A PROJECT REPORT ON ROLE AND IMPORTANCE OF INVENTORY MANAGEMENT AND CONTROL IN OPERATIONS MANAGEMENT.

SUBMITTED BY NEHA N. VYAS ROLL NO 201115

GUIDED BY SPONSOR GUIDE: MR. D. K. YADAV PROJECT GUIDE: PROF. PIYUSH SHAH

MASTERS OF MANAGEMENT STUDIES DURGADEVI SARAF INSTITUTE OF MANAGEMENT STUDIES SUNDER NAGAR, S.V ROAD, MALAD (WEST), MUMBAI 400064

UNIVERSITY OF MUMBAI 2010 2012

Students Declaration
I hereby declare that this report, submitted in partial fulfillment of the requirement for the award for the Master of Management Studies, to Durgadevi Saraf Institute of Management Studies, is my original work and not used anywhere for award of any degree or diploma or fellowship or for similar titles or prizes. I further certify that without any objection or condition I grant the rights to Durgadevi Saraf Institute of Management Studies, to publish any part of the project if they deem fit in journals/Magazines and newspapers etc without my permission.

Date: Place:

--------------------------------Signature Name: NEHA.N.VYAS Class: Roll No: 201115

Certificate
This is to certify that the dissertation submitted in partial fulfillment for the award of Master of Management Studies of Durgadevi Saraf Institute of Management Studies., is a result of the bonafide research work carried out by Ms. Neha.N.Vyas under my supervision and guidance. No part of this report has been submitted for award of any other degree, diploma, fellowship or other similar titles or prizes. The work has also not been published in any journals/Magazines.

Faculty guide Name: Prof. Piyush Shah Signature : ______________

Date: Place:

ACKNOWLEDGEMENT
I wish to thank all those who helped me and without whose support, I could not have completed this project successfully. First and foremost I express my heart full thanks to Mr.D.K.Yadav, for granting me the permission to do the project and for his constant guidance during my project. I would like to thank with immense gratitude Dr. Rakesh Singh, the Director of Durgadevi Saraf Institute of Management Studies for allowing me to undertake this project. I have immense pleasure in expressing my deep sense of gratitude to Prof. Piyush Shah, Professor Operations Department, of Durgadevi Saraf Institute of Management Studies for his valuable guidance, time, co-operation and support without which this project report would not have been completed. I would also like to thank Mr. Tanay Sahay (Marketing Manager) and Ms. Mayuri of OM Logistics Ltd, for their guidance, time, co-operation and support; I was able to complete my project effectively. Last but not least, I would like to thank my family and friends for their wholehearted support for the completion of this project.

Executive Summary:
Title: To Understand The Role And Importance Of Inventory Management And Control In Operations Management. Inventory can be a pain or a boon for corporations depending on the quantity, type and location along the supply chain. 3PLs can have a big influence in the location part of inventory management. This has a significant effect on the stock out as well as the obsolescence costs for organisations. The report explores the role of a 3PL in creating inventory optimisation for its clients. The process of client interaction at Om Logistics has been studied and steps have been suggested to create win win solutions. The objective of this project is also to study how Om logistics manages and controls its inventory and what are the various inventory control techniques used in doing the same. The major objective of the study is to prepare a report on inventory control management acknowledging all the activities carried out by Om logistics at its regional head office, Chakan, Pune. The process of making this report started from knowing how important Inventory management and Control is at OM Logistics. A detailed study was done to understand how OM Logistics controls and manages its Inventory and which techniques does the company follows to do the same. And how this helps in enhancing the profitability of the firm. The process has also included the identification of ways to reduce the inventory costs. The project was made taking idea from the process that is carried out at the warehouses in the Regional Head Office, quarterly in-house magazine named OM MANGALYAN and most importantly with the help and guidance of Mr. Tanay Sahay sir and Ms. Mayuri mam. The entire staff/ labour working in the warehouse guided me to know the exact process. The project also includes little secondary data. Once the data was collected, it was corrected by the head of the company, and now it will be printed for the final issue, as it has finalized.

What is logistics?
Logistics is the universal thread or pipeline that plans and coordinates the delivery of products and services to customers all over the world (see diagram on the next page). Logistics professionals manage and coordinate activities in this global pipeline to ensure an effective and efficient flow of materials and information from the time a need arises until it is satisfied and beyond. Some of the many activities involved in logistics include: customer service, warehousing inventory control, transportation, materials handling, forecasting, purchasing, and strategic planning. The UK Institute of Logistics and Transport defines logistics as the time-related positioning of resource. It has also been defined as the management of inventory in motion and at rest. The goal of these logistics activities is to satisfy the needs of the ultimate consumer-you. Simply stated, logistics managers ensure that the right product, in the right quantity, in the right condition, is delivered to the right customer at the right place, at the right time, at the right cost. A more comprehensive definition of logistics adopted by CLM includes inbound, outbound, internal, and external movements: Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customers requirements. Logistics is involved every time we purchase a product, whether its food, medicine, or clothing. It doesnt matter how we shopat a store, by mail order, through direct sales, or via the Internet- we are being served by the logistics pipeline outlined in the next page. The items we purchase have been transported from manufacturers near and far to get to us- and logistics professionals have managed each of these journeys. Consider the last shirt that one purchased. The cotton may have been grown and processed in Georgia. Then it was shipped to South Korea where it was spun into fabric. The bolts of fabric were sent to Guatemala for cutting and assembly. The completed shirt was then transported to the U.S. retailer that sold it to us. And, thats not all! The buttons, thread, packaging, and labels all went through similar international logistical paths to become part of our shirt as well. Every product in our home has in some way been touched by this incredible field. Pick up a soft drink, styling gel, a computer, or a CD player and consider the path each of these items has travelled to get to us. We have been depending on logistics all of our life to provide the best that the world has to offer.

Role of Logistics in Competitive Advantage:Companies can make competitive advantage through logistics excellence. Exploiting logistics service and performance will help OM Logistics to set themselves apart from their competitors. It is a unique approach. Incorporating logistics as a critical element of their marketing and business strategy will help a company to grow their sales. Effective logistics can significantly contribute in positioning themselves as a preferred supplier. Product, promotion and price have been used for years by companies to develop recognition. Now it's time to exploit and incorporate place, i.e., Logistics, as the base for a marketing and business strategy to grow the business and to gain market share. Customers would perceive that the particular company provides a competitively superior value and service and that is a strong foundation for growth. Logistics presents a way to market to customers. There is only so much that can be done with promotion and price. A value-added logistics strategy is a strong way to be a preferred supplier because our customers are saying that we are worth doing business with. They say, "We want to do business with you." We will grow, maybe even into portions of the market, we have not reached before. Looking at it another way, we may have a great product, sound promotion efforts and a good price. But if we have difficulty in doing business with, in fulfilling orders and timely and completely meeting customer requirements, we may not achieve maximum growth. We could even lose sales and market share with a poor logistics service. A marketing strategy based on logistics, and the customer benefits and service it brings, works whether our customers are domestic or international. We can be a market leader, not a follower. Be aggressive; be an innovator, not a reactor. When we are only reacting, instead of innovating, we have put ourselves in the catch-up mode. As such, we may never be quite sure of what we should be doing and why. With this strategy, we position ourselves as a valued supplier. Price issues, while always important, can be balanced with the service we provide. This can create opportunities for enhanced price opportunities. And if we are a preferred supplier, our customers recognize that. They promote us and what we bring to the table. With this strategy, we demonstrate to customers how important they are and how much we value them. We can position ourselves as a preferred supplier. We can use logistics as a cornerstone of our marketing strategy for growth. Understanding what our customers expect, how well our competitors perform and how well we operate. We must find ways to develop a strong logistics program which meets and exceeds customer requirements. Reengineering our operation and developing a strong logistics capability is not an overnight fix. It takes time and commitment. We must not delay and miss the opportunity to grow customer satisfaction, sales and market

share. And once we have begun this strategy and process, it does not stop. Market and customer needs are constantly changing. Our ability to change and lead the change, as a market leader is ongoing. We must constantly work to improve service, reduce time and reduce costs as our customers require.

