raghvendra singh -scm prject at renupower division

SUMMER TRAINING PROJECT

ON

“SUPPLY CHAIN MANAGEMENT”

SUMITTE TO SUBMITTED BY:

Mr. ANUN SINGH RAGHVENDRA PRATAP

FACULTY OF MARKETING PGDM (MARKETING)

1 Supply Chain Management

DECLARATION

I hereby declare that Summer Training report on the topic “supply chain management” is

factual report to my project work undertaken towards practical fulfilment of the degree of

MBA from “LLOYD BUSINESS SCHOOL, Greater Noida.”The facts and figures

presented here is correct and true to best of my knowledge and belief.

Raghvendra pratap Date-07-08-2010 Lloyd Business School

(Greater Noida U.P)


ACKNOWLEDGEMENT

It is a matter of great pleasure to thank all esteemed persons and my parents who helped me to complete my final research project successfully otherwise it would not been possible.

Acknowledgement is not only a ritual, but also an expression of indebtedness to all those who have helped in the completion process of the project. One of the most pleasant aspects in collecting the necessary and vital information and compiling it is the opportunity to thank all those who actively contributed to it.

I like to express my deepest gratitude and thanks to my Project Guide Mr. Rajnikant Verma and HOD Mr. Anurag kumar Keshri (Manager, Purchase) for the valuable guidance and constant encouragement which he extended to me throughout my research project from 08-06-2010 to 07-08-2010.

(Raghvendra pratap)


PREFACE

Summer training is an integral part of our academic curriculum. During the training a

student gets an opportunity to understand the practical aspect of theory. Training makes

understand us organization behaviour. Training makes the concept clearer and gives

modern skill which helps us to understand the new business concept. During the training

we get opportunity to share our views with a knowledgeable person who help to us solve

our problem, which come in our mind related to topic. Under training we aware that books

gives us only basic knowledge, which is theoretical part but during the training we learn

numerical part as well as theoretical part.

This report is outcome of the summer training that we have undergone at Hindalco

Industries limited for the partial fulfilment of PGDM.

The topic allotted to me by the company is “Supply Chain Management of Hindalco Ind.

Ltd. (RPD)”.

A supply chain is a network of facilities and distribution options that performs the

functions of procurement of materials, transformation of these materials into intermediate

and finished products, and the distribution of these finished product for final uses. Supply

chains exist in both service and manufacturing organizations, although the complexity of

the chain may vary greatly from industry to industry and firm to firm.


The project emphasizes on the financing mix of the company. I have tried to my best to

make a good report. However no one can claim perfection in it’s entirely. Preparation of

project requires perseverance, initiatives, proper guidance and direction. So it’s mandatory

to take the aid of various departments. Actually project summarized forms of several

activities, But I focused towards:

ERP involved In E-Procurement

Vendor Development

Vendor Rating

Annual Rate Contract

Vendor Waiver


CONTENT

1. INTRODUCTION TO ADITYA BIRLA GROUP

An Executive Summary of Hindalco

Renusagar power division Profile

Plant Details of RPD

Group Vision and Mission

Department Vision and Mission

2. PLANT LOCATION

3. POWER PLANT OVERVIEW

4. INTRODUCTION TO THE PROJECT

What is Supply Chain Management

ERP involved In E-Procurement

Vendor Development & Quality control cell

Vendor Development

Vendor Rating

Vendor management

5. OBJECTIVE OF STUDY

6. RESEARCH METHODOLOGY

7. FINDINGS AND LIMITATIONS

8. CONCLUSION & SUGGESTION

9. BIBLIOGRAPHY


Introduction to Aditya Birla Group.

CHAIRMAN’S FOREWORD“Time and again, the supremacy of the human element cannot be over emphasized. The success of failure of an organization depends on people, on human beings, on their talent, on their initiative, on their ability to lead and coordinate with others, to work as a team. It also depends on the ability of the organization, to motivate them to greater heights.

We carry forth this vision of the people.”

( KUMAR MANAGALAM BIRLA )


The Aditya Birla Group is India’s first truly multinational corporation global in vision,

rooted in Indian values, A US $24 billion corporation with a market cap of US $31.5

billion and in the league of Fortune 500, the Aditya Birla Group is anchored by an

extraordinary force of 140,000 employees, belonging to 25 different nationalities. In India,

the Group has been adjudged “The Best Employer in India and among the top 20 in Asia”

by the Hewitt-Economic Times and Wall

Street Journal Study 2009. Over 50 per cent of its revenues flow from its overseas

operations.

The group’s products and services, offer distinctive consumer solutions. Its 66 state-of-the-

art manufacturing units and sect oral service span throughout the world.

Entry of Syt. Ghanshyam Das Birla

1916 - First taste of industrial management – take over of sick cotton mill in Delhi.

1918 - First limited company – Birla Brothers Limited.

The real industrial thrust in 1919 with Birla Jute in Calcutta and 1921.

Jiyajeerao Cotton – Gwalior

Birla Jute was established in defiance of Scottish monopoly.

1923 - Purchase of Kesoram Cotton.

