A

PROJECT REPORT

ON

“LOGISTICS MANAGEMENT IN BOMBAY DYEING MFG. LTD”

A detailed study done in

“OPERATION”

Submitted in partial fulfillment of the requirement for the award of degree of Master of Management Studies (MMS) under the university of Mumbai

Submitted byMITHUN LODHA

ROLL NO: 54BATCH: MMS 2014-2016

Under the guidance of PROF VEENA CHAVAN

Bharati Vidyapeeth’sInstitute of Management Studies& Research

Navi Mumbai

(i)ACKNOWLEDGEMENT

I would like to express my gratitude to all those who gave me the possibility to complete this

project.

I would like to thank my guide PROF. VEENA CHAVAN for her continuous guidance.

I would like to thank my guide PROF SHRIKANT MOKAL for her guidance in company

I am thankful to our DIRECTOR DR D.Y.PATIL for providing me a platform and

supporting me towards the successful completion of this project. I also want to thank my

class mates who have helped me in getting acquainted with various aspects during the

project.

In the end, I express my gratitude to my family who inspired me in doing this work. Without

their inspirations the completion of this work was almost impossible.

MITHUN LODHA

SIGNATURE OF THE STUDENT

(ii)PLEASE PASTE HERE THE CERTIFICATE FROM THE COMPANY

(iii)PLEASE PASTE HERE THE CERTIFICATE FROM THE INSTITUTE

(iv)EXECUTIVE SUMMARY

As we know that Bombay Dyeingand Manufacturing Co. Ltd. is a production unit. Whenever

production term comes then first thing comes in our mind that is inventory. Because

inventory is base for any production unit so, when we control and manage the inventory

properly then the company is benefited (By reducing holding and carrying cost of inventory).

Bombay Dyeingand Manufacturing Co. Ltd. has two plant locations in Patalganga and

Ranjangaon, Patalganga unit is for PSF production and Ranjangaon is for Textile Processing.

The project work is done for Patalganga branch. This branch is certified for ISO 9001-2000,

ISO 14001-2004, and OHSAS 18001-1999. TheBombay Drying’s PSF material have earned

goodwill and trust of customers and the Bombay Drying’s PSF material has come to be

recognized as a powerful symbol of quality.

Raw material for PSF is PTA (PrifiedTeraphthalate Acid) and MEG (Mono Ethylene Glycol)

which is mostly imported from South Korea and Saudi Arab. Here 160 type of PSF is

produced. The type is depending on denier of material viz. 0.8-15 denier with various cut

length, with main four grades: CQ, SS, ST, and OI. Then this raw material goes through

various process (process are detailed in production line overview) and finally PSF is to be

manufactured. The finished PSF is packaged in bale using packing machines. And waste of

PSF is packaged manually. The bale weight is around 400 kg for white material and 250-300

kg for black material.Specific coding stickers are used for convince of Logistic department

like red colour for CQ, blue colour for SS, green colour for ST, no colour for OI.

For this study of inventory management regards to Bombay Dyeingand Manufacturing Co.

Ltd. various techniques such as EOQ, ABC Analysis, FSN Analysis, HML Analysis, XYZ

Analysis, VED Analysis is to be studied. Management minimizes investment in inventory

and meet a demand for the product by efficiently organizing the production and sales

operations. The firm should minimize investment in inventory which involves costs i.e.

ordering cost and carrying cost, so that smaller the inventory, the lower is the cost to the

firm.

(v)

TABLE OF CONTENTS

PARTICULARS PAGE NO:

Acknowledgement (i)

Certificates (ii)

Executive Summary (iv)

Table of Contents (v)

Chapter 1: Introduction of the Project

1.1: Concept & Significance of the Study 2

1.2: Objective of the Study 3

1.3: Scope and Limitations 4

1.4: Literature Review 5

Chapter 2: Introduction to Industry

2.1: Introduction to Industry 8

2.2: Introduction to Company 13

2.3: Organization Structure 23

2.4:Awards& Recognition 24

2.5: Research Methodology 26

Chapter 3: Research Methodology

3.1: Research Design 26

3.2: Data Collection techniques 27

Chapter 4: Data Analysis and Interpretation 28

Chapter 5: Conclusion and Suggestions

5.1: Recommodation 57

5.2: Conclusion 58

Chapter 6: Learning Experience from the summer project

6.1: Learning Experience 60

6.2 Biblography 61

CHAPTER-1

Introduction Of The Project

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1.1 Concept & Significance of study

The title of the project is “Logistics management at Bombay Dyeing and Mfg. Co. Ltd.”

Logistics has been performed since the beginning of civilization. Logistics involves the

integration of various processes like transportation, inventory, warehousing, material

handling, information and packaging. Implementing best practice of logistics has become

one of the most exciting and challenging operational areas of business and public sector

management. One of the several competencies required to create customer value is efficient

logistics. Cost reduction in transportation plays a major role in the current competitive

market.

Logistics is becoming an important factor of gaining and sustaining competitive advantages.

It has gained recognition in business organizations as one of theimportant business

functions and a tool for developing competitiveness. The public distribution systemin the

country needs logistical support for delivering goods at the right place on time and at the

lowest cost. This in turn benefits on saving the transportation cost and time, cost of inventory

and warehousing.As far as the society is concerned, this will also lead to optimum utilization

of scarce resources of fueland reduced cost of transportation expenses.

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1.2 Objectives

1. To Study and understand various operations in company’s logistics.

2. To study, analyze and improve the inventory management of the company.

3. To analyze inventory techniques implemented at company and understand their impact.

4. To Study the warehousing operationin the company.

5. To identify returns process of the company.

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1.3 Scope& Limitations :

Logistics involve the integration of transportation, inventory, warehousing, information,

material handling and packaging of an organization. The operating responsibility of logistics

is the geographical positioning of raw materials, work-in-process, and finished inventories

where required at the lowest cost possible. The study is concentrated with above Logistics

activities of the BOMBAY DYEING &MFG. CO. LTD

Limitations:

- TAKT time (gap between two production processes)

- Fluctuation in demand of FG.

- Outside transportation facility & transporter responsibility.

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1.4 Literature Review

Literature portrays logistics and SCM practices from a variety of different perspectives with

a common goal of ultimately improving performance and competitiveness.

Based on literature, we find that the important supply chain practices concerns are mainly

related to:

1. Supply Chain Collaboration and Partnership with various stakeholders such as the product

developers, suppliers, channel partners and end-users.

2. Supply Chain Structure including facilities network design taking into account related

transportation and logistics.

3. Forecasting and Demand Management to cope with supply chain complexity in a cost-

effective and delivery-efficient way.

4. Use of Information and Communication Technologies (ICT) to facilitate the above.

While there is plenty of published literature that explains or espouses SCM, there is a dearth

of empirical studies examining logistics and SCM practices. Galt and Dale (1991) study ten

organizations in the UK and find that they are working to reduce their supplier base and to

improve their communications with the suppliers. Fernie (1995) carries out an international

comparison of SCM in the grocery retailing industry. He finds significant differences in

inventory held in the supply chain by the US and European grocery retailers, which could be

explained by difference in degrees of their SCM adoption. Tan and Wisner (2000) compare

SCM in the US and Europe. Tan (2002) relates SCM practices and concerns to firm’s

performance based on data from US companies. He lists nine important supply chain

concerns such as lack of sophisticated ICT infra-structure, insufficient integration due to lack

of trust and collaboration among the supply chain stakeholders and thereby lack of supply

chain effectiveness and efficiencies. Basnet et al. (2003) report the current status of SCM in

New Zealand, while Sahay et al. (2003) discuss supply chain strategies and structures in

India. These surveys rank the perceived importance of some SCM activities, types of

hindrances and management tools on the success of SCM using representative samples

mostly from manufacturing. Quayle (2003) surveys supply chain management practice in

UK industrial SMEs (Small Manufacturing Enterprises) while Kemppainen and Vepsalainen

(2003) probe current SCM practices in Finnish industrial supply chains through interviews of

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managers in six supply chains. They analyze the change of SCM both in terms of operational

practices and organizational capabilities. Chin et al. (2004) conduct a survey that examines

the success factors in developing and implementing supply chain management strategies for

Hong Kong manufacturers. Moberg et al. (2002) state that there is little literature on

information exchange. Feldmann and Muller (2003) examine the problem of how to establish

an incentive scheme to furnish reliable and truthful information in supply chains.