Inventory and Inventory Management: What is inventory?

Inventory/stock is a detailed, itemized list, report, or record of things in one's possession, especially a periodic survey of all goods and materials in stock. It is the amount or value of a firm's current assets that consist of raw materials, work in progress, and finished goods. It is also an itemized catalogue or list of tangible goods or property, or the intangible attributes or qualities. The value of materials and goods held by an organization: To support production (raw materials, sub assemblies, work in process), For support activities (repair, maintenance, consumables), or For sale or customer service (merchandise, finished goods, spare parts). Inventory is often the largest item in the current assets category, and must be accurately counted and valued at the end of each accounting period to determine a companys profit or loss. Organizations whose inventory items have a large unit cost generally keep a day to day record of changes in inventory (called perpetual inventory method) to ensure accurate and on-going control. Organizations with inventory items of small unit cost generally update their inventory records at the end of an accounting period or when financial statements are prepared (called periodic inventory method). The value of an inventory depends on the valuation method used, such as first-in, first-out (FIFO) method or last-in, first-out (LIFO) method. GAAP require that inventory should be valued on the basis of either its cost price or its current market price whichever is lower of the two, to prevent overstating of assets and earning due to sharp increase in the inventory's value in inflationary periods. The optimum level of inventory for an organization is determined by inventory analysis. Also called as stock in trade or just stock.

Types of Inventory:Raw materials:Raw materials are inventory items that are used in the manufacturer's conversion process to produce components, subassemblies, or finished products. These inventory items may be commodities or extracted materials that the firm or its subsidiary has produced or extracted. They also may be objects or elements that the firm has purchased from outside the organization. Even if the item is partially assembled or is considered a finished good to the supplier, the purchaser may classify it as a raw material if his or her firm had no input into its production. Typically, raw materials are commodities such as ore, grain, minerals, petroleum, chemicals, paper, wood, paint, steel, and food items. However, items such as nuts and bolts, ball bearings, key stock, casters, seats, wheels, and even engines may be regarded as raw materials if they are purchased from outside the firm. Generally, raw materials are used in the manufacture of components. These components are then incorporated into the final product or become part of a subassembly. Subassemblies are then used to manufacture or assemble the final product. A part that goes into making another part is known as a component, while the part it goes into is known as its parent. Any item that does not have a component is regarded as a raw material or purchased item. Work-in-process:Work-in-process (WIP) is made up of all the materials, parts (components), assemblies, and subassemblies that are being processed or are waiting to be processed within the system. This generally includes all materialfrom raw material that has been released for initial processing up to material that has been completely processed and is awaiting final inspection and acceptance before inclusion in finished goods. Finished goods:A finished good is a completed part that is ready for a customer order. Therefore, finished goods inventory is the stock of completed products. These goods have been inspected and have passed final inspection requirements so that they can be transferred out of work-in-process and into finished goods inventory. From this point, finished goods can be sold directly to their final user, sold to retailers, sold to wholesalers, sent to distribution centres, or held in anticipation of a customer order. MRO goods inventory:Maintenance, repair, and operating supplies, or MRO goods, are items that are used to support and maintain the production process and its infrastructure. These goods are usually

consumed as a result of the production process but are not directly a part of the finished product. Examples of MRO goods include oils, lubricants, coolants, janitorial supplies, uniforms, gloves, packing material, tools, nuts, bolts, screws, shim stock, and key stock. Even office supplies such as staples, pens and pencils, copier paper, and toner are considered part of MRO goods inventory.

Classification of Inventory: Production inventories:They represent raw materials, parts and components that are used in the process of production. Production inventories include a. Standard industrial items purchased from outside (also called bought outs). b. Non-standard items (purchased items). c. Special items manufactured in the factory itself (also called works made parts or piece parts. MRO inventories:They refer to the maintenance; repairs and operation supplies, which are consumed during process of, manufacture but do not become a part of the product. In-process inventories:They represent items in the semi-finished condition (i.e. Items in the partially completed stage) Goods-In-Transit:They represent such materials, which have been paid for but have not yet been received by the stores. Inventories are also classified based on the reasons for which they are accumulated. The categories of inventories include cycle stock, in-transit inventories, safety or buffer stock, speculative stock, seasonal stock, and dead stock. Cycle Stock:Cycle stock is inventory that results from replenishment of inventory sold or used in production. It is required in order to meet demand under conditions of certainty, that is, when the firm can predict demand and replenishment times (lead times). In-transit Inventories:In-transit inventories are items that are en route from one location to another. They may be considered part of cycle stock even though they are not available for sale or shipment until after they arrive at the destination. For the calculation of inventory carrying costs, in-transit

inventories should be considered as inventory at the place of shipment origin since the items are not available for use, sale, or subsequent reshipment. Safety or Buffer Stock:Safety or buffer stock is held in excess of cycle stock because of uncertainty in demand or lead time. Average inventory at a stockkeeping location that experiences demand or lead time variability is equal to half the order quantity plus the safety stock. Speculative Stock:Speculative stock is inventory held for reasons other than satisfying current demand. For example, materials may be purchased in volumes larger than necessary in order to receive quantity discounts, because of a forecasted price increase or materials shortage, or to protect against the possibility of a strike. Production economies also may lead to the manufacture of products at times other than when they are in demand. Seasonal Stock:Seasonal stock is a form of speculative stock that involves the accumulation of inventory before a seasonal period begins. This often occurs with agricultural products and seasonal items. The fashion industry also is subject to seasonality with new fashions coming out many times a year. The back-to-school season is a particularly important time. Dead Stock:Dead stock refers to items for which no demand has been registered for some specified period of time. Dead stock might be obsolete throughout a company or only at one stockkeeping location. If it is the latter, the items may be transhipped to another location to avoid the obsolescence penalty or mark down at their current location.

Meaning of Inventory Management:

Inventory management, or inventory control, is an attempt to balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory. 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. Inventory Management Systems and processes identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status. It handles all functions related to the tracking and management of material. This includes the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances. Management of the inventories, with the primary objective of determining, controlling stock levels within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and handling costs. Inventory Management can also be explained as activities employed in maintaining the optimum number or amount of each inventory item.

Meaning Of Inventory Control:Inventory control is the technique of maintaining the size of the inventory at some desired level keeping in view the best economic interest of an organization. The inventory control system offers comprehensive reporting capabilities to keep you on top of inventory status. It can help bring about the creation of new or improved pricing methods, and even enhanced customer service. Inventory control is a part of a production program which specifies the material requirement and schedule the order of work to be done. Inventory control means keeping a track of inventory, so that items are available when they are needed. It can be achieved through: Purchasing items at an economic price at a proper time and in sufficient quantity. Provision of suitable and secured location with sufficient space. Inventory identification system. Up to data and accurate record keeping by a responsible staff.

OM GROUP:

The Group Companies

1. OM Logistics Ltd 2. OMX Express 3. Om Trans Logistics Ltd. 4. Om Telecom Logistics Pvt. Ltd. 5. Om Trax Packaging 6. Solutions Ltd. 7. OMX Info Management Ltd. 8. Om Infra Construction 9. Om Trans Logistics Inc. (North America)

OM Group facilitates:
400 branch offices catering to 1,000 + delivery locations Over 10 Million Sq. Ft. Of warehousing and storage space in India More than 3,000 dedicated logistics professionals and a fleet of 3,000 assorted mix of dedicated vehicles covering nearly 62,000 miles per day The brain behind the success of OM Group is Mr. Ajay Singhal (Chairman and Managing Director). The Annual Turnover of OM Group was Approximately Rs 850 crores in the year 2010.

OMX Express
OMX Express is India's leading express, train and air cargo service provider. They enable time-bound and safe door to door movement of both large and small cargo consignments across the nation. Services they provide are as follows:

Small cargo dispatches Door to door delivery Time bound transfers To pay facility Special area delivery Holiday delivery Cod- Dod Real time information

OMTRANS Logistics Ltd.

