SHIVA RAJ
Content
A Project Report on
³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´
BY A.S.SIVARAJ (Registration number: 21109631089) OF RAJALAKSHMI ENGINEERING COLLEGE, THANDALAM, CHENNAI-602 105 A Project report
Submitted to
FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION
ANNA UNIVERSITY
MAY-2010
1
A Project Report on
³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´
BY A.S.SIVARAJ (Registration number: 21109631089) OF RAJALAKSHMI ENGINEERING COLLEGE THANDALAM,CHENNAI-602 105 A Project report
Submitted to
FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION
ANNA UNIVERSITY
MAY-2010
2
CERTIFICATE
This is to certify that the project report on ³³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´ is a bonafide project work done by.A.S.SIVARAJ, a full time student of the department of management studies, RAJALAKSHMI ENGINEERING COLLEGE, in partial fulfillment of the requirements for the award of the degree of Master of Business Administration of Anna University, during the year 2009-2011.
PROF.T.C THOMAS Head of the Department
Mrs.R.SINDHU Faculty Guide
3
DECLARATION
I A.S.SIVARAJ hereby declare that the project work entitled ³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE ³submitted to the Anna University in partial fulfillment of the requirements for the degree in MASTER OF BUSINESS ADMINISTRATION is an authentic record of work carried out by me under the guidance of Mrs.SINDHU Faculty, MBA Department, RAJALAKSHMI Engineering college and MR.NAGARAJAN SN INVENTORY OFFICER ASHOK LEYLAND LTD ENNORE.
PLACE: CHENNAI DATE:
A.S.SIVARAJ
4
ACKNOWLEDGEMENT I take the pleasure in conveying my gratefulness to all those who stood by my side for completing the project successfully. I extend my immense gratitude to our honorable chairman Dr.(Mrs.) Thangam Meganathan, M.A., M.Phil., PhD. for his sincere endeavor in educating us in his premier institution. I thank our principal Dr.Renganarayan for providing all the required facilities for completing the project work. I would like to express my heartfelt gratitude to our Head of the Department Mr.T.C.Thomas, who is responsible for molding my thinking to complete this project, I deem it as pleasure to take this opportunity to express my heartfelt thanks and profound gratitude to Mrs.R.SINDHU, faculty guide, his whole hearted support and valuable guidance during the period of research. I wish to express my thanks to all our Department staffs, for their valuable suggestion during the period of my project work. I would like to place my thanks to DIRECTOR Mr.P.S.Pandyan, B.Tech., B.L.,MBA.,I.A.S (Retd), for allowing me to carry out the study and I also place my sincere thanks to DEAN Mr.S.Shankar,PGDM(IIM-C) for their keen involvement and constant encouragement in the successful completion of the project work and express my heartiest thanks to Mr.NAGARAJAN of ASHOK LEYLAND LTD ENNORE
I take this opportunity to thank my parents, family members and friends, who have helped me to complete this project by giving co-operation and encouragement towards the initialization development and the success of the project. GUIDE: Mrs. R.SINDHU NAME: A.S.SIVARAJ
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TABLE OF CONTENTS:
Chapter no
I
Contents
INTRODUCTION 1.1 company profile 1.2 objective of the study
Page no
1 8 14
II
MAIN THEME OF THE PROJECT 2.1 Review of Literature 20
III
DICUSSION RESULTS 3.1 Analysis and interpretation 3.2 Findings from the study 22 35 36
IV BIBLOGRAPHY
6
ABRTRACT
The project work entitled ³A STUDY OF ORGANIZATIONAL STRUCTURE AND INVENTORY MANAGEMENT IN ASHOK LEYLAND´ with the help of gemba. Know the various reduction techniques involved in the inventory management. The problem is complicated by the fact that demand is uncertain, and this uncertainty can cause stockouts in which inventory is depleted and orders cannot be filled. Here, we discuss a model in which the inventory level is reviewed periodically, and orders are placed at regular intervals to order up to a certain base stock. This policy is known as a Policy of Periodic Review, Order-Up-To Base Stock.
7
INT
TION:
ASHOK LE LAND:
Ashok L l
i a commercial vehicle manufacturing company based inChennai
India. Founded in 19 8, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating si plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 0,000 vehicles and about ,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M C ) segment with a market share of 28% (200 -08). With passenger transportation
options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment. The company claims to carry over 0 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 1 ton to 2 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from . tons to 9 tons. The joint venture announced withNissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (< . tons).
8
Type Industry Founded Key people Products Revenue Employees Parent Subsidiaries
: public : automotive : 194 : R.Seshasayee, R.J. Shahaney, S.P. Hinduja, D.G. Hinduja Vinod Dasari : Automobiles, Engines. : US$ 1.4 billion (2008-09) : 11,500 : Hinduja group : Ennore foundries Limited Automotive Coaches and Components Limited Gulf-Ashley Motors Limited Ashley Holdings Limited Ashley Investments Limited Ashley Design and Engineering Services (ADES) Avia Ashok Leyland Ashok Leyland Project Services Limited Lanka Ashok Leyland
Head quarters : Chennai, India
9
HISTORY:
The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent India. Pandit Jawaharlal Nehru, India¶s first Prime Minister, persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. The company was established in 1948 as Ashok Motors, to assemble Austin cars. The company¶s destiny and name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Today the company is the flagship of the Hinduja Group, a British-based and Indian originated transnational conglomerate. Early products included the Leyland Comet bus which was a passanger body built on a truck chassis, sold in large numbers to many operators, including Hyderabad Road Transport, Ahmadabad Municipality, Travancore State Transport, Bombay State Transport and Delhi Road Transport Authority. By 1963, the Comet was operated by every State Transport Undertaking in India, and over 8,000 were in service. The Comet was soon joined in production by a version of the Leyland Tiger. In 1968, production of the Leyland Titan ceased in Britain, but was restarted by Ashok Leyland in India. The Titan PD3 chassis was modified, and a five speed heavy duty constant-mesh gearbox utilized, together with the Ashok Leyland version of the O.680 engine. The Ashok Leyland Titan was very successful, and continued in production for many years.
Over the years, Ashok Leyland vehicles have built a reputation for reliability and ruggedness. This was mainly due to the product design legacy carried over from British Leyland. Through tie-ups with global technology leaders, supplemented by in-house R&D infrastructure and capabilities, Ashok Leyland has maintained its technological leadership even as it offers the most comprehensive range of model configurations in its class. Ashok Leyland had collaboration with Hino Motors, Japan from whom the technology for the H-series engines was bought. Many indigenous versions of H-series engine were developed with 4 and 6 cylinder and also conforming to BS2 and BS3 emission 10
norms in India. These engines proved to be extremely popular with the customers primarily for their excellent fuel efficiency. Most current models of Ashok Leyland come with H-series engines. In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH) was taken over by a joint venture between the Hinduja Group, the Non-Resident Indian transnational group and IVECO Fiat SPA, part of the Fiat Group and Europe's leading truck manufacturer. Ashok Leyland¶s long-term plan to become a global player by benchmarking global standards of technology and quality was soon firmed up. Access to international technology and a USD 200 million investment programmed created a state-ofthe-art manufacturing base to roll out international class products. This resulted in Ashok Leyland launching the 'Cargo' range of trucks based on European Ford Cargo trucks. These vehicles used Iveco engines and for the first time had factory-fitted cabs. Though the Cargo trucks are no longer in production, the cab continues to be used on the 'ecomet' range of trucks.