There is little literature on logistics and SCM practices in India. Available literature focuses

either on the best practices (Joshi and Chopra, 2004) or on re-engineering of internal

operations of the firms (Deshmukh and Mohanty, 2004, Kankal and Pund, 2004). In context

of ICT, Saxena and Sahay (2000) compare the manufacturing intent to be an agile

manufacturer and their Information Technology (IT) infrastructure in terms of scope of use,

extent of use and integration of IT-based systems. The more recent studies are mainly based

on questionnaire surveys and secondary data sources (Sahay and Mohan, 2003,

www.etintelligence.com, Sahay et al., 2006). Vrat (2004) discusses some issues and

challenges as well as the potential of SCM in India. All these studies find Indian firms

generally lagging behind their counterparts in the developed countries.

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CHAPTER-2

Introduction TO Industry

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2. 1 INTRODUCTION TO INDUSTRY

The Indian textile industry is one of the largest in the world with a massive raw material and textiles manufacturing base. Our economy is largely dependent on the textile manufacturing and trade in addition to other major industries. About 27% of the foreign exchange earnings are on account of export of textiles and clothing alone. The textiles and clothing sector contributes about 14% to the industrial production and 3% to the gross domestic product of the country. Around 8% of the total excise revenue collection is contributed by the textile industry. So much so, the textile industry accounts for as large as 21% of the total employment generated in the economy. Around 35 million people are directly employed in the textile manufacturing activities. Indirect employment including the manpower engaged in agricultural based raw-material production like cotton and related trade and handling could be stated to be around another 60 million.

A textile is the largest single industry in India (and amongst the biggest in the world), accounting for about 20% of the total industrial production. It provides direct employment to around 20 million people. Textile and clothing exports account for one-third of the total value of exports from the country. There are 1,227 textile mills with a spinning capacity of about 29 million spindles. While yarn is mostly produced in the mills, fabrics are produced in the powerloom and handloom sectors as well. The Indian textile industry continues to be predominantly based on cotton, with about 65% of raw materials consumed being cotton. The yearly output of cotton cloth was about 12.8 billion m (about 42 billion ft). The manufacture of jute products (1.1 million metric tons) ranks next in importance to cotton weaving. Textile is one of India’s oldest industries and has a formidable presence in the national economy inasmuch as it contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. They include cotton and jute growers, artisans and weavers who are engaged in the organised as well as decentralised and household sectors spread across the entire country.

INDIAN TEXTILE INDUSTRY STRUCTURE AND GROWTH

India’s textile industry is one of the economy’s largest. In 2000/01, the textile and garment industries accounted for about 4 percent of GDP, 14 percent of industrial output, 18 percent of industrial employment, and 27 percent of export earnings (Hashim). India’s textile industry is also significant in a global context, ranking second to China in the production of both cotton yarn and fabric and fifth in the production of synthetic fibers and yarns.

In contrast to other major textile-producing countries, mostly mostly small-scale, nonintegrated spinning, weaving, cloth finishing, and apparel enterprises, many of which use

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outdated technology, characterize India’s textile sector. Some, mostly larger, firms operate in the “organized” sector where firms must comply with numerous government labor and tax regulations. Most firms, however, operate in the small-scale “unorganized” sector where regulations are less stringent and more easily evaded.

The unique structure of the Indian textile industry is due to the legacy of tax, labor, and other regulatory policies that have favored small-scale, labor-intensive enterprises, while discriminating against larger scale, more capital-intensive operations. The structure is also due to the historical orientation towards meeting the needs of India’s predominately low-income domestic consumers, rather than the world market. Policy reforms, which began in the 1980s and continued into the 1990s, have led to significant gains in technical efficiency and international competitiveness, particularly in the spinning sector. However, broad scope remains for additional reforms that could enhance the efficiency and competitiveness of India’s weaving, fabric finishing, and apparel sectors.

Structure Of India’s Textile Industry

Unlike other major textile-producing countries, India’s textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale firms:

• Composite Mills. Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially “sick.”

• Spinning. Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in India’s textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers. In 2002/03, India’s spinning sector consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units.

• Weaving and Knitting. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. India’s weaving and knitting sector remains highly fragmented, small-scale, and labor-intensive. This sector consists of about 3.9 million handlooms, 380,000 “powerloom” enterprises that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. “Powerlooms” are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers.

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Modern shuttleless looms account for less than 1 percent of loom capacity.

• Fabric Finishing. Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving, or knitting units.

• Clothing. Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors).

Growth of Textile Industry

India has already completed more than 50 years of its independence. The analysis of the growth pattern of different segment of the industry during the last five decades of post independence era reveals that the growth of the industry during the first two decades after the independence had been gradual, though lower and growth had been considerably slower during the third decade. The growth thereafter picked up significantly during the fourth decade in each and every segment of the industry. The peak level of its growth has however been reached during the fifth decade i.e., the last ten years and more particularly in the 90s. The Textile Policy of 1985 and Economic Policy of 1991 focussing in the direction of liberalisation of economy and trade had in fact accelerated the growth in 1990s. The spinning spearheaded the growth during this period and man-made fibre industry in the organised sector and decentralised weaving sector.

ROLE OF INDIAN TEXTILE INDUSTRY IN THE ECONOMY

Textile industry plays a significant role in the economy. The Indian textile industry is one of the largest and most important sectors in the economy in terms of output, foreign exchange earnings and employment in India. It contributes 20 per cent of industrial production, 9 per cent of excise collections, 18 per cent of employment in industrial sector, nearly 20 per cent to the country’s total export earnings and 4 per cent ton the GDP. The sector employs nearly 35 million people and is the second highest employer in the country. The textile sector also has a direct link with the rural economy and performance of major fibre crops and crafts such as cotton, wool, silk, handicrafts and handlooms, which employ millions of farmers and crafts persons in rural and semi-urban areas. It has been estimated that one out of every six households in the country depends directly or indirectly on this sector.

India has several advantages in the textile sector, including abundant availability of raw material and labour. It is the second largest player in the world cotton trade. It has the largest cotton acreage, of about nine million hectares and is the third largest producer of cotton fibre in the world. It ranks fourth in terms of staple fibre production and fourth in polyester yarn

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production. The textile industry is also labour intensive, thus India has an advantage.

The key advantages of the Indian industry are:

• India is the third largest producer of cotton with the largest area under cotton cultivation in the world. It has an edge in low cost cotton sourcing compared to other countries. • Average wage rates in India are 50-60 per cent lower than that in developed countries, thus enabling India to benefit from global outsourcing trends in labour intensive businesses such as garments and home textiles. • Design and fashion capabilities are key strengths that will enable Indian players to strengthen their relationships with global retailers and score over their Chinese competitors. • Production facilities are available across the textile value chain, from spinning to garments manufacturing. The industry is investing in technology and increasing its capacities which should prove a major asset in the years to come. • Large Indian players such as Arvind Mills, Welspun India, Alok Industries and Raymonds have established themselves as 'quality producers' in the global market. This recognition would further enable India to leverage its position among global retailers. • India has gathered experience in terms of working with global brands and this should benefit Indian vendors. 

GOVERNMENT INITIATIVES

With a view to raise India's share in the global textiles trade to 10 per cent by 2015 (from the current 3 per cent), the Ministry of Textiles proposes 50 new textile parks. Out of the 50, 30 have been already sanctioned by the government (with a cost of US$ 710 million). Set up under the Scheme for Integrated Textile Parks (SITP), this initiative will not only make the industry cost competitive, but will also enhance manufacturing capacity in the sector.

INDIAN TEXTILE INDUSTRY – SWOT ANALYSIS

Strength

» India has rich resources of raw materials of textile industry. It is one of the largest producers of cotton in the world and is also rich in resources of fibres like polyester, silk, viscose etc. » India is rich in highly trained manpower. The country has a huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates. » India is highly competitive in spinning sector and has presence in almost all processes of the value chain. 