1926 - Orient Paper Mills.

1931-33 - Bharat Sugar, Upper Ganges Sugar, New Swadeshi Sugar, New Delhi Sugar.

By 1947 - Assets wroth Rs. 25 crores in 20 companies.

Thereafter

1954 - Durgapur Iron & Steel

1957 - Gwalior Rayon, Nagda

1962 - Hindalco commencement of production

1966 - Take over of Indian Rayon

1967 - Renusager power Division Commencement of Production


SOME RECENT MILESTONES

In May 2007, Novalis became a Hindalco subsidiary with the completion of the

acquisition process. The transaction makes Hindalco the world's largest aluminium

rolling company and one of the biggest producers of primary aluminium in Asia, as

well as being India's leading copper producer.

In May 2006, the company signed an MoU with the Government of Madhya

Pradesh for setting up a greenfield aluminium smelter and a captive power plant.

The company also entered into a joint venture with Essar Power (M.P.) Ltd. to

develop and operate coal mines at Mahan, Madhya Pradesh. The joint venture will

supply coal to the proposed aluminium smelter and power complex in Madhya

Pradesh

In May 2006, the company's copper mining subsidiary Aditya Birla Minerals

Limited (formerly Birla Mineral Resources Pty Ltd.) came out with an equity

offering and subsequent listing on the Australian Stock Exchange (ASX)

In March 2006, the company acquired an aluminium rolling mill and wire rods

facility, from Asset Reconstruction Company (India) Limited (ARCIL), belonging

to Pennar Aluminium Company Limited

In January 2006, the company concluded 4:1 rights issue of its shares on partly paid

basis. It was the largest ever rights issue in the history of corporate India and first

one to issue partly paid instruments

In September 2005, the company split its shares in ratio of 10:1 in order to enhance

liquidity and to encourage participation from retail investors

In April 2005, the company signed an MoU to establish a world class integrated

aluminium project in the state of Orissa


An Executive Summary:

ADITYA BIRLA GROUP

The Aditya Birla Group was the first in Indian to venture overseas, by starting a joint

venture in Ethiopia. Thereafter, over the last quarter century, this group has started 20 very

successful and diversified ventures spread through the Asian region. It has been declared

by Euro money that this is the only truly multinational group of India.

At present, the group has more than 50 manufacturing units, producing a diverse range of

products, financial service, trading and computer consultancy. It is also expanding its

activities in the field of telecom, oil refinery, power generation, copper smelter etc.

Globally the Aditya Birla Group is:

A metals powerhouse, among the world’s most cost-efficient aluminium

and copper producers. Hindalco-Novelis from its fold is a Fortune 500 company. It is the

largest aluminium rolling company. It is one of the three biggest producers of

primary aluminium in Asia, with the largest single location copper smelter.

No.1 in viscose staple fibre

The fourth largest producer of insulators

The fourth largest producer of carbon black

The 11th largest cement producer globally

Among the world’s top 15 BPO companies and among India’s top three

Among the best energy efficient fertilizer plants


In India:

A premier branded garments player

The second largest player in viscose filament yarn

The second largest in the chlor-alkali sector

Among the top five mobile telephony companies

A leading player in life insurance and asset management

Among the top three supermarket chains in the retail business

Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does

not come in the way of the need to keep learning afresh, to keep experimenting.

Beyond business – “Reaching Out”

A value based, caring corporate citizen the Aditya Birla Group inherently believes in the

trusteeship concept of management. A part of the group’s profits is ploughed back in to

meaningful welfare driven initiative that make a qualitative difference to the lives of

marginalized people. These activities are carried out under the aegis of the Aditya Birla

Center for community initiatives and Rural Development spearheaded by Mrs. Rajashree

Birla.

Beyond business — the Aditya Birla Group is:

Working in 3,700 villages

Reaching out to seven million people annually through the Aditya Birla Centre for

Community Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla

Focusing on: health care, education, sustainable livelihood, infrastructure and

espousing social causes


GROUP PHILOSOPHY RESTS ON FOUR PILLARS:

CUSTOMERIZE

PEOPLE- IZE

STRATEGIZE

INSTITUTIONALIZE

GROUP VALUES

OUR VALUES ARE NON NEGOTIABLE, THEY ARE NEVER TO BE JETTISONED,

FOR US OUR VALUES ARE OUR WELLSPRING. THESE ARE:

INTEGRITY

COMMITMENT

PASSION

SEAMLESSNESS

SPEED


RENUSAGAR POWER DIVISION PROFILE

Particular Details

Company Name : Hindalco Industries Ltd.

Establishment year : Incorporates in 1958 but

Commercial production began

in 1962.

Address of Registered Office : Century bhavan, 3rd floor,

Dr. Annie Besant road, worli

Mumbai -40025

Address of company : Renusagar Power Plant

P.O.-Renusagar

Dist. – Sonebhadra,

U.P.

Turn over of the company : Rs. 18.5 thousand crore &

Asset Valued at Rs. 8.5

thousand crore.

Generation : 746 MW Captive Power Plant.

