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INVENTORY MANAGEMENT "Managing the level of inventory is like maintaining the level of water in a bath tub with an open drain. The water is flowing out continuously. If water is let in too slowly, the tub is soon empty. If the water is let in too fast, the tub overflows."
The dictionary meaning of inventory is 'stock of goods'. The investment in inventory is very high in most of the undertakings engaged in manufacturing. The amount of investment is sometimes more in inventory than in other assets. About 90 percent part of working capital is invested in inventories. It is necessary for every management to give proper attention to inventory management. A proper planning of purchasing, handling, storing and accounting should form a part of inventory management. By proper planning it is possible for a company to reduce its levels of inventories to a considerable degree, without any adverse effect on production and sales, by using simply inventory planning and control technique. The reduction in excessive inventories carries a favorable impact on company's profitability. An 1) 2) 3) 4) efficient system of inventory management will determine.
What to purchase How much to purchase From where where to to store, purchase etc.
"Effective inventory management enables an organization to meet or exceed customers' expectations of product availability while maximizing net profits or minimizing co. Inventories constitute about 60% of current assets of companies of India. The manufacturing companies hold inventories in the form of raw materials, work in process, finished goods, stores and spares, chemicals, lubricants etc.
Three motives for holding inventories: To facilitate smooth production and sales operation (transaction motive), To guard against the risk of unpredictable changes in usage rate and delivery time (precautionary motive) To take advantage of price fluctuation (speculative motive)
Inventories represent investment of a firm‟s funds. The objective of the inventory management should be the maximization of the value of the firm. The firm should therefore consider costs, return, risk factors in establishing its inventory policy. Two types of cost are involved in the inventory maintenance:O “Ordering cost” requisition, placing of order, transportation, receiving, inspecting, storing, clerical staff, are fixed per order. Therefore, they decline as the order size increases. O “Carrying cost” warehousing, handling, clerical staff, insurances and taxes. Carrying costs vary with inventory holding. As order size increases, average inventory holding increases and therefore the carrying costs increase. The firm should minimize the total cost (ordering+carrying). The economic order quantity of inventory level occur at point where total cost is minimum EOQ = √2AS/C, where A= annual requirement, S = ordering cost per unit, C = carrying cost per unit per annum When should the firm place an order to replenish inventory? The inventory level at which the firm places order to replenish inventory is called re-order level. It depends on lead time, usage rate Re-order level = lead time * usage rate Lead time is the time normally taken in replenishing inventory after the order has been placed. Under uncertainty about lead time. Therefore firms maintain safety stock which serves as a buffer or cushion to meet contingencies. Re-order level = safety stock + lead time * usage rate A firm which carries number of inventories that differ in value, can follow a selective control system. ABC analysis classifies- A category consists highest value, B category consists high value items, C category consists lowest value item. Tight control may be applied for high value item and loose control for low value item.
Large number of companies these days follows the total quality management (TQM) system which requires companies to adopt just in time (JIT) and computerized system of inventory.
Research covers the search for retrieval of information for a specific purpose. Basically research is the objective and systematic method of finding solution to a problem. The steps followed to conduct this study are as follows:(1) Formulating research problem – The problem under study viz. how effective are the measures applied by Iffco, Aonla to control the inventory is basically studied through analytical research. Material is important for the efficiency of the system. It is a matter of great importance for inventory department. Inventory department of IFFCO, Aonla is responsible for efficient inventory control. Thus the whole study is conducted under the guidance of officers of this department. (2) Extensive literature survey – Many published studies, books or material on effective control of inventory were referred to for getting a true direction to research process. (3) Data collection – The study is conducted through collection of data through surveys, interviews with officials etc. Personal interviews were conducted where a set of pre- conceived questions were asked from the officers of inventory department regarding material control policies adopted by them. Books of accounts of Aonla –I and Aonla – II are studied thoroughly to details about inventory stock, cost of material consumed, increase and decrease in stock in the last few years etc. a. Sample of material was obtained randomly. ABC analysis was used where sample of material was graded under three categories: A, B, C. (4) Analysis and interpretation – The data about inventory is analysed to find out the effectiveness and efficiency of inventory policy. As regards the financial performance, the data about different financial indicators is analyzed to calculate the different ratios and to draw the graphs. This section deals with the methodology used in my study. It describes the nature of study, data collecting method, accounting procedure of inventories, valuation and verification of inventories etc. The data used in study was manually collected from the employees of IFFCO as well as from the net. Data were collected through the inventory software, databases, net and by asking questions to the employees. There is no manual coding. I have also included some financial data with the help of annual report. We were placed in different departments that are related to the inventory. We were told how the documentation in different departments like srv, po ,isrv , bills etc. are done .
TOOLS OF THE STUDY I have mainly concerned the literature survey. I have used the graphs and tables in this study. There is the use of Histogram in Graphical presentation.
SOURCES OF DATA There were various sources for collecting the data. But I have collected data from some of the resources that are as following1) 2) 3) 4) 5) 6) 7) Through asking the questions from the employees Net Annual report of IFFCO Accounting manual of IFFCO From the stores By the inventory software (PSL) that is used in IFFCO I have also collected some information from the purchasing department.
INTRODUCTION ABOUT IFFCO
During mid- sixties the co-operative sector in India was responsible for distribution of 70 percent of fertilizers consumed in the country. This Sector had adequate infrastructure to distribute fertilizers but had no production facilities of its own and hence dependent on public/private Sectors for supplies. To overcome this lacuna and to bridge the demand supply gap in the country, a new cooperative society was conceived to specifically cater to the requirements of farmers. It was a unique venture in which the farmers of the country through their own co-operative societies created this new institution to safeguard their interests. The numbers of co-operative societies associated with IFFCO have risen from 57 in 1967 to 38, 155 at present. Indian Farmers Fertilizer Co-operative Limited (IFFCO) was registered on November 3, 1967 as a Multi-unit Co-operative Society. On the enactment of the Multistate Cooperative Societies act 1984 & 2002, the Society is deemed to be registered as a Multistate Cooperative Society. The Society is primarily engaged in production and distribution of fertilizers. The byelaws of the Society provide a broad frame work for the activities of IFFCO as a Cooperative Society. IFFCO had set up the KALOL plant for manufacture of Nitrogenous Fertiliser and KANDLA plant for manufacture of Phosphoric fertilizer. These plants commenced commercial production in the year 1974-75. IFFCO had emerged as Asia's largest Fertilizer Cooperative with its four modern sophisticated plants at KALOL and KANDLA in GUJRAT and PHULPUR and AONLA in UTTAR PRADESH. IFFCO is country's largest producer of nitrogenous and complex fertilizer IFFCO IS: 1. 2. 3. UREA NPK/DAP TOTAL 'N' Largest producer of fertilisers in the country Number of Plant Locations : Five Installed Annual Capacity ('000 MT) - 4242.2 - 4335.4 - 2628.2 with the total production capacity of 2.6 million tones.
TOTAL 'P2O5 - 1712.8
Only Fertilizer Institution in the country to produce 68.47 lakh MT of fertilizers and 93.24 lakh MT of sales during 2007-08 Contributed about 20% to the total 'N' and 25% to the total "P2O5" produced in the country during the year 2007-08. Fertilizers marketed through 39,564 Cooperative Societies and 15 Farmers Service Centers. Service to the Farmers through a variety of programmers. VISION Increase their crop productivity through balanced use of energy efficient fertilisers; maintain the environmental health; and to make co-operative societies economically and democratically strong for professionalized services to the farming community to ensure an empowered rural India." MISSION IFFCO's mission is "to enable Indian farmers to prosper through timely supply of reliable, high quality agricultural inputs and services in an environmentally sustainable manner and to undertake other activities to improve their welfare" To provide to farmers high quality fertilisers in right time and in adequate quantities with an objective to increase crop productivity. To make plants energy efficient and continually review various schemes to conserve energy. Commitment to health, safety, environment and forestry development to enrich the quality of community life. Commitment to social responsibilities for a strong social fabric. To institutionalize core values and create a culture of team building, empowerment and innovation which would help in incremental growth of employees and enable achievement of strategic objectives. Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for stakeholders. Building a value driven organization with an improved and responsive customer focus. A true commitment to transparency, accountability and integrity in principle and practice. Sourcing raw materials for production of phosphatic fertilizers at economical cost by entering into joint ventures outside India. To ensure growth in core and non-core sectors.
„Mission 2005‟ and „Vision 2010‟. Diversification into other Profitable Sectors. The salient features of the „Vision-2015‟ document are as under . These plans have resulted in IFFCO becoming one of the largest producer and marketeer of Chemical Fertilisers by expansion of its existing Units. 4. 5. 7. 9. Setting up of fertilizer production facilities in India and outside the country through joint ventures. biofertilisers. Vision – 2015 In pursuit of its growth and development. Exploration /Distribution of marketing of Hydrocarbons. Generation of Power. Manufacturing of Petrochemicals. pesticides etc. Strategic Alliances through IFFCO Consortium. setting up Joint Venture Companies Overseas and Diversification into new Sectors. 6. 8. 3. A true co-operative society commitment for fostering co-operative movement in the country. VISION 2010 In order to maintain the sustained pace of remarkable growth being achieved under mission2005 the society is in the process of formulating another growth plan "VISION 2010" which aims at: 1. Value addition to agro-products and marketing.15000 crore by 2010 Installation of Ammonia and Urea plants including acquisition of fertilisers units. Production and marketing of micronutrients seeds. : IFFCO has now visualized a comprehensive plan titled „Vision-2015‟ which will be guided by the following objectives: Production of fertilizers through expansion of existing units. 2. Strengthening its raw material sourcing through Strategic Joint Ventures in India and abroad. Attaining an annual turnover of Rs. Banking and Financial services Information technology and IT enabled services. Backwards integration to meet feedstock requirements such Phosphoric acid. IFFCO had embarked upon and successfully implemented its Corporate Plans.
30. professionally managed and to equip the Farming Community with advanced agricultural practices for improved Productivity.000 crores. Achieve Fertilizers Production / Marketing target of 15 million Tonne per annum with an annual turnover of Rs. Enhancing presence in International Markets through Strategic Joint Ventures and Synergistic Acquisitions. . better Resources Management and promoting Renewable Energy sources. Maximizing the synergies of the Core Business through Downstream Value Additions and Forward/ Backward Integrations. Leveraging State of the Art Technologies and Global best practices to retain its global competitiveness. To bring in Sustainability and Strategies to prevent Climate Change by reducing Energy Consumption. To help the Cooperative Societies become economically strong. To stand as a Global Leader in Fertilisers Production to cater to the food security need of the nation. Diversification into other profitable businesses to maximize returns to our stakeholders. to ensure an Empowered Rural India. Promoting Integrated Nutrient Management to improve efficiency of Fertilizer use and promoting location specific research on efficient fertilizer practices.
DIRECTOR DY. DEVELO PMENT) . MDCUM-MKT.MDCUMFINANCE DIRECTOR DIRECTOR DIRECTOR (TECHNICA L) (HRD) DIRECT OR (COOP.ORGANIZATION CHART OF IFFCO BOARD OF DIRECTORS CHAIRMAN AND VICE CHAIRMAN MANAGING DIRECTOR DY.
Patel . IDBI Bank Ltd. Managing Director Director (Technical) Director (Coop.Tope Managing Director Dy. Saxena Shri R. The Hongkong and Shanghai Baking Co-operation Ltd. U.L. G. Dr. ICICI Bank Ltd. Development) Director (HRD) BANKERS India Overseas Bank State Bank of India Bank of Baroda Standard Chartered Bank The Maharashtra State Co-operative Bank Ltd.P.Awasthi Shri Arabindo Roy Shri Rakesh Kapur Shri K. Managing Director-cum-Marketing Director Jt. The West Bengal State Co-operative Bank Ltd.BOARD OF DIRECTORS The Directors of IFFCO Chairperson Vice-Chairperson Directors Shri Chandra Prakash Shri Halappa Basappa Achar Shri Kartick Chandra Sarkar Shri Harminder Singh Jassi Shri M.Gopal Reddy Shri Ankushrao R.S. Singh Shri Surinder Kumar Jakhar Shri N.N. The Karnataka State Co-operative Bank Ltd. Singh Dr.P. The Punjab State Co-operative Bank Ltd. Madhya Pradesh State Co-operative Bank Ltd.
advisory and technological interventions sourced from within the country and abroad and in accordance of the Cooperative Principles and in harmony with the law and culture of the land. IFFCO has grown steadily since its inception today. Improving agricultural productivity through balanced fertilizer application.OBJECTIVE OF THE COMPANY The broad objectives of setting up this venture:1) 2) 3) 4) 5) 6) 7) 8) Producing fertilizers. Promoting the fertilizers distribution system in the co-operative sector. Promoting nation's growth through modern family techniques. IFFCO started with two modern plants at a cost of Rs. It has emerged not only as the largest fertilizer producing organization in India but also Asia's largest fertilizer co-operative. 976 million. Ensuring availability of fertilizers at the farmer's doorstep. One ammonia and urea complex at Kalol and NPK plant at Kandla both in Gujrat. Strengthening cooperation distribution system. Creating scientific awareness among farmers. IFFCO's Main Aim "Strengthening management and participatory character of the Indian Cooperative Movement by using duly tested and appropriate consultancy. To promote the activity for enriching the life of the rural." .
