A

PROJECT REPORT

On

“A STUDY ON INVENTORY MANAGEMENT IN WIRTGEN INDIA

PVT. LTD. PUNE”

By

Praveen Kumar Mishra

For the course of MBA (Operations & Supply Chain)

Under the guidance of

Prof. V. I. PATIL

Submitted to

“SAVITRIBAI PHULE PUNE UNIVERSITY”

IN PARTIAL FULFILMENT OF THE REQUIREMNT FOR

THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

Pune District Education Association’s

COLLEGE OF ENGINEERING, MANJARI (Bk.), PUNE

(2023-2024)

1
 Pune District Education Associations

Collage Of Engineering, Manjari (BK), Pune 412307

CERTIFICATE

This is to certify that “Praveen Kumar Mishra” is a bona-fide student this College As a part of
Pune University curriculum, the student has undergone study project in “A Study on Inventory
Management in Wirtgen India Pvt. Pune” for the partial fulfillment of the requirement for the award
of the Degree of “Master of Business Administration (MBA)” under “Savitribai Phule Pune
University” for the academic Year 2023-2024

Project Guide H.O.D Principal

Prof. V. I. Patil Dr. R. V. Patil Dr. R. V. Patil

2
COMPANY CERTIFICATE

3
 Declaration

I hereby declare that the project titled “A Study on Inventory Management in Wirtgen India
Pvt. Ltd. Pune” is a genuine work done by me and all the information collected is authentic and
true to the best of my knowledge. The finding of this report is based on the information collected
by me. This project was undertaken as a part of course curriculum of MBA program at College of
Engineering, Manjari (BK), Pune -412307,

Mr. Praveen Kumar Mishra

Student name & Signature

Date

Place: Pune

4
 Acknowledgement

It is a matter of grate satisfaction and pleasure to present this report on “A Study on Inventory
Management in Wirtgen India Pvt. Ltd. Pune”. I take the opportunity to owe my thanks to all
these involved in my project. This project could not be completed without the guidance of my
guide Prof. V. I. PATIL and head of department Dr. R. V. Patil Their timely suggestions &
encouragement made it possible for to complete this project for me. All efforts might have gone
in vain without their valuable guidance.

I also thanks to Mr. Shaukat Shaikh (Senior Manager) Wirtgen India Pvt. Ltd. For
give me an opportunity to work. I take this opportunity and privilege to articulate my deep sense
of gratefulness to the Branch head and the staff of the Wirtgen India Pvt. Ltd. company for their
timely help and positive encouragement.

Praveen Kumar Mishra

MBA (Operations)

Place: Pune

5
 Index

Chapter No. Particulars Page No.

1 Executive Summary 7

2 Company Profile 9

3 Objective And Scope of Study 17

4 Theoretical Background 22

5 Research Methodology 34

6 Data Analysis & Interpretation 41

7 Limitations Of the Study 55

8 Suggestions & Recommendation 56

9 Bibliography 58

6
Executive Summary

7
In the Inventory Management the basic financial aim of an enterprise is maximization
of its value. At the same time, a large both theoretical and practical meaning has the
research for determinants increasing the firm value. Most financial literature contains
information about numerous factors influencing the value. Among those factors is the
net working capital and elements creating it, such as the level of cash tied in accounts
receivable, inventories and operational cash balances. A large majority of classic
financial models’ proposals, relating to optimum current assets management, were
constructed with net profit maximization in view.

Inventory changes (resulting from changes in inventory management policy of the firm)
affect the net working capital level and the level of operating costs of inventory
management in a firm as well. These operating costs are result of storage, insurance,
transport, obsolescence, wasting and spoilage of inventory.

At Wirtgen India Pvt. Ltd. i studied the overall aspects of the inventory management.
The main focus of the study is to study the existing inventory system at the firm.

Successful control management involves balancing the costs of inventory with the
benefits of inventory. Many small business owners fail to appreciate fully the true costs
of carrying inventory, which include not only direct costs of storage, insurance, and
taxes, but also the cost of money tied up in inventory. This fine line between keeping
too much inventory and not enough is not the manager's only concern.

8
Company Profile

9
Wirtgen Group:

The Wirtgen Group – a strong partner you can rely on.

The strength of the Wirtgen Group follows from the excellence of its four core brands
with their unique wealth of experience. Together, Wirtgen, Vögele, Hamm and
Kleemann unite a long tradition and great prowess in the art of German engineering.
Our Group operates in two business areas and is well positioned in both:

Wirtgen Road Technologies comprises technologies for the new construction and
rehabilitation of roads.

Wirtgen Mineral Technologies encompasses technologies for the mining of mineral

deposits and for the processing of mineral raw materials and recycling materials.

In India, we can offer you our world-renowned service at no less than twenty different
locations. The expertise of more than 500 professional employees is available to you
24 hours a day.

We provide in-depth sales and applications advice on machines and original parts,
offering you a competent job site and workshop service. You can rest assured that all
Wirtgen India employees collaborate closely to ensure swift decision-making and fast
troubleshooting at all times. True to our motto “Close to our customers”, we are right
there, wherever you need us!

10
Brands:

Wirtgen: -

Cold milling machines:

With 7 types of machines and working widths ranging between 35 cm and 2.0 m, our
cold milling machine range in India is the broadest in the sector – designed to meet your
challenges in daily operation. As it is typical for Wirtgen, each of these cold milling
machines boasts a very high performance plus an optimum milling result.