Telephone No. : 05446-277161/62/63

Fax No. : 05446-277164/278596

Website : http:// www.hindalco.com

: http://www .adityabirla.com

Types of Company : Power Generation Plant

Nature of Business : Produced Electricity for own

Plant, Consumption.

ABG Business : Electricity (Also Produced

Aluminum, copper, cement,


http://WWW.adtyabirla.com/

http://www.hindalco.com/

Carbon black, textiles,

Fertilizers Chemicals, Mining

Insulator, Gas, Software, BPO,

Finance insurance, Telecom, Retail)

Contact Person : Mr. Nishant Kumar Gupta

HOD of Purchase : Mr. Anurag Kumar Keshri

Manpower statement:-

1. Technical Staffs 732

2. Commercial Staffs 243

3. Total HOD’s 28

4. Temporary manpower / Contract Workman 2000-4000

(As per requirement)

5. No. of Department 52

6. Total Department with section 60

Total strength-

Staff : 975

Workers: 1790 2765

List of Machinery:-

Installed Capacity in MW : 746

Number of Units : 10

Unit Description:-

a. Boiler : 11 Nos.

b. Turbine : 10 Nos.

Production capacity : 742 MW


Fact File about the Company (Hindalco Industries Ltd.):-

1. India’s Largest & lowest cost aluminum producer

2. Largest Producer of White cement in India

3. Fastest Growing Copper Company in India

4. World Leader in Viscose Staple Fiber

5. Leading Private sector Mutual Fund & Insurance Company.

6. Successful Forays in to Software & BPO

7. World’s Third Largest Producer of Insulator.

PLANT DETAILS OF RENUSAGAR POWER DIVISION15 Supply Chain Management

RenuSagar Power Division is a division of Hindalco Industries Ltd. for Generating and

supplying uninterrupted Power exclusively to the interact Alumina Complex at Renukoot,

UP. RenuPower is located at RenuSagar, Almost at the pithead of Singrauli Coal Mines of

Northern Coal Fields Ltd. In the vicinity of Govind Vallabh Pant Sagar (popularly known

as Rihnad Lake) in the district of Sonebhadra of the State Uttar Pradesh, India. The Total

installed capacity of plant is about 746 MW and comprises of 10 T.G. Set 11 Boilers.

RenuSagar Power Plant is one of the most efficiently operating at a plant load Factor of

around 100.8%.

As HINDALCO is increasing its aluminium productions, it has become necessary to

augment the power capacity of its thermal plant at Renusagar.M/S HINDALCO

industries limited (HIL) has an integrated aluminium complex with a manufacturing

capacity of 2,42,000 tonnes per annum of primary aluminium metal and 4,50,000tonnes

per annum of alumina at Renukoot. HINDALCO is also producing rolled and extruded

aluminium products with an annual production capacity of 80,000 and 13,700 tonnes

per annum respectively and properties redraw rods with an annual capacity of 40,000

tonnes per annum.

Renusagar power plant is ranked one among the best-operated captive power plant with

highest generation, plant load factor and utilization factor and lowest specific oil

consumption and D.M. water consumption.


Milestones in the construction of the Power plant

TG Commissioned On Boiler Commissioned On

No. of Sets Date of No. of Boiler Date of

Commissioning Commissioning

T.G. No.-1 04.10.1968 Boiler No.1 17.06.1967

T.G. No.-2 09.09.1967 Boiler No.2 21.11.1967

T.G. No.-3 02.11.1981 Boiler No.3 08.06.1982

T.G. No.-4 09.04.1983 Boiler No.4 01.02.1983

T.G. No.-5 31.03.1989 Boiler No.5 18.09.1981

T.G. No.-6 23.03.1997 Boiler No.6 06.05.1991

T.G. No.-7 27.03.1998 Boiler No.7 28.03.1997

T.G. No.-8 31.03.1998 Boiler No.8 27.03.1998

T.G. No.-9 29.11.2002 Boiler No.9 31.03.1998

T.G. No.-10 31.03.2003 Boiler No.10 31.03.2003

Boiler No. 11 31.03.2003

Unique Features of Renusagar


First captive power plant for Aluminium Industries established and commissioned

way back in 1967.

Power plant established at the pithead of Coal Mines of Northern Coal Fields

Limited enabling coal transportation by ropeway.

Renusagar Power Plant consistently opening at a Plant Load Factor of above 90%

for last three decades and is comparable to the best work – wide.

First Training Centre of the country recognized by Central Electricity Authority,

Govt. of India. Technical Training and Management Development Centre

(TTMDC) has been organizing structured training programs for introduction and

orientation level training for new entrants, skill development programs for all levels,

workers general development programs, TPM and WCM training programs and

managerial effectiveness programs for staff.

PERFORMANCEAs the aluminum smelter need continuously and steadily power supply, high plant

availability and operation at rated capacity, is the permanent importance for Renusagar

power plant availability factor (PAF) and plant Load Factor (PLF) of around 100.8% and

more consistently for over two decades (against the national average of 55%) right from its

inception. 11 It has dispelled the misconception that such a high PAF and PLF cannot be

achieved by the thermal power plant using a low-grade coal.

