Professional Documents
Culture Documents
1.1 INTRODUCTION
Inventory management is the process of efficiently overseeing the constant
flow of units into and out of an existing inventory. This process usually involves
controlling the transfer in of units in order to prevent the inventory from becoming too
high, or dwindling to levels that could put the operation of the company into jeopardy.
Competent inventory management also seeks to control the costs associated with the
inventory, both from the perspective of the total value of the goods included and the
tax burden generated by the cumulative value of the inventory.
Balancing the various tasks of inventory management means paying attention
to three key aspects of any inventory. The first aspect has to do with time. In terms of
materials acquired for inclusion in the total inventory, this means understanding how
long it takes for a supplier to process an order and execute a delivery. Inventory
management also demands that a solid understanding of how long it will take for
those materials to transfer out of the inventory be established. Knowing these two
important lead times makes it possible to know when to place an order and how many
units must be ordered to keep production running smoothly.
Calculating what is known as buffer stock is also key to effective inventory
management. Essentially, buffer stock is additional units above and beyond the
minimum number required to maintain production levels. For example, the manager
may determine that it would be a good idea to keep one or two extra units of a given
machine part on hand, just in case an emergency situation arises or one of the units
proves to be defective once installed. Creating this cushion or buffer helps to
minimize the chance for production to be interrupted due to a lack of essential parts in
the operation supply inventory.
Inventory management is not limited to documenting the delivery of raw
materials and the movement of those materials into operational process. The
movement of those materials as they go through the various stages of the operation is
also important. Typically known as a goods or work in progress inventory, tracking
materials as they are used to create finished goods also helps to identify the need to
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Production Planning
Inventory Reduction
The emphases on each area will vary depending on the company and how it
operates, and what requirements are placed on it due to market demands. Each of the
The wrong quantities of the wrong items are often found on warehouse shelves.
Even though there may be a lot of surplus inventory and dead stock in their
warehouse(s), backorders and customer lost sales are common. The material a
distributor has committed to stock isnt available when customers request it.
Computer inventory records are not accurate. Inventory balance information in the
distributors expensive computer system does not accurately reflect what is
available for sale in the warehouse.
CLASSIFICATION OF BATTERIES
Batteries are broadly classified into two segments like: Automotive batteries
Industrial batteries
AUTOMOTIVE BATTERIES
Apart from mopeds all other automobiles including need storage batterys
automotive batteries are playing predominant role in automobile sector by
influencing customers in the automobile market. Automobile batteries can be further
distinguished as the original equipment (OE) markets as low as 5-6%.OE segment has
the advantage of securing continuous order and in queries. This enables manufactures
to streamline production facilities, plan production schedules and attain certain level
of operational efficiency.
The replacement market, on the other hand, is much larger. The replacement
market is characteriesed by the pre sense of large unorganized sector, which
constitutes around 55-60% of the total replacement market. This is possible due to
low capital entry barrier. These players have the advantage of in applicability duties.
INDUSTRIAL BATTERIES
The industrial battery segment comprises of to main categories. One comprise
of the stationary segment and second relating to motive power and eclectic
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RECYCLING BATTERIES
Battery acid is recycled by neutralizing it into water of converting it to sodium
sulphate for laundry detergent, glass and textile manufacturing. Cleaning the battery
cases, meeting the plastic and reforming it into uniform pellets recycle plastic. Lead,
which makes up 50% of every battery, is method, poured into slabs and purified.
The following are the major manufacturers in battery industry in India,
Exide Industries
Standard Batteries
Amco Batteries
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RAILWAYS
In Railways, the demand estimate is based on the annual coach production this
comes to 2500 numbers by Railways itself and 1000 numbers more by various other
segments, replacement demand and annual requirement for railways electrification.
STORAGE BATTERIES
In the storage battery industry, some new units have come up. The latest
development in this field is maintenance free rechargeable storage battery. These are
also known as Value Regulated Lead Acid (VRLA) or Sealed Maintenance Free
(SMF) batteries. Improvement of technology in this industry is benefiting customers.
Amara raja batteries limited (ARBL) incorporated under the companys act
1956 on 13th February 1985 and converted in to public limited company on 16th
September 1990.
The chairman and managing director of the company is Sri Galla Ram
Chandra Naidu. ARBL is the first company is India which manufactures value
regulated lead acid (VRLA) batteries. the main objective of the company is
manufacturing of good quality of sealed maintenance free (SMF) acid batteries .The
company is setting up to rs.1,920 lakhs plant is in 185 acres in karakambadi village,
Renigunta Mandal. The project site is notified under B category.
