pankaj summer training report

7/30/2019 PANKAJ Summer Training Report

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SUMMER TRAINING PROJECT REPORT

ON

STUDY OF MATERIAL MANAGEMENT IN EIUL

EAST INDIA UDYOG LTD., GHAZIABADU.P

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR

THE MASTERS DEGREE IN BUSINESS ADMINISTRATION

OF

UTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN

SUBMITTED TO:

INTERNAL GUIDE EXTERNAL GUIDE

Name : Dr. Hemant Sharma Name: Mr. Ramesh Chand

Designation : Professor Designation: Personnel Officer

IMS Company Name: EIUL

Dehradun Location: Sahibabad

SUBMITTED BY:

PANKAJ SHARMA

MB11B06

INSTITUTE OF MANAGEMENT STUDIES, DEHRADUNBATCH 2011-13


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ACKNOWLEDGEMENT

I am immensely thankful to god who provides me the health ability to withstand

the problem coming in my way. I am thankful to Dr. Hemant Sharma ofMBA

department, Institute of Management Studies, Dehradun for his

encouragement and providing other assistance whenever required. Without

Their guidance & suggestions the project would not have seen the light of the

day. They shared their valuable time, long experience through which I have

become aware of different tools & aspects of management, which were hard to

find elsewhere for the completion of my training & project.

I wish to express my guidance to Mr. Ramesh Chand (Personnel Officer),

who generously helped me to color the mosaic of this project report with the

title of their knowledge, expertise and memories. Thanks are also due to various

employees for their co-operating during research.


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INTERNAL GUIDE CERTIFICATE

I have the pleasure in certifying that Mr. Pankaj Sharma is a bonafide student

of 3rd

Semester of the Masters Degree in Business Administration (Batch

2011-13), of Institute of Management Studies, Dehradun under UttarakhandTechnical University Roll No.- 110140500065. He has completed his project

work entitled Dr. Hemant Sharma under my guidance.

I certify that this is his/her original effort & has not been copied from any other

source. This project has also not been submitted in any other Institute /University for the purpose of award of any Degree.

This project fulfils the requirement of the curriculum prescribed by this Institute

for the said course. I recommend this project work for evaluation &

consideration for the award of Degree to the student.

Signature :

Name of the Guide : .

Designation :

Date :


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EXECUTIVE SUMMARY

East India Udyog was established in 1968 as a diversification initiative taken by

Mr. H.P Lohia, when his other manufacturing interests were Textiles, Yarns,Jute and Transport.

EIUL have integrated our manufacturing facilities with advance technology in

1980 with the establishment of Lamination processing plant, facilities for sheet

metal fabrication of Transformer Tanks, Pressed Steel Radiators and

Transformer oil Refinery. This augments our production unit around 6000 nos.

wound core transformers, 10,000 nos. distribution transformers, 700 nos.medium power transformers and 250 nos. power transformers, having equated

capacity of 2000 MVA per annum. However, we are consistently gearing up toenhance the capacity by 1000 MVA per annum. We are also making strategy to

establish another manufacturing unit for 40 nos. EHV Transformers initially

shall be operational at Roorkee by mid of the year 2012.

Title of my project is STUDY OF MATERIAL MANAGEMENT IN

EIUL. Material Management is the branch of logistics that deals with the

tangible components of a supply chain. Specifically, this covers the acquisition

of spare parts & replacements, quality control of purchasing and ordering such

parts, and the standards involved in ordering, shipping, and the warehousing thesaid parts. The idea behind this title is to understand the material management in

EIUL which consists of functions like material planning and programming,

purchasing and outsourcing, inventory control, storekeeping and warehousing,

codification, standardization and evaluation of all products, transportation and

material handling, inspection and quality control cost reduction through value

analysis, disposal of surplus / obsolete material, distribution etc.

The study material would include manuals, organization documents and

reference books. There is a provision of library and p.c. would be given for

more assistance. For first few weeks would be to know the various processes in

material management and with time functioning of each of this process in EIUL

would be studied. In this process there would be a continuous supervision byexternal guide.

Thus idea for choosing this project is to gain functional knowledge in the field

of material management.


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List of Contents

Page No.1) Objectives of Project 72) Scope of Project 8

3) Introduction

3.1) Company Profile 10

3.2) Organization Structure 23

3.3) Roles & Responsibilities of the departments 24

3.4) Roles & Responsibilities of MM dept. 25

4) Theoretical framework/ Literature Review

4.1) Definition4.1.1) Material Management 28

4.1.2) The Production Department 29

4.1.3) Standard Operating Procedure (SOP) 30

4.1.4) Purchase 31

4.1.5) Inventory 32

4.1.6) Raw-materials 33

4.1.7) Semi-finished goods 33

4.1.8) Finished goods 334.2) Key points of Material Management 33

4.3) Purchase cycle 34

4.4) Quality assurance & Testing 34

4.5) E-procurement 37

4.6) Just-In-Time 42

4.7) Supply chain Management 44

4.8) Enterprise Resource Planning (ERP) 46

5) Data collection

5.1) Research 51

5.2) Research design 51

5.3) Data 51

5.3.1) Primary sources

5.3.2) Secondary sources


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6) Findings

6.1) Strengths of EIUL 54

6.2) Weakness of EIUL 54

6.3) Opportunities 54

6.4) Benefits of E-procurement 55

6.5) Importance of Contract management 55

7) Conclusion & Recommendation 59, 61

8) References 63

9) Annexure 64


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List of Tables & Figures

Page No.

1) Fig.1,2 102) Fig. 3,4 13

3) Fig. 5 15

4) Fig. 6 16

5) Fig. 7,8,9 18

6) Fig. 10 23

7) Fig. 11 29

8) Fig. 12 38

9) Fig. 13 44


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1.1 Objectives of Project:

To understand the different processes under materials managementdepartment of East India Udyog Limited (Ghaziabad).

To analyze the material requirement planning procedure.

To classify the various components based on its value and movements.


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1.2 Scope of the Project:

The scope of material management includes decision on purchasing raw

material, management & control of work in progress items, stores and the

shipping and distribution of finished products. The materials flow is divided

into production control, inventory control & the material handling function

The projects will provide following functionality

Procurement process covering e-procurement.

Quality assurance & Testing.

Just in Time (JIT).

Supply chain management.

ERP and its implementation.


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INTRODUCTION


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3.1 Company Profile


Mr. H.P Lohia, when his other manufacturing interests were Textiles, Yarns,

Jute and Transport.

Transformers are the backbone of networks through which electricity is

distributed to various places. However, only efficient and reliable Transformers

promise an uninterrupted supply of electricity. We East India Udyog, offer

sophisticated and fully-equipped transformers fabricated keeping the

advancements of technology in the industry. The establishment is the

brainchild of Mr. H.P. Lohia, who is an eminent name in the electricity industry.

With strong hand on Jute, textiles, yarn, and logistics sectors, he is consistently

marching ahead with in-depth knowledge and years of experience in

Power Sector. He has proved his domain expertise by launching innovative and

high quality transformers at competitive price, since mid of 1960s, apparently,

with an idea of empowering India future with growth by making available high

quality transformers to support electricity distribution.

Fig.1 Fig.2


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Vision and Mission

Vision: To actively contribute in achieving the objective power for all by2012.

Mission: EAST INDIA are committed to engineering excellence by-

Continual improvement of our quality management systems & Enhancing

customer confidence by meeting their needs consistently involving all

employees and suppliers.