CONTRIBUTION IN THE FIELD OF POWER

SECTOR


It is the credit of RENUPOWER that despite the fact it uses high ash (35%) and abrasive

coal, high PAF and high PLF has been achieved by it. Consistently modification in the ID

Fans, dust collectors and indigenous methodology of prolonging the life of pressure port

tubes was a trend-setter, its result oriented approach to bring down tube leakage to less

than per bottle per annum, has worldwide acclaim. Renusagar is an acknowledged leader to

the thermal power plant. It adopted modern touch techniques from initial stages itself and

was able to limit its planned overhaul duration by restrain to PERT/CPM.

ENERGY CONSERVATION19 Supply Chain Management

Renusagar is conscious of energy conservation has made concentrated effort to reduce and

limits its auxiliary power and oil consumption per unit generated has been maintained at

less than 0.8 ml per Kwh. Against the national average about 11 ml per Kwh for its size of

units.

Training and Development activities at Renusagar

Are grouped into three categories:

Functional/Technical Programmes

Managerial/Behavioural Programmes

Supporting Programmers

Catering to the need of organizational initiatives like ISO Certification (ISO 9001, ISO

14001, and OHSAS 18001), QC, WCM Implementation, ERP etc.

While Induction & Orientation Level Training (IOLT), Technical Skill Development

Programmes, Management and Supervisory Development Programmers, Mock Drills and

Supportive Programmers on ISO-14001 and ISO-9001 and OHSAS 18001 are aimed at

knowledge and skill development. A number of initiatives like departmental Learning

System and Coaching (LSC), Mentoring, Quality Circle, Inter Unit Visits, One Point

Lessons, KAIZENS contributes to creating an open atmosphere and spread the implicit &

explicit knowledge concentrated in different pockets of the organization


.ASH DISPOSAL AREA

Renusagar Power Division is allotted an area measuring 61.2 Hectares (151.25 acres) for

construction of new Ash pond by the Forest Department under Govt. Grant Act after due

approval from MOEF on 10 years lease basis. The State Environment Department while

recommending the case for transfer the land to Renusagar has imposed a condition to

develop a Green Belt of 100 meters on Eastern Side and 50 meters on Southern Side of the

pond which was duly adhered.

The above land is in the form of a valley and uneven hilly terrain. The volume available for

ash storage after construction of the embankment is about 107 Lacs M3. The quantity of

ash produced from all the ten units is around 17.6 Lacs M3 per year which is average of

36% in the coal consumed in a year.


Fly ASH utilisation Plant

As we know RPD is producing around 17.6 Lacs M3 Ash per year. And it is very well

utilised by Supplying it free to not only Ultratech Cement but also to other Private Cement

factories situated around the present location. As we saw how well planned and well

designed RPD is dumping ash. It has another wild card which helped hindalco to bag ISO-

14000,is Fly ASH Utilisation Plant which Produces nearly 40 different Product from

Bricks to pots,Road blocks to Pavement tiles.

Composition of Mixture used for bricks and Pots

Ash 128kg

Gypsum 16kg

Lime 26kg

Sand 30kg

200kg


GROUP VISION AND MISSION


RENUSAGAR VISSION

“To be one of the best operated and maintained Captive Power Plant, with enviable Plant

Load Factor, to supply uninterrupted power to Hindalco Renukoot at lowest cost.”

RENUSAGAR MISSION


“To pursue creation of value at all levels of plant Operations for our customers,

Shareholders, Employees and Society at large.”

TTMDC VISION

“To create a learning organization to match the technological changes and face future challenges.”


TTMDC MISSION“To develop TTMDC as a resource center and centre of excellence in power sector Development.”

HINDALCO VISSION“To be a premium metals major, global in size and reach, with a passion for excellence.”

HINDALCO MISSION “To relentlessly pursue the creation of superior shareholder value by exceeding customer expectations profitably, unleashing employee potential and being a responsible corporate citizen adhering to our values.”

HINDALCO SAFETY POLICYCommitment to achieve heath of safety excellence by providing health and safety wok environment.

Values we Value: In the words of our chairman Mr. Kumar Mangalam Birla: “Great and lasting businesses are never built on quick sands of opportunism. For us, at The Aditya Birla Group, if by living our

values means, perhaps growing at a pace slower than we would otherwise have liked, so be it. For us, the key to Enduring leadership lies


in knowing what we stand for and in living by that. In essence, our values provide us with a moral

DEPARTMENTAL VISION AND MISSION

The department shall strive to procure from right source of desired quality at right time at optimal cost in right quantity.

The procurement system encompasses all the material procured by the purchase department.


