Project Report

On
Effectiveness of Inventory
Management
From
A thesis submitted in the partial fulfillment of the requirement
for the aware of the degree of

MBA
In

Supply Chain
Management

Sikkim Manipal
University

For the Session July

2013

Developed By:

Guided By

Acknowledgement
It gives me immense pleasure to express our sincere and whole hearted sense of
gratitude to my guide for their invaluable and untiring guidance and supervision
throughout my study. To derive benefits of their enormous experience, it is a
matter of great privileged for me. I take this opportunity to express my sincere
thanks and full appreciation to my faculty guide or Lecturer who extended their
wholehearted cooperation, moral support and rendering ungrudging assistance
whenever needs. I wish them very best in their life.

S.NO

PARTICULATES

Executive Summary

Chapter-I
Introduction of Topic

09-22

Chapter-II
Profile of The Organization& Literature Review

23-37

Chapter-III
Research Methodology

51-54

Chapter-IV
Data Analysis & Interpretation

55-67

Chapter-V
Finding & Inferences

68-69

Chapter-VI
Conclusion & Recommendation

70-72

Chapter-VII
Bibliography

73

PAGE
NUMBER
08

EXECUTIVE SUMMARY:The inventory management is an indispensable part of health care organization.

Due to emergent nature of work incompany the role of inventory management is
very crucial.
The purpose of this study is to determine the ways of achieving the effective
inventory management system at Swasthik power, korba.
In first chapter we have given a general introduction of inventory management,
objective of the study, need of study and scope of study.
In chapter two, thecompany profile and literature review talks about the issue in
inventory management, empirical studies that have been carried out.
In chapter three gives research methodology, which consist type of research,
research design, sampling, sample size, sample unit and limitations of the study.
Chapter four is an analysis of the collected data using pie- charts and
interpretations are given.
Chapter five and six consists findings and conclusion& recommendations
respectively.
To enhance the effectiveness of the existing inventory management system, the
recommendations are as follows:
Well defined procedure of inventory management.
Responsibilities should be clearly defined.
Company should adopt accurately measure inventory level and forecast
supply needs methods.
Use of advance technology in inventory management.

CHAPTER-1
INTRODUCTION

INTRODUCTION:What is inventory management?

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. The scope of inventory management also 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.
In health care organization, inventory management and supply chain is a new
way of conceptualizing medical inventory management. Supply chain is an
indispensable component in inventory management. A supply chain as
a
virtual network that facilitates the movement of product from its production,
distribution and consumption. In considering supply chains,
health care manager are not only concerned with their relationship with the
companies at the upstream source of the product to minimize their overall cost
in supply management. The health care manager, as a leader of the provider link
in the chain, is in a strategic position and should facilitate collaborative
partnership with the adjacent links of the chain. Let us closely examine the
various links in
the supply chain from the perspective of a health care provider.
WHY KEEP INVENTORY?
Why would a firm hold more inventory than is currently necessary to ensure the
firm's operation? The following is a list of reasons for maintaining what would
appear to be "excess" inventory.
a) MEET DEMAND.
In order for a retailer to stay in business, it must have the products that the
customer wants on hand when the customer wants them. If not, the retailer will
have to backorder the product. If the customer can get the good from some other
source, he or she may choose to do so rather than electing to allow the original
retailer to meet demand later (through back-order). Hence, in many instances, if

a good is not in inventory, a sale is lost forever.

b) KEEP OPERATIONS RUNNING.

A manufacturer must have certain purchased items (raw materials, components,
or subassemblies) in order to manufacture its product. Running out of only one
item can prevent a manufacturer from completing the production of its finished
goods.
Inventory between successive dependent operations also serves to decouple the
dependency of the operations. A machine or work center is often dependent
upon the previous operation to provide it with parts to work on. If work ceases
at a
Work center, then all subsequent centers will shut down for lack of work. If a
supply of work-in-process inventory is kept between each work center, then
each machine can maintain its operations for a limited time, hopefully until
operations resume the original center.
c) LEAD TIME.
Lead time is the time that elapses between the placing of an order (either a
purchase order or a production order issued to the shop or the factory floor) and
actually receiving the goods ordered. If a supplier (an external firm or an
internal department or plant) cannot supply the required goods on demand, then
the client firm must keep an inventory of the needed goods. The longer the lead
time, the larger the quantity of goods the firm must carry in inventory.
A just-in-time (JIT) manufacturing firm, such as Nissan in Smyrna, Tennessee,
can maintain extremely low levels of inventory. Nissan takes delivery on truck
seats as many as 18 times per day. However, steel mills may have a lead time of
up to three months. That means that a firm that uses steel produced at the mill
must place orders at least three months in advance of their need. In order to
keep their operations running in the meantime, an on-hand inventory of three
months steel requirement would be
necessary.
d) HEDGE.
Inventory can also be used as a hedge against price increases and inflation.
Salesmen routinely call purchasing agents shortly before a price increase goes
into effect. This
gives the buyer a

chance to purchase material, in excess of current need, at a price that

is lower than it would be if the buyer waited until after the price increase occurs.
e) QUANTITY DISCOUNT.
Often firms are given a price discount when purchasing large quantities of a
good. This also frequently results in inventory in excess of what is currently
needed to meet demand. However, if the discount is sufficient to offset the extra
holding cost incurred as a result of the excess inventory, the decision to buy the
large quantity is justified.
f) SMOOTHING REQUIREMENTS.
Sometimes inventory is used to smooth demand requirements in a market where
demand is somewhat erratic.
There are three basic reasons for keeping an inventory:
1) Time - The time lags present in the supply chain, from supplier to user at
every stage, requires that you maintain certain amount of inventory to use in this
"lead time"
2) Uncertainty - Inventories are maintained as buffers to meet uncertainties in
demand, supply and movements of goods.
3) Economies of scale - Ideal condition of "one unit at a time at a place where
user needs it, when he needs it" principle tends to incur lots of costs in terms of
logistics. So Bulk buying, movement and storing brings in economies of scale,
thus inventory.

SUPPLY CHAIN MANAGEMENT OFcompany:The healthcare supply chain is composed of three major players at various
stages: 1) producers,
2) Purchasers,
3) Healthcare providers.

PRODUCER/MANUFACTURER:Producers include

pharmaceutical

companies,
medical-surgical
products
companies,
device
manufacturers, and manufacturers of capital equipment and information
systems. Purchasers include grouped purchasing organizations (GPOs),
pharmaceutical wholesalers, medical-surgical distributors, independent
contracted distributors, and product representatives from manufacturers.
Providers includecompanys, systems ofcompanys, integrated delivery networks
(IDNs), and alternate site facilities. At a broader level, healthcare supply chains
are very fragmented. The three players are largely operating independently from
one another and coordinated supply chain management hardly exists. The
Journal of the American Medical Association found that 85 90% ofcompany
cost structure is comprised of fixed costs (Roberts, 1999). This finding
putscompanys more in a league with transportation or heavy manufacturing than
with most other service industries (Ward, 2006). Neumann indicates (2003) that
supplies constitute 25% to 30% of acompanys total operating expense.
In addition, 25% of those expenses are tied to administration, overhead, and
logistics. The healthcare industry is slow to adopt the supply chain management
techniques that have had proven success in other industries.

Distributors, Wholesalers, and Electronic data interchange

(EDI):Distributors for medical-surgical suppliers are independent intermediaries who
operate their own warehouses; they purchase the product from manufacturer and
suppliers to sell to providers. The intermediaries are called distributor or
wholesalers depending on whether the products final resale has
another layer
before reaching the customer. One of the most significant contributions of
distributors to the health care supply chain was the deployment of electronic
order-entry systems to their customer base. Linking providers
through
electronic communication to their distributors is formally defined as electronic
data interchange (EDI).
EDI provides direct, real time computer to computer electronic transmission of
purchase orders, shipping notices, invoices, and the like between providers and
distributors. The cost for standardized EDI transactions for a purchase order, as
compared to costs with manual systems, saves operational costs for both
providers and distributors.