In the journey towards global standards of quality, Ashok Leyland reached a major milestone in 1993 when it became the first in India's automobile history to win the ISO 9002 certification. The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle manufacturing units in 2002. In 2006, Ashok Leyland became the first automobile company in India to receive the TS16949 Corporate Certification.
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COMPANY PROFILE:
The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent India. Pandit Jawaharlal Nehru, India's first Prime Minister persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948, Ashok Motors was set up in what was then Madras, for the assembly of Austin Cars. The Company's destiny and name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Mr. R. Seshasayee is a Chartered Accountant who started his career with Hindustan Lever Limited in 1971. He joined Ashok Leyland in 1976. Appointed as Executive Director in 1983, he was elevated as Deputy Managing Director in 1993 and has been the Managing Director since April 1, 1998. From the date when he took position as the Managing Director of Ashok Leyland he for the growth of the company very sincerely and bought it to a good position and still his process is continuing for the company. Lanka Ashok Leyland was established in 1982, this is a joint venture between Ashok Leyland and the Government of Sri Lanka. Equity holding of Ashok Leyland Ltd. in the joint venture is 28%. From 18 seater to 82 seater double-decker buses, from 7.5 tons to 49 tone in haulage vehicles, from numerous special application vehicles to diesel engines for industrial, marine and genset applications, Ashok Leyland offers a wide range of products.
Ashok Leyland has six manufacturing plants ±
Ennore Plant, Chennai. Hosur Plants Unit I, Unit II and Unit II A. Alwar, Rajasthan. Bhandara, Maharashtra Pant Nagar, Uttaranchal 12
In the popular metro cities, four out of five state transport undertaking buses come from Ashok Leyland. Some of them like the Double Decker and Vestibule buses are unique models from Ashok Leyland, tailor made high-density routes. Statistics reveal that the company is India¶s largest exporter of medium and heavy duty trucks. It sells close to 83,000 medium and heavy vehicles each year. The company has a near 98.5% market share in the Marine Diesel engine markets in India. At 60 million passengers a day, Ashok Leyland buses carry more people than the entire Indian Railway network
ORGANISATION STRUCTURE
In 1987 the overseas holding by LRLIH (LAND ROVER LEYLAND INTERNATIONAL HOLDINGS LIMITED) was taken over by a joint venture between the Hinduja group, the Non Resident Indian Transnational group and IVECO Fiat SPA part of the Fiat group and Europe¶s leading truck manufacturing company. Ashok P Hinduja is the chairman of the company. The Hinduja group also associated with Ennore Foundries Limited, Automotive Coaches and Components Limited, and Gulf Ashley Motors Limited. The subsidiary holdings are Ashley Holdings Ltd., Ashley Investment Ltd., and Ashok Leyland Project Services. The chief competitors of the company are; Mahindra Volvo Tata Motors
With a commanding strength of the about 12,000 employees the company is looking forwards to enhance the scope of its action. It is aiming at expanding its production operation overseas to make it a more globally accessible company. It is looking to acquire a small to medium sized commercial vehicle manufacturers in China and other developing nations, which have an established product line. An example would be the 2007 acquisition of the Czech based Avia¶s truck business rechristened Avia Ashok Leyland Motors.
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VISION
Be among the top Indian corporations acknowledged nationally and internationally for -Excellence in quality of its products. -Excellence in customer focus and service.
MISSION
Is a leader in the business of commercial vehicles, excelling in technology, quality and value to customer fully supported by customer service of the highest order and meeting national and international environmental and safety standards.
GEMBA
Gemba is a Japanese word meaning ³Real Place´ where the real action takes place. In the manufacturing industry, there are 3 major activities directly related to earning money, developing, producing and selling products.
GEMBA KAIZEN
Three ground rules for practicing kaizen in Gemba .1.House Keeping 2. Muda Elimination [Waste Elimination] Waste of over production Waste of inventory Waste of waiting Waste of Motion Waste of transportation Waste of Producing Rejects Waste of processing 3. Standardization.
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GEMBA MISSION
N7i+1 New 7 initiatives 1. Increase in the number of GEMBA units 2.5s [SEIRI, SEITON, SEISO.SEIKETSU, SHITSUKE] 3. EEI (Effort and Ergonomy index) 4. CMI (Cost management initiative) 5. Inventory Initiative 6. Critical machine-OEE 7. Quality 8. Safety
CURRENT STATUS:
Ashok Leyland is the second technology leader in the commercial vehicles sector of India behind Tata Motors. The history of the company has been punctuated by a number of technological innovations, which have since become industry norms. It was the first to introduce multi-axled trucks, full air brakes and a host of innovations like the rear engine and articulated buses in India. In 1997, the company launched the country¶s first CNG bus and in 2002, developed the first Hybrid Electric Vehicle.
The company has also maintained its profitable track record for 60 years. The annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431 medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest exporter of medium and heavy duty 15
trucks. It is also one of the largest private sector employers in India - with about 12,000 employees working in 6 factories and offices spread over the length and breadth of India. The company has increased its rated capacity to 105,000 vehicles per annum. Also further investment plans including putting up two new plants - one in Uttarakhand in North India and a bus body building unit in middle-east Asia are fast afoot. It already has a sizable presence in African countries like Nigeria, Ghana, Egypt and South Africa. Ashok Leyland has also entered into some significant partnerships, seizing growth opportunities offered by diversification and globalization ± with Continental Corporation for automotive infotronics; with Alteams in Finland for high pressure die casting and recently, with John Deere for construction equipment. As part of this global strategy, the company acquired Czech Republic-based Avia's truck business. The newly acquired company has been named Avia Ashok Leyland Motors s.r.o. This gives Ashok Leyland a foothold in the highly competitive European truck market. The Hinduja Group also bought out IVECO's indirect stake in Ashok Leyland in 2007. The promoter shareholding now stands at 51% MILESTONE: Major Milestones in India¶s Commercial Vehicle Industries 1966 > 1967 > 1968 > 1979 > 1980 > 1982 > 1992 > 1993 > 1997 > 2001 > 2002 > Introduced full air brakes Launched double-decker bus Offered power steering in commercial vehicles Introduced multi-axle trucks Introduced the international concept of integral bus with air suspension Introduced vestibule bus Won self-certification status for defence supplies Received ISO 9002 India's first CNG powered bus joined the BEST fleet Received ISO 14001 certification for all manufacturing units Launched hybrid electric vehicle
16
ACHIEVEMENTS:
At 60 million passengers a day, Ashok Leyland buses carry more people than the entire Indian rail network Ashok Leyland has a near 85% market share in the Marine Diesel engines markets in India In 2002, all the vehicle-manufacturing units of Ashok Leyland were ISO 14001 certified for their Environmental Management System. First time in Indian commercial vehicle industry In 2005, received the world-renowned BS7799 Certification for its Information Security Management System (ISMS) - first time for an auto manufacturer in India In 2006, received the coveted ISO/TS 16949 Corporate Certification ± first in Indian auto industry It is one of the leading suppliers of defense vehicles in the world and also the leading supplier of logistics vehicles to the Indian Army.