PLANT LOCATION


POWER PLANT OVERVIEW

Make

Sr.No. Unit Capacity(MW) Turbo

Generator

Boiler

1. TG# 1 67.5 GE(USA) CE(USA)

2. TG# 2 67.5 GE(USA) CE(USA)

3. TG# 3 77 SIEMENS/ BHEL

(Consortium) CE(USA)

4. TG# 4 77 SIEMENS/ BHEL

(Consortium) CE(USA)

5. TG# 5 68 BERGMANN

BORSIG

BHEL

6. TG# 6 74 ABB(GERMANY) BHEL

7. TG# 7 74 ABB(GERMANY) BHEL

8. TG# 8 77 GE (USA) BHEL

9. TG# 9 80 SIEMENS

(GERMANY)

BHEL

10. TG# 10 80 SIEMENS

(GERMANY)

BHEL


INTRODUCTION TO THE PROJECT

What is Supply Chain Management?

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

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

end customers (Harland, 1996). Supply Chain Management spans all movement and

storage of raw materials, work-in-process inventory, and finished goods from point of

origin to point of consumption (supply chain).

Another definition is provided by the APICS Dictionary when it defines SCM as the

"design, planning, execution, control, and monitoring of supply chain activities with the

objective of creating net value, building a competitive infrastructure, leveraging worldwide

logistics, synchronizing supply with demand, and measuring performance globally."

Supply chain management is a cross-function approach including managing the movement

of raw materials into an organization, certain aspects of the internal processing of materials

into finished goods, and the movement of finished goods out of the organization and

toward the end-consumer. As organizations strive to focus on core competencies and

becoming more flexible, they reduce their ownership of raw materials sources and

distribution channels. These functions are increasingly being outsourced to other entities

that can perform the activities better or more cost effectively. The effect is to increase the

number of organizations involved in satisfying customer demand, while reducing

management control of daily logistics operations. Less control and more supply chain

partners led to the creation of supply chain management concepts. The purpose of supply

chain management is to improve trust and collaboration among supply chain partners, thus

improving inventory visibility and the velocity of inventory movement.


PRELIMINARY PURCHASE REQUISITION

Experience has proved that no inventory control mechanism can be effective and

fruitful unless material procurement is controlled and regulated at the very

procurement plan stage itself.

At Renusagar, 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 also 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 it’s equivalent with other departments and gets same spares for use. He also

explores possibility of using alternative material which may be available in stock or

purchase value of which would be comparatively lower.


MANAGEMENT INFORMATION SYSTEM

Inventory control cell prepares following monthly MIS report:

Comparative stock statement under- critical, non-critical and insurance for various

departments and identifies increase/reduction vis-à-vis previous month as also ideal.

Statement on specific items with details, which contributed to increase in the

inventory in the particular month along with the consumption plan.

The above report is discussed amongst the HOD’S during MPR (monthly

performance review meeting). These are discussed with the president during

monthly financial review meeting.

Inventory control cell also prepare following quarterly report

XYZ ANALYSIS

INSURANCE STOCK REVIEW

AGE ANALYSIS OF SPARES

PERIODIC (ANNUAL) REVIEW FOR REGULAR ITEMS

In case of high regularly used data is collected abut their past consumption and unit/

boiler/ department-wise requirement for the next financial year, as projected by the user

department. The entire requirement for is consolidated and after deliberation, the

composite quantity with phased deliveries is communicated to the purchase department for

placement of annual/bi-annual orders. Items covered under the above exercise include:

Boiler tubes.

Grinding rolls

Bearings

Ariel ropeway spares etc.


Based on the ABC analysis, consumable regular items are reviewed and their

ROL/ROQ are revised annually. In certain cases if there is a departure from the

norms/practices, ROL/ROQ are reviewed and revised midterm ROL/ROQ formulated for

auto-identifying by stores department, cover the following major consumable groups:

Battery, types, tubes etc.

Oil & lubricants

Chemical

Steel

Welding electrodes & accessories etc.

For removing abnormalities and to introduce more effective system, even for low

value regular spares and consumables, ROL/ROQ are being determined in place of

the prevalent maxima/ minima system.


FUNCTIONAL FEATURE OF PURCHASE

DEPARTMENT

AT RENUSAGAR

The method of purchase can be subdivided into four methods:

Comparative bids

Annual rate contract

Proprietary items

Repeat orders

The purchase department work involves:

Making purchases

Vendor development & rating

Product development

Market development

STRENGTH OF PRESENT SYSTEM

At RPD various project are being carried out to control the inventory as discussed

earlier & the success story of these analysis are quite satisfactory such as:

Last three years data of non/slow moving items shows declining trend from 161.62

(in lacs) in 2006-2007 to 111.45 in 2007-2008 to 94.32 in 2008 -2009.

In order to keep the stores items as per ROL/ROQ and avoiding stock out position.

Purchase requisition is simplified in terms of no. of destination traveled from

originator to buyers.


Purchase requisition is being sent online, hence tremendous time saving

achievement.

PR status is updated on-line.

PR internal lead-time reduced through ERP system.

Assessment committee and disposal committee is formed by RPD management on

October 2003. for disposal of obsolete items

By the continuous monitoring efforts, shop floor inventory reduced from Rs. 250

lacs to 86 Lacs.