Group Purchasing Organizations (GPOs):Group purchasing organizations provide a critical financial advantage to
providers, especiallycompanys andcompany systems, by negotiating purchasing
contracts for products and nonlabor services. A typical GPO has manycompany
organizations as its
members and uses this

as collective buying power in negotiating contracts with many

suppliers: of pharmaceuticals, medical-surgical supplies, laboratory, imaging,
durable medical equipment, facility maintenance, information technology,
insurance, and food and dietary products and services. The contracts usually last
three to five years, giving providers price protection. The overwhelming
majority ofcompanys participate in group purchasing. Often acompany belongs
to one or more GPOs. The GPOs can be either for-profit and investor owned, or
nonprofit. They differ in geographic coverage, size, and scope.
.
E-Distributors:E-commerce in health care can be viewed from different perspectives. Here we
will concentrate on two aspects: business-to-business (B2B) commerce and
business-to-customer (B2C) commerce. B2B e-distribution provides efficiencies
in many areas for providers, GPOs, and suppliers in the chain through reduced
transaction costs and prices, reduced cycle times with automatic replenishments,
deliveries on a JIT basis, and dynamic planningall the way to
upstream forecasting for pull-demand, rather than push-demand sales by
suppliers.
Firms provide e-Catalog, e-Request for Proposal (eRFP), e-Auction, and eSpecials (limited discounts on some items), which emulate traditional systems
on-line and are available to bothcompanys and physician offices.

NEW CONCEPT OF MATERIAL MANAGEMENT

Materials Management in Healthcare
(A patient-centered approach)
Materials management plays a crucial role in providing efficient healthcare by
touching three vital aspects of medical supplies used in thecompany viz.
a)
b)
c)

Availability,
Safety and
Affordability.

Supply chain is the lifeblood of a healthcare organization. As most departments

depend heavily on supplies, materials management can ease or cramp
acompanys operations. From a low cost needle to a high-end
orthopedic implant, micro steel instruments or pieces of linen, supplies are
indispensable during a patients stay at thecompany. Quality care cannot be
provided on time
unless required material is available in adequate quantity. Materials
management plays a crucial role in providing efficient healthcare by touching
three vital aspects
of medical supplies

used in thecompany viz. availability, safety and affordability.

Timing (The most crucial aspect):The time factor is probably not as crucial in any other field as it is in healthcare
delivery where delay of a few seconds can cost a life. Moreover, availability of
a low cost catheter is as critical as a high value pace maker when it comes to
medical care. Therefore, inventory managers have the huge responsibility of
making thousands of diverse medical consumables available on time. The
challenge is even greater as the number of expected patients are unpredictable;
suppliers are unreliable and costs are rising.
With recent developments in automation and information technology and
emerging trends in the medical supplies industry, materials managers are now
better equipped to handle time constraints. Innovative inventory supply models
like consignment and rental contracts have eased the pressure of making critical
supplies available on time. Life-saving products like defibrillators, drug eluting
stents and heart valves are available atcompanys at zero investment. The
responsibility for replenishing the stock lies on the vendor. In addition, the
patient benefits from the latest technological innovations without thecompany
having to carry the fear of obsolescence.

Patient safety (The first

priority)
The safety of patient is the top priority in healthcare, and materials managers
play a crucial role in protecting his / her interest. The biggest responsibility of a
materials manager is to ensure that the products purchased for clinical use are of
good quality. It can be achieved by developing a product
evaluation system
consisting of well-defined parameters to guarantee that only approved products
enter acompanys stockroom.
Despite cost being an important criterion in assessing new
products, safety and clinical efficacy concerns are prioritized. Physicians should
be consulted to help determine if a new product is performing and producing
desired clinical impact. Another effective way of determining the safety of a
product is to check for CE mark or FDA approval. The vendors access
needs to
be restricted and back door sales discouraged to ensure that only properly
reviewed products are brought into the facility.
Materials managers
need to take initiative

in organizing hands-on training for caregivers to ensure safe use of

complex and critical equipment like laparoscopic graspers, staplers and arterial
filters. Absence of proper training can result in patient injury leading to serious
medico-legal issues. Training programmes conducted by experts can be held
either in-house or at specially designed state-of-the-art institutes equipped with
ergonomically designed simulation labs and conference halls with telesurgery
facilities. In many instances, clinical outcome improves with the use of
advanced techniques and hence regular training should be encouraged.

Cost(An
variable)

important

There is tremendous pressure on materials mangers to initiate serious cost

cutting measures. While the cost of medical supplies has been spiraling up,
greater number of patients is demanding high quality and reasonably priced
healthcare services. Since cost of supplies forms a significant portion of
healthcare expense, materials mangers should continuously strive to get better
deals. Economical prices help ensure affordable medical care for vast majority.
The healthcare organization in turn reaps the benefit of better revenue
realization stemming from increased number of patients. While the prices
available to an organization are influenced by the purchasing volumes,
negotiation skills of the purchasing personnel also play an important role.
Knowledge of competitive products, awareness of current market trends and
capability to use the database for price/volume information helps tremendously
in the bargaining process. Other sources for product related information,
including regulatory issues are product fairs and conferences, internet articles
and periodicals.
Collaborative relationships with clinicians and networking with othercompanys
and vendors can help in keeping abreast with latest products and upcoming
technological trends. Such close and continuous interaction also gives important
clues about non-performing products. Instituting an efficient system for
payables is effective in getting rebates and discounts, which can be passed on to
the patient. The medical supplies industry is flooded with innovative products
and services. Materials managers should continuously scout for competitive
alternative product / techniques that can give better outcome. While cost is an
important criterion, quality of the product needs to be the primary concern to
ensure that patient care is not compromised.
Conclusion

good

inventory

management programme is always patient-centred. While inventory is

concerned with monetary issues,companys are in the business of serving
patients. Although technology has an important role to play, the emphasis
should be on using it in a way that makes a difference to the quality of patient
care. Automating inefficient processes may not yield any productive result.
Processes should be reengineered to make them more patient-friendly. Costeffectiveness, time consciousness and safety are key drivers of a patientcentered approach. Once this goal is clear, technology can support and drive the
efforts towards realizing efficiencies and improving the quality of health care
services.

Requirements for effective inventory:

1. A system to keep track of the inventory in storage and on order.
2. A reliable forecast of demand.
3. Knowledge of lead times and lead time variability.
4. Reasonable estimates of inventory holding costs, ordering costs, and shortage
costs.
5. A classification system for inventory items in terms of their importance.

TECHNIQUES USED IN INVENTORY MANAGEMENT

ABC ANALYSIS
VED ANALYSIS(Vital, Essential, and Desirable)
FSND ANALYSIS(Fast, Slow-moving, Non-moving and dead stock)
SDE ANALYSIS(Scare, Difficult and Easy)
HML ANALYSIS(High, Medium and Low)

A-B-C ANALYSIS:The ABC analysis is a business term used to define an inventory categorization
technique often used in materials management. It is also known as Selective

Inventory Control. Policies based on ABC analysis:

A ITEMS: very tight control and accurate records
B ITEMS: less tightly controlled and good records
C ITEMS: simplest controls possible and minimal records
The ABC analysis provides a mechanism for identifying items that will have a
significant impact on overall inventory cost, while also providing a mechanism
for identifying different categories of stock that will require different
management and controls.

The ABC analysis suggests that inventories of an organization are not of equal
value. Thus, the inventory is grouped into three categories (A, B, and C) in
order of their estimated importance.
'A' items are very important for an organization. Because of the high value of
these A items, frequent value analysis is required. In addition to that, an
organization needs to choose an appropriate order pattern (e.g. Justin- time)
to
avoid
excess
capacity.
'B' items are important, but of course less important, than A items
and more important than C items. Therefore B items are
intergroup items.
'C' items are marginally important.

VED ANALYSIS :VED analysis divides items into three categories in the descending order of their
critically as follows:
V stands for vital items and their stock analysis requires more attention,
because out of stock situation will result in stoppage of production. Thus, 'V
items must be stored adequately to ensure smooth operation of the plant.
'E' means essential items. Such items are considered essential for efficient
running but without these items the system would not fail. Care must be taken
to see that they are always in stock.
'D stands for desirable items which do not affect the production immediately
but availability of such items will lead to more efficiency and less fatigue.
VED analysis can be very useful to capital intensive process industries. As it
analyses items based on their critically, it can be used for those special raw
materials which are difficult to procure.

