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INDUSTRY PROFILE
1. A. BRIEF HISTORY OF CERAMIC TILES INDUSTRY

Origin and growth of industry

The word Ceramic comes from the Greek word “Keramos” meaning pottery, it is related to
an old Sanskrit root meaning “to burn” but was primarily used to mean “burnt stuff”. In the
early days the tiles were handmade, hand formed and hand-painted. But today the ceramic tile
is not handmade or hand painted for most of the part.
Historically, man has desired to create living space, which were beautiful, durable, and user
friendly. With that in mind, man has made ceramic tile long ago i.e. thousands of years ago.
Rumors have it that the 1st clay tiles were produced seven to eight years ago in the area of
Holy Land. Many sources independently verify that he actually known history of tiles can be
traced in 4000 BC in Egypt.
In those days in Egypt, tiles were used to decorate various houses. Clay bricks were dried
beneath the sun or backed, and the first glazes were blue in color and were made from
copper, very exquisite.
The ceramic is also found during the period of Mesopotamia, these ceramics bore
decorations, which were white and blue striped and later possessed more varied patterns and
colors.
China is also found as great center of ceramic art, fine white stoneware with the earliest
Chinese glaze was produced during the Shan-Yin dynasty.
The usage and the art of making and decorative ceramic tiles had spread and by 900 A.D
decorative tiles had become widely used in Persia, Syria, and Turkey and across North
Africa. As transport and communication developed, tile usage and its penetration in other
territories increased. Wars and territory take over caused this art to spread even faster.
The Romans introduced tile making in Western Europe as they occupied territories. The low
countries of Northern Europe somehow acquired the technology from Persia, while the
Moors brought African tiles with them when they invaded Spain.
The decorative tiles primarily used to decorate the churches of newly built missions. By the
end of 12th century, use and manufacture of Ceramic tiles had spread across Italy and Spain
and into the rest of the Europe. Till that time they were mainly used to decorate the floors of
Cathedrals and Churches. The sill had eventually vanished from Europe in the 16 th century

following the reformation.

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But the decorative wall tile art had survived in Turkey and Middle East and the Delft tiles art
survived in the Holland. A form of tile making had also evolved among the natives of North
and South America at the same point

Thus using of ceramic tiles was also found in oldest pyramids of Egypt civilization, Babylon
Civilization and also Mesapation Civilization.
During the period of Islamic period, all methods of decoration were brought in to perfection
in Persia.
In case of Indian Ceramic tiles were used in India long back ago, the use of ceramic tiles
were found used during the period Harappa and mohanzadaro civilization.
The Ceramic tiles industry in India has followed similar trends internationally which have
been characterized by excess capacities and falling margins.
The countries like Malaysia, Thailand, Indonesia, Sri Lanka and setting up their own plants.
China has emerged as a major competitor.
In India, the per capita consumption is low as 0.30 Sq.mt. compared to China (2 Sq.mt),
Europe (5 to 6 Sq.mt) and Brazil (2.5 Sq.mt).
Rising disposable incomes the growing middle class and 40 million units of housing storage
hold out a great potential.
A major change that took over the ceramic tile industry was the introduction of vitrified and
porcelain tiles. These new entrant product types are said to be the tiles other future.

The Indian industry has developed an export market although at the lower end. In the volume
it constitutes less than half a percent of the global market.

The Indian exports are rising at the rate of 19% per annum. The top- end of the global export
market is presently dominated by Italy (40.80%) and Spain (26.40%).
India is ranked in the top five (5) countries in terms of tiles production in the world. With
proper planning and better quality control, Indian exports contribution to the G.D.P of the
country significantly increasing every year even though there is economics slow down.

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1 B. GROWTH OF CERAMIC TILES INDUSTRY

Ceramic tiles today have become an integral part of home improvement. It can make a huge
difference to the way your interiors and outlook and express

The growth of ceramic tiles industry is unique, there are several stages in growth of ceramic
tiles industry the people started to use the clay tiles a long years ago i.e about seven to eight
thousand year (7000-8000) years ago, which is starting point of ceramic industries.

The Romans used the first clay tiles in the holy land there after we can see the use of wall and
floor tiles covering in Egypt pyramids, places and houses ancient Egypt 4000 B.C.

Has the time passed there were many changes in using of clay tiles, more varied colors and
patterns of clay tiles were developed by Mesopotamia civilization people.
During the period of Shang-Yin dynasty (1523-1028 B.C) the China had become the center
of ceramic art, fine white stoneware with the earliest Chinese glaze were produced during this
period.

The wars and territory take-over lead to spread of art making ceramic clay tiles all over the
world, mainly throughout the Europe countries through Romans.

In case of India Ceramic Industry is about thousands of years old, It includes Ceramic tiles,
sanitary ware and crockery items. Ceramic products are manufactured both in the large and
small-scale sector with wide variation in type, size, quality and standard.

The Indian ceramic tile industry has been divided into organized and unorganized sector,
unorganized sector holds 44% total production and organized sector holds 56 % of total
production in the county.
State-of-the-art ceramic goods are being manufactured in the country and the technology
adopted by the Indian Ceramic Industry is of international standard.

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In last 2 years, there is significant export potential for sanitary ware. These are presently
being exported to East and West Asia, Africa, Europe and Canada. The exports were of the
order of Rs .60 crore during 2003-04.

In the early days, the tiles were hand-made, each tiles was hand- formed and hand printed,
and thus each was a work of art in its own right.

Ceramic tiles was used almost everywhere on walls, floors, ceilings, fire places, in murals
and as an exterior cladding on building.

Today, Ceramic tiles throughout the world are not hand-made or hand printed for the most
part is automated manufacturing techniques is used and the human hand does not enter into
the picture until it is time to install the tile.

Ceramics can be used in a wide range of fields and new applications are constantly being
added to the list as this industry develops and constantly improves the properties of their
ceramics. Some of the current fields where its usage is more widespread are:

o Construction Industry;
o Lighting Electrical;
o Electrical Applications;
o Medical;
o Environmental and Space Applications.

The purpose of using of ceramic tiles as changed from time to time now at present ceramic
tiles are used along with decoration purpose it has been used for some other purpose such as
Chemical resistant wall and floor tiles are used in labs and production industries, heat
resistant are used in many of iron and steel and other high heat expediting industries.

The investment in the last five years is nearly 2000 cores this increase in the investment is
due to the boom in the real estate sector in India, the industry enjoys unique distinction of
being highly indigenous with an abundances of raw materials, technical skills, infrastructural
facilities despite being fairly capital intensive.

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These ceramic industries are labor insensitive in nature it as provided overall about 550,000
employments in the country in which 50,000 is direct employment and other 500,000 is
indirect employment.

1. C. MAJOR PLAYERS IN THE INDUSTRY

a. Asian Granite (India) Ltd.


b. Antique Raj Industries Ltd.
c. Bell Ceramics Ltd.
d. City Tiles Ltd.
e. Deco Lights Ceramics Ltd.
f. Euro Ceramics Ltd.
g. H & R Johnson (India) Ltd.
h. Jalaram Ceramics Ltd.
i. Kajaria Ceramics Ltd.
j. Murudeshwar Ceramics Ltd...
k. Naveen Ceramics Ltd.
l. Net Ceramics Pvt. Ltd.
m. Oracal Granite Ltd.
n. Sentine Ceramics Pvt Ltd.
o. Sogo Ceramics Pvt. Ltd
p. Somany Tiles Ltd.
q. Varmora Granite (P) Ltd.
r. Vrindavan Ceramics Ltd.

Among all these major players the H & R Johnson act as market leader in the
organized secretor of ceramic Industries by capturing 22 % of total market share in
the country at present.

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COMPANY PROFILE
2 A. BACKGROUND AND DETAILS OF THE COMPANY

H. & R. Johnson (India) Limited (HRJ) is India's No. 1 tile company established in the year
1958 offering a wide range of wall and floor tile products across various segments v.i.z. Wall,
Floor, Vitrified, Exterior and Industrial.

The company also has diversified interests in sanitary ware and bathroom accessories. With a
vast portfolio comprising of 5 well-known brands in India (Johnson, Marbonite, Porselano,
Endura & Milano) HRJ provides the most innovative products of international standards that
is coupled with the best of pre and after sales service.

HRJ have the most modern manufacturing plants located across six strategic locations across
India. Our plants are located in Dewas (MP), Pen (Maharashtra), Kunigal (Karnataka),
Karaikal (Tamilnadu), Vijayawada (Andhra Pradesh) and Rajkot (Gujarat). HRJ units employ
the best of technology from world leaders in tile manufacturing machinery. HRJ plants are
ISO compliant with both 9001 as well as 14001 certifications. Besides this, HRJ units in
Dewas, Kunigal and Karaikal are OHSAS 18001 certified for excellence in safety standards.

H. & R. Johnson (India) Ltd. Believes that sustainability growth comes only with a powerful
product to create that products it is necessary to have synergy between the people and
process, HRJ had established such a synergetic environment, where empowerment arises
through the principles of trust, transparency and team spirit.

The company (HRJ) as its key focus has been makes their products available across the
length and breadth of the country, the company (HRJ) tried to cater to all types of customers
needs and requirements. This has been achieved by expanding the capacities of plants so that
supply does not fall short of customers demands, as a result of which the company as able
capture the market leader position in India.

