Kirloskar Institute of Advanced Management Studies

Summer Internship Report Conducted at Kirloskar Brothers Limited, Kondhapuri

(Valves Business Unit)

Submitted by: Vipul Aurange

Duration: From 1st April to 15th May 2013

1|Page

ACKNOWLEDGEMENT

I would like to thank our operations faculty, Prof. M. K. Seshasayee for introducing us to basic concepts of operations and fetching our interest in Operations Management. I acknowledge the valuable guidance and encouragement by Mr. Dinesh Dalvi, my company guide at KBL. He gave me time whenever I requested his guidance even in his highly busy schedule, gave permission to communicate with managers as well as workers to collect important information necessary for the project.

I would like thank our directors Dr. Gopal Iyengar, Dr. Janaki Naik, our placement executive Mrs. Shruti Das, SIP Coordinator Mr. Arvind Sinha for giving this opportunity to learn practical aspects of industry through SIP. I would also like to thank my faculty Guide Mr. Ellur Anand, alumni guide Mr. V.S.R. Prasad who guided me throughout the internship and shared their valuable experiences with me for the successful completion of my project.

I also thank the KBL staff, management and workers for their help and support without which identifying the project opportunity and doing this project was not possible.

Last but not the least; I thank Mr. Shivaji Sutar, worker at store to give me details of the physical movement of material which was necessary for designing the system.

2|Page

TABLE OF CONTENT

Topic

Page No.

1. Executive Summary .... 4

2. Introduction . 5

3. Objective of the study . 6

4. Concepts used in the study . 7

5. Brief about KBL, Kondhapuri . 8

6. Methodology followed 12

7. Proposed System Design . 15

8. Interpretation and conclusions/summary .. 17

9. Recommendations .. 18

10. Limitations of the study . 19

11. Scope for future improvements . 20

12. Bibliography 20

3|Page

EXECUTIVE SUMMARY:
The main objective of this internship was to do a project which will be value add to the company as well as an experiential learning to me. In terms of value add to the company I did a project in the supply chain area which was focused on material management in store and identifying and tracking of materials. The solution suggested was a barcode system installation in store along with a software database which will be interlinked to SAP. The whole process of material management in and out of store was studied to find opportunities for required and possible improvements. Different types of materials handled by the store were studied along with their attributes and allocation in the store. The project also has features like generating a priority list for better allocation of frequently issued materials. Different cases of materials were observed and solutions for them were designed, for example: rubber materials like gasket, paints have expiry date so they need to be issued in a FIFO (first in first out) manner. So the system has to have additional parameters for such materials and should show earliest material location while issuing it. It will also overcome SAPs limitation of issuing material only when all the material BOM mentioned in the BOM is available. Many such cases were considered and discussed with related personnel for finding a solution. The main focus of the project was to hasten the store processes by providing them with an automated system. Along with the main objective of doing a project, my sub-objective was to study KBL, Kondhapuri in terms of functioning of each department and coordination among them to meet the objective to deliver the customer. Each department was studied for their role and coordination with other departments. Also, KBL was studied for their policies and achievements. The practices followed to achieve various certificates like ENCON, 5S, ISO were observed. I also tried to know the CSR activities taken under by KBL. How KBL responses to after sales technical queries and site complaints for better customer relationship was studied.

4|Page

INTRODUCTION
KBL, Kondhapuri manufactures variety of valves with a size range of 15mm to 3800mm. Valves are either manufactured in-house or out-processed or outsourced for manufacturing. All the material required for the manufacturing is provided by the store department. Material is provided not only for in-house but also for outsourced production by store. KBL, Kondhapuri unit has more than 100 vendors for different valves under the range of 15mm to 600mm. An inventory of more than 1600 types of materials is handled by the Store department. This material is stored on racks, plastic crates and metallic cages called bins; and large size material like castings are stored under shades outside the store. Though company uses SAP as an ERP, it faces many issues regarding identifying the material type, keeping the track of accurate physical quantity. These issues slow down the store processes and may delay the production. Also SAP is used by management personnel at store and there is no automation at the floor level. Therefore actual store processes of receiving material as well as issuing for production are traditional and there is scope for automation for faster processing. Currently, incoming flow of the material start with the inspection of received material; qualified material is put into the respective bins/crates/racks and the quantity is entered into the bin card of that bin. The proposed system will use barcode stickers on each bin which will contain the data like, material contained, physical quantity and other material parameters like dimensions, construction material, expiry date etc. Barcode stickers will also be pasted to few materials directly which are large in size, less in quantity or have expiry date. When new material comes in the store, the material will be inspected and directly put into the respective bins; bin barcode will be scanned and new quantity will be added into the database through the barcode reader itself. While issuing material, the production order for which the material needs to be issued will be entered into the barcode reader. The barcode reader will display the BOM fetched from SAP and material will be taken out from different bins as required. Every time some material is taken out of a bin, bin barcode will be scanned and taken quantity will be entered. This quantity will be automatically deducted from the bin database and will be assigned to the purchase order. This will help tracking the material flow from store to manufacturing. Though SAP has field to save the bin location of each material, this location may vary from the actual location of particular material since bin location is sometimes changed. Also SAPs access is restricted to the management and not store workers, store workers face difficulty in locating particular material. The new system will provide them with an access to the separate database which will ease them in finding any materials location.