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» Indian garment industry is very diverse in size, manufacturing facility, type of apparel produced, quantity and quality of output, cost, and requirement for fabric etc. It comprises suppliers of ready-made garments for both, domestic or exports markets. 

Weakness 

» Knitted garments manufacturing has remained as an extremely fragmented industry. Global players would prefer to source their entire requirement from two or three vendors and the Indian garment units find it difficult to meet the capacity requirements.» Industry still plagued with some historical regulations such as knitted garments still remaining as a SSI domain.» Labour force giving low productivity as compared to other competing countries.» Technology obsolescence despite measures such as TUFS.» Low bargaining power in a customer-ruled market.» India seriously lacks in trade pact memberships, which leads to restricted access to the other major markets. » Indian labour laws are relatively unfavorable to the trades and there is an urgent need for labour reforms in India. 

Opportunity

» Low per-capita domestic consumption of textile indicating significant potential growth.» Domestic market extremely sensitive to fashion fads and this has resulted in the development of a responsive garment industry.» India's global share is just 3% while China controls about 15%. In post-2005, China is expected to capture 43% of global textile trade.» Companies need to concentrate on new product developments.» Increased use of CAD to develop designing capabilities and for developing greater options.

Threats 

» Competition in post-2005 is not just in exports, but is also likely within the country due to cheaper imports of goods of higher quality at lower costs.» Standards such as SA-8000 or WARP have resulted in increased pressure on companies for improvement of their working practices.» Alternative competitive advantages would continue to be a barrier.

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2.4INTRODUCTION OF COMPANY

Profile of the company

Name of the industry: BOMBAY DYEING & MANUFACTURING CO. LTD.

Name of the owner: THE WADIA GROUP.

Type of industry: PROCESSING INDUSTRY PSF Plant.

Address: A-1, PATALGANGA INDUSTRIAL AREA, P.O. BOX NO.5 DIST-

RAIGAD MAHARASTRA (410220)

Bombay Dyeing is the part of the Wadia group, which is more than 130 years old. Wadia

group initially ventured into the area of ship building, and more than 355 ships were

designed and built by the group. As the industrialization grew in the 19 th century, so did the

trading and new opportunities for the business. In the late 19th century Bombay was next only

to New Orleans as the world’s largest cotton port. NowrosjeeWadia sensed an opportunity in

India’s mushrooming textile industry and on august 23,1879,Bombay dyeing was founded in

a humble red brick shed with beginning of a small operation where cotton yarns spun in

India was dip dyed in hand in three colors-turkey red, green and orange and laid out in the

sun to dry. The company started with grey yarns in 1895 and soon after had surplus

production, which it exported to china since then Bombay Dyeing has grown into one of the

India's largest producer of textiles.

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Company Results and Dividends –

The Company’s turnover increased by 22% and by Rs.1732crore during the current year as

compared to Rs.1418crores in the previous year. The Textile division recorded decline in

turnover from Rs.334crores last year to Rs.294crores in the current year. The PSF division

recorded a turnover of Rs.867crores for the current year compared to Rs.811crores last year.

The revenue from the Real Estate division during the current year was Rs.562crores as

compared to Rs.273crores last year. The profit after tax for the current year was

Rs.18.42crores compared to a loss of Rs.194.62crores in the previous year. The financial

performance of the Company has improved compared to the last year. The demand for textile

products remained stagnant in the domestic market. The export market declined due to low

demand in USA and Europe. The performance of the PSF division was adversely impacted

due to non-availability of raw material and over-supply situation in the market.

The Real Estate Division showed marked improvement due to sale of residential units at a

better realization per flat. The Division also sold the remaining space in the commercial

building at Worli. The Company’s results were also impacted due to increase in finance costs

arising from higher borrowings required for the operations. Your Directors recommend a

dividend of Rs.2.50 per share for the year ended 31st March, 2010 to be paid, if declared by

the members at the ensuing Annual General Meeting, as compared to dividend of Re. 1 per

share in the previous year.

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Textile Division –

The overall turnover declined by 12% from Rs.334crores to Rs.294crores, mainly on account

of lower exports at Rs.50crores compared to Rs.80crores in the previous year. Domestic

retail sales witnessed the effect of economic slow-down in the beginning of the year, but

recovered during the latter part of the year under review. Retail sales at Rs.158crores during

the year were at the same level as last year. The profitability of the Division suffered from

the effects of falling exports, competition in the domestic market and sharp rise in raw

material cost. Several steps have been initiated to improve the performance of the Division

such as increased capacity utilization, reduction of factory cost through improved efficiency,

lower wastages, reduction in selling & distribution expenses and administrative overheads

etc. Inventory and receivables have been reduced considerably resulting in lower burden of

interest on working capital. The Division is striving to improve the sales volume by better

marketing in domestic as well as exports market. The international and domestic demand has

started looking up with the improved global economic environment.

Polyester Division –

PSF industry in the country continued to face excess capacity. Despite the adverse conditions

the Company could increase sales volume of PSF by 42% as compared to the previous year.

The Company achieved average capacity utilization at 77% for the year which is comparable

with the industry standards. In March quarter, the capacity utilization rose to 88%. Division

profitability suffered on account of low realization due to severe competition coupled with

higher raw material prices. Although export markets expanded, the margins remained under

pressure. Switch over from liquid fuel to Natural Gas in second half helped to reduce the

energy cost. The company is pursuing a strategy to increase capacity utilization, confine to

focused profitable product range, reduce cost in areas of operations including import of raw

material on long term contract basis and expand the share in the domestic market to improve

overall sales realization.

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Real Estate Division –

The revenue from the Real Estate Division was Rs.562crores during the current year

compared to Rs.273crores in the previous year. During the year the Company sold the

remaining part of the commercial building under construction at Worli and also some flats in

the building under construction at Spring Mills, Dadar. The Company has also leased out

surplus space in the existing properties, income from which has started accruing from March

quarter 2010. The construction of the residential tower at Spring Mills and the commercial

building at Textile Mills is nearing completion. The demand for residential property has

picked up and prices of the same have also witnessed a steady rise in the past few quarters.

Your Company will be progressing the next phase of development with a view to leverage

the market trends.

Fixed Deposits –

Company has discontinued acceptance of fixed deposits from June 2009. Deposits of

Rs.81.14crore were outstanding as at 31st March, 2010. No deposits have matured as at 31 st

March, 2010.

Polyester Division Details –

Industry Structure and Developments – Amongst the three major PSF producers in the

country, your Company recorded highest volume growth at 40 % as compared to the industry

growth of 16 %. The growth momentum is expected to continue during the current year. The

exports are also expected to be maintained at current levels, thereby enabling the company to

further improve the capacity utilization in the coming year.

Opportunities and Threats– Steady rate of growth in PSF demand and increasing prices of

cotton, viscose and acrylic fibers make way for higher capacity utilization of the PSF plant as

well as improved realization. Strategy to rely more on contracted import of raw materials

will help to avoid raw material availability constraint. Use of Natural Gas helps in curtailing

the conversion cost. However, wide fluctuation in crude oil prices and exchange rate have

ma cascading impact on raw material and finished goods prices and consequently, the

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margins may be adversely affected. Irrational competitive actions may also result in lower

profitability.

Outlooks– Continued healthy GDP growth is expected to boost the demand for PSF,

especially in a scenario where other fibers are witnessing sharp price escalation. The advent

of Technical Textiles is also gaining momentum, and will offer opportunities for growth in

high margin niche areas. The raw material availability is expected to ease with new

capacities both in India and neighboring countries.

Risks and concerns– Wide fluctuation in crude oil prices, exchange rate and any political

uncertainties in West Asia will affect the prices and availability of key raw materials.

Although we have taken adequate measures to ensure availability of raw materials from

various sources, nevertheless, the price instability arising out of such consequences may

affect our business prospects.

Analysis of the Annual Report 2011

Analysis of Profit & Loss Account for the year ended as on 31st March 2011 –

Gross Sales has increased by 35% as compared to the previous year 2010-11 which in turn has boosted the total income of the company.

Total income shows increase of Rs.274.57crore which is a favorable sign for company and also for forecasting the next quarter digits of accounts.