The company has the clear-cut policy of direct selling without any
intermediate. So they have setup six branches and are operated by corporate
operations office located in Chennai. The company has virtual monopoly in higher
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2. SEITION
Systematic arrangement
Arranging in order
A place for everything and everything in it place
3. SEISO
4. SEIKETSU
5. SHITSUKE
Sort out ,
Segregate necessary from unnecessary.
Discard what is not required.
Decide on frequency of sorting.
- Self discipline
- Forming the habit-Be discipline
COLLABORATION
STRENGTHS
Proven technology from GNB and being a pioneer:
in India
To transfer our spheres of influences and enrich the quality of life by building
institutions that provides better access to better opportunities, goods and services. To
more people All the time.
SOCIAL PROGRAMMES
Housing colony for employees in progress. Total plan, 500 families over five
years.
Plan to provide community hall, open auditorium, parks and play ground.
Training center for employees.
Bachelors hostel, co-operative stores banks in operation.
Roads, water supply, streetlights, greenery educational villages.
Award and reward to the younger generation for improvement of education.
Modernization of public parks for the fledged recreation of children.
Public awareness programs (in Mumbai) on environmental protection, through
street
Theatrewhose Mumbai is it any way on the occasion Of Earthday April 23rd 2001.
BRAND
Amara rajas reflects the innate dynamism of the company .the emblem
demonstrates the interplay of the universally in Yang symbols and the philosophy of
balanced forces. the color green and black emphasize the perfect symmetry of
absorbing and releasing energies, while the entire form in continuous motion signifies
unrelenting progress. The color green also elucidates the role of technology as an
integral part of the companys growth. Not incidentally, it also connotes the
companys resolve to preserve and nature the environment.
QUALITY PLOICY
ARBLs main aim is to achieve customer satisfaction through the collective
commitment of employees in design; manufacture and marketing of reliable power
systems, batteries, allied products and services.
TO ACCOMPLISH, ARBLFOCUS ON
Establishing superior specifications for our products and processes
4v/200ah batteries
Design optimization of higher AH batteries for DOT application
Design optimtsation of batteries92v/1285 for TL/AC-railway application.
Formation cycle optimization results in reduced duration and rejection
Chemist curing cycle optimization
cycle time
Validating alternative grades of propylene to converse energy and to improve
productivity.
AWARDS
Honorable doctorate degree 2008by S V University, Tirupatthi and JNTU ,
Hyderabad
The spirit of excellence Award by academy of fine arts, Tirupatthi
Best entrepreneur of the year 1998 - by Hyderabad association
Industrial economist business excellence award-1991 award by the industrial
economist Chennai.
Excellence award by institution of Economic Studies (ES), New Delhi.
Undying rattan award by institution of ES I, new Delhi
Q1 certificate-2002 by FORD Company.
chittoor
GALLA FOODS PUBLIC LTD(GFPL), Puthalapattu, chittoor
GENERAL INFORMATION
ARBL
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Railway coaches
Telecom
UPS
CAPACITY
The capacity per the year 2005-2006 of IBD is 3, 70,000 cells per annum.With
an existing production capacity of 5 lakh units of automotive batteries, the-new
Greenfield plant will now be able to produce one million batteries per annum.This is
the first phase in the enhancement of Amararajas production capacity, for this the first
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CUSTOMERS
ARBL has prestigious OEM (Original Equipment Manufacturer) clients like FORD,
GEHERAL MOTORS,
DAEWOD MOTORS,
MERCEDS BENZ,
DAILMLER,
MARUTHI UDYOGE LTD.,
Premier auto Ltd, and
Recent acquired a preference supplier alliance with ASHOK LEYLAND,
HINDUSTAN MOTORS, TELCO, MAHINDRA & MAHINDRA and SWARAJ
MAZAD.
COMPETITORS
The major competitors for Amararaja batteries products are:
Exide Industries Ltd
Hyderabad Batteries Ltd
GNB Industries (US based)
PRODUCTS
Type of VRLA batteries manufactured in IBD is:
POWERSTACK
KOMBAT(UPS Battery)
BRUTE
GENPRO
construction
- improved connection
Factory charged
- Ready to use
POWER STACK
Applications: Power plants, process and service industry, Railways,
Telecommunication, Uninterruptable power supply (UPS) systems, electronic private
automatic branch exchange (EPABX) , Defence (Onshore & Off share wireless
communication cellular radios), Motive power.
BRUTE:
Applications: Forklifts, pellet truck, stackers, 8platforms trucks.