FNSD ANALYSIS:FNSD analysis divides the items into four categories in the descending order of
their usage rate as
follows:

'F' stands for fast moving items and stocks of such items are consumed in a
short span of time. Stocks of fast moving items must be observed constantly and
replenishment orders be placed in time to avoid stock-out situations.
'N' means normal moving items and such items are exhausted over a period of a
war or so. The order levels and quantities for such items should be on the basis
of a new estimate of future demand to minimize the risks of a surplus stock.
'S' indicates slow moving items, existing stock of which would last for two
years or more at the current rate of usage but it is still expected to be used up.
Slow moving stock must be reviewed very carefully before any replenishment
orders are placed.
'D' stands for dead stock and for its existing stock no further demand can be
foreseen. Dead stock figures in the inventory represents money spent that
cannot be realized but it occupies useful space. Hence, once such items are
identified, efforts must be made to find all alternative uses for it. Otherwise, it
must be disposed off.
HML ANALYSIS
Unit value is the basis of this analysis and not the annual consumption
value.
H- Unit value>1000(Sanctioned by higher officials)
M-Unit value 100to1000.
L-Unit value<100.
SED ANALYSIS:SED analysis classified items into three groups called scarce, difficult and easy
and focuses on ease of procurement as the criterion. The information so
collected is then used for finalizing purchasing strategies. Scarce group include
items of which there is death, are imported or obtained through canalizing
agencies of the government. Such items are procured on annual basis without
any EQO type analysis, difficult items include those items which are available
indigenously but are not easy to procure due to exotic raw material being used.
Certain items which are difficult to be produced due to design complexity also
come under difficult category. Items under easy category are produced on a
mass- scale, locally available, absence of string specification and are easy to
produced.
For the obvious reason scarce group is taken care by the experienced senior
buyers while the easy group procurement is the responsibility of junior and
inexperienced buyers.

STATEMENT OF PROBLEM:A study on effectiveness of Inventory management at SWASTHIK

POWER.

OBJECTIVES OF THE STU DY:1. To study the tools and techniques of inventory management adopted at
Swasthik power.
2. To study the inventory control measures in inventory management.
3. To study how ABC analysis and VED techniques are implemented in
inventory management.
4. To identify problems related to inventory management.
5. To study the inventory management procedure.

NEED OF THE STUDY: To improve and maintain relationship between Buyer

Supplier.
To reduce inventory by implementation of comprehensive
methods of inventory management.
To improve supply- chain management.
To get best quality material at competitive material.
To reduce inventory cost by using methods of inventory
management.
To improve overall performance of company by adopting
comprehensive

methods of inventory management.

To remove waste full activities by continuous improvement.
To reduce input cost and increase output performance.
To increase customer satisfaction by providing best service.
To ensure cost efficient benefits to the organization.
To maintain inventory and predict according to the forecasting
techniques.
To enhance the effective use of resource to increase the
productivity.
SCOPE OF THE STUDY:Inventory management being a very important concept in all the
companys having a void coverage often calls for the managerial attention. In
the modern times inventory management has become the integral part of the all
companies. So all the firm gives special importance for inventory
management. The major
objective of the study is to examine the effectiveness of inventory management
system adopted by Swasthik power; the study mainly focuses on the techniques
used by thecompany to control the inventory.

In supply-chain management.
In productivity enhancement.
In operation management.
In assets management.
In inventory forecasting, valuation and visibility.
In quality management
In demand forecasting

CHAPTER-2
COMPANY PROFILE& LITERCTURE REVIEW

INTRODUCTION

Geographical Location
Nearest town and railway station is Korba.
Korba is well connected with Champa (55 km by road) and Bilaspur (115
km) by state
Highway. Both Bilaspur and Champa are important stations on MumbaiHowrah route.
Nearest airport is Raipur, about 220 km by road

VISION STATEMENT:Achieve global standards of excellence in productivity and customer

satisfaction.
Swastik Power was registered as a Company wholly owned by
Government of India on
th

27 Nov 1965
Started with capacity of 100000 ton
The company was engaged in manufacture of aluminium and had plants
at Korba in C.G and Vidhan Bagh in West Bengal
Integrated aluminium complex producing a metal from Bauxite.
The company was having integrated manufacturing plant for the
manufacture

and sale of aluminium

metal, wire rods and semi-fabricated products

Prior to disinvestment Swastik Power was having share capital of
Rs.488.8Cr, which was owned and controlled by the Government of
India.
nd

Swastik Power was privatized on 2 March 2001.

HR STRATEGY SWASTIK POWER

HR VISION

BUILD EXCELLENCE IN PEOPLE PROCESSES TO DEVELOP A WORLD

CLASS ORGANISATION THAT PEOPLE ARE PROUD TO ASSOCIATE
WITH

SWASTIK POWER Management Team

MD, Aluminium Business

President & Whole Time Director

Operating Team

Team
Plant I

Enabling

Team Leader

Vice President

Plant II
Sr.Vice President

Team
Power
TBA

Team Leader
Marketing

Company Head
Sr.Vice President

Team Leader
General Manager

Company Head
Asso.Vice President

Company CCO
TB

Vice President

Head
Asso.Vice President

Associate G M

MANPOWER - UNIT WISE

Trainee
Non Exe
MT
GET
E&O

Plant-I

Plant-II

Power

Marketing

Enabling
Team

Background Aluminum industry

Aluminum production in India commenced in 1938 with the commissioning of
Aluminum Corporation of India's (Indal) plant in technical and financial
collaboration with Alcan, Canada having a capacity of 2,500 ton per annum.
The plant started

with sheet production

using imported aluminum ingots.

In 1959, Hindustan Aluminum Corporation (Hindalco) was set up at Renukoot
in UP with an initial capacity of 20,000 ton per annum. Malco, a public sector
undertaking was commissioned in 1965 with a capacity of 10,000 ton per
annum. Swastik Power, a PSU with a similar capacity of 10,000 ton, followed
this in 1975. Finally in 1987, National Aluminum Company (Nalco) with a
capacity of 0.218mn ton was commissioned in technical collaborate In the
1970s, the government regulated and controlled the aluminum industry through
price distribution controls and barriers to entry. The 1970 Aluminum Control
Order compelled the Indian companies to sell 50 % of the aluminum produced
for electrical purposes.
The government decontrolled the industry in 1989 with the removal of the
Aluminum Control Order. The industry was de-licensed in 1991 and was
allowed liberal import of capital goods and technologies.
The demand for aluminum grew 6 % in the 1980. Aluminum demand post
liberalization registered a growth rate of 12%. This coupled with the increase in
the global aluminum prices ($1800/ ton in 1994) led to increased investments in
this sector.
The downstream capacity in the aluminum industry spurted due to sufficient

duty differential between aluminum ingots or primary metal and value

added downstream products. In March 1993 while the duty on aluminum ingots
was 25% the duty on downstream products was 70%. However, with the change
in the tariff structure undertaken in the 1997 budget, duty on semi-fabricated
metal was lowered to 25%. This change adversely affected the fortunes of the
downstream producers.