As the working capital increases to meet the market demand of the product, the expenditure and the cost of sales and production also increase and here for this year ended as on 31st March 2011, expenditure has shown a 14% increase with Rs.275crore.

Since there is an increase of 24% in profit before tax its good sign for the company for next quarter.

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Analysis of Balance Sheet as on 31st March 2011 –

Reserves and Surplus in the balance sheet as on 31st March 2011, has increased by

Rs.917.84Crore as compared to previous years which is good sign for company in

coming quarters.

Loan funds i.e., loans availed are decreased by Rs.537.81Crore, it is favorable

position for the company but the working capital of the company is negatively

affected due to this condition.

Depreciation on fixed assets has 21% of increase as compared to previous year 2010.

Inventory management cost has shown a high increase of Rs.887.48Crore which is a

matter of concern, since it affects Net working capital of the company negatively.

Net current liabilities has shown increase of 4% increase, and if these are decreased

in coming quarter then there can be a most favorable situation.

Analysis of Cash flow statements for the year ended as on 31st March 2011 –

Cash and Cash equivalents inflow from operating activities is Rs.551.97Crore which

has increased by 86% as compared to previous year.

The above cash has been used for investing activities and for the year it is

Rs.31.51Crore which has decreased by 63% and hence the effect on net income

forecasted for next few years may prove to be negative.

Cash and cash equivalents used for financing activities is Rs.597.37Crore. This

outflow of cash has increased by 74% as compared to previous year.

The total cash decrease for the year is Rs.13.89Crore which has been increased by

35% as compared to previous year. Hence total amount of cash decrease is

Rs.13.89Crore which is a major concern, but if this cash and cash equivalents

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decrease is due to net working capital or inventory management, then it is not a

problem for company since, work in progress and the finished goods sales can

generate cash in next quarters. For the next analysis we have,

Particulars Amount in Crore Rupeesa. Closing Stock Work in progress 24.89Finished goods 101.46Office Premises 0.30

b. Opening stock Work in progress 18.34Finished goods 60.52Office premises 0.30

c. Total(b-a) (47.49)

Since we get that the working capital investment is Rs.47.49Crore which has caused the increase in cash usage and hence cash and cash equivalents has decreased.

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Vision

We will offer differentiated PSF specialty products and services in a most economical way

and create value for the customers and nation.

Mission

We will discommodities our PSF business and pursue niche market to have competitive

advantage.

LOGO OF BOMBAY DYEING-WEIGHING BALANCE

The logo states the following figures-

One side - Money given by the customer

Other side - Fabric bale

On the weighing balance the vessel which contains fabric bale is always heavier than the

vessel containing money.

The logo expresses to its customers that the quality of the fabric is always greater than the

money placed on the other side.

Bombay Dyeing at present is the largest exporter of sophisticated made-up items and also of

products made of cotton and poly cotton. Bombay Dyeing has created a sizable market in the

production of a wide range of fabrics and ready-mades. This includes both formal and casual

wear. The consumer section of Bombay Dyeing comprise of bed linen, towels, furnishings,

suiting and shirting fabrics, and cotton and polyester blended dresses and saris.

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Patalganga Unit

BDMC (Polyester division), Patalganga the new PSF plant is of around 452 crores. Total

area of plant is 41 acres. Total no. of employees in 3 shifts is 464.The Patalganga unit of

BDMCL has a maximum throughput capacity of 540 tonnes per day. The normal daily

production however varies depending upon market requirements. It usually operates around

320 tonnes per day. At patalganga polyester plant, a final product called POLYESTER

STAPLE FIBRE, abbreviated as PSF is produced.

The process is comprised of one major reaction namely continuous polymerization PTA

(purified terephthalic acid) and MEG are polymerized in three steps to produce the polymer.

The polymer is then fed to spinning unit where it converts into spun fibre. From spinning

unit, it is fed to fibre draw line, where it is drawn.

Polyester Plant is situated at Patalganga, 70 Km. away from Mumbai & 35 Km. from JNPT, Maharashtra.

1) It maintains high standards of Safety, concern for Environment and Energy

Conservation measures.

2) It is certified against ISO 9001-2000, ISO 14001-2004, and OHSAS 18001-1999.

3) It has received 5 Star Safety Statuses with Sword of Honor by British Safety Council.

4) It is the earliest signatory to Responsible Care initiative of the ICMA.28

Products :

PSF (Polyester Staple fibre)

Polyester chips

Finished PSF: 160varieties, 0.8-15 denier with various cut length

Main four grades: CQ, SS, ST, OI

29

2.5 Organigram:

30

Awards & Recognition

1. Home and life style –retailer of the year 2005 awards instituted by ICICI bank payment solution and ksatechnopak

2. Images fashion awards 2006 as best brand in the home fashion category.

3. Super brand 2006-2007 in recognition of its commitment to constantly providing value to the customer.

4. Largest domestic brand in made ups and home textile at the textile conclave 2013- Brand India.

5. Brand leadership award in retail sector ( Merit) 2013- For the brand that has established and maintained its leadership in the retail sector.

31

CHAPTER-3

RESEARCHMETHODOLOGY

32

3.1 Research Methodology

REDMEN & MORY defines, “Research as a systematized effort to gain knowledge.”

It is a careful investigation for search of new facts in any branch of knowledge. The purpose

of research methodology section is to describe the procedure for conduction the study. It

includes research design, sample size, data collection and procedure of analysis of research

instrument.

Research always starts with a question or a problem. Its purpose is to find answers to

questions through the application of the scientific method. It is a systematic and Intensive

study directed towards a more complete knowledge of the subject studied.

RESEARCH DESIGN :

Acc. to Kerlinger, “Research design is the plan structure & strategy ofinvestigation

conceived so as to obtain answers to research questions and to controlvariance.

Acc. to Green and Tull, “A research design is the specification of methodsand procedures

for acquiring the information needed. It is the overall operationalpattern or framework of the

project that stipulates what information is to be collected from which sources by what

procedures.

Its found that research design is purely and simply the framework for a study thatguides the collection and analysis of required data.

Research design is broadly classified to :

· Descriptive research design

Exploratory research design

This research is aExploratory research. The major purpose of this research isdescription of state of affairs as it exists at present.

33

3.2 Data Collection

1. Primary data

The researcher used qualitative research data collection method, in which the following

specific methods are used.

- Observation

- interview

2. Secondary data

The researcher used internal and external sources (methods) of data collection.

- Internal source is fully processed viz. company manuals

- External sources are published viz. books and journals, & electronic database viz.

internet

34

CHAPTER-4

Data Analysis

AndInterpretation

35

4.3 LOGISTICS

4.3.1 Definition

Logistics is the management of the flow of goods, information and other resources, including

energy and people, between the point of origin and the point of consumption in order to meet

the requirements of consumers. Logistics involve the integration of information,

transportation, inventory, warehousing, material-handling.

Logistics as a business concept evolved only in the 1950s. This was mainly due to the

increasing complexity of supplying one's business with materials and shipping out products

in an increasingly globalize supply chain, calling for experts in the field who are called

Supply Chain Logisticians. This can be defined as having the right item in the right quantity

at the right time at the right place for the right price and is the science of process and

incorporates all industry sectors. The goal of logistics work is to manage the fruition of

project life cycles, supply chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus

(outbound logistics). Inbound logistics is one of the primary processes and it concentrates on

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

from suppliers to manufacturing or assembly plants, warehouses or retail stores and

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

and the related information flows from the end of the production line to the end user.

The main functions of a qualified logistician include inventory management, purchasing,

transportation, warehousing, consultationand the organizing and planning of these activities.

Logisticians combine a professional knowledge of each of these functions so that there is a

36

coordination of resources in an organization. There are two fundamentally different forms of

logistics. One optimizes a steady flow of material through a network of transport links and

storage nodes. The other coordinates a sequence of resources to carry out some project.

4.3.2 Responsibility and authority

Sr. MANAGER-LOGISTICS

RESPOSIBILITY

a) Implementation and maintenance of quality system in logistics department and

review its effectiveness.

b) Improvement project to release objectives of business and quality plan in logistics

department.

c) Establishing and administration on effective cost control in logistics department.

d) Overview dispatch logistics of finished goods and coordination of PTA receipts.

e) Monitoring performance of all transporters and rating them.

f) Contract management of all outsourcing directly handled by the department.

g) Submit monthly MIS report to JMD through Divisional Manager.

h) Monitor resources requirement and replenish as necessary.

i) Monitoring export consignment.