Some shortcut use in purchase department ICC- Inventory control chainRFQ- Request for quotationPOR –purchase operationARC- average rate contractANC- average maintains contractLC- legislative concernIPC- Interested part concernITC- International tariff codeBO- business opportunityOEMS-original equipment manufacturesARC- annual rate contractMOM- minutes’ of meetingRC-rate contract PR-purchase requisitionPC- product contract


PROCUREMENT PROCESS USING ERPE R P

ERP stands for enterprise resource planning. It is a software solution that helps companies

to gain competitive edge by integrating all business process and optimizing the resource

available.

The traditional application system treats each transaction separately. It is build around

strong boundaries of specific functions that they are meant to cater to. ERP stops treating

these transactions separately as stand alone activities and consider them to be part of inter

linked processes that make up the business. An ERP system stores data generated as a

result of diverse transactions that are confined to any departmental or functional

boundaries, but are rather integrated to be used by multiple users, for multiple purposes

and at multiple places.

ERP should not be mistaken as a magic tool that can transform anything overnight. Its

successful implementation is a long journey towards enterprise excellence.

To support such a diverse system, companies need sophisticated information technology

infrastructure and other important enabling tools like workflow, Workgroup, Groupware’

Internet, Intranet, Data ware housing etc. These entire components together from the ERP

backbone.


ERP FOR HINDALCO

Today business is become an ever-changing phenomenon due to Large-scale production

facilities, new product development, technology up gradation, sales strategy, capacity

utilization, capacity expansion changing business scenarios, mergers & acquisitions and

opening of economies. These increasing business complexities warrant fast response,

which in turn requires accurate data. The organization needs to be proactive and plan ahead

of time. To do business optimization, HINDALCO on hand requires tools such as extended

ERP including and SCM applications, and on the other hand, needs to change itself to a

learning organization focusing on its people, skills, core competency culture and practices.

IF DO NOT GO FOR ERP


proved customer service by way of visibility of orders and order status, efficient

distribution system and reduced operational expenses are some of the important business

benefits which is derived from ERP.

In addition ERP initiative provides us an opportunity to re-look at existing processes,

remove redundancy by way of systemization and benchmarking, standardization of process

across units for seamless integration and provide foundation for e-commerce. Ever since

the advent of e-commerce, trade boundaries are becoming a history. Today, a virtual store

is a reality. Conducting on Internet business is no longer in choice.

Not that is happening only in developed countries, but also in India. In India total value of

Internet trade in the last year was Rs. 600 Cr. By the year 2008 it is expected to cross Rs.

50,000 Cr. As per Mckinsey-Nasscom report to be successful e-commerce enabled

enterprise, having an Internet site is just not sufficient. We must have our business

processes and all the back-end mechanism like production planning, order status & its

visibility, predictable delivery date and customer service in place. To sell on Internet we

must know details of our stocks lying at any location


SYSTEM FOR PR PROCESSING THROUGH E.R.P.

Business Requirement:-

1. All the Purchase Requisitions will be routed through Inventory Control Cell (As defined

in the System)

2. The items and values within the sanctioning authority of Sr. Executive President (Refer

Order No. Sr.EP/00/81 dt. 29.08.2003) will be processed in sequential order as under:-

2.1.ICC will submit hard copy of PR to Secretary to Sr. Executive President, who will

obtain approval from Sr. Executive President.

2.2.Shri Kurien Thomas will retain and maintain a file of such approved PRs and will

send a copy to ICC or communicate ICC about the status.

2.3.Routing PR will then be done by ICC.

Note: PR amount above 20 Lacs and items i.e. imported, furnitures, Computers,

Telephones, Decorative electrical goods and House hold items/ House hold electrical

goods and the like are to be got approved by Sr. Executive President.

3. Procurement of IT related items will be done as per Sr. Executive Presidents Office

Order Nos. EP/010/105 dated 21.10.2000, EP/00/44 dated 6.4.2001, SrEP/00/81 dated

29.8.2003 and Director (Whole Time) circular dated 28.12.2001. Hence PR for such

items will be released only from IT department for which all requirements will be sent

to IT department.


4. The Central Stores will release PR for the ROL item. Apart from revised ROL item

(under ERP) following consumable are also added in ROL items:-

Ribbon Cassettes

Toner Cartridges

Ink Cartridges

Print Heads

Floppy Diskettes

Zip Disks

Screen Anti Radiation

B. Process Requirement :-5. All the Block sanction & special sanction items has to be processed in Oracle with

appropriate Task Codes as mentioned below:-

5.1.Block Sanction

Department has to obtain Task Code from Accounts Department

The entire PR will be raised in G19 organization in Oracle only.

5.2.Special Sanction

Task Code has been fixed which will be 9500 for all the items & PRs.

All the PR will be raised in G02, G05, G08, G11, G14 & G17 organization for

units 1-5, 6, 7, 8,9 & 10 respectively in Oracle only.

Note: HOD will contact Technical Cell for procuring the item under Block or

Specia1Sanction..

6. Before raising PRs end users to ensure correctness in:-

Item Description

Unit Cost, Criticality, Legacy code

Organization

In case any discrepancy the same is to be got corrected from ICC before processing

PRs.