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OBJECTIVES PRIMARY OBJECTIVES
y
To study the organizational structure & inventory management in Ashok Leyland Ennore.
y
To provide suggestions to improve the existing inventory management system
y To know the stock layout of various stores
18
Organizational structure:
General Manager personal administrator
Assistance general manager
Manager industrial relation (I.R)
Manager human resource (HR)
Medical officer
Senior manager
Manager
Chief security officer
Senior manager
Deputy Manager
Senior manager
Ass manager
Deputy Manager
Manager Security officer Deputy Manager Assistance manager
Ass manager Deputy Manager Senior manager
Senior officer Welfare manager
Ass security officer
Senior officer
Senior officer Officer
Senior officer
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ORGANIZATIONAL CHART FOR INVENTORY MANAGEMET IN AL: PLANT DIRECTOR (ENNORE) N.MURUGAPPAN
DGM-MATERIALS N.RAJARAMAN
AGM-MATERIALS PLANNING B.RAGHAVA RAO
DIVISIONAL MANAGERMATERIAL PLANNING T.VIMAL BABU
MANAGERMPL V.FRANCO RAJ EDM
DEPUTY MANAGERMRL PS.ANBARA SU IUT
DEPUTY MANAGER-MRL B.ARUN BOM/MRP
ASSISSTANT MANAGER-MPL T.PRIYADHARS H INI-BOM
TRANIEE-MPL J.UMADEVI EDM
PROCESSING EDM COORDINATION IMPLEMENTION TECHNOLOGY COORDINATION
NEW MODELS FOLLOW UP TECHNOLOGY CO-ORDINATION OBSOLETE,NM AND SURPLUS DECLARATION AND DISPOSAL.LINE 3 CO-ORDINATIOR FOR BOM
IUT COORDINATI ON
M BOM CREATION/U PDATION IN PLM.ZFGB/NE PTUNE COORDINATION FOR BOM
EDM PROCESSIN G
20
INVENTORY PLANNING IN ASHOK LEYLAND
SALES PLANNING
AGGREGATE PLANNING
MASTER PRODUCTION SCHEDULE
MATERIAL REQUIREMENT PLANNING
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TYPES OF STORES: A AC C D E EI F P PP R S GB H HA HM J K KL LH X ZA
BOF A stores Store for shop 7 components Consumable spares Westland stores Engine store 4D engine stores Fabrication stores Production stores Engine dressing item Rough items Sheets ZFGB stores Hardware stores Assembly stores Assemble stores Rear axle stores KDC stores Pilot production Hino engine stores Parts warehouse stores Zone A stores
22
Based on marketing requirements, production department releases new model spec
DIAGRAM
PPM PLAN
SPEC/DRG RELESE BY PD SPEC TO BOM CONVERSION
BOM COMPARISON WITH SIMILAR STD.MODEL BOTH SPEC WISSE AND COMPENENT WISE
ADD OR DELETE LIST(FIRE) TO USER DEPARTMENT
MODEL WISE FOLLOW UP LIST FOR NEW/DISCRETE LOW VOLUME ITEMS
CO-ORDINATE WITH PURCHASE/PPC AND MANUFACTURING FOR INTRODUCTION
23
INVENTORY CONTROL MEASURES
SCHEDULING
Stock+ WIP considered Green list requirement µD¶ tag for deleted items
COLLECTIONS
Strictly against schedules.JIT card and LCL trigger
VALIDATIONS
MRP items-against schedules. JIT items-schedules+JIT card. LCL items -against triggers
RECEIVING
Receipts against validation.any excess will be highlighted to purchase.
ISSUES
Suitable corrective action.against plan and WIP availability
JIT/LCL TRIGGERS
24
Pull/consumption based triggering
INTRODUCTION TO INVENTORY MANAGEMENT To minimize supply and demand imbalances in the supply chain, firms utilize various methods of inventory management. The problem is complicated by the fact that demand is uncertain, and this uncertainty can cause stockouts in which inventory is depleted and orders cannot be filled. Here, we discuss a model in which the inventory level is reviewed periodically, and orders are placed at regular intervals to order up to a certain base stock. This policy is known as a Policy of Periodic Review, Order-Up-To Base Stock. Under this policy, one orders a variable quantity Q every fixed period of time p in order to maintain an inventory position ( Qty on hand + Qty on order ) at a predefined base stock level S, also known as the "order-up-to level." The base stock level S is determined by calculating the quantity needed between the time the order is placed and the time that the next period's order is received, and adding a quantity of safety stock to allow for variation in the demand. The time between the placing of the order and the receiving of the next period's order is the sum of the review period p and the replenishment lead time l (lower-case L). The demand per unit of time, , is multiplied by the time between order placement and the next period's order arrival ( p + l ) to determine the expected quantity to be sold. The safety stock depends upon the variability in the demand and the desired order fill rate. To calculate the safety stock, first calculate the standard loss function, designated as L(z). This function is dependent on the values of the desired fill rate f, the demand and its standard deviation , the time between orders p, and the replenishment lead time l : L(z) = ( 1 - f ) µ p / ( p + l )1/2
Once L(z) is known, z can be found in a look-up table and the safety stock can be calculated by: ( p + l )1/2
Safety Stock = z
If the review period p is reduced, the safety stock does not necessarily reduce because p is in both the numerator and denominator of the standard loss function which determines the value of z. The average level of on-hand inventory is the sum of the cycle stock ( equal to µp/2 ) and the safety stock. The on-hand inventory does not include those units in the delivery pipeline.
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This model can be complicated by the following real-world issues: variable lead times, nonstationary demand, multiple inventory sites, multiple customer classes, and multi-item order fill rate. When several components are needed to build a system, each component having the same fill rate, the overall system order fill rate (multi-item fill rate) will be lower than the component fill rate since an order cannot be completed even if only a single component is missing. The multi-item fill rate is the product of the individual item fill rates. For n items having the same component fill rate:
order fill rate = (component fill rate)n
When there are long shipping times, the idea of postponing the last stages of final assembly until the product reaches the distribution center (DC) may become attractive. At the DC, the units can be localized and customized according to the demand patterns seen at that time. The result is that the total safety stock required at the DC is reduced by a factor of n1/2 , where n is the number of different SKU's for which the customization is being postponed. To maximize the benefits of postponement, the product should be designed to be distribution center localizable. The variable features of the product can be isolated into one or two modules that are to be installed in the distribution center.