AUTHORITY

a) Adjudicate grievances disputes/ claims of contractors, directly handled by logistics

department.

b) All authority of Dy. Manager-Logistics/ Asst. Manager-Logistics.

c) Signing in transporters/logistics bill.

Dy. MANAGER- LOGISTICS

RESPOSIBILITY

a) Receive sales order from marketing/regional sales offices duly approved by VP/JMD

37

b) Contact various transporter and to arrange for trucks for various destinations as per

sales order.

c) Ensure that requisite number of trucks report at gate in time.

d) Minimize the turnaround time of transportation.

e) Ensure that the trucks supplied by the transporter are in good condition.

f) Generate report for MIS

g) Timely release of agency’s bill.

AUTHORITY

a) Signing of purchase requisition.

b) Signing of RGP, MIV’s, MRV’s, and GRN’s

c) Signing material rejection/shortage excess advice, delivery challan cum gate pass.

d) Identify the training needs for the department and organize training as appropriate

consultation with training department.

e) Generate report for MIS with appropriate authority.

f) Implementing and maintaining the quality policy and system.

g) Transfer activities (truck movement)

Asst. MANAGER

RESPOSIBILITY

a) Ensure that the functions of factory warehouse, buffer zone and offsite W/H

including despatch activities are carried out smoothly.

b) Meet all the statutory requirements to carry out above operations.

c) Oversee the administration and safety of the warehouse.

d) Utilize resources available with the department to the optimum level.

e) Co-ordinate and correspond with all the other departments including QC and

statutory authorities.

f) Ensuring safety of warehouse, material handling equipment and manpower.

AUTHORITY

a) Signing of material requisition.

38

b) Signing of RGP, MIV’s, MRV’s, and GRN’s

c) Signing material rejection/shortage excess advice, delivery challan cum gate pass.

d) Generate report for MIS in absence of Dy. Manager.

LOGISTICS ASSISTANT

RSPOSIBILITY

a) Prepare daily dispatch report and stock report.

b) Take note if sales orders from SAP and check availability of material. Arrange trucks

for dispatches and keep follow up for it.

c) Register truck entry and give SO no. to transporter representative on LR for truck

gate in.

d) Co-ordinate for dispatches with regional offices.

e) Unloading of imported PTA containers.

f) To ensure PSF waste bagging is done timely to keep waste area free .

g) Loading of PSF, CHIPS and waste.

h) Prepare returnable gate pass for logistics activity.

AUTHORITY

a) To book trucks for dispatches.

b) To instruct shop floor people for smooth operation of logistic department.

4.3.3 Recourse management

a) Financial resources:

To meet the expenses for the entire financial year, an annual budget is prepared considering

the previous year’s actual expenditure, current years continuity of similar expenditure and

the scale of current year activity / plans. The annual budget copy is submitted to DGM-

materials & logistics for compilation and eventual authorization as per procedure laid out in

Apex manual.

b) Capital budget approval:

Whenever the need arises for additional equipment, tool, material handling

equipment, for warehouse, a request letter highlighting details of the item required,

specification, quantity, justification for the item requisitioned is made to the Sr. Manager-

Materials & Logistics.

39

After reviewing, DGM-Materials & Logistics takes the approval from VP.

Works contract/ plan change approval:

When the resource requirement is for plant change/ service oriented, requisition is raised for

works contract. It is sent to DGM-Materials & Logistics /VP (commercial). On receipt of

approval, the work is issued by the engineering services department on specific party for

executing the work.

c) Manpower resources:

Any additional manpower requirement arising out of necessity/ vacancies is informed

to Personnel & Administration (P&A) department by Dy. Manager Logistics through DGM-

Materials & Logistics/ VP.

Temporary contract labour as and when required to cope with the extra workload is

mobilized by putting up a requisition to the Chief Operating Officer(PSF) justifying

requirement. Once his approval is received, the letter is forwarded to Personnel &

Administration-Department for arranging the manpower required.

4.3.4 Storage and preservation

The entire layout of buffer zone, warehouse is laid out and identified.

Storage of all products is done as per the location provided.

The storage of products is planned in such a way that safety of items and personnel

during handling is ensured.

Normally the bales are stacked in tier of maximum 6 layers.

Storage area are examined periodically so that deterioration, if any are detected

promptly at the early stage and dealt with suitably.

The packed PSF is delivered to the customer as per detailed.

In case of any emergent situation when product is kept outside the covered area of

ware house, it is properly secured, kept over tarpaulin and covered with polythene sheets.

40

4.3.5 Stock verification

Periodic assessment of stock:

Stocks in warehouses are assessed on a periodic basis to detect deterioration and also to

verify quantity. During assessment, if damage or deterioration is apparent, such product will

be assessed by appropriate internal functions and a follow-up action is taken. The disposition

of items will be based on such assessment.

This stock verification is done once in a month.

Perpetual audit:

Logistic Assistant/ Sr. Executive checks the actual stock in comparison with book stock and

any deviation noticed are rectified and repot Asst. /Dy. Manager-Logistics.

4.3.6 Receipt and storage of packed PSF bales

After the production is declared by production department and the quality is checked

and declared by QC lab. The Logistics Assistant physically checks this and arranges for

shifting the QC lab cleared bales from baler area with the help of Forklift operator to in-plant

warehouse. For shifting to offsite warehouse dedicated trucks are used. Shifting from baler

area is 24*7 continuous jobs to create space to accommodate fresh production of bales. The

bales are normally weighting 400 kgs and from one line same merge no is produced but these

may be of different degrees e.g OI,II ST, SS CQ.

From SAP, location of the same merge no. and grade, if previously produced, is

identified.

Specific area for particular Denier no. is designated. If space is not available, in that

designated area, then the available vacant rows are identified and this row no. is allotted for

the bales.

If full row is not available for keeping the new merge no production, then

rearrangement of bales is done to get a clear row and shifting of material is done

accordingly.

Bales are loaded from buffer area into flat bottom trucks and transit transport is done

to the identified warehouse location. This movement is done on the strength of Excise

invoice on payment of duty. Similarly loading and in-transit operation is done in 1 st and 2nd

shift only. Operation in 3rd shift is done only in exceptional condition.

Morning shift Logistics Asst. takes over 2nd shift production from PSF production

department, identify location from SAP, enter row no. in SAP and then start transporting to

41

identify warehouse. If direct loading from buffer area is required then after taking over

production from production department and entering into SAP, dispatch is done.

One forklift in each shift operates for shifting from buffer zone to loading into trucks.

One Logistics Asst. in each shift takes charge in buffer zone. When plant will run at full

capacity, then two forklifts will be required for shifting and loading into trucks.

Both the loading bays will be used for transit operation all the time.

Warehouse assistant receives bales in flat bottom trucks. Bales are first unloaded and

kept for inspection. The driver handovers the list of bales that was received from buffer zone

Logistic-Asst. to the warehouse Logistics Asst. warehouse Asst. inspect the bales, confirm

the allocation available and put the bales in designed row.

4.3.7 Dispatch

Sales order by Marketing to Logistics based on product code, customer code,

shipping point and weight.

Entry into system by Logistics.

Transport is arranged by Logistics.

Transporter report at gate with LR copies and sales order number. 3 copies of loading

advice is given to transporter by offsite weighbridge/ gate.

The trucks are surveyed for availability of tarpaulin on the floor and the dryness of

the tarpaulin.

Logistics generate picks list from the system.

Based on pree dispatch list bales are shifted by forklift operator to loading point.

Logistics checks the bales as per pree list & give clearance to load.

Entry of bale no. in done into system as per material loaded in truck, all three loading

advice will be filled up with details of bales one loading advice will be kept at warehouse.

Care is taken that bales are handled properly without any physical damage. In case

they are damaged/ torn, it is replaced.

Stock register will get updated from system.

Dispatch details are entered in daily report register kept at warehouse.

Checklist is filled by concerned Logistics Asst.