As of part of aggressive expansion plan of the company (HRJ), company is looking keenly on
the rural markets in India including Class B and C towns, as their existing distribution
network is strong enough to cater to any customer requirements company is expecting the

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30% growth of their distribution network in these rural market areas. The company is
expecting at least 25% turnover from the rural area operations.

i. PERFORMANCE AND GROWTH OF THE COMPANY:-

H & R Johnson’s (HRJ) unique growth profile, high brand pull and proven track record are
symbol of company strong performance. They are on a constant quest to make superior
products through extensive research. The results is evident through the annual sales records,
the company are recorded 1,000 ( one thousand cores) sales in India, during the year 2007-08.

ii. AREA OF OPERATIONS OF HRJ:-

The companies’ distribution network is the largest in the country comprising of 1200 dealers
and 15,000 sub- dealers, spread across the length and breadth of the India. In addition to this,
they also have 22 branches and ware house that gives them a tremendous reach in market
place.
In case of worldwide presence or operation of H &R.Johnson (HRJ) association with Johnson
Ceramic International ensures that consumers can find the companies tiles across the world.
The company’s products are sold in all continents of the world, so that the Johnson name is
globally associated with high quality design- led products.

iii. NATURE OF BUSINESS:-

H & R Johnson (India) Limited is the undisputed market leader in the tile industry since last
50 years across various product categories. The company is engaged in production of Tiles,
sanitary ware, taps and kitchens. The company offers wide range of products which are of
different colors and design to meet the needs of customers throughout the India. Today, the
company enjoys the recognition of being the only company to offer end-to-end solutions of
Tiles, Sanitary ware, Taps, and Kitchens.

H & R Johnson (India) Pvt. Ltd. (HRJ) is a member of many reputed industry organizations
like Indian Council of Ceramic Tiles and Sanitary Ware (ICCTAS), Indian ceramic Society,
Indian Merchants Chambers (IMC), Bombay Chamber of Commerce and Industry (BCCI),
confederation of Commerce and Industry (FICCI), Employers Federation of India (EFI) and

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Construction Industry Development Council (CIDC) and Chemical Allied Products Export
Promotion Council (CAPEXIL).

2 B. HISTORY OF THE COMPANY AND ITS DETAILS

H. &.R. Johnson (India) Ltd. (HRJ) is the Indian No. 1 tiles company established in the year
1958, HRJ is the market leader in the tiles industries for last 50 years, it as currently 22 %
market share in India even after stiff competition from both organized and unorganized
sector.
HRJ is a private company. It has been incorporated according to the companies’ act of 1956
and it as his registered office at Bombay for its Indian operations.

2 C. OWNERSHIP PATTERN:-

H. & R. Johnson (India) Ltd. (HRJ) is private owned company.


Share Holding Pattern HRJ:-

a. Rajan Raheja, India ( owner of Exide Batteries, Prism Cements, Outlook News and
Mizine) India - 60% of shares in the company.

b. Herbert son & Robertson, UK – 40%

2 D. JOINT VENTURE & COLLABORATIONS

The company had made his joint venture and collaborations with many organized and
unorganized sector for production activity in order to meet the demands of their customers in
time.
The important joint venture and collaborations done by the company to carry out production
is as under:-
• 50:50 Joint Venture with sentinel ceramics private ltd (SPCL) in the year 2004.

• 50:50 Joint Venture with Gujarat based company namely Antique Granite Pvt Ltd.
(AGL) in the year 2007

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• Tie up with many unorganized players for 09 (nine) million Sq. Tiles production in
the year 2007.

2E. VISION & MISSION OF THE COMPANY

I. . VISION OF THE HRJ:-

The Vision Statement of the H. & R. Johnson (HRJ) is “Improving life styles of
our customer by providing innovative products and services”

II MISSION OF THE HRJ:-

The Mission of the H.& R. Johnson (HRJ) is “ To be one of the leader in ceramic tiles
production with a strong reputation for high quality products and excellent customers
services and to provide on enjoyable and challenging environment for all the
employers”

2F. QUALITY POLICY& QUALITY OBJECTIVES OF HRJ.

A. QUALITY POLICY IF THE HRJ:-

The quality policy of the H. & R. Johnson (HRJ) is “We shall continuously strive to
provide quality products and services to meet the customer’s expectation”.

B. QUALITY OBJECTIVES OF HRJ:-

• To Constantly improve upon products and service quality

 Customer complaints should be Zero

 Introducing new products Minimum 5 designs in every 6 months

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• To impart training to enhance the competencies of all our employees.

• To set, monitor and evaluate employee’s performance through key result


areas. Min.3 assignments are given to each employee to complete during the
year. It will be reviewed during the year end and new assignment will be set.

• To bring about continual improvement in utilization of key resources like fuel


and glaze.

 Water consumption should be less than 21 ltrs / Sq.mt

 Glaze Loss should be Less than 3 %

 Variable cost should be less then Rs 120 per Sq.mt

 Electric energy should be less than 3.4 units/Sq.mt

ISO CERTIFICATE DETAILS

 ISO 9001- 2000:-

It is an international standard for quality management system in the area of


production design and services. 20 (Twenty) clauses are to be implemented and
maintained by the organization, as per the standard all the activities are suitably
recorded and produced at the time of audits. One person is made responsible for the
maintenance of these standards and is called management representative. ISO clauses
cover all the areas of production installation design and services. And all the plants of
HRJ as obtained this ISO 9001 certificate.

 ISO 14001-2004:-

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It is an international standard for environmental management systems (EMS) related


to organizations continuously strives to carry out all activities to minimize its impact
on environment. Through conversation of its natural resources by its efficient use,
utilization of waste and prevention of pollution. All these clauses related to this
standard enhance the health of employees and provide better working atmosphere, all
the plants of HRJ as obtained this ISO 14001 certificate.

 OHSAS 18001-2007:-

It is an international standard of Excellence Safety Standards, all the plants of HRJ as


obtained the this OHSAS 18001 certificate for their excellent safety measures taken
by the company in all of its plants in order to protect the interest of their employees.

2G. ACHIEVEMENTS AND AWARDS:-

I. ACHIEVEMENTS:-

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H & R Johnson (India) Ltd. (HRJ) has been ranked at the 20th position in the annual
study conducted by Ceramic World Review, the most reputed international magazine
for the Ceramic sector worldwide, published form Italy.

HRJ is the 1st Indian tile company to have made its foot print in this prestigious study.
This listing was drawn on the basis of the total production volumes, other
information, and facts and figures.

H & R Johnson (India) Ltd. (HRJ) as attended the 2 nd International Ceramic Congress
held in Verona from 29th June to 4th July 2008 where more then 1000 delegates have
attended from 39 countries.

The company peoples Visited Ceram Research Laboratory at Stake-on-Trent, UK


where the company representatives made presentation on the company’s
developments.

II. AWARDS:-

H & R Johnson (India) Ltd. (HRJ) has owned the prestigious Reader’s Digest Trusted
Brand Award in the year 2007.

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2H. PRODUCT PROFILE:-

Tiling can be one of the most exciting and vibrant improvements you can make to
your home. The company offers various options which are limitless as our
imagination, the company as fully computerized design studio and professional who
understand the various aspects of design like color, light and space which can help us
to improve over life style.

H. &.R.Johnson (I) Ltd. Is only Ceramic Tile Company in India which has more than
3000 running designs. The range is being increased at the rate over 5 new designs
every month, and all these designs with matching wall and floor tile combinations that
inspire a vast array of styles and ideas. In addition Johnson International UK design
bank of over 50000 designs, which help us to choose and adapt right designs.

H. &.R.Johnson mainly have 5 (five) Ceramic Tiles Brands which meets the needs of
all types of customers and market, it also offers sanitary and kitchen ware items to its
customers.

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The popular five brands of HRJ ceramic tiles are:-


i. Johnson

ii. Marbonite

iii. Endura

iv. Porselano

v. Milano

These popular brands are classified in to wall tiles range and floor tiles range.

i. JOHNSON.

Ceramic tile is the ultimate floor product, combining the beauty with durability it will not
stain, mildew, burn or fade. It is not affected by moisture. It is “allergy- free” soil, fumes,
smoke and germs will not penetrate it is the easiest of all finishes to clean never need buffing,
waxing or finishing.
H & R Johnson (India) Ltd. Offers high quality clay floor tiles to its customers, these tiles are
high temperature fired and has high silica content, thus giving strength and resistance
compare to other clay tiles.
The company’s clay tile is carefully blended from clay out of company owned pits, volcanic
top soil, and high temperatures under the fresh water lake sand. These balanced combinations

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gives the good quality clay tiles which are sold under the brand name “Johnson tiles”. This
brand items is available in different sizes for both wall and floor range.

a. Wall Range
12x16" Concept (320x400mm Rectified)

13 x 19 Hilighter

320 x 480 Monoporosa

4x4" (108x108mm)

8x8" Countryside Designer (200x200mm)

Johnson Hilighter Steel

Johnson Hilighter Textile

b. Floor Range:-
16x16" (406x406mm)

200x200 Anti-skids

8x8" Countryside Designer (200x200mm)

8x8'' Concept (200x200mm)

Goodwood Series

Leatherland Series

Woodenza-Laminated Wooden Flooring

ii MARBONITE:-

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Marbonite manufactures, distributes and markets high –quality ceramic tile products.
The largest Indian Ceramic tile manufacturer and one of the largest in the world. This
brand items is available in different sizes for both wall and floor range.

a. Wall Range:-

Marbonite Metallium

Marbonite Wonder Wall

Marbonite Wonder wall Specials

b. Floor Range:-

Marbonite 2x2 Colors India

Marbonite 3x3 Slabs

Marbonite 4x2 Slabs

Marbonite Metallium

Marbonite XL (700 x 700)

iii ENDURA:-
Endura is band name of HRJ it is one of the world largest floor covering manufacturers and
distributors and is a leading producer of Yarn, Ceramic tiles, area rugs and bath mats. Endura
designs, manufactures and markets woven and tufted broadloom carpet, area and accent rugs
and mats and variety of hard surface flooring products. This Endura products are available at
different size and shape for both in floor and wall range.

a. Wall Range:-
300x300mm Outdoor

MOH9 Tiles

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PEI-V-Tosca Series

Russtone

Shower Area Tiles (Tosca anti skid)

b. Floor Range:-

Acid-resistant

Alkali-resistant

Cement Concrete Tiles

LPEI-V-Regular

PEI-V-Tosca Series

Rock Face Series

iv. PORSELANO:-
It is a glazed vitrified joint free tile. It is re sized and ready to lay, hygienic (dirt doesn’t
accumulate in the joints, when laid without leaving gaps) higher flexural strength.

v. MILANO:-

Milano is other brand of HRJ; it replicates the charm and elegance of natural stone products
at a fraction of the cost. Combo, wall and floor tile exist to enhance any residential or
commercial environment.