Core ValuesBCOMIT

Business Ethics

Customer Focus

Organisational & Professional pride

Mutual Respect & Trust

Innovation & Speed

Total Quality for Excellence


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Overview of Organisation

History:

East India Udyog Limited (EIUL) was established in 1968 and has state-of-art

manufacturing unit at Sahibabad (Ghaziabad) U.P. The production of

transformers started in 1971. Since then, we have served our esteemed

customers and have supplied transformers to almost every state of India. And

today we have a long list of satisfied customers.

India symbolizes unity in diversity and the East India Group reflects the same

by being one, unified entity with diverse interests: in transformers, cables,

textile yarns, Particle boards, and exports. With a total direct employment of

above 7000 persons and an annual turnover of above1500 million, the group has

been serving the needs of Indian and international customers since last 38 years.

East India Udyog Ltd (EIU), a unit of this diversified group was established in

the year 1968 and started production of transformers in 1971 and cables in

1990. The company major manufacturing units are located in Sahibabad

(Ghaziabad) in U.P.

About the Company:


Mr. H.P Lohia, when his other manufacturing interests were Textiles, Yarns,

Jute and Transport.

Today, EIUL is a reputed global enterprise manufacturing transformers under

the Chairmanship of Mr. N.K. Lohia, Mechanical Engineering from BITS,

Pilani, and a Technocrat with a dream. The main driving force behind EIUL's

growth has been the belief that "A stone will make dreams come true and that

limitless effort can overcome any obstacle".

EIUL aims to become a leading Company in Transformer business that grows

continuously throughout the future. EIUL's employees have adopted this

challenging spirit on its path to growth.


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Fig.3 East India Udyog, Ghaziabad Fig.4 East India Udyog, Roorkee

Transformers are the backbone of networks through which electricity isdistributed to various places. However, only efficient and reliable Transformers

promise an uninterrupted supply of electricity. We East India Udyog, offer

sophisticated and fully-equipped transformers fabricated keeping the

advancements of technology in the industry. The establishment is the brainchild

of Mr. H.P. Lohia, who is an eminent name in the electricity industry. With

strong hand on Jute, textiles, yarn, and logistics sectors, he is consistentlymarching ahead with in-depth knowledge and years of experience in

Power Sector. He has proved his domain expertise by launching innovative and

high quality transformers at competitive price, since mid of 1960s, apparently,

with an idea of empowering India future with growth by making available highquality transformers to support electricity distribution.

We, at EAST INDIA, are committed to engineering excellence by continual

improvement of our quality management systems to enhance customer

confidence by meeting their needs consistently involving all employees andsuppliers.

East India is known for its quality and excellence which is reflected by the

appreciation given by the various clients. Besides satisfying the needs of Indian

power sector, EIU has entered into international marketplace and is looking

ahead to set up more units in power transformers up to 50MVA 220KV class in

its eternal stride towards excellence.

During this period, it has grown from a small-scale unit to substantial operationby backward integration of facilities and reduced dependence on the chief


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materials and parts. EIU has its own lamination processing plant consisting of

automatic slitting and continuous hearth annealing furnace and in-house

facilities for making nearly all components required for transformermanufacturing.

Our world-class infrastructure equipped with requisite equipment allows us to

manufacture a product range that is highly advance and superior to the othersavailable in the market. Our manufacturing unit is located in Roorkee and

Ghaziabad, two of the foremost industrial cities of India. We have integrated

our manufacturing facilities with advance technology in 1980 with the

establishment of Lamination processing plant, facilities for sheet metal

fabrication of Transformer Tanks, Pressed Steel Radiators and Transformer oil

Refinery. This augments our production unit around 6000 nos. wound core

transformers, 10,000 nos. distribution transformers, 700 nos. medium powertransformers and 250 nos. power transformers, having equated capacity of 2000

MVA per annum. However, we are consistently gearing up to enhance the

capacity by 1000 MVA per annum. We are also making strategy to establish

another manufacturing unit for 40 nos. EHV Transformers initially shall beoperational at Roorkee by mid of the year 2012.

Quality:

The precedence Quality is what sets us apart from the rest. The company has a

complete quality assurance program which is designed as per requirements tocover all aspect of design, procurement, incoming material inspection,

inventorying of components, in process inspection, product testing, packing,

dispatch, and after sales service. EIU, an ISO: 9001 Certified Company since

May2000, was upgraded to ISO-9001-2000 in February, 2003 from DLIQ-

Certification India (P) Ltd, an accreditation body of JAS-ANZ videCertification No.2497.

Our Projects Division is undertaking Turnkey Projects of up to 220 kV. Besides

Electricity Boards, we are doing turnkey projects for private companiesincluding Bajaj (33 kV Line), Usher (132 kV Line), Yadu Sugar (132 kV Line),Grasim (132 kV Line), K. L. Rathi Steel (132 kV Substation). We are presently

executing Turnkey Projects of more than Rs.200crores including 132KV Lines

and Sub-stations on total turnkey basis. We are at present doing multipleturnkey projects in Assam, Haryana, Maharashtra, UP.

We are geared up and have an experienced and qualified team to successfully

and timely execute such Projects even in most challenging situations. Our

Customers always boast of our timely execution of Projects and methodologywith most stringent quality controls. We shall be shortly involved in execution


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of Projects up to 400KV and above and we look forward to be one of the fastestgrowing EPC Companies in the Country within a very short future.

We aim to become a leading company in transformers, Conductors and Turnkey

Projects that grows continuously throughout the future. EIULs groupemployees have adopted this challenging spirit to personify our path growth.

There is an incessant pursuit to design and develop transformers that effectively

trim down line cost and line loss and improve the quality and reliability of the

electrical supply systems. For the purpose, EIU, along with using conventional

drawing methods, also uses the latest CAD (computer aided designing)

software. Before finalizing the design, it is ensured that it meets manifold

requirements like customer specifications, short circuit and high voltage

withstand requirements, ease of erection and maintenance, and all designs in

addition to performance checks are subjected to appraisal to attain high

reliability not only in service but also as transformers progress through

manufacturing and test.

Growth of EIUL Installed capacity & Generation

Fig.5


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EIUL contributes in manufacturing Transformers in India

EIUL - 1600,000 KVA per annum

Fig.6

Our Products:

We have won the faith of millions of domestic and international clients by

delivering high-performing and qualitative products. The products offered by usare:

Distribution Transformers upto 2500 KVA, 11 KV Class.

Power Transformers upto 16 MVA, 33 KV Class.

Dry type transformers upto 3 MVA, 33 KV Class.

Single phase and three phase Transformers of Wound Core type

upto 100 KVA rating. EHV Power transformers upto 100 MVA, 132 KV Class

Along with transformers, East India Udyog Limited is also producing over

60,000 kms of AAAC, AAC, & ACSR conductors per annum. The product line

consists of:

AAAC Conductors in all sizes.

AAC Conductors in all sizes. And last but not the least

ACSR Conductors in all sizes, including Bersimis conductor used in1200 KV Transmission lines

Total Capacity as on 31-03-2012

21.1%

78.9%

EIUL

Rest of

companies


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East India has also forayed into the EPC project business in the year 2006, and

since then, has bagged and executed several prestigious projects for clients like

DHBVNL, MSEDCL, ASEB, UPPCL etc.