74 Lakh MT Production of NPK/DAP/NP (Previous Best 32.69 Lakh MT in 2008-09) 54. 401. 807.26 Lakh MT in 2006-07) 118.885 MT per employee Highest Marketing Productivity (Previous Best 7.Performance Highlights for the Year 2009-10 81.809 Crore Total Turnover (Previous Best Rs.397 MT in 2008-09) . 32.68 Lakh MT in 2008-09) 38.2 Crore in 2002-03) Rs.933 Crore in 2008-09) 1.58 Lakh MT in 2008-09) 63.608 MT per employee Plant Productivity (Previous Best 1. 16.09 Crore in 2002-03) Rs.68 Lakh MT in 2008-09) 43.669 MT in 2005-06) 7. 557.98 Lakh MT Highest Production of Fertilisers (Previous Best 71.92 Lakh MT Highest Sale of NPK/DAP/NP (Previous Best 53.10 Crore Profit After Tax (Best PAT Rs.35 Lakh MT Highest Sale of Urea (Previous Best 58.28 Crore Profit Before Tax (Best PBT Rs. 567.89 Lakh MT in 2008-09) Rs.24 Lakh MT Highest Production of Urea (Previous Best 40.27 Lakh MT Highest Sale of Fertilisers (Previous Best 112.
Highest Production of Fertilisers 71.68 lakh MT (Previous Best 70.84 lakh MT (Previous best 38.907Gcal / MT in 2007-08) .68 lakh MT (Previous Best 39.63 lakh MT in 2007-08) Production of NPK/DAP/NP 31.29 lakh MT in 2007-08) Highest Sales of NPK/DAP 53.12163 crore in (2007-08) Plant (Best 1669 MT in 2005-06) Productivity 1376 MT per employee Highest Marketing Productivity 7380 MT per (Previous best 6158 MT in 2007-08) Composite Energy employee Consumption 5.49 lakh MT (Previous best 54.12 lakh MT in 2006-07) Highest Production of Urea 40.95 lakh MT in 2007-08) Highest Turnover Rs 32800 crore (Previous best Rs.Provisional highlights of IFFCO performance during 2008-09.00 lakh MT (Best 32.26 lakh MT in 2006-07) Highest Sales of Fertilisers 112.24 lakh MT in 2007-08) Highest Sales of Urea 58.33 lakh MT (Previous best 93.9433 Gcal/ MT Lowest 5.
BALANCE SHEET AND PROFI AND LOSS ACCOUNT OF IFFCO .
10 YEAR’S PERFORMANCE HIGHLIGHTS OF IFFCO .
PRODUCTION IN IFFCO ( in Lakh MT) SALES IN IFFCO (in Lakh MT) .
2. 4. 6.O. 5.C. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD. the world‟s leading Technology Media Event and Research Group Best managed Workforce Award for the year 2004 from Hewitt Associates and CNBC TV-18 Two Awards for Highly Commendable Accounts National HRD Award from National HRD Network for outstanding contribution in HR Development IFFCO Annual Report bagged the third prize. INDUSTRIES CHIMIQUES DU SENEGAL OMAN INDIA FERTILISER COMPANY S. INDIAN POTASH LTD.A. COOPERATIVE RURAL DEVELOPMENT TRUST 1. IFFCO FOUNDATION 3. LEGEND INTERNATIONAL HOLDINGS INC MAJOR AWARDS RECEIVED Prestigious Economic Times Acer and Intel Smart Workplace Award in the Manufacturing and Industrial Segment “Best Content Service” as well as the “Best Project Management” in respect of IFFCO Kisan Sanchar Limited (IKSL) at the World Communications Award held at London Institute of Chartered Accountants of India (ICAI) Award for Excellence in Financial Reporting for IFFCO‟s Annual Report and Accounts for the year 2007-08 Best Cooperative Society Award from Public Relations Society of India ( PRSI ) at its Golden Jubilee Ceremony in Mauritius IFFCO has been ranked 1st in Sales Turnover and 2nd in terms of Networth and Profitability amongst unlisted enterprises by Economic Times Intelligence Group for the year 2007-08 IFFCO has also got Prestigious CIO 100 Award by International Data Group (IDGI India). instituted by Public Relations Society of India (PRSI) FAI Golden Jubilee Award on “Transfer of improved Farm Technologies” 1st Prize for Best Corporate Film from NCU Three awards for Best Display in FAI Exhibitions IFFCO Corporate film was adjudged the best by Public Relations Society of India (PRSI) IFFCO has bagged FAI “Best Video Film Award 2006-07” for film on “Water Harvesting”. 3.IFFCO ASSOCIATES 1. KISAN SEWA TRUST 2. . NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD.
GROWTH IN THE NUMBER OF MEMBER SOCIETIES 1967-68 1974-75 1980-81 1986-87 1992-93 1998-99 2004-05 2007-08 2008-09 2009-10 : 57 : : : : : : : : : 25528 26960 28134 30200 35072 37381 39564 39824 39862 ABOUT AONLA UNIT LOCATION State State Capital Distance from Lucknow Distance from New Delhi Nearest Airport Railway Station Road Area under Plant Area under Township YEAR OF COMMISSIONING INVESTMENT : : : : : : : : : : : : : Uttar Lucknow 280 260 New Aonla (10 Km.6 Crore 1996 Rs. Km. Delhi Plant) Plant is In Bareilly-Aonla Bareilly highway.7 Crore : Ammonia-Urea Complex commissioned in 1988 AONLAI AONLA- II YEAR OF DEBOTTLENECKING : INVESTMENT Crore . from the Pradesh Km. 651. 260 220 Hectares Hectares YEAR OF EXPANSION INVESTMENT AONLA-UNIT Rs.149.2 954. 2008 Rs.
an Ammonia.urea complex is comprised of the two phases:- 12- AONLA-1 AOLLA-2 1- AONLA -1 was established in 1988 and it was digested to nation by honorable Prime Minister of India late Shri Rajeev Gandhi on 17 May 1989.48. It was set up on 08 January 1985 and started commercial urea production at 16 July 1988. honorable . This unit was designed to nation by Prime Minister of India Shri I. a quality registrar has certified it as ISO: 9002 unit and M/s BVQI London has accredited it as ISO:14001 unit. The infrastructure of AONLA unit is very big and constructed on 713 acres of land. The Aonla unit.800 9.400 19.19. Southwest on Bareilly-Aonla Road.99.908 TECHNOLOGY AMMONIA UREA 'N' 3480 6060 2788 HALDOR TOPSOE SNAMPROGETTI The IFFCO AONLA Unit is located in the Gangetic Plains of Uttar Pradesh in Bareilly district about 28 Km. 2- AONLA-2 was established in1996 December. Gujral on 28 Jan 1997.PRODUCT CAPACITY TPD TPA 11. IFFCO Aonla unit is the most efficient and quality-wise as well as environmental oriented unit so that M/s KPMG Peat Marwick.K.
01.SALIENT FEATURES OF AONLA UNIT PARTICULARS CAPACITY (per annum) AMMONIA UREA PROJECT ZERO DATE MECHSNICAL COMPOSITION UREA STARTED COMMERCIAL PRODUCTION STARTED FEEDSTOCK PROJECT crores) GAURENTEED SPECIFIC ENERGY PER MT AMMONIA 8. Natural Gas In 660 Natural Gas with Naptha 995 16.01.12.03 G Cal 7.600 MT 8.4 G cal COST(Rs.600 MT 30.64.05.1988 5.1985 08.12.1993 30.1988 26.600 MT 8.07.1988 25.34 G Cal with Natural Gas + Naptha UREA 5.64.76 G Cal 5.01.1996 5.1996 AONLA I AONLA II (Natural Gas from HBJ pipeline being supplied from Bombay high) .600 MT 08.1996 PRODUCTION 15.11.01.09.
Incidentally this will also reduce the subsidy to Government vis a vis imported Urea. 19 lakh per MTPD of Urea as against the Rs. 65-70 lakh per MTPD Urea in case of a Grassroots Plant. 2. PLANTS There 1.Capacity Enhancement of Aonla and Phulpur Units:- IFFCO has submitted the Techno-Economic Feasibility Report (TEFR) for Capacity Enhancement of Aonla and Phulpur Unit to the Department of Fertilisers (DOF).115 lakh MT: Name Unit Phulpur-1 Phulpur-2 Aonla-1 Aonla-2 Total of Present Capacity MTPD) 1670 2620 2620 2620 9530 ( Proposed (MTPD) 2080 3000 3000 3000 11080 Capacity Increase (MTPD) 410 380 380 380 1550 in Capacity The installed cost for the Enhanced Capacity is estimated at about Rs. are mainly OF four plants Ammonia Urea Product AONLA in the unit UNIT namely: Plant plant Handling Plant 4. Following enhancement in capacity has been envisaged with a total annual increase in Urea Capacity by 5. Steam and Power Generation Plant . Therefore De-bottlenecking of existing Urea Units is the best route to create additional capacity. We are awaiting final clearance from DOF. IFFCO has initiated action for De-bottlenecking of its plant at Aonla and Phulpur Units for Capacity Enhancement. 3.
1. Italy on Ammonia stripping process. UREA PLANT There are four streams of Urea Plant having the capacity to produce 4x1310 MTPD OF Urea Fertiliser. captive power plant and stem generation facilities have been provided. HRU unit of Ammonia –II add to the steam supply of the complex. . Additionally. AMMONIA PLANT There are two streams of Ammonia plants having the capacity to produce 2x1520 MTDP of liquid ammonia. 2. Two silos of 45. Denmark process with Natural Gas and Naphtha as main raw material. STEAM AND POWER GENERATION PLANT To meet the continuous power supply needs of the main plants.000 and 30.000 MT capacity have been provided to Urea product to ensure continuous urea production even if it is not taken off due to nonavailability of rail wagons or seasonal demand fluctuations. PRODUCT HANDLING PLANT Product handling plant is composed of Urea storage known as Silo and packing and transport activities. The technology is based on Haldor Topsoe. The technology is based on Snamprogetti. 3. 4. two gas turbines each having the capacity of 18MW along with heat recovery steam generation unit has been provided to cater to the plant needs of power and steam. In this plant.
General Manager Manager Manager Technical Ammonia Urea Plant JGM/CM Production JGM/CM Utility JGM/CM Comm.LINE CHART AT AONLA UNIT Sr. JGM/CM F & A Plant Mechanical Process Power Plant Purchase F& A Electrical Design & Drawing Offsite Store . General General JGM/CM JGM/CM Maint.
Fire & Safety & Env. Civil Laboratory Training & Development JGM/CM JGM/CM System P & A . Traffic Product Handling Instrumental Library &Document General Engg.
handling Instrumental Fire & safety Civil Laboratory Traffic T&D Gen. & docu. Lib. . General Manager General Manager General Manager JGM/DGM Production JGM/DGM Maint. JGM/DGM Technical JGM/DGM Utility JGM/DGM Comm. JGM/DGM F&A Ammonia Mechanical Process Power Plant Purchase F&A Urea Plant Electrical Design&draw . Offsite Store Prod.ORGANISATION CHART AT IFFCO AONLA UNIT Sr. Engg.
FINANCE & ACCOUNTS DEPARTMENT AT A GLANCE:- .
Aonla is divided into sections.The Finance & Accounts Department of IFFCO. to facilitate smooth and easy functioning and 5 control. ORGANISATION STRUCTURE SUPPLY NOTE WORK FINANCE BOOKS/FICC FINANCIAL BILL PAYROLL PSL WORK IMPORTED INDIGENOUS SERVICE CONTRACT & ACCOUNT SHEET SECTION PAYMENT ORDER DEPARTMENT CELL CONCURRENCE SECTION SECTION SECTION CONTRACT SUPPLY SUPPLY .
ORGANISATIONAL STRUCTURE FINANCE & ACCOUNT DEPARTMENT BOOKS/ FICC CELL FINANCIA L CONCURR ENCE BILL SECTION PAYROLL & TRANSAC TION PSL SECTION SUPPLY SECTION NOTESHE ET PAYMENT WORK ORDER INDIGENO US SUPPLY IMPORTE D WORK CONTRAC T SERVICE CONTRAC T .
Manager (Accounts) Sr.LINE OF CONTROL IN FINANCE & ACCOUNTS DEPARTMENT HOD JGM/DGM (F & C) CHIEF MANAGER (F & A) CHIEF MANAGER (F & A) Sr. Account Officer Sr. Manager (Accounts) Sr. Accountant Jr. Manager (Accounts) Manager Accounts Manager Accounts Manager Accounts Manager Accounts DEPUTY ACCOUNT MANAGER Assistant Manager(Acc. Manager (Accounts) Sr. Accountant .) Senior Accounts Officer Account Officer Jr.
control and execution of financial activities. Routine finance functions on the other hand. The financial resources have been planned and controlled in a proper and continuous manner. maintenance and keeping of records. Money or capital being a scare as well as crucial resource in the working of any organization needs to be given prime importance. They are chiefly and are incidental to the effective handling of the material finance functions. The various areas covering under the preview of subsections are as follows 1. IFCC (Fertiliser Industries Coordination committee) Costing & Pricing Cells Reporting 2. Proper and smooth functioning of this section is very vital for the organization to survive and grow. BOOKS SECTION This section basically deals with accounting function. The various functions include: Books: Preparing and maintaining balance sheets. As among the most crucial decisions of a firm are those which relate to finance.Each company is carried with a purpose of earning money. Finance & accounts from an integral part of any organization. Finance functions are of two types: Managerial finance function Routine finance function Managerial finance functions are so called because they require skilful planning. PAY ROLL SECTION This section deals with the payments of salary and wages to the employees and extending various other benefits are covering under to preview are – Salary Leave Travel Concession (LTC) Medical Allowance . do not require a great managerial ability to carry them out.