Vi. H & R JOHNSON (I) LTD GRANITE:-

H & R Johnson (I) Ltd Granite Company is dedicated to cater the needs of fastidious and
discerning taste of granite customers in India and abroad. H & R Johnson (I) Ltd Granite
divSision is equipped with exhaustive know how in source of minerals to produce.

It is also introduced fully vitrified tiles. Johnson granite is internationally preferred


alternative to Italian marble. Johnson granite can really add grandeur and royalty to the room

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without scarifying the toughness and utility of the product, Johnson granite is ideally suitable
for high traffic areas like shopping malls, showrooms and hotel lobbies etc., which needs to
display splendor and eminence as well as withstand the high pedestrian traffic, design effects
available are soluble salt colors, flame effects, salt and pepper effects and also plain colors in
various sizes.

2J. SERVICE PROFILE:-

As being the leaders of the Indian tile market, company as always tried to gain the
esteemed customers through various contact programmers, bridging the distances time and
space barriers and customer care department to attend the quires.

H & R Johnson (HRJ) is the first tile company to establish the customer care center at its
corporate office in Mumbai, customer care executives go through the rigorous training in
order to give proper and full information about the all product technical specification,
providing information and recommendation to help the customers in order to make right
choice and decision while buying the Ceramic tiles.

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CHAPTER: 3

7S FRAMEWORK

3A. STRUCTURES:-

Organization Structure is one of the important aspect of the company, it represents the size of
the organization and diversity.

Organization structure of the company explains who the people and their work are organized
in the company, it also talks about policies and procedures which govern the organization, it
also explains who the organization operate within its internal environment.

The Organization structure also talks about the Hierarchical levels, flow of authority and
responsibility, decision making activity and procedure etc.

 Board Of Directors

The Board of Directors of H & R Johnson (India) Ltd are as follows:-

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 Rajan Raheja Chairman

 Akshay Raheja Director

 Viren Raheja Director

 Peter mukarjea Director

 Vijay Agarwal M.D

 Company Structure:-

The company is headed by Mr. Vijay Agarwal who is the Managing Director of the company,
the company follows functional structure.

In the company the Managing Director is followed by Vice President and General Manager
(Operation) under him different functional departments are located, the various Departments
like quality control, production, maintenance, supply chain, human resource management
comes under control of general manager. Under supply chain manager, material manger,
dispatch manager purchase manager, and geologist comes into picture.

Different departments and Its Function:-

 Production Department:-

The production department is important department In the H & R Johnson (I) ltd as it is
involved in manufacturing of Ceramic Tiles. The production department involved in
conversion of raw material in to finished goods.

Organization Chart of Production Department:-

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(Chart 01 Showing the Organization structure of Production department)


Senior Manager
(Production)

Assistant Manger Assistant Manger Assistant Manger Senior Engineer

(Pressing Dept.) (Dipping Dept.) (Glazing Dept.) (Killen Section)

Production Function:-

(Chart 02 Showing the Production function)

Input Convertion Out Put.

(Source: - H.R. Dept.)

Stages of Production function in HRJ at Kunigal Plant.

1. 1st House Mixing

2. Slip House and Spry dry

3. Press and process

4. Firing kiln

5. Glazed color

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6. Screen Printing

7. Firing No.2

8. Quality Check

9. Packing

10. Dispatch

• Purchase Department:-

Purchase Department is responsible for the procurement of materials for production,


production department provides information regarding the requirement of materials to
purchase department and it is the duty of purchase department to make supply of required
materials at minimum cost without any interruption to the production activity.

• Personal and Admistration Department:-

Personal and Admin Department is in-charge of Human Resource in the organization, this
department take care of Various HR activities such as Human Resource Planning,
Recruitment, Training, Promotion, Handling the Grievances and welfare activity. It is duty of
Personal department in the organization to supply the required quality and quntitity Human
Resources as and when requested by the other department without delay at minimum cost.

Organization Chart of Personal and Admin. Department:-

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(Chart 03 Showing the Organization structure of Personal and Admin


Dept.)

Senior Manager Personal and Admin.

Senior Officer Personal and Admin.

Assistant Officer Personal and Admin

Assistant Officer Security


(Source H.R.Dept.)

Marketing and Distribution Department:-

H & R Johnson (India) ltd. (HRJ) is being the undisputed market leader in Ceramic Tiles
Industry by having 22% Market share in organized sector.
The company does not carry out any direct marketing activity but the marketing activity of
the company is carried through dealers and sub- dealers who are situated throughout India.

PRICING:-
HRJ adopted the “Cost Plus Pricing Method” production units sends the actual cost of
Production to the Corporate Office, then PMG ( Product Managers Group) decides the Price
of the Product after considering the Market Condition and cost of Production.

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Distribution Channel:-
(Chart 04 showing the distribution channel)
Factory Go down Dealer Consumers.
(Source H.R.Dept.)

Accounts and MIS:-

Accounts Department look after the fixed, Variable, and semi-Variable cost of production
other Admin. and selling expanses of the factory. Each plant have their own accounts
department which also looks after the MIS department. The Accounts departments of all
plants are integrated through centralized SAP system.
Accounts department also carry out the controlling activity in the organization. It establishes
the standards and compares the actual performance with that pre fixed standards, if there is
any deviation in the actual performance from the standard fixed then the corrective action
well be taken by the department.
MIS is a system is systems which are adopted by the organization to support the day to day
activities.
SAP is adopted as MIS system in the organization; SAP provides the integrated account and
management system for entire HRJ Corporation controlled by Central Head Office situated at
Bombay.

Organization Chart of Accounts and MIS. Department:-

(Chart 05 Showing the Organization structure of Accounts and MIS


department)

Senior Manager Accounts and MIs.

Deputy Manager Accounts and MIS.

Assistant Manager Stores

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Assistant Officer Excise


(Source H.R.Dept)
3B. STAFF:-

Staff means the people in the enterprise and their socialization into the organization culture.
The “staffing”. Staffing is the process of acquiring human recourses for the organization and
assuring that they have the potential contribution to the achievement of the organization
goals.
H & R Johnson (India) Ltd (HRJ) generally prefers to have highly qualified technical and
dedicated management professionals to their company.

At present there are total 1600 Employees (i.e Corporate Staff) and 22,673 workers (this
includes all other workers and employees other then the corporate staff) are working at H &
R Johnson (India) Ltd.

1. Different Cadres and the Strength in each Cadres at Kunigal Plant.

The different Cadres of Employers and the strength of each Cadres of Employs at H & R
Johnson (India) Ltd, Kunigal Plant (HRJK) are as follows.

(Table-01 showing the Different cadres and strength in each cadres at HRJK)

STAFFS NO. OF EMPLOYEES

Corporate staff 15

Managerial Staff 68

Technical Staff 35

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Trainees and Apprentices 26

Contract Workers 98

Canteen Staff 11

Security Staff 21

Operators 78

TOTAL 362

(Source HR Dept.)

2. Recruitment Process:-

Recruitment Process is function involved in searching for the perspectives employees whose
skills and knowledge suites the organization requirement and stimulating them to apply for
the Job in the organization.
H & R Johnson (India) Ltd (HRJ) Generally Prefer the highly qualified technician and
dedicated management professionals in their company.
In case of Recruitment Process in H & R Johnson (India) Ltd (HRJ) is as follows:-
HR manger first identifies the various sources from which the organization can get the
required employees according to the requirements of different departments, based on the
requests made by Department heads for Human Resources.
• Calling for application and screening of the application
• Then the selected candidate will be interviewed by the Department Heads
• Then the final Interview will be carried by the General Manager at corporate level or
at plant level for those candidates who get succeeded in second interview.
• Training for selected candidates will be given, Finally induction for the candidates
who completed the training successfully
• Requirements of jobs changes according to job Profile.

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• In H & R Johnson( India ) Ltd (HRJ) junior level post will be filled by the fresher’s
and senior level posts by the experienced people.

3. Training Programmers :-

In H & R Johnson (India) Ltd (HRJ) both On the job Training and Off the job
Training is given.

a) On the Job Training Methods:-

Job Rotation

Weekly Training

Internal Transfer to various other Departments

b) Off the Job Training Methods:-

Skill Development

Personality development

Seminars

Lecturing

4. Facility provided to Staff (Staff Welfare)

A. Provident Fund:-

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H & R Johnson (India) Ltd (HRJ) is providing employer contributed provident fund
for all of its Employees.

B.Canteen Facility;-

H & R Johnson (India) Ltd (HRJ) is providing Canteen facility at subsidized or


reduced cost for all of its Employees.

C.Vehicle Facility:-

H & R Johnson (India) Ltd (HRJ) is providing bus facility or transportation facility to
its Employees.

D.ESI Facility:-

H & R Johnson( India ) Ltd (HRJ) is providing medical facility to its employees

E.Insurance Facility:-

H & R Johnson (India) Ltd (HRJ) is providing free Accidental Insurance coverage to
all of its Employees.

F.Cultural Facility:

H & R Johnson (India) Ltd (HRJ) is celebrating the various National


And state Festivals along with the Employees.
H & R Johnson (India) Ltd (HRJ) is conducting various sports and
Cultural activities for its Employees.

G.Other Facility:-

H & R Johnson (India) Ltd (HRJ) is providing free uniform and shows to all of its
companies employees.