Omtrans Logistics offers logistics support and single window solutions involving all components of total supply chain management. We employ a combination of infrastructure, state-of-the-art information technology and professional experts to offer our customers a 100 percent hassle-free experience. Most of all, we believe in adopting customer-friendly systems and a customer-oriented approach. Omtrans Logistics Limited has a presence in over 80 countries through strategic alliances with its channel partners. The company also has its own office in North America thereby providing crucial logistic support to its business associates in other parts of the world. The turnover of Omtrans Logistics Ltd. Was approximately 175 crores in the year 2010. Omtrans Logistics offers a wide array of services for management of cargo movement both domestically and internationally. We undertake the following supply chain management services efficiently and strategically so that your business becomes simple and cost-effective: Multimodal transport operations Full documentation desk Inventory Management Cargo insurance Conventional and local transportation Arranging Special Equipment i.e. Flatrack, opentop and reefer containers

Om Telecom Logistics Pvt. Ltd.

As a premium provider of telecom logistics and services, Om Telecom Logistics Pvt. Ltd. Has been constantly evolving innovative processes to enhance the supply chain efficiency. Our strict adherence to process and system implementation has helped us bring about a qualitative change in the field of telecom logistics. They offer the most reliable and efficient system for warehouse and inventory management solutions and last-mile (secondary) delivery. Our Unparalleled reverse logistics processes are well-defined and considered one of the best in the Telecom industry. They are enjoying a strong foothold by being able to cater to both Indian as well as Global clients. Services that they provide are as follows: Warehouse and inventory management for export/import Project handling Door to door pick up and delivery all over the world Transportation by Road, Train and Air Committed and efficient transit time State-of-the-art material handling equipments ONLINE WAREHOUSE MANAGEMENT SYSTEM (WMS).

OMX Info Management Ltd.

OMX Info Management provides you with a consistent platform to manage all your corporate records effectively. We understand the importance of information to your business, which is why securing it is our prime concern. Our rapid retrieval systems ensure that you take timely and informed decisions to improve your business agility. Through our structured document destruction processes, you can reduce litigation risks and demonstrate regulatory compliance. The turnover of OMX Info Management Ltd. Was approximately 25-30 crores in the year 2010. Services that they provide: Record management: crucial for business Secure solutions Information at finger tips Document destruction Disaster recovery programs Media vault programs Flexible work hours

OM Infra Construction
Bridging the gap
Om Infra Construction caters to a growing segment of business by providing a proper interface between the warehouse owners who want to lease/sell their warehouses and the companies who want to hire/buy the warehouses. Our qualified and experienced staff carry out proper inspection of these warehouses in order to ascertain their suitability for storage purpose. We grade these warehouses under various categories and maintain data on the same. We offer companies only those warehouses which would be most suitable to meet their storage requirements for a particular type of good and further assist our clients with formalities relating to the lease documents.

Efficient, cost-effective solutions

Enjoying the pan-India network of our parent company, Om Logistics Ltd., with 400 branches, Om Infra Construction has emerged as a pioneer in this segment, facilitating efficient and cost-effective solutions to domestic as well as global clients.

Buy-Sell, Lease-Hire
Their dedicated team of experts carry out meticulous inspection of industrial units, Commercial plots or composite units, which are then graded under various categories according to their respective storage suitability. Based on our assessment, these warehouses are offered To the interested companies, according to their specific requirements. To ensure smooth functioning of the entire process, we also assist our clients with the lease/sale documentation.

OM Logistics Ltd:Company Profile:

Om Logistics Ltd., the flagship company of Om Group has been instrumental in providing innovative and value added solutions for Indian Corporate and Multinationals. Its the only leading multi-modal logistics company with single window integrated logistics services for all the elements of the supply chain management in India. Through its innovative and cost saving methods, Om Logistics Ltd. Has consistently added value for its customers, which can be complimented by our competence to take the driving seat for generating maximum air cargo in India. It has been dealing with corporate, multinational automobile industry and has been pioneer in transportation, warehousing and logistics support to the sector. Om Logistics Limited is one of the top logistics services providers in India. It has its' corporate office at 130, Punjabi Bagh (Transport Centre) Delhi 35. The company has its' branches and company owned warehouses all over India. The total number of branches of the company is 250 and 200 associates. There are total 16 Hub Centres spread all over India out of them 07 are the Large Hub Centres and 09 are mini Hub Centres. There are approximately 5000 employees working in this company in its' Head Office and Branches spread all over India. The Manpower is well qualified, experienced and trained. Company has a large fleet of vehicles approximately 4000 including own and attached vehicles.

Resources of the Company

Fully Equipped Branches: The Company has got a wide network of approximately 250 Branches and 200 Franchisees to provide door to door services to the customers. All the Branches are fully equipped with all necessary implements i.e. Pallet Trucks, Fork Lifts, Pallets, Bins, Vehicles, Generators, and Platforms for loading and unloading etc. The Branches are strengthened with all kinds of modern office appliances i.e. Computers, internet, mobile phones and other communication devices. I.T. Infrastructure: The Company has got a very strong online infrastructure which is able to provide each and every necessary information to the customers and various Branches every time through its' On Line Track N Trace System. Company Owned Warehouses: In all most all big cities and towns of the country the company has got its own fully equipped Warehouses.

Mess and Other Facilities to the Employees: The Company has provided accommodation and mess to all the employees working in various branches all over the country. Car cum - Mobile facilities to the Branch Managers/ Area Managers/ regional Managers The turnover of OM Logistics Ltd in the year 2010 was approximately 550 crores.

Vision
To provide integrated logistics solutions and services designed to redefine customer satisfaction, rationalize cost and time relationship and bridge the gap between Indian Requirements and International Practices and Standards.

Mission
We commit ourselves to delivering quality services encompassing safety, security, flexibility and innovation. We work in an environment with perfect blend of planning and execution to meet the challenges of change and competition. We value our manpower and train them to work with team spirit.

Quality Policy
Om Logistics is committed to offering logistics solutions and services to the Indian industry which are designed to deliver customer satisfaction in order to help, support and grow businesses in a win-win situation.

Om Logistics believes in setting benchmarks in...

Customer satisfaction Control on cost and commitment to time Schedules Market research and development Convenience Communication systems Creating a win-win situation

Om Logistics provides various services such as: Small cargo Door to door delivery Retail level services Warehousing Time bound delivery To pay facility Special area delivery Holiday delivery

The Basic Standard Operating Procedure (SOP) followed at Om Logistics Ltd. are as follows:START Customer places the order to take the consignment through call, email, etc. Documents and vehicles required are prepared by the Traffic Manager The executive is sent to the customer with the vehicle The consignment is taken from the customer to the branch/hub Document is checked at the gate Documents are then sent to tho the respective warehouse Unloading of the goods is done The goods are again loaded to another vehicle for the final destination Goods are dispatched to the consignee Stamp/signature is taken by the driver on the acknowledgement copy

PTO

The same document is given to the account department Driver takes his money from the account department A DDR-Daily Delivery Report is prepared and sent to the Head office by the accountant The bill is prepared by the POD department for the customer/consignor Marketing executive submits the bill and collects the payment Receipt is made and a copy is sent to the customer and to the head office FINISH

OM Logistics layout at Pune (Chakan):Parking Gate no. 1 (Office) Lawn Area Office Area Parking Gate no. 2 (Office)
Warehouse no. 8