5|Page

OBJECTIVE:
The objective of the internship is to get experience of the industrial world. Taking this opportunity to work in a manufacturing company as a simulation, I wanted to understand how such companies function with coordination to deliver to the customer. The interest area was supply chain and the one of the objective was to study the supply chain management of KBL. The means to learning was to do a project which will be both value add to the company and learning to me. Following is the list of objectives of the internship at KBL: To study the company in terms of products, markets, turnover etc. To observe the companies policies, rules and regulations, CSR activities, safety measures taken, certificates achieved and targeted. To study each department, their function, roles, coordination with other departments and challenges faced. To do a project in one of the departments of supply chain management (selected projected was in the store) Project objectives (Barcode system in store): Technological up-gradation of the store processes. Having an independent database of material in store. Providing better assistance in better decision making. Reconciliation and inter-linkage with SAP whenever required. Reducing the incoming and outgoing material process time. Obtaining accuracy in the material management. Supporting in standardization. Generating priority-wise allocation list. Overcoming the SAPs limitation of issuing material only when all the material mentioned in the BOM is present. Reducing paperwork. Minimizing the scrap or extra material as well as shortage of material.

6|Page

CONCEPTS USED:

Supply Chain Management

Inventory Management

Lean Manufacturing

5S Methodology

Warehouse Management System

7|Page

Brief About KIRLOSKAR BROTHERS LIMITED, Kondhapuri:

KBL Kondhapuri is a small manufacturing unit of Kirloskar Brothers Limited Flagship Company of the Kirloskar group. It is located at a village Kondhapuri, 48 km from Pune with built up area of 34000 m2. KBL Kondhapuri manufactures a variety of valves. Product line: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii.

Butterfly Valves Sluice Valves Reflux Valves Kinetic Air Valves Foot Valves Gate Valves Globe Valves Check Valves Dual Plate Check Valves Ball Valves Steam Trap Device Suction Diffuser (New Product Development) Triple Duty Valves (New Product Development)

Every valve may vary in dimensions, material construction, pressure and temperature rating according to customer requirements or application. The general size range varies from 15mm to 3800mm. There are three shops for production/manufacturing of valves. Production may be partly or fully outsourced for small size valves in the range of 15mm to 600mm and are manufactured in Shop 2. In-house production is carried out in Shops 1 & 2 for valves of size range 650mm and above (biggest valve manufactured by the company was of size 3800mm). Sluice valves are manufactured mainly in shop 1 and butterfly valves are manufactured in shop 3 since both these shops have testing facility for these two valves separately as mentioned. Different machines used in the production are Vertical Turning Lathe (VTL), drilling, lathe, Horizontal Balancing Machines (HBL) etc. Companys sale in FY 13 was Rs. 106.7 crores. KBL, Kondhapuri has manpower of 111, including 29 permanent workers, 17 temporary workers; total office staff of 65 including engineers, managers and trainees. The company emphasises on energy conservation and motivates all the workers towards it. It also takes proper safety measures for the employees, like compulsion of helmet and shoes while going to the shop floor. Training & Development programs may be partly conducted at KBL, Kirloskarwadi and partly at KBL, Kondhapuri. Training period is of 1 year after which the trainee may be employed depending on the performance of the trainee and requirement of the company.