GROUP COMPANIES:

A.JYOTI UDYOG LIMITEDTransformers, Cables & Conductors

B.EAST INDIA OVERSEAS LIMITEDChemicals & International Trading

C.ALLIANCE POWER CORPORATIONTransformer ComponentsD.YOGESHWAR DEVELOPMENT LIMITEDReal Estate Business

E.TECHNO HARDWARE ENTERPRISES PRIVATE LIMITEDReal Estate Business

F. PRISM AUXILIARIES PRIVATE LIMITEDReal Estate Business

G.HARI OVERSEAS LIMITEDInvestment & Finance


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Products & Services:

Fig.7 Transformer (Distribution and Power) Fig.8 Conductor (All types)

Fig.9 EPC Contracts (EHV)

Transformers:

Types of Transformers

Distribution Transformers upto 1500 KVA, 11 KV Class

Power Transformers upto 16 MVA, 66 KV Class

EHV Transformers upto 160 MVA, 220 KV Class

Dry Type Transformers upto 2 MVA

BEE Certified 3 & 4 Star Transformers upto 200 KVA

Single Phase Wound Core Type Transformers upto 25 KVA

Three Phase Wound Core CRGO/ Amorphous Metal Transformersupto 200 KVA
http://www.eastindiaudyog.com/transformer.phphttp://www.eastindiaudyog.com/epc-contracts.phphttp://www.eastindiaudyog.com/conductors.phphttp://www.eastindiaudyog.com/transformer.phphttp://www.eastindiaudyog.com/epc-contracts.phphttp://www.eastindiaudyog.com/conductors.phphttp://www.eastindiaudyog.com/transformer.phphttp://www.eastindiaudyog.com/epc-contracts.phphttp://www.eastindiaudyog.com/conductors.php


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EPC-Contracts:

Types of EPC-Contracts

Turnkey contracts for Transmission Lines, Substations and Erectioncontracts of upto 220 kV

APDRP Works

RGGVY Works

Feeder Separation Work

R-APDRP Works Infra Structure Projects

Production Capacity:With one of the most innovatively designed and comprehensive plants in Asia,

the installed production capacity at EIUL 1600,000 KVA per annum. EIUL is

self sufficient unit that manufactures the most of the components that are

required for manufacture of transformers.

As part of its expansion and backward integration project, a lamination

processing plant along with facilities for sheet metal fabrication of

Transformers, Tanks, Pressed steel radiators and Transformer oil refinery havebeen established in house.

Approvals

Our Power & Distribution Transformers are approved and being used by the

following Departments/ Statutory Bodies:

a. Uttar Pradesh State Electricity Board & its all DISCOMsb. Bihar State Electricity Boardc. Madhya Pradesh State Electricity Board & its all DISCOMsd. Maharashtra State Electricity Board & its all DISCOMse. Chattisgarh State Power Distribution Co. Ltd. & its all DISCOMsf. Jharkhand State Electricity Boardg. Haryana State Electricity Board & its all DISCOMsh. Tripura State Electricity Distribution Co. Ltd.i. Uttarakhand Power Corporation Ltd.

j. Orissa State Electricity Board & its all DISCOMsk. Mizoram State Electricity Board

l. Assam State Electricity Boardm.National Thermal Power Corporation (NTPC) Ltd.


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n.National Hydro Power Corporation (NHPC) Ltd.o. Power Grid Corporation of India Ltd. (PGCIL)

p. Damodar Valley Corporation (DVC)

Besides above, we are approved & have supplied transformers to various localdepartments/ statutory bodies like Ghaziabad Development Authority, BSES

Yamuna Power Ltd., Railways, CPWD, MES, Coalfields, ONGC, OrdinanceFactory, etc. We are also approved & have supplied transformers to various

African & Middle East Countries.

Our Clients:

EIUL has as on date manufactured & supplied more than 2, 00,000

Transformers of different capacities and voltage class to its various Customerscomprising of practically all utilities in the country. A glance at the CustomerProfile in the Statement of Major Supplies will authenticate the point.

SEBs of J&K, Himachal, Punjab, Haryana, U.P., Uttarakhand, M.P.,

Rajasthan, Maharashtra, Karnataka, A.P., Bihar, Assam,

Meghalaya & Jharkhand

Coalfields NCL, MCL. WCL, BCCL. SCCL, CCL. & SECL.

Railways Northern, N.E., S.E., S.C., Western, Central, Eastern ,NorthCentral & N.F

Public Sector NTPC, NHPC, ONGC, IOCL, NEEPCO, etc.

Turnkey Project Operators Larsen & Toubro Limited. Reliance Energy Ltd., Mumbai. Nagarjuna Construction Co. Ltd., Hyderabad Maytas Infra Limited, Hyderabad. TATA Projects Ltd., Hyderabad IVRCL Infrastructure & Projects Ltd., Hyderabad. Areva T & D India Limited Subhash Projects & Marketing Limited, Kolkata Instrumentation Ltd., Lucknow. KEC International Ltd., Mumbai Shyama Power (India) Pvt. Ltd., Gurgaon. Lanco Infratech, Hyderabad.. Indo Power Project Ltd., Kolkata. Kalpataru Power Transmissions ltd. Genus Power infrastructures Ltd. Angelique International Ltd. , New Delhi. A2Z Maintenance & Engineering Ltd.

Others CEL, BARC, THDC, AIR, CPWD, MES, Air Port

Authority, Development Authorities & Housing Boards,

DLF, Unitech, Vipul group, Ansal group, Mahagun, &Supertech.


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Some of the recently completed projects:

a. Turnkey contract under RGGVY Scheme by Assam State ElectricityBoard, Guwahati, worth Rs. 55.00 Crore.

b. Turnkey contracts under Feeder Separation Scheme of Dakshin HaryanaBijlee Vitran Nigam, Faridabad, worth Rs. 9.50 Crore.

c. Turnkey contracts under Feeder Separation Scheme of Maharashtra StateElectricity Distribution Co. Ltd., Aurangabad, worth Rs. 21.00 Crore.

d. Turnkey contracts under APDRP Scheme by Dakshinanchal VidyutVitran Nigam Ltd., Agra, at Firozabad & Shikohabad worth Rs. 8.80

Crore.

e. Turnkey contract for 132 KV Transmission line of Abhinav Steels Pvt.Ltd., Jaunpur, worth Rs. 3.00 Crore.

Upcoming Projects:

a. Turnkey contracts under R-APDRP Scheme of Purvanchal Vidyut VitranNigam Limited worth Rs.45.00 Crores in Allahabad Circle (UP)

b. Turnkey contracts under Infra Plan of Maharashtra State ElectricityDistribution Co. Ltd., Nagpur, worth Rs. 71.00 Crores.

c. Turnkey contract under R-APDRP Part-B Scheme in Sitapur fromMadhyanchal Vidyut Vitran Nigam Ltd., worth Rs. 75.00 Crore.

d. Turnkey contract under R-APDRP Part-B Scheme in Rai Bareli fromMadhyanchal Vidyut Vitran Nigam Ltd., worth Rs. 26.13 Crore.

e. Turnkey contract under R-APDRP Part-B Scheme in Sultanpur fromMadhyanchal Vidyut Vitran Nigam Ltd., worth Rs. 43.00 Crore.