Cold recyclers:

Path breaking cold recycling technologies supplement our range in the asphalt sector.
Reusing the milled material, these efficient road rehabilitation processes save on
resources and costs.

Soil stabilizers:

Premium-quality roads can only be built on stable base layer. Wirtgen soil stabilizers
can

create an optimum base layer, even on tough terrain, by mixing in limestone or concrete.

Slipform pavers:

Whether you are constructing a road, a runway or monolithic profiles, Wirtgen slipform
pavers operate extremely accurately thanks to precise levelling – quality that pays off.

Surface miners:

11
Wirtgen surface miners cut, comminute, and convey a wide range of materials – all in
a single pass. This saves costs. Another advantage is the high purity of the mined
material when working on thin seams – thanks to the adjustable cutting depth.

Vogele:

Pavers from Vögele –

High quality for precision paving.

With 11 pavers and a wide selection of screeds, Vögele is offering a full product range
for India, comprising modern machines with a width of between 5 and 16 m for every
paving task.

Intuitive operation for fatigue-free working.

Whether they are wheeled pavers for use on confined job sites or tracked pavers with a
high laydown rate and traction for large pave widths, all the pavers in the “dash 2” and
“dash 3” generations are equipped with the well-structured operating concept ErgoPlus.

Hamm:

Rollers from Hamm – Innovative technology for optimum compaction.

Outstanding performance data combined with a low fuel consumption and an award-
winning design: these are the hallmarks of Hamm’s rollers for India.

A wide product range – tailored to your applications.

12
Apart from tandem rollers, Hamm’s wellrounded product range also includes the
perfectly coordinated range of rubber-wheeled and static three-wheeled rollers.
Compactors with smooth roller drums or pad foot roller drums for earth-moving round
off the range.

Kleemann:

Crushing and screening plants from Kleemann – Mobility which will cut your
operating costs.

Kleemann’s crushing and screening plants for the processing of mineral raw materials
and the recycling of construction materials have a particularly accurate and robust
design.

Services:

ON THE JOB SITE OR IN THE WORKSHOP: OUR SERVICE IS RIGHT

WHERE YOU NEED IT.

Whether on your job site or in our workshop –our staff are at your service.

Whether you are using machines from Wirtgen, Vögele, Hamm or Kleemann –
Wirtgen India´s service engineers know your machines inside and out and can be
relied on to make the right moves in any repair or service situation. Our employees
continually increase and expand their knowledge – something which is particularly
important to us

13
and beneficial to you. This ensures that we can always keep pace with all the latest
technical developments.

Experienced service engineers provide direct on-site support.

Wirtgen India´s specially trained mobile service engineers provide support when
machines need to be up and running again quickly. They will travel to your business
premises or straight to the job site. These experienced helpers will rush to your aid,
even on remote job sites or during unusual working hours. The tools employed by our
excellently trained service fitters include WIDOS, the electronic documentation system
which contains all the detailed technical information on each type of machine, from the
operating manual and the hydraulic, electrical and hosing diagrams to the machine
specifications, safety manual and spare parts catalogue. Furthermore, mobile service
kits containing measuring instruments for electrical and hydraulic components
guarantee that any malfunctions are diagnosed quickly. The mobile workshops in our
wellequipped service vans also provide invaluable support. For an on-site service that
leaves nothing to be desired.

As per our mission “Close To Our Customer” drew us into the logistics business in
2010. The success of our internal strategic operation led our expansion to serve a
variety of corporate customers across many industries. In today’s increasingly
competitive business landscape, we take care of the entire span of transportation and
logistics needs so that our clients can focus on their core competencies.

We know the corporate world is fast-paced and stressful. Our experienced team
manages every logistics need so our clients can focus on their core activities. You’ll
find our satisfied customers across key industry verticals like Automotive, Consumer
Goods, Telecom, Financial Services, IT, and Infrastructure Development.

Vision:

To be India’s leading, most preferred, integrated logistics service provider.

14
Mission:

 To serve our customers in global markets, by providing creative, cost effective,

technology enabled solutions that continuously meet and exceed our customers’
expectations thus enhancing stakeholder value.
 To provide continuous opportunities for growth and knowledge enhancement to
our employees and business associates.

Also, to serve and give back to the communities within which we work, with integrity
and responsibility.

Core Values:

 Consider every customer a partner, evolving to make every customer a co-

owner.
 Be the standard by which competitors services are measured.
 Maintain the highest levels of professionalism, ethics, and integrity in whatever
we do.
 Social responsibility and inclusive growth.
 The growth, development, and dignity of our employees.

15
Management Team Wirtgen India:

Sr. No. Name Designation

1 Ramesh Palagiri MD & CEO Wirtgen India

2 Nilesh Jajodia Chief Financial Officer

3 RK Shaw Head - Technical Service

4 Sanjoy Saha Asst. General Manager- After Market Business Development

5 Aseem Dhingra General Manager- Sales & Service North

6 KP Shetty General Manager- Sales & Service West & South

7 Dhiraj Das Asst. General Manager- Service East

8 Rupesh Auti Dept. Manager – Logistics & Spare part

16
Objective And Scope Of Study

17
Meaning and Nature of Inventory:

Inventory can be referred to as sum of the value of raw materials fuels and lubricants,
spare parts, maintenance consumables, semi processed materials and finished goods,
stock at any given point of time.

In large company’s inventory place a most significant part of the current assets. The
business has about 15 to 30% of inventories in total assets.