4.3.8 Dispatch procedures

42

A) Dispatch procedure – Logistic – Domestic

1. Mrkt. to punch Contract, Sales orders for dispatches.

2. Mrkt. to arrange trucks for dispatches.

3. Logistic to sign LR to allow truck inside for loading by checking SO, material availability,

prorate if any given.

4. Security Dept. makes Gate Entry of truck as per LR given.

5. Accounts – Weighing Bridge make weighment& give loading slip to truck driver.

6. Logistic checker/supervisor/SAP operator received loading slip & LR from driver.

7. SAP operator check LR, loading slip in totality, e.g. customer name, order qty., etc. if all

is compiling, print’s material list & handed over to logistic supervisor/checker.

8. Checker traces material from given material list.

9. Forklift operator load material in truck under the control of supervisor/checker.

10. Supervisor hand over list of loaded material to SAP operator.

11. SAP operator generate excise invoice & handover document such as excise invoice copy,

LR copy, packing list etc. to driver.

12. Weighing Bridge make weighment of loaded truck.

13. Securities Dept. finally release truck by checking correction for net wt. as per SAP &

weighing slip.

B) Dispatch procedure – Logistics – Export

1. Mrkt. to mail export DO

2. Logistics to generate contract in SAP.

3. After GM & JMD approval logistic to generate SO & PO in SAP.

4. Commercial Dept./Mrkt. to arrange containers for dispatches.

5. Logistic to mail PO to Security Dept. for allowing containers for export loading.

6. Security Dept. makes Gate Entry of containers as per PO mailed by logistic & LR given

by transporter.

7. Accounts – Weighing Bridge make weighment& give loading slip to truck driver.

6. SAP operator received loading slip & LR from driver.

8. SAP operator check LR, loading slip in totality. e.g. customer name, order qty., etc. if all

is compiling, print’s material list & handed over to logistic supervisor/checker.

43

9. Checker traces material from given material list.

10. Forklift operator load material in container under the control of supervisor/checker.

11. Supervisor hand over list of loaded material to SAP operator.

12. SAP operator generate billing document, packing list & mail it to Accounts Dept. for

further processing.

13. Accounts Dept. to generate excise invoice, ARE Form, commercial invoice, packing list

etc.

14. Accounts to get clearance from excise.

15. Excise to punch led seal, excise seal, shipping line seal (account Dept).

16. Account to handover document to container driver.

17. Weighing Bridge make weighment of loaded container.

18. Security Dept. finally releases containers by checking correction for net wt. as per SAP

& weighing slip.

C) Dispatch procedure – Logistics – NEPAL Export

1. Mrkt. to mail Nepal export DO.

2. Accounts Dept. to generate contract, SO in SAP.

4. Customer/ Mrkt. to arrange containers for dispatches.

5. Logistics to mail SO to Security Dept. for allowing trucks for Nepal export loading.

6. Security Dept. makes Gate Entry of trucks as per SO mailed by logistics & LR details

given by transporter.

7. Accounts – Weighing Bridge make weighment& give loading slip to truck driver.

8. SAP operator received loading slip.

9. SAP operator checks Gate entry, SO, loading slip in totality. e.g. customer name, order

qty., etc. if all is compiling, print’s material list & handed over to logistic supervisor/checker.

10. Checker traces material from given material list.

11. Forklift operator load material in truck under the control of supervisor/checker.

12. Supervisor hand over list of loaded material to SAP operator.

13. SAP operator generate billing document, packing list & mail it to Accounts Dept. for

further processing.

14. Accounts Dept. to generate excise invoice, Nepal invoice, ARE Form, commercial

invoice, packing list etc.

44

15. Accounts to get clearance from excise.

16. Excise to punch led seal.

17. Account to handover document to transporter.

18. Transporter to prepare LR.

19. Logistics to check correctness of LR prepared by transporter.

20. Weighing Bridge make weighment of loaded truck.

21. Security Dept. finally releases truck by checking correction for net wt. as per SAP &

weighing slip.

4.3.9 Process flow chart of dispach activity

A) Buffer zone to Customer

45

B) OFFSITE TO CUSTOMER

46

47

4.3.10 Returns

Products are returned by the customer through duly paying documents under cover of

letter citing reason for return.

A returned product is shifted to assigned location.

RETURN OF MATERIAL

48

4.3.11 Transportation

Region wise transporters are assigned contractually by Marketing Department.

As per sales order, the concerned transporter is contacted, addressing shipping point,

quantity and delivery date.

Number of trucks to report with date and time will be confirmed.

Intimation though mail & telephone will be given.

Follow up will be done with the transporter.

Vehicles will reach plant for loading along with L.R copies & sales order no.

Transportation companies

1) Surat Goods Transport Pvt. Ltd

2) Sudhir Roadways Corporation

3) West Coast Logistics

4.3.12Handling of PSF wastes

PSF waste is considered as finished product for all commercial dealing & sales

contract is finalized by Marketing Department.

Detailed instruction about DO’s and DONT’s while handling/ loading are explained

to customer by Logistics Department.

The waste material is duly segregated by user at source and is dumped in designated

area.

a) The waste material is decontaminated from the process material by user Dept. before

it is shifted to the designated area.

b) The contractor his personnel and also concerned personnel from BDMC are trained in

handling and transportation of wastes.

The material safety data sheet for the PSF waste and handled by Logistics personnel.

As per sales order PSF waste loaded in customer truck with the help of forklift,

weighment done & Invoice generated.

4.4 INVENTORY CONTROL OF FINISHED GOODS (BALES)

49

4.4.1 Introduction

The term inventory means the value or amount of materials or resource on hand. It

includes raw material, work-in-process, finished goods & stores & spares.

Inventory Control is the process by which inventory is measured and regulated

according to predetermined norms such as economic lot size for order or production, safety

stock, minimum level, maximum level, order level etc.

Inventory control pertains primarily to the administration of established policies,

systems & procedures in order to reduce the inventory cost.

4.4.2 Objectives of Inventory Control

To meet unforeseen future demand due to variation in forecast figures and actual

figures.

To average out demand fluctuations due to seasonal or cyclic variations.

To meet the customer requirement timely, effectively, efficiently, smoothly and

satisfactorily.

To smoothen the production process.

To facilitate intermittent production of several products on the same facility.

To gain economy of production or purchase in lots.

To reduce loss due to changes in prices of inventory items.

To meet the time lag for transportation of goods.

To meet the technological constraints of production/process.

To balance various costs of inventory such as order cost or set up cost and inventory

carrying cost.

To minimize losses due to deterioration, obsolescence, damage, pilferage etc.

To balance the stock out cost/opportunity cost due to loss of sales against the costs of

inventory.

50

To stabilize employment and improve lab our relations by inventory of human

resources and machine efforts.

4.4.3 Benefits of Inventory Control

Ensures an adequate supply of materials.

Minimizes inventory costs.

Facilitates purchasing economies.

Eliminates duplication in ordering.

Better utilization of available stocks.

Provides a check against the loss of materials.

Facilitates cost accounting activities.

Enables management in cost comparison.

Locates & disposes inactive & obsolete store items.

Consistent & reliable basis for financial statements.

4.4.4 Factors Affecting Inventory Control

Type of product

Type of manufacture

Volume of production

Finances

Availability of material

4.4.5 Technique of inventory control analysis:

A) ABC Analysis

What is ABC Analysis?

51

ABC analysis is a type of analysis of material dividing in three groups called A-group items,

B-Group items and C-group items For the purpose of exercising control over materials.

Manufacturing concerns find it useful to divide materials into three categories.An analysis of

the annual consumption of materials of any organisation would indicate that a handful to top

high value items (less than 10 per cent of the total number) will account for a substantial

portion of about 70 per cent of total consumption value.

Remember: 10% of total number of items carries 70% of value. - "A" group items. Similarly,

a large number bottom items (over 70 per cent of the total number of items) account for only

about 10 percent of the consumption value.

Remember: 70% of total number of items accounts for only about 10% of consumption value

- "C"-group items. Between these two extremes will fall those items the percentage number

of which is more or less equal to their consumption value.

