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1.1 COMPANYS PROFILE

ABB is a Swiss multinational corporation headquartered in Zurich, Switzerland,

Operating mainly in Power Products, Power Systems, Automation, Low Voltage

Products and Process Automation. ABB is one of the largest engineering companies as

well as one of the largest conglomerates in the world. ABB has operations in Around

100 countries, with approximately 1, 24,000 employees, and reported Global Revenue

of $31.6 billion for 2010.

ABB is a leader in power and automation technologies that enable utility and industry

customers to improve performance while lowering environmental impact.

POWER PRODUCTS

Power Products are the key components to transmit and distribute electricity. The

division incorporates ABB's manufacturing network for transformers, switchgear, circuit

breakers, cables and associated equipment. It also offers all the services needed to

ensure products performance and extend their lifespan.

POWER SYSTEM

Power Systems offers turnkey systems and services for power transmission and

distribution grids, and for power plants. Sub stations and sub station automation systems

are key areas. Additional highlights include flexible alternating current transmission

systems (FACTS), high-voltage direct current (HVDC) systems and network

management systems. In power generation, Power Systems offers the instrumentation,

control and electrification of power plants.

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DISCRETE AUTOMATION

This division provides products, solutions and related services that increase industrial

productivity and energy efficiency. Its motors, generators, drivers, plc provides power,

motion and control for wide range of automation application.

LOW VOLTAGE PRODUCTS

The low voltage products division manufactures low voltage circuit breakers, switches ,

control products, wiring accessories and cable systems.

PROCESS AUTOMATION

The main focus of this ABB business is to provide customers with products and

solutions for instrumentation, automation and optimization of industrial process.

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1.2 ORGANIZATION STRUCTURE

1.3 ABB HARIDWAR PLANT

Haridwar plant of ABB is a subunit of ABB INDIA PVT LTD. In Haridwar plant ABB

is basically into the manufacturing of Miniature circuit breaker (MCB). MCB stands for

Miniature circuit breaker. It is an automatically operated electrical switch designed to

protect an electrical circuit from damage caused by overload or short circuit. Its basic

function is to detect a fault condition and, by interrupting continuity, to immediately

discontinue electrical flow. Unlike a fuse, which operates once and then has to be

replaced, a circuit breaker can be reset (either manually or automatically) to resume

normal operation.

Haridwar plant manufactures MCBs Consists of,

Seventeen ratings. (From 0.5A to 63A

ABB HARIDWAR STRUCTURE

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1.4 OBJECTIVE OF THE PROJECT

The objective of my project is:

To understand the SUPPLY CHAIN MANAGEMENT PROCESS of ABB.

The project will also include the detailed study of the effectiveness of the SCM

process of ABB.

1.5 SCOPE OF STUDY

The scope of the project is defined as follows

The scope of study will include understanding the procurement system

activities that takes place in the organization i.e. procurement of materials and

services.

The project will also study the various stages of the procurement process i.e.

(Purchase process and negotiations etc).

This project will try to study, how the supply chain management, can be

seamlessly coordinated and executed from start to finish, ensuring much higher

levels of on-time delivery.

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2.1 SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the management of a network of interconnected

businesses involved in the ultimate provision of product and service packages required

by end customer. Supply chain management spans all movement and storage of raw

materials, work-in-process inventory, and finished goods from point of origin to point of

consumption.

2.2 SCM AT VARIOUS LEVELS

Strategic level

Strategic network optimization, including the number, location, and size of

warehousing.

Strategic partnerships with suppliers ,creating communication channels for

critical information and operational improvements such third party logistics.

Tactical level

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process

definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

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Operational level

Daily production and distribution planning, including all nodes in the supply

chain.

Demand planning and forecasting, coordinating the demand forecast of all

customers.

Inbound operations, including transportation from suppliers and receiving

inventory.

Production operations, including the consumption of materials and flow of

finished goods.

Outbound operations, including all fulfilment activities, warehousing and

transportation to customers.

The main functions of the SCM department are:-

Receiving Purchase requisitions from the various departments.

Selection of source of supply i.e. selecting the vendors.

Placing the order to the vendor.

Delivery at right time i.e. taking follow up from various vendors.

Inspection and passing of bills to payment department.

Preservation of purchase records.

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 Good relations with vendors.