Inventory is composed of assets that will be sold in feature in the normal course
of business operations. The assets which firms stores as inventory is anticipation
of need are raw materials, work in progress and finished goods.

Meaning Of Inventory Management:

Inventory management consists of maintaining for a given financial investment an
adequate of something in order to meet and accepted pattern of demand. Inventory
considers control over costs of inventory on one hand and handle the size of inventory
on other hand.
Controlling investments in inventories constitute crucial part in current assets.
An efficient inventory controlling system will decide,

 What to purchase.
 When to purchase.
 How to purchase.
 Size of purchase.
And from where to purchase (Suppliers)

The main purpose of inventory management is to ensure.

1. Required quantity of availability of raw materials
2. Minimize the investments in inventories
3. Maintain reasonable stock levels not excess or not under stocks

18
Inventory Control:

Inventory control is the system devised an adopted for controlling investments in

inventory. It involves inventory planning and decision making about the quantity and
time of purchase, fixation of stock levels, maintenance of stock records and continuous
stock – taking.

Objectives Of Inventory Control:

Inventory control includes not only of the physical stocks but also of the funds invested
on it.
That twin objectives of inventory control are,
1. To maintain a balanced inventory.
2. To keep the amount invested in inventory as low as possible without hampering either
flow of the production or deliveries of finished goods.

 To avoid both under stocking and over stocking of inventory.

 To eliminate duplication in ordering or replenishing stocks. This is possible with

the help of centralized purchasing.

 To ensure continues supply of materials, spares and finished goods so that

production should not suffer and any time and customers demand should also be met.

 To design proper structure for inventory management. A clear-cut

accountability should be fixed at various levels of the organizations.

 To ensure right quality goods at reasonable prices. Suitable quality standards

will ensure proper quality of stocks. The price analysis, the cost analysis will ensure
paying of proper prices.
 To facilitate furnishing of data for short term and long-term planning and
control of inventory.

19
Need For Inventory Management:
In this competitive business world, each and every business organization need
inventory management system for determining what to order, when to order, where and
how much to order so that purchasing and storing costs are the lowest possible without
affecting production and sales. Thus, inventory management control incorporates the
determination of the optimum size of the inventory-how much to be order and when
after taking into consideration the minimum inventory cost.

The overall inventory management includes design and inventory control organization
with proper accountability establishing procedure for inventory handling disposal
of scrap, simplification, standardization, and codification of inventories, determining
the size of inventory holdings, maintaining record points and safety stocks, economic
order quantity, ABC analysis and VALUE analysis and finally framing an
INVENTORY MANUAL.

Objective Of the Study:

The main objective of the project work is to study and analyze and preparation of
INVENTORY MANAGEMENT in Wirtgen India Pvt. Ltd.

The objectives are: -

1. To know about the Purchasing procedure of the inventories.

2. To study about classification and codification of inventories.
3. To analyze the records of stock levels.
4. To analyze about JIT and Two bin system of Wirtgen India Pvt. Ltd.
5. To know about the profitability of Wirtgen India Pvt. Ltd. throw inventory
management.

20
Methodology:

To attain the objective of studying the inventory of Wirtgen India Pvt. Ltd. The
information has been collecting two ways.
1 Primary data
2. Secondary data

Primary Data:
In Primary data the analysis of purchasing procedure, inventory data, inventory
turnover ratio, stock levels, ABC analysis, two bin system, JIT has made possible by
the discussions with various administrative executives and other concerned people of
Wirtgen India Pvt. Ltd.

Secondary Data:
The Secondary data has been collected from annual reports of organization, internet
(www.wirtgenindia.com) and books.

Scope Of the Study:

The topic titled “A STUDY ON INVENTORY MANAGEMENT is conducted in

Wirtgen India Pvt. Ltd. The scope of the study is limited to inventory management and
period is limited to three financial years of the company. The analysis was conducted
from 2021-2022 to 2022-2023.The tools used for are ratio analysis. The trend analysis
is for sales and inventory is conducted. The study is based on the inventory data
available from financial statements and internal records of the company and primary
data collected through informal interview with the company officials.

21
Theoretical Background

22
About SCM at Wirtgen India:

What we do: Our focus has always been on providing end to end solutions. Our capabilities
reflect this focus.

Our capabilities span various logistics activities:

23
About SCM at Wirtgen Logistics:

With a turnover more than a 1000 crores last year, we are one of the largest integrated
3PL service providers in India today. Our supply chain activities span industries and
verticals:

Transportation:

We provide customized transportation solutions spanning modes, industries, and

various product types. Our expertise helps you to optimize both the inbound and
outbound flows of material and goods. We also understand that modern enterprises
operate in an environment of few borders; our capabilities thus span both domestic and
international solutions for our partners. Our solutions are customized based on the
particular requirements and benefits sought.

24
Primary Transportation:

Our expertise and collaborative solutions for primary transportation enable us to offer
a broad spectrum of services while still maintaining a keen focus on service vs. cost
performance of the supply chain. Our solutions span:

 International transport – exports and imports by sea and air.

 Domestic long-haul transportation – by road and rail.

Our extensive domestic network allows us to operate regular routes across the country
while meeting stringent transit time and service level requirements. The ability to meet
both regular and ad-hoc requirements for FTL and LTL needs, allow us to provide
predictable solutions optimizing total logistics cost.