7. End users to fill in the information viz. Locator, Cost Code & Task Code (if any) at

Line level i.e. item wise while raising PRs.

8. The following to be strictly taken care while the PR is in review process:-

8.1.In case ICC has rejected all the items of the PR with necessary justifications, end

users should not reuse the PR.

8.2.If quantity of any PR line has been suggested to be reduced to zero, then the line has

to be deleted and may not be reused for any new item.

8.3.If PR for any additional Item(s) are required to be raised it may be done with the

help of Fresh PR. In no case it should be added in an existing PR sent to Originator

by ICC for review.

9. In order to keep a track of deptt. wise Survey/ Shutdown items Location and cost code

combination as suggested in the enclosed sheet to be used. In case, correct combination

is not used the PR will be rejected/ sent back to originator by ICC.

10.Alteration of PR after the approval from ICC has to be strictly avoided and end users

are requested not to alter any PR lines/Qty after being approved by ICC. Under extreme

circumstances, if Supervisor feels need of revision over the received PR by ICC, it will

be mandatory on part of Supervisor to re-route the PR through Originator and ICC.

11.End users are further requested not to delete or overwrite the ICC comments in the

Long Description. If comments have to be added for their necessary reference, it may

be added in the end without changing the existing comments.

Cooperation of all concerned is solicited to strengthen the Inventory control activity.

VENDOR DEVELOPMENT & QUALITY CONTROL

CELL


VDQC is a part of purchase dept. Consisting of members from Purchase dept. They play a

crucial role in enrollment of new Vendor in the Vendor Data Base.

Process of Vendor Enlistment through VDQC

a. New application for registration

b. Selected applications are reviewed in Monthly meeting of VDQC.

c. Selected applications are forwarded to user or Originator Dept for review or

feedback

d. Vendor Rating according to Parameter is done.

e. If Selected,then presented in meeting for enlistment.

f. Vendor Assesment form(VAF) is issued to vendors along with purchase order incase

of trail Purchase Order.

g. Review VAF form in VDQC monthly meeting

h. If approved then Registration letter is issued by Convener.

i. Enlist name in Approved Vendor list (material wise) with Status’T’ in case of

vendor selected through VDQC.

Note: Rejected forms are kept in database only if they carry potential and are

rejected beacuse of high number of Vendors in the list according to the material.

VENDOR DEVELOPMENT


Vendor development has been done and there rating is done on the basis of quality, price

service & lead-time. For new vendors the preliminary survey and revaluation is done in the

quietest possible time.Types of Vendor Development:

a. Type I: By Facilitating & Devloping product technology of vendors premises to

supply items of critical nature available from limited sources only.

b. Type II: By Market Intellegence

c. Type III: By inter unit comparision of common Items.

d. Type IV: By tapping ancillary unit of OEMS.

e. Type V: By information recieved from newspaper,product catalogue or directly

from Vendors.

f. Type VI: By Discussion with originator (user) regarding application of Items.

g. Type VII: By discusing with OEMS to top Authorized Sources.

CONCIDERED PRAMETER

Sl. Term Parameter Score Weight age


Catagory OEMS 10

Other Manufacturer 8

Authorized Dealer 6

Sub-Contractor 4

Trader 2 0.20

Location Kolkata 10

A-Class City(Metro’s) 8

B-Class Cities 6

C-Class Cities (Town) 4

Others 2 0.20

Payment Credit (30 days+) 10

Credit (Upto 30 Days) 8

Part Advance 6

Doc through Bank 4

Proforma 2 0.20

Turnover 500 Cr + 10

1-500 cr 8

50lac-1cr 6

10-50Lacs 4

Less than 10 Lacs 2 0.20

Certification ISO 10

ISI 8

Award MFG/Excellence 6

SSI/NSI & Ancillary 4

Others 2 0.20

1.00

SYSTEM OF VENDOR WAIVER

a. Vendor Rating at Vendor Level45 Supply Chain Management

b. Vendor rating at Vendor Site

c. Duration of Vendor Policy

d. Overall Vendor Rating

e. Effect of short Supply of Shipment Quality

f. Vendor rating according to delivery

Rating Weightage

i. Delay upto 15 days 35 35

ii. Delay from 16-30 Days 30 30

iii. Delay from 31-60 25 25

iv. Delay above 61 days 10 10

Rating consist of two major parts:\

A. Quality - 65%

B. Delivery - 35%

Rating according to the Overall Vendor rating:

85-100 - Excellent

65-84 - Good

40-64 - Satisfactory

Below 40 - Poor

Post-Rating action:All active Vendorsto be Informed that there performance of last

Financial year as per Following:

A Grade: Appreciation letter with Congratulation

B Grade: Appreciation Letter to meet expectations with scope of improvement.46 Supply Chain Management

C Grade: Performance is Adequate but need improvement

D Grade: Warning Letter.

Some Facts About Vendor Rating:

Vendor rating Done on Annual Basis.