3 C. SKILLS:-

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H & R Johnson (India) Ltd (HRJ) is the company well known for its quality products, which
is evident through state – of – the – art design and technology. It is the company that is bench
marked for its quality and customer service H & R Johnson( India ) Ltd (HRJ) possess highly
qualified, technical and managerial experts selected from the creamy layer of labour market.

Skills required for the Organization:-

The some important skills which are expected by the organization by its Employees are as
follows:-

• Good Communication Skills

• Decision Making Skills

• Negotiation Skills

• Discriminating Skill

• Empathy

• Inter-Personal Skill

• Good at academic Back ground

• Business related Skills

• Basic Computer Skills

Skill Enhancement:-

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The Various steps taken by H & R Johnson( India ) Ltd (HRJ) to enhance(Improve) the skill
of its employees are as follows:-

o Job Rotation

o Personality Development Programs

o Counseling

o Seminars

o Inter departmental Transfers

o Paper Presentation

o Communication Development Programs

o Work Shops

3 D. SYSTEMS:-

System refers to all the rules, regulation, procedures and process both formal and informal,
which complement the organization structure to work successfully. The system and process
of controlling is the measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are being accomplished.

Management Information System (MIS):-

H & R Johnson( India ) Ltd (HRJ) is an company which is systematic in doing its day- to-
day work and any work for that matter is done in a systematic and deployed in all facts of
companies operation both for business. The major units have centralized main frames where
minor once has mini- tiles systems.

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In the data communication area, all the units are linked up through a wide area; corporate
data network H & R Johnson( India ) Ltd (HRJ) each of major units is in process of setting up
its campus wide back bone network supported by LAN for inter office/ department
connectivity for system integration.

ERP System:-

ERP is a soft ware system which is used in H & R Johnson (India) Ltd (HRJ), it links all the
6 plants and 24 branches together. It commonly called as SAP system.

There are different models in SAP they are:-

• MM Models used in Material Management\PP Models used in Production and


planning

• SD Models used in selling and Distribution

• HRD Models used in Personal and Admin

• Matinees Model used in preventive Matinees

Thus these models of ERP System will provide a complete business solution to the l
organization, this ERP system is customized according to the needs of the organization.

There is core group IT personnel is available in each of units to look after the systems in all
units and branches.

Inventory Control System:-

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Inventory control system, which ensures that right quality of material is available in right
quantity at the right time and right place with right amount of investment.

Normally H & R Johnson( India ) Ltd (HRJ) keep the stock of one month in the organization,
the raw materials which are imported from Italy and other countries will be kept in more
stock and other local raw material will be kept in less stock.

3 E. STYLE:-

Management Style and Decision Making Process.

H & R Johnson (India) Ltd (HRJ) is practicing top down style of management system. Where
the information flows from top to bottom in the organization hierarchy.

The major decisions about the finance were taken by General Manager supported by
Accounts Department.

The other decision is delegated to the Respective Department where the decisions are taken
by the department heads.

The management follows the participative style were the subordinates were allowed to
participate in decision making activity.

In order to motivate the people in organization the company gives rewards for good ideas.

3 F. STRATEGY:-

A set of actions that the company starts with and which it must maintain. It also means the
integrated vision and direction of the company, as well as the manner in which it derives
articulate communicates and implements that vision and direction.

• Development of intermediaries and bulk tiles manufacturing using Variety of


machinery and equipment.

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• Manufacturing of intermediate and bulk tiles under one roof i.e H & R
• Johnson (India) Ltd (HRJ)
• Manufacturing the finished tiles under ISO Certification standards and
• International Standards.
HR Strategy:-

HR Strategy of H & R Johnson (India) Ltd (HRJ) aims mainly at recruiting and retaining
talents in the organization

Developing Good Organizational Culture and good working environment to its employees in
the Organization

HR Strategy of the Organization aims at developing leadership qualities in the employees.

HR Strategy of the company tries to improve the ability of its employees through training and
performance appraisal

The H & R Johnson (India) Ltd (HRJ) providing various awards and befits to its employees
in order to motivate them to work hard and retain them in the organization

Some of them awards given by company are as follows: - Safety Award

• Best Attendance Award

• Best Performance Award

• Man of the Year Award

• Man of the Month Award

Marketing Strategy (Advt. and Sales Promotion):-

The company has adopted many Advertisement and Sales Promotion activity as main part of
its marketing Strategy.

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Advertisement:-
The Company does its advertisement through various Popular sources such as:-
 Paper and Press Media

 Traffic Rail

 Wall painting

 Road Drivers Advertisement

 Sign Boards

Sales Promotion:-

The Company does its Sales Promotion through various ways such as:-

 Attending Exhibition

 Creating Brand awareness

 Organizing trade Fair

 Arranging distributors conferences

3 G. Shared Values:-

The shared values are one of the important element which required for the growth of the
organization. Shared values are those values shared by all members of the organization
without having any discrimination.
These values may be explicit or Implicit and they are the key ingredients to the good culture
of the organization.

H & R Johnson (India) Ltd. (HRJ) has always sought to be value driven organization. These
values continued to direct group’s and business

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The six core shared values of H & R Johnson (India) Ltd. (HRJ) are as below which direct
the way of doing the business.

 INTEGRITY:- “We must conduct our business fairly, with honesty and
transference. Everything we do must stand the test of public scrutiny”.

 UNDER STANDING:- “We must be caring, show respect, compassion and


humanity for our colleagues and customers around the world and always work for the
benefit of our nation”.

 EXCELLENCE:- “We must constantly strive to achieve the highest possible


slandered in our day to day work and the quality of the goods and the services we
provide”.

 UNITY:- “We must cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation”.

 RESPONSIBILITY:- “We must continue to be responsible, Sensitive to the


countries, communities and environment, in which we work always ensuring that
comes from the people, goes back to the people many times over”.

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CHAPTER: 4

SWOT ANALYSIS

(Table 02 Showing SWOT analysis of HRJ)

STRENGTHS WEAKNESS
 Quality :- The plants of company have  Problematic Industrial Relations.
high quality Ceramic Tiles

 Lack of skilled worker s and

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 Brand Name:- The company enjoys professionals in the company


high brand equity.

 Under utilization of sources


 Market Share:- The Company is
market leader in India by having 22%
 Trade Union fear
total Market in Organized sector

 Profit:- The company is Continuously  Outdated Machinery and equipments in


making profit the plant.

 Awards:- The company has achieved


many international Award which
increased the good will of the company

 High Production Capacity

OPPORTUNITIES THREATS

 Increase in export and sales because of  Substitutes such as marbles and granites
overseas demand getting popularity

 Huge Rural Market  Increase in competition

 Benefits of Economies of Scale  Falling market share

 Entrance of new foreign companies

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PART B
CHAPTER: 5
INTRODUCTION

Inventory Management:-
In recent decades business men have shown an increasing awareness in the field of inventory
control.

In past centuries, inventories were considered as indication of wealth; even inventories


greatly in excess of the amount needed to carry on the process of production and distribution
were considered beneficial.

Inventories are often referred to as "graveyard" as surplus stock has been a principle cause of
business failure. As a result, business men have developed an almost pathological fear of
increasing inventories

Every enterprise needs inventory for smooth running of its activities. It serves as a link
between production and distribution processes. There is, generally, a time lag between the
recognition of a need and its fulfillment. The greater the time-lag, the higher the
requirements for inventory. The unforeseen fluctuation in demand and supply of goods also
necessitate the need for inventory. It also provides a cushion for future price fluctuation.

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The investment in inventories constitutes the most significant part of current assets/ working
capital in most of the undertakings. Thus, it is very essential to have proper control and
management of inventories. The purpose of inventory management is to ensure availability
of materials in sufficient quantity as and when required and also to minimize investment in
inventories.

Decisions relating to inventories are take primarily by executives in production, purchasing,


and marketing departments. Inventories generally represent a very significant proportion of
total assets. Hence the importance of inventory management cannot be overemphasized.

MEANING OF INVENTORY

The dictionary meaning of inventory is 'Stock of goods’, or ‘List of goods'.


Various authors understand the word inventory differently.
In accounting language it may mean 'Stock of finished goods only'.
In a Manufacturing concern, it may include 'Raw materials', work-in –progress,
consumables.
To understand the exact meaning of the word inventory, we can study from usage side or
from the point of operations.

INVENTORY INCLUDES THE FOLLOWING

1. Raw materials:
Raw materials form a major input into the organization. They are required to carry
out production activities uninterruptedly. The quantity of raw materials required will
be determined by the rate of consumption and the time required for replenishing the
supplies. The factor like availability of Raw materials and Government regulations
etc too affect the stock of Raw materials. Raw material holds nearly 50% of cost of
production.

2. WORK-IN-PROGRESS.
The work in progress is stage of stocks, which are in raw materials and finished
goods. The raw materials enter the process of manufacturing but they are yet to attain

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a final shape of finished goods. The quantum of work in progress depends upon the
time taken in the manufacturing; the more will be the amount of work-in-progress.

3. FINISHED GOODS.
These are the goods, which are ready for the consumers. The stock of finished goods
provides a buffer between production and market. The purpose of maintaining
inventory is to ensure proper supply of goods to customers. In some concerns the
production is undertaken on order basis, in these concerns there will be need for
finished goods. The need for finished goods inventory will be more when production
is undertaken in general without waiting for specific orders.

4. SPARES
The consumption pattern of raw materials, consumables, finished goods are different
from that of spares. The stocking policy of spares is different from industry to
industry. Some industries like Transport will require more spares than order
concerns. The costly spares parts like engines; maintenance parts, etc. are not
discarded after use, and rather they have kept in ready position for further use. All
decision about spares is based on financial cost of inventory on such spares and the
cost that may arise due to their non-availability.