Secondary Transportation:

The ability to distribute from warehouses / hubs to consumption points or the ability to
manage medium and short haul transportation is integral to the success of any supply
chain solution. The ability to scale to demand while continually maintaining service
levels and predictability is a must. Our solutions are scalable to different demand
scenarios and to the specific nature of the different types of goods being transported.
With a variety of vehicles available, with customized packaging as well as handling
solutions, we ensure that our solutions are fully adapted to your needs.

Tertiary Transportation:

Our distribution management solutions are perfect for instant order fulfillment and
making sure your products reach their final sales point on time. The ability to plan and
optimize routes, vehicle deployment and utilization ensures we meet performance and
cost targets. Addressing the operational challenges at a ground level in each city and
making allowances for local differences, allows us to ensure that we provide the most
optimal solution in every case.

Technology:

25
Without technology our supply chain solutions are never optimal. Our SCM technology
can be broadly classified as:

 MILES: Our transport management solution, based on Oracle Transport

Management System (OTM).
 MLL WMS: A warehouse management system developed by us in-house.
Sufficiently scalable and flexible to meet most requirements.

Stores & Line Feed:

Another critical auto SCM component, our expertise ensures JIT parameters are met
and right inventory is always available at the right time.

26
Various value adds include:

Functional Profile:

The Wirtgen India Pvt. Ltd. Material & Logistics. is headed by Asst. General Manager
(After Market Business Development) who is assisted by Managers from product
department, quality assurance, finance department, PHRD Department, Supply
Module Department, The General Manager (Operations) is also assisted by Senior
Managers from Service Department, Administrative Department, Vehicle Engineering.

Departmentalisation:

In Wirtgen India Pvt. Ltd., the departmentalization is divided into:

I. Direct Department.
II. Indirect Department.

I. Direct Department:

27
The department which directly involves in the production process comes under this
category. The core departments are as follows:
 Production Planning & Control Department.
 Engineering Department
 Technical Services.
 Paint Shop.

II. Indirect Departments:

The departments which are not directly involves in the production process and gives
more assistance come under this category. The core departments are as follows:
 Administrative Department.
 Finance Department.
 Personnel and HRD Department.
 Service Center.
 Material Control Department of ancillary development department.
 Vehicle Engineering Department.
 Industrial Engineering Department.
 Maintenance Stores Department

Introduction:
Material Control

1) Definition of Material Control

2) Objectives of Material Control
3) Deference between Materials Control and Inventory Control
4) Material Purchasing and Purchasing Procedure.

Introduction:

28
The Primary Objective of cost accounting is cost control. This is achieved byexercising
effective control over element of cost of the three elements of costs, i.e., material cost,
wage cost and expenses, direct material cost is the largest single item of expenditure
and substantial proportion of the costs of an organization.
The term materials include physical commodities used to make the end –
product. The raw materials and supplies are equivalent to cash, and they make up an
important part of cost of manufacturing in many cases.

Material Control:

Material Control refers to managerial functions which are directed to ensure that
required quantity and quality of material is provided at the proper time with the
minimum amount of capital.
Material Control is affected by co-ordination and control activities related to

 Related to Material Planning.

 Related to Material Sourcing.
 Related to Material Purchasing.
 Related to Stores and Material Handling.

Definition Of Material Control:

The Term Material Control means “The regulation of the function of anorganization
relating to the procurement, Storage, and usage of materials in such away as to maintain
an even flow of production without excessive investment in material stock.

Material control involves the control of the three important functions. They are:
1. Procurement or Purchase Control
2. Storage or Stock or Inventory Control and
3. Issue or Usage or Consumption Control.

29
Objectives Of Material Control:

The Twin Objectives of Material Control:

A. Avoidance of production delay by maintaining an even flow of production.
B. Preventing excessive investment in material stock.

Other than these two objectives the other objectives are as follows:
1. To effect purchases of materials of the right quantity consistent with the standards
prescribed
in respect of the finished products.
2. To make available assured supply of materials to keep the cycle of production going
without any interruption.
3. To Procure materials on the most favorable terms with a due to effect maximum
economy in
the cost of buying.
4. To ensure effective utilization of materials.
5. To prevent over stocking of materials and consequent locking – up of working
capital.
6. To prevent losses during up of storage of materials.

Purchasing Activities of Inventory In Wirtgen India:

30
 SR.
NO. PROCESS SUB ACTIVITY
Ordering
MATERIAL
Execution
PROCUREMENT PROCESS
1 Closing- SAP
TRANSPORT BILL Bill Entering
2 PASSING Bill Passing- SAP
VENDOR AIDED
Material Transfer
MATERIAL RECEIVED
Document Entering-SAP
3 AND DISPATCHED
VENDOR AIDED
Reconciliation-SAP
RECONCILATION
Vendor Aid Material Transfer Debit
4 PROCESS REJECTION
Receiving Document
PRE-IN PROCESS Security
5 Meetings and closures
NON-MOVING Identification through Nonmoving EN
IDENTIFICATION AND finalized and disposal approve from finance.
6 DISPOSAL and dispatch
STATIONERY Identifying quotation comparison information
7 PURCHASING record and P.O.
MANAGEMENT Information gathers compilation schedule.
8 INFORMATION SYSTEM Updation
9 LOGISTICS Material collection and dispatch

In Wirtgen India., the materials as purchased on monthly basis from the various
vendors. Schedule made on monthly basis, for every month the suppliers list is prepared
and purchase the require quantity of materials from the selected vendors. In further
purchasing procedure process, i.e., for next month material management department
look after previous month performance of vendors the performance like, time of