Industry structure
The aluminum industry can be distinctly divided into primary metal producers
and downstream metal producers. The integrated aluminum manufacturers like
Hindalco, Swastik Power, Malco and Indal have a substantial presence in the
down stream aluminum market.
Primary metal producers contribute to approximately 89 % of the metal
production in the country. Re-rollers or scrap recycling units produce the rest.
Primary metal producers are integrated in the sense that they manufacture
aluminum from bauxite since they have bauxite mines with large reserves in
their possession.
Trends In Capacity (000 ton)

Year

Hindalco

Nalco

Swastik

Indal

Malco

Total

Power
1990-91

150

218

100

117

25

610

1991-92

150

218

100

117

25

610

1992-93

150

218

100

117

25

610

1993-94

150

218

100

117

25

610

1994-95

150

218

100

117

25

610

1995-96

210

218

100

117

25

610

1996-97

210

218

100

117

25

610

1997-98

242

230

100

117

25

654

The total installed capacity in FY98 was 0.65mn tpa. Though Indal's total
primary aluminum capacity is 117,000 tpa, its operational capacity is only
50,000 tpa. The Belgaum smelter has been non-operational for the last 36
months due to power problems and the company has recently decided to close
down the smelter.
Value added metal producers manufacture aluminum products by purchasing
either primary metal from the integrated aluminum producers or by importing
the same from the international markets.
Integrated

producers

with

presence in value added products are in a better position to capitalize

on this value addition when compared to stand-alone producers. The regular
supply of primary aluminum metal, the price volatility in primary aluminum
procurement and the depreciation of the rupee (in the case of imported metal)
are the key factors that affect the viability of downstream producers.
The downstream aluminum producers are also plagued by the high import duty
content of primary aluminum. Currently the import duty on aluminum is 27.5%,
which includes the 10% surcharge imposed in the recently concluded budget.
The table below depicts the landed price of primary aluminum in different
scenarios. From the table it is clear that the primary aluminum producers are
relatively protected, whereas the downstream producers have to bear the brunt
of high import duty.
Effective Landed Price in Different Scenario (Rs/ton)
Rs38/$

Rs 40/$

$/Ton

15%

20%

25%

15%

20%

25%

1,500

69,736

72,768

75,801

73,407

76,598

79,790

1,550

71,943

75,071

78,199

75,730

79,022

82,315

1,600

74,150

77,374

80,598

78,053

81,446

84,840

1,650

76,357

79,677

82,997

80,376

83,870

87,365

1,700

78,564

81,980

85,396

82,699

86,294

89,890

1,750

80,771

84,282

87,794

85,022

88,718

82,415

Value added downstream products are available in various forms viz (a) Rolled
products (b) Extruded products (c) Foils (d) wire rods and (e) Aluminum wheels
used in automobiles etc. Integrated producers like Hindalco and Indal have
significant presence in downstream products.
Capacity of Rolled Products
Company

Capacity(ton)

Hindalco

80,000

Indal

90,000

Swastik Power

40,000

Malco

7,000

Pennar

30,000

Sterlite

20,000

Light Metal

10,800

Others

15,000

Total

292,800

Rolled products are manufactured by rolling slabs to the required

thickness and coiling them. The coils are further slit into the required width.
Rolled products are used in manufacturing aluminum foils, pressure-cooking
sheets, building sheets and flooring sheets used in transport.
The current installed capacity of rolled products is to the tune of 0.29mn ton.
Integrated aluminum producers (with the exception of Nalco) having a capacity
of 0.21m ton contribute to nearly 75 % of the aggregate capacity.
Indal with a production capacity of 90,000 tpa is the largest producer of rolled
products in the country, followed by Hindalco (80,000 tpa) and Swastik Power
(40,000 tpa).
Other producers in the manufacture of rolled products are Sterlite Industries,
Pennar Aluminum, and Light Metal Industries (merged with India foils in
December 1997). There also existed re-rolling mills who collectively supply
around 1, 00,000 ton of rolled products the rolled products market to a large
extent is dependent on a strong economic growth and resultant rise in demand.

PLANT AT KORBA
The sections of Integrated Aluminium Plant, Korba, are -

1. Alumina Plant: -

Bauxite (ore)

2. Smelter Plant : 3.

Alumina

Alumina

Molten Aluminium Metal

Fabrication Plant: - Molten Aluminium Casting & Shaping of

Aluminium
.

Metal

SALEABLE PRODUCTS

Hot Rolled Products

Cold Rolled Products

HR Plate

Plain Sheet

HRF Coil

Chequered
Sheet
Corrugated
Sheet
Part Coil

CRF

SWASTIK POWER YEARWISE TURNOVER & PROFIT/LOSS

STATEMENT:YEAR

KORBA

BBU

Total

Turnover

Profit/Loss
1973-74

-360

-360

50

1974-75

-665

-655

372

1975-76

-482

-482

1410

1976-77

-361

-361

4609

1977-78

-91

-391

5618

1978-79

-551

-551

10174

1979-80

-1617

-1617

8078

1980-81

-2338

-2338

5979

1981-82

-3963

-3963

8540

1982-83

-5284

-5284

10603

1983-84

-3794

-3794

14455

1984-85

-1470

-5

-1475

22801

1985-86

-7479

-258

-7737

25362

1986-87

-4113

-202

-4315

27761

1987-88

256

-220

36

31872

1988-89

921

-399

522

36768

1989-1990

574

-464

110

41619

1990-1991

473

-454

19

46715

1991-1992

411

-320

91

51860

1992-1993

721

-535

186

51318

1993-1994

2209

-682

1527

62799

1994-1995

9432

-381

9051

71653

1995-1996

16945

-612

16333

71653

1996-1997

13447

-816

12631

76057

1997-1998

13951

-565

13386

86100

1998-1999

14574

-765

13809

88523

Production
SWASTIK POWER (000's MT)
Cash costs of production

2005 2004 2003 2002 2001

100

97

96

68

87

BHARAT ALUMINIUM COMPANY (SWASTIK 61.1 56.2 56.8 71.5 72)

A House Of Diversified Excellence

The SWASTIK GROUP established in the year 1961 is one of the leading
trading houses in eastern India. With diversified activities it is also engaged in
the providing engineering, management and financial consultancy services in
the field of infrastructure development from the concept to commissioning. As a
trading company engaged in catering the requirement of Mining, Construction
Power Plants, Forging, Casting and Export Etc. SWASTIK GROUP has played
a significant role in the development of Indian Industry and Infrastructure
Projects. We at SWASTIK aim to provide most effective and prompt after sales
services for the equipments sold by us through trained personnel and after sales
services for the equipment sold by us through manufacturing plant-trained
personnel and experts.
CHAIRMEN'S MESSAGE
We at SWASTIK GROUP are committed to give our customers the best
possible products & services at most competitive prices as per agreed standards
and within the stipulated time frame, to their entire satisfaction.
We shall strive relentlessly towards a Zero-defect culture through the
commitment of each and every member of our Company.
And of course, we shall not stop there, but keep on
going.
Hanuman Sarawgi
Chairman
VISION
To be known and identified as an ethical, trust worthy and dependable company
relied upon by clients, offering real and lasting solutions at an affordable cost.
OBJECTIVE
To be partners in progress by assisting our clients in optimizing their potential
to achieve corporate goals by offering THE SOLUTION.
The SWASTIK GROUP renders services in the form of Consultancy. Supply of
Equipments and Spares, Erection and Commissioning and operation in the
following fields:

1. Mining and Construction

a. Open Cast Mining
Hydraulic Excavators, Rope Shovels, Blast hole Drills, Loading Equipment,
Rear End dumpers, Draggles, Bulldozers, Motor Graders etc.
Coal and Mineral Preparation and Beneficiation Plants & Material Handling
Equipment.
Pollution Control Equipment.
Complete equipment for large Open-Pit Mining with annual productions of 10
million tons by Shovel-Hauler process or semi-continuous process.
b. Underground Mining
Drilling, Loading, Man and Material Transportation Equipments, Under Ground
Support Vehicles.
Complete projects for mining (Minerals and Metals).
2. Power Plants
Mini / Micro Hydel Power Projects.
Thermal Power Projects up to 1000 MW.
Hydel Power Projects up to 360 MW.
Transmission and Distribution Equipment.
3. Materials Handling and Reduction Equipments
Cranes - EOT / HOT up to 250 MT capacity.
Mobile Cranes - Tyre mounted and crawler.
Port cranes ( Luffing Cranes, Container Handling Cranes ).
Barges, Sea going vessels.

Crushers and Grinders.

4. Ferrous and Non-Ferrous Metal, Ferro- Alloys, Minerals and other metals
Aluminum, Brass, Copper, Chromium Metal, Ferro-Silicon, Rolled products,
Steel, Silicon metal etc.
5. Machine Tools
Special Purpose Machine Tools.
Foundry Equipments and Machines.
Electrical Pneumatic and Cordless Engineering Tools.
CNC Machines.
6. Forgings and Castings
Forging & Castings of Ferrous and Non Ferrous Metals, Mn Steel Casting,
Liner Plates, Rolls for Rolling Mills etc.
7. Manufacturing
Frooti
Appy Fizz
Bailley
8. Export
Commodities
Tea, Spices, Jute, Processed Food (Veg. & Fruits), Rice, Fruit Pulp & Juice,
Garments, Textiles, Cosmetics, Decorative Laminates, Marble, Minerals,
Granite (Polished and Unpolished) etc.
Ferrous & Non-Ferrous Metals.
Forgings & Castings.
Engineering

Products.