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3.1 PROCUREMENT CYCLE

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3.2 PURCHASE PROCESS

Purchasing refers to a business or organization attempting to acquire goods or services

to accomplish the goals of the enterprise. Purchase activities can be organized by using

two basic approaches: centralization and decentralization.

Centralized Purchasing:

Single purchase department: The purchasing function is under a single

administrative control when there is a lack of maturity in branch offices. The

vital tasks of stores such as classification and codification are done by central

office.

Decentralized Purchasing:

When an organization has several plants in widely separate locations and

manufactures different products, each with individual material requirements,

decentralized purchasing is needed there.

The procurement process includes following steps:

3.2.1 Raising a Purchase requisition note

A purchase requisition is an authorization for a purchasing department to procure goods

or services. It is originated and approved by the department requiring the goods or

services. Typically, it contains a description and quantity of the goods or services to be

purchased, a required delivery date, account number and the amount of money that the

purchasing department is authorized to spend for the goods or services, plant name

from which plant it is ordered. Often, the names of suggested supply sources are also

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included. A purchase requisition is owned by the originating department and should not

be changed by the purchasing department without obtaining approval from the

originating department.

As part of an organization's internal financial controls, the commercial department

institutes a purchase requisition process to help manage requests for purchases.

Requests for the creation of purchase of goods and services are documented and routed

for approval within the organization.

Process of purchase requisition note:

1. Creation of Purchase Requisition Note.

2. Release of Purchase Requisition Note.

Purchase Requisition Note is prepared through SAP. It is an online process and is

released by Business Unit (BU) Head. After release of Purchase Requisition Note the

purchase order are raised. Once a requisition has been entered into SAP it must be

converted into a Purchase Order.

3.2.2 Solicitation

Solicitation means obtaining quotations, bids, offers or proposal from potential sources

as appropriate. It is required to obtain quotation for price comparison and to study terms

& conditions of work. Request for quotation (RFQ) are send to selected potential

vendors via

Telephone (verbally)

E mail (Written)

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The documents include Request for proposal (RFP), Request for quotation (RFQ),

Invitation to bidding, invitation for negotiation, contractor initial response.

Solicitation involves obtaining information in the form of bids and proposals from

prospective sellers. The seller trying to win business bears most of the effort of

gathering the information.

3.2.3 Selection of Vendor

Once the activity / procurement material or service has been identified, approved for

execution and budget being available, then following activities are performed:

Identifying the Vendor

Procurement Team identifies minimum of 3 Vendors who could undertake the

execution of proposed activity. While identifying the Vendor-following things

are taken into consideration:

Past experience of the Vendor-in execution of the proposed activity.

Past experience with the Vendor-in previous deals with ABB.

Capability of the Vendor-in execution of the proposed activity within the given

time frame.

a) Obtaining quotations

All the identified Vendors are asked to submit a quotation through RFQ (Request

for quotation) for the proposed activity within the specified timeframe. The

Quotations submitted contains:

I. Rates- At what rate the vendor will supply the material.

II. Profit Margin- What is the margin of profit of vendor.

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III. Taxes Claimed/Chargeable-Service Tax / Sales Tax etc.

IV. Freight, if any.

V. Terms of Execution

VI. Terms of Payment- In which mode of payment, the vendor wants payment from

customer.

VII. Any other details that may be specifically asked from the Vendor.

b) Negotiations & Vendor Selection

Once all the quotations have been received, the same are analyzed with the help of

analysis sheet w.r.t. Rates, Terms of Execution / Performance, Terms of Payment,

Past Performance, Market standing (Execution purpose) and any other factor that

may be important for the purpose of taking decision in selection of the Vendor.

The negotiations with the Vendor are performed by a team consisting of Circle

Shared Services Head, and User Department.

3.2.4 Raising a Purchase Order

A purchase order (PO) is a commercial document issued by a buyer to a seller,

indicating types, quantities, and agreed prices for products or services the seller will

provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy

products or services. Acceptance of a PO by a seller usually forms a one-

off contract between the buyer and seller, so no contract exists until the PO is accepted.

A Purchase Order is a document representing a formal request to a vendor to supply

goods in accordance with stipulated terms and conditions. Purchase Orders are

created in case of material purchases only. Work orders are same as purchase orders,

but are created for services. Work order is stand for issuing some task to the vendor.

These are the basis for processing goods / service receipts and invoice verification. It

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can also be described as a legal commitment between ABB and a vendor for the

supply of goods or services.