31
delivery, quantity discounts, term of payment, mode of delivery, quantity of materials
and good will of the suppliers in the market.
Based on these factors’ vendors list is prepared.
Vendors (OR) Stores Suppliers of Wirtgen India -Pune
(MARCH – 2012)

SR.NO. NAME OF VENDOR PLACE

1 BOSCH REXROTH INDIA AHMEDABAD
2 POCKLEN INDIA BANALORE
3 BONFIGLIOIL INDIA BANALORE
4 CARRARO INDIA PUNE
5 TEKSONS READIATOR MUMBAI
6 CUMMINS INDIA PUNE
7 GEMCO POWER MUMBAI
8 DEUTZ INDIA PUNE
9 D&N WIND PUNE
10 WIPRO INDIA BANALORE
11 VEENA INDUSTRIES PUNE
12 MASS PRECISION PUNE
13 SKF BEARINGS PUNE
14 BKT TIRES CHENNAI
15 BREAKS INDIA LTD. PUNE/CHENNAI
16 LUCAS TVS LTD. PUNE/CHENNAI
17 RANE (MADRAS) LTD. CHENNAI
18 WHEELS INDIA LTD. PUNE DIVISION PUNE
19 BUNDY INDIA INDUSTRIES DADRA
20 SPICER INDIA LTD. PUNE

When the vendors list is prepared for a particular month purchase order placed before
the vendor for purchasing of the materials.

32
 After the purchase of the supplies from the different vendors inventory is
checked, the damaged or spoiled materials segregated vendors vise from the materials
are packed, through transport the rejected materials sent back to the respective vendors.
Other than the rejected materials are kept in stores 1, 2, 3 ------- based on classification
of materials. From the stores department stores are sent to the production plant, in
production plant the raw materials are converted into finished products, the produced
finished products dispatched from the organization to the market.

33
Research Methodology

34
About Research:

 Research is undertaken within most professions.

 More than a set of skills, it is a way of thinking: examining critically the
various
aspects of your professional work.
 It is a habit of questioning what you do, and a systematic examination of the
observed information to find answers with a view to instituting appropriate.
changes for a more effective professional service.

Definition Of Research:

When you say that you are undertaking a research study to find answers to a question,
you are implying that the process.
1. is being undertaken within a framework of a set of philosophies (approaches);
Philosophies means approaches e.g. qualitative, quantitative and the academic
discipline in which you have been trained.
2. uses procedures, methods and techniques that have been tested for their validity and
reliability.

Validity:
Validity means that correct procedures have been applied to find answers to a
question.

Reliability:
Reliability refers to the quality of a measurement procedure that provides
repeatability and accuracy.

35
Characteristics Of Research:

Research is a process of collecting, analyzing, and interpreting information to answer

questions.

But to qualify as research, the process must have certain characteristics: it must, as
far.
as possible, be controlled, rigorous, systematic, valid, and verifiable, empirical and
critical.

Controlled:
In real life there are many factors that affect an outcome. The concept of
control implies that, in exploring causality in relation to two variables(factors), you
set up your study in a way that minimizes the effects of other factors affecting the
relationship.
This can be achieved largely in the physical sciences (cookery, bakery), as
most of the research is done in a laboratory. However, in the social sciences
(Hospitality and Tourism) it is extremely difficult as research is carried out on issues
related to human beings living in society, where such controls are not possible.
Therefore, in Hospitality and Tourism, as you cannot control external factors, you
attempt to quantify their impact.
Systematic-
this implies that the procedure adopted to undertake an investigation follow a certain
logical sequence. The different steps cannot be taken in a haphazard way. Some
procedures must follow others.
Valid and verifiable:
This concept implies that whatever you conclude based on your findings is correct
and can be verified by you and others.
Empirical:
this means that any conclusion drawn are based upon hard evidence gathered from
information collected from real life experiences or observations.
Critical:

36
Critical scrutiny of the procedures used, and the methods employed is crucial to a
research enquiry. The process of investigation must be foolproof and free from
drawbacks. The process adopted and the procedures used must be able to withstand
critical scrutiny.
Types Of Research:

Research can be classified from three perspectives:

1. Application of research study
2. Obectives in undertaking the research
3. Inquiry mode employed
Application:
From the point of view of application, there are two broad categories of research:
 Pure Research

Pure research involves developing and testing theories and hypotheses that are
intellectually challenging to the researcher but may or may not have practical.
application at the present time or in the future. The knowledge produced through.
pure research is sought to add to the existing body of research methods.

 Applied Research

Applied research is done to solve specific, practical questions, for policy.

formulation, administration and understanding of a phenomenon. It can be.
exploratory, but is usually descriptive. It is almost always done based on
basic research. Applied research can be carried out academically or industrially.
institutions. Often, an academic institution such as a university will have a specific
applied research program funded by an industrial partner interested in that
program.

Type of research methodology adopted in the project:

37
 The type adopted here is the Analytical Research Methodology. This kind of
methodology includes using of facts and information already present to make critical
evaluation out of the event. Data play as important role in research. Facts,
information, or premises systematically collected and formally presented for the
purpose of drawing inferences may be called data.
Data can be collected from primary and secondary sources. Primary data refers to the
information obtained firsthand by the researcher on the variable of interest for the
specification of study. Secondary data refers to secondhand information gathered from
the existing source.