Material Reduction Equipments.

Spares for heavy earth moving machines.
9. General Trading
Bearings, Cement, Ferrous & Non-Ferrous Metals, Gears and Speed Reducers,
Lubricants, Petroleum products, rubber compounds and Chemicals. Steel, Tyres
and Tube etc.
10. Electrical Equipments and Components
Transformers
Switchgears
Motors
Luminaries
LT and HT Cables
11. Consultancy Services
We provide Engineering and Management consultancy Services for
Infrastructure Projects i.e. Roads, Bridges, Ports and Harbors, Water Treatment
and Distribution, Sewage treatment, Material Handling Plants, Railways, Urban
development etc.
12. News
We see the future of consulting on high value capital projects as the delivery of
an integrated service by experienced professionals from across all the major
facets of the construction sector. Working together we bridge between the
complex technical, contractual, financial and programming issues that affect
capital project procurement, fulfilling a unique niche for our Clients.
HPR was created from the merger of High-Point with the long established firm
of Rendel, Palmer & Tritton in 1985. High-Point had been founded in 1970;
Rendel Palmer & Tritton dated back to 1822. Historically both companies had
been involved in some of the greatest and most challenging construction
projects around the world.

HPR is now a private company with a significant portion of the shares

held by the management. The company has re-focused on long term strategic
targets and core growth markets.
We now employ around 200 staff and provide an integrated service with senior,
experienced consultants drawn from a wide range of professional backgrounds
from across the sector. Our approach to our engagement with Clients is simply
set down. Our Clients work on many of the worlds major projects; we
provide project definition, project leadership, design & interface
management, and
project turnaround. Our focus is defining and managing the key issues by which
the objectives of our Clients are met.
More than anybody else in HR Department the onus is high on "Recruitment
Specialist",
he
is
like
"companies"
advertising
manager.
He must be well versed with the "Business" of the company, its strategies and
policies.
It is for him to keep himself updated with the latest skill sets, available in the
market. It is for him to "keep" him self updated with the "Business Competitors"
of the organization. Even the onus of "retaining people is on "Recruitment
Specialist".
It is for them to find if the "person" will be able to fit into the "culture" of the
organization.
A good Recruitment Specialist must be in a position to answer the following
questions:
How much time and expense does your administrative staff expend to open,
respond, and route resumes to the hiring team? The best way to do this is to
figure out an average cost per resume and track how many resumes you receive
for each job to be able to calculate the administrative cost per job.
A.
How much time does your hiring team / recruiter spends screening
through resumes? This may also be an average cost per resume received for the
job.
B.
If your organization conducts preliminary phone interviews, how many
were conducted and how much time, did the recruiter to prepare, conduct,
summarize and communicate the results of those interviews spend?
C.
Do you have an automated applicant-tracking program? This is an
indirect cost that you may choose to pro-rate across your hires for a specific
period, somewhat like depreciating a new computer on your taxes.
A.
Did your hiring team or the interviewee incur any travel expenses
that were reimbursed by the company?
D.
How much time were spent scheduling interviews?
E.
How many
staff members were

involved in the interviews? How long per interview? How many

interviews? What is the average cost of the interviewers' time
F.
How much time and what was the cost for follow-up with candidates
during negotiations and to notify those that were not hired?
G.
What was the cost of referral fees from a recruiting agency or an
employee referral?
H.
What costs will the company be paying the new hire to relocate? Some
costs may include moving company, airplane tickets, hotel accommodations,
temp housing, house hunting visits, assistance with sell/buy, or
spouse/dependent assistance.
I.
What was the cost for background investigations and/or reference
checks? Drug screens.
J.
If there was a signing bonus, how much was it?
K.
What costs does the company typically incur to bring someone onboard orientation, mentor, benefits enrollment, computers, cell phones, uniforms, etc.?
L.
How long did it take to fill the position from start to hire date? What
could you have done to reduce the time to hire and not have affected the quality
of the hire?
M.
What was the impact on productivity while the position was left vacant?
This is a very difficult calculation to conduct especially depending on the
position. However, it does have an impact on the hiring manager and the
organization as a whole. If it cannot be quantified, at least keep it in mind.
N.
How satisfied was the hiring manager / organization with the hire? This
assessment can be done following the hiring but should be repeated again 3 - 6
months after the employee has been on the job to get a real sense of how
successful
the
hire
was.
Conclusion
For a Recruitment Professional to be efficient and effective, there is so much to
do. They can play an important role in "Organization Transformation", provided
they are "true an fair" in their dealings. I have also mentioned in one of my
"earlier write-up" that "Recruitment Professional" is corrupt, there is a good and
bad face of each profession, and all that is matter is how true you are to yourself
and your integrity.
Recruitment procedure guidelines:- (Policy before investment in
SWASTIK POWER)

The recruitment action is normally processed after issue of valid

creation of order and receipt of advice for recruitment from the Manpower
Section.

As soon as the proposal for creation of posts is finally approved

and sanctioned by the competent authority after financial concurrence on the
basis of the recruitment and justification placed by the indenting department, the
manpower section will issue necessary creation order for the creation of
required post/posts.


If the posts are required to be filled up at the local level,
i.e. at the Project in Korba, the manpower section will first consider the method
of filling the posts either by promotion from within, trade test or by directs
recruitment of fresh trainees or experienced personnel from outside. For the
purpose of fresh recruitment, it will be also consider as to whether the post is to
be filled internally or from outside. This is considered after taking into
consideration the suitability of the available personnel within the project for a
particular post. If it not possible to fill the post internally then it is decided to
resort to recruitment from outside, necessary directions will be issued by the
manpower section to the recruitment section.

As soon as the recruitment section gets necessary information and

direction from the manpower section towards the filling up of the posts, the
recruitment officer (Administrative Officer/R) will finalized the following
things:
a)
Posts and pay scale as per approved nomenclature and scale of
pay.
b)
Job specifications approved by indenting department.

After obtaining confirmation for the same from the indenting

department, he puts up before personal manager for his final approval.
Internal Circular
After the finalization and approval about the name of post, scale of pay and job
specification by the personal management, officer in charge of the recruitment
section will prepare a recruitment program and obtain approval of the P.M for
taking further action. Following items are included in the recruitment program:
Date of internal circular

Last date of receipt of application in response to the internal

circular

Last date of the scrutiny of the applications

Last date finalizing the list of internal candidates to be called

for interview

Last date of interview for the internal candidates

Last date of finalizing and approval of the selection panel

Last date of issue of offers

Notification to Employment Exchange

Last date of receiving the list of names from the employment

exchange

Last date for obtaining the non availability certificate incase the
employment
exchange is unable to supply suitable candidates.

Last date of holding interview

Last date of finalizing and approval of the selection panel

Last date of issue of offers

Notification
to
Advertisement


Last date of receipt of application from candidates

Last date of scrutiny of application

Last date of preparing a list of eligible candidates to be called for

interview

Last date of approval by the P.M.

Last date of submitting list of candidates to be called for interview

Last date of issue of Call Letters to candidates for interview

Last date for the interview

Last date for finalizing the selection panel and its approval by P.M

Last date of issue of offer letters for selected candidates.