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PRODUCTION FACILITIES
During the year under review ARBL has priorities and directed its objectives
towards streamlining the production process by assimilating and synchronizing
capacities of different section of plant to optimize the capacity utilization. As a part of
this prograhhe, ARBL has proposed to increase the capacity of assembly and
formation section. The reasons for the capacity are as follow:
EXPANSIONS IN AN AS UNDER
To meet the growing demand for the power stack batteries.
To cope-up with the peak level operations during the second half of the fiscal
year
To improve the overall productivity & quality/
To balance the line capacity of the plant with essential utilities & facilities.
To achieve the above, ARBL had conducted an elaborate study on the capacities of
different sections and identified the section wide requirements.
This had clearly spelt out the need for capacity expansion in power stack assembly
line formation section, on completion of the explanation programmed the capacity
will increase from 1,00,000 to 1,60,000 batteries per annum.
S.NO
PRODUCT NAME
FEATURES
AMARON HARVEST
AMARON SHIELD
AMARON
HI-LIFE Long life maintenance free, Cars,
Utility
BATTERIES
fully scaled and tested No Vehicles, Tractors, 4
leakage/improved safety
Wheelers,
HCVs
APPLICATIONS
KOMBAT
High
discharge,
High
performance
batteries
which are compact light
weight factory charge,
explosion resistant and
environmental friendly
AMARA
RAJA(POWER
STACK)INDUSTRIES
Industrial
applications, Power
plants,
Railways,
Light
weight,
study Telecommunications,
weather proof and long process and service
lasting, High integrity, Industry,
Defense,
High energy density.
Motive, Power solar
Photo
voltaic,
Electric
vehicle,
Emergency lighting.
Zero maintenance, No
specific gravity checks, No
water tapping up required
RAJA
long life, ideal size factory For Generators
charged, therefore ready to
use assured starting and
service.
AMARA
GENPRO
AMARON
BATTEIRS
QUANTA
HI-WAY
Ups Batteries
LOCATION OF ARBL
HIERARCHY
M.D
Vice-President-Finance
AGM-Financial
AGM-Secretarial
Manager CommercialManager
g
Co-OrdinatorCo-Ordinator
Asst. Manager
Manager MIS
Sr. Officer
Co-Ordinator Co-ordinator
Sr. Manager
asury
Co-Ordinator Co-Ordinator
capacities o different sections and identified the section wide requirements. This had
clearly spelt out for capacity expansion program .The plant capacity will increase
from 1, 60,000 to 2, 75,000 batteries per annum. The estimated cost of expansion is
Rs.1, 080 cores.
MAJOR USERS
A. RAILWAYS
Train lighting, air conditioning, diesel engine starting, signaling systems,
control systems, emergency breaking systems and telecommunications.
B. TELECOMMUNICATION
Central office power plants, microwave repeaters station, RAX in public
building, emergency lighting systems at air ports, fire alarm system etc.
C. POWER SYSTEMS
Switch gear control systems, power hose control systems, rural street
lighting etc.
D. UPS SYSTEMS
Backup power to computers in progress control system in industry etc.,
E. TRACTION
Forklift trucks, earth motioning machinery, mining locomotives and road
vehicles etc.
F. PETROCHEMICALS
Off-shore and On-shore pill exploration lighting systems, security systems etc.
G. DEFENCE:
Defense communication, aircraft and helicopter ground starting, stationary and
mobile diesel engine starting etc.
Converting
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pure Lead
into Lead
Oxide
Gird
Casting
Paste mixing by
Adding
sulphuric Acid
and
waterthe
Winding
Pasting
Gird
Finishing
Formation
Sealing
the
jar
Group
pasted
Grid
with Lead
BOARD OF DIRECTORS
The company has a non-executive chairman and the number of independent
directors is 3 representing 33.33% of the total number of directors i.e. more than onethird of the total number of directors. The number of the total non-executive directors
are 8 i.e. 88.89% which is more than 50% of the total number of directors. Hence the
board of the company has an optimum combination of executive and non-executive
directors in conformity with the provisions clause 49 of the listing agreement.
None of the members of the board is holding membership in more than 10
committees or chairmanship in more than 5 committees as specified in clause 49 of
the listing agreement.
Category
1.
Promoter/Non-executive chairman
2.
Promoter/Managing Director
3.
Dr. G.Ramadevi
Promoter/Non-executive Director
4.
Non-Executive Director
5.
Non-Executive Director
6.
Non-Executive Director
7.