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INVENTORY Inventory is the total amount of goods and/or materials contained in a store or factory at any given time. Inventory is a list of goods and materials held available in stock by a business Objectives of inventory management y Increase corporate profitability
y y
Predict impact of corporate policies minimize total logistics cost while meeting customer service requirements
Types of inventory Cycle (or) working stock *WIP *Decoupling stock In-transit inventory Safety stock(Buffer stock) Anticipation stock *Seasonal *Speculative Dead stock Why is it necessary to have inventories *To achieve transportation & production scale economics *To take advantage of quality purchase discount *To maintain a source of supply. *To support the firm¶s customer services polices *To meet changing market conditions (e.g.., seasonality, demand fluctuations, competition) *To overcome the time and space differentials that exist b/w producers & consumers *To accomplish least total cost physical distribution commensurate with a desired level of customer services
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Why hold inventory Inventory serves five purpose: Achieve economics of scale Balance(unstable) supply & demand Specialization in manufacturing Protection from uncertainties in demand/order cycle Buffers critical interfaces (decouples)
Why less inventory Reduce costs Avoid obsolescence To increase competitiveness in market Overall it is to achieve ³THE GOAL´
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TREND ANALYSIS FOR INVENTORY MANAGEMENT YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 INVENTORY 5176.74 5953.44 4104/56 5069.41 5680.81 9025.61 10703.21 12239.14 13300.14 ESTIMATED -2330.73 -1189 -47.27 1094.46 2236.19 3377.92 4519.65 5661.38 6803.11 YEAR 2010 2011 2012 FORECASTED 7944.84 9086.57 10228.3
16000 14000
12000 10000 8000 6000 4000 FORECASTED 2000 0
-2000 -4000
YEAR
INVENTORY ESTIMATED
YEAR
1
2
3
4
5
6
7
8
9
12000
10000
8000 6000
4000
YEAR FORECASTED
2000
0
1
2
3
29
The spectrum The demand forecast Ensure proper supply from vendor Ensure efficient production system Ensure delivery on time Ensure customer delight
Inventory reduction techniques MIFS(VSM) PFED JIDOKA STANDARDISATION KANBAN JIT VMI(S)
30
VMS -- Vendor management stock OBJ: To maintain inventory with optimum stock PURPOSE: To maintain matched stock as per the consumption EXPECTED BENEFITS: Reduce inventory & floor space
Process followed 1) All the identified items will be stored in designated locations. 2) Identified components stock will be spent to supplier by 9.00am everyday though email. 3)Days plan given by PPL will be sent along with stock by 9.00am everyday 4)All the components selected for VMS is under green channel 5) Priority is given for VMS vehicle in gate entry & unloading 6) No other material will be carried in VMS truck material will be supplied for the quantity equal to today¶s plan 7) Supplier¶s are educated the process
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STOCK INFORMATION SYSTEM
SI NO 1 AL PART NO 0E1090 XX PART NO 0987891 DESCRIPTION RADIATOR STOCK SIZE 40 LOT SIZE 20 SAFETY STOCK 36
2 3 4 5
6 7
NP098N 09NIU2 OJ34913 9034NG
N7893L N4109N
OP2901B OP09823 O451032 IO524J36
O34190H O384TU8
BATTERY POWER STEERING PROPELLOR SHAFT GREAR BOX
AIR CYLINDER TYRE
40 64 64 52
52 40
20 32 32 32
25 40
36 49 80 64
60 43
8 9 10
I09214 9HU438 35OI12
OP0342N O5432M1 043NBG4
BRAKES FRONT/REAR LIGHT SEATS
40 40 70
40 20 35
58 54 24
PARTS SELECTED FOR PHASE 1
SI NO 1 AL PART NO 0E1090 DESCRIPTION RADIATOR STATUS
2
3
NP098N
09NIU2
BATTERY
POWER STEERING
4
5
OJ34913
9034NG
PROPELLOR SHAFT
GREAR BOX
32
PART
SI NO 1
L
T
AL PART NO N7893L
F R PHASE 2
DESCRIPTION AIR CYLINDER STATUS
2
3
N4109N
I09214
TYRE
BRAKES
4
5
9HU438
35OI12
FRONT/REAR LIGHT
SEATS
ID CARD
XXX LOGO
VMS VISA : XXX Company : 09:00Hrs : Daily/shift
VMS Partner Delivery time Delivery frequency
33
VENDOR DETA L¶S
VENDOR ELECTED IN IRST H SE
1.XXX LTD
VENDOR SELECTED IN SECOND PHASE
SUPPLIER NAME 1.XXX LTD 2.XXX LTD 3.XXX LTD
STOCK LEVEL AT THE TIME OF IMPELEMENTION OF VMS
SI NO AL PART NO XX PART NO DERCRIPTION STOCK SIZE STOCK VALUE
1 2
3
4 5
6
O 34913 9034N
O451032 O524 36
PROPELLOR S AFT
REAR BOX
§
10
35O 12
043NB 4
SEATS
§ ¨
9
9
¨
¦
§
8
09214
438
OP0342N
O5432M1
7
N4109N
O384T 8
TYRE BRAKES
FRONT/REAR T L
¥
¥
N7893L
O34190
A R CYL N ER
¨
09N 2
§
¨
©
§
¨
¥ ¦
©
¤¤
SU
LIER NAME
LOCATION
CHENNAI
LOCATION HOSUR HOSUR HOSUR
0E1090 NP098N
0987891 OP2901B
OP09823
£
¢
¡
STATUS
STATUS
RADIATOR BATTERY
POWER STEER N
40 40
64
260000 260000 416000
64 52
52
416000 338000 338000 260000 260000 260000 455000
40 40
40
70
3263000
34
CURRENT ST CK LEVEL F VMS ITEMS
SI NO 1 2 3 4 5 6
7
AL PART NO 0E1090 NP098N 09NI 2 OJ34913 9034N
XX PART NO 0987891 OP2901B OP09823 O451032 IO524J36 O34190H
O384T 8
DESCRIPTION RADIATOR BATTERY
STOCK SIZE 40 40 64
STOCK LEVEL
220000 220000 352000
PROPELLOR SHAFT
REAR BOX
N7893L
N4109N
AIR CYLINDER 52
TYRE 40
8 9 10
I09214 9H 438 35OI12
OP0342N O5432M1 043NB 4
BRAKES FRONT/REAR LI HT SEATS
VMS DISPLAY BOARD
PART NO : PART NAME : BIN LOCATION : BUFFER QUANTITY : MAX QTY : SUPPLIER : SUPPLIER LOCATION : XXXX CONTACT PERSON : CONTACT NO : TRIGGERING MODE : TRISSELIN TIME :
POWER STEERIN
64 52
352000 286000
40 40 70
286000 220000 220000 220000 385000 2761000
35
FINGINGS Inventory level phase 1 is know 5.37Ls from 16.51 Ls Inventory level phase 2 is know 12.78Ls from 28.72Ls Store room reduce to 2 from 3 Area space 100sqm from 500sqm One point contact for easy monitoring & follow Daily stock verification & maintained stock acq
36
BIBLOGRAPHY
BOOKS. Operations & production management by R.pannierselvam. Library records from ashok leyland
WEBSITES. WWW.WIKEPIDIA.COM WWW.ASHOKLEYLAND.COM
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³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´
BY A.S.SIVARAJ (Registration number: 21109631089) OF RAJALAKSHMI ENGINEERING COLLEGE, THANDALAM, CHENNAI-602 105 A Project report
Submitted to
FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION
ANNA UNIVERSITY
MAY-2010
1
A Project Report on
³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´
BY A.S.SIVARAJ (Registration number: 21109631089) OF RAJALAKSHMI ENGINEERING COLLEGE THANDALAM,CHENNAI-602 105 A Project report
Submitted to
FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements For the award of the degree of MASTER OF BUSINESS ADMINISTRATION
ANNA UNIVERSITY
MAY-2010
2
CERTIFICATE
This is to certify that the project report on ³³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE´ is a bonafide project work done by.A.S.SIVARAJ, a full time student of the department of management studies, RAJALAKSHMI ENGINEERING COLLEGE, in partial fulfillment of the requirements for the award of the degree of Master of Business Administration of Anna University, during the year 2009-2011.