There are two types of Methods for Data collection namely:

-Primary Data Collection Method

-Secondary Data Collection Method

1) Primary Data Collection Method: -

Following are the different types of Method for collecting Primary Data:

A) Survey Method

B) Observation Method

C) Experimentation Method

Primary Data Collection Method used for Project Work: -

In Primary Data collection Method, I am using Observation Method for my Project or

research work. I collected data by taking interview of Wirtgen staff and senior
Managers.

2) Secondary Data Collection Method: -

Following are the types of Secondary Data collection Method:

a) Internal Source

b) External Source

38
Internal Source: -

The mentioned or presented Data collected from the web side of Wirtgen India Pvt Ltd
and get information from Mr Rupesh Auti – Deputy Manager.

Also, data collected through Wirtgen Staff.

External Source: -

In External source method, Data was collected through website. In my project data
collected from website of Construction Equipment Web site & magazine.

Also review Annual, Weekly and Monthly Reports of Govt of India regarding
Constructional Equipment Business.

Stores Department:

Efficient storekeeping and inventory control in dispensable to the control of material

cost. Goods are received into the stores after inspection, and they are held and issued to
production as and when required. The store department rendering service departments
and the accounts departments.
Functions Of the Storekeeper:

The main functions of storekeeper are receipt, storage, and issue of materials. There
are a few other functions which are identical to these. They are:
1. Receive materials into the stores after checking them with the content of the goods
received note and the inspection report.
2. Store the material in the allotted places.
3. Maintain stock records entering their receipts, issue, and balances.
4. Employ location coding and stores coding for easy identification of every item of
stores.
5. Maintain the store department neat and tidy.

39
6. Protect the materials and preserve them in good condition.
7. Issue materials only against authorised requisitions.
8. Maintain stock levels in respect of every item of stores
9. Make a physical verification of materials at periodical intervals.
10. Initiate purchase requisitions for the replenishment of stocks.
11. Receive back surplus materials returned and make re-entries of the received back
materials.

40
Data Analysis & Interpretation

41
Tools and Techniques of Inventory Controls:

1. CLASSIFICATION OF INVENTORY.
2. CODIFICATION OF INVENTORY.
3. JIT ANALYSIS.
4. TWO BIN SYSTEM.
5. KANBAN
6. MILK RUN CONCEPT
7. DETERMINATION OF STOCK LEVELS
8. INVENTORY TURNOVER RATIOS.

Classification Of Inventory:

Classification of inventory is of two kinds:

a. Made to stock.
b. Made to order.

In Wirtgen India, made to stock procedure is following for the classification of

inventory.

Made To Stock:

ABC Classification: -

This is also referred as “Always better control approach” are the “Alphabetic
approach”. ABC Concept of classifying goods in and inventory is very commonly used
for exercising effective inventory control. Under these techniques the items in inventory
are classified according to the value of usage. The higher the value item have
lower safety stocks because cost of production is very high in respect of higher value
items. The lower value items carry higher safety stocks. The annual conception analysis
of Wirtgen India Pvt. Ltd.., would indicate that handful of top high value items, less

42
than 10% of the total number will account for a substantial portion of above 75% of the
total consumption value and such vital few items called A items. Large number of
bottom items over 70% of the total number account for only 10% of the consumption
value and referred to as C category items. The items that lie between the top and the
bottom are referred as B category items.

Under the ABC analysis Wirtgen India Pvt. Ltd. using a special concept is XYZ
analysis were

ABC represents the value of materials.

XYZ represents the consumption of materials.

The table explanation

% of Items % of Value Category –1 Category –2

10 70 A X
20 20 B Y
70 10 C Z

Purchasing Procedure of ABC Items:

A ITEMS – 1 TO 3 DAYS
B ITEMS – 2 TO 5 DAYS
C ITEMS – 7 DAYS OR WEEKLY

43
XYZ Classifications:

X – (Runner Model): -Which is presently manufacturing.

Y – (Repeater Model):-It is used in the manufacturing of vehicles.
Z – (Stranger Model):-Which are consumed less.

AX – ITEMS – Daily Consumption

AY – ITEMS – Time taken for 2 to 3 days for consumption.
AZ – ITEMS – By taking as per order.

ABC analysis helps to concentrate more efforts on A since greatest monetary

advantages will come by controlling these items. Attention should be paid in estimation
requirements, purchasing, maintaining safety stocks, and properly storing of A category
materials. These items are kept under a constant review so that a substantial material
cost may be controlled. The control of C items may be relaxed, and these stocks may
be purchased for the year. A little more attention should be given towards B category
items and their purchased should be understood quarterly of half yearly intervals.

Wirtgen India. following classification of inventory in ABC, XYZ analysis to maintain

a proper stock level according to the flow of the day-to-day inventory in the
organization. By giving course to the ABC classified inventory it is easy to identify the
inventory from the stores department. It helps to save the time to choose from the stores
department, in selection of the vendors, material holding cost, estimation in expenditure
of working capital, determining in inventory levels and so on…….

Codification Of inventory:

44
After the classifying all items of stores, it becomes necessary to allot code numbers to
the classified items. The object of classification of only to allot a symbol or code
number to every item to facilitate easy location and handling.
In Wirtgen India Pvt. Ltd. the codification of materials done by allotting the number
and alphabets.

Numbering System for Wirtgen India Pvt. Ltd.:

In Wirtgen India Pvt. Ltd. each and every part of material consists 10 digit code
and code is
divided into 4 different goods.

X XX XXXX X
First Group Second Group Third Group Fourth
Group

First Group:
The first group will be alphabet (Range A to Z) indicates types of standards.