Some of the ongoing Projects:

a. Turnkey Contract under REC Scheme for Feeder Separation work inPaschimanchal Vidyut Vitran Nigam Ltd. Meerut worth Rs.52.65 Crores

b. Turnkey Contract under REC Scheme for Feeder Separation work inPaschimanchal Vidyut Vitran Nigam Ltd. Meerut worth Rs.38.81 Crores

c. Turnkey contracts under Gaothan Feeder Separation Scheme of

Maharashtra State Electricity Distribution Co. Ltd., Akola worth Rs.58.00Crores


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d. Laying of LT Aerial Bunched Cable for Paschimanchal Vidyut VitranNigam Ltd., worth Rs. 12.29 Crore.

e. 132 KV S/C Line for M/S Yadu Sugar Limitedf. Construction of 132 KV Line from 220 KV Substation Dadri for M/s

Grasim Industries.g. Turnkey Contract for 33 KV D/C Line 35 KM for Lalitpur Power

Generation Co. Ltd (Bajaj Group) for their upcoming 1980 MW Power

Plant.

h. 220 kV Line for U. P. Power Transmission Corporation Ltd., betweenModipuram to Muzaffarnagar.

i. Construction of 132 kV S/C Line on D/C Towers for M/s Usher EcoPower Ltd. from their Power Generation Plant to 132 kV Grid SubstationKosi (Mathura).


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3.2) Organisational Structure

Fig.10 Organisation chart illustrating the structure (For full chart refer Annual Report)

Chairman & Managing

Director

Director

(HR)

Director

(Finance)

Director

(Projects)

Director

(Operations)

Director

(Marketing)

Director

(Technical)

Executive Director

Senior General Manager

General Manager

(Executive)

General Manager

(Technical)

A.G.M (Projects)

Mr.Dinesh Kumar

A.G.M (Projects)

Mr.M.K.Gupta

A.G.M (Projects)

Mr.V.P.Singh


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3.3 Roles & Responsibilities of the Departments

The organizational structure lays out an outline of the organization, graphicallydepicting the authorative and administrative power at each level of employees.

It clearly defines the hierarchy of positions in an organization. The figure below

gives the organization structure of the EIUL.

A)HR - Human Resource department serves these key functions:

1. Recruitment & Selection2. Training & Development (People or Organization)

3. Performance Evaluation and Management

4. Promotions/ Transfers

5. Redundancy

6. Industrial and Employee Relations

7. Record keeping of all personal data.

8. Compensation, Pensions, Bonuses etc.

9. Confidential advice to internal customers in relation to problemsat work.

10.Career Development

11.Competency Mapping

12.Time motion study is related to HR function.

13.Performance Appraisal

B)FINANCE - It basically deals with:

1. Payment to vendors after received the materials as per tendering.

2. Salaries of all employees.

3. Money received after sale of scarps.

4. Investment decision.

5. Working Capital Management.


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C)PROJECTS - It deals with the number and kinds of roles on a project are

tied to the kinds of activities that have to be carried out to meet the

projects goals and objectives. Successful teams enroll the end user as an

insider, an active member of the product team.

D)OPERATIONS It is very wide department, it deals with production,

maintenance and planning. Some of functions related to it are

planning, controlling, scheduling, quality control, management etc.

E)MARKETING This departments objective is to analyze the entiremarket with the different regions.

F)TECHNICAL- This department mainly concerns with engineering and

main job of this section is building up of power plant and its maintenance.


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3.4 Roles and Responsibilities of Material Department

CM- Corporate Material, CS- Contract Services

I. Corporate Contracts :

Tendering And Award of Major Packages of New Projects,

II. Corporate Material:

System And Policy Guidelines for Site Contracts & Materials

Professional guidance to site Contracts & Materials

Procurement of corporate requirements

Monitoring functions of Site Contracts & Materials.

III. Site Contracts & Materials

Tendering & Award of

All minor packages of new Projects, Expansion Project and R&M including

Construction Materials during Project Stage.

Procurement of spares, consumable and Services during Operations

Stage.

CMD

ED

(CC&M)

ED

(Regions)

GM (CM) GM (CS)

GM

(Project)

DGM(C&M)


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Theoretical

Framework /

Literature Review


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4.1 Definition:

4.1.1 Material Management

Material Management is a process of management which coordinates,

supervises & executes the tasks associated with the flow of materials to through

and out of an organization in an integrated fashion.

Every organization, big or small, depends on materials and services from other

organizations to varying extents. These materials and services are obtained

through exchange of money and the physical arrangement of it all is

called Materials Management.

Objectives of Materials Management:

Continuity of supply in order to maintain a uniform flow of materials.

Reducing of overall material cost through the use of specific tools &

techniques.

Releasing working capital by ensuring affective control over inventories.

Ensuring right quality at right place.

Establishing a harmonious buyerseller relationship.

Ensuring lower departmental costs, higher and better services to customer

and maintaining of ethical practices and standards.

Material Management functions:

Material planning and programming.

Purchasing and outsourcing.

Inventory control. Storekeeping and warehousing.

Codification.

Standardization and evaluation of all products.

Transportation and material handling.

Inspection and quality control.

Cost reduction through value analysis.

Disposal of surplus/ obsolete material.

Distribution.


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4.1.2 The Production Department:

As the Stores Department must ensure that all items, materials and tools, as well

assparepartsfor machinery, are always avai lable for continuous, uninter

rupted production, it requires adequate warning about expectedfuture needs, in terms of types, quantities, qualities (and possibly even

colors). Stores might also have responsibility forquality control and for

inspection (although these might be the responsibility of a separate

department which, again, must work closely with the Stores).

The relationship between the Stores and Production Departments:

R a w m a t e r i a l,

C o m p o n e n t s,

T o o l s e. t. c

Scrap & By

Products

Finished productsReject & damaged

Products

Fig.11 Flow chart relationship between stores & production dept.

STORES DEPT. PRODUCTION

DEPT.

QUALITY CONTROL

INSPECTION


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4.1.3 Standard Operating Procedure (SOP)

An SOP is a written document or instruction detailing all steps and activities of

a process or procedure. These should be carried out without any deviation or to

modification to guarantee the expected outcome. Any modification or deviationfrom a given SOP should be thoroughly investigated and outcomes of the

investigation documented to the internal deviation procedure.

All quality impacting processes and procedures should be laid out in Standard

Operating Procedure (SOPs). These SOPs should form the basis for the routine

training program of each employee. SOPs should be regularly updated assure

compliance to the regulatory requirements and working practices. A minimum

review schedule of 3 years is recommended changes of SOPs are in general

triggered by process or procedural changes/adjustments. The internal site

change control procedure should manage these changes. SOPs should be inplace for all quality system plus the specific operational activities on site. The

structure of an SOP system and total amount of SOPs should be carefully taken

into consideration too many SOPs could lead to a collapse of the SOP system.System SOPs should not be mixed up to keep systems and interaction between

quality systems easy.


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4.1.4 Purchase

Purchase means buying quality materials with reasonable price to sustain

the production in efficient manner.

Two types of Purchase:

1. Centralized

2. Decentralized

3.

1. Centralized: - Single purchase department: The purchasing function isunder a single administrative control when there is a lack of maturity in

branch offices. The vital tasks of stores such as classification and

codification are done by central office. In some cases items are divided

broadly into two categories:

a. Vital items which are handled by the central purchasing section.b. Desirable items which are directly handled by the branch/ local

purchase section.

2. Decentralized: - When an organization has several plants in widely separatelocations and manufactures different products, each with individual material

requirements, decentralized purchasing is needed there.

