materials which are imported from other countries but carry
reasonable stocks which are available locally.
b) If we purchase less quantity of materials at a time it will reduce the carrying cost but
increases the ordering cost and vice versa. Therefore optimum ordering quantity is
necessary, which minimizes the cost.
c) The company should maintain a safety level and also reordering point so that they come
to know at what time they should order for the supply of material and need not to suffer
from short fall of required material.

SUGGESTIONS
 The company has to take remedial measures to control its inventory.
 Firm should take necessary measures to overcome its financial difficulties.
 It must improve its inventory by proper utilization of stock.
 The company is suggested to improve its manufacturing technologies or machineries.
 The firm should adopt appropriate techniques to increase the overall efficiency.
 The company is suggested to have its own vehicle, so that high transportation cost
can be avoided. It will be helpful in bringing raw material to the factory premises.

75
 The machinery should be properly maintained, those who are working on machineries
should be trained properly.
 A small amount of investment of advertisement may increase the sales in long run. As
the unit exists under modern complex world.
 The firm has to show more consideration towards labor welfare measures. And
company should provide more facility to the workers.
 Another important remedy is that the firm should keep an eye on international market
and affective marketing policies.
 The organization can expand their business with the same products are by
diversifying its products.

76
 CHAPTER 8

CONCLUSIONS

77
CONCLUSION

After the study, we can come to a conclusion that, effectiveness of inventory management
should improve in all the aspects, hence the industry can still strengthen its position by
looking into the following.

 The inventory should be fast moving so that warehouse cost can be reduced.
 The finished goods have to be dispatched in feasible time as soon as manufacturing is
completed.
 Optimum order quantity should be maintained, hence cost can be minimized.
 Proper inventory control techniques are employed by the inventory control
organization within the framework of one of the basic models like ABC, HML and
VED etc.

78
 CHAPTER 9

BIBILIOGRAPHY AND ANNEXURE

79
QUESTIONNAIRE

Instructions for filling the questionnaire:

1. This questionnaire contains 4 sections and seeks your opinion pertaining to various facts
concerning to JIT to be filled by any senior person of the Company.
2. Please answer each question carefully.
3. If you have any doubt, do not hesitate to contact me.
4. Data will be kept secret.

SECTION A

Personal Information

1.       Name _____________________________ Designation/ Position

___________________
2.       Total Experience in this Industry____________________________________________
3.       Address _______________________________________________________________
4.       Tel. No. _________________ Fax _______________ Email
________________________
5.       Whether any sort of JIT training is carried out by you? (Tick) Yes/No

Company Profile

1.       Name and Address of the Company_______________________________________

___________________________________________________________________
2.       Main Products manufactured____________________________________________
_ __________________________________________________________________
3 Type of company (Tick) Manufacturing/ Process
4.       Total investment in the Company on Fixed Assets___________________________
5.       Annual Turnover of the Company________________________________________

80
6. Category of the Company (Tick) Large/ Medium/ Small
7.       Quality certifications if any
_______________________________________________________________________
_______________________________________________________________________
8.       Total Manpower_____________________________________________________
 Higher Management__________________________________________
          Engineers___________________________________________________
          Supervisors_________________________________________________
          Skilled Workers______________________________________________
9. Whether JIT implemented in the Company (Tick) Yes/ no

Signature

81
 Section -B
PROBLEMS IN JIT IMPLEMENTATION

Please mark () at appropriate place

1. At what level your company is facing the problems when using JIT system.

Sr.
PROBLEMS 1 2 3 4 5
No.
Problems Concerning to Management          
1 Resistance offered from Management          
2 Lack of management Participation          
3 Lesser interest to innovation and change          
4 Lack of training for Managers          
5 Problems in the identification of areas where to apply JIT          
6 Management resistance to share Authority with employees          
7 Lack of transparency in the organization          
8 Lack of Co-operation with the Suppliers          
9 Lack of mutual trust and Co-operation with the Employees          
10 Lack of Communication within the company          
11 Lesser knowledge about JIT          
Problems Concerning to Employees          
1 Lesser awareness of JIT among employees            
2 Lack of support from employees          
3 Lack of flexible workforce          
4 Lesser response to innovation and change by employees          
5 Lack of motivated workforce          
6 Lack of mutual trust and Co-operation with the management          
Problems Concerning to Supplier/ Vendors          
1 Lack of knowledge about JIT on part of suppliers          
2 Lack of communication and Co-operation with Management          
3 Lesser support from suppliers          
4 Quantity problems with supplied Materials          
5 Quality problems with supplied Materials          
6 Timing problems with supplied Materials          
7 Lack of supplier training and Development          
Problems Concerning to Technology/Processes          
1 Lack of standardization          

82
2 Lack of performance Measure system          
3 Lack of technology          
4 Lack of transportation and Material Handling Facility          
5 Lack of machinery and Equipment          
6 Problems in using Kanban          
7 Problems in maintenance          

Abbreviations: 1. No Problem
2. Little Problem
3. Problem
4. Big Problem but can be Managed
5. Big Problem and cannot be Managed