Process of purchase order note in ABB:

1. Creation of Purchase Order Note.

2. Release of Purchase Order Note.

Purchase Order Note is prepared through SAP. It is an online process and is released at

different levels of management i.e. A1, A2, A3, A4 according to the amount required for

procurement. Up to Rs. 50 Lakh, release from A1, A2, A3 levels is required while for

amount exceeding Rs. 50 Lakh release from level A4 is required. The different levels of

management are as defined below:

A1 - Supply Chain Management

A2 - Controller

A3 - BU (Head)

A4 Division Head

3.2.5 Raising a Goods Receipt Note

Goods receipt note is a document used to record the inward entry of the any goods

received at the premises of the organization. The document normally consists of the

details of Quantity Received, Quantity Rejected and Quantity Accepted, Supplier

Name . It is generated to ensure the receipt of goods at the warehouse and to

complete the invoice cycle. The report is generated for the materials, which are

received in response to the purchase orders, send to the vendors. Once a Purchase

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Order has been completed the information sits in the system until the goods is

received. Once this has happened and you have an invoice it is time to complete a

GRN. The GRN has information relating to what has been received, how much and

when. On completion of the GRN a copy is sent to payments, with the invoice, for

payment.

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4.1 Selection of Vendor
Once the activity / procurement material or service has been identified, approved for

execution and budget being available, then following activities are performed

Identifying the Vendor

Shared Service Procurement Team identifies minimum of 3 Vendors who could

undertake the execution of proposed activity. While identifying the Vendor-following

things are taken into consideration:

Past experience of the Vendor-in execution of the proposed activity.

Past experience with the Vendor-in previous deals with ABB.

Capability of the Vendor-in execution of the proposed activity within the given

time frame.

4.2 CASE STUDY

Three vendors, namely A, B and C quoted for the same material of ABB and their prices

are Rs. 1, Rs. 1.5 and Rs. 3. Now some questions arises while selecting the vendor

1) Which vendor is providing the best quality material?

2) Vendor A is providing the material at lowest price. Should we purchase from A?

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 3) Is vendor uses good machinery for the manufacture of the material? otherwise its

effects can be seen in the product?

So for resolving all these problems, SCM team of ABB use to take four major steps

while selecting the vendor

1) Firstly, they use to visit the vendors plant.

2) Check their material quality.

3) Check their machinery.

4) Check their material test certificate.

4.3 Supplier Qualification Process of ABB

Supplier Supplier Continuous

Self selected by Improvemen
4.3.1Supplier Qualification: ABB t Plan
Site Visit
Contract to work with?
How do we determine which suppliers
QCD
Indicators
Supplier Self Assessment:
Approved?
Quality File
Developed Rating
The supplier evaluates himself against the ABB Supplier Quality
Adjustments
Requirements and submits the result with supporting documents and actions to
Audit
ABB
fill gaps to the requesting ABB unit
Supplier
List

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Review and site visit

A team from ABB visits the supplier plant and checks their various

requirements, and evaluates whether supplier is capable of fulfilling their

requirements or not. The team constitutes of SCM team, production manager

and a finance department member.

Approval

The team decides if the supplier can be added to the Approved Supplier list.

Process Qualification:

Quality File:

The supplier must develop and maintain a file containing:

Drawings and specifications

Product / Process Design Development Plan

Product Design Review

Process Design Review

Product / Process Design Change (if any)

Approved sub-supplier list

Sub-supplier initial samples approval

Product / Process Control Plan

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 Product/Process Capability studies (if required by ABB)

Process Qualification Report

Preventative Maintenance Plan

4.3.2 Process Qualification

Ensure the Control Plan is adequate and is applied

1. Process Audit (per supplier)

There is a need to audit the application of the quality requirements

within the suppliers manufacturing process.

This process audit includes verification of:

Quality Assurance File

Product/Process Control Plan

Incoming goods

Manufacturing

Tooling and Maintenance

Material and Functional Tests

Packing and Shipping

Problem Solving and Corrective Actions

Logistics

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4.3.3 Continuous Improvement: Monitor suppliers and work with

them to improve performance

Supplier Monitoring:

o Key Indicator Data collected monthly, posted for review by ABB and

supplier

a) Supplier Quality (% defect free lots received )

b) On-time delivery (% of all shipped received complete and

on time, based on agreed Incoterms )

Performance Improvement:

ABB shall work with the supplier to improve performance and/or process capability

where needed and adjust the supplier rating based on performance.