 RISK AND COST OF HOLDING INVENTORIES

The holding of inventories involves blocking of firms funds and incurrence of capital and
other costs. It also expresses the firm's risk involved in holding inventories.

1. Capital costs.

2. Storage and Handling Costs.

3. Risk of Price Decline.

4. Risk of Obsolescence

5. Risk Deterioration in Quality.

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5A. STATEMENT OF THE PROBLEM

The purpose of the project is to analyze the Inventory Management techniques and process
followed by H & R Johnson (India) Ltd (HRJ) at Kunigal Plant and to give the
suggestion to further improve the inventory management in the plant.

5B. OBJECTIVE OF THE STUDY

• To study the Classification of Raw materials.

• To study the inventory control and analysis system followed by the company.

• To study the investment in inventory for last 5 Years.

• To Inventory management followed by the company.

• To make a study on the inventory ratio.

5C. SCOPE OF THE STUDY

The scope of the study is limited to Inventory management activities and techniques followed
by H & R Johnson (India) Ltd (HRJ) at Kunigal Plant, It includes only secondary data
collected from various sources like income statement, ledger Books, computer systems,
documents, records, account books of the company etc.

5D. RESEARCH METHODOLOGY

To achieve the foresaid objectives of the study, only secondary data have been used.

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The data collected from reports generated on the inventory holding, published information on
inventory costs, ledgers, documents, account books, personal interview and discussion with
the managerial staff of HRJ Kunigal Plant and other materials are collected from various
textbooks, company brochures, magazines.etc.
Inventory for the last five Years (2005-09) as taken to calculate the some important inventory
ratios.

5E. LIMITATION OF THE STUDY

• The study was limited to H & R Johnson (India) Ltd (HRJ) at Kunigal Plant.

• H & R Johnson (India) Ltd (HRJ) is a private limited company hence financial report
is not available to make complete analyses of performance.

• The study is based completely on secondary data i.e information given by company.
Within the above limitation efforts are made to reach realistic conclusion .

 OBJECTIVES OF INVENTORY MANAGEMENT

• To avoid both over- stocking and under-stocking of inventory.

• To keep material cost under control so that they contribute in reducing cost of
production and overall cost

• Understand the various methods of stock valuation and its implication to the
company’s financial accounts.

• Understand the importance and purpose of Inventory Control

• Understand the different techniques of Inventories.

• To achieve the use of ratio analysis as a tool for measuring the effectiveness of
inventory management.

• To understand the purchase procedure.

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• To maintain investments in inventory at optimum level as required by operational and


sales activities.

• To minimize losses through deterioration, pilferage, wastages and damages.

• To eliminate duplicating and replenishing stocks.

• To ensure right quality goods at reasonable prices. Suitable quality standards will
ensure proper quality of stocks.

TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT

Effective inventory management requires an effective control system for Inventories. The
following are important Tools and Techniques:
1. Determination of Stock levels.
2. A.B.C Analysis
3. V.E.D Analysis
4. Inventory Turnover Ratio
5. Classification & Codification of Inventories.

1. DETERMINATION OF STOCK LEVELS.

For a firm carrying too much and too little of inventories is detrimental. If the
inventory level is too little, the firm will face frequent stock-outs involving heavy
ordering costs and if the inventory level is too high, it will be unnecessary tie-up of
capital. Here the firm should maintain an optimum level of inventory where the
inventory costs are minimum and at the same time there is no stock-out which may
result in loss of sale of stoppage of production. The various stock levels are discussed
as such.

Various stock levels are

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MINIMUM LEVEL

This represents the quantity, which must be maintained in hand at all times.
If stocks are less than the minimum level, then the work will stop due to shortage of
materials.
The following factors are taken into account while fixing minimum stock level.
• Lead time.

• Rate of consumption

• Nature of materials

A. RE-ORDER LEVEL.
When quantity of materials reaches at a certain figure, then fresh order is sent to get the
materials again. The order is sent before the material reach minimum stock level. It is a level
which is fixed between Minimum Level & Maximum Level. The rate of consumption, the
number of days required replenishing the stocks and maximum quantity of materials required
on any day are taken into account while fixing reordering level.

B. MAXIMUM LEVEL.
It is a quantity of material beyond which the firm should not exceed its stock. If quantity
exceeds maximum level limit then it will be overstocking. A firm should avoid overstocking
because it will result in high material cost. Overstocking means blocking of more working
capital, more space for storing the materials, more wastage of materials and more chances of
losses from obsolescence. Maximum stock level depends on the following factors
• The availability of capital for purchase of materials.
• The maximum requirement of materials at any point of time.
• The availability of space for storing the materials.
• The rate of consumption of materials during lead time.
• The cost of maintaining the stores.
• The possibility of fluctuations in prices.
• The nature of materials. If materials are perishable in nature, then they cannot
be stored for long.

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C. DANGER LEVEL.

It is a level beyond which materials should not fall in any case. If danger level arises then
immediate steps should be taken to replenish the stocks even if more cost is incurred in
arranging the materials. If materials are not arranged immediately there is possibility of
stoppage of work.

2. A.B.C. ANALYSIS.

The materials are divided into number of categories for adopting a selective approach for
material control. It is generally seen in the manufacturing concern, a small percentage of
items contribute a large percentage of value of consumption and large percentage of items of
materials contributes small percentage of value. In between these two limits there are some
items which have almost equal percentage of value of materials. Under ABC Analysis the
materials are divided into 3 categories.

They are as follows,


• 10% of the items contribute to 70% of value of consumption & this category is called
A.

• 20% of the items contribute to 20% of value of consumption & this category is called
B.

• 70% of the items contribute to 10% of value of consumption & this category is called
C.

ABC analysis helps to concentrate more efforts on category A since greatest monetary merit
will come by controlling these items. An attention should be paid in estimating requirements,
purchasing and maintaining safety stocks and properly storing of a category of materials.
Control of C items may be relaxed since these stocks may be purchased for a year. A little
more attention may be given for B category items and there purchase should undertake
quarterly or half-yearly intervals.

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3. V.E.D ANALYSIS.

The V.E.D analysis is used generally for spare parts. The requirements and urgency of
spare parts is different from that of materials. Spare parts are classified as
V (Vital), E (Essential), D (Desirable)
Vital spares are must for running of concern smoothly & these must be stored adequately.
The non-availability of vital spares will cause disorder in the concern. The Essential type of
spares is also necessary but their stocks must be kept at low figures. The stocking of
Desirable type of spares may be avoided at times. If lead time of these spares is less, then
stocking of these spares may be avoided.
The classification of spares under three categories is an important decision. A wrong
classification of any spare will create difficulty for production department.

Classification of spares should be left under technical staff because they known the need,
urgency, and use of these parts.

4. INVENTORY TURNOVER RATIOS

Inventory turnover ratios are calculated to indicate whether inventories have been
used efficiency or not. The purpose is to ensure the blocking of only required
minimum funds in inventory. These are also known as Stock Velocity. It normally
calculated as sales/average inventory or costs of goods sold average inventory costs.

Inventory Turnover Ratio = costs of Goods sold.

Average Inventory at Cost.

5. CLASSIFICATION AND CODIFICATION OF INVENTORIES.

The inventories in a concern may have raw materials, WIP, finished goods, spares,
consumable stocks etc. each of these have sub division and everything is classified
according to that. Then code number is given to all the items in the concern. Proper
classification may lead to more production. These two helps in prompt issue of
materials to work place.

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 INVENTORY MANAGEMENT IN INDIA

INVENTORY MANAGEMENT PRACTICES


1. Inventory levels in India appear to be high. The reasons are as follows:

a). Purchase executive are severely penalized for stock outs, but they are not questioned
for high inventories.

b). Lengthy and bulky import procedures in the past forced companies to carry huge
amounts of inventories for imported items.

c) It pays to keep inventories high because prices rise due to inflation.

d) Most of the vendors are not reliable in terms of delivery schedules and quality of the
materials supplied. Hence, companies carry large safety stocks.

e) Due to lack of standardization there is a large variety of stores.

2. The most commonly used tools of inventory management in India are ABC analysis,
FSN analysis, and Inventory Turnover analysis

AREAS OF IMPROVEMENT:-

Inventory management in India can be improved in various ways. Improvement could be


effected through:
1. EFFECTIVE COMPUTERIZATION.
Computer should not be used merely for accounting purposes but also for improving
decision-making.
2. REVIEW OF CLASSIFICATION.
ABC & FSN classification must be periodically reviewed.
3. IMPROVED CONDITION.
Better coordination among purchase, production, marketing and finance
departments will help in achieving greater efficiency in inventory management.

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4. DEVELOPMENT OF LONG TERM RELATIONSHIP


Companies should develop long-term relationships with vendors. This would help in
improving quality and delivery.

5. DISPOSAL OF OBSOLETE/SURPLUS INVENTORIES.


Procedures for disposing obsolete and surplus inventories must be simplified.

6. ADOPTION OF CHALLENGING NORMS.


Companies should set benchmarks with global competitors and use ideas like JIT to
improve inventory management.

 INVENTORY VALUATION

Many methods of materials costing and inventory valuation has come into use among
the more common methods of costing materials and valuing inventories are:

(1) First in First Out Method [FIFO]:


Here the earliest acquired stock is assumed to be used first. The stock is assumed to
be used first. The stock which is bought first is issued first. In other words the principle is
that the materials are issued in this order and at the price of their original purchase.
This method is claimed to be accurate for the reason that the materials are charged
into production at actual cost in the order of receipt. The closing inventories are valued at
the most recent prices. If the closing inventory balance includes material at several different
prices, the problem of considerable clerical work is involved.
This method assumes that the order in which materials are received in the stores is the
order in which materials are issued from the stores. Hence the materials which is issued first
is issued first is priced on the basis of the cost of material received earliest.