Remember: 20% of total number of items account for only about 20% consumption value -

"B" group items. Items in the top category are treated as "A" items, items in the bottom

category are called as "C" category items and the items that lie between the top and the

bottom are called "B" category items. Such an analysis of materials is known as ABC

analysisorProportional parts value analysis.

Classification of items into A, B and C categories:

The logic behind this kind of analysis is that the management should study each item of

stock in terms of its usage, lead time, technical or other problems and its relative money

value in the total investment in inventories. Critical items i.e., high value items deserve very

close attention and low value items need to be devoted minimum expense and effort in the

task of controlling inventories.

The Material Manager by concentrating on "A" class items is able to control inventories and

show visible results in a short span of time. By controlling "A" items and doing a proper

inventory analysis, obsolete stocks are automatically pinpointed.

The following steps will explain to you the classification of items into A, B and C categories.

1. Find out the unit cost and and the usage of each material over a given period.

2. Multiply the unit cost by the estimated annual usage to obtain the net value.

3. List out all the items and arrange them in the descending value. (Annual Value)

4. Accumulate value and add up number of items and calculate percentage on total52

inventory in value and in number.

5. Draw a curve of percentage items and percentage value.

6. Mark off from the curve the rational limits of A, B and C categories.

A category product is semi dul

B category product is opal white

C category product is black

B) FSN Analysis

By doing FSN analysis materials can be classified based on their movement from inventory

for a specified period. Items are classified based on consumption and average stay in the

inventory. Higher the stay of item in the inventory, the slower would be the movement of the

material.

F – Fast Moving

S- Slow Moving

N- Non moving

Sometimes the terms FNS is also being used, where

F – Fast Moving

N- Normal Moving

S- Slow Moving

There following steps in doing the FSN analysis:

Calculation of average stay and the consumption rate of the material in warehouse.

FSN Classification of materials based on average stay in the inventory.

FSN Classification of the material based on consumption rate.

Finally classifying based on above FSNanalysi

Inventory control analysis technique used:

FNS analysis technique is used for inventory control. In this past data are extraplorated as

per trend (demand) seen in the history. The company BOMBAY DYEING is manufactures

53

PSF (polyester staple fibre) which is used for producing spun yarns (blends), so the demand

of PSF is totally depend on downstream industries which are in spun yarn making business.

According to the customer requirement company produce PSF of required denier and

cutlengths. The company produces 0.8 to 15 denier PSF fibre. But the demand for all

material is not same.

According to past record:

F - FAST MOVING MATERIALS - 0.8D, 1.2D, 1.4D, 2D

N – NORMAL MOVING MATERIALS - 4D, 6D, 7D

S – SLOW MOVING MATERIALS - ALL OTHERS

Sometimes demand varies according to season like, some months before of winter the

demand of high denier and black fibre is more because normally people wears dark colour

cloths in winter season.

Fast moving goods keep larger stock

Normal moving goods keep medium stock

Slow moving goods keep less stock

4.2STORE AND WAREHOUSE

4.2.1Responsibility and authority

MANAGER-MATERIALS:

Responsibility:

a) Ensure that the functions of store and warehouse including dispatch activities are

carried out smoothly.

b) Meet all the statutory requirement to carry out above operations.

c) Oversee the administration and safety of the stores and warehouse department.

d) Utilize resources available with the department to the optimum level.

e) Co-ordinate and correspond with all the other departments and statutory authorities.

f) Ensuring safety of plant and equipment and man power.

g) Purchase responsibilities are covered in purchase procedure manual.

Authority:

a) Signing of RGP/NRGP

54

b) Signing of material rejection memo/ delivery challan.

c) Prepares/signs amendments to procedures, checklists, formats of quality manual prior

to the approval by manager-Materials.

d) Purchase authorities are covered in purchase procedure manual.

Dy. MANAGER – MATERIALS

Responsibility:

a) Exercise inventory control of stock items.

b) Oversee the day-to-day transactions.

c) Ensure that there is adequate co-ordination with other departments.

d) Take all steps necessary to ensure safety, security and housekeeping.

e) Generate/send periodical reports to all concerned.

f) Co-ordinate with internal auditors, statutory auditors.

Authority:

a) Signing of RGO/NRGP and material rejection memo/delivery challan.

b) Issuing of materials against authorized/correct MIV.

c) Exercise authorities of DGM – Materials & Logistics during his absence.

Sr. EXECUTIVE-MATERIALS / EXECUTIVE-MATERIALS

Responsibility:

a) Oversee the day-to-day stores activity.

b) Ensure that there is adequate co-ordination with other departments.

c) Scrap disposal.

d) Ensuring safety of plant.

Authority:

a) Signing of RGO/NRGP and material rejection memo/delivery challan.

b) Issuing of materials against authorized/correct MIV.

c) Receipt and issue of materials.

MATERIALS ASSISTANT

Responsibility:

55

a) Receive the challan from the transporter / head office and enter the details in control

register.

b) Arrange to unload the goods from the trailer/truck and store in the receiving bay as

designed and acknowledge.

c) Verification of goods and the quantity as per challan to inform short receipt / excess

and arrange for inspection.

d) Prepare GR based on challan and inspection remarks and distribute to concerned.

e) Keep all records, duly filed.

f) Collect the goods from transporters godown and transfer to plant.

g) Arrange for housekeeping in their respective area.

h) Ensure that all details are entered in computerized system and reports are taken as per

report requirement.

i) Accept the material returned to store and take into stock.

j) Ensure that materials are properly preserved.

Authority:

a) To issue material against authorized/correct reservation.

b) To receive the materials and give acknowledgment.

c) To open and close stores during the beginning and ending of office hours.

OPERATOR-FORKLIFT

Responsibility:

a) Make sure that the vehicle is in good running conditions with fuel and other requisite

things.

b) Shifting the loaded pallets of chemicals/oil/packing material from stores to C.P. area

and Baler area, Shifting of empty pallets, drum from various locations to stores area.

c) Load, unload, shift, the items as requisitioned by stores personnel

Authority: To drive the forklift/crane.

56

CHECKING OF RECEIPTS

OPENING OF PACKAGES

CHECKING OF CHALLANS

RECEIPT OF MATERIAL

GR GANERATION

TAGGING OF MATERIALS

INSPECTION OF ITEM

MATERIAL REJECTION

BINNING

INFORMATION TO SUPPLIERINFORMATION TO PURCHASE

AUTHORISATION OF RGP/DC/GP

RETURING OF Mtl TO SUPPLIER RETURING OF Mtl TO SUPPLIER

REPLACEMENT ACTION BY SUPPLIER

REJECTION

ACCEPTED

A

A

RECEIPT FLOW CHART57

4.2.3 Any new item requires codification; the details of item with are received from user.

They are codified entered in system.

4.2.4 Issue

a) Material issues are carried out through authorized reservation in SAP system by

users. The checklist of all issues transactions are taken at next day morning.

b) In case system is off/not working due to ant other reason, material issue is done

through hardcopy of reservation and is subsequently fed into system on getting computerized

reservation.

c) The reservation as appearing in the system is checked for code, material description,

cost Centre, quantity indented, authorization and that all columns are filled with.

d) During silent hours shift engineer issues material to users on behalf of store personal

through hardcopy of reservation. On next working day this reservation is regularized in

computer system by concerned department personal and copy is destroyed.

4.2.5 Returns

a) Materials are returned by the user through an authorized receipt reservation, in

computer system mentioning the code number, description, quantity, cost centre, reason for

returning.

b) As far as possible, the items are returned in the same conditions as it was during the

time of issue so that it can be taken into stock.

c) All the material are duly identified by a tag and kept at assigned location.

4.2.6 Stock verification

Stock verification refers to the process of physically checking the quantities of different

items of material available in stock in a store or warehouse and tallying these physically

available quantities with the quantities shown in stores stock records.

Stock verification is done not only for spare parts, but for all types of material that may be

stocked.

a) Periodic assessment of stock:

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Stocks in stores are assessed on a periodic basis to detect deterioration and to verify quantity.