Purchase should be done according to the following principles:

Buying the right quality.

Buying the right quantity.

Buying at a right place.

Buying from right source.

Buying at right time.

Buying right material.


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4.1.5 Inventory

Any available resource having economic value kept idle is called inventory.

Hence in manufacturing company materials, work in progress materials and

finished goods form inventory.

Though WIP is not idle it still an inventory as long as it remains in company

premises.

Functions of Inventory:

To store just enough quantity in view of inventory carrying cost. To keep safety

stock to avoid shortage. Numbers of orders should be such that ordering cost

also is reduced. Extra care is to be taken in ordering and storing of perishable

goods.

Understand the seasonable availability of some items and their pricing and

arrange right quantity at right price and of right quality. Know the trend of up

and down in production items, quantity and accordingly adjust the purchases.

Inventory Control Methods:

ABC analysis: Based on annual consumption value of materials.

VED analysis: Based on importance of items in production.

HML analysis: Based on individual item prices.

FSN analysis: Based on usage/movement of materials.

XYZ analysis: Based on closing inventory value of items.

SDE composition: Availability basis. Minima-Maxima system: To reorder on reaching min. stock.

Two-Bin system: To order on reaching min. stock.

Fixed period system (p-system): Pre-fixed production ordering.

JIT method: Based on avoiding storage and inventory carrying costs.

Fixed quantity system or EOQ method: Purchase of economic

quantity.


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4.1.6 Raw Materials

It is the 1st

state of material by which production process starts. After doing

all production process it will be become finished goods.

3.1.7 Semi finished Goods

It is the material which is work in progress, i.e. the semi state of the material

during production process for finished goods.

3.1.8 Finished Goods

It is the final product which can be done by the firm after doing all the

production processes. This is the product for sale.

4.2) Key points of Material Management

Planning sets the goal and indicates the available sources of finance.

Scheduling specifies the requirements, the quantum and the delivery

schedules. Purchasing and Procurement select vendors and contracts with them.

Inspection and Quality control conducts test checks for conformance to

specifications.

Store and Inventory control determine inventory status, undertake

maintenance and upkeep.

Materials handling and Distribution logistics control physical

movement flow and distribution and finally, traffic, shipment and

dispatch conclude with final delivery.


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4.3 Purchase Cycle

Recognize, describe and define the need.

A.Classification of Needs Type of need

Strategic or Operational?

Repetitive or Non- Repetitive

Size (quantity; dollars)

Speed/Timing

B.Specification of Needs

Transmit the need (requisitions)

Determine sources, investigate and select supplier/analyze bids. Prepare and issue the PO.

Follow-up the order (including expediting and de-expediting).

Receive and inspect the material.

Clearance of the invoice and payment to supplier.

Close the order/record.

4.4 Quality Assurance & Testing

EIUL is a self sufficient unit that manufacturers most of the components that are

required for manufacture of Transformers.

As part of its expansion and backward integration project, a lamination

processing plant along with facilities for sheet metal fabrication of

Transformers, tanks pressed steel Radiators and Transformer oil Refinery havebeen establishedin house.

Quality is what sets us apart from the rest. The company has a complete qualityassurance program which is designed as per requirements to cover all aspect of

design, procurement, incoming material inspection, inventorying ofcomponents, in process inspection, product testing, packing, dispatch, and after

sales service. EIU, an ISO: 9001 Certified Company since May2000, was

upgraded to ISO-9001-2000 in February, 2003 from DLIQ-Certification India(P) Ltd, an accreditation body of JAS-ANZ vide Certification No.2497.

Today EIUL is ISO: 9001: 2000 Certified organizations.


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The Right design:

There is an incessant pursuit to design and develop transformers that effectively

trim down line cost and line loss and improve the quality and reliability of the

electrical supply systems. For the purpose, EIU, along with using conventionaldrawing methods, also uses the latest CAD (computer aided designing)

software. Before finalizing the design, it is ensured that it meets manifold

requirements like customers specifications, short circuit and high voltagewithstand requirements, ease of erection and maintenance, and all designs in

addition to performance checks are subjected to appraisal to attain high

reliability not only in service but also as transformers progress throughmanufacturing and test.

Tested & Trusted:

High exactitude test equipment is used to test each and every end product as per

the norms and systems approved by organizations with worldwide recognition

for quality control. Apart from section wise testing of components and sub

assemblies, the fully assembled transformer undergoes all routine tests as per

applicable standards in EIUs well-equipped laboratory. Special tests like heat

run are also conducted on a prototype of every lot. Other unique tests likeImpulse test, Dynamic and Thermal Short circuit test are conducted at

prominent autonomous laboratories like Central Power Research Institute(CPRI), Bhopal/ Bangalore/Muradnagar ; ERDA; Vadodara; NTH etc.

Comprehensive Quality Assurance Program:

At EIUL, great emphasis is placed for high quality products and exemplary

service in order to satisfy ever increasing customer demands.

Quality Control System

To achieve the above objective, a comprehensive Quality Assurance systembeen established at EIUL. This covers all aspects of Design, Procurement,

production, Inspection and Testing performance and Reliability of ETS

Transformers. EIUL values the principles of TQM and has a well defined

system in place for all activities like manufacturing, procurement of material,vendor evaluation, stores & inventory control, testing of semi finished/finished

products, calibration, addressing customer complaints, marketing andmanagement review.


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Testing & Trails:

Rigorous Routine and type Tests are conducted in presence of CustomersRepresentatives.

Routine Tests:

After passing through a series of rigorous quality checks at various stages, all

Transformers are subjected to Routine tests as specified in IS/IEC standards in

our well equipped laboratory. All results of Routine Tests are recorded andmaintained.

Type Tests:

Besides Routine Tests, one Transformer of each rating is subjected to following

type tests at our works:

Air pressure test

Temperature Rise Test

Vacuum Test

Unbalanced Current Test

Zero Sequence Impedance Test Acoustics Level Test

Other type Tests & special Tests: EIULs transformers have also been subjected

to the following Type Tests for Design Verification at an independent

Government approved Laboratory:

Capacitance & Tan Delta Test On Winding

Impulse test

Short circuit Test

More than 120 nos. of EIULs transformers up to 10 MVA rating have

withstood Short Circuit Test (Thermal/Dynamic Ability) at CPRI, Bhopal and

Bangalore & ERDA, Vadodara. About 235 nos. of transformers of rating up to

10 MVA manufactured by EIU have also passed impulse Voltage withstand

Test at CPRI, Bhopal, Bangalore, Muradnagar, ERDA, Vadodara and N.T.H.,Ghaziabad.


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4.5 E-Procurement

E-Procurement is very important to achieve e-governance and for applicability

of uniform procurement process to all units. It has the ability to reduce

procurement cost by reduction in lead time, reduction in transaction cost and

cycle times etc. E-procurement also helps in building collaborative relationship

with suppliers. It enables greater transparency; implements best practices, and

increases the vendor base. It also reduces the possibility of cartel formation and

generates reasonable competition. It helps to achieve savings in administrative

and process cost. E-procurement enhances the security and it is also a step

towards ERP system for the organization.