Second Group:
This will be a two-digit numeric and will be in line with the existing part numbering
system and the two digits are the first two digits indicating the vehicles and associated
systems / sub systems.

Third Group:
Third Group will be a four-digit numerical and will be running serial number for the
type of standard applicable.

45
Fourth Group:
This will be a one alphabet will indicate the revision status of the standard.

For Example: - Code for “ASSY CLUTCH CABLE” is.

08 02 BA 0690N

Where: -

08 is Clutch system.
02 is Sub-System – (Sub System)
B is External Controls – Mechanical
A is General
069 is Running Serial Number
0 is M & M Design
N is Colour Code

JIT – Just in Time Inventory Control

Just in time purchasing in the purchase of materials and supplies in such a manner that
delivery immediately precedes the demand of use. This will ensure that stocks are as
low as possible. JIT purchasing is implemented by developing closer relationship with
suppliers so that company and suppliers work together operatively. In JIT purchasing,
arrangement is made with supplier for more frequent deliveries of smaller quantities of
materials so that each delivery in just sufficient to meet immediate production
requirements. JIT systems reduce the investment in raw materials and work in progress
stocks.
JIT purchasing includes savings in factory space, large quantity discount and reduced
paperwork arising from issuing blanket long-term orders to fewer suppliers instead of
purchase orders.

46
Direct Online (DOL) method is following in JIT system. In JIT A Class items are
purchasing and the time between the purchase of these items are 1 to 2 days.

Milk Run Concept:

It is a new type of inventory classification using by Wirtgen India Pvt. Ltd.

Milk Run Concept is a day-to-day purchasing concept. Here the buyer will purchase
the material according to the production, which is for the next one day.
The buyer will first know the safety control stock and then he tells the suppliers the
estimated trigger value. In milk run concept only quality certified stock will be
delivered the purchaser should estimated the lead time and it is compulsory so as to
have the control over the lead time. It is direct online system there will be inspection so
as to save time and inventory handling cost.

A and B class items are considered under the milk run concept.
Advantages: -

 Economical transportable lot (minimum transportation cost per piece)

 No inventory carrying cost at plant and at warehouse.
 It is direct online system (DOL)
 Quality certified stock will be delivered and so no inspection is required.

Two Bin System:

The material inventory is physically separated into two bins. The quantity contained in
the first is used between the time on order is received and the next order is placed.

47
During the lead time the quantity contained in the second bin is made use of the second
bin contains enough stock to cover the usage between ordering and delivery plus
additional units into the second bin to restore the original quantity and the remaining
quantity is put in the first bin.
This method is most suited to the controlling of low value items i.e., C category items.
Under Two Bin system in Wirtgen India Pvt. Ltd., KANBAN Cards system is
following. C class items are storing in the bins under KANBAN system

Kanban Card Model (BIN CARD)

KAN BAN CARD SCHEDULE OF “LOAD KING” VEH ASSY (NEF PRTPE 25
STR)

Determination Of Stock Levels:

Carrying too much and too little inventories is determinate to the firm. If the inventory
level is too little, the firm will face frequent stock – outs involving heavy ordering cost
and if the inventory level of inventory where costs are the minimum and at the same
time their ID. No. Stock-out, which may result in loss of sale or stoppage of production.
Various stock levels are discussed below.
Minimum Stock Level:

This is the lower limit below which the stock of any item should not normally be
allowed to fall. This is also technically known as safety or buffer stock. The prime
considerations in fixing the minimum stock level or safety stocks are:
a. Average rate of consumption.
b. Lead time.

Minimum Stock Level = Reordering level Normal X Average

delivery per period time

48
Lead-Time:

A purchasing firm requires some time to process the order and time is also required by
the supplying firm to execute the order. The time taken processing the order and the
executing it is known as lead-time. It is essential to maintain some inventory during this
period.

Reorder Level:

Reorder level is fixed between the minimum and maximum levels. When stock of a
material reaches this point, the storekeeper should initiate action for the purchase of
material. The reorder level is slightly more than minimum stock level to guard against
a. Abnormal usage
b. Abnormal delay in supply

Reorder level = Maximum consumption X Maximum period

required during the period. for delivery.

Maximum Stock Level:

Maximum stock level represents the upper limit beyond which the quantity of any item
is not normally allowed to rise. The main object of establishing this limit is to ensure
that unnecessary working capital is not blocked in stores. Theoretically, maximum
stock level is the sum – total of minimum stock level and economic order quantity.

Maximum level = Reorder Level + Reordering quantity – Minimum

consumption

Average Stock Level:

49
The average stock level is calculated as such:

Average stock = minimum stock level + ½ of re-order quantity.

Danger Level:

This is generally fixed below the minimum stock level. Normal stock should not be
below the minimum level. If it reaches the danger level at any point of time, urgent
action for replenishment of stock must be taken to prevent stock out.

Estimation Of Stock Levels:

There are different techniques used in the calculation of the stock levels.

Reordering Quantity - 2500 units

Reordering Period - 4 – 5 weeks

Weekly usage:-

Maximum usage - 900 units

Normal usage - 700 units

Minimum usage - 500 units

Reordering Level = Maximum consumption X Maximum Reordering Period

= 900 X 5 = 4500 units.

Ex: -Consider “Load King” for calculation purpose.