Section –C
ELEMENTS OF JIT

1. Which of the following elements of JIT system are important and difficult to implement in your
company?

Degree of Importance Degree of Difficulties

83
Sr. Element 1 2 3 4 5 1 2 3 4 5 N/A
No.
Elements Concerning to Organization & People
1 Continuous Improvement
2 Customer satisfaction
3 Employee involvement in Decision Making
4 Flexible Workforce
5 Teamwork
6 Quality Circles
7 Quality Function Deployment
Elements Concerning to Plant & Equipment
1 Flow Layout
2 Preventive maintenance
3 Total productive maintenance (TPM)
4 Group Technology
5 Automation
Elements Concerning to Process & Product
System
1 Process flexibility
2 Standardization
3 Product simplification
4 Process simplification
5 House Keeping (tidiness, clarity, cleanliness)
6 Kanban card or system
7 Standard Containers
8 Statistical process control (SPC)
9 Waste Reduction
10 Zero Defect
11 Setup Time Reduction
12 Smooth Flow of Material
13 Work-In-Process Reduction
Elements Concerning to Suppliers/ Vendors
1 JIT Purchasing
2 Buffer Stock Removal
3 Inventory Reduction
4 Lead Time Reduction
5 Small Lot Size

Abbreviations: Degree of Importance Degree of Difficulties

1. Not at all Important 1. Not at all Difficult/ Very Easy

2. Least Important 2. Least Difficult
3. Neutral 3. Neutral

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 4. Important 4. Difficult
5. Very Important 5. Very Difficult

Section – D
DEGREE OF EXPECTED BENEFITS

1. How much benefit did you expect after implementation of JIT system?

Sr. Benefit 1 2 3 4 5
No.
 Benefits Concerning to Organization 
1 Improvement in Competitive position          
2 Improved customer Relations          
3 Improvement in Vendor performance          
4 Improvement in Relation with suppliers          
5 Reduction in the number of Suppliers          
6 Improvement in Equipment efficiency/utilization          
7 Reduction in transportation time          
8 Improvement in Process flexibility          
9 Reduction in Scrap          
10 Improvement in Productivity          
11 Improvement in System's flexibility          
12 Reduction in WIP          
13 Reduction in overhead          

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14 Reduction in inventories          
15 Reduction in lot size          
16 Reduction in production lead time          
17 Reduction in space requirement          
18 Increase in Profit          
19 Improvement in Manpower utilization and Efficiency          
20 Reduction in receiving material inspection          
Benefits Concerning to Employees
1 Improvement in Worker motivation          
2 Improvement in team work          
3 Improvement in Material handling          
4 Improvement in Manpower utilization and Efficiency          
5 Reduction in receiving material inspection          
Benefits Concerning to Customer
1 Improvement in Product          
2 Improvement in Quality          
3 Improvement in frequent deliveries          

Abbreviations: 1. Not at all Beneficial 5. Highly Beneficial

2. Least Beneficial
3. Beneficial
4. Very Beneficial

5. How satisfied are you with the current policy regarding just in time.

(1) Not at all

(2) Some what
(3) Satisfied
(4) Quite Satisfied
(5) Very Satisfied.

Thank you very much for you valuable time

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BIBLIOGRAPHY

REFERENCES

BOOKS:
1. Balakrishnan, R., Linsmeier, T.J., Venkatachalam, M., 1996. Financial benefits from
JIT adoption: effects of customer concentration and cost structure. The Accounting
Review 71 (2), 183–205.
2. Celley, A.F., Clegg, W.H., Smith, A.W., Vonderembse, M.A., 1986. Implementation
of JIT in the United States. Journal of Purchasing and Materials Management, 9–15.
3. Droge, C., Germain, R., 1998. The just-in-time inventory effect: does it hold under
different contextual, environmental, and organizational conditions? Journal of
Business Logistics 19 (2), 53–71.
4. Foster, G., Horngren, C.T., 1987. JIT: cost accounting and cost management issues.
Management Accounting 6, 19–25.
5. Gilbert, J.P., 1990. The state of JIT implementation and development in the USA.
International Journal of Production Research 28 (6), 1099–1109.
6. Norris, D.M., Swanson, R.D., Chu, Y., 1994. Just-in-time production systems: a
survey of managers. Production and Inventory Management Journal 2, 63–66.
7. Peters, T., 1990. Time-obsessed competition. Management Review 9, 16–20.
8. Bowen D. & Youngdahl W. (1998). Lean Service: In Defence of a Production-Line
Approach, International Journal of Service Industry Management Vol.9 No.3
9. Karlsson C. (1995). Total Effectiveness of Just-In-Time System, International Journal
of Operations & Production Management, Vol 14 No 3.
10. Kochan A. (1997). Ford – Valencia: Just In Time and Just On Site, Assembly
Automation, Vol. 17 No. 1
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 11. Ramarapu N. (1995). A Comparative Analysis and Review of JIT Implementation
Research, International Journal of Operations & Production Management, Vol. 15
No.1.

LINKS:
 www.bdaconnect.com/india/ficci
 www.google.co.in
 www.wikipedia.org
 www.ibef.org
 www.trai.gov.in
 www.scribd.com
 http://www.infoedge.in
 www.rediff.com
 www.marketingterms.com
 www.internetworldstats.com
 http://www.wisegeek.com/
 http://www.truckads.com/
 www.emarketer.com

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