In this relation monthly production report is prepared and all documents and accounts are prepared by the Finance & Accounts Department. Conveyance Advances Loans to employees Aonla Unit undertakes processing of salary and other staff related payments of all employees through Human Resource Management System (HRMS). EXCISE Duty is not charged on production of Urea. So duty on ammonia is charged. The duty is deposited in the Government bank account on the 5th day of the month. IFFCO mainly produce ammonia and urea at Aonla plant. Taxation Section As per the status and operations of the society.relation of HRMS and FAS so that cash payment/receipt vouchers. Central Excise Duty As we know that this duty is charged by Central Government on the goods manufactured. Bank Payment Vouchers and Journal Vouchers generated in HRMS are automatically posted online to Payroll Section of Finance & Accounts Department. Financial Accounting System (FAS) which is also based on Oracle DBMS has been launched in F&A DEPARTMENT through which General Ledger Sub Ledger of Employees is maintained and Trial Balance and Financial Accounts are generated. It deals with the following Taxes: Central Excise Duty Income Tax Service Tax Sales Tax 4. Simultaneously. The System integrates Personnel & Administration Department and Finance & Accounts Department. 3. There is also inter. It is an integrated package based on Oracle DBMS. .
INVENTORY MANAGEMENT .
Inventory Management involves the control of assets being produced for the purpose of sale in the normal course of the company's operations. However. The literary meaning of inventory is stock of goods. the importance of inventory management to the company depends upon the extent of investment in inventory. The goal of effective inventory management is to minimize the total costs – direct and indirect . For consumption in the process of production of goods and services for sale including maintenance supplies and consumables other than machinery spares. According to International Accounting Standards-2. In the process of manufacture for such a sale. inventory is a tangible property which is held: For sale in the ordinary course of business.that are associated with holding inventories.CONCEPT OF INVENTORY MANAGEMENT Dictionary meaning of inventory is "detailed list of movable articles". The term 'inventory' includes: .
some materials might have been issued to the production process but might not have been completed as finished goods. controlling and organizing the types of all goods. quantity. status. Managerial functions are performed with respect to inventory. For timely availability along with optimum size. Bolts. The objective of inventory management is to plan the optimum size of inventory which is neither excessive nor deficient and is timely available. 2. Only on the basis of various control techniques one can ensures whether inventory would be timely available. But effective control in itself depends upon organizing and coordination.P.sequence etc. The idea is to uncouple the production and sales function so that it is no longer necessary to produce the goods before a sale can occur. are the examples of stores and spares parts. As such. 3. Inventory of Finished Goods :- All goods manufactured during a particular period may not be sold immediately. Inventory of Raw Materials:In the case of manufacturing concerns. To ensure smooth production function and also to avoid any kind of production delays the concern has to keep inventory of raw materials. This is known as work-in-process.) :- Sometimes the manufacturing system involves various processes for converting raw materials into finished goods. inventory management comprises the functions of planning. 4. The application of managerial function on the basis of management principles in the field of inventory is termed as inventory management.1.I. Such spare parts are either bought from outside or manufactured in the concern itself. nuts screws. it may be called inventory management. These are to be kept in warehouse.. there is need for controlling as well. Inventory of Work-In-Process (W. Thus. Inventory of Stores and Spare Parts :- This inventory consists of those products which serve as accessories to the main products manufactured for the purpose of sale. various types of raw materials are being used in the production system. . clamps. etc. flow and time.
finance manager will effort towards to keep investments in different types of inventory at a minimum possible level so that the business concern may earn maximum return. financial management is concerned with the financial aspect of the inventory management. In financial management. Production Marketing management management In production management. Three important functional aspects of a business are closely related to inventory management. production manager will always strive to have a large inventory of raw materials and of such a good quality as to ensure stable production operations. . marketing manager aims at satisfying ever increasing demands for improved customers' service by having large inventory of inside goods.Need for inventory management Inventory management is an integral part of general management. These are: 1) 2) 3) Financial management Here the production management and marketing management are related to the physical aspect of inventory management and. In marketing management.
Thus it is . it and is divided control into of following materials sections: Purchase section ( It is responsible for purchasing of materials ) Store section ( It stores the inputs) These both sections are interrelated and perform their function on coordination. All purchases are to be made only by the materials department except purchases of petty item through some vouchers and Department Managers within the limits prescribed in purchase procedure.MATERIAL DEPARTMENT Material Department is responsible for the proper handling of inputs and controlling of material inputs. Material department recognizes the need of the input materials and arranges them for the plant. Material management includes two important functions: That's Purchasing Storing why. Purchase department do enquiry about the inputs whether it is required or not. verification and controls of materials in right quantity and at right time to facilities the production function. 1) 2) 3) 4) 5) Reorder level Last Average monthly consumption Material purchase indent should give following in purchase for stock information: stores items level reference Quantity since last Maximum purchase /minimum order PURCHASE SECTION The purchase department is at the interface of internal and external department. It includes the procurement. This enquiry is done in two ways that are: 1) 2) Single Two stage stage After enquiry purchase department invites a tender. After confirmation of all terms and conditions the department contacts the supplier and orders for the inputs. Proper handling of input materials ensures the smooth running of plant.
after sale service. 1. 4. various vendors. PURCHASE The purchase process can be expressed as following: PROCESS INDENTER Material Purchase Requirement (MPR) Single stage Enquiry Two stage Enquiry . The purchase department considers various things before purchasing the raw materials.responsible for purchasing of materials and other raw materials whatever is required by the organization. comparison between them. Purchase department is responsible for the delivery of right amount of material at the right time and at the right location to avoid the hampering of the production. Information Sources Reasonable All price terms about of of and the input materialthat material vendor material conditions Indenter is that person which raises the indent. dispatching follow up and payment terms. 3. 2. Purchasing involves the extra knowledge as the tenders. their prices. Purchasing is distinct from buying.
The availability of input material at all points of time is the responsibility of purchase . If that particular material is not available at the particular point of time then store informs to the purchase department. 2) RECOGNITION OF NEED:.The purchase department recognizes the need of indenter and checks whether that material is available in the store or not. Now the indenter informs to the store. This indenter may belong to any department.E- Procurement (15 days) (21 Manual days) Opening Quotation Comparative Statement (QCS) Technically Acceptable L-1 Bidder Order (With approval of competent authority) It can also be summarized as follows: 1) RAISING OF INDENT:.First of all the indenter raises the indent. After it the working of purchase department starts.
h.Single stage is followed when there is no or very few chance of technical deviation. f. for this. chances of technical deviation. b. c. This enquiry is done in case of nonproprietary items. This enquiry is done in case of . e. If it is not available the MRP goes to the purchase department. d. Indentor Budget MPR Material description/ Proposed Reason Item code/ proposed code Unit Quantity required Value code No. For further action. 2- TWO STAGE:- Two stage enquiry is followed when there is more proprietary items.department. 3) REQUISITION TO PURCHASE:. the MRP is send to the stores. In this he gives several a. first approval to given by immediate higher authority of the indenter.This is an intimation to purchase department by the indenter that he has need of certain materials. a information like:- 4) MRP SCRUTINY Next step involves scrutinizing of the MRP to certified the genuinely of the need. g. to check whether the material is available or not. Next. Here it is scrutinize in three ways: 5) types: 12Single stage Two stage Approval scrutiny Budget scrutiny Technical scrutiny SENDING or ENQUIRY/INVITATION TO BID:.Enquiry can be done by two 1- SINGLE STAGE:. Here there is no restriction on supplier or vendor. He raises indent by filling form 'Material Purchase Requisition' (MPR).
Here the proprietor is invited to set a competitive price. 6) before There may be global tenders also.This is for the proprietary items and is sent to only one vendor. 8) Receipt of materials:After the consignment reaches the stipulated place. 7) Purchase order:- After selecting the best offer.A. Enquiry is sent in order to know the prices and other terms and conditions of vendors. giving quality and price the top priority. material. Quotation must be technically acceptable. quantity and then sent to the store where the store releases the "Stores Receipt Voucher" (SRV). B) vendor. A bank guarantee of performance is taken from the vendor in advance which is usually 5% of the P.Items can be classified in to two categories keeping in view the purchasing function – A) Proprietary items:. per week. Generally technically acceptable L-1 bidder is chosen.These are those for which there is no restriction on Proprietary bidding:.These are those items e. the terms agreed upon by the payment is done by the organization according to the purchase two parties.O. spares which have to be bought from particular supplier or vendor. Receiving of offers:. purchase order is sent to that vendor with all the terms and conditions specified and details of the material to be purchased are also given. iii) Press tender/Open bidding:.O. Normal payment is done after 30 days from the receipt or acceptance of .If the amount involved in purchase is more than three lakhs and the item is non proprietary then press tenders are issued in various news papers.This is done for non proprietary items and bids are invited from a limited no. The material is checked for quality conditions. time limit is set for delivery of consignment and in case of delay a penalty is imposed @ 5% of P.g. i) Bidding can be done in three waysNonproprietary items:. QCS is also sent to the technical department and in consultation with it one more than one offer are chosen. ii) Limited tender enquiry:.After all the bids have been submitted the tenders are opened tender committee to compare the quotations- Quotations comparison statement (QCS) is made and bid with lowest quotation is generally chosen. From here it is delivered to the indenter. of vendors selected from the registered vendors with the company.
For every step. recommendations of indenter. a separate file is opened and correspondence goes on. . changes in price. A rejection report is prepared in case of damaged items. manager (F& A). materials manager & general manager are sought. defective or damaged items supplied etc. For every indent.9) Follow up done for every order:. In case of damaged input materials the store does not accept the materials.It may be regarding delay in supply.
5. After the intimation from the bank is received the invoice of the suppliers will be scrutinized by 1. 7. Purchase supplied supplied are specified Quantity purchase supplied. is recovered before releasing the balance payment. 3. 8. The advance payment to contractors shall be made against submission of bank guarantee in the Performa provided by IFFCO. It should be ensured that penalty for delay. Where payment required to be made. only then advance payment is given. After the documents are received by the bankers. Price basis the finance and account department order are as as specified in in the the for the followingnumber purchase order. sale tax and other taxes are as per the order. Other terms and conditions of the purchase order. or Ex-works whether F. Whether excise duty. 2.O. 2Full payment / 90% to 95% payment:- In case the terms of payment provide for full payment or part payment against dispatch documents through bank. Advance payment against indemnity bond shall not be released as provided in the purchase procedure. 6. Whether Whether materials materials 4. they are forwarding bank intimation along with a copy of the purchase order to ascertain that the invoice is raised for the material ordered and conforms to the other terms and conditions of purchase order. The payments under the contracts must be regulated as per the expressed terms and conditions. Where there is delay in supplying the material and the payment through bank is 90% to 95%. 3Full payment / Balance payment after receipt of materials:- In case the purchase order provides the 100% payment after receiving of materials . a clarification is to be sought from materials department and proper approval taken for waiving of penalty or otherwise before retiring documents.PAYMANT AGAINST PURCHASE There are various modes of payment through which payment is done: 1Advance payment to supplier:If both the parties are agreed upon advance payment that is specifically provided in the contract order.R. Any payment not covered by the contractual terms and conditions should not be released. the supplier will be negotiating the documents through the bankers. Whether bank charges are claimed as per the purchase order. as provided in the purchase order.
For any short landing or breakage between the port of dispatch and port of destination. the balance payment may also to be released after the MRR is received and it is confirmed that the material has been accepted after inspection and taken on charge. IMPORTED MATERIAL Materials procured may be either indigenous or imported.5 % if the value goods not delivered for every week of delay or part thereof limited to a maximum of 5% of the contract value. If the payments are made through L/C against documents. Clearing and handling of imported material is the responsibility of material department on the arrival of ship the materials will be cleared with reference to the invoices and bills. MATERIAL CODING . the project authorities may take following actions - 1. Cancel the order in part or full and purchase such cancelled materials from elsewhere on account and at the risk of the suppler without prejudice to his right inspect of goods delivered. OR 1. inspected In and accepted per the MRR. In case the purchase order dispatch documents and the balance payment after receipt of materials. they will make the payment to the foreign party by debiting to the appropriate advance account. Delivery Delay In any contract. claim action shall be taken by them. the time and date of the delivery is the essence of the contract.and accepted payment is to be released after the MRR is received from the stores department. the same shall be debited to advances to foreign suppliers account. Before released of the payment. Accept delayed delivery at price reduced by a sum equivalent to 0. the invoices should be scrutinized as the case of payments released through bank. For major projects the foreign contracts are normally finalized at head office level and payment against these contracts are made by the concerned unit. In addition it should also be verified whether all the items invoiced 4have been received. project engineer shall prepared the MRR and sent same to project accounts for clearing the supplier's advance account for material. On receipt of material at site. In the event of delay in the execution of the order beyond the date of delivery as stipulated in the order. Where the order has been placed by the unit directly.