Mr.P.Lakshmana Rao
Independent Director
8.
Independent Director
9.
Mr.Nagarjun Valluripalli
Independent Director
10.
Yang
- Karakambadi, Tirupathi.
- Chennai, Hyderabad
Delhi,
SELLING POLICY
The Company is adopting the policy of direct selling without any
intermediates as the product falls under the category of Capital Goods. The Company
established its based and in major cities like Mumbai, Calcutta, New Delhi, Mysore,
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PRODUCT LINE
Conventional Batteries Charges
: 40AH to 6000AH.
: 40AH to 1500AH.
: 40AH to 80 AH.
Diagnostic Tools
Beta Check (Health Monitor)
ENVIRONMENTAL PROGRAMS
SOCIAL PROGRAMS
Housing Colony to the Employees is in Progress.
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Total Plan 500 families over five years, 108 already commissioned.
Plant provide Community Hall Open Auditorium, Recreation club,
Park and play Ground.
Training Centre for Employees.
Bachelors hostel, Co-operative Store and Banks in Operation.
Roads, Water Supply, Street Lights, Greenery, Educational and Cultural Activities.
Enhancement in neighboring villages.
Awards and Rewards to the Younger Generation for improvement of education
Modernization of Public Parks for the fledged of Children.
14001 certification
New corporate logo launched.
May 2002-commissioned phase1 of new automotive battery plant with a
REVIEW OF LITERATURE
DEFINITIONS OF INVENTORY MANAGEMENT
The overseeing and controlling of the ordering, storage and use of components
that a company will use in the production of the items it will sell as well as the
overseeing and controlling of quantities of finished products for sale.
Inventory management is a science primarily about specifying the shape and
percentage of stocked goods. It is required at different locations within a facility or
within many locations of a supply network to precede the regular and planned course
of production and stock of materials.
The scope of inventory management concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management, inventory
forecasting, inventory valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space for inventory, quality
management, replenishment, returns and defective goods, and demand forecasting.
Inventory management is primarily about specifying the size and placement of
stocked goods. Inventory management is required at different locations within a
facility or within multiple locations of a supply network to protect the regular and
planned course of production against the random disturbance of running out of
materials or goods.
Inventory management is the process of ensuring that a company always has
the products it needs on hand and that it keeps costs as low as possible.
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Inventory management
Excessive level of
inventory however, results in large carrying costs, including the cost of capital tied up
in inventory warehouse fees, insurance etc.
A major problem with managing inventory is that the demand for a
corporations product is to a degree uncertain. The supply of the raw materials used
in its production process is also somewhat uncertain. In addition the corporations
own production contains some degree of uncertainty due to possible equipment
breakdowns and labor difficulties.
Because of these possibilities, inventory acts as a shock absorber between
product demand and product supply. If product demand is greater than expected,
inventory can be depleted without losing sales until production can be stepped up
enough to select the unexpected demand.
However inventory is difficult to manage because it crosses so many lines of
responsibility. The purchasing manager is responsible for supplies of raw material
and would like to avoid shortages and to purchases in bulk order take advantages of
quantity discounts.
The production manager is responsible for uninterrupted production and wants
to have enough raw materials and work in process, inventory on hand to avoid
disruption in the production process. The marketing manager is responsible for
selling the product and wants to minimize the chances of running out of inventory.
The financial manager is concerned about achieving an appropriate overall rate of
return. Funds invested in an inventory are idle and do not earn a return.
Nature of Inventories
Inventories are stock of the product a company is manufacturing for sale
and components that make up the product. The various forms in which inventories
that exist in manufacturing company are
Raw materials
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RAW MATERIALS
These are those basic inputs that are converted into finished product through the
manufacturing process. Raw materials inventories are those units which have been
purchased and stored for future production.
WORK-IN-PROCESS
These inventories are semi-manufacture products. They represent products that
need more work before they became finished for sale.
FINISHED GOODS
These inventories are those completely manufactured products which are
ready for sale. Stocks of raw materials and work-in-process facilitate production
while stock of finished goods is required for smooth marketing operations. Thus,
inventories serve as link between the production and consumption of goods.
TRANSACTION MOTIVE
It emphasizes the need to maintaining inventories to facilitate smooth
production and sales operation.
PRECAUTIONARY MOTIVE
SPECULATIVE INVENTORIES
It influences the decision to increase or reduce inventory level to take advantage
of price fluctuations.
The firm should always avoid a situation of over investment or under
investment in inventories.