Warehouse no. 7

Warehouse no. 6

Warehouse no. 4

Warehouse no. 5
Parking

Warehouse no. 3 Warehouse no. 2

Warehouse no. 1

Layout and Warehousing details at OM Logistics:Starting with the gate no. 1, the various vehicles give the challan or builty to that gate office and then only they are allowed to enter the premises of the Hub. Here all the records of the vehicles which are going and coming is kept in the books. There is space for parking of the vehicles which are currently not in use, exactly behind the gate office no. 1. Then there is a big lawn area, where there is greenery and then the office building is there. Various activities related to the Human resource, Finance and Marketing is carried out here. There is a cash department also, in which no one, other than the employees of the same department are allowed. Going forward, towards the warehouses, once again there is a gate no. 2. The vehicles that enter the premises need to show their gate pass at the office which is at gate no. 2 and this is mandatory, without which the vehicles wont be able to enter the warehouses area. There are basically two types of warehouses in Om Logistics Ltd. Company, and those are transshipment warehouse and delivery warehouse. The delivery warehouses are 1, 4, 6, 7, and 8. And the transshipment warehouses are 2 and 3. Transshipment is Transfer of

a shipment from one carrier, or more commonly, from one vessel to another whereas in transit. Transshipments are usually made (1) where there is no direct air, land, or sea link between the consignor's and consignee's countries, (2) where the intended port of entry is blocked, or (3) to hide the identity of the port or country of origin. Because transshipment exposes the shipment to a higher probability of damage or loss, some purchase orders or letters of credit specifically prohibit it. The hub of Om Logistics at Chakan, Pune acts as a junction for the other hubs all over India. These types of warehouses usually transport the goods or consignments directly from hub to hub. Consignments here are transshipped which are supposed to go out of Maharashtra, and to the various regions like southern, western, eastern and also southern. The transshipment warehouses at Om Logistics are divided into various sections and these sections are named according to the regions. Warehouse no. 2 and 3 also provides the facility of fresh booking, that means the customers can come to the warehouse and place an order or they can also drop their consignments here. After this, the further process is carried out according to the policies and procedures of the company. The process at these warehouses plays a major role in cost cutting, as the small consignments are combined into a large consignment. And then these consignments are shipped to the consignee. These large shipments are made, taking into consideration, the consignments which are supposed to go on the same route. Sometimes it may also happen that the large shipments are divided into smaller ones. The various sections in which the warehouse no. 2 is divided are as follows:1. Rudrapur 2. Baghola 3. Ambala 4. Nasik
Warehouse no. 3 is divided into the following sections:-

5. Mumbai 6. Chennai 7. Binola 8. Haridwar

1. Aurangabad 2. Kanpur 3. Lucknow 4. Nagpur

5. Indore-Pritampur 6. Hyderabad 7. Shiwal-Satara 8. Goa-Kolhapur

The transhipment process helps in cost cutting because of combining the small shipments into the big shipments, so that it makes the dispatching of the consignments to the destinations that is on the same route. If they use different vehicles for different destinations then it will incur huge costs for them.

Warehouse no. 5 is an exception, because it is divided into 3 parts:1. The first part is for the stationery department of the company. Here all the material related to the stationery is kept, for the further usage of the company. 2. The second part is being provided by the company to NBC for their use. This part is custom bonded and all the goods/consignment of NBC is only kept. 3. The third part of this warehouse is for Air and Train delivery. Usually the consignments that are kept here are required on urgent basis by the customers. The consignments or goods that come in this warehouse is not stored for more than 24 hours. Then towards the left there are 3 warehouses lined up, which are warehouse no. 4, 6 and 8 and towards the right warehouse no. 5 and 7. The operations at warehouse no. 1 and 7 are performed in a similar way. Both these warehouses provide services to the private and corporate customers. The goods stored and transported in these warehouses are nearer to the Pune hub. The dispatch of the goods to the consignee is done as soon as the consignment comes. Sometimes, the process of loading and unloading is also skipped, because the goods are directly sent to the consignee without any interruptions in between. The various companies that are near to the Pune hub are Behr India, Spicer India, and Gabriel India, Cummins, Piaggio etc. In the warehouse no. 1, stacking of the goods is not done. The goods or consignments are kept or segregated according to the region/place to which it belongs. The dispatching of the materials is done according to the customers requirements. Unlike, in the warehouse no. 7, stacking is done. There are in all 23 racks in this warehouse, and is divided into 3 parts vertically. 700 pallets can be stacked in this warehouse. The various racks are divided according to the different regions. ABC analysis technique is followed here, according to the weight of the consignments. In the warehouse no.4, the consignments or goods of the nearby area i.e., within the Pune region are kept. There are in all 14 racks in this warehouse and each rack is divided into 3 parts. The goods are mostly of automobile sector and are directly dispatched to the consignee without the loading or unloading activities. 900 pallets can be stacked at a time in this warehouse. And the goods are kept on the basis of the company, from where it has come. In other words, the racks are divided according to the various companies. The various companies, whose materials are kept in this warehouse, are JBC, Force, Kirloskar, Johndeer, General motors, Minda industries and Gabriel. Warehouse no. 4 follows the technique of FIFO in the general case, but if there is any rejection part, then this warehouse follows the technique of LIFO. Warehouse no. 6 is exclusively for Tata Motors and only consignments or goods of Tata Motors are stored in this warehouse and are also transported from the same. Vendors/suppliers of Tata Motors send the various materials to this warehouse. And as and when the need arises at the assembly line, the goods are sent directly to the plant of Tata Motors.

The clients of Warehouse no. 8 are those who are in Chakan MIDC and area nearby Chakan. Goods of these clients are stored in this warehouse. The consignments or goods in this warehouse are directly sent to the final consignees place or to the branch nearby consignee. In this warehouse, all type of consignments are stacked. There are in all 12 racks in this warehouse and each rack is again divided vertically into 4 parts.

Inventory Management in a 3PL:Recent economic trends have resulted in a slight uptick toward increasing safety stocks at distribution centers. Shippers are now being challenged to control inventory levels by balancing the need to get product into their customers' hands while maintaining lean supply chains. The challenge that companies try to overcome every day, every month and year is controlling stock levels in the warehouse to reach an equilibrium between the need for product availability and the need for minimizing stock holding, handling, ordering, and shipping costs. If the operations group of a company is finding it is finding it increasingly difficult to maintain this balance, then they should explore the option of outsourcing the management of companys inventory to a third party logistics provider. Third party logistics providers inventory management services are moving beyond simple warehouse management to contract warehousing and value-added services. There are all sorts of things that 3PLs are willing to do in addition to storing inventory, That includes picking, packing, and light assembly, as well as handling warranty claims, returns and repairs. 3PLs also now support the reverse logistics process, expanding services beyond simply providing outbound supply chain support. As manufacturers use 3PLs for more aspects of inventory management, the relationship becomes more "sticky"; with more tasks handled by a 3PL partner, a manufacturer might be less willing to switch to another 3PL. 3PL providers also can offer greater flexibility to manufacturers through inventory management services. A 3PL can run with the systems and processes to help companies identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status. A 3PL uses techniques such as ABC analysis, lot tracking, cycle counting and using the latest in inventory management technologies, third party logistics companies provide clients with a strong visibility of their supply chain enabling them to more effectively find a good balance. If a company already has an exceptional operations group to maintain this balance then maybe a 3PL may not be the answer. But it is always good for a company to keep their options open and never stop exploring the new opportunities and technologies that are emerging in the logistics industry.

Various ways to lower inventory costs:The prime objective for all supply chains is to provide clients with what they want, when they want it. Inventory management plays a central role in every supply chains need to satisfy its clients.

Inventory policies drive two types of costs: period operating expenses and working capital requirements. 1. Reduce Order Transaction Costs: In the office, use the computer to generate purchase orders (POs), EDI for PO transmission, advance shipping notices (ASNs) to reduce expediting, and historical vendor performance to prioritize expediting to lower purchasing costs. 2. Lower Inventory Holding Costs: Improve space utilization in leased, contract, or public warehouses (or to minimize or delay expansion of owned facilities) through narrow aisle handling equipment, mezzanines, layout, or more appropriate storage modes. 3. Base Safety Stock on Customer Service: Prioritizing SKUs consistent with corporate objectives, using the appropriate number of product classes, establishing class sizes that leverage the investment to maximize fill rates, updating safety stock levels dynamically and basing the service levels for each class on the financial goals of the business all serve to either reduce safety stock inventory, reduce out-ofstock situations or increase revenue.