It facilitates. It ensures clarity. stores. Every item maintained by its code in the stock as well as in the store accounting section. It will be very typical to identify them at the time of requirement. 5. For the coding of materials the account person assigns code for every item of store. sub-group may be indicated by 12 codes for the digits different coding materials are is as decimals. Whenever a transaction is done in store for the inventories the full details of that transaction is send to store accounting section also. Alphabetic: Each item is denoted by a combination of alphabets. The item/material code remains same in stores and accounting section. Secrecy of description can be maintained. So the items are coded to avoid confusion. CODING There a) b) are different Numeric: types of Each coding item is that are given as a follows: number. Material coding facilitates the account persons and store manager to maintain the transactions of the items whether of receiving or of issuing. mechanized accounting. c) d) This Alphanumeric: helps in remembering It is a combination of alphabets and numeric code. If the selected indicates the inventory sound when it is pronounced. 2. Thus every item has a code that is called its material code. forms reduces Ease identification is comprehensive. IFFCO various Ammonia . It Lengthy economizes descriptions space in in It of are replaced and by a codification simple clerical of code. 3. it is known system. work.It is very typical for the every organization to maintain the stock items in case of large number of items. Decimal System: It is basically a numeric system. 4. 6. because the computers of stores and accounting section are connected through Local Area Network. 7. alphabet as the mnemonic codes. (LAN) In this way it is very comfortable task to maintain the inventories on the inventory software with the help of material coding. follows: 11 In The 1. Advantages 1. done.
boxing and protection shall conform to the specification or requirements of the order. All goods shall be dispatched by rail/road freight paid and the railway receipt/lorry receipt shall be posted to the concerned officer of IFFCO. Only materials those cleared by the inspection will be taken on charge in stores. DOCUMENT REQUIRED FOR THE DISPATCH OF GOODS Following Challan Packing Test Railway/ Consignment documents are required for the dispatching of 3 materials: copies copies copies copies note list certificate Lorry/ Air 4 3 3 Inspection of Material The material department shall coordinate with other departments and arrange inspection of material at vendor's shop prior to dispatch. The supplier shall be held liable for the damage or breakage of the goods due to defective or insufficient packing. It will be according to term and conditions that are given already in the format. Packing & Dispatch All packing. The person inspecting the material will sign . 2 3 3 3 Urea Offsite Product handling Power plant digits digits digits digits -14 -15 = = = = for for for for the the the the size plant 12 13 location equipment material and 1 digit = for the item identification. 4.2. 3. Inspection of materials in other cases shall be carried out on receipt of materials at site. 5.
. This insurance is done by IFFCO TOKIO GENERAL INSURANCE COMPANY. MRR No. As soon as the shortage per damage of the materials is noticed the material department will lodge the provisional claim with the underwriters and pass on the relevant papers to the finance & accounts department for lodging monetary claim. the material department should take up the matter with the supplier for arranging replacement. Damaged/Short/Rejected Materials If the materials are received short or in damaged condition. A report is prepared in this case. Accounting of Raw Materials Based on the projected consumption requirement of raw materials. the procurement action is taken by the commercial department at the head office which is in Delhi. there are some conditions in this regard. Generally indenter is called upon for the inspection of the material. Its copies are distributed among all the parties which are involved in it. After the adjustments the bill section sent the copy of journal voucher along with all necessary details such as P. Sometimes inspection is done at the gate of IFFCO. Ammonia The consignment of phosphoric acid and Ammonia are received at Kandla and the material actually received is valued at the contracted cost & freight price. Described below Imported is the accounting Phosphoric requirement acid of major and raw material. . Its copies are sent to the supplier.O. name of the supplier to the insurance section for following up the claim with the insurance company. If there is any damage in the material or they are insufficient in quantity then rejection report is prepared. Only after inspection material enters into the store. purchase department and finance and account department. In cases where the responsibility for the transit insurance is on IFFCO a claim should be lodged with insurance company for the value of material plus incidentals. In respect of transit insurance claims bill section will pass an adjustmentEntry debiting "claim recoverable account" and credit the "Advance to Vendors account".on the stores receipt voucher in token of having inspected and accepted the material. quantity and value. Where the responsibility for short supply or damages in transit is of the suppliers. No.
Natural Gas Kalol and Aonla plant consume as feed stock and fuel. The valuation of inventory at the month end is to be made on the basis of exchange rates prevailing on the last day of the month. The quantity received is accounted at the price payable to the party which is fixed by the Govt. The difference if any between the provisional rate and the actual payment rate shall be charged off to the consumption account. Naphtha Naphtha is supplied by IOC against advance payment terms. Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives. Indigenous Ammonia The indigenous ammonia is supplied by KRIBHCO / GNFC to Kandla unit. The material received valued at agreed price plus local sales tax and freight for transportation of material up to plant site. The account department also ensures that all claim suppliers for shortage are booked on monthly basis and necessary on quarterly basis for the pending claims. There are excise duty concessions available for these items provided they are consumed for manufacture of . are also included in inventory valuation. gas is supplied to IFFCO at the price fixed by Govt. The unit sends the telex to head office for making payment to ONGC / GAIL after due certification of bill by the head of technical department about quantity of gas received. The finance department at head office ensure that payment for these raw materials are released on due dates to avoid interest liability. if the material is already consumed. This price is fixed at par with the landed cost of imported ammonia. the ocean freight element is loaded separately. handling charges etc.Where free on board (FOB) price is agreed. As per the contract with ONGC. Potash Potash purchase orders are placed by the commercial department time to time depending on the material requirement. After releasing the payments the inter unit debit advice is sent to plant. The meters provided at the inlet point in the plants are the basis for monthly billing. All connected expenditure like customs duty. of India from time to time. On receipt of the payment advices the supplier's account is adjusted in the plant. of India.
The inventory and consumption account then shall be accounted at the actual procurement price. For Catalysts & Resins where IFFCO has pooling arrangement with other companies. . Accounts department in coordination with production department shall ensure that all the excise duty requirements are fulfilled that the duty concessions are fully availed. Catalysts & Resins The Catalysts & Resins are produced by the material department at the plant.fertilisers. The inventory is valued based on the quantity received as per MRR received from production department on monthly basis. on the receipt of the material the inventory is valued at the agreed price. the material received is taken to inventory at the actual price paid and equivalent amount is credited to "material received on loan account". by time to time the naphtha is supplied to Kalol unit from Mathura refinery. This entry will be reverse when the material is procured by IFFCO and replenished for return of loan. The price payable to IOC for naphtha is fixed by the Govt.
STORE SECTION Store of any organization is of vital importance. 1. It is the responsibility of stores to receive the material required by the organization's operations to keep it properly & to issue it as when required. Store B for Aonla-2 unit. The stores are divided in two subsections for greater flexibility like receipt and custody section. Store A for Aonla-1( this store contains that spares which are used by Aonla-1) 2. In IFFCO there are two stores.( it contains mainly catalysts used by Aonla-2 ) Store has the following warehouses: - Main Cement Petrol Cable Chemical Paint PDIL Store godown Pump yard godown godown store .
Here the quantity mentioned in challan and purchase order are compared. . If not he will ask for open delivery. 7) Inspection is done by the indenter: Suppose all items are accepted then the material is handed to custody section after putting identification & giving a SRV control number. purchase. SRV Has 7 copies. the accounts section is informed for necessary action and getting claim from insurance company. department. concerned But ultimately they have to be send to stores. Some deliver the goods to stores. If any discrepancy is found during checking. 2) 3) The documents may be: Goods receipt / railway receipt / challan Form Excise duty The particulars of the document are noted in the carrier receipt register (CRR). information is sent to supplier. accounts. stores. 6) The next operation is filling the stores receipt vouchers (SRV).A.e. The process 1) involves following steps. If some items are defective then the accepted items will be sent to custody and for defective ones. when an item is replaced. In case of damage he has to give a consignment may without document i. The document regarding the material may be sent to the stores. its dispatch advice is made. indenter & insurance company and the particulars noted in rejection register. contractor. the document is given to an agent termed as handling He will collect the material. If there is some breakage then either item may be replaced by company or claim against insurance is obtained. door delivery and is some cases it may be face to face 5) delivery. The date of receipt is filled in CRR. two for accounts and one for each purchase. After the entry in the register. RECEIPT SECTION:- This section is responsible for receiving the materials and inspecting them. 4) Consignment's cases are intact. indenter. master file & custody section. Then he has to certificate. 8) Direct charge SRV (DCSRV) is prepared when indenter wants material directly from receipt section.
B). Spares have been classified plant wise. General Product Ammonia Urea handling Power Equipments items In IFFCO inventory 1. is divided General into two types: and 2. by internal stores return voucher (ISRV). When a particular part is returned then this received in stores. pipe etc. When someone wants to issue certain material he has to fill the store issue voucher (SIV). . The material received here is first checked as per SRV for every material there is a card. Spare are those inputs which are specific to a particular plant and are of particular size. SPARES:About 41249 spares of Aonla Unit-1 are housed in store and 19804 spares of Aonla Unit-2 are housed in store. Custody section takes care of spares. CUSTODY SECTION:- This section is responsible for proper keeping of materials and issuing them when required by different department and contractors. The first digit of the code of item is numbered according to given criterion- Sp. Once the item is issued again information is updated in the kardex. After issuing the material the number of issue and the quantity issued is noted in SIV control registers. Spares General are those inputs which can be used at various sites as wire. C. These cards are located in bins according to code of material is received in custody the card information is updated.
Outline of stores Function: The authority of receipt. operations. Receipt /Issues/ Returns Transfer of Materials:a) The second copy of the material receiving reports after pricing. 4. 1. gets it inspected laboratory. imported with issues. In addition certain chemicals are permitted to be stored in production department due to the operational needs. stores section Valuation of stores items should do on weighted average basis. In certain cases a nominal stock of few consumable items can be permitted with uses departments such as maintenance. verification.ACCOUNTING FOR STORES General a. issued the same for product bagging and maintains Maintenance of records for all quantitative transaction of packing material is the responsibility of bagging department. The bagging department receives the material. Similarly the raw materials are handled by production department Functions with all of responsibilities Store in respect of quantity accounting. laboratory and administration department for meeting emergencies. materials return for and capital for transfer works stock of and functions:materials. 2. shall be passed on to the stores accounts sections to scrutinized the same with reference to store item code quantity . Section:- Accounting The section dealing with accounting of stores in the finance department shall have following 1. 3. The authority of storage of packing materials like bags is vested with bagging in the stocks department. 2. Accounting Accounting Associating of of receipts. store and issue of all material is centralized in the materials department subject to exception in permitted in certain cases.
incidental i) Materials issued to contractors shall be priced at the monthly weighted average rate . one copy of the price issue notes may be sent to the work accounts section to enable them to debit the contractor's account. if any. shall be given in accordance with the e) In case of material like steel plates etc. the job for which material is issued. as then case may be. The difference in quantity in weight basis. After issue / return of materials. Shall be cleared against individual MRR's on receipt bill of d) The issue notes shall be priced on the weighted average rate basis after accounting the last receipt of material. c) For clearance of imported materials. expense code and unit measure etc. and process it for accounting of receipt of materials. issue section of stores department arranges data entry on the daily basis. The section shall ensure that all receipts. After ascertaining the nature of expenditure. where materials are received on actual weight basis and the issues are accounted are on theoretical weight basis as per sectional measurements. in case the shortage is more than the consumption f) norms. It is the responsibility of material department to take action to square up the transactions h) within the reasonable time. an appropriate account code chart of account. Inter unit transfer of material shall be accounted at cost basis freight and other charges shall be borne by the transferee unit. amount deposited for custom duty in the PD entry account etc. in consultation with consuming department. shall be adjusted to revenue / capital account. issues and returns / transfer voucher raised by the stores section are finally posted in the price store ledger. For all issue notes relating to works contracts. the quantity accounting shall be kept on weight basis. the same should be recovered from the contractor. cost / service code. A monthly abstract also be prepared and passed on to works accounts group for check. g) Details for receipts and issue of materials received / issued on loan shall be maintained by the competent by the store account section loan transactions shall be approved authority.of measure etc. Checklist processed is sent to stores accounting section for scrutiny in respect of store item code. b) The corrections and financial and financial adjustments are made to arrive at final check list after scrutiny of final check list entry in priced store ledger is to be processed.