PROF.T.C THOMAS Head of the Department
Mrs.R.SINDHU Faculty Guide
3
DECLARATION
I A.S.SIVARAJ hereby declare that the project work entitled ³A STUDY ON ORGANIZATIONAL STRUCTURE & INVENTORY MANAGEMENT IN ASHOK LEYLAND LTD ENNORE ³submitted to the Anna University in partial fulfillment of the requirements for the degree in MASTER OF BUSINESS ADMINISTRATION is an authentic record of work carried out by me under the guidance of Mrs.SINDHU Faculty, MBA Department, RAJALAKSHMI Engineering college and MR.NAGARAJAN SN INVENTORY OFFICER ASHOK LEYLAND LTD ENNORE.
PLACE: CHENNAI DATE:
A.S.SIVARAJ
4
ACKNOWLEDGEMENT I take the pleasure in conveying my gratefulness to all those who stood by my side for completing the project successfully. I extend my immense gratitude to our honorable chairman Dr.(Mrs.) Thangam Meganathan, M.A., M.Phil., PhD. for his sincere endeavor in educating us in his premier institution. I thank our principal Dr.Renganarayan for providing all the required facilities for completing the project work. I would like to express my heartfelt gratitude to our Head of the Department Mr.T.C.Thomas, who is responsible for molding my thinking to complete this project, I deem it as pleasure to take this opportunity to express my heartfelt thanks and profound gratitude to Mrs.R.SINDHU, faculty guide, his whole hearted support and valuable guidance during the period of research. I wish to express my thanks to all our Department staffs, for their valuable suggestion during the period of my project work. I would like to place my thanks to DIRECTOR Mr.P.S.Pandyan, B.Tech., B.L.,MBA.,I.A.S (Retd), for allowing me to carry out the study and I also place my sincere thanks to DEAN Mr.S.Shankar,PGDM(IIM-C) for their keen involvement and constant encouragement in the successful completion of the project work and express my heartiest thanks to Mr.NAGARAJAN of ASHOK LEYLAND LTD ENNORE
I take this opportunity to thank my parents, family members and friends, who have helped me to complete this project by giving co-operation and encouragement towards the initialization development and the success of the project. GUIDE: Mrs. R.SINDHU NAME: A.S.SIVARAJ
5
TABLE OF CONTENTS:
Chapter no
I
Contents
INTRODUCTION 1.1 company profile 1.2 objective of the study
Page no
1 8 14
II
MAIN THEME OF THE PROJECT 2.1 Review of Literature 20
III
DICUSSION RESULTS 3.1 Analysis and interpretation 3.2 Findings from the study 22 35 36
IV BIBLOGRAPHY
6
ABRTRACT
The project work entitled ³A STUDY OF ORGANIZATIONAL STRUCTURE AND INVENTORY MANAGEMENT IN ASHOK LEYLAND´ with the help of gemba. Know the various reduction techniques involved in the inventory management. The problem is complicated by the fact that demand is uncertain, and this uncertainty can cause stockouts in which inventory is depleted and orders cannot be filled. Here, we discuss a model in which the inventory level is reviewed periodically, and orders are placed at regular intervals to order up to a certain base stock. This policy is known as a Policy of Periodic Review, Order-Up-To Base Stock.
7
INT
TION:
ASHOK LE LAND:
Ashok L l
i a commercial vehicle manufacturing company based inChennai
India. Founded in 19 8, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating si plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 0,000 vehicles and about ,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M C ) segment with a market share of 28% (200 -08). With passenger transportation
options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment. The company claims to carry over 0 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 1 ton to 2 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from . tons to 9 tons. The joint venture announced withNissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (< . tons).
8
Type Industry Founded Key people Products Revenue Employees Parent Subsidiaries
: public : automotive : 194 : R.Seshasayee, R.J. Shahaney, S.P. Hinduja, D.G. Hinduja Vinod Dasari : Automobiles, Engines. : US$ 1.4 billion (2008-09) : 11,500 : Hinduja group : Ennore foundries Limited Automotive Coaches and Components Limited Gulf-Ashley Motors Limited Ashley Holdings Limited Ashley Investments Limited Ashley Design and Engineering Services (ADES) Avia Ashok Leyland Ashok Leyland Project Services Limited Lanka Ashok Leyland
Head quarters : Chennai, India
9
HISTORY:
The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent India. Pandit Jawaharlal Nehru, India¶s first Prime Minister, persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. The company was established in 1948 as Ashok Motors, to assemble Austin cars. The company¶s destiny and name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Today the company is the flagship of the Hinduja Group, a British-based and Indian originated transnational conglomerate. Early products included the Leyland Comet bus which was a passanger body built on a truck chassis, sold in large numbers to many operators, including Hyderabad Road Transport, Ahmadabad Municipality, Travancore State Transport, Bombay State Transport and Delhi Road Transport Authority. By 1963, the Comet was operated by every State Transport Undertaking in India, and over 8,000 were in service. The Comet was soon joined in production by a version of the Leyland Tiger. In 1968, production of the Leyland Titan ceased in Britain, but was restarted by Ashok Leyland in India. The Titan PD3 chassis was modified, and a five speed heavy duty constant-mesh gearbox utilized, together with the Ashok Leyland version of the O.680 engine. The Ashok Leyland Titan was very successful, and continued in production for many years.
Over the years, Ashok Leyland vehicles have built a reputation for reliability and ruggedness. This was mainly due to the product design legacy carried over from British Leyland. Through tie-ups with global technology leaders, supplemented by in-house R&D infrastructure and capabilities, Ashok Leyland has maintained its technological leadership even as it offers the most comprehensive range of model configurations in its class. Ashok Leyland had collaboration with Hino Motors, Japan from whom the technology for the H-series engines was bought. Many indigenous versions of H-series engine were developed with 4 and 6 cylinder and also conforming to BS2 and BS3 emission 10
norms in India. These engines proved to be extremely popular with the customers primarily for their excellent fuel efficiency. Most current models of Ashok Leyland come with H-series engines. In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH) was taken over by a joint venture between the Hinduja Group, the Non-Resident Indian transnational group and IVECO Fiat SPA, part of the Fiat Group and Europe's leading truck manufacturer. Ashok Leyland¶s long-term plan to become a global player by benchmarking global standards of technology and quality was soon firmed up. Access to international technology and a USD 200 million investment programmed created a state-ofthe-art manufacturing base to roll out international class products. This resulted in Ashok Leyland launching the 'Cargo' range of trucks based on European Ford Cargo trucks. These vehicles used Iveco engines and for the first time had factory-fitted cabs. Though the Cargo trucks are no longer in production, the cab continues to be used on the 'ecomet' range of trucks.