Last date of joining by the candidates

The advertisement of the post will be made both in local as well as All India
News Papers as per standing practice.
Immediately on receipt of application, the scrutiny starts in the
recruitment section. The details of the scrutiny will be tabulated and scrutinized
in the approved Performa and sent to indenting department for a detail scrutiny
to consider the technical aspects and determining the suitability of the candidate
for the calling in the interview.
As soon as the applications are received from the indenting
department after the detailed scrutiny, recruitment section will finally prepare a
list of candidates to be called for interview and obtained approval of the same
by the P.M.
Interview Call
As soon as the list of candidates to be called for interview is approved by P.M,
the recruitment section issue letters for interview. The recruitment section will
inform the members of the Selection Board and Training Center about the date,
time and the venue for holding the written test and interview.
Constitution of Selection Board
The Selection Board for each post will be constituted as per the decision of GM.
Generally, two personnel from the indenting department and one from HR
department are present in the Selection Board.
Approval of Selection Panel & Issue of offers of Appointment
Due weight age for domicile, qualification and experience should be continued
to be given as per existing practice. Based on this, final Assessment Record
should be prepared taking into consideration the marks obtained in
Written/Trade Test an interview, sign by the members of the Selection Board.
All of those scoring 60% and more marks will be eligible for the Selection
Process. Specific recommendation of the committee, if any, should also be
recorded and signed by the members.
The selection panel and recommendations of the Selection
Board will be put up before PM for his approval. After obtaining the approval
of PM necessary
offers in favour of

selected candidates will be prepared and issued by the recruitment

section.
As soon as the candidate reports for duty in response to the offer issued to him,
the recruitment section will check his certificates and other relevant particulars
and send to the establishment section to be issued with the posting order.
Time Schedule

Issue of departmental circular and issue of offers for filling up the posts
through departmental candidates internally- total period not exceeding 45 days
from the date of receiving advice from the manpower section.

Notification to employment exchange and filling up the post through

employment exchange-total period not exceeding 50 days from the date of
receiving advice from the manpower section or from the date, the steps for
recruitment through internal candidates is concluded.

Issue of advertisement within 15 days from the date of receipt of nonavailability certificate from the employment exchange. Last date of receipt of
application through press advertisement not exceeding 1months from the
date issue of advertisement.

Last date for scrutiny of applications and issue of letters of interview

not exceeding 21 days from the date of receipt of applications.

Date for calling the candidates for interview- not exceeding 21 days from
the date of issue of letters of interview.

Date for calling the candidates for interview not exceeding 21 days
from the date issue of letters of interview.

Last date for issue of offers of appointment to the selected candidates

not exceeding 15 days from the date of interview

Maximum joining time to be granted to the candidates not exceeding

1months from the date of issuing the offer of appointment.

TRAINING & DEVELOPMENT

Vision Statement
To continuously upgrade Swastik Power Employees knowledge
base, skillsets and equip them with competencies aligned for fulfilling the Organizational
needs for
today
and
tomorrow
Mission Statement
To develop talent leaders who can build sophisticated business
in line
with the Group Philosophy - people who are technologically literate, globally
astute and operationally
agile
Swastik Power Learning Centre

Deliverable:
A minimum of 15

Employees to be trained everyday i.e. 4500 Employees to be trained

per annum.

Mandatory Training Interventions like Multiskilling & Multitasking,

Safety, Health, Housekeeping, Basics of Computer and Vocational Skill up
gradation to be conducted round-the-year.

Training to the Workmen on Safety and System Quality to be conducted

inside the Plant with the help of IHS and System Quality. Training to be
coordinated by Swastik Power Learning Centre.

Empanelment of at least 10 nos. of best in class professionals, drawn

from various SBUs, for conducting classroom and shop floor training courses/
workshops

Additional infrastructural facilities (as per the next slide).

Training, being an investment with the highest potential returns, to be

made an integral part of Companys business strategy including issue of
policy statement on the training target

Development of Training Policy.

Training Matrix from identified Training Needs.

Training Calendar.

Training Manual.

Analysis of Training Feedback form.

Development of Infrastructural Facilities at BLC.

Revised Training Programmes for the Trainees.

Training- Objective

To avoid knowledge obsolescence.

To continuously upgrade skills - in consonance with various

Improvement Projects and also the ambitious Smelter and Power Projects.

To help Swastik Powernies discover a new route to success through

positive attitude, self-motivation, inter-personal skills and effective
communication.

To help Swastik Powernies to set goals and begin with an end in mind.

To facilitate Job Enrichment and Job Enlargement.

To develop Lateral/ Out-of-Box Thinking.

Training Why?

Is essential to keep pace with the changes.

Is a capital investment and asset building for the future?

Is a proven tool for employee motivation and retention?

Taking care of the training needs of an employee

Reinforces his/ her interest in the job and contributes
to job satisfaction and creates competencies for new
Roles or functions for the existing employees

Addressing

the visible gap in the

available knowledge,
Skills and mindset vis--vis the imminent requirements
Of an Organization committed to modernize and expand
the existing Plant Facilities
Training Initiatives

Hands On training under mentorship of highly motivated

main stream
employees

Classroom inputs by line executives on all aspects of technological

processes, O&M practices and basic management

Emphasis on developing right attitudes

Inculcating a sense of belonging to and identity with the Organization so

that harnessing potential becomes as natural as any other process in the
Organization

Fig. Model of training process

Mandatory Training Areas:
JUNIOR MANAGEMENT
Human Relations

Motivation

Self Development

TQM & Quality Awareness

Safety

Leadership

Communication & Presentation Skills

Value based Management

MIDDLE/ SENIOR MANAGEMENT

Managing teams and groups

Communication and Presentation Skills

Team Building

Managing to

lead

for

excellence,

innovate and for Team Effectiveness

ESTABLISHMENT
FUNCTIONS:SWASTIK POWERs HR establishment section consist of two
cells
a) Executive cell
b)Workman cell.
1.
Both cells are working separately but their main work is similar
i.e to maintain the record of leave availed by the individual executive, nonexecutive and workman as per company rule
2.
To maintain the personal files of executive, non-executive and
workman..
3.
To get the new entrants joining after checking and verifying
their personal documents concern with the post they are joining and to issue the
joining orders, appointment order and posting including providing information
to plant authorities from Top to Bottom.
4.
To maintain and complete the formalities of those employees
who resign, retire or if terminated to issue the orders of their deductions or
refund award of P.F and pension and other dues.
5.
To maintain and keep individual employees performance
appraisal, confidential reports (C.R) and assessment records of Trade
test of workman and to issue Promotion/ Up gradation orders in consultation
with appropriate authorities after necessary approval from management.
6.
Leave Travel Allowance(LTA) :- Under LTA three options are
available for employeesst
a)
First option- employee avails this, in the1 year of LTA;
he gets the amount after tax deduction.
b)
Second option- employee claims LTA and gets five days
leave. Tax deduction is done in next year.
.
Third option- employee claims LTA in second year and gets five days leave.
Thus he claims two years amount.

LITERATURE REVIEW:Introduction
This chapter explains the theoretical and empirical evidence about inventory
management. In theory, features of effective inventory management systems are
explained, how the use of computers affects the organizations use of inventory
management systems, the need for controls and how to much demand with
supply. In practice the chapter tries to look at previous studies done on the
inventory management. It also establishes the knowledge gap.
Successful inventory 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.

Review of Theories
Inventory control is not a Science, more nearly it is a set of methods for figuring
out how much stock to order, when and how to receive it (Tibur, 2008). It is one
of the roles that management has to play by putting a system of keeping track of
items in inventory. A powerful inventory management system is the base of the
every good retail software package. An inventory management system lets you
know what our important needs, with inventory management systems are, you
can get minors to majors report on what you have in stock, on order transit.
Retailers software with an inventory management system eliminates
the guesswork from running your retail business. The system can be set
up to
automatically notify you when it is time to order more inventories such as when
stock falls below a prearranged level. By always having your hottest items in
stock, you will be sure to not sell due to out-of- stock items. Many retail
software packages will even generate purchase orders, further streamlining
inventory management. In addition to increasing your sales, retail software with
an inventory management system drastically reduce your operating costs by
reducing the time spent manually counting inventory and creating purchases. It
will also track which items are selling and which are not. By identifying your
less moving items you can adjust their position, pricing or other issues earlier.
You can also see which items are often purchased in pairs and can group them
consequently in the store. Keeping inventory cost low is vital to competitive
benefits.

In a company, materials management has become a distinct function.