Overall performance is calculated by using OTD and quality and the vendors are

classified into class A, B and C.

Ratings above 90% - Class A

Ratings between 80%- 89% - Class B
Ratings between 61%- 79% - Class C

Blacklisting of Vendor: If any vendor falls below 60% of rating

consecutively for three supplies for a given articles, then the vendor is black

listed and information is sent to him.

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5.1 LOGISTICS

Logistics is the management of the flow of goods and services between the point of

origin and the point of consumption in order to meet the requirements of customers.

Logistics involves the integration of information, transportation, inventory,

warehousing, material handling, and packaging, and often security. Logistics is a

channel of the supply chain which adds the value of time and place utility.

Logistics is one of the main functions within ABB. The main targets of logistics can be

divided into performance related and cost related. They are high due date reliability,

short delivery times, low inventory level and high capacity utilization.

Inbound logistics is one of the primary processes and it concentrates on purchasing and

arranging inbound movement of materials, parts and/or finished inventory from

suppliers to manufacturing or assembly plants, warehouses or retail stores.

Outbound logistics is the process related to the storage and movement of the final

product and the related information flows from the end of the production line to the end

user.

5.2 CASE STUDY

Haridwar is a holy place, So There are many occasions when the

material movement from vendor to manufactur is zero.
ABB SCM team procure materials four times in a month
Say- on 1st ,7th, 15th and 25th.

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 So there are four lots but the store capacity of the plant is
to store only three lots.
Now SCM team order for 1st, 7th and 15th. So the store is
full.
When the material of 25th comes, the 1st lot which is in
store is totally consumed in the production.
Now comes to Our problem, suppose the transports are not
alloweded in haridwar from 20th to 25th.
So, SCM team will change the schedule of the ordering.
So 1st ,7th and 14th Day procure material Will come
directly to store and the next order will be on 19th which is
put in the logistics warehouse.
When the store has capacity to store a lot. The material is
transferred from logistics warehouse to the store.

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6.1SECONDARY SOURCES

Secondary data is the details that are available in the form of facts and figures. The

sources of secondary data are;

Magazines

Websites

Books

The information regarding the project collected indirectly i.e. other than above

resources as follows

Vendor Qualification Process Chart used in Vendor Selection Process.

Vendor Evaluation Sheet.
Vendor Registration Form.

Purchase Order Format

Demand Form or Purchase Requisition Form (Through this form demands are

sent to the material department by the user in which specifications and quantity

are specified.)

Company websites

GRN (good receive note)

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7.1 BENEFITS OF SAP IN BUSINESS

SAP System is a fully integrated business management system covering among others;

Logistics, Production, Finance and Human Resources Companies both large and small

traditionally utilized multiple software applications from various vendors or developed

their own applications in- house to process their critical business transactions. SAP was

the first and, to date, the most successful company to integrate nearly all business

processes into one software solution for use in any business in any country in the world.

Not only SAPs applications reduce the need for complex and redundant in-house

development, but it also created new business efficiencies by automating many tasks

across a corporation and incorporating business best practices into each updated version

of its software

Tangible Benefits:-

Provides greater and effective control on accounts payable by having increased

control on invoicing and payment processing

Reduction of paper work

Availability of timely information

Greater Accuracy

Improved cost control

Intangible Benefits

Improved Customer Satisfaction.

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 Improved vendor Performance.

Increased flexibility.

Reduced quality cost.

Improved information utility.

Improved information accuracy

7.2 LOOP HOLES

The employees were not aware about all the tools of SAP so proper training is

required for them.

Although SAP is implemented but still paper work is done which causes delay in

process.

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8.1 CONCLUSION

This project report is undertaken to understand and learn the various activities followed

in the ABB. They are as follows:-

Proper procurement system is followed using SAP.

1 How to select vendors, maintain relationship with them.

8.2 RECOMMENDATION

1. The new recruits and less experienced employees should be given proper

training on related SAP modules.

2. Proper work division should be done so that employee knows what work is

assigned to them. Sometimes during my training period I noticed that in the

payment process because of lack of coordination and work assigned to particular

employees, was done by their fellow employees who have to do the next step of

payment so that the payment is not blocked.

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9.1 REFERENCES

WEBSITES

www.abb.com

www.wikipedia.com

www.abb.co.in

BOOKS

Production & Operation Management by R.V. Badi

Operation Management by Krajewski

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