In the journey towards global standards of quality, Ashok Leyland reached a major milestone in 1993 when it became the first in India's automobile history to win the ISO 9002 certification. The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all vehicle manufacturing units in 2002. In 2006, Ashok Leyland became the first automobile company in India to receive the TS16949 Corporate Certification.
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COMPANY PROFILE:
The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent India. Pandit Jawaharlal Nehru, India's first Prime Minister persuaded Mr. Raghunandan Saran, an industrialist, to enter automotive manufacture. In 1948, Ashok Motors was set up in what was then Madras, for the assembly of Austin Cars. The Company's destiny and name changed soon with equity participation by British Leyland and Ashok Leyland commenced manufacture of commercial vehicles in 1955. Mr. R. Seshasayee is a Chartered Accountant who started his career with Hindustan Lever Limited in 1971. He joined Ashok Leyland in 1976. Appointed as Executive Director in 1983, he was elevated as Deputy Managing Director in 1993 and has been the Managing Director since April 1, 1998. From the date when he took position as the Managing Director of Ashok Leyland he for the growth of the company very sincerely and bought it to a good position and still his process is continuing for the company. Lanka Ashok Leyland was established in 1982, this is a joint venture between Ashok Leyland and the Government of Sri Lanka. Equity holding of Ashok Leyland Ltd. in the joint venture is 28%. From 18 seater to 82 seater double-decker buses, from 7.5 tons to 49 tone in haulage vehicles, from numerous special application vehicles to diesel engines for industrial, marine and genset applications, Ashok Leyland offers a wide range of products.
Ashok Leyland has six manufacturing plants ±
Ennore Plant, Chennai. Hosur Plants Unit I, Unit II and Unit II A. Alwar, Rajasthan. Bhandara, Maharashtra Pant Nagar, Uttaranchal 12
In the popular metro cities, four out of five state transport undertaking buses come from Ashok Leyland. Some of them like the Double Decker and Vestibule buses are unique models from Ashok Leyland, tailor made high-density routes. Statistics reveal that the company is India¶s largest exporter of medium and heavy duty trucks. It sells close to 83,000 medium and heavy vehicles each year. The company has a near 98.5% market share in the Marine Diesel engine markets in India. At 60 million passengers a day, Ashok Leyland buses carry more people than the entire Indian Railway network
ORGANISATION STRUCTURE
In 1987 the overseas holding by LRLIH (LAND ROVER LEYLAND INTERNATIONAL HOLDINGS LIMITED) was taken over by a joint venture between the Hinduja group, the Non Resident Indian Transnational group and IVECO Fiat SPA part of the Fiat group and Europe¶s leading truck manufacturing company. Ashok P Hinduja is the chairman of the company. The Hinduja group also associated with Ennore Foundries Limited, Automotive Coaches and Components Limited, and Gulf Ashley Motors Limited. The subsidiary holdings are Ashley Holdings Ltd., Ashley Investment Ltd., and Ashok Leyland Project Services. The chief competitors of the company are; Mahindra Volvo Tata Motors
With a commanding strength of the about 12,000 employees the company is looking forwards to enhance the scope of its action. It is aiming at expanding its production operation overseas to make it a more globally accessible company. It is looking to acquire a small to medium sized commercial vehicle manufacturers in China and other developing nations, which have an established product line. An example would be the 2007 acquisition of the Czech based Avia¶s truck business rechristened Avia Ashok Leyland Motors.
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VISION
Be among the top Indian corporations acknowledged nationally and internationally for -Excellence in quality of its products. -Excellence in customer focus and service.
MISSION
Is a leader in the business of commercial vehicles, excelling in technology, quality and value to customer fully supported by customer service of the highest order and meeting national and international environmental and safety standards.
GEMBA
Gemba is a Japanese word meaning ³Real Place´ where the real action takes place. In the manufacturing industry, there are 3 major activities directly related to earning money, developing, producing and selling products.
GEMBA KAIZEN
Three ground rules for practicing kaizen in Gemba .1.House Keeping 2. Muda Elimination [Waste Elimination] Waste of over production Waste of inventory Waste of waiting Waste of Motion Waste of transportation Waste of Producing Rejects Waste of processing 3. Standardization.
14
GEMBA MISSION
N7i+1 New 7 initiatives 1. Increase in the number of GEMBA units 2.5s [SEIRI, SEITON, SEISO.SEIKETSU, SHITSUKE] 3. EEI (Effort and Ergonomy index) 4. CMI (Cost management initiative) 5. Inventory Initiative 6. Critical machine-OEE 7. Quality 8. Safety
CURRENT STATUS:
Ashok Leyland is the second technology leader in the commercial vehicles sector of India behind Tata Motors. The history of the company has been punctuated by a number of technological innovations, which have since become industry norms. It was the first to introduce multi-axled trucks, full air brakes and a host of innovations like the rear engine and articulated buses in India. In 1997, the company launched the country¶s first CNG bus and in 2002, developed the first Hybrid Electric Vehicle.
The company has also maintained its profitable track record for 60 years. The annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431 medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest exporter of medium and heavy duty 15
trucks. It is also one of the largest private sector employers in India - with about 12,000 employees working in 6 factories and offices spread over the length and breadth of India. The company has increased its rated capacity to 105,000 vehicles per annum. Also further investment plans including putting up two new plants - one in Uttarakhand in North India and a bus body building unit in middle-east Asia are fast afoot. It already has a sizable presence in African countries like Nigeria, Ghana, Egypt and South Africa. Ashok Leyland has also entered into some significant partnerships, seizing growth opportunities offered by diversification and globalization ± with Continental Corporation for automotive infotronics; with Alteams in Finland for high pressure die casting and recently, with John Deere for construction equipment. As part of this global strategy, the company acquired Czech Republic-based Avia's truck business. The newly acquired company has been named Avia Ashok Leyland Motors s.r.o. This gives Ashok Leyland a foothold in the highly competitive European truck market. The Hinduja Group also bought out IVECO's indirect stake in Ashok Leyland in 2007. The promoter shareholding now stands at 51% MILESTONE: Major Milestones in India¶s Commercial Vehicle Industries 1966 > 1967 > 1968 > 1979 > 1980 > 1982 > 1992 > 1993 > 1997 > 2001 > 2002 > Introduced full air brakes Launched double-decker bus Offered power steering in commercial vehicles Introduced multi-axle trucks Introduced the international concept of integral bus with air suspension Introduced vestibule bus Won self-certification status for defence supplies Received ISO 9002 India's first CNG powered bus joined the BEST fleet Received ISO 14001 certification for all manufacturing units Launched hybrid electric vehicle
16
ACHIEVEMENTS:
At 60 million passengers a day, Ashok Leyland buses carry more people than the entire Indian rail network Ashok Leyland has a near 85% market share in the Marine Diesel engines markets in India In 2002, all the vehicle-manufacturing units of Ashok Leyland were ISO 14001 certified for their Environmental Management System. First time in Indian commercial vehicle industry In 2005, received the world-renowned BS7799 Certification for its Information Security Management System (ISMS) - first time for an auto manufacturer in India In 2006, received the coveted ISO/TS 16949 Corporate Certification ± first in Indian auto industry It is one of the leading suppliers of defense vehicles in the world and also the leading supplier of logistics vehicles to the Indian Army.