The return note shall be priced on the basis of the original issue requisition against which the material was drawn if such reference is available. general stores. After reconciliation a monthly material consumption statement. return note shall be priced by he stores accounting section at the same rate which it was issued and the Value shall be debited to the relevant code of stores and spares parts inventory accounts by credit to the cost center / job number where the material is received back. A copy of this statement shall be forwarded to store section for verification of the bin card balances. phosphoric acid. all documents. if any discrepancy is reported. issues and past closing balance shall also be prepared. Insurance of Stock & Stores For stocks of ammonia. Under the mechanized system of store accounting. In addition. it shall prepare the priced store ledger. and finished . m) The price store ledger balance for each category store shall reconciled value wise with the control account balance in the ledger wherever possible. j) For material returned to stores. The accounting for the difference between issue price and recovery price provided in the contract shall be Cleared by the accounts section dealing with the works. Recovery should be predefined basis and must be uniform. Discrepancy if any shall be reconciled by the store section with the stores accounts section. is prepared and circulated to concerned department by the 10th of following month for verification of its correctness and for monitoring the budgeted expenditure. k) No material shall be transferred to one card to another card without giving proper by means of a information to the stores account section. cost center wise. otherwise the same should valued at the prevailing average monthly rate applicable to that material. bags. naphtha. the same is adjusted in the ensuring month.and debited to materials issued to contractors account. The accounts section shall draw out reconciliation on monthly basis. The EDP section shall prepare the all accounting abstracts with the summary figures with monthly journal entry. receipts. Such transfers shall be made transfer voucher on receipt of such transfer voucher and pass adjustment entries by debiting and l) crediting respective accounts. Ledger abstract for all items transacted during the month giving the opening stock. such as MRR's issue notes return notes and transfer vouchers shall be sent to the EDP section after exercising the prescribed checks.
Raw material & Packing materials Stores. In case of a declaration policy. The liability of the insurers is limited to the insured amount. insurance shall be obtained in the form of declaration policy whereby the average daily stock for each product held during the month shall be declared to the insurers in the first week of the next month. The store department will ensure that the posting in the Kardex are updated before the verification of inventories. strike terrorism. the insured amount for each product shall be stated separately. Inventories Verification The officer of stores will coordinate the job of physical verification and the accounts officer in charge shall render all assistance to ensure that the physical verification of inventories is carried out as per the policy and the policy and the approved program. The inventories are classified in three categories for verification purpose. malicious damage. In case of finished goods also the same principle applied except that no adjustments in the books of accounts shall be made. The stock of finished products lying at different marketing warehouses should also be adequately covered through the warehousing agencies. insurance shall be taken to cover the risks arising out of fire explosion. Before insurance is obtained. earthquake. At any time if it is found that the actual stock is more than the insured amount to avoid less amount of insurance. packing materials and finished products are to be verified on quarterly basis by an independent surveyor by the society. Chemicals & Spare parts Finished products The stocks of raw materials. riot.products held at plants. According to the value of stores and finished products keeps on varying from time to time. This is as per guidelines issued by the head office. However the stock registers shall be adjusted on the basis of actual stock in order to replace the notional figures of stocks by more accurate . No adjustments need be carried out in the books of accounts unless the discrepancies in liquid raw materials and solid raw material are in excess of 1% to 5% respectively. etc. insurance premium is payable for minimum 35 % of the insured value. Kardex contains all the information that is in the store. According to the declaration policy. various categories of stores shall be reviewed with a view to select such items for which of insurance is considered necessary.
It is desirable to complete the physical verification work by March every year so that reconciliation/adjustment action can be completed within the year itself.000/10.001 to 50. For the purpose of verification of stores. spares. Internal 1) Check One set of document for receipts. After filling up the particulars of the value and quality discrepancies with reference to the priced stores ledger balance. issues and return of materials shall be sent to the accounting section of finance department. The inventories for other items such as stores. C categories. The priced store ledger shall provide value of each receipt. priced store ledger shall be prepared for each item for stores. chemicals & spare parts shall be classified in to A. 50. Categories A B C Value (Rs. Based on these documents. B. RECONCILIATION AND ADJUSTMENT After each physical verification by the custodians of inventories and suitable adjustment action has to be taken. 10. are also verified every year keeping in view ABC analysis of stock items value and exercise of verification may be completed by March every year.000/Quantum of Verification 100% 70% 25% A team of stock verifiers shall prepare a stock verification sheet giving the kardex balance and the physical balance of each item covered in the stock verification.000/Below Rs. the stock verification sheets shall be forwarded to the materials department for scrutiny and reconciliation and adjustment in consultation with finance department accepted shortage shall be processed for the approval of the competent authority. The material code number between stores and accounts shall be identical. construction materials etc. Issue and return transaction along with quantity ledger.estimate based on physical verification. per unit) Above Rs. The quantity balance appearing in priced .
they provide the information to Managers who make more accurate and timely decisions to manage their operations.. 3. Efficient material control reduces losses and wastage of materials that otherwise pass unnoticed. e. The cost of placing an order (e.. effectively utilize people and equipment. what is lost if the stock is insufficient to meet all demand. The three main 1. g. in this case the expenditure shall be charged to the appropriate expense account at time purchase. certain percentage of demand will be met from stock without delay. Inventory control is the core of material management. canteen stores etc. If men and machinery in the factory could wait and so could the customers.e. 2. and urgency of requirements. for row material stocks) or the set-up cost of production. materials good not lie in want for them and no inventory need to be carried.g.. factors The cost in of inventory holding the control stock decision (e.store ledger shall serve as counter check for accuracy of bin card balance in store which is essential 2) for proper functioning of inventory control system The priced store ledger shall not be maintained for large number of low value items such as stationery.g. based making on the process interest are: rate). The need and importance of inventories varies in direct proportion to the idle time cost of men and machinery. But it is highly uneconomical to keep the men and machine waiting and the requirements for modern life are so urgent that they can not wait for materials to arrive after the need for them . Inventory Control Inventory control is concerned with minimizing the total cost of inventory. and communicate with customers. i. Quantitative record shall be kept by the concerned department and shall be produced as and when required for audit purpose. coordinate internal activities. The third element is the most difficult to measure and is often handled by establishing a "service level" policy. Inventory control is a systematic control and regulation of purchase and usage of materials in such a way so as to maintain an even flow of production at the same time avoiding excessive investment in inventories. medicines. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials. Inventory Management and the activities of Inventory Control do not make decisions or manage operations. The cost of shortage.
proper planning and controlling of inventories are of great importance. This requires that inventory management policy must balance the requirements of the following two opposing and conflicting i) ii) cost ends: To maintain a large quantity for smooth operation and efficient customers' services.has arisen. A good inventory management policy should ensure smooth and uninterrupted supply without making unnecessary investment of funds in inventory. If investment in inventory will be more then the company has to bear carrying cost and that finance can not be utilized. To maintain only a minimum possible inventory because holding costs and opportunity of funds invested in inventory. . Thus. Because materials constitute a significant part of the total production cost of the product. cost is controllable to some extent.
which will bring it to the maximum level. TECHNIQUES OF INVENTORY CONTROL Reduction of surplus stock is an essential requirement inventory control. minimum. . an order is placed to replenish its supply. absolute items To protect the inventory against deterioration. To provide for efficient store of materials so that inventories are protected from losses fire and threat To and keep handling surplus time and and costs are kept at to minimum.OBJECTIVE Scientific 1) control of OF inventories INVENTORY should serve the following CONTROL purposes: To provide the continuous flow of required materials. parts and components for uninterrupted flow of production. Minimum level establishes the reorder point and order is placed for quantity of material. In that. quantities in hand of each item or class of stock are reviewed periodically. efficient 2) 3) by 4) 5) 6) To minimize investment in inventories keeping in view operating requirements. To ensure that finished goods are available for delivery to customers just to fulfill the orders. obsolescence and unauthorized use. 2) Order Cycling System: In this system. if it is observed that stock level of a given item will not be sufficient till the next schedule review keeping in view of its probable rate of depletion. Various techniques are available to solve the various types of problems associated with inventory control:1) 2) 3) 4) 5) 6) Review Order Fixation Use of The of of slow and ABC Min-Max cycling various control non-moving plan system levels ratios items Analysis 1) Min-Max plan: In this plan analyst lays down a maximum and minimum for each stock item.
3) Fixation of Various Levels: Certain stock levels or fixed levels are given below:- A). Safety stock is a buffer to meet some unanticipated increase in usage. Safety Level:- Normal issues of stock usually stopped at this level and made only under specific instructions. Re-ordering level = Maximum Consumption Maximum Re-order period. Re-ordering Level:- When the quantity of materials reaches at a certain figure then fresh order is sent to get materials again. Maximum Level = Re-ordering level + Re-ordering Quantity (Minimum Consumption Minimum Re-ordering period) B). Minimum Level = Re-order level . Minimum Level It represents the quantity of stock that should be held at all the time.(Normal consumption Normal Re-order Period) C). Safety stock level = Ordering Level . D). . If the quantity exceeds maximum level limit then it will be overstocking. stock level is normally not allowed facing below this level. Maximum Level It is the quantity of materials beyond which a firm should not exceed its stocks.(Average rate of consumption Re-order level) OR = (Maximum rate of consumption – Average rate of consumption)Lead Time.
4) Use of Control Ratios: Inventory turnover ratio helps management to avoid capital being locked up unnecessarily. The speed of movement should be increased. The turnover of different items of stock can be analyzed to find out the moving stocks. The percentage of slow moving stores = Slow moving stores / Total Inventory . 5) Review of slow moving and non- moving items:- Stock turnover ratio should be as high as possible. Slow moving stock should be identified and speedily disposed off. This ratio reveals the efficiency of stock keeping. Inventory turnover ratio = Cost of materials consumed / Cost of average stock held Where. Cost of average stock = [Cost of opening stock + Cost of closing stock] / 2 during the period Inventory turnover ratio [in days] =Days during the period /Inventory turnover ratio. Loss due to obsolescence be eliminated or these items used in some profitable work.
i. cost significance for each materials item in relation to total cost and inventory value. We calculate the index by dividing a part's inventory quantity by its usage during the most recent 24 month period. Turnover frequency is measured by an exposure index. "B" report shows the parts with more than a one year supply but less than a 2-year supply. Irrespective of how simple or how complex a system is. the more proximate criteria for judging the are: Comprehensibility:Inventory system range from the utterly simple to the complex ones. It measures money value i. The logic behind is that the management should study each item of stock in terms of its usage.TECHNIQUE USED IN IFFCO FOR INVENTORY CONTROL The ABC Analysis: With the numerous parts and materials that enter into each and every industrial production. and low value items need to be devoted minimum expense and effort in the task of controlling inventories. to the problem of analysis. it . inventory control leads itself. The ABC Reports are made: "A" inventory reports lists parts having little or no turnover. regardless of whether it is automated or manual. inventory and foremost. Criteria For Judging The Inventory System:- While the over-all objectives of the inventory system is to minimize the cost to the firm the risk level acceptable to the management. Critical.e. technical or other problems and its relative money value in the total investment in inventories. lead-time . This Plan is based upon segregation of material for selection control. Such analytical approach is popularly known as ABC (ALWAYS BETTER CONTROL) Analysis.e. high value items deserve very close attention. "C" report lists the parts with more than six months supply but not more than one year.
Of course this cannot be and this should not be carried too far. The more common sources of value decline are: by hand.should be clearly understood by all affected parties. Obsolescence caused by changes in technology & shifts in consumer taste. the details of that transaction is reaches to the systems of the store accounting section. Is questions the raised system in this responsive context to are: change? Can new products. So this software helps much in maintenance of stocks. This generates enthusiasm for the system and enhances its credibility. Adaptability:The 1. this software has the variety of qualities which we can discuss with the help of menus of software. The system must be properly explained to all concerned people so that its purpose. whenever a transaction is made in the store. It should provide adequate forewarning which triggers appropriate corrective steps Inventory Software:- In IFFCO the PSL software is used for the management of inventories. new situations and new requirements be handled by the system? A certain degree of flexibility and adaptability must be desired into the system to make it versatile. it is likely to be a complex monstrosity. Physical deterioration with the passage of time. It makes very easy to account persons to maintain the transactions of inventories. 2. logic and rationale are transparent. A part of this software is installed on the systems of the stores. Price fluctuation because of inherent volatility of certain commodities The inventory system should be capable of inducing timely action. If it is developed with this ideal. A part from this. Remember the caveat that the design of any system should ordinarily take care of about 90% of the cases. leaving the balance 10% to be handled Timeliness:Inventories may suffer loss in value on account of a variety of factors. This software holds all the transactions of the stocks. The system must not provide for every possible and imaginable contingency. So with the help of LAN environment it is very easier to accountants to retrieve the information regarding the transactions made by the stores. There are six different menus in this software these are as . because both the systems are connected in the local area network (LAN). Otherwise it is likely to be perceived as a mysterious 'Black box' of dubious value.
2. 6. 3. entry Physical Verification Entry . 4. 5.follows: 1. Exit Data entry Queries Reports Processing Calculator DATA ENTRY MENU Data Entry SRV SIV ISRV SAV STV (IN) STV (Out) Document Adjustment SIV Adjustment Entry of Surplus/ obsolete/ ISRV Insur.