4. Reduce Acquisition Lead Times: For either manufactured or purchased product, any reduction in lead time, whether supplier lead time, transportation time or receiving cycle time, provides a one-time, permanent reduction in cycle stock inventory proportional to the throughput level of the SKU and the degree of lead time reduction. In a similar manner, reducing lead time variability and increasing inbound unit-, SKU-, or order-fill rates both increase supply reliability and reduce safety stock inventory for a given customer service level. 5. Dont Stock It, or If Some Stocking is Required, At Least Not Everywhere: In a network of storage locations, not stocking every SKU in every location can reduce both inventory and transportation costs. 6. Get Help From Friends: Collaborative Planning and Replenishment (CPFR) is an open set of pre-defined business processes and IT/communications standards created to facilitate collaboration between supply chain partners. CPFR can reduce inventories through inventory balance, forecast, demand and other data visibility and associated collaboration in the planning area. 7. Maintain Accurate Inventory Balances: Inaccurate inventory balances undermine the very best forecasting and safety stock management processes. They can always be addressed with effective cycle counting and issue root cause identification efforts. 8. Measure Performance: Reporting, posting in public locations internally, and reviewing performance results with natural work teams lay the groundwork for continuous improvement. In highly seasonal businesses, providing last years results along with this years facilitates same time last year comparisons, which may be much more meaningful than this month versus last month.

Inventory Control Techniques:There are several techniques a person can use to increase profitability and streamline workflow via proper inventory control. Through research, competitive analysis and experience, an effective business leader can balance costs versus benefits to storing and ordering the necessary supplies to ensure business vitality. The supply chain is made of all materials that help you to produce, market and supply your product. Inventory control means that you have identified every facet of your supply chain and its logistics. The various inventory control techniques are as follows:-

ABC Analysis (Always Better Control):In any inventory, which contains more than 1 stocked item, some items, will be more

important to organizations than others. Some items may have a very high usage rate, so if they ran out many customers would be disappointed. Other items might be of particularly high value, so excessively high inventory levels would be particularly expensive. One common way of discriminating between different stock items is to rank them by the value of their usage. Items with a particular high value of usage are deemed to warrant careful control, whereas those with low usage values need not be controlled quite so rigorously. Maintaining inventory through counting, placing orders, receiving stock, and so on takes personnel time and costs money. When there are limits on these resources, the logical move is to try to use the available resources to control inventory in the most efficient way; to achieve this, an ABC analysis is one way to control the inventory effectively. ABC analysis is based on the Pareto principle, after the nineteenth-century Italian Philosopher who illustrated graphically the fact a small of the population owned that most of the wealth in Italy. It is sometimes called the 80:20 rule, as 20% of the population owned 80% of the wealth.

ABC analysis underlines a very important principle Vital few: trivial many. Statistics reveal that just a handful of items account for bulk of the annual expenditure on materials. These few items, called A items, therefore, hold the key to business. The other items, known as B and C items, are numerous in number but their contribution is less significant. ABC analysis thus tends to segregate all items into three categories: A, B, and C on the basis of their annual usage. The categorization so made enables one to pay the right amount of attention as merited by the items. A-items: it is usually found the hardly 5-10% of the total items account for 70-75% of the total money spent on the materials. These items require detailed and rigid control and need to be stocked in smaller quantities. These items should be procured frequently, the quantity per occasion being small. B-items: these items are generally 10-15% of the total items and represent 10-15% of the total expenditure on the materials. These are intermediate items. The control on these items need not be as detailed and as rigid as applied to C items. C-items: these items are generally 70-80% of the total items and represent 5-10% of the total expenditure on the materials. The procurement policy of these items is exactly the reverse of A items. C items should be procured infrequently and in sufficient quantities. This enables the buyers to avail price discounts and reduce work load of the concerned departments. Policies of Control for A, B and C categories.:Any sound stock control system should ensure that the each item gets the right amount of attention at the right time. ABC analysis makes this possible with considerably less efforts due to its selective approach there are number of ways in which ABC classification can be made use of: a. Degree of Control:Someone at the senior level should be made responsible for regular reviewing of these items. Up-to-date and accurate records should be maintain for these items. B items should be brought under normal control made possible by goods record keeping and periodic attention. Little control is required for C items. b. Ordering Procedure:A items should be subject to frequent review to reduce unwarranted stock outs and possibilities of overstocking. A reasonable good analysis for order points is required for B items but the stocks may be reviewed less frequently. No such computations are necessary for C items. These should be bought in bulk.

c. Staggering of delivery schedules:Staggering of delivery schedules is one of the best strategies to reduce the inventory investment and ensure un-interrupted inflow of materials. Staggered deliveries tend to reduce cost of order writing but increase the cost of inspection and receiving. Annual contract with scheduled deliveries are desirable for A and B class of items. C class of items, however, should be purchased in bulk on single-order-basis. d. Stock records:Details records of goods ordered, received, issued and goods on hand should be maintained for A category of items. No such detailed records are necessary for C items. Any routine method that ensures goods and accurate records is enough for B category of items. e. Priority treatment:VIP treatment may be accorded to A items in all activities such a processing of purchases orders, receiving, inspection movement on the shop floor, etc., with an object to reduce lead time and average inventory. No such treatment is necessary for B items. No priority is assigned to C items. f. Safety Stock:All items of consumption are equally important from production point of view. Safety stock should be less for A items. The possibility of stockouts can considerably be cut down by closer forecasting, frequent reviewing and more progressing. C items, on the contrary, should have sufficient safety stock to eliminate progressing and to reduce the probability of stock outs. A moderate policy is required for B items, safety stock being neither too high nor too low. g. Value Analysis:To secure maximum benefits, it is essential to select those items for value analysis which offer the highest scope for cost reduction. The usage classification is a useful step in this direction. Only A and B items are selected for detailed value analysis and the former is given priority over the latter. C items should not be value analyzed. ABC analysis is followed in the warehouse no. 4 and 7 at Om Logistics Ltd. Unlike the standard analysis, the goods here are kept on the basis of their weight and the stacking of material. This is done, so that it becomes easy for the labour to lift those goods. The goods of the maximum weight is kept at the lowermost rack which is included in the part A. The rack at the medium level can bear the goods with moderate weight, that is, approximately 500kg and this

comes under the B category. Last but not the least, C category comprises of the top most level rack, in which goods of around 200-250kg is kept.

VED Analysis:V stands for vital, E for essential, D for desirable. This classification is usually

applied for spare parts to be stocked for maintenance of machines and equipments based on the criticality of the spare parts. The stocking policy is based on the criticality of the items. The vital spare parts are known as capital or insurance spares. The inventory policy is to keep at least one number of the vital spare irrespective of the long lead-time required for procurement. Essential spare parts are those whose non-availability may not adversely affect production. Such spare parts may be available from many sources within the country and the procurement lead time many not be long. Hence, a low inventory of essential spare parts is held. The desirable spare parts are those, which, if not available, can be manufactured by the maintenance department or may be procured from local suppliers and hence no stock is held usually. VED analysis is not followed at OM Logistics Ltd., as they are not a firm which produces anything. And this analysis focuses on the criticality or on the functional basis of the various factors/products without which the production may come to a standstill.