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OBJECTIVES PRIMARY OBJECTIVES
y
To study the organizational structure & inventory management in Ashok Leyland Ennore.
y
To provide suggestions to improve the existing inventory management system
y To know the stock layout of various stores
18
Organizational structure:
General Manager personal administrator
Assistance general manager
Manager industrial relation (I.R)
Manager human resource (HR)
Medical officer
Senior manager
Manager
Chief security officer
Senior manager
Deputy Manager
Senior manager
Ass manager
Deputy Manager
Manager Security officer Deputy Manager Assistance manager
Ass manager Deputy Manager Senior manager
Senior officer Welfare manager
Ass security officer
Senior officer
Senior officer Officer
Senior officer
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ORGANIZATIONAL CHART FOR INVENTORY MANAGEMET IN AL: PLANT DIRECTOR (ENNORE) N.MURUGAPPAN
DGM-MATERIALS N.RAJARAMAN
AGM-MATERIALS PLANNING B.RAGHAVA RAO
DIVISIONAL MANAGERMATERIAL PLANNING T.VIMAL BABU
MANAGERMPL V.FRANCO RAJ EDM
DEPUTY MANAGERMRL PS.ANBARA SU IUT
DEPUTY MANAGER-MRL B.ARUN BOM/MRP
ASSISSTANT MANAGER-MPL T.PRIYADHARS H INI-BOM
TRANIEE-MPL J.UMADEVI EDM
PROCESSING EDM COORDINATION IMPLEMENTION TECHNOLOGY COORDINATION
NEW MODELS FOLLOW UP TECHNOLOGY CO-ORDINATION OBSOLETE,NM AND SURPLUS DECLARATION AND DISPOSAL.LINE 3 CO-ORDINATIOR FOR BOM
IUT COORDINATI ON
M BOM CREATION/U PDATION IN PLM.ZFGB/NE PTUNE COORDINATION FOR BOM
EDM PROCESSIN G
20
INVENTORY PLANNING IN ASHOK LEYLAND
SALES PLANNING
AGGREGATE PLANNING
MASTER PRODUCTION SCHEDULE
MATERIAL REQUIREMENT PLANNING
21
TYPES OF STORES: A AC C D E EI F P PP R S GB H HA HM J K KL LH X ZA
BOF A stores Store for shop 7 components Consumable spares Westland stores Engine store 4D engine stores Fabrication stores Production stores Engine dressing item Rough items Sheets ZFGB stores Hardware stores Assembly stores Assemble stores Rear axle stores KDC stores Pilot production Hino engine stores Parts warehouse stores Zone A stores
22
Based on marketing requirements, production department releases new model spec
DIAGRAM
PPM PLAN
SPEC/DRG RELESE BY PD SPEC TO BOM CONVERSION
BOM COMPARISON WITH SIMILAR STD.MODEL BOTH SPEC WISSE AND COMPENENT WISE
ADD OR DELETE LIST(FIRE) TO USER DEPARTMENT
MODEL WISE FOLLOW UP LIST FOR NEW/DISCRETE LOW VOLUME ITEMS
CO-ORDINATE WITH PURCHASE/PPC AND MANUFACTURING FOR INTRODUCTION
23
INVENTORY CONTROL MEASURES
SCHEDULING
Stock+ WIP considered Green list requirement µD¶ tag for deleted items
COLLECTIONS
Strictly against schedules.JIT card and LCL trigger
VALIDATIONS
MRP items-against schedules. JIT items-schedules+JIT card. LCL items -against triggers
RECEIVING
Receipts against validation.any excess will be highlighted to purchase.
ISSUES
Suitable corrective action.against plan and WIP availability
JIT/LCL TRIGGERS
24
Pull/consumption based triggering
INTRODUCTION TO INVENTORY MANAGEMENT To minimize supply and demand imbalances in the supply chain, firms utilize various methods of inventory management. The problem is complicated by the fact that demand is uncertain, and this uncertainty can cause stockouts in which inventory is depleted and orders cannot be filled. Here, we discuss a model in which the inventory level is reviewed periodically, and orders are placed at regular intervals to order up to a certain base stock. This policy is known as a Policy of Periodic Review, Order-Up-To Base Stock. Under this policy, one orders a variable quantity Q every fixed period of time p in order to maintain an inventory position ( Qty on hand + Qty on order ) at a predefined base stock level S, also known as the "order-up-to level." The base stock level S is determined by calculating the quantity needed between the time the order is placed and the time that the next period's order is received, and adding a quantity of safety stock to allow for variation in the demand. The time between the placing of the order and the receiving of the next period's order is the sum of the review period p and the replenishment lead time l (lower-case L). The demand per unit of time, , is multiplied by the time between order placement and the next period's order arrival ( p + l ) to determine the expected quantity to be sold. The safety stock depends upon the variability in the demand and the desired order fill rate. To calculate the safety stock, first calculate the standard loss function, designated as L(z). This function is dependent on the values of the desired fill rate f, the demand and its standard deviation , the time between orders p, and the replenishment lead time l : L(z) = ( 1 - f ) µ p / ( p + l )1/2
Once L(z) is known, z can be found in a look-up table and the safety stock can be calculated by: ( p + l )1/2
Safety Stock = z
If the review period p is reduced, the safety stock does not necessarily reduce because p is in both the numerator and denominator of the standard loss function which determines the value of z. The average level of on-hand inventory is the sum of the cycle stock ( equal to µp/2 ) and the safety stock. The on-hand inventory does not include those units in the delivery pipeline.
25
This model can be complicated by the following real-world issues: variable lead times, nonstationary demand, multiple inventory sites, multiple customer classes, and multi-item order fill rate. When several components are needed to build a system, each component having the same fill rate, the overall system order fill rate (multi-item fill rate) will be lower than the component fill rate since an order cannot be completed even if only a single component is missing. The multi-item fill rate is the product of the individual item fill rates. For n items having the same component fill rate:
order fill rate = (component fill rate)n
When there are long shipping times, the idea of postponing the last stages of final assembly until the product reaches the distribution center (DC) may become attractive. At the DC, the units can be localized and customized according to the demand patterns seen at that time. The result is that the total safety stock required at the DC is reduced by a factor of n1/2 , where n is the number of different SKU's for which the customization is being postponed. To maximize the benefits of postponement, the product should be designed to be distribution center localizable. The variable features of the product can be isolated into one or two modules that are to be installed in the distribution center.