(2) Last in first out method [LIFO]


This method is the opposite of the FIFO method. It assumes that the material which is
acquired last is issued first. Hence material issues are priced on the basis of the cost of the
recent purchases.

(3) Weighted average cost method:

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Under this method issues are priced at the weighted average cost of materials in stock
[The weights being proportional to quantities]. To get an unto date weighted average cost
figures, a new weighted average cost is calculated each times a delivery is received.

(4) Standard price [cost] method:


Under this method a standard price is pre-determined when materials are purchased
the stock account is debited with the standard price. The difference between the actual price
and standard between the actual price and standard price is carried to a difference account.
Material issued is charges as per the standard price.

(5)Simple Average Method:

Under this method, material issues are valued at average price. It is calculated by
dividing the total price of the materials in the stock, from which the material to be priced
could drawn by the number of prices used in that total. The issue price is determined as
follows:

Issue price = unit prices of materials in stock


Number of purchases
This method works well there is little variation in the purchase prices.

PERPETUAL INVENTORY SYSTEM:-

Maintenance of Systematic inventory record on continuous basis is generally referred to as


perpetual inventory. It consists of maintaining a record for each type of material showing the
quantities and the value of materials received, issued and in stock. It may also contain
information relating to the quantity of materials ordered from time to time, expected delivery
date and unit cost. The object of perpetual inventory system is to ensure that production is
interpreted due to shortage of materials, to facilitate regular checking, to avoid closing down
for stock taking and to provide basis for verification of physical quantity in stock.

Perpetual inventory comprises of the following three components.

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1. Bin Card ( Quantitative Perpetual Inventory)

2. Stores Ledger ( Valued Perpetual Inventory)

3. Continuous Stock Taking ( Physical Verification of Stock)

 CODIFICATION OF THE INVENTORY.

1. Alphabetic Systems:-

Under this system the alphabet of the material is the starting point of codification
subsequently Sub-alphabet may be used if necessary.
Eg:- Iron ore - IN-O
Iron Bars - IN-BA

2. Numerical system:-

Under this each item is allotted a numeral. It is based on number rather than alphabet. The
number are allotted as codes and the numbering may be simple numbers, block numbers or
dash/ stroke number.

3. Combination of Alphabetic Numeric System:-

This system is a mixture of both the systems- alphabetic and numeric. For example, Iron bar
may be allotted code as IN-BAR01.This system has the merits of the two systems. There are
some demerits of codification. The main demerits are that often codes are misunderstood and
when there is a mistake, finding out exit code becomes difficult, more over when large
numbers are coded in one group this leads to confusion.

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 OBJECTIVES INVENTORY MANAGEMENT AT H & R JOHNSON (I) Ltd.,

• Inventory Management plays a vital role in HRJK. Each item of raw materials is
given a unique code number and balance is known automatically.

• The centralized SAP soft ware is used for the purpose inventory management in the
plant, this soft ware connects the kunigal plant with the other plants which helps in
sharing of information.

• Supply of raw materials as and when required by the production department.

• Optimization of Profit and minimization of cost.

• Minimization of Raw materials storage cost.

• To ensure uninterrupted supply of raw materials

• Minimize wastage and losses of materials.

• To provide quality raw material

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7 A. CLASSIFICATION & CODIFICATION OF INVENTORY

HRJK follows ABC classification whether the materials are divided into number of
categories for adopting a selective approach for material control

ABC CONTROL CHARACTERISTICS


(Table-03 showing the ABC control characteristics)

A TYPE B TYPE C TYPE

Very strict Control Moderate Control Low Control

Very slow safety stocks High safety stocks High safety stocks

Frequent Ordering Once in 2 to 3 months More Ordering

Maximum follow up Periodical follow up Exceptional follow up

Weekly Control Quarterly control Quarterly control


Statement Statement Statement

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Many source as possible Two or more source Two or more source

Centralized Purchasing Combined Purchasing Decentralized Purchasing

CLASSIFICATION OF INVENTORY AT HRJK

In HRJK the inventory are classified based on their monitory value.

• The goods worth 250,000/- and Above comes under group A

• The goods worth 250,000 to 150,000 comes under group B

• The goods worth 150,000 and below comes under group C

CODIFICATION OF INVENTORY DONE AT HRJK


(Table-04 showing the Classification and codification of Inventory at HRJK)

General Code Description

231000 Clays

231001 Minerals

231002 Additive and solvents

231003 Glaze Materials

231004 Stains and Colours

231005 Fules

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231006 Package Materials

231007 Stores and Loose tools

231008 Referactories

231009 Abrasives

231010 Dies and Punches

231011 Screen Materials

232000 Intermediate Goods

234000 Finished Goods


(Source- Inventory records)

Some of important Inventory under each group

 231000 Clays:-

Ro100Clay000006 Bentonit Powder White


Ro100Clay000040 Clay B 555
Ro100Clay000050 Clay BEGUR
Ro100Clay000065 China Clay
Ro100Clay000105 China Clay (VCC)
Ro100Clay001175 Clay Shanwal

 231001 Minerals:-

R020MALU000010 Calcined Alumina


R020MALU000012 HGRM – 30
R020MALU000013 Boric Acid
R020MALU000018 Boric Penta
R020MALU000118 Soda Feldspar
R020MALU000218 Micalse 200

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 2311002 Additive and solvents:-

RO301A000040 Craborical MM3


RO301A000041 Soda Ash
RO301A000042 Sodium Slicate
RO301A000044 Medium TF98
RO301A000055 UBM
RO301A000060 Policer 101

 231003 Glaze Materials

ROHOLSCRRP T001O Screen print Base CRSB


ROHOLSCRRP T0012 Screen print Base CRTBI
ROHOLSCRRP T0015 Screen print Base CRTB3
ROHOLSCRRP T0018 Matta Glaze 3651
ROHOLSCRRP T0020 Matta Glaze 3605

 231004 Stains

RO5025 T000DS005 Stain ET 805


RO5025 T000DS006 Stain SPC 355
RO5025 T000DS007 Stain SPC 312
RO5025 T000DS008 Stain11W114 Métal red
RO5025 T000DS009 Stain11W115 Métal Yellow
RO5025 T000DS010 Stain11W116 Métal White

 231005 Fuels

U0001FU00HSD0001 High Speed Diesel


U0001FU00HSD0002 L.P.G. Industries
U0001FU00HSD0003 Nitrogen Cylinder
U0001FU00HSD0004 Coal
U0001FU00HSD0005 Coffee Husk
U0001FU00HSD0006 Coke

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U0001FU00HSD0007 Coal Catine

 231006 Packing Materials

PO60131JF35001 COOR Sheet JF3


PO60131JF35002 Wrapper Round

 231007 Spare Tools

M9400DCZZG005 Gas Plug


M9400DCZZG006 Mono meters
M9400DCZZG007 Bolts
M9400DCZZG008 Colours
M9400DCZZG009 Sakets
M9400DCZZG010 Belts

 231008 Referactories items

S3101GRA14M0040 Ceramic Rollers


S3101GRA14M0041 Sill Bricks

 231009 Abrasives

M9400PLSQKD1150 Grinding wheels


M9400PLSQKD1151 Diachep
M9400PLSQKD1152 Elastic wheels
M9400PLSQKD1153 Helical gear
M9400PLSQKD1154 3QWHL

 231010 Dies and Punches

S140031REAR005 Surface Punches 16X 16 Endura


S140031REAR006 Surface Punches 406X 406
S140031REAR007 Surface Punches 380X 380
S140031REAR008 Esin Plain JFRC
S140031REAR009 16X 16 Rubber

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 231011 Screen Cloths

S4201SC13000020 Boalth Cloth


S4201SC13000021 Leath Bellow
S4201SC13000022 Screen fram

 231012 Working in progress

TV001WIP0012 FL Past
TV001WIP0013 BR-16
TV001WIP0014 FRIT-DFT
TV001WIP0015 WL- TPG
TV001WIP0016 Glossary
TV001WIP0017 Endura Dust

231013 Finished goods

1000009 KWJ 200 X 200 Grey


1000010 KWJ 412 X 412 Dark Blue
1000011 KWJ 320 X 320ARCS
1000012 KWJ 18 X 18 Brown
1000013 KWJ 32X 32 White
1000014 KWJ 28 X 28 Black

The Finished goods produced in HRJK are mainly classified in to 3 (three) types, they are
1. Premium (P)
2. Commercial (C)
3. Economical (E)

The Premium tiles are high quality tiles, the cost of this tiles are also high compare to other
quality tiles. The quality and price of the tiles goes on decreasing in other types of tiles.

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7.B:INVENTORY CONTROL AND ANALYSIS


STORES DEPARTMENT

The organization has well managed stores department in the factory. These are separate stores
department for raw materials, finished goods and for tools. Each and every department
maintains the stock registers through the collection of batch wise production documents from
each of these major parts and products are stored and kept ready to dispatches in orderly
manner.

The inventory norms are met by each and every stores department of plant depending upon
the various parameters like demand, production level, and cost of holding inventory,
availability of raw materials.

After the purchase sections making its comparative statement analysis about the
specifications of the material supplied by various suppliers, the departmental HOD’s checks
the samples regarding the quality and finally the confirmative order will be sent to stores
department. The chief store keeper the check the materials to confirm that it is as stated in the
invoice and puts in the respective places.

 STORES FUNCTION

Following are some important functions of a properly organized stores department:-

• Issue requisitions for purchase of materials

• Receive purchased materials form the receiving department

• Store materials in proper places so as to identify and locate items without delay

• Issues materials to production and services departments and ensure that materials
issues are properly authorized and accounted for.

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• Arrange safe keeping of materials so as to prevent losses due to defective storage and
handling.

• Take physical inventory of all stores at periodical intervals

• Provide full information about materials in stock whenever so necessary

• Maintain proper record of inventory

• Protect materials against pilferage theft and fire.