FSND Analysis:F-S-N analysis is based on the consumption figures of the items. The items under this

analysis are classified into three groups: F (fast moving), S (slow moving) and N (non-moving) and D (dead stock). To conduct the analysis, the last date of receipt or the last date of issue whichever is later is taken into account and the period, usually in terms of number of months, that has elapsed since the last movement is recorded. Such an analysis helps to identify: a. Active items which require to be reviewed regularly b. Surplus items whose stocks are higher than their rate of consumption; and
c. Non-moving items which are not being consumed

Age of inventory indicates duration of inventory in organization. It shows moving position of inventory during the year. If age of inventory is minimum it means, the turnover position of that particular item of inventory is satisfactory. If the age of any particular item of inventory, it indicates the slow moving of stock which may be due to lower demand for the product, inefficiency in shocking policy, excessive stocking etc. The excessive investment in stocks means, high investment is locked-up in inventory leads to lower profitability of the firm due to excess carrying costs. 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. FSND analysis is followed in the warehouse no.6 of OM Logistics Ltd. This warehouse contains the stock of only TATA Motors. SDE Analysis:-

SDE analysis is based on the problems of procurement namely: a. Non-availability b. Scarcity c. Longer lead time d. Geographical location of suppliers, and e. Reliability of suppliers, etc. SDE analysis classifies the items into three groups called scarce, difficult and easy. The information so developed is then used to decide purchasing strategies. Scarce classification comprise of items, which are in short supply, imported or canalized through government agencies. Such items are best to procure limited number of times a year in lieu of effort and expenditure involved in the procedure for import. Difficult classification includes those items, which are available indigenously but are not easy to procure. Also items, which come from long distance and for which reliable sources do not exist, fall into this category. Even the items, which are difficult to manufacture and only one or two manufacturers are available belong to this group. Suppliers of such items require several weeks of advance notice. Easy classification covers those items, which are readily available. Items produced to commercial standards, items where supply exceeds demand and others, which are locally available, fall into this group. The purchase department employs SDE analysis: a. To decide on the method of buying:- Eg: Forward buying method for some of the items in the Scarce group; Scheduled buying and contract buying for Easy group b. To fix responsibility of buyers:- Eg: Senior buyers may be given responsibility of S and D groups while E group may be handled by junior buyers or directly by the storekeeper.

G-NG-LF/GOLF Analysis:Its like SDE Analysis. It is based on nature of suppliers which determine quality, lead

time, terms of payment, continuity or otherwise of supply and administrative work involved. The analysis classifies the items into 4 groups G-NG-L and F. This stands for Government, Open Market, Local or Foreign source of supply. For many items, imports are canalized through Government agencies such as state trading corporation, minerals and metals trading corporation, Indian drugs and pharmaceutical etc. For such items the buying firms cannot apply any inventory control techniques and hence to accept the quota allocated by the government. Open market category is those who form bulk of suppliers and procurement is rather easy. L category includes those local suppliers from whom items can be purchased offthe-shelf on cash purchase basis. F category indicates foreign suppliers since an elaborate import procedure is involved, it is better to buy imported items in bigger lots usually covering the annual requirements. The transactions with such suppliers: a. Involve a lot of administrative work. b. Necessitate search of foreign suppliers. c. Require opening letter of credit. d. Require making of arrangement for shipping and port clearance.

S-OS Analysis:S-OS analysis is based on seasonality of the items and it classifies the items into two

groups S (seasonal) and OS (off seasonal). The analysis identifies items which are:a. Seasonal and are available only for a limited period of time. For example agriculture produce like raw mangoes, raw materials for cigarette and paper industries, etc. Are available for a limited time and therefore such items procured to last the full year. b. Seasonal but are available throughout the year. Their prices, however, are lower during the harvest time. The quantity of such items requires to be fixed after comparing the cost savings due to lower prices if purchased during season against higher cost of carrying inventories if purchased throughout the year. c. Non-seasonal items whose quantity is decided on different considerations.

MNG Analysis:-

MNG analysis based on stock turnover rate and it classifies the items into M (moving items), N (non-moving items) and G (ghost items). a. M (moving items) is those items, which are consumed from time to time. N (non-moving items) are those items, which are not consumed in the last one year. G (ghost items) is those items that had nil balance, both in the beginning and at the end of the last financial year and there were no transactions (receipt or issues) during the year. b. Analysis mainly helps to identify non-existing items for which the store keeps bin-cards or waste computer memory or waste computer stationary while preparing stores ledger. Stores department even might have even ear-marked space for these non-existent items. c. All pending/ open purchase orders (if any) of such items should be cancelled.

XYZ Analysis:-

a. X-Y-Z analysis is based on value of the stocks on hand (i.e. Inventory investment). Items whose inventory value are high are called as X items while those inventory value are low are called Z items. And Y items are those which have moderate inventory stocks. b. Usually X-Y-Z analysis is used in conjunction with either ABC analysis or HML analysis. c. XYZ analysis helps to identify a few items, which account for large amount of money in stock and take steps for their liquidation/retention. d. XYZ when combined with FSN analysis helps to classify non-moving items into XN, YN, and ZN group and thereby identify a handful of non-moving items, which account for bulk of non-moving stock. These can be studied individually in details to take decision on their disposal or retention.

HML Analysis:H-M-L analysis is similar to ABC analysis except for the difference that instead of

usage value, price criterion is used. The items under this analysis are classified into three groups that are called high, medium and low. To classify, the items are listed in the descending order of their unit price. The management for deciding three categories then fixes the cut-off-lines. For example, the management may decide that all items of unit price above Rs. 1000/-will of H category, those with unit price between Rs. 100/- to Rs.1000/- will be of M category and those having unit price below Rs. 100/- will be of L category. HML analysis helps to:a. Assess storage and security requirements. b. To keep control over consumption at the departmental head level. c. Determine the frequency of stock verification. d. To evolve buying policies to control purchase. e. To delegate authorities to different buyers to make petty cash purchase.

Economic Order Quantity:The order quantity depends upon the cost of the inventory items, the rate and nature of

demand (whether constant or fluctuating), the replenishment time, and the inventory carrying costs and ordering costs for the inventory items. The EOQ can be calculated with the help of a mathematical formula. Following assumptions are implied in the calculation: a. Constant or uniform demand- although the EOQ model assumes constant demand, demand may vary from day to day. If demand is not known in advance- the model must be modified through the inclusion of safe stock. b. Constant unit price- the EOQ model assumes that the purchase price per unit of material will remain unaltered irrespective of the order offered by the suppliers to include variable costs resulting from quantity discounts, the total costs in the EOQ model could be redefined. c. Constant carrying costs- unit carrying costs may very substantially as the size of the inventory rises, perhaps decreasing because of economies of scale or storage efficiency or increasing as storage space runs out and new warehouses have to be rented. d. Constant ordering cost- this assumption is generally valid. However any violation in this respect can be accommodated by modifying the EOQ model in a manner similar to the one used for variable unit price. e. Instantaneous delivery- if delivery is not instantaneous, which is generally the case; the original EOQ model must be modified through the inclusion of a safe stock. f. Independent orders- if multiple orders result in cost saving by reducing paper work and the transportation cost, the original EOQ model must be further modified. While this modification is somewhat complicated, special EOQ models have been developed to deal with it. These assumptions have been pointed out to illustrate the limitations of the basic EOQ model and the ways in which it can be easily modified to compensate for them.

Traditional Inventory management has been deciding how much to order? And when to order? But challenges of today require inventory managers to find answer to the question where to stock the material as this greatly influences customer satisfaction level. High level of inventory indicates higher customer satisfaction level, but cost of high inventory is obviously high. Hence the modern challenge is high customer satisfaction at minimum inventory.

Fixed Order Quantity Approach: Q model:The above approach also called Q model signifies that the order quantity can be fixed at a

level depending on demand, value and inventory related costs. A stock level called Re Order Level [ROL] is fixed, which triggers ordering. Re Order Level is the lead-time consumption or product of lead-time and demand rate during lead-time. When we follow this approach order quantity is fixed by calculating EOQ and ROL is fixed by calculating lead-time consumption. Inventory cycles can be conceptualized by looking at the figure given below and drawn in the class.

Constant monitoring is the main disadvantage of this model Salient Features of the above approach:a. Widely used technique. b. Requires constant monitoring of stock levels. c. Suitable for high value and critical items Limited by the assumptions made cost of in transit inventory, volume transportation rates, use of private carriage, etc

LIFO Method:An asset-management and valuation method that assumes that assets produced

or acquired last are the ones that are used, sold or disposed of first. Last in first out is another method used by logistics companies to handle inventory. LIFO restocks merchandise by moving older items to the back and making room for any new items that are the same. In the LIFO system, the last items stocked are the first items sold. This method is useful for merchandise that has no sell-by or expiration date. Since the company will sell the older products in the future, an organization that uses the LIFO system should control the distribution of the merchandise at timely intervals to ensure that products do not remain warehoused for excessive periods of time.