STV (out) etc. There are some spares which are not in used. Physical Verification: In case of verification of stock the person responsible for stock verification estimates a range of items for verification and after verifies the selected range of items. In in the data entry menu above there are several options diagram. comes under obsolete items. Entry: With the help of this option we may easily make the adjustments in the stock issue voucher (SIV). The surplus items means. SIV. due to any previous adjustment. If the value of material has wrongly feed in the documents or the valuation is high then it is used to decreases the value of that material. Entry: This option is used to enter the data in various types of documents like SRV. We give entry them in surplus. Adjustment ISRV: This option of data entry menu has the same working in issue stock return voucher (ISRV). Thus easily adjustments are made. REPORTS Reports Summary Month Month Report Report account before after head PSL PSL MENU wise runs runs . the items which are exceeds from the records.The very first menu that is data entry is used for the various types of entries shown Document of transactions. While the spares which are not in working condition or they are outdated. ISRV. STV Adjustment (in). Entry of Surplus/ Obsolete: This option is used for adjust the surplus items which are declared by the plant. So in case of this situation the accountants make entry @ of 1 Rupee per unit of items. they punched the quantity verified or lock the verified quantity till the next verification. This is used whenever the valuation of any material has to increase.
PSL Inventory Kardex Code Yearly Issue Issue wise summary more inventory for JV Consumption status HO than above OTHER REPORTS Summary A/C head wise: This option creates the summary reports of all the A/Cs in respect of accounts heads like Inventory Construction General Materials spares (Ammonia. .) Tools Chemicals Stores etc. Loose Urea etc.
Inventory consumption: This option of the report menu shows the data regarding the consumption of materials according to the date. This code is of 12 digits in the IFFCO. Kardex shows the update inventory and also shows the past status of every past tears. its value. Code wise inventory status: This option creates a report inventory code wise. maximum and reorder level. because if there is any mistake in any document and PSL run is performed it will Monthly create report the wrong after final PSL reports. when the material was issued i. STV (in). The accountant may see the past status as on any past date. its current stock.SIV. This report helps in forecasting of material purchasing for the future consumption of the materials. Kardex: The kardex is the very useful tool for showing the current status of all the items. We can see the consumption of a particular item. vendor. its balance in the store. receipts. location in the store and as well as its minimum. The kardex retain all information about the material. We can create report for selected codes. SAV. It helps in deciding the re-order level of inventory.Monthly report before PSL runs: This option creates the monthly report of all the documents like .. ISRV. Here I have given a example of kardex in which each detail of material is written. It is as follows. so that the account persons may check whether the documents are correct or not.e. STV (out) etc.e. So that by this option we can see all the journal voucher of the entries of inventories. runs: The working of this option is same as the previous option but the difference is that the reports made after the PSL run are more accurate updated and non volatile in nature. issues. . Thus it reserves every information about the materials. PSL JV: After processing of PSL run all the documents becomes updated and all the transactions also gets updated. It is in form of software in IFFCO. As when the material was received i.
In this option we may see the status of various materials or items. opening quantity.f.000 QUERIES MENU Queries Brows Inventory Master This menu has single option that is brows inventory master. values.ND112M2 Current stock: 1. PSL rate that is the per unit price and also the location of that material. Level : 10.000 Max. In a query task we are supposed to enter the material code in the material code box and then click over the retrieve button.L : 15.e. Level : 30. that are of twelve digits number.000 NO Location: MA-PF-64-4R R. This option is very helpful in search of any particular transaction in inventories. we can perform the query task.O. PROCESSING MENU Processing . material description.5KW . on the basis of material codes. As the name of this menu. 01/01/1900 Material code: 998574907100 MOTOR 1. CGL .000 Min. As soon as we click over the retrieve button the whole in formation regarding that code is appears on the screen.MATERIAL KARDEX w. closing quantity. The appearing statement contains the material code.
because all the reports which are forwarded to the concerning authorities and are the basis for the further actions are made only after the processing or the PSL run. PSL Process I: The option process I update and calculate the values for all documents and makes available to create the final reports. PSL processing makes update all the documents. So that this task is very sensitive so the operating person should have the great care and responsibility in processing task. Reverse stock for physical kardex mismatch: . If there is any mismatch in PSL and Kardex the report shows those mismatches on the screen. Put A/C group in inventory Master: This option also a processing task when we executes this option it assigns the account group to all the inventory / item codes so that these codes may link to a particular account group. PSL Process is done for tallying codes and value of the material. Once a PSL run is processed the data can not be changed. Reverse stock for PSL kardex mismatch: It is very important processing because it creates a list of all the items which are mismatching in respect of units / quantity between the PSL and kardex. In this inventory are grouped.Weekly PSL proc.1 Reverse stock for Physical Kardex mismatch Put account group in INVMAST Cumulative process Reverse stock for PSL Kardex mismatch PSL Process 1 Processing is the most important task of this software.
Calculator & Exit Menus The calculator menu has no sub option we can use the calculator only by clicking on the calculator menu. These are listed as below: 1. It helps much in manual calculations make the surety of correctness. because the physical verification of the inventories is done once in a year. ISSUE VOUCHER SIV (Store issue voucher) 3. ADJUSTMENT VOUCHER SAV (Stock adjustment voucher) STV (Stock transfer voucher) SRV When material is checked with challan / invoice and the purchase order for quantity SRV (store receipt voucher) is prepared and the material kept in section. . RECEIPT VOUCHER SRV (Store receipt voucher) ISRV (Internal store receipt voucher) DCSRV (Direct consumption store receipt voucher) 2. This processing performed once in year. Apart from this the exit menu is simply for quitting the software. SRV can be of two types: (a) FIS (Receipt from supplier voucher) These vouchers are generally generated by the store whenever the material is received from the supplier/ vendor in stores.This option creates a list of mismatches of karedx and physical verification. whenever we click over the exit menu it exits from the software DIFFERENT VOUCHERS In IFFCO there are 3 types of receipt and 1 issue voucher are generally used for the particular receipt and issue material.
the job for which the material is issued . 1 copy to indent department. After ascertaining the nature of the expenditure . SIV (STORE ISSUE VOUCHER) . 2 copy account department. One copy lies with the indenter itself. These ISRV can be of 5 types which are as follows: BD: Such type of ISRV are generally used by the particular department for the general item. an appropriate account code shall be given in accordance with the chart of account.(b) H. in this stage the concerned party or department will revert back the remaining raw material to store by using such type of issue voucher. BB: Such type of ISRV are used for the spare return by the particular department. BE: These vouchers are used for stationary items. Note: The issue notes shall be priced on the Weighted Average Rate basis after accounting the last receipt of the material. BA: these are also used by controller for spares.P (Receipt voucher for direct consumption) These vouchers are generally generated when material is directly received by the indenter for direct consumption of raw material. ISRV (INTERNAL STORE RECEIPT VOUCHER) If the hundred percent of the issued material have not been utilized by the particular department or parties. Two copy to account department. The copy of these SRV will be dispatched departments such as: (a) (b) (c) (d) 1 copy to purchase department. BC: Such type of ISRV are generally used by the contractor for return of remaining raw material. 1 copy lie with stores itself. Note: The copy of these ISRV will be send to the following departments mentioned as: (a) (b) (c) One copy to store.
There are some materials which are not bought through purchasing order. IA: These vouchers are generally used when the spares are issued to contractor. IC: Such types of vouchers are generally issued to the contractor in case of general items. IB: These vouchers are issued by the department for spares.The accepted & stock charged material is to user department against Store Issue Voucher issue to contractor through SIV. As an indenter needs a stationary material then he has no need to go through the whole purchasing process. (d) One copy lie with the store itself. (c) Two copy to account department. (b) One copy to indenter. STV ( Store Transfer Voucher) . In this case SAV is prepared. (e) One additional copy to security. These SIV can be of 5 types such as: ID: Such types of SIV are generally used by the particular department for the general item. DCSRV (Direct Consumption Store Receipt Voucher) DCSRV is prepared when the material is not purchased through purchasing order. NOTE: The copy of these SIV will be dispatched to following department such as: (a) One copy to purchase department. The authority of the SIV is given to competent person of Indenter department and this sign checked by the store section before issue and any permanent employee of IFFCO AONLA shall sign it at the time of receipt of material by the indenter department. SAV (Store Adjustment Voucher) These vouchers are used when there is some fault in the code of the material. IE: Such vouchers are generally issued by the particular department for the stationary items.e. He has to take permission from its immediate officer. After that he may purchase that product and form DCSRV i. But in SAV the value of the material should be same that is equal to the previous material which was entered in the voucher by mistake. Direct Consumption Store Receipt Voucher.
Store Transfer Voucher is used in case of transferring the material from one store to another. One is for Aonla-1 Unit and second for Aonla-2 Unit. Thus STV is used when we transfer the input material from one store to another. STV are of two types: 1) 2) STV(in) STV(out) . In Aonla-2 store generally catalyst are stored. As we know that there are two stores in IFFCO.
Code department See. e by MGR/ MGR(S) Sr. Qty Reqd . Deptt.O. Material Code 1 2 3 4 Please use one voucher for Hash Total max.M.L.O. Job/ work order Cost center Exp. P.STORE ISSUE VOUCHER No. Qty Issued Balanc Rs.S. S no./ S. four items Preferable same group Authorised by Received by Name Issued by Kardex posted Checked by Description U.S. Posting J. Designation . P.
S.L.no. Code department See.INTERNAL STORE RETURN VOUCHER ISRV No. SIV No.New/Serviceable/Recondition/Scrap/Empty cylinder Inspected by Authorised by Name Returned by Received by Kardex Posted P. Material Code Description Unit Qty Retur n Qty Receive Balance Rs. Date Date Job/work order Vendor Code Exp. Posted by Certified by Designation . P. S. 1 2 3 4 Reason for Return.
MGR(S) P.L.M.S. P. Job/ work order Cost center Exp. Material Code 1 2 3 Description U.S.STORE ISSUE VOUCHER CONTRACTOR No. by MGR/Sr. 4 Please use one voucher for max. Qty Issued Balance Rs. S. Code department See.O. four Hash Total items Preferable same group Authorised by Received by Issued by Kardex posted Checked by J.O. Qty Reqd./ S. Deptt. Posting . no.
& ABNL ABB Ltd. No. CRR Date RECD Date CHALLAN/BILL No. Transporter S.Name Designation INDIAN FARMERS FERTILISER COOPERATIVE LTD. Value Inspection remarks PO SNo Card balance No Po: Challan: Received: Accepted: Rejected: DIS/REJ No.No. Date:. AONLA UNIT STORES RECEIPT VOUCHER SRV NUMBER DATE CRR NUMBER SRV PREPARED: PO Date GR/RR No. RR DEPT CODE: DEPT Name . FORM 31 No. ITEM CODE Freight Paid From: Truck/Trailer/Wagon FARIDABAD DESCRIPTION Unit Qty.
No. DEPT CODE: DEPT Name . GR/RR No. INDIAN FARMERS FERTILISER COOPERATIVE LTD. Date:. AONLA UNIT DIRECT CONSUMPTION STORE RECEIPT VOUCHER DCSRV SRV NUMBER DATE CRR NUMBER SRV REF: PO No. DESCRIPTION IFPH IFFCO PHULPUR UNIT Freight Paid From: TRK/WGN PHULPUR Unit Qty.& Date Inter unit trans. FORM 31 No. Value Inspection remarks CRR Date RECD Date CHALLAN/BILL No.PO SNo Card balance No Po: Challan: Received: Accepted: Rejected: DIS/REJ No. Transporter S.
NO. M12*165MM 12*165(SS304) LONG PT.BN PO SNo No Po: Challan: Received: Accepted: Rejected: DIS/REJ No. code INDIAN FARMER FERTILISER COOPERATIVE LTD.PO SNo BOLT WITH NUT SIZE No Po: Challan: Received: Accepted: Rejected: Exp. AONLA UNIT SAV 089UYW008 DATE : 8/6/2005 NUMBER: STORES ADJUSTMENT VOUCHER . Exp. Code DIS/REJ No.
E Stock -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------SIGN INDENTER OFFICER STORE KEEPER MANAGER STORE STORE STORE .----------------------------------------------------------------------------------------------------------------------------------------------------------FROM TO ----------------------------------------------------------------------------------------------------------------------------------------------------------Sno Code No.
PKD. WORKS RAMPUR ROAD.NO: AUTHORITY DISPATCH:GM S.B. SIV NO: SR.BY MR MR MR PREP.O/W. SIGNATURE& STAMP RECEIVER‟S 4) INDENTOR 5) G. MANAGER STORES FREIGHT THE AFORESAID ITEMS HAVE BEEN RECEIVED IN GOOD ORDER & CONDITION COPY TO: 1) CONSIGNEE 2) TRANSPORTER 3) CM(F &A)/ INSURANCE .O.M. BY -DO-DO-DODESPATCH THROUGH: DOOR DELIVERY RR/GR NO: FOR GATE PASS: PKGS COST: RS.NO 1 DESCRIPTION 2RE-69 ROUND RAR(5 NO) QUANTITY UNIT MR REMARKS FOR MACHINING 2 3 4 CASE MARK DIMENSIONS& TOTAL NO PKG NET WT.O.DESPATCH ADVICE NO: TIN NO: KER ENGG. BAREILLY C.APP./W.GUNJ. BAREILLY P.FILE .