Depending on the size of the company it could be a separate department or in a
smaller set up it could be under the care of the Manager. Materials in a company
range from consumables, stationery to even equipments besides the
pharmaceuticals and optical goods. The first broad section inventory
management which is delineated into the following parts: Purchasing, Storage,
Issue, and Inventory

Need for inventory control records:A comprehensive inventory control record system is relevant in order that:a) Goods sold can be recorded and balances in both physical and monetary
terms calculated.
b) Checks can be implemented on regular or random basis to minimize losses
due to pilferage or damage in stores.
c) Goods can be recorded on a receipt in relation to both quantity and price, by
use of highly effective integrated computer system besides the manual system.
d) Replacement of stock can be ordered when re-order level is reached.
e) Records can be examined in order to highlight slow moving inventory which
may deteriorate or become obsolete.
f) Inventory can be charged to the appropriate department code when issued
from store.
g) Returns to store can be properly recorded/ accounted for.
h) Rightful quality and quantity duly signed for and recorded in Goods
Received Note (GRN).
i) Stock taking procedure at a given time is done efficiently.
j) The valuation of stock for balance sheet and profit measurement purposes can
be accurately implemented (Kagiri, 2006).

Empirical studies
Strategy for resolving maximum profit for inventory minimization:Green and MischaDick (2001) found out that just like any investment in
business; inventory needs to serve the purpose of maximizing profit. However,
in many cases inventory has turned into a major cash flow constraint thus
making it necessary to optimize inventory using analytical and statistical
methods in an integrated approach.
One of the biggest challenges in optimizing inventory is the fact that it is merely
an output of many inter-organizational processes, all too often organization
attempt to lower
inventory using non-

analytical approaches which lower service levels. The study was

conducted through a case study of a major US corporation, where Green and
MischaDick identified two-step approach of significant value; optimizing
inventory levels while viewing the existing order fulfillment process as a given
constraint and changing the fundamental order fulfillment process across the
entire system. The first step was used to make quick and successful cash
availability. The second step was used to generate breakthrough business results
and provide a robust order fulfillment process that was to perform at lower
inventory levels while providing extraordinary service levels. The real world
constraint is taken into account prior to deciding on the appropriate changes.
Simulations are conducted to verify the appropriateness of the analytical models
using actual process data.
Cash flow problem is identified, further analysis reveals that inventory levels
are high and turns are below most major competition.
This study has not focused on the systems necessary for inventory management;
they have only taken into consideration inventory level as a strategy for
maximizing profit.
Inventory value using six- sigma:Green and MischaDick (2002) found out that old equipment are viewed as not
worth understanding and improving for the operations, however, replacement
cost can be staggering. Certainty purchasing new equipment is necessary at
times. However, frequently it is possible to produce good product with existing
equipment. Properly characterizing existing equipment using statistical methods
can yield significant improvements. The research was carried out through a case
study to a major US manufacturer, made the decision to stop providing critical
components. The supplier made the decision because the equipment was the 3040 years old, yields had traditionally run at 60% and the margins were low, a
baseline of the extrusion process was performed and a vast list of potential
factors was identified during process mapping. It was also determined through
measurement system studies that the measurement systems were not capable of
measuring the parts. The measurement systems were improved and several
screening designed experiments were conducted. Results showed a few key
factors to be important. Follow-up optimization experiments were run. The
process was producing 100% yield within 3 months on existing numbers. The
next step was to produce parts that had not been previously produced. The first
parts off of the new die met the desired specification, although slightly off
target.
This study has only considered the value addition or utilization of existing
equipment considered outdated to produce high quality product efficiently,
therefore it did not consider the systems necessary for inventory management

C H A P T ER - 3
RESEARCH METHODOLOGY

Research Methodology and design

Introduction
Under this section the chapter will show the methods and techniques that will be
used to collect and analyze data during research. The research to be carried out
is on enhancing effective inventory management in Swasthik power. Areas to be
touched on include research design, target population, types of data, sources of
data, tools to be used to collect data and the sampling design to be used.

Research Methodology:A Research Methodology defines the purpose of the research, how it proceeds,
how to measure progress and what constitute success with respect to the
objectives determined for carrying out the research study.
Research design:The research design is descriptive in nature. The design shows the analysis of
the variables relevant to the subject under study because it will focus its
attention on the individual study and not the whole population of swasthik
power. . It is based on data collected through structured questionnaire from the
respondent.
Target Population:The study targets the staff of swasthik power and vendors. Primary data will be
collected through questionnaires which will be the main source of data and
secondary data will be used to assist the evaluation of data to be collected in the
field. Data collected in the field will be tested and results will help to write a
report upon completion of analysis.
SAMPLING DESIGN:Sampling is the process of obtaining about an entire population by examining
only a part of it. Sampling plans calls for three decisions.

a) Sample unit
b) Sample size
c) Sampling procedure
The design to be adopted for the study will be based on convenient sampling.
The population for the study will consist of employees in the Swasthik power.
SAMPLE UNIT
SWASTHIK POWER
SAMPLE SIZE
20 employees
SAMPLING PROCEDURE:For the study, respondent were selected on the basis of random sampling.
SOURCE OF THE DATA:The study requires both primary and secondary data.
PRIMARY SOURCE: Questionnaires
Interviews
SECONDARY SOURCE:

Indirect observation
Library and research work
Internet, web pages and blogs
Articles
Books

Secondary data will be used to analyze the primary data in light of real world
situations.
ANALYSIS OF THE DATA:The primary data will be analyzed with the help of statistical tools and
techniques.

DATA PRESENATION TOOLS USED:Primary data was collected through the questionnaire by distributing
questionnaires; questionnaires with both close ended and open
ended questions have been used as sample respondents. The facts are
presented in the form of pie- charts and bars.
LIMITATIONS OF STUDY: The study is confined to Swasthik power, korba only.
The interpretations and recommendations applicable to this cooperative.
The study was conducted on the assumptions that the information is given
by respondent.
Sample size is restricted to 20 respondents.
Time constraints.
Top management has not adequate time, due to their busy schedule.

CHAPTER-4
DATA ANALYSIS&INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

Q.1. Do you know about inventory management?
1) Yes

3) cant say

2) No

can't
say
0%

No
40
%

Yes
60
%

Interpretation:From above pie chart, it is clear that most of the people are aware about
inventory management but 40% employees are not aware.
Q.2. Do you know about production management?
1) Yes

2) No

can'
15

No
40%

3) cant say

Interpretation:From above figure, shows that 45% employees are aware with production
management but 40% employees are not aware.
Q.3. Do you know about supply-chain management?
1) Yes

2) No

3) cant say

cant
say
19
%
No
12%
Yes
69%

Interpretation:From above pie figure , shows that only 69% employees are aware about
supply-chain management, 12% employees are not aware.
Q.4. Which type of operation management you use?
1) Traditional
2) Just in time
3) Both
18
16
14
12
10
8
6
4
2
0
Traditional

Interpretation:-

Just- in time

Both

Above figure represents that traditional method of inventory management is

more in use than just in time.
Q.5. Do you know about A-B-C analysis?
1) Yes

2) No

3) Cant say

Cant'sa
y
11
%

No
26
%
Yes
63
%

Interpretation:From above pie figure , shows that 63% employees know about A-B-C analysis
and 26% dont know.
Q.6. Do you know about V.E.D analysis?
1) Yes

2) No

3) Somewhat
Cant'sa
y
0%

No
40
%
Yes
60
%

Interpretation:Pie figure shows that 60% employees are aware about V.E.D analysis, 40%
employees dont know.
Q.7. Are you agree that with the help of inventory management any
organization can increase its productivity?
1) Strongly agree 2) Agree 3) Indifference 4) Disagree 5) Strongly
disagree
Indifference
15%

Strongl Disagre
y
e
disagr
0%
ee
0%

Strongly
agree
50
%

Agree
35%

Interpretation:Figure shows that 50% employees are strongly agree, 35% employees are agree
and 15% employees are indifference.
Q.8. Are you satisfy with the store activities? ( i.e. issuing of material, quantity,
and quality etc. of the material).
1) Strongly Satisfy 2) Satisfy 3) Dissatisfy 4) Strongly dissatisfy
Strongl
y
10
%

Strongl
y
Satisfy
40
%

Dissatisfy
25%

Satisf
y
25
%

Interpretation:-

Interpretation:Pie figure shows that 40% employees are strongly satisfy, 25% employees are
satisfy ,25% employees are dissatisfy and 10% employees are strongly
dissatisfy.
Q.9. Are you satisfy with the purchasing procedure adopted bycompany?
1) Strongly Satisfy 2) Satisfy 3) Indifference 4) Dissatisfy 5) Strongly
dissatisfy