8|Page

Following is the list of departments of the company: HRM & Communication Design & Development Pattern Management Stores & Dispatch Sales Coordination Quality Assurance Production MED Procurement Accounts & Finance After Sales queries and complaints Maintenance & Utilities Production Planning & Control

Brief about departments of the company: a) HRM & Communication: This department deals with all the human resource in the company, from their recruitment till the retirement. It looks after the safety of the factory workers. It also arranges training and development of the employees. It also carries out confirmation, performance appraisal activities. It also focuses on the employee satisfaction. One of the steps towards employee satisfaction witnessed by me was installation of air cooler for employees in the mess during the summer. b) Quality Assurance: One of the points of difference of KBL valves is quality. QA department checks quality at various stages of production. Right from the purchased raw material/semi finished goods to the finished goods, quality department is functional. Though many valves are outsourced, they are tested for quality and only then dispatched for delivery to costumer. KBL also allows inspection from the customer. Inspection may be third party or direct customer witnessing it. QA department coordinates with the sales coordination as well as production for such inspections. This department also coordinates with the purchase, store and sometimes directly communicates with the vendor for any quality issues. c) Accounts & Finance: Many of the financial activities are centralized for KBL which are carried out from companys corporate office. However, for the plant level transactions; accounts & finance department is present at plant. This department generates funds requisition and gets it approved from the corporate office for plant level transactions. Few functions of this department include invoicing for customer, making outstanding payments to the vendors, generating Letter of Credit (LC) for customer, paying other expenses at the plant. Payment from customer is again centralized for KBL at corporate office. d) Design & Development: This department functions at two stages namely pre-order and post-order. In pre-order stages this department coordinates with Regional Offices (RO), sales coordination and purchase. During this phase this department check the feasibility for the enquiry from customer and generates quotation for the customer. Simultaneously it also creates drawings for the customer, QA, Purchase and Production departments.

9|Page

In the post order phase (after RO receives receipt of purchase), design & development department verifies Contract Review Format (CRF). Accordingly it formulates BOM for the order and uploads it to SAP. Another important function of this department is New Product Development. Through this, they find out the customer requirements which are not satisfied by current products and try to design a new product (similar to R&D). e) Production: Production department carries out the shop floor production as well as looks at the outsourced production. Machines used for production are Vertical Turning Lathe (VTL), drilling, lathe, Horizontal Balancing Machines (HBL) etc. Production department mainly coordinates with Planning for knowing the production priority, store for acquiring material, QA for ensuring quality and inspections and dispatch for dispatching the material. f) After Sales Queries and Complaints: This department functions as after sales service provider. It solves customer queries like installation and functioning of the valve. It may provide onsite training for valves functioning. This department also solves customer complaints like valves leakage, nonfunctioning due to jamming, cracked valves etc. Frequent coordination is with Marketing & Sales Coordination, QA and production. This department also suggests corrective actions if the fault in valve is from companys manufacturing. g) Pattern Management: This department generates patterns of various materials specially castings. The main objective is to assist in production by providing appropriate casting design. This department generally coordinates with purchase, and may communicate directly to vendors as well as KBL foundry at Kirloskarwadi. h) Marketing and Sales coordination: This department is considered as a single point contact between ROs (also customers) and the production plant at Kondhapuri. Once the order is approved by the customer to RO, it is handed over to this department. It arranges inspections. It may also update customer about the progress of their order. This department also plays role in invoice generation for customer and guides in dispatching the material. i) Maintenance & Utilities: This department looks after the plant maintenance. It ensures preventive maintenance is carried out on the respective dates. This department does all types of breakdown maintenance. It also functions as utilities provider. This department also assists in achieving certificates like energy conservation and works towards cost reduction.

10 | P a g e

j) Stores & Dispatch: Any material which is to be brought inside the company has to come through this department. This department has two main functions: inventory management and dispatching the finished goods. All the raw material, semi-finished goods, finished goods, packaging material; tools are handled by the store. This department takes in the material as per the purchase order, inspects it and then adds to store. When it is required for production, it issues the material. Frequent communication is with production, purchase, planning, sales coordination, accounts departments. k) Procurement: All the material required for production and plant is purchased by this department. It communicates with vendors and places orders as per the requirement. It does activities like vendor rating, vendor selection, negotiation with vendors etc. l) Production Planning & Control (PPC): PPC, also known as planning department coordinates with sales coordination, purchase, production, store, dispatch to ensure the on-time production and delivery. Its target is to achieve Monthly Operating Plan (MOP). It sets priorities to the production orders and accordingly communicates with respective departments. m) MED: Main function of this department is checking the feasibility of the valves to be manufactured. This department receives drawings from design department and checks whether it can be manufactured in KBL. It also enlists tooling, jigs & fixtures required for production. It helps in troubleshooting during production. It sometimes participates in new product development. Moreover, KBL, Kondhapuri has Regional Offices (RO) at different regions for sale of vales. These ROs is a link between customer and the company. They receive inquiry from customer and see the feasibility. Their focus is to convert such inquiries into contracts. ROs are located at following locations throughout the country. Ahmadabad Kolkata Chennai Hyderabad Lucknow Bangalore Indore Delhi Mumbai Nagpur Bhubaneswar Jaipur Pune Ludhiana Ranchi

For overseas enquiries and sales, Corporate Global Marketing Services (CGMS) department is present at corporate office of KBL. The company complies to various national and international standards like: IS/BSEN/API/AWWA.