Stores department is responsible for receipt, issue of Raw materials, tools, spare parts and
miscellaneous items and the finished goods are stored within the factory premises of H & R
Johnson, Kunigal Plant (HRJK).
Excise department is responsible for dispatching the finished goods to various godown spread
throughout the country, after fulfilling various requirements such as payment of various tax
fixed by the government.

Marketing department is responsible for sales planning and execution, the production
activities carried out in HRJK according to the orders given by the sales department.

Sales department is in better position to monitor and control stocks at ware house located
throughout the country due to the close interaction and co- ordination with the distribution
channels.

 FUNCTIONS NS OF STORES OFFICERS

Stores Manager

Job Description
• Be functionally responsible for stores at Kunigal
• Review, decide and plan changes in location of stores and materials

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• Review stores organization systems and procedures and then propose changes
required.
• Recommend to superior authorities regarding acquisition of material handling, stores
system and procedure and information reporting.
• Participate in purchase decision making meetings as a member

Assistant Stores Officer.

Job Description
• Monitor and analyze movement of stock to identify items, which may be disposed of.
• Ensure that statutory requirements of packing, measuring instruments are satisfied
• Prepare various stores information reports and submit it properly within the time
specified.
• Physically verify and check the materials in stock to ensure that they are accordance
or match with the stores records.
• Ensure proper arrangement of materials

CHIEF STORE KEEPER

Job Description
• Is responsible for materials in his custody
• Supervise activities of subordinate helper/ attender
• Receive materials from suppliers
• Receive materials back from production department
• Take into custody, after satisfying with regard to quantity and only materials which
passed by the laboratory and other department regarding the quality of the materials
• Keep rejected materials separately
• Maintain proper documents and records as directed

 DOCUMENTS USED IN STORES DEPARTMENT

1. Purchase Indent:- it is a statement issued to stores department of details as

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(1) Number

(2) Description

(3) Specification Number units

(4) Quantity required

(5) Stock- on –hands

(6) Quantity out standing on ordered

(7) Delivery schedule

(8) Purchase rate

(9) Remarks

2. Purchase order:- It is issued by purchasing officer to supplier . it includes


• Purchase order number
• Purchase order date

• Suppliers name

• Materials to be supplied

• Prices and taxes if any

• Delivery schedule

• Payment conditions

3. Goods Received Note:- It is considered for accounting purpose i.e posted to ledger

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• To take receipt to ledger

• For accounting purpose and payments

• To costing and purchase department having been received material

• For each supply separate goods received note is raised based on one goods received
report entry and after getting authorized sign.

• The materials accepted will be taken to holding stores, from inspection room, there it
will be stocked in different locations identified for the purpose and then taken to stock
ledger.

4. Goods Received Reports:- It is given by material Department to stores department.


It includes.
• Date

• Suppliers Name
• Address

• Purchase Order No.

• Description of Materials

Quality control department certifies quality of materials and is signed by store keeper,
chief storekeeper and Assistant Store keeper.

5. Issue Note of Stores Requisition:- Issue of materials is done by receiving indent


“Stores Requisition and issue note” , that are given by concerned user departments it
includes.

• Code Number

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• Date

• Serial Number

• Description of materials

• Quantity required and Issued

• Value

• Signature of approval and signature of person who issue note.

6. Stores Ledger:- It is maintained by costing department and is identical with that of


bin card . on account of every item in stores and makes record of receipt, issue balance.

MATERIALS DEPARTMENT

It is area covered by whole process of management for balanced growth and efficient running
of enterprise. It is essential that material control, material supply and material utilization
leads to:
• Maximize production and productivity
• Reduce cost of production
• Maximize Profit margin.

 OBJECTIVES

• Maintain continuity in flow of materials


• Effective control of stock
• Good seller buyer relations

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• Co- ordination, growth and ethical standards

 MATERIALS HANDLING

Material handling refers to the operations connected with receiving, moving, and
packing storing and issuing materials. It covers a wide range of activities from
acquisition to issue and dispatch of materials or stores. Materials handling coasts may
form anything between 15% to 75% of the cost of production depending upon the
type of materials, their bulk and weight, frequency of handling operations etc.
The advantages of an efficient system of material handling are as follows.

• It helps minimizing the cost of indirect labour and cost of transportation

• It increases the volume of turnover and improves the effectiveness of stock


control

• It minimizes the cost of labour at receiving and dispatching points

• It reduces damage to products

• It adds to industrial safety

• It results in the elimination of haphazard material handling and there by brings


about increased output, higher productivity and larger profits

• It reduces fatigue of workmen and improves working conditions which in turn


help to increase productivity.

 Types of Equipment Used:-

The following types of equipment are used for material handling purposes in HRJK:-
• Unloading equipment ex:- fork-truck, Power-Pallet truck etc.

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• Handling equipment ex:- Rota bins, over head stacking reaching cranes,
conveyor, fork- truck etc
• Equipment for delivery at operational point in the factory ex:- conveyor,
crane, power-pallet truck etc.
• Equipment for movement between operation points Ex:- conveyors, Over
head traveling cranes hoist etc.
• Equipment for delivery for customers ex:- vans, railway wagons etc.

PURCHASE DEPARTMENT

Purchase department constitutes major department in HRJK. Purchasing department of


company is common with other department to discharge duties, responsibilities and frame
work of the company.
Purchase department is service department and their function is to assist in production of
goods in which company is engaged.
The functions of purchasing departments are:-

• To provide capital goods, plant and machinery


• To provide raw materials, spare parts, miscellaneous stores as required.
• To make available balanced materials, spare parts, miscellaneous stores as required.

 ROLE OF PURCHASING DEPARTMENT IN HRJK

• Production:- It is true that, management appreciates importance and role of purchase


department is to achieve desired production.

• Routine Functions:- It is to be understand that directives from management is basis


for day today functions of purchasing department.

• Specifications:- All existing written instructions for working of department including


format adopted for forms/ registrations are carefully examined and edited for

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modification/deletion/retention and those adopted are arranged to meet the


specifications.

• Authority:- It is under the authority of management. It is treated confidential and


copies are numbered and distributed to required departments.

 STAGES OF IDEAL PURCHASE:-

Purchase procedure is a lengthy process generally it includes following stages


1. Receiving purchase requisition
2. Decision regarding what, when and how much to buy
3. Determining the sources of supply
4. Selecting the supplier by issuing tenders
5. Selecting and placing purchase orders.
6. Follow up of purchase orders
7. Receiving of materials
8. Inspection of materials
9. checking the invoices and setting the accounts.

HRJK follows the following purchase procedure:-

A) Forecasting and timely initiation of Demands:-

• In case of production items, demands are obediently related to approved


production. Production department head prepare the production plan, Bill of

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Material (BOM) is drawn out according to the standards available in the


company. This BOM is placed at least 3 months before the commencement of
production plan. The production plan is based on the demand placed by the
marketing department through the head office.

• In order to maintain smooth operation of production, it is essential to maintain


derived level of stock in respect of items with repetitive demands known as
“Stock items”.

• In case of capital items and non-stock items responsibility for initiating


purchase indent will rest with concerned consuming department.

• The purchase department in the plant has classified the purchases made by
them into four levels based on their value of purchase. i.e level 1, level2,
level3 and level 4.

• All the purchase ranging from Rs1 (one ) to 20,000 (twenty thousand) comes
under level 1 which need to approved by the Assistant Manger (Purchase
department)

• All the purchase ranging from Rs 20,000 (twenty thousand) to 50,000 (fifty
thousand ) comes under level 2 which need to approved by the senior Manger
(Purchase department)

• All the purchase ranging from Rs 50,000 (fifty thousand ) to 5,00,000 ( five
lakhs) comes under level 3 which need to approved by the General Manger of
the plant

• All the purchase Above 5,00,000 ( five lakhs) comes under level 4 which
need to approved by the President of the plant

• All the capital purchase made by the plant should be approved by the head
office.

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B) Maintenance of Proper Specification

In respect of all stock items “History Cards” are maintained both by stores sections as
well as at purchase department. It includes all relevant information on items as code
number, detailed specifications like suppliers, performance of various suppliers so as to
assess vendor evaluation, purchase indent will be sent to purchase department who will
arrange to register same in “Demand Register” format.

C) Registration of Suppliers:-

The main objective of registration of suppliers is to facilitate location of reliable source o


suppliers to cover different purchases indents. With in this view, firms are registered as
approved suppliers taking in to consideration, financial standing capacity, performance.
This registration of the suppliers will be approved by the Head office and this will be
entered in the centralized SAP data of the company,( i.e data base of the company
maintained and controlled by the Head office) which can be used by the other plants of
H & R Johnson.

D) Quotation:-

After drawing the BOM based on the requirement placed by material department and
approval of that BOM form proper authority, then the purchase department ask quotation
from their registered supplier ( there will be 2- 3 suppliers for each item).
After receiving the quotation this will checked, compared with each other and proper
quotation will be selected for placing purchase order.

E) Issue of Purchase Order (P.O):-

A purchase order is contractual document, which authorizes the supplier to supply the
material. Once the purchase order is issued to a supplier, it is obligatory on the part of
purchase manager to take delivery of materials and arrange for the payment of invoice.
At the time of preparation and placement of purchase order the following points to be
remembered..

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1) Purchase order to be placed within validity period of tender and generally should around
with conditions as maintained by tender.
2) In case of deviations from tender, a condition stipulated by tender period consent is
essential before modifying and including same in Purchase Order.
3) Copies of Purchase Order to be distributed to.
• Suppliers
• Stores
• Accounts Section
• Purchase Section
4) Various items in purchase order as description of materials, specifications quality, rate
levy of sales tax, statutory levies, delivery terms, payment terms are clearly specified and
should require approval of competent authority.
5) Approving authority should append these signatures on approved tenders as taken of their
acceptance.
6) Head of Material department should sign all purchase order.