HARRIS GANJ KANPUR FAX: CRR NUMBER: SUB: OUR P. NO:4410/1294/WS0137//071125 YOUR REF/INVOICE/BILL.No Material Description Desp. 1. The packing case/s was/were received in sound/broken condition. S.REJECTION/DISCREPENCY REPORT REF: M/S AB SALES & SERVICES 365. On opening the case/s and checking the contents the following discrepencies have been observed. 2. DATE: DATE: DATED: Please refer to the supply of materials against your invoice/Challan No.CHALLAN NO. Received Excess Short Rejected Unit QUANTITY Remarks .O. as mentioned above. 10/SP/TAX/08 RR/LR NUMBER: GR 8319469 Transporter: SOUTH EASTERN ROADWAYS BOMBAY Dear Sir.
Being excess supply than our order quantity. Dispatch replacement against breakages/unacceptable material. MANAGER (STORES) e-Mail: Fax: Through E-proc Phone . material has not been accepted. 4. Inform disposal action for breakages/unacceptable material. Make good of shortages. For INDIAN FARMERS FERTILISER COOP. Cost of damage if any_____________________________________________ Payment Terms: yours faithfully.ACTION REQUIRED BY YOU YOU ARE REQUESTED TO:1. 2. 3.LTD. Location CH.
No. with earliest delivery. Quantity 220 Unit MT . P. S. Bareilly TENDER ENQUIRY MPR No 080380 Enquiry No: 6000/672/UT0044/IE/080308(*) This Enquiry is due on 14/07/2008 Desired Delivery: 4 Weeks INDENTOR‟S COPY UTILITIES DEPT Enquiry Type Single Stage Dear Sir. Please submit your Sealed Quotation.INDIAN FARMERS FERTILISER COOPERATIVE LIMITED Aonla Unit. 1 Item Code Description DC Liquid Chlorine 99% pure as per IS code 646/1988(latest version) in IFFCO. as per terms and conditions and specification given below and enclosed herewith. IFFCO Township.O.
Add: 803-4..O. Your Quotation: Our Enquiry No: Delivery Delivery Period. Please arrange to supply the following as per your quotation referred above subject to conditions mentioned herein and enclosed herewith. Consignee: Destination: Dear Sir. shall furnish a Performance Bank Guarantee equivalent to 5% of the P. value in our Performa enclosed. Nationalised/ Scheduled Commercial Bank/ Cooperative Bank who are members of IFFCO‟s consortium of Banks (Except other cooperative and Gramin Banks) having branch in India and be valid to cover the guarantee period with a claim period of further six months. Nehru place City: New Delhi E-mail: Code: JASU Test Copy Pin: 110019 Order No. This bank guarantee shall be issued by any State Bank of India and its associates.No 1 2 Total Value Price Basis : Ex-Works Ahmadabad ………………… Description Quantity Unit Rate Amount P& F Charges : P&F Charges @ 2. S.O. INDIAN FARMERS FERTILISER COOPERATIVE LIMITED PURCHASE ORDER Thru Courier M/s : JASUBHAI ENGINEERING PVT. Chiranjiv Towers.O.PERFORMANCE BANK GUARANTEE: The seller on award of P.00% extra ./W.
Excise Duty Sales Tax : Extra as applicable against documentary evidence present rate is @ 14. Proprietory. MPR Description: Procurement of official furniture for the year-2008 Brief Justification: Office furniture are required for different section/deptt. capital.: On freight to pay basis. Supply.. IFFCO-AONLA MATERIAL PURCHASE REQUITION: Budget Code SanctionedAmt UtilisedAmt This MPR(Rs.. Ordinary. D. Lucknow. ……….42% : Extra as applicable against form „C‟ Freight Codn. Co. ………… ………. Single stage Indentor: ADMN SECTION Suggested Vendor Ctegory: Godrej & Boyce Mfg. Domestic..) Balance Issue-Date: Expected: Dly Date: N*.05 ………. Last Pos/WOs Ref Nos: Last Pos/WOs total value: . Class: Stock.C..
S.No Item code Material decription Unit Quantity required Inventory levels Value Stk-oth.: 2200/2171 .unit/ last 3yr consumption 1 2 3 DC DC DC MPR-NO.: 080472 Dept-Ref-No.
ANALYSIS FORMULAE USED FOR ANALYSIS INVENTORY TURNOVER OF RAW MATERIAL =raw material consumed / total average inventory HOLDING PERIOD(IN MONTHS) = 12/ inventory turnover ratio .
e.05 lakhs.this was due to drastic increase in its issue by 88.I INVENTORY . in 2008 i. PIPES In 2007 the inventory of pipes was 104.this shows that from 2008 to 2009 inventory is increasing but issue decreases that means there was high receipts in this year i. by 35.8% in 2008. lubricants. general items that plays a significant role in increase or decrease of its inventory. fittings. valves. Total inventory of general stores was 1527.37%. This was due to less receipt and increase in issue by 61.63% in 2010. to 136.47 lakhs in 2007 that increased to 1678.89% and in 2009 it increased by 53% and then there was a decrease by 5.05 lakhs. It contains pipes.e. FITTINGS Its inventory increased from 114.32% then in 2009 it increased to 184.GENERAL STORES It has the highest value in total inventory and plays significant role in increase or decrease of total inventory. That increased by 76.76%.AONLA.91%. electric items.63% and in 2010 it decreased by 15.43% and issue also decreased by 4% due to which the inventoty turnover decreased and holding period increased as it is a inverse function of inventory turnover.35%. by 19.02 lakhs.51 lakhs i. by 9. this was due to unused items of ESP project are received by stores and in 2008 CEP project was finished that caused in decrease in issue. In 2009 the inventory of pipes again increased by 31. this was due sudden decrease in issue by 84. In 2010 the inventory went down by 3.97%. VALVES .e.e. more purchase of pipes inspite of its less usage because of which inventory turnover decreased in 2009 and holding period increased.17 lakhs i.
in 2009 its increase was by 3. GENERAL ITEMS These are the items that are used all the plants and offices of this unit.3% .49%in 2010 due to which its inventory turnover increased and holding period decreased.As in above cases its inventory also first increased from 2007 to 2009 then decreased in 2010. in 2009 there was a increase in it by 105.28% and then in 2010 there was a fall in its inventory. It was 259. Due to high inventory and low issue its inventory turnover has a decreasing trend and its holding period increasing.05% in 2008.96%. In 2009 it was increased by 20.65%. Its inventory was 129.946% and in 2010 it went up by11.89 lakhs i.38% because of that its inventory came down in 2010 and inventory turnover increased and thus holding period decreased. Its inventory was 138. then in 2009 and 2010 there was an .e. by 86. LUBRICANTS There was a sudden fall in the inventory of lubricants from 2007 to 2008 .99 lakhs in 2007 that increased by 52.09 months that is quite a high time period.46% and in 2010 it again decreased by 8.This was done due to the reason that it takes many days in purchasing items and this inventory has to be maintained for sudden demand of these items. In 2010 its issue increased by 112.26 lakhs in 2007 that increased by 182. As there is decrease in usage of items the inventory turnover also decreased in 2010 and the holding period increased to 109.62 lakhs in 2008. Issue of it decreased by 35.01%. Its inventory was 189. There was decrease in issues.98 lakhs in 2007 and in 2008 it came down to 33.70 lakhs and it came down to 97. ssssELECTRIC ITEMS Same is the case of electric items. this was because its issue first increased in 2009 and then decreased in 2010. There was continuous increase in its inventory even when its issue was going down that shows there was regular purchase of these items even when they are not in so much use.
02 lakhs in 2008 that decreased by 41. FIRE AND SAFETY Its inventory increased and then there was a sudden fall in 2009.increase in it. Due to decrease in inventory turnover value its holding period increased.56%. ABRASIVES. SPECIAL FITTINGS. But due to the time taken by purchare process there may be shortage of these items when they are needed so there regular purchase is being done. CIRCLIPS. SAND. It went up by 17.23% and then increased by 13. BEARING. FASTENERS.36 lakhs in 2007 and was increased by 13. PAINT. 2010 is in increasing pattern.e. SCRAP MATERIAL are having zero or very less inventory that does not effect the otal inventory very much. In 2010 inventory goes up but issue value came downbut the holding period was almost same. HOSES BELT.01% . The issue values are decreasing with increase in inventory that shows there is not better utilisation of kept inventory.24% in 2009 and in 2010 there was a down fall in its inventory by 5. LAB CHEMICALS. although its average inventory for 2008. GLASS WEARS are having less inventory and are having almost same level of inventory and there issue are also less and of almost same values for the 3 years. Groups like FLANGS. Because of above reasons the inventory turnover first decreased in2009 then increased in 2010 and the vice versa for holding period.47. TYRES. 2009. BOLT. Issue of it also decreased in 2009 but the inventory turnover remains same for 2008and 2009 i. TOTAL GENERAL STORE it was 1269.Its issue was 1249. BELLOWS.NUTS STUD. this is so because the recipts decrease d with issue.31% in 2008. TUBES. WELDING MATERIALS. . TOOLS AND SPARES . FILTERS.
ESP total is decreasing .51% but issue is decreasing over these years so inventory turnover also decreased. GENERAL ITEMS are having no or negligible inventory and PIPES. WELDING MATERIALS. OFFSITE. GASKETS. .56% in 2008. 2009. STEAM & POWER. INVENTORY . FITTINGS. Its issue also decreased.53% in 2010. there was a decrease by 1. SHEET. AMMONIA Inventory is increasing for 2008. UREA Its inventory increased till 2009 and then there was a sudden fall. In 2009 it increases by 84.It has a trend of decreasing inventory over these 3 years. PA. It has major inventory of AMMONIA. PRODUCT HANDLING . Its inventory was 640. RINGS. GENERAL STORES – ESP FILTERS. And an increase in issue was 838. VALVES are having decreasing trend of inventory and trend of increasing issue .45% and in 2010 it goes up by 6. There was decrease by 99.Thus inventory turnover increases and holding period decreased.SPARES IN STOCK It has the items that are used specifically by different plants. thats why its inventory turnover is decreasing.21% due to which its inventory turnover increased in 2009 and holding period decreased for that period. These are the items that are not of regular use but then also its inventory has to be maintained.its issue values are also decreasing.4% in 2010 from 2009. 2010 is increasing constantly. Thus its inventory turnover increased .45 lakhs2007 That comes down by 4. UREA.
75% in 2010. in 2009 by 3. . Its issue decreased in 2009 and increased in 2010 by 201. PRODUCT HANDLING It has a trend of decreasing inventory over 3 years i.89%. in 2009 it increased by 136.52% and then decreased by 99.72% in 2008 . INVENTORY – STEEL It has decreasing inventory in 2008. Its issue first increased from 2008 to 2009 and in 2010 it suddenly decreased due to that its turnover is more in 2009 . thus its inventory turnover increased in 2010. TOTAL SPARES It was 1703. Its issue increased by 202.89%. its inventory turnover increased in 2009. increased by 35.LOOSE TOOLS IN STOCK Its inventory is increasing over the yearsand issue is decreasing that shows purchases are being done even when its usage rate is low as it can be demanded any time .01% and in 2010 by 20. there was less receipts but its issue increased by 70.e. Its issue increased by 412. INVENTORY .98% and then there is a decrease in it.CATALYST IN STOCK Its inventory was decreased by 86.02% .1%.OFFSITE Its inventory has an increasing trend. In 2008 it increased by 18.15 lakhs in 2007 that decreased by 5.62% and then decreased by 73.48% and in 2010 it increased by 12. Thus its inventory has to be maintained anyways.55% in 2010 due to that inventory turnover first increased in 2009 and then decreased in 2010.4% in 2010 due to that its inventory turnover for this year increased. INVENTORY .62% in 2009 and by 33.5% .
increased by 14. It decreased by 2. AONLA –II INVENTORY .23% in 2008 . It has a high value of issue in 2008 when there was CEP project running and after that it decreased. this increase was due to decrease in issue and increase in receipts .INVENTORY – TIMBER Since there is very less usage of timber so. TOTAL INVENTORY In 2007 it was 3731.28% in 2009 and in 2010 it increased by 5.GENERAL STORE .33%. Its reason may be that the CEP project was finished in 2008 that results in decrease in issue and thus its inventory turnover decreased and its holdind period increased but with small rate. its inventory is kept very low and its issue is also less.88 lakhs.