11 | P a g e

METHODOLOGY:
To select a project in supply chain area, opportunity was searched in Procurement and Store & Dispatch departments. Research design followed is as follows:

Data Source

Information about department's function, processes, was collected from managers as well as other personnel from departments. Also they were asked for the challenges or issues faced in their departments.

Questionnaire for the department personnel Method of data Observation of the store processes
collection

Verification of issues

Issues/problems told by departments were verified and their effect on the company as a whole was studied.

Research for solution

Considering the issues, research was done on internet. Articles were refered, faculty guide was refered. Multiple options were found out and one of them (Barcode system) was shortlisted.

Testing the feasibility

The solution was suggested to GM and store department. The solution was discussed with barcode solutions provider company for feasibility.

Designing the new system

New barcode system was disigned with some process changes. Designed barcode system was apporved from GM and store department.

Research for barcode company

Four barcode solutions provider companies were found out from internet. Personal visit was made to these companies to evaluate them. One was shortlisted on multiple paramaeters.

12 | P a g e

PROCESS FOLLOWED:
1. Understanding the current system in the store: Following questions were asked to the store manager and store workers: a. What is the main function of the store? b. What types of material is handled by the store? c. What is the incoming material flow? d. What is done if faulty or unwanted material is found during inspection? e. What is the material issuing process? f. Do you any procedure to prioritize the material locations for faster movement of material? g. Do you face any issues in store functioning? 2. Finding an opportunity for a project. Following questions were asked to store workers: a. What problems are faced during material inflow? b. How do you locate the required material? c. What problems are faced during the issuing of material? d. Any other problems do you face in store? 3. Suggesting the barcode system for store. The designed barcode system was suggested to KBL management through a small presentation. Persons present for presentation were General Manager Operations, Store Manager and Assistant Manager, Divisional Manager and PPC (Production Planning and Control) Manager. The discussion during the presentation gave better insights of requirements. This system was also explained to the store workers since they will be using the bar code system in store and their requirements were noted down for designing the system.

4. Finding barcode system providing companies and selecting one of them. Following four companies in Pune were visited and requirement was specified. http://www.delmonsolutions.com/ a. Delmon Solutions: b. Edutechpn: http://www.edutechpn.com/ & VTELEBYTE: http://vtelebyte.com/ c. Karan Marking Systems Pvt. Ltd. http://www.karanindia.com/ d. NeoTech Identity Solutions Pvt. Ltd. http://www.neotechid.com/ Edutechpn and VteleByte companies work together and seeing their expertise in this field, these companies were shortlisted for the projects execution. Their potential was seen through their past projects.

13 | P a g e

5. Arranging a visit for Edutechpn and VTELEBYTE at KBL to note the system requirements. A visit for VteleByte sales manager and software developer was arranged at KBL on 9th May 2013. Plant was shown to them. Meeting with store department was arranged for them where they discussed technical aspects of SAP processing of store. Another meeting was arranged with GM and divisional managers. In this meeting the new process and projects feasibility was discuss with the management.

14 | P a g e

PROPOSED SYSTEM DESIGN:

Material inflow:
Released Purchase Orders are updated to barcode database as To be received

Received material is inspected

Disqualified material

Qualified material Short quantity

Rejected or extra material is added to the Rejected Material database

One type of material is counted and compared with the barcode database

Material is transferred from To be received to Inventory database and added in the respective bin data

Operator will put the material into the respective bin

Short material

If all the new material is placed at standardized locations

More material is pending to be placed

All the material is placed at respective locations

Incoming material cycle is over and material is added to the SAP database for issuing

Shortage is added into the Short supply database on the suppliers name

(Note:

signifies barcode system intervention and

shows regular processing.)