FIFO Method:An asset-management and valuation method in which the assets produced or acquired

first are sold, used or disposed of first. FIFO may be used by a individual or a corporation. Organizations use FIFO to organize warehouses and inventory. Organizations that use FIFO organize inventory so that the merchandise stored first is the merchandise that is retrieved first. This method of warehouse organization is particularly effective for inventory that has perishable or date-specific qualities. Logistics companies can also use the FIFO system throughout the supply chain, including the inventory, warehousing and transportation of all material handled by the company.

National Bearing Company (NBC):NATIONAL ENGINEERING INDUSTRIES LTD., JAIPUR was founded in the year 1946 as a pioneer industry in the field of bearing manufacture by the renowned industrialist, late Shri B.M. Birla, under the name of "National Bearing Company Limited." The first bearing was manufactured in 1950 with a modest start of 30,000 bearings in 19 sizes. The company is now manufacturing nearly 3.8 million bearings per month in over 500 different sizes ranging from 6 mm bore to 1300 mm outer diameter and has the capacity to manufacture bearings upto 2000 mm outer diameter. At NEI, the development of bearings is a never ending job. With ever increasing activities and grant of industrial licenses for other vital industries and manufacturing of Roller Bearing Axle Boxes for Railway Rolling Stock, Steel Balls, Tapered Roller Bearings, Spindle Inserts etc., the name of the company was changed in 1958 to "National Engineering Industries Ltd." retaining its original trade mark NBC. The industry is spread over 118 acres of land in Jaipur and 56 acres in Gunsi (Newai). The development of National Engineering Industries Ltd., was pioneered with a theme "Indigenisation and Self-reliance". NBC Bearings are widely used by 2 and 3 Wheelers, Cars, Trucks, Tractors, Electric Motors, Railway wagon, Coach and Locomotive manufacturers as Original Equipment and Steel Mills, Heavy Engineering Plants, Bulldozers, Shovels, Tillers and Thermal Power Plants all across the country. (I) PLANT AT JAIPUR : (i). Ball Bearing: The latest advanced techniques for manufacturing and Quality Assurance are implemented to meet the rapid increase in demand for Quality, diversity of specifications and new types of bearings. This Division is spread over a covered area of 14,694 Sq. Meters. (ii). Steel Ball: Precision Steel Balls up to 25 mm diameters for NBC Bearings are manufactured on precision grinding and lapping machines to achieve super finished surface, accuracy and roundness as per ISO standards. This Division is spread over a covered area of 4,700 Sq. Meters. (iii). Tapered Roller Bearing: Precision Tapered Roller Bearings are manufactured in Inch and Metric series from 15.875mm bore to 95.25mm bore with technology obtained from our earlier collaborator, Federal Mogul Corporation, USA and now with NTN Corporation, Japan. These bearings are used by all major

Automobile manufacturers in the country as Original Equipment.This Division is spread over a covered area of 11,652 Sq. Meters. (iv). Railway Bearing: (a) (b) (c) Roller Bearing in Axle Box. Spherical Roller Bearing. Cartridge Tapered Roller Bearing.

This Division is spread over a covered area of 4,855 Sq. Meters. (v). Large Diameter Bearing: Self-sufficiency in steel is the call of the day, so is the importance of bearings in Steel Mills Equipment. NEI has the distinction of being one of the ten manufacturers of these bearings in the world, who can manufacture large diameter bearings up to 2000 mm diameter. The Large Diameter Bearings Division is spread over a covered area of 2,508 Sq. Meters.

(II) PLANT AT GUNSI (NEWAI): Established in the year 1980-81 as an expansion project of NEI Ltd. The factory is equipped with fully automated grinding lines with electronic in-process and post- process gauging and centrally air-conditioned assembly lines with auto gauging and test

equipments for quality and reliability of the products. The plant is spread over a covered area of 7,200 Sq. Meters.

(III) PLANT AT MANESAR: NEI has set up its third Ball Bearing manufacturing plant in the fastest growing industrial town of Manesar in Haryana. The plant is having a covered area of 5200 sq. Meters. With the most advanced and sophisticated machines imported from reputed manufacturers from Europe and Japan . This plant is equipped with state of the art fully automated grinding lines, assembly lines and inspection equipments.

RESEARCH and DEVELOPMENT AT JAIPUR : (a) Design and Development:

Complete in-house facility for design development of all types of bearings and tooling is available. The design of all types of bearings is done on proengineer 3D Modeling and Analysis Software. Complete engineering and research facility is available to solve intricate problems with expert advice on design, development, manufacturing, installation and maintenance of bearings. With the signing of the technical collaboration agreement with NTN Corporation, Japan and

BRENCO Inc of USA, the capability to offer finest engineering services in the bearing industry has enhanced. Services of team of experienced engineers are available for selection of bearing as per applicat ion. (b) Machine Building :

NEI has the capability of machine building to design, develop and manufacture special purpose CNC Grinding Lines, HT Lines, Material Handling Equipments and other special purpose machines which have been made for its captive use to keep pace with latest technology. A well equipped electronic design, development laboratory with all testing facilities supports the Machine Building Division. Machine Building has the capability and supports the Manufacturing Divisions by overhauling and retrofitting of the existing equipments, resulting in upgraded quality and improved productivity. R and D Division is spread over a covered area of 2,007 Sq. Meters. SAP - ERP: In order to reengineer and integrate the Business processes for sales, production, materials and finance, NEI has successfully implemented SAP- ERP. By use of this Package, our processes now conform to international standard.

The major customers of NBC are as follows: Tata Motors 1. Pimpri 2. Chinchwad 3. Chakan 4. Palwal 5. Bangalore 6. Jamshedpur 7. Pantnagar Mahindra and Mahindra 1. Nagpur 2. Rudrapur 3. Haridwar 4. Hyderabad 5. Kahne 6. Vadgaon

Laxmi Hydraulics (Solapur)

Bajaj Auto Ltd 1. Waluj (Aurangabad) 2. Chakan

Laxmi Drucken (Solapur) Z-F Steering Gear India Ltd Kirloskar Brothers Ltd Platemasters (Bhosari) Pradhan Engineering Hematic Ghatge Patil Industries Ltd. Rane Axle and Pressing Pvt. Ltd. S.M. Auto Engineering Pvt. Ltd. AAM India MRC Logistics Mahindra Vehicle

Sansera Engineering Mahabal Auto Ancillaries Crompton Greaves Ltd P.M. Diesels Pvt. Ltd Carraro India Force Motors India Forge and Drop Stampings Ltd. Kinetic Engineering Ltd. VE Commercial Vehicle Ltd. TVS Logistics Sanshu Industries

Other than the above customers, NBC also has a few more customers. OM Logistics charge NBC on the basis of the provision that they give to them.

Process: The process followed at NBC is same as the Standard Operating Procedure (SOP) which is followed at Om Logistics Ltd. This procedure is explained at the beginning stage of this project. But the process followed for Tata Motors is a bit different than the standard one. The reason being the SAP, all the orders received, goods or consignments received in the warehouse, the goods despatched, etc. are all entered in the SAP. SAP is software that is designed to make companies management their resources and work force. SAP stands for Systems, Applications and Processing. It is both a company as well as a software. It is basically an ERP type software, that is used by a large number of Fortune 500 companies. ASN no. is very important in case of Tata Motors, whereas the company Bajaj uses portal for the record of its inventory at various warehouses. In this warehouse no. 5, the vendors say the requirement and it is despatched accordingly. As stated earlier, this warehouse is the depo and all the invoices related to NBC are created here only. The approximate monthly turnover of the inventory at this warehouse is around 3.5crores to 4crores. The office of NBC is in pune. So the bill of all the charges of the goods despatched, transported and everything is delivered at the office of NBC by the incharge of the depo himself. No person other than him can do this. The incharge goes three times in a month to deliver this bill and gets the payment. Warehouse: Custom bonded warehouses are those which are licensed by the Government to accept imported goods for storage until the payment of customs duty. They are located near the ports. They are either operated by the Government or work under the control of customs authorities. The warehouse is required to give an undertaking or 'Bond' that it will not allow the goods to be removed without the consent of the custom authorities. The goods are held in bond and cannot be withdrawn without paying the customs duty. Such warehouses are very helpful to importers and exporters. If an importer is unable to pay customs duty immediately after the arrival of goods he can store the goods in a bonded warehouse. He can withdraw the goods in installments by paying the customs duty proportionately. Goods lying in a bonded warehouse can be packaged, graded and branded for the purpose of sale. Central Warehousing Corporation operates 75 Custom Bonded Warehouses with a total operated capacity of nearly 0.5 million Mts. OM Logistics Ltd. has provided NBC with a custom bonded warehouse with an area of 3000 sq.ft. And this warehouse is the main depot of NBC. This is warehouse no. 5, and this warehouse is divided on the basis of customers/ company. That means that the stock in this warehouse is kept company/customer wise. And again every companys stock is divided according to part number. For example: Tata Motors have part nos. As 683/672, 32213, 32214, 25572. And Bajaj have 6204, TMB6304, 613963, 6201RS, 6200RS, 1838001M as their part nos. Mr. Sandeep is the person in charge of this warehouse and handles all the activities that needs to be done, and has 3 labours under him to do the various loading and unloading work. This