The major dangers of over investment in inventories are
i. Unnecessary tie up of the funds and loss of profits.
ii. Excessive carrying cost.
iii. The risk of liquidity.
The consequences of under investment in inventories are
i. Production hold-ups
ii. Failure to meet delivery commitments. Inadequate raw
materials.
iii. Work-in-process will result in frequent in production interrupts.
AN EFFICIENT INVENTORY MANAGEMENT SHOULD
ORDERING COSTS
Every order is placed for stock replenishment, certain cost are involved. The
ordering cost may vary, dependent upon type item.
This cost of ordering includes
Paper work cost, typing and dispatching order.
Follow-up costs the follow-up required ensure timely supplies include the
travel cost for purchases follow-up, telephone telex and postal bills.
Cost involved in receiving the order inception, checking and handling to the
stores.
Any set up cost of machines if charged by supplier, either directly indicated in
quotations or assessed thought quotations for various quantities.
The salaries and wages to the purchase department are relevant for
consideration if the purchasing function is carried out at the same level with
existing staff.
There are certain costs that remain the same regardless of the size of the lot
purchased or requisitioned. This would be retailer ordering from the distributor,
from the distributor ordering from a factory warehouse, for the factory warehouse
ordering a new production run from the factory, and for the factory ordering raw
materials from vendors. These kinds of costs are called preparation or set up
costs.
If we are ordering to replenish supplies at one stock point from another stock
point, our interest is in the incremental clerical costs of preparing orders,
following these orders. Expediting them when necessary, etc, a large segment of
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involved, there are other characteristics of the situation that vary among types of
inventory and must be captured if the decision model is to be an accurate
representation of the physical circumstances.
LEAD TIMES
Obtaining inventory usually requires a lag from the initiation of the process
until the inventory starts to arrive. This lead-time may be a few minutes or it may be
many months, and depends in part on whether the firm is producing goods for its
For
example, assume that a firm has placed in order for 10 cases of paper towels. For
such a small order the rate of replenishment is infinite; the firms inventories well go
up 10 cases in a very short time as the goods are quickly unloaded.
For large order from vendors, or for inventory produced with in the firm, the
replenishment rate may be slower.
Types of inventory
They are needed because of the time required to move stocks from one place to
another place.
These are carried to ensure ready suppliers to consumer even when these are
irregular and unpredictable fluctuations in their demand.
4. ANTICIPATION INVENTORIES
demand.
5. CYCLE INVENTORIES
These result from managements attempt to minimize the total cost of carrying
and ordering inventory. They arise from ordering in batches or lots, rather from
needed basis.
Inventories can be further classified into production inventories maintenance
repair and operation (MRO) inventories, in-process inventories and finished goods
inventories.
Maintenance, repair and operation supplies which are used in the production
of goods or services but do not become part of the product.
CARRYING COSTS
Carrying costs constitute all the costs of holing items in inventory for a
given period of time. They are expressed either in rupees per unit per period or as a
percentage of the inventory value per period. Components of this cost include the
following.
1.Storage and Handling costs: It includes the cost of warehouse space.
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EOQ=
Where
EOQ=economic order quantity
Co=cost of ordering an order
AD= annual consumption of an item
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unit value is the criterion and not the annual consumption value. The
item of inventory should be listed to the descending order of unit value and it is up to
the management to fix limits for the three categories. For example, the
the
management may decided that all units with unit value of Rs.2000 and above will be
H items, Rs 1000 to 2000 M items
analyses is useful for keeping control over consumption at department levels for
deciding the frequency of physical , and for controlling purchases.
5) SDE CLASSIFICATION
The SDE classification is based upon the availability of items and is very
useful in the context of scarcity of supply. In this analysis, S refers to scarce items,
generally imported, and those which are in short. D refers to difficult items, which are
available indigenously but are difficult items to procure. Items which have to come
form distance places or for which reliable suppliers are difficult to come by, fall in to
D category. E refers to items which are easy to acquire and which are available in the
local strategies
The SDE classification. Based on problems faced in procurement, is vital to the leadtime analyses and in deciding on purchases strategies.
6) MINIMUM-MAXIMUM TECHNIQUE
The minimum maximum system is often used in connection with manual
inventory control system. The minimum quantity is established in the same way as
any re- order point. The maximum is the minimum quantity plus the optimum lot
size. In practice, a requisition is initiated when, a withdrawal reduces the inventory
below the minimum level, and the order quantity is the maximum minus the inventory
status after the withdrawal. If the final withdrawal reduce the stock
the stock
substantially below the minimum level, the order quantity will be higher than the
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