26
INVENTORY Inventory is the total amount of goods and/or materials contained in a store or factory at any given time. Inventory is a list of goods and materials held available in stock by a business Objectives of inventory management y Increase corporate profitability
y y
Predict impact of corporate policies minimize total logistics cost while meeting customer service requirements
Types of inventory Cycle (or) working stock *WIP *Decoupling stock In-transit inventory Safety stock(Buffer stock) Anticipation stock *Seasonal *Speculative Dead stock Why is it necessary to have inventories *To achieve transportation & production scale economics *To take advantage of quality purchase discount *To maintain a source of supply. *To support the firm¶s customer services polices *To meet changing market conditions (e.g.., seasonality, demand fluctuations, competition) *To overcome the time and space differentials that exist b/w producers & consumers *To accomplish least total cost physical distribution commensurate with a desired level of customer services
27
Why hold inventory Inventory serves five purpose: Achieve economics of scale Balance(unstable) supply & demand Specialization in manufacturing Protection from uncertainties in demand/order cycle Buffers critical interfaces (decouples)
Why less inventory Reduce costs Avoid obsolescence To increase competitiveness in market Overall it is to achieve ³THE GOAL´
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TREND ANALYSIS FOR INVENTORY MANAGEMENT YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 INVENTORY 5176.74 5953.44 4104/56 5069.41 5680.81 9025.61 10703.21 12239.14 13300.14 ESTIMATED -2330.73 -1189 -47.27 1094.46 2236.19 3377.92 4519.65 5661.38 6803.11 YEAR 2010 2011 2012 FORECASTED 7944.84 9086.57 10228.3
16000 14000
12000 10000 8000 6000 4000 FORECASTED 2000 0
-2000 -4000
YEAR
INVENTORY ESTIMATED
YEAR
1
2
3
4
5
6
7
8
9
12000
10000
8000 6000
4000
YEAR FORECASTED
2000
0
1
2
3
29
The spectrum The demand forecast Ensure proper supply from vendor Ensure efficient production system Ensure delivery on time Ensure customer delight
Inventory reduction techniques MIFS(VSM) PFED JIDOKA STANDARDISATION KANBAN JIT VMI(S)
30
VMS -- Vendor management stock OBJ: To maintain inventory with optimum stock PURPOSE: To maintain matched stock as per the consumption EXPECTED BENEFITS: Reduce inventory & floor space
Process followed 1) All the identified items will be stored in designated locations. 2) Identified components stock will be spent to supplier by 9.00am everyday though email. 3)Days plan given by PPL will be sent along with stock by 9.00am everyday 4)All the components selected for VMS is under green channel 5) Priority is given for VMS vehicle in gate entry & unloading 6) No other material will be carried in VMS truck material will be supplied for the quantity equal to today¶s plan 7) Supplier¶s are educated the process
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STOCK INFORMATION SYSTEM
SI NO 1 AL PART NO 0E1090 XX PART NO 0987891 DESCRIPTION RADIATOR STOCK SIZE 40 LOT SIZE 20 SAFETY STOCK 36
2 3 4 5
6 7
NP098N 09NIU2 OJ34913 9034NG
N7893L N4109N
OP2901B OP09823 O451032 IO524J36
O34190H O384TU8
BATTERY POWER STEERING PROPELLOR SHAFT GREAR BOX
AIR CYLINDER TYRE
40 64 64 52
52 40
20 32 32 32
25 40
36 49 80 64
60 43
8 9 10
I09214 9HU438 35OI12
OP0342N O5432M1 043NBG4
BRAKES FRONT/REAR LIGHT SEATS
40 40 70
40 20 35
58 54 24
PARTS SELECTED FOR PHASE 1
SI NO 1 AL PART NO 0E1090 DESCRIPTION RADIATOR STATUS
2
3
NP098N
09NIU2
BATTERY
POWER STEERING
4
5
OJ34913
9034NG
PROPELLOR SHAFT
GREAR BOX
32
PART
SI NO 1
L
T
AL PART NO N7893L
F R PHASE 2
DESCRIPTION AIR CYLINDER STATUS
2
3
N4109N
I09214
TYRE
BRAKES
4
5
9HU438
35OI12
FRONT/REAR LIGHT
SEATS
ID CARD
XXX LOGO
VMS VISA : XXX Company : 09:00Hrs : Daily/shift
VMS Partner Delivery time Delivery frequency
33
VENDOR DETA L¶S
VENDOR ELECTED IN IRST H SE
1.XXX LTD
VENDOR SELECTED IN SECOND PHASE
SUPPLIER NAME 1.XXX LTD 2.XXX LTD 3.XXX LTD
STOCK LEVEL AT THE TIME OF IMPELEMENTION OF VMS
SI NO AL PART NO XX PART NO DERCRIPTION STOCK SIZE STOCK VALUE
1 2
3
4 5
6
O 34913 9034N
O451032 O524 36
PROPELLOR S AFT
REAR BOX
§
10
35O 12
043NB 4
SEATS
§ ¨
9
9
¨
¦
§
8
09214
438
OP0342N
O5432M1
7
N4109N
O384T 8
TYRE BRAKES
FRONT/REAR T L
¥
¥
N7893L
O34190
A R CYL N ER
¨
09N 2
§
¨
©
§
¨
¥ ¦
©
¤¤
SU
LIER NAME
LOCATION
CHENNAI
LOCATION HOSUR HOSUR HOSUR
0E1090 NP098N
0987891 OP2901B
OP09823
£
¢
¡
STATUS
STATUS
RADIATOR BATTERY
POWER STEER N
40 40
64
260000 260000 416000
64 52
52
416000 338000 338000 260000 260000 260000 455000
40 40
40
70
3263000
34
CURRENT ST CK LEVEL F VMS ITEMS
SI NO 1 2 3 4 5 6
7
AL PART NO 0E1090 NP098N 09NI 2 OJ34913 9034N
XX PART NO 0987891 OP2901B OP09823 O451032 IO524J36 O34190H
O384T 8
DESCRIPTION RADIATOR BATTERY
STOCK SIZE 40 40 64
STOCK LEVEL
220000 220000 352000
PROPELLOR SHAFT
REAR BOX
N7893L
N4109N
AIR CYLINDER 52
TYRE 40
8 9 10
I09214 9H 438 35OI12
OP0342N O5432M1 043NB 4
BRAKES FRONT/REAR LI HT SEATS
VMS DISPLAY BOARD
PART NO : PART NAME : BIN LOCATION : BUFFER QUANTITY : MAX QTY : SUPPLIER : SUPPLIER LOCATION : XXXX CONTACT PERSON : CONTACT NO : TRIGGERING MODE : TRISSELIN TIME :
POWER STEERIN
64 52
352000 286000
40 40 70
286000 220000 220000 220000 385000 2761000
35
FINGINGS Inventory level phase 1 is know 5.37Ls from 16.51 Ls Inventory level phase 2 is know 12.78Ls from 28.72Ls Store room reduce to 2 from 3 Area space 100sqm from 500sqm One point contact for easy monitoring & follow Daily stock verification & maintained stock acq
36
BIBLOGRAPHY
BOOKS. Operations & production management by R.pannierselvam. Library records from ashok leyland
WEBSITES. WWW.WIKEPIDIA.COM WWW.ASHOKLEYLAND.COM
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