During assessment, if damage or deteriotion is apparent, such items will be assessed by

appropriate internal functions and a follow-up action is taken.

b) Inventory summary ledger is printed for specific group or sub-group. During

perpetual audit physical stock is verified and if deviation is noticed is marked on inventory

summery ledger. In addition following activities are also done:

Proper tagging and making on items,

Preservation,

Ensuring correct location,

Damage /leakage.

c) Details of deviation are entered in computer system by concerned material assistant.

d) List of items with deviation is taken by assistant officer. These items are checked for

location description whenever required help from user is obtained to locate item. Item found

during this process are deleted from system.

e) Stock verification and perpetual audit status is reported in monthly MIS.

4.2.7 Inventory control

a) The inventory control exercise is limited to the stock items only.

b) The stock of item when comes down below the predetermined reorder level, the

material requisition is raised to replenish the stock.

c) The stock of chemicals/catalyst used in main plant/utility and items used in packout

era reviewed in the beginning of the week and action is taken as needed.

d) The non-moving items are listed and stock reviewed within the department and again

with user department to monitor the movement once in year.

4.2.8 Analysis of data

Following data is collected on regular basis:

a) Stock of bale covers, pet straps - Weekly.

b) No. of complaints about store services - Monthly.

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Warehouse Management System (WMS)

A 'warehouse management system' (WMS) is a key part of the supply chain and primarily

aims to control the movement and storage of materials within a warehouse and process the

associated transactions, including shipping, receiving, putaway and picking. The systems

also direct and optimize stock putaway based on real-time information about the status of bin

utilization. A WMS monitors the progress of products through the warehouse. It involves the

physical warehouse infrastructure, tracking systems, and communication between product

stations.

More precisely, warehouse management involves the receipt, storage and movement of

goods, (normally finished goods), to intermediate storage locations or to a final customer. In

the multi-echelon model for distribution, there may be multiple levels of warehouses. This

includes a central warehouse, a regional warehouses (serviced by the central warehouse) and

potentially retail warehouses (serviced by the regional warehouses).

Warehouse management systems often utilize automatic identification and data

capture technology, such as barcode scanners, mobile computers, wireless LANs and

potentiallyradio-frequency identification (RFID) to efficiently monitor the flow of products.

Once data has been collected, there is either a batch synchronization with, or a real-time

wireless transmission to a central database. The database can then provide useful reports

about the status of goods in the warehouse.

Warehouse design and process design within the warehouse (e.g. wave picking) is also part

of warehouse management. Warehouse management is an aspect of logistics andsupply chain

management.

Benefits of WMS

A comprehensive warehouse management system helps streamline multiple functions of your

enterprise:

Receiving – Gain insights into shipments that have been delivered, but that are not yet at their

final location. Make sure items at low stock levels are staged and put away first, reducing the

impact of out-of-stocks and inefficient fulfillment processes.

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Put-Away – Know the location of all inventory on your shelves. Route your workers to the right

location, set up their picks in the proper order to minimize travel time, and increase the number

of orders they can pick each day.

Picking – Improve error-proofing and productivity in the picking process. Workers receive their

picks on a mobile device that routes them to the proper location. Scanning items when you pick

them verifies that the right item at the right quantity is picked.

Packing – Ensure the accuracy of each order that is picked and reduce material costs by

determining the right sized shipping carton.

Shipping – See that each order is properly packaged and shipped to the right destination and

delivered on the right date.

ROI in WMS

Although installing a full-scale warehouse management system can be a costly investment, you will

quickly recognize its value. After a warehouse management system has been up and running for only

a few months, many of our customers say that they cannot envision their operations without it. From

achieving real-time visibility into inventory and orders, to decreasing the time it takes to invoice and

receive customer payments, a warehouse management system package extends mobility to each

worker in your warehouse and prepares you to scale your business.

Relying on paper trails and manual data entry to manage your warehouse compromises worker

productivity and inventory accuracy. Once received via printer, orders are picked, packed and

shipped, with a paper trail tracking every step of the process. That information is then manually

entered it into the system and filed. Should a discrepancy appear in a customer's order or invoice,

pinpointing the problem requires cross referencing the data in both the system and file cabinets.

Problem solved with WMS

As a result, your organization can avoid experiencing:

Delayed access to information in the system if has been entered days, or weeks late.

Inaccurate information in the system

Mis-shipments

Late invoices

Difficulty locating items as they are moved within the warehouse

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CHAPTER-5

Conclusion And Suggestions

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5.1 OBSERVATIONS AND FINDINGS

The space utilization is good. Total 160 types of product handling and storing is a

challenging work but company employees are expert in managing this entire thing. And the

control on the responsible manpower i.e. contractor, transporters is outstanding. Logistics

Dept. is using Optimum Transportation Policies which are beneficial for company, and has

good maintained relations with transporters.

Problems

Tracing of bales.

Mistakes in sending material or bale by checker.

First In First Out sometimes not possible.

Proper allocation of materials.

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5.2 RECOMMENDATION

1) Implementation of barcode/RFID technique

Use of barcodes and radio-frequency identification (RFID) tags to provide automatic

identification of bales (inventory objects). RFID reduces chances of Out of Stocks; helps in

tracing the location of specific type of material. For recording an inventory transaction, the

system uses a barcode scanner or RFID reader to automatically identify the inventory object,

and then collects additional information from the operators via fixed terminals

(workstations), or mobile computers.

(Real-time inventory control systems may use wireless, mobile terminals to record inventory

transactions at the moment they occur. A wireless LAN transmits the transaction information

to a central database.)

2) Use proper demand forecasting tools to avoid unnecessary stock.

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5.3 CONCLSION

The Logistics Dept. is one of the key Dept. of the Bombay Dyeing and Mfg. Co. Ltd. It has

deep forward and backward linkages with the rest of the Dept. and has a strong multiplier

effect resulting in smooth operation of the company. In today’s world cost management and

cost reduction has become a priority for most businesses. Most companies are compelled to

explore and exploit all possible cost reduction and productivity enhancement techniques.

Knowing where and how to save money is what we are all about! In the present study, it has

been established that if the company implement scientific, technological tools for their

Logistic Management, then it ultimately boosts the manpower work efficiency, due to this

company profit will be increased.

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CHAPTER-6

Learning Experience From The SUMMER PROJECT

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6.1 Learning Experience

Codification

All the stock items/non stock items are codification plan.

Codification plan:

a) First three digit indicates main group.

b) Fourth, fifth, sixth, seventh, and eight digit indicates ’items’ individual code number,

size wise, alphabetically, range wise etc. in ascending order.

c) Valuation category:

CCZER indicates items with zero value.

CCSIMP indicates imported.

CCSLOC indicates Indigenous.

d) The specification of each and every item is held in the computer system.

2 1 2 8 5 2 9 5

Main group items individual serial no.

SAP (SYSTEM APPICATIONS PRODUCT)

As a product will not give profit unless we properly implement and effectively execute.

Through SAP, an integrated system will help us in faster and effective decision making

which results in cost cutting & profit improvement.

5.2 Benefits

a) Based on actual & updated data, actual margin is available online on real time basis

to help analyze & correct product wise/ order wise profitability.

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b) Helps to enable timely cost and process corrections to achieved budgeted margin.

c) Availability of online stocks is lead to reduction in inventory & control on lead times.

Also better control on ageing of stocks. This helps in better working capital management &

reduction of costs.

d) Helping in better planning & provide alerts to avoid losses due to stocks out.

e) Order booking & billing is online enabling On Time In Full (OTIF) measure.

f) Manual data collection is avoided eliminating use of data entry operations.

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BIBLIOGRAPHY

BOOKS

Pitman publishing Ltd, Second edition 1979, A guide to stock control, A Battersby

Prentice hall of India, Fifth edition 1990, Inventory control (theory & practice),

Martin K. Stirr& David W. Miller

Tata McGraw-Hill publishing, T M H edition 1978, Cost reduction from A to Z,

Higgins &Stidger

From Internet

http://www.bombaydyeing.com/

http://iamsam.hubpages.com/hub/ABC-Analysis-Technique-of-Inventory-Control

http://www.managementparadise.com/forums/elements-logistics-logs/200330-hml-analysis-xyz-analysis.html

http://www.materialsmanagement.info/inventory/xyz-analysis-of-inventory.htm

http://knowscm.blogspot.in/2008/04/how-to-do-fsn-analysis.html

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