warehouse is well maintained, registered and is in the lock and key system. OM Logistics charge NBC for the rent of this warehouse, for the transportation of the goods @ 2.75 per kg and also for the warehousing of goods. Questionnaire: 1. Is inventory management needed in NBC? Yes No

2. If yes, then why? 3. Which inventory control technique/techniques are followed at the warehouse of NBC in Om Logistics? ABC XYZ FSN SDE All of the above

4. Is there any inventory control technique followed at NBC at the time of delivery? Yes No

5. If yes, then which inventory control technique is followed at the time of delivery? LIFO FIFO Both

6. If both LIFO and FIFO is used, then why? 7. What are the various benefits of using LIFO/FIFO techniques to NBC? 8. What is the percentage contribution of FIFO and LIFO technique in the warehouse of NBC? 9. Which inventory control technique is followed when there is a rejection part? 10. Why is this technique used? 11. What do they do with the rejection part?

The above questionnaire was prepared to have a clear idea about how the various operations activities are carried out at the warehouse of NBC. The above questions were asked to the person in charge of the warehouse. The response/answers which I got are as follows: 1. Yes, offcourse. 2. Inventory management is needed at each and every company which is a manufacturing unit, or provides logistics services. Because this helps in performance of the smooth operations of the company. 3. At Om Logistics, almost all the various techniques are used to control the inventory. 4. Yes, a technique is followed at the time of delivery and is also followed at the warehouse. 5. At the time of delivery, FIFO technique is followed. 6. No, only FIFO technique is used here. 7. Benefits of FIFO: Materials are kept and recorded in a logical and systematic manner. Movement of materials in a continuous, orderly manner represents a condition necessary to and consistent with efficient materials control, particularly for materials subject to deterioration, decay and quality are style changes. 8. 100% FIFO technique is used in this warehouse. 9. Actually, we should be using the LIFO technique for the rejected material, but we follow the same FIFO method even for the rejected material. 10. There is no reason as such. We follow the FIFO technique right from the start and the process is continued the same way. 11. The rejection part is kept at the warehouse and we just inform the company about it. The further process depends on the instructions given by the company.

Shortcomings and Recommendations at OM Logistics Ltd:By being there at OM Logistics as an intern I have observed a few things which are appreciating and other things that need to be taken care of. As we know every company has a positive side, and along with that a negative side. The following are the shortcomings and the ways to overcome the same are as follows: Maintenance of the inventory:- Inventory at all the warehouses of Om Logistics is

properly maintained, except the warehouse no. 8. Material handling is a major problem here. The various material handling equipments are not properly used, causing damage to the goods or consignments and also to the equipments. Workers must be given proper training to handle the materials in the right way. They should know how to use the various equipments in order not to cause damage to the materials. Periodically, maintenance checks should take place, so as to ensure that the materials are in good condition. All the activities carried out in the warehouse should be under the supervision of someone from the company. Maintenance of the warehouse:- The space in warehouses are not properly utilised,

especially the delivery warehouses, except the warehouse no. 6. But at the other warehouses stacking is done properly, and they see to it that the space is utilised to the maximum. The cleanliness of the warehouses is also an issue. Transhipment warehouses are clean and also the delivery warehouse no. 6, which is provided to Tata Motors. Absence of cleanliness may cause problems to the workers and damage to the goods. Proper segregation and sorting of the goods should be done. All the goods should be kept in a proper order; standardisation can be a solution to keep the right goods at the right place. Standardizing will also help in making the process simple and easy. The company should also clean the warehouses periodically which will help in maintaining the right ambience for the workers and also the goods. Material handling equipments:- The provision of material handling equipments is not

enough to cater to the needs of the workers working there. In other words the number of material handling equipments is very less. This in turn leads to the damage of these equipments. Every warehouse must have 2 manual forklifts and one of the electric forklifts. The workers must use the forklifts smoothly, not causing damage to them. This in turn will help in the proper handling of the materials, by causing no damage to them. Use of improper inventory control techniques:- At the warehouse no. 5, the part which

is given to NBC follows improper inventory control technique. We are well versed with the

concept of FIFO (First In First Out) and LIFO (Last In First Out) which is rightly mentioned earlier. Warehouse of NBC follows only the FIFO system, for all types of the goods, even for the rejection part. As the goods consist of bearings, it gets rust easily. So if a rejection part comes, then also the company sends the earlier rejection part which came first. This results in more physical damage of the goods, leading it to become a scrap. I would recommend the company to suggest the person handling the warehouse of NBC to follow the system of LIFO for the rejection part. Because that would help in causing less damage to the recent rejected part and the goods can be brought to the proper condition very easily and in a short span of time. FSN:- The inventory control technique of FSN is not properly used. Here in this part

also, segregation comes into the picture. Though the warehouse no. 6 follows the technique of FSND, but still they are not able to properly maintain it. They keep the materials wherever they get space and this is not right. Because it leads into confusion as to where the goods are kept and this also increases the lead time. This problem can be solved very easily if the goods or the consignments are kept according to their movement. That means it should be kept on the basis of fast moving, slow moving, non moving and the dead stock. This will help in proper maintenance of the FSND inventory control technique and will also help in no wastage of time in searching the goods and the consignments. Creation of problems by vehicles:- At the warehouse no. 7, while the vehicles come for

the unloading, it takes more than 10 minutes for unloading the goods from one vehicle. The vehicles are lined up for the unloading purpose at the same time, it creates huge problem in the movement of materials into the warehouses. This activity also wastes time, as the workers will have to again keep the goods properly. I would suggest them to inform the drivers of the vehicles to maintain a gap of 10 mins in each and every vehicle. This will help in proper movement of the materials and also will not waste time and effort of the workers in doing the same work again and again. By doing this, the goods or consignments can be kept properly at the time of unloading without wasting time. They can also inform about the same at the main gate, so that they can ask the vehicles to wait for some time and then send them after a required gap. These were the various problems at OM Logistics Ltd. and solutions given by me for the same.

Conclusion:Inventory Management and Inventory Control must be designed to meet the dictates of the marketplace and support the company's strategic plan. The many changes in market demand, new opportunities due to worldwide marketing, global sourcing of materials, and new manufacturing technology, means many companies need to change their Inventory Management approach and change the process for Inventory Control. Despite the many changes that companies go through, the basic principles of Inventory Management and Inventory Control remain the same. Some of the new approaches and techniques are wrapped in new terminology, but the underlying principles for accomplishing good Inventory Management and Inventory activities have not changed. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations. The basic building blocks for the Inventory Management system and Inventory Control activities are: Sales Forecasting or Demand Management Sales and Operations Planning Production Planning Material Requirements Planning Inventory Reduction

The emphases on each area will vary depending on the company and how it operates, and what requirements are placed on it due to market demands. Each of the areas above will need to be addressed in some form or another to have a successful program of Inventory Management and Inventory Control.