67%.36%. PIPES Pipes plays a significant role as it has high inventory above all other items.26%. Its inventory was 635.26%. In 2008 it was increased by 19% .23%. In 2007 the inventory of pipes was 128. This was due to fewer receipts. To make this at constant level its inventory should be kept at moderate level. Inspite of this its issue decreased over last 3 years. its issue decreased by 66. Its issue decreased over 3 years. Inspite of decrease in issue its purchase is increasing due to which inventory turnover decreased and holding period increased. In 2009 there was a drastic decrease in issue by 78.76% in 2008.93 lakhs and it increased by 37.84 lakhs in 2007 that increased by 11.43%. in 2009 by 62. In 2009 it increased by 86. in 2010 by 68. This was due to increase in purchases and receipt due to completion of project CEP in 2008. VALVES It has a trend if increase in inventory over last 3 years.77%.68% and then in 2010 it decreased by 15.577%. Increase of inventory in 2008 was due to finished projects. In 2009 it was decreased by 35.95% and it reduced by 20. And it has a trend of increase in holding period. we see that even when issue is decreasing inventory is increasing due to which its inventory turnover decreased and holding period increased. In 2008 it was increased by 16. again in 2009 it increased by 59.41% and in 2010 by 10.36%.77%.87% in 2008. ELECTRICAL ITEMS . FITTINGS Inventory of fittings increased. In 2010 its inventory goes down by 5. Its inventory turnover has a trend of decreasing values. in 2009 by 48% and there was a negligible decrease in it in 2010. In 2010 it decreased by 60.General items plays important role in increase or decrease of its inventory. Due to above reasons its inventory turnover ratio decreased constantly over last 3 years and holding period increased.
valves plays significant role . This was to clear out all its inventory by issuing it. On the other hand its issue increased by 314. . FILTERS. INDUSTRIAL FUEL. Same was the case with issues it was either 0 or very low. there was a small change in inventory ans issue so its inventory turnover is almost same for these years.9 lakhs that decreased by 5. fittings. Its inventory turnover decreased to . In 2010 its inventory goes down by 16.08% .In 2007 its inventory was 52.08%. There was a decrease in 2008 in its inventory by 1. Total inventory of spares has a increasing graph over last 3 years.43% and issue increased by 94.18 lakhs in 2007. In 2007 it was 1258.66% in 2008.INDUSTRIAL GASES are having zero or very low inventory. BELLOWS.GENERAL STORES – ESP It was 131. in 2009 by 32. LAB CHEMICAL.09 in 2010. ABRASIVE.612% and in 2010 it increased by 22. GLASS WEARS. This shows that these items are either not in regular and frequent use or they are used in less quantity that is why its inventory is not required in heavy quantity.56% and came down to 0 in 2009.11 in2009 and then increased in 2010 to . FIRE AND SAFETY ITEMS .04% in 2009. INVENTORY. SYNTHETIC PAINTS.53% in 2009 and 13. Its issue increased by 13. STRAINER. GENERAL ITEMS In 2008 its inventory increased by 22. In this group pipes.53 lakhs and increased by 21. 7.55%.99% in 2010.93%.97% and then Decreased by 4.804% and its issue decreased by 69.8% due to which inventory turnover increased in 2009 and decreased to . Its issue increased by 6049.41% in 2009 and decreased by 76. in 2009 increased by 9.03% in 2008.21. but at the end inventory of all these items under ESP becomes 0.2%. flanges.
77 lakhs in 2007 that was increased by 15/145% in 2008 and then a sudden fall in 2009 by 45. The fluctuation in inventory is not very high thus the inventory turnover has not been fluctuated very much.08% and in 2010 it decreased by 87. In 2009 issue decreased by 8.SPARES IN STOCK AMMONIA It has the highest inventory above all other items under this group.45% in 2010.7% in 2008.01% in 2009 and by 9.77% and then again decreased in 2010 by 4. by 37. As in the case of ammonia it also has a increase in issue in 2009 and decrease in 2010.96% and in 2010 it increased by 23. In 2007 it was 782. In 2009 it was increased by 35. this shows there not proper utilisation of items under this group.03% and decreased by 2% in 2010. OFFSITE Its inventory was 99.7%.34% and then there was a sudden fall in 2010 96. LOOSE TOOLS IN STOCK . Its issue is lower than other items in this group. inventory increased inspite of decrease in issue due to which the inventory turnover decreased .52%.34% in 2010.39 lakhs in 2007 and increased by 1.INVENTORY. in 2008 it increased by 25.54% and in 2010 by 14. Its inventory increased over last 3 years.15 lakhs. in 2009 it increased by 4.11 lakhs that increased by 18.56%. Its issue value has a increase in 2009 by 571. UREA It also has trend of increasing inventory over last 3 years. In 2007 it was 306.55%. Its inventory turnover decreased in 2010.1%.09% and then increased by 60.87%. Its issue value increased drastically in 2009 by 823. PRODUCT HANDLING It was 55. In 2009 it went down by 7.55% in 2008.
In 2009 it increased by 43. Its inventory turnover increased in 2009 and decreased in 2010.014% in 2010.55 lakhs and decreased by 42.CATALYST IN STOCK In 2007 it was 406.93 lakhs in 2007 and it increased by 7. due to which inventory turnover is very low. OVERALL INVENTORY The inventory was 2337.30 lakhs and increased by 20. INVENTORY STEEL-STRUCTURAL It has increasing trend over the last 3 years. INVENTORY CEMENT There is no inventory of cement at all that means there is no or very low usage of it. Its issue increased by 89. Its holding period decreased in 2009 and then sudden increase in it in 2010.Its inventory is constant over last 3 years .88% in 2008.8% in 2009 . increased by 107% in 2009 and decreased by 14. As holding period for catalyst should not be very high .62% and in 2010 it decreased by 7. due to that its inventory turnover increased in 2009.06% in 2010. increased by 301. .97% in 2009 and in 2010 it decreased by 47. even the issue was in 2007 of low value. INVENTORY . Its issue increased by 188.07%.785 in 2009 and in 2010 it decreased by 8.44%in 2008. In 2007 it was 34.04% in 2008.123%. There was 0 or negligigle issue in 2009 and 2010.77%. in 2010 it decreased by 73.01% in 2009 and decreased by 47.for this its inventory should be maintained to desired level. Its issue increased by 164.12%. Due to this its inventory turnover is more in 2009 and there was a decrease in 2010 in inventory turnover.
TREND FOR TOTAL INVENTORY IN AONLA I AND AONLA II TREND OF INVENTORY IN GENERAL STORES AND SPARES IN AONLA I AND AONLA II .The inventory of Aonla I is much more than of Aonla II even though their production capacity is same . this is because some items are stored in aonla I that are issued for aonla II also.
6000 5000 4000 3000
spares(in lakhs ) aonla II spares(in lakhs ) aonla I general stores( in lakhs) aonla II general stores( in lakhs) aonla I 2007 2008 2009 2010
INVENTORY OF AONLA I
1% 4% 3%
1% raw material stores and spares 30% loose tools
chemicals & catalyst
packing material construction material
53% stock in process
0% raw material stores and spares loose tools 46%
chemicals & catalyst
stock in process
raw material stores and spares loose tools
chemicals & catalyst
3% 1% 1% 7%
packing material construction material 73%
stock in process
0% raw material 7% stores and spares loose tools
13% 1% 67%
chemicals & catalyst
packing material construction material
stock in process
INVENTORY OF AONLA II 2007 0% 4% 16% raw material 0% stores and spares loose tools 35% chemicals & catalyst construction material 42% 0% 3% packing material stock in process finished goods .
1% 1% 0% 1% 0% 2008 raw material stores and spares loose tools chemicals & catalyst 0% 8% construction material packing material 89% stock in process finished goods 0% 4% 0% 2% 0% 2009 raw material stores and spares loose tools 31% 63% 0% chemicals & catalyst construction material packing material stock in process finished goods .
2010 0% 2% 0% 14% 0% raw material stores and spares loose tools chemicals & catalyst 19% construction material 65% packing material stock in process 0% finished goods Conclusion and recommendations .
In iffco ERP should be applied. Poor quality material can halt the production.the delivery of material is syncronised with the manufacturing cycle and speed. There is no use of JIT due to which stores has to maintain high inventory of those items also that are not in regular use.this is desired in view of the financial considerations involved in the problem and also because of need for cordinating the different kinds of of inventories and conflicting viewpoints of different departments. This system requires perfect understanding and coordination between the manufacturer an dsuppliers in terms of the timing of delivery and quality of the material.The basic objectives of inventory management appear to be conflicting in nature. Enterprise resource planning (ERP) is an Integrated computer-based system used to manage internal and external resources including tangible assets. Decisions relating to inventories should be taken by higher authority of the organization as well as departments. JIT system eliminates the necessity of carrying large inventories. As in maintainance of inventory two types of cost incurres in it holding cost and carrying cost. JIT (Just In Time) is a system in which material or the manufactured components and parts arrive to the manufacturing sites or stores just few hours before they are put to use. The company should use JIT to control and lower their inventory. Responsibility for control of inventories is of the top management. It is a software architecture . financial resources. and human resources. which calls for a greater concentration of efforts on inventory items accounting for the bulk of usage value.ABC analysis based on this emperical reality advocates in essence a selective approach to inventory control. materials. But JIT can not be implemented here for raw material used here . and thus saves carrying and other related costs to the manufacturer. As lower inventory will result in reduction in carrying and holding cost incurred in it.Inventories should increase or decrease in amount or time as related to sales requirement and production schedules. In most inventories a small proportion of items accounts for a very substantial usage(in terms of monetary value and annual consumption)and a large proportion of items accounts for a small usage. The items whose inventory are high but issue are less should be tried to reduce .though decisions in this regard might will be based upon the combined judgement of the production manager.the sales manager and the purchasing manager. So to lower it adequate level of inventory should be maintained. The JIT inventory system compliments the Total Quality Management (TQM).
ERP vendors are also moving toward better integration with other kinds of information security tools. Built on a centralized database and normally utilizing a common computing platform.in Annual report 2010 of IFFCO Accounting Manual of IFFCO NIT of purchase department of IFFCO I M Pandey . and insider crime.Iffco. might involve a disgruntled employee intentionally modifying prices to below-the-breakeven point in order to attempt to interfere with the company's profit or other sabotage. ERP systems consolidate all business operations into a uniform and enterprise wide system environment.nic. such as industrial espionage.whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. such as embezzlement. A datatampering scenario. Some security features are included within an ERP system to protect against both outsider crime. REFRENCES www. for example. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind.
1% 3% 1% 1% 7% 0% 14% 2009 raw m aterial stores and spares loose tools chem icals& catalyst packingm aterial construction m aterial 73% stockin process finished goods .
2010 1% 3% 0% raw material 8% 7% stores and spares loose tools 13% 1% 67% chemicals & catalyst packingmaterial construction material stock in process finished goods INVENTORY OF AONLA II .
2007 0% 4% 16% 0% raw material storesand spares loose tools 35% chemicals & catalyst construction material 42% 0% 3% packingmaterial stock in process finished goods 1% 1% 0% 0% 8% 1% 0% 2008 raw material stores and spares loose tools chemicals & catalyst construction material packingmaterial 89% stock in process finished goods .
0% 4% 0% 2% 0% 2009 raw material stores and spares loose tools 31% 63% 0% chemicals & catalyst construction material packingmaterial stock in process finished goods .
2010 0% 2% 0% 14% 0% raw material storesand spares loose tools chemicals & catalyst 19% 65% 0% construction material packingmaterial stock in process finished goods Conclusion and recommendations .
The company should use JIT to control and lower their inventory. JIT (Just In Time) is a system in which material or the manufactured components and parts arrive to the manufacturing sites or stores just few hours before they are put to use.the sales manager and the purchasing manager. There is no use of JIT due to which stores has to maintain high inventory of those items also that are not in regular use. Decisions relating to inventories should be taken by higher authority of the organization as well as . Poor quality material can halt the production.though decisions in this regard might will be based upon the combined judgement of the production manager. Enterprise resource planning (ERP) is an Integrated computer-based system used to manage internal and external resources including tangible viewpoints of different departments.Inventories should increase or decrease in amount or time as related to sales requirement and production schedules. The JIT inventory system compliments the Total Quality Management (TQM). But JIT can not be implemented here for raw material used here . So to lower it adequate level of inventory should be maintained. This system requires perfect understanding and coordination between the manufacturer an dsuppliers in terms of the timing of delivery and quality of the material. In most inventories a small proportion of items accounts for a very substantial usage(in terms of monetary value and annual consumption)and a large proportion of items accounts for a small usage. As lower inventory will result in reduction in carrying and holding cost incurred in it. As in maintainance of inventory two types of cost incurres in it holding cost and carrying cost. and thus saves carrying and other related costs to the manufacturer. The items whose inventory are high but issue are less should be tried to reduce .The basic objectives of inventory management appear to be conflicting in nature. Responsibility for control of inventories is of the top management.this is desired in view of the financial considerations involved in the problem and also because of need for cordinating the different kinds of of inventories and conflicting departments. JIT system eliminates the necessity of carrying large inventories. which calls for a greater concentration of efforts on inventory items accounting for the bulk of usage value.ABC analysis based on this emperical reality advocates in essence a selective approach to inventory control. In iffco ERP should be applied.the delivery of material is syncronised with the manufacturing cycle and speed.
ERP vendors are also moving toward better integration with other kinds of information security tools. such as industrial espionage. financial resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. and insider crime. for example. might involve a disgruntled employee intentionally modifying prices to below-the-breakeven point in order to attempt to interfere with the company's profit or other sabotage. materials. REFRENCES • • • • • www.nic. Built on a centralized database and normally utilizing a common computing platform. such as embezzlement. ERP systems consolidate all business operations into a uniform and enterprise wide system environment. A datatampering scenario. and human resources.Iffco.in Annual report 2010 of IFFCO Accounting Manual of IFFCO NIT of purchase department of IFFCO I M Pandey . ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind.assets. Some security features are included within an ERP system to protect against both outsider crime.