Concept and Scope

E-procurement is purchase and sale of supplies and services and management of

procurement process over internet. Manual tender processes can be long and

cumbersome, often taking three months or longer, which is costly for both buyer

and supplier organizations. E-tendering replaces these manual paper-based

tender processes with electronically facilitated processes based on best

tendering practices to save time and money. Through E-tendering, EIUL is ableto manage the tenders coming in, with all tenders stored in one place. It can cut

and paste data from the electronic tender documents for easy comparison in a

spreadsheet. Suppliers cost in responding to Notice Inviting Tender (NIT) is

also reduced as the tender process cycle is significantly shortened. E-tendering

offers an opportunity for automating most of the tendering process: from help

with preparing the tender specification; advertising, to tender evaluation and

placing of the contract.

The process of e-procurement shall be taken up at Contracts & Materials

(C&M) department after receipt of the requisition or the indent. The indent duly

approved by the competent authority, as per Delegation of Powers (DOP)

handbook of EIUL, is a pre-requisite to initiate e-procurement action. Once the

indent is approved, the C&M department then plan and organize the

procurement action.


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The purchasing process basically involves the following elements:

Fig.12: The Purchasing Process

1. Identify or anticipate material or service needs.

2. Evaluate potential suppliers.

3. Select suppliers.

4. Release and receive purchase requirements.

5. Continuously measure and manage supplier performance.


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These stages may vary in different organizations, depending on whether

purchasing is sourcing a new or repetitively purchased item, and also whether

there is a detailed approval process for purchases that exceed a specific dollar

amount. New items require that purchasing spend much more time up frontevaluating potential sources. Repeat items usually have approved sources

already available. The Exhibit illustrates a typical purchasing process used in

many enterprises with some typical contingency elements shown. This diagram

also shows how supplier evaluation and selection involves the purchase of new

items or services, or during a review of existing purchase contracts.

A document flow accompanies the movement of orders and material throughput

the purchasing process. Historically, preparing and managing the properpurchasing documents has been a time-consuming process. Most firms have

streamlined the document flow process to reduce the paperwork and handling

required for each purchase. The suite of tools used to achieve efficiency in

purchasing transactions is broadly defined as e-procurement. Companies are

using e-procurement tools to manage the flow of documents by (1) automating

the document generation process and (2) electronically transmitting purchase

documents to suppliers. The benefits of electronically generating and

transmitting purchasing-related documents include

A virtual elimination of paperwork and paperwork handling

A reduction in the time between need recognition and the release and receipt

of an order

Improved communication both within the company and with suppliers

A reduction in errors

Lower overhead costs in the purchasing area

Purchasing personnel spend less time on processing of purchase orders and

invoices, and more time on strategic value-added purchasing activities.


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Procedure for Indenting:

For the purpose of indenting, material planning is required. It is nothing but

classifying the materials into various categories to facilitate a speedy and

efficient procurement. In this process all the materials which may be required at

any of the EIUL projects or offices are classified into five major categories and

their procurement is to be done on the basis predefined for them.

1. Stock item (AR)

2. Insurance items(I)

3. Unit Replacement Item (UR)4. Capital item (P)

5. Other non-stock items (Not falling under any of the above category).

But since this classification is very vague and unspecific, a further classification

is done to exercise selective control over all Material Management activities.

This classification is known as ABC analysis.

INDENT

COST ESTIMATION

FINANCE

CONTRACT MATERIAL HR


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Benefits to EIUL

Reduced tender cycle-time.

Fast and accurate pre-qualification and evaluation, which enables the

automatic rejection of suppliers that fail to, meet the tender specification.

Faster response to questions and points of clarification during the tender

period.

Reduction in the labour intensive tasks of receipt, recording and

distribution of tender submissions.

Reduction of the paper trail on tendering exercises, reducing costs to both

the organization and the suppliers.

Improved audit trail increasing integrity and transparency of the tendering

process.

E-Procurement further promises the following gains to the supplier/vendor

community:

No geographical barriers: Sales/Marketing time reduction, whichotherwise is spent on price negotiations, follow up etc., as this will lead to

the quicker order finalization at our end.

Reduction in vendors cost as they need not to travel our offices and thereis no need to make those umpteen calls (communication cost).

Complete transparency in the process/ the operating community, leadingto sound decisions.


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4.6 Just In Time (JIT)

Good inventory management contributes significantly to the organization

performance. Apart from reducing the material procurement, storage andhandling cost, it also contributes to good housekeeping and lesser spacerequirement. Procuring or manufacturing and parts just on time can help

preventing wastage, obsolescence and capital locked in inventory. It makes the

workplace more organized and into lesser confusions for managing the work.

Concept

To create Just-in-time is a state of mind achieving competitive excellence by

creating an attitude of continuous improvement, through 100% involvement toeliminate all waste, institutionalizing only value-adding activities with 100%

qualityNOTHING ELSE!

Benefits of JIT

Low stock

More space

Short lead-time Low ordering cost

Manpower

Energy

Maintenance cost

Improved quality

Increased productivity

Greater flexibility

Better relations and control activities

Simplified scheduling

Increased capacity

Better use of human resources

More product variety


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JIT Implementation at EIUL

At EIUL, 8 main committees have been formed for implementation of JIT.

They are:

Just-in-time (JIT) material handling & logistics.

Planned maintenance.

5-S & MUDA (Work environment).

Skill, education &training.

Early management of assets.

Individual equipment improvement.


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4.7 SUPPLY CHAIN MANAGEMENT AT EIUL

PRELIMINARY PURCHASE REQUISITION

Experience has proved that no inventory control mechanism can be effectiveand fruitful unless material procurement is controlled and regulated at the very

procurement plan stage itself. At EIUL, maintenance department prepares the

preliminary purchase requisition in the proposal from (rough/hand written) and

sends it for review to the inventory control cell. This PR mentions the type of

spares or consumables and its criticality in terms of purpose for which it is proposed

to be procured. The inventory control cell first determines the PR value on the

basis of last procurement rate or quotation and assigns ERP number/

code. It al so supplements information in respect of:

Stock in stores

Pending PR quantity with expected delivery

Consumption pattern for past 3 years, and

Delivery schedule suitability, considering consumption plan.

The industrial engineer associated with the inventory control cell ascertains

availability of material or its equivalent with other departments and gets same

spares for use. Heal so explores possibility of using alternative material which

may be available in stock or purchase value of which would be comparatively lower.

Fig. 13 Supply chain management


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Management Information System

Inventory control cell prepares following monthly MIS report:

Comparative stock statement under- critical, non-critical and insurance for variousdepartments and identifies increase/reduction vis--vis previous month as

also ideal.

Statement of specific items with details, which contributed to increase in theinventory in the particular month along with consumption plan.


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4.8 Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) systems integrate internal and

external management information across an entire organization,embracing finance/accounting, manufacturing, sales and service, customer

relationship management, etc. ERP systems automate this activity with anintegrated software application. The purpose of ERP is to facilitate the flow of

information between all business functions inside the boundaries of the

organization and manage the connections to outside stakeholders.

ERP systems can run on a variety ofcomputer

hardware and networkconfigurations, typically employing a database as a

repository for information. SAP is software used to implement the ERP system.

Characteristics:

ERP (Enterprise Resource Planning) systems typically include the following

characteristics:

An integrated system that operates in real time (or next to real time), without

relying on periodic updates.

A common database, which supports all applications.

A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by

the Information Technology (IT) department.

Functional Areas:

The following are common functional areas covered in an ERP System. Inmany ERP Systems these are called and grouped together as ERP Modules:

i.