FLOW OF ACTIVITIES FOR PROCUREMENT OF MATERIALS:-


 User department will ask stores for require stock

 If stock is not available in stores, stores department will request purchase


department to produce material.

 The purchase department after placing an order will send copy of purchase
order to stores department. This ensures that request is obliged and stores department
prepares itself ready for receiving materials and available space for storing such
materials.

 As goods reach to premises, concerned department heads before inspects it


entered to premises.

 Inspection is carried out to verify if goods comply with specifications and any
claim of insurance is required, if any damage occurred during transit.

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 Next step is that the inspected goods will be sent to stores.

IDENTIFICATION AND DISPOSAL OF OBSOLETE ITEMS

Scrap items consists of materials that are considered to be of no further productive uses in the
operation of organization
They include.
 Empty containers of materials consumed as bottles, tins , and drums.

 Rejected or defective raw materials and packing materials

 Spares, engineering, that longer intended to be used as machinery is scraped or


sold

 Packing material no longer intended to use because new packing materials to be


used because of change in packing pattern.

 Defective finished goods produced which are unable sale in market.

7.C: DATA ANALYSIS & INTERPRETATION

 DIFFERENT LEVELS OF RAW MATERIALS, TOOL AND SPARE PARTS


MAINTAINED AT HRJK.

Max. Level:-
Frites (raw material) 140 tones
Other raw materials 100 tones
Stains and colours 3.5 tones

Reordering Level:-
Frites (raw material) 70 tones

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Other raw materials 50 tones


Stains and colours 1.75 tones

Minimum Level:-
Frites (raw material) 35 tones
Other raw materials 25 tones
Stains and colours 0.5 tones
In case of loose tools and spare parts HRJK uses mini-max technique as these can be
measured in numbers.

Max. Level: - 6 Numbers

Reordering Level: - 2 Numbers

Minimum Level: - 4 Numbers

Size of the Inventory:-

The position of the inventory for the period of 2004-05 to 2008-09 of H & R Johnson,
Kunigal plant is given below.

Table 05 shows the inventory size in the plant for the period of five years
(RS.IN LAKHS)

Year 2004-05 2005-06 2006-07 2007-08 2008-09

Inventory 679.71 701.34 954.44 842.75 720.99


(Source-Accounting Records)
From the graph and table we can interpret that there is a fluctuation of inventory during last 5
years, the cost of inventory in the year 2004-05 was Rs 679.71 lakhs which raised to Rs.
701.34 and then to 954.44 in the year 2005-06 and 2006-07 respectively, then it reduced to

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842.75 and then to 720.99 in the year 2007-08 and 2008-09 respectively. This implies that the
working capital blocking in the inventory has been reduced gradually from last two years.

(Chart 06 showing the inventory position of plant (Rs.) in graphical presentation)

Cost of the Production:-


Table 6 shows the cost of production in the plant for the period of five years
(Rs in Lakhs)

Year 2004-05 2005-06 2006-07 2007-08 2008-09


Cost of

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Production 3629.24 3139.73 3791.45 3521.41 3553.77

(Source: Cost summary)

In case of total cost of production from the above graph and table we can conclude that there
is fluctuation in total production cost from last five years, in the year 2004-05 the total
production cost was 3629.24 lakhs which come down to 3553.77 lakhs in the year 2008-09.
This shows that there is reduction of cost of production and fluctuation in demand.

Chart 7 showing the cost of production in graphical presentation

CALCULATION OF INVENTORY RATIO


 INVENTORY TURN OVER RATIO:-

Table 7 showing the inventory turnover ratio

Years Times Days


2005-06 4.54 70.29

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2006-07 4.60 78.26


2007-08 3.93 91.41
2008-09 4.54 70.29

(Source Inventory Summary)

From the above calculation we can conclude that there is fluctuation in the inventory holding
period, in the year 2005-06 holding period was 70.29 days it reached 91.41 days in the year
2007-08 then again it as fallen to 70.29 days in the year 2008-09. This is because of fall in the
average inventory during the period 2007-2009.

Chart 8 showing the inventory turnover ratio

Note:-
Inventory turnover ratio= Cost of production/ Avg. Inventory

 WORK IN PROGRESS TURN OVER RATIO:-

Table 8 showing the work in progress turnover ratio

Years Times Days


2005-06 69.57 5
2006-07 40.41 9
2007-08 36.23 10
2008-09 69.26 5

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(Source Inventory Summary)

From the above calculation we can conclude that there is fluctuation in the WIP turnover
ratio, in the year 2005-06 holding period was 5 days it reached 10 days in the year 2007-08
then again it as fallen to 5 days in the year 2008-09. This is because of fall in the average
inventory during the period 2007-2009.

Chart 9 showing the work in progress turnover ratio

Note:-
WIP turnover Ratio= Cost of production/Avg. WIP

 STORES AND LOOSE TOOLS TURN OVER RATIO:-

Table 10 showing the stores and loose tools turnover ratio

Years Times Days


2005-06 11.73 31
2006-07 16.29 22
2007-08 16.48 23
2008-09 18.23 20

(Source Inventory Summary)

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From the above calculation we can conclude that there is fluctuation in the Stores and loose
tools turnover ratio, in the year 2005-06 turnover ratio was 31 it as fallen to 20 days in the
year 2008-09.

Chart 10 showing the stores and loose tools turnover ratio

Note:-
Stores and Loose tools turnover ratio= Cost of production/ Avg. Stores and Loose tools

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“A STUDY ON INVENTORY MANAGEMENT”

8. FINDINGS, SUGGESTIONS & CONCLUSION


 FINDINGS:-

 It is a practice of the plant to purchase the raw-material and inventory based on


the order received by the marketing department.

 The plant is following the simple Average method to issue the materials for
production department.

 The scrap obtained in the process is very high i.e about 30to 35% of total
production activity.

 Vendors are rated based on their performance with respect to delivery, quality
and price standards

 All material is stored in right condition at respective locations and The Company
has items, which are slowing moving and non-moving, which are disposed off at
regular intervals.

 The inventory has been decreased gradually from last two years (2007-08 & 2008-
09) because of following reasons.

 Mini-Max technique was replaced by manual ordering by the


departmental HOD’s

 The important raw material clay stated to procure locally instead


purchasing from other states at high cost.

 Some of other raw materials like Glaze materials and stains were
started manufacture in their own plant

DON BOSCO INSTITUTE OF TECHNOLOGY, BANGALORE-74 77


“A STUDY ON INVENTORY MANAGEMENT”

 Import substitute goods were used for manufacturing.

 Costly fuels were replaced for cheap source.

 The existing inventory system can be improved by adopting modern techniques of


inventory control systems.

 SUGGESTION:-

After having discussed the inventory management at the Ceramic tiles plant it is clear that the
inventory management plays an important role in the organization.
The following suggestion can be given:-

1. The plant should consider the scientific inventory control techniques instead of
traditional methods.

2. ABC classification of inventory which is followed by the plant should be done


systematically, scientifically and regularly or otherwise instead of ABC technique of
inventory control they can go for HML classification which is most suitable for plant.

DON BOSCO INSTITUTE OF TECHNOLOGY, BANGALORE-74 78


“A STUDY ON INVENTORY MANAGEMENT”

3. There should proper security and fencing around the plant to reduce the theft of
inventories.

4. The organization can follow the VED Analysis to maintain, manage the spare part and
loose tools in the organization.

5. Proper maintenance of machinery should be done to reduce the scarp value.

6. The re-order level which exists in the company is of moderate standards, it should be
more correlated to demand and production.

7. The investment in current assets should be managed optimum the level of


production. Surplus current assets can be deployed in long term investments to have
profitable feedbacks.

8. It has seen that the current ratio has been decreased from year to year, which is not in
favor of the company, and it may hamper the credit worthiness of the company. To
maintain balance between current assets and current liabilities in favour to company.

9. The company should strive to decrease the depreciation charges by maintaining the
assets properly and maintaining the up-to-date documents of the assets.

10. Full utilization of production capacity should be made to get the benefits of
economies of scale which will help in cost reduction.

11. There should be proper co-ordination between the production department and
inventory handling department for efficient out comes.

12. Technical audit should be done at regular intervals to reduce the pilferage of
inventory.

DON BOSCO INSTITUTE OF TECHNOLOGY, BANGALORE-74 79


“A STUDY ON INVENTORY MANAGEMENT”

CONCLUSION:-

H & R Johnson (I) Ltd. Leading ceramic tiles manufacturer in India, Kunigal plant has been
awarded the ISO 9001-2000, ISO 14001-2004 cortication and OHSAS 18001-2007
certification, this is the proof for the performance of the HRJK. It is 50 years old company
which has a gained good will of the customer because of its quality.

By the overall case study I can conclude that Inventory is managed in an effective and
efficient manner, by preventing over or under investment in inventories in its Kunigal plant.

HRJK Stores department is concerned with receiving of materials, storing of materials, and
issuing of materials for production. Purchase department is involved in purchase of raw
materials for production both from domestic as well as international markets.

Ratio analysis helped the organization analyzing its performance; these Inventory ratios are
showing the better results which are sign of good inventory management.

Inventory system wants to answer the three basic question of what, how much and when this
control and answering is not an easy task but should be done through the established of
inventory management policy.

A lower level of inventories can run the risk of stock-out and higher level runs the risk of
obsolescence and avoidable increase in cost. In other side a non - recovered receivable bills,
if delay may become bad debts, therefore proper principles should be implemented for non
delay. Therefore, an economic balance is essential to struck between the cost of carrying
inventories and the cost of a desired level achievement of such an equilibrium calls for
systems approach to production planning and control associated with marketing, distribution
system and capital structures as emerging from Corporate long range planning.

DON BOSCO INSTITUTE OF TECHNOLOGY, BANGALORE-74 80