15 | P a g e

Material outflow:
Monthly plan is received and priority wise daily plan of issue is generated

Daily plan is given to supervisor for issuing the material

Operator enters the id of the customer into the bar code reader to whom the material has to be issued
BOM will appear on the scanner

Operator selects one type of material in the list, checks the location and collects required quantity from that bin

He scans the Bin barcode and assigns material to that customer

Material is automatically assigned to that costumer and deducted from that bin data

Unavailable material

If all the required material is collected from BOM All the material from BOM is collected

More material is required to be collected

All the material is delivered to the respective person

Material issuing cycle is over and material database is automatically updated to SAP
Pending material is received

Material is kept as Pending for that costumer and will be delivered when store received that material

16 | P a g e

INTERPRETATION AND CONCLUSION OF STUDY:

There is scope for automation of processes in the store. This automation will hasten the store processing, i.e. both the incoming of material as well as issuing of material. As a result, it will reduce the overall production time and hence delivery to the customer. Material required for the manufacturing may be very costly. Current system sometimes takes unnecessary time for the material in and out movement from store. If step by step automation is started, it will ensure positive results and smoother processing in the store. Also sometimes costly inventory is found absent in SAP, and the question is to what to do with this inventory. Such issues are high priority and need to be solved as soon as possible. Company has well established ERP i.e. SAP, but this advantage may turn as constraint in such cases. So there should be a system which will assure that such mismatch will not occur and in case it does occur, this system itself should be able to solve them (by Reconciliation of barcode system database and SAP). The current system also needs a lot of manual work like writing down all the material codes and quantity in a muster and then on the bin card. This takes a lot of time as well as requires paper usage. The suggested system will emit these steps. Scope for further automation is also possible, after initial installation of the suggested system. The system will not only reduce the processing time, but will also help in increasing employee satisfaction since they will be able to work faster and unnecessary steps will be emitted, and also they will be using new technology which itself will work as a motivator. Though this system is mainly designed for store, it will benefit the whole organization. Since, it will remove many lacunas and will assist in better harmony among various departments related to store.

17 | P a g e

RECOMMENDATIONS:

o There should be restrictions to the production workers that no material should be issued without the permission from store department. This creates quantity mismatch. And this is necessary for new system to be successful. o Material allocation should follow 2nd S and 5th S properly and regularly. Currently sorting of frequently issued material is not fully implemented. o Material issuing authority on SAP should be with store department rather than production department. This will solve many interdepartmental issues. As well as store department can themselves issue material physically as well as on SAP, hence ensure accuracy. o For the above mentioned transfer of authority, a new location (say sub-store) should be added to the SAP and store department should be able to issue material to this location while physically issuing the material. And production department should have authority to issue material from this new location. o A computer system allotted to the store supervisor is situated inside the store departments office. However the material is received and issued from store gate which is distant from office. So when supervisor has to access his computer system, he has to frequently go inside the office. Hence, relocating this computer system near the store gate will be more appropriate. Also for the new system to be useful, it is recommended that there should be a computer system near the store gate.

18 | P a g e

LIMITATIONS:
The designed system is only semi-automated. Since, few processes like placing the material at their location are manual and cannot be automated at present. This leaves the situation in the hands of store workers. Any mistake in these manual steps will be carried forward in the system. Present SAP process which gives authority of issuing material from store to production is with production department rather than store department. The proposed system will not solve the issues occurring due to this process. The project installation will take time frame of more than three months. Therefore, the store has to function in the same way as it has been functioning till for this time period. Though I have tried to collect most of the required information, it is difficult to ensure that system will help in every situation, since the situations in the store are volatile.

19 | P a g e

Scope for Future Improvements:

Barcode printer and smaller version of software database can be installed at vendors end. With this, vendors can paste barcodes to few materials or batch of material. This will ease the identification of materials at incoming stage. Barcode printer at vendor end and scanner at security can also be beneficial. Vendors can paste a barcode sticker to the invoice containing information about the consignment. This will hasten the inward process at gate and also at stores incoming stage. A smaller version of this system can be installed for Tool Crib and Gauge room to replace the current system of manually issuing tools or gauges. At later stage when materials required for production will be numerous, an EKanban can be installed at store as well as shop floors, which will display live stocks of material.

BIBLIOGRAPHY:
https://en.wikipedia.org/wiki/Warehouse_management_system http://www.inventoryops.com/warehouse_management_systems.htm http://inventorysystemsoftware.wordpress.com/2011/05/02/top-10-benefits-inventorymanagement/ http://www.compsee.com/WhitePaper-PDF/zebra-BarCodesManufacturing.pdf http://www.barcode-systems.com/index.php/solutions/automatic-identificationsystems/manufacturing http://www.technologystudent.com/prddes1/barcode1.html http://vtelebyte.com/ http://www.edutechpn.com/ http://www.delmonsolutions.com/ http://www.karanindia.com/

20 | P a g e