Financial AccountingGeneral Ledger, Fixed Asset, Payables, Receivables, Cash, Financial

Consolidation.

ii. Management AccountingBudgeting, Costing, Cost Management, Activity Based Costing.

iii. Human ResourcesRecruiting, Training, Payroll, Benefits, Diversity Management,Retirement, Separation.
http://en.wikipedia.org/wiki/Management_informationhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Softwarehttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Databasehttp://en.wikipedia.org/wiki/Financial_Accountinghttp://en.wikipedia.org/wiki/General_Ledgerhttp://en.wikipedia.org/wiki/Accounts_Payablehttp://en.wikipedia.org/w/index.php?title=Financial_Consolidation&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Financial_Consolidation&action=edit&redlink=1http://en.wikipedia.org/wiki/Management_Accountinghttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/Activity_Based_Costinghttp://en.wikipedia.org/wiki/Human_Resourceshttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Traininghttp://en.wikipedia.org/wiki/Payrollhttp://en.wikipedia.org/w/index.php?title=Employee_Benefit&action=edit&redlink=1http://en.wikipedia.org/wiki/Retirementhttp://en.wikipedia.org/wiki/Separationhttp://en.wikipedia.org/wiki/Separationhttp://en.wikipedia.org/wiki/Retirementhttp://en.wikipedia.org/w/index.php?title=Employee_Benefit&action=edit&redlink=1http://en.wikipedia.org/wiki/Payrollhttp://en.wikipedia.org/wiki/Traininghttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Human_Resourceshttp://en.wikipedia.org/wiki/Activity_Based_Costinghttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/Management_Accountinghttp://en.wikipedia.org/w/index.php?title=Financial_Consolidation&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Financial_Consolidation&action=edit&redlink=1http://en.wikipedia.org/wiki/Accounts_Payablehttp://en.wikipedia.org/wiki/General_Ledgerhttp://en.wikipedia.org/wiki/Financial_Accountinghttp://en.wikipedia.org/wiki/Databasehttp://en.wikipedia.org/wiki/Computer_networkhttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Computer_hardwarehttp://en.wikipedia.org/wiki/Softwarehttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Management_information


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iv. ManufacturingEngineering, Bill of Materials, Work Orders, Scheduling,

Capacity, Workflow Management, Quality Control, Manufacturing

Process, Manufacturing Projects, Manufacturing Flow, Product Life

Cycle Management.

v. Supply Chain ManagementSupply Chain Planning, Supplier Scheduling, Order to

Cash, Purchasing, Inventory, Product Configurator, Claim Processing.

vi. Project ManagementProject Planning, Resource Planning, Project Costing, Work Break Down

Structure, Billing, Time and Expense, Performance Units, Activity

Management.

vii. Customer Relationship ManagementSales and Marketing, Commissions, Service, Customer Contact, Call

CenterSupport.

viii. Data ServicesVarious "selfservice" interfaces for customers, suppliers and/or

employees.

ix. Access ControlManagement of user privileges for various processes

Components:

Transactional database

Management portal/dashboard

Business intelligence system

Customizable reporting

External access via technology such as web services

Search

Document management

Workflow management
http://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Bill_of_Materialshttp://en.wikipedia.org/w/index.php?title=Workflow_Management&action=edit&redlink=1http://en.wikipedia.org/wiki/Quality_Controlhttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Supply_Chain_Managementhttp://en.wikipedia.org/w/index.php?title=Order_to_Cash&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Order_to_Cash&action=edit&redlink=1http://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Product_Configuratorhttp://en.wikipedia.org/wiki/Project_Managementhttp://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Customer_Relationship_Managementhttp://en.wikipedia.org/wiki/Call_Centerhttp://en.wikipedia.org/wiki/Call_Centerhttp://en.wikipedia.org/wiki/Access_Controlhttp://en.wikipedia.org/wiki/Dashboardhttp://en.wikipedia.org/wiki/Business_intelligencehttp://en.wikipedia.org/wiki/Web_servicehttp://en.wikipedia.org/wiki/Enterprise_searchhttp://en.wikipedia.org/wiki/Document_managementhttp://en.wikipedia.org/wiki/Workflow_managementhttp://en.wikipedia.org/wiki/Workflow_managementhttp://en.wikipedia.org/wiki/Document_managementhttp://en.wikipedia.org/wiki/Enterprise_searchhttp://en.wikipedia.org/wiki/Web_servicehttp://en.wikipedia.org/wiki/Business_intelligencehttp://en.wikipedia.org/wiki/Dashboardhttp://en.wikipedia.org/wiki/Access_Controlhttp://en.wikipedia.org/wiki/Call_Centerhttp://en.wikipedia.org/wiki/Call_Centerhttp://en.wikipedia.org/wiki/Customer_Relationship_Managementhttp://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Project_Managementhttp://en.wikipedia.org/wiki/Product_Configuratorhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/w/index.php?title=Order_to_Cash&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Order_to_Cash&action=edit&redlink=1http://en.wikipedia.org/wiki/Supply_Chain_Managementhttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Quality_Controlhttp://en.wikipedia.org/w/index.php?title=Workflow_Management&action=edit&redlink=1http://en.wikipedia.org/wiki/Bill_of_Materialshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Manufacturing


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Implementation

ERP's scope usually implies significant changes to staff work processes and

practices. Generally, three types of services are available to help implement

such changesconsulting, customization, and support. Implementation timedepends on business size, number of modules, customization, the scope of

process changes, and the readiness of the customer to take ownership for the

project. Modular ERP systems can be implemented in stages. The typical

project for a large enterprise consumes about 14 months and requires around150 consultants. Small projects can require months; multinational and other

large implementations can take years. Customization can substantially increase

implementation times.

Process preparationImplementing ERP typically requires changes in existing business

processes. Poor understanding of needed process changes prior to startingimplementation is a main reason for project failure. It is therefore crucial that

organizations thoroughly analyze business processes before implementation.

This analysis can identify opportunities for process modernization. It also

enables an assessment of the alignment of current processes with those provided

by the ERP system. Research indicates that the risk of business processmismatch is decreased by:

linking current processes to the organization's strategy;

analyzing the effectiveness of each process;

Understanding existing automated solutions.

ERP implementation is considerably more difficult (and politically charged) in

decentralized organizations, because they often have different processes,

business rules, data semantics, authorization hierarchies and decision

centers. This may require migrating some business units before others, delaying

implementation to work through the necessary changes for each unit, possibly

reducing integration (e.g. linking via Master Data management) or customizingthe system to meet specific needs.

A potential disadvantage is that adopting "standard" processes can lead to a loss

of competitive advantage. While this has happened, losses in one area are often

offset by gains in other areas, increasing overall competitive advantage.
http://en.wikipedia.org/wiki/Master_data_managementhttp://en.wikipedia.org/wiki/Master_data_management


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Benefits

ERP can greatly improve the quality and efficiency of a business. By

keeping a company's internal business process running smoothly, ERP can

lead to better outputs that will benefit the company such as customer service,and manufacturing.

ERP provides support to upper level management to provide them with

critical decision making information. This decision support will allow the

upper level management to make managerial choices that will enhance thebusiness down the road.

ERP also creates a more agile company that can better adapt to situations

and changes. ERP makes the company more flexible and less rigidly

structured in an effort to allow the different parts of an organization to

become more cohesive, in turn, enhancing the business both internally andexternally.