50
Calculated of the load king vehicle as 500 units.

Normal Daily consumption = 700 units

Normal Reorder period= 4.5 weeks
Reorder level= 4500 units
Minimum usage = 500 units
Minimum Reorder period= 4 weeks
Maximum Reorder period= 5 weeks

Minimum Stock Level:

= Reorder Level – (Normal consumption X Normal Reorder Period)

= 4500 – (700 X 4.5)
= 4500 – 3150
= 1350 Units

Maximum Stock Level:

= Reorder Level + Reorder Quantity – (Minimum consumption X
Minimum Reorder Period)
= 4500 + 2500 – (500 X 4)
= 7000 – 2000
= 5000 Units

Average Stock Level:

= Minimum stock + ½ of Reordering Quantity.

= 500 + (½ X 2500)

51
= 500 + 1250
= 1750 Units

Minimum Stock Level = 1350 Units

Average Stock Level = 1750 Units
Maximum Stock Level = 5000 Units

Inventory Turn Over Ratio:

“A Ratio which measures the number of times a firm’s average inventory is sold during
a year” – Kohler.

Computation of inventory turnover ratios for different items of materials and

comparison of the turnover ratios provide a useful guidance for measuring inventory
performance. A high turnover rate indicates that the material in question is a fast
moving one. A low turnover rate on the other hand indicates over investments and
looking up of working capital on undesirable items.

“Inventory or Stock turnover is measured in terms of the ratio of the value of materials
consumed to the average inventory during the period”. The ratio indicates the number
of times the average inventory is consumed and replenished by dividing the number of
days for which the average inventory is held can be ascertained. Comparing the number
of days in the case of two different materials, it is possible to know which is fast moving
and which slow on that basis, an attempt may be made to reduce the amount of capital
locked up and prevent over stocking of slow-moving items.

Average Inventory = Opening Stock + Closing Stock

2

Inventory turnover ratio = Material consumed

52
 Average Inventory

Inventory turnover in number of days = Number of days in a year

Inventory turnover ratio

YEARS 2023 2022 2021 2020

Opening Inventory
(Rs. in lakhs) 75983 49970 45675 46904
Closing Inventory
(Rs. in lakhs) 78670 75983 49970 45675

Inventory Turn Over Ratio:

53
 AVERAGE
INVENTORY INVENTORY INVENTORY TURNOVER
INVENTORY
YEARS CONSUMED TURNOVER IN NUMBER
(Rupees in
(Rupees in Lakhs) RATIO OF DAYS
Lakhs)

75983 + 78690 610570.04 365

March –2023 610570.04 2 77336.5 7.895
=77336.5 =7.895 =46
49970 + 75983 459537.10 365..
March –2022 459537.10 2 62976.5 7.296
= 62976.5 =7.296 =50
45675 + 49970 335286.52 366..
March –2021 335286.52 2 47822.5 7.01
=47822.5 =7.01 =52
46904 +45675 250021.8 365..
March –2020 250021.84 2 446389.5 5.389
=46389.5 =5.389 =68

A high turnover ratio indicates that the material in question is a fast moving one
and also a low number of stocks are replacing stocks in large number of installments.
In the year 2018, 2019, 2020 the stock turnover ratio is gradually decreasing and the
inventory turnover in number of days are in high level. This indicates the inventory
faced a bad position in these three years. And from 2021, 2022, 2023 the stock turnover
ratio continuously increased from 5.38 to 7.296 & the inventory in number of days is
low level. This position indicates that the stocks are fast moving and get converted into
sales quickly.

54
Limitations:

 Since the study is based on the inventory management i.e. obtained from the
company’s finance and production department, the limitations of the inventory
management shall be equally applicable.

 The study is conducted within short period thus it may not be as detailed & fully
fledged.

 The study is conducted with the data available, and analysis was made according
to it.
 Lack of additional information’s from the company due to confidential matters.

55
SUGGESTIONS

AND

CONCLUSION

56
Conclusions: -
 From the various calculations and figures relating to inventory management it
is clear that the inventory classification of A items is maintained for 1 – 3 days, as a
result it reduces investment in raw material, reducing the lead time and also the large
quantity discount because the stock are kept for 1 – 3 days.

 Class A & B items are considered under the just in time philosophy as the
procurement time has been reduced up to greater extent by the proper co-ordination of
buyer and Supplier.

 There is great improvement in the inventory turnover ratio from 3 years. It is

increased from 5.38 to 7.895% this position indicates that the stocks are fast moving
and get converted into sales quickly in Wirtgen India Pvt. Ltd.

 Finally, we conclude that Wirtgrn India Pvt. Ltd. plant the inventory system is
very good with high Japanese techniques.

Suggestions: -

 Safety stock material is always in stock to keep production process continuous.

 For smooth production, store should provide adequate supply of items. This in
turn will lead to timely delivery of goods to customers.
 Store should always make verification of inventory holding cost for the
better control of inventory in the organization and to increase the profitability.
 Store should maintain the safety stock, so that they can use it when there is need
of the inventory.
 The total cost of inventory should be compared with the total benefits arising
out of inventory for determining its optimum level.

57
Bibliography

58
 Books:

Book Name Editor Publication

Newage International
Research Methodology Prof. C.R. Kothari
Publication.
Materials And Logistics
Management Prof. L. C. Jhamb Everest Publications Ltd.
Logistics And Supply Chain Prof. D. K.
Macmillan Ind. Ltd
Management Agrawal
Foundations of Inventory
Management Zip Kin McGraw Hill

Websites:
www.wirtgenindia.com

59