Indiffere
n ce
11%

Dissatis
fy
5%

Satisfy
18%

Strongl
y
dissatis
fy
0%

Strongl
y
Satisfy
66
%

Interpretation:Above pie figure shows that 66% employees are strongly satisfy with the
purchasing procedure , 18% employees are satisfy 11% employees are
indifference and 5% employees are dissatisfy.
Q.10. What is the method do you use to issue the material?
1) First in, first out (FIFO)
Both

2) Last in, first out (LIFO)

3) Other

12
10
8
6
4
2
0
FIFO

LIFO

Other

Both

4)

Interpretation:Figure shows that last in, first out (LIFO) method is mostly adopted and then
first in, first out (FIFO) . In few cases both methods are used for issuing the
material.
Q.11. Is there any purchasing committee?
3) Cantsay
1) Yes
2) No
18
16
14
12
10
8
6
4
2
0
Yes

No

Cantsay

Interpretation:Figure shows that most of the employees are aware about the purchasing
committee of the organization.
Q.12. Purchasing committee consists:
1) Managing director, Purchase manager, Store in charge and store
manager.
2) MD, Purchase manager, doctor, Different departments heads.
3) MD, different department heads, purchasing manager.
4) MD, purchase manager, doctors.

3
15%

2
25
%

Interpretation:-

4
10
%

1
50
%

Figure shows that 50% of the employees are aware about purchasing committee
members, 50% employees are not aware.
Q.13. Inventory management is used by organization for
1) To reduce uncertainty.
2) To reduce uncertainty in lead time
3) To build stock for scale of economies 4) To reduce the inventory cost
5)All above
10
9
8
7
6
5
4
3
2
1
0
reduce
reduce
scale of
uncertain uncertain economi
ty
ty in lead es
time

reduce
the
inventor
y cost
5)All
above

All above

Interpretation:Figure shows that most of the employees are aware about objective of inventory
management.
Q.14. Which type of order method is used by organization?
1) Lot to lot 2 )Economical order quantity 3)Fixed order quantity 4)Fixed
order time
10
8
6
4
2
0
1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Interpretation:Above figure shows that economical order quantity is used by the organization
for most of the items but in few cases they use other methods.
Q.15. Which type of purchasing order is prepared?
1) Manual
2) Electronic
3) Both
16
14
12
10
8
6
4
2
0
Manual

Electronic

Both

Interpretation:Figure shows that organization use manual methods than electronic.

Q.16.Which type of purchasing order procedure is used by the organization?
1) Formal( Paper work)
2) Informal(Telephonic order)
3) Electronic data interchange(EDI) i.e. (though e-mail)
4) All above
Electronic
data
interchan
ge
10%

All
above
5%

Informa
l
15
%
Forma
l
70
%

Interpretation:Figure shows that 70% work in inventory is done through formal paper work
,15% works is done trough informal methods, 10% is done by EDI.
Q.17. Who make the purchasing order?
1) Purchasing manager 2) Store in charge

Store
manager
45%

3) Store manager

Purchasi
ng
manager
37
%

Store
in
charge
18
%

Interpretation:Figure shows that 45% respondent assume that purchasing order is prepared by
store manager, 18% store- in manager and 37% purchasing manager.
Q.18. Who approved the purchasing order?
1) Purchasing manager 2) Store-in charge
) Store
Store-in manag
er
charge
7%
10%

Purchasi
ng
manager
83
%

Interpretation:-

3) Store manager

Figure shows that 83% respondents assume that purchasing order is

approved by the purchasing manager, 10% by store-in charge and 7% by store
manager.

Q.19. Is there any specific place for receiving and inspection of material?
1) Yes
2) No

yes
25
%

no
75
%

Interpretation:Figure shows that 75% respondents assume that in company there is no specific
place for reception of material.
Q.20. Purchasing and storage is handled by single department?
1) Yes
2) No

no
15
%

yes
85
%

Interpretation:Figure shows that 85% respondent assumes that purchasing and storage is done
by a single department.
Q.21. A.B.C and V.E.D analysis is done
1) Yearly

2) Half yearly

3) Quarterly

4) Monthly

monthel
y
7%

quaterly
22%

yearly
44%

half
yearly
27
%

Interpretation:Figure shows that 44% respondents assume that A.B.C and V.E.D analysis is
done in a year, 27% assume half yearly, 22% quarterly and 7% monthely.
Q.22. Purchasing order is given in a month:
1) One time
2) Two times

more
than
two
times
54%

3) More than two times

one
time
31
%

two
time
15
%

Interpretation:-

Figure shows that

54%

respondents

assume that purchasing order is given more than two times in a

month, 31% one times and 15% two times

Q.23. Safety stock (also called buffer stock) is a term used by logisticians to
describe a level of extra stock that is maintained to mitigate risk
of stockouts (shortfall in raw material or packaging) due to uncertainties in
supply and demand.
2) Strongly agree 2) Agree 3) Indifference 4) Disagree
5) Strongly
disagree
Strongl
y
disagr
ee
10
%
Disagre
e
14%
Indifference
9%

Agre
e
24
%

Strongl
y
agree
43
%

Interpretation:Figure shows that 43% respondents are strongly agree with the statement, 24%
are agree and 10% are strongly disagree.
Q.24. Do you have safety stock for each item?
1) Yes
2 ) No

no
19
%

yes
81
%

Interpretation:Figure shows that 81% respondents are agree that each item has safty stock,
while 19% respondents disagree.

CHAPTER-5
FINDINGS & INTERFERENCES

Findings & interferences:The primary data, which is collected with the help of questionnaire
represent many essentials findings about the performance appraisal
system of the Swasthik power.
In swasthik power most of the employees are
aware about inventory management, production
management and supply- chain management.
Swasthik power is using traditional and just- in time
methods
of operation management.
Inventory department is using A-B-C and V.E.D
analysis for the management of material.
Store department is using first in frst out method
of issuing of material in swasthik power.
Swasthik power consist a purchasing committee
which is
composed of Managing director ,purchase
manager, store-in charge and store manager.
Store department is using economical order
quantity method of order.
Most of the purchasing order is manually
prepared and it is prepared by store manager
and approved by purchase manager. No order
can give without approval of purchase
manager.
In company there is no specifc place for
receiving and inspection of consignment
material from the distributor or producer.
Product
evaluation system in

Swasthik power is not so effective.

CHAPTER-6
CONCLUSION & RECOMMENDATIONS

CONCLUSION:1. Inventory department of Swasthik power uses economical order

quantity as the basis for stockage levels and reorder quantities.
2. There exists a moderate level of satisfaction with the current
system.
3. The majority of respondents had a moderate level of
experience/knowledge of inventory management.
4. The

level of efficiency/ effectiveness of the

inventory management system is moderate.

5. The coordination between different departments is low, which
reduces the overall productivity company.
6. There is centralized system of inventory management.

RECOMMANDATIONS: Swasthik power should adopt accurately measure inventory

level and forecast supply needs methods.
There should be a clear and easy procedure that how inventory
will move throughout the company.
Responsibilities should be well defined for each employee in
inventory management system.
Store should have more space so that in according to need it can
be extended.
The employees should have skills and qualification according
to the need of the place.
Optimize process to eliminate operational bottleneck.
Generate aware in the employees for inventory management
and clearly define the objectives of inventory management to
the employees of company.
Minimize shrinkage due to theft or unnecessary use of
inventory.
Audit

should be done by

the top management at regular basis.

Advance inventory management technology should use to
improve performance.
There should be strong coordination between different
departments of company
Hospital should use effective product evaluation system.

BIBLIOGRAPHY: http://www.v2020eresource.org/newsitenews.aspx?tpath=news1
2008
http://currentnursing.com/nursing_management/material_manag
ement_ABC_VED_HML_analysis.html
http://www.scribd.com/doc/29335516/Inventory-ManagementProject
http://www.saching.com/Articles/The-Role-of-MaterialManagement-in-the-Success-of-a-Company-2416.html
http://www.publishyourarticles.net/knowledge-hub/costaccounting/what-are-the-techniques-of-store-inventorycontrol.html