Faster response to customers and employees, visibility of inventory process

across EIUL, tracking of status of various activities like project execution etc.

Same working culture throughout the organization.

The SAP ERP application is integrated Enterprise Resource Planning (ERP)

software manufactured by SAP AG that targets business software requirements

of midsize and large organization in all industries and sectors. It allows for open

communication within and between all company functions.


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DataCollection


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5.1 Research:

Research is a process in which the researcher wishes to find out the end result

for a given problem and thus the solution helps in future course of action. The

research has been defined as A careful investigation or enquiry especially

through search for new facts in branch of knowledge

5.2 Research Design:

The research design used in this project is Analytical in nature the procedure

using, which researcher has to use facts or information already available, and

analyze these to make a critical evaluation of the performance.

5.3 Data: Its mean information.

It is broadly divided into 2 categories:

1. Primary Data

2. Secondary Data

5.3.1 Primary Data

The information regarding the project we can get directly from the source as

follows:

Supervisors guidelines about the project.

Some information regarding my project was given by Material

departments several employees.


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5.3.2 Secondary Data

The information regarding the project we can get indirectly i.e. other than above

resources as follows:

Purchase Order register

Purchase Manuals

Several purchase files

(Materials which had already purchased and also the files for the

materials which are being to be purchased)

SAP User Manual

Company websites

GRN (Good Receive Notes)

SIC (Store Inspection Certificate)


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ANALYSIS

&

FINDINGS


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6.1 STRENGTH OF EIUL:

The company has kept with itself sufficient funds to meet any kind of

cash requirement.

Efficient working capacity of plants.

Efficient and timely completion of projects.

A minimum risk factor.

Best-integrated project management systems.

Company with excellent record and high profits.

Highly motivated and dedicated workers and officers no industrial

relations problem.

Excellent growth prospects with significant additions, modifications andreplacements.

Employee-friendly personnel policies.

Low project cost of EIULs plants.

6.2 WEAKNESS OF EIUL:

Depleting raw materials.

Some of the plants have become old and need investment in Renovation

& Modernization.

6.3 OPPORTUNITIES:

Demand and supply gap.

Rising prices of raw materials.

Coming up of other sources of power. Huge capital requirement for expansion, diversification, horizontal &

vertical integration and R&M.


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6.4 BENEFITS OF E-PROCUREMENT TO EIUL:

Reduced tender cycle-time. Fast and accurate pre-qualification and evaluation, which enables the

automatic rejection of suppliers that fail to meet the tender specification.

Faster response to questions and points of clarification during the tender

period.

Reduction in labour-intensive tasks of receipt, recording and distribution

of tender submissions.

Reduction of paper trail on tendering exercises, reducing costs to both the

organization and the suppliers. Improved audit trail increasing integrity and transparency of the tendering

process.

Improved quality of tender specification and supplier response.

Provision of quality management information.

6.6 IMPORTANCE OF CONTRACT MANAGEMENT:

Availability of materials: There should be continuous availability of all

types of materials in the factory so that the production may not be held up

for want of any material. Minimum quantity of each material is fixed to

permit production to move on schedule.

No excessive investment in materials: there should be any excessive

investment in stocks. Investment in materials must not tie up funds that

could be better used in other activities. For this purpose, a maximum

quantity is assigned to each item of material above which stock should

not be exceeded. So there should be no over stocking of materials

because that would result in loss of

1. Interest charges2. Higher godown charges


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3. Deterioration in quality

4. Losses due to obsolescence

Reasonable price: Materials should be purchased at the reasonable price.

Quality is not to be sacrificed at the cost of lower price. The material

purchased should be of that quality alone which is needed.

The price paid should be the minimum possible otherwise the higher

cost of the finished products would make the products would make the products

uncompetitive in the market.

Minimum wastage: There should be minimum possible wastage of

material while these are being stored in the godowns by storekeeper or

used in the factory by the workers. Wastage should be allowed up to the

certain level known as normal level of wastage and it should not exceed

the level.

Risks of spoilage and obsolescence: Material must be avoided from it.

For this purpose a maximum quantity of each material is determined and

a proper method of issue of material is followed. The materials received

earlier should be issued earlier.

Information about availability of materials: It should be made

continuously available to the management so that planning of production

may be done. The storekeeper can supply under a proper system of

material control.

Supply of material at right time: Procurement assures the required need

and to demand or fulfill at the right time from the right place so as to

utilize all the resources and none of them are kept idle.


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Other importance:

1. To stoppage the wastage of materials.

2. To maintain the flow of production.

3. To stoppage the theft of material.

4. To reduce the cost of storage.

5. Wastage during the process of manufacture should be the minimum

possible.


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CONCLUSION


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In EIUL there is a separate department called Contracts and MaterialManagement which is responsible for the various activities of material

management. The scope of Material management is very wide.

Materials alone would take up a whopping Rs 150 laces or about 70% of the

total expenses involved in such a venture.

This capital expenditure is routed through Contracts & Material Department.

This alone would suffice to speak volumes of having to have a strong Material& Contracts Management system to be in place for managing companys

resources efficiently and to contribute to its success and growth.

The success and efficiency of an operating station in terms of optimum

utilization of capacity is dependent on the availability of right quantity of raw

materials, spares and consumables at right price and at right time.


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RECOMMENDATION


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According to EOQ (Economic Order Quantity), as the company does not

follow EOQ for its purchasing, the company can be adjusted to ordermaterials. This will reduce the cost & help to enhance the profit of the

company.

The company is required to maintain safety stock for its components in

order to avoid stock-out conditions & help in continuous production flow.

While preparing cost estimate many times, last awarded rates are taken

which at times are quite old. Hence in such cases parallel market rates

collection should be insisted upon.

Sometimes in the bid documents the treatment of taxes and duties inevaluations are not clearly indicated. This leads to confusion. This aspects

need special care while reviewing bid documents.


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REFRENCES


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References:

Websites:

www.eastindiaudyog.com/

www.wikipedia.org.

Textbooks:

Gupta, C.J. (2006), Material Management Text and Cases, Pearson

Education India.

Donald W. Dobler & David N.Burt, Purchasing & Supply

Management.

Applied Material Management,by S.Chatterjee.

Introduction to Material Management,by J. R. Tony Arnold, Lloyd M.

Clive.

Martand Telsang Industrial Engineering & Production Management

S.Chand & Co.

Manuals:

EIUL Manuals.

Policy Guidelines for implementation of E-Procurement at EIUL.
http://www.eastindiaudyog.com/http://www.eastindiaudyog.com/http://www.wikipedia.org/http://www.wikipedia.org/http://www.wikipedia.org/http://www.eastindiaudyog.com/


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APPENDICES

Questionnaire:

1) Do you think E-procurement is affective in purchasing process in an

organization?

a) Yes b) No

2) Which type of materials do you need in your organization?

a) Finished goods

b) Semi-finished goods

c) Raw material

3) Do you want to use a classification system for the materials in your

organization?

a) Yes b) No

4) Do you need to look up purchase orders based on Universal Product Codes

(UPCs) when receiving material from suppliers?

a)Yes b) No

5) Is E-procurement shows transparency in the business process?

a) Yes b) No

6) Do you think facility location is cost effective?

a) Yes b) No

7) Is plant layout plays an important role in material management?

a) Yes b) No

8) Do you use various different units to manage material in your organization?

a) Yes b) No


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