Vendor rating Done on The basis of Quality (65%) and Delivery time (35%)

Rating Communicated to all vendors with Encouragement for further improvement.

Companies policies,Certifications etc are shared with Vendors.

We monitor Vendor Rating on Half Yearly Basis.

Vendors Satisfaction Survey: Vendor Satisfaction Survey is carried out Annualy.

System established since 2001.

Detail questionaire sent to Vendor giving their feedback

Feedback compiled & action plan prepared and Implemented.

Parameter for Vendor Satisfaction Survey:i. Corporate Image

ii. Proffesional Approach

iii. Communication

iv. Managerial Competency

v. Well defined System

vi. Planning & schedulling

vii. Commitment

VENDOR MANAGEMENT

We can understand to the vendor management by the following

1- Quantity of vendor


2- Selection 3- Performance

a-vendor ratingb-vendor visit

4- Vendor satisfaction 5- Vendor development

VENDOR QUALITY Punctuality in delivery Behaviour of vendor Vendor supply system Goods quantity Brand of goods Marks of goods

SELECTION OF VENDOR Enquiry of vendor Enquiry of vendors goods and brand Vendor feedback basis on the other companies Selection basis on supply capability ,place ,goods quality, registration

no. etc.

PERFORMANCE OF VENDOR Vendor rating See vendor goods quality Procedure for vendor rating system

VENOR VISITING

I. Vendors, who are supplying A category items.II. Vendors ,who are supplying critical items of category A and B

III. Original equipment manufactures, who are supplying spare shall not be visited.

IV. Vendor situated in a particulars area shall be covered at a time.

VENDOR STISFACTION Material procured from vendors available in approved suppler. The purchase department elect vendors who operate stable processes at

their end and capable to supply material. After come vendors satisfaction by following process


I. Search of vendorsII. Quotation

III. Purchase orderIV. Goods receivedV. Payment

VI. Vendors ratingVII. Vendors satisfaction

VENDOR DEVELOPMENTVendor development do on following basis

Category Location


Payment Tern over Certification quality

CAUSES OF HIGH INVENTORY AT RENUSAGAR

a) Variety of equipments

b) Project surplus

c) High lead time/sources of supply are to for flung

d) Modification/ improvement in design system

e) Obsolescence of machinery

f) Rate inflections (increased)

g) No proper policy to declare insurance spares (high)

h) Long duration of TG survey

i) Propriety spare

OBJECTIVE OF THE PROJECT

TO GET PRACTICAL INDUSTRIAL EXPOSURE.


EXPLAIN SUPPLY CHAIN MANAGEMENT

STATE THE IMPORTANCE OF PURCHASING AND MATERIAL

MANAGEMENT.

THE TASK IS TO ANALYZE THE SUPPLY CHAIN MANAGEMENT SYSTEM

OF HINDALCO INDUSTRIES LTD. & TRACE OUT THE DRAWBACK OF

THE CURRENT SYSTEM & GENERATING AN IDEA TO TOUCH HIGHER

LEVEL OF COMPETENCY IN CONTROLLING THE PROCUREMENT

PROCESS.

TO ANALYZE THE CURRENT ERP SYSTEM IN MANAGING THE

PROCUREMENT.

TO CUT SHORT THE PROCUREMENT PROCESS BY INTEGRATING MORE

OF E-PROCUREMENT.

TO ANALYZE THE DATA OF ANNUAL RATE CONTRACT TO STUDY THE

PRESENT TREND IN ACCORDANCE TO PREVIOUS DATA AT RPD.

TO ANALYZE THE INDUSTRIAL SUFFICIENCY IN MANAGING THE

INVENTORY.

TO ANALYZE THE MATERIAL REQUIREMENT PLANNING PROCEDURE.

TO STUDY THE PREVIOUS 4 FINANCIAL YEARS DATA TO FIND OUT

CONSISTENT AND REGULAR VENDORS,WHO CAN ENJOY VENDOR

WAIVER ACCORDINGLY

TO ANALYZE THE CURRENT PROCEDURE OF VENDOR DEVELOPMENT

& RATING.

TO STUDY AND PLAN A NEW AND MORE EFFECTIVE SYSTEM OF

VENDOR WAIVER.

RESEARCH METHODOLOGY:


Descriptive and conclusive types of research is conducted. On the basis of the empasis laid

on the analysis of the information and the data the type of research used in descriptive

research. This kind of research is needed to provide a theoretical framework and

background on which, total knowledge and operational practices can be used and judged.

The major purpose of descriptive research is description of the state of affairs, as it exits at

present.

RESEARCH DESIGNThe study is carried out on the basis of information and data collected from Purchase and

Central Stores of Hindalco Ind. Ltd(RPD).

The following procedure is followed

I. The research includes interpretation of Procurement process at Hindalco.

II. Understanding the Supply Chain/Purchase policies of Hindalco.

III. Determining the Purchase Cycle.

IV. Analyzing the Vendor rating and Vendor Waiver.

V. Evaluation and conclusion.

DATA COLECTION METHOD


The data is collected through both primary and secondary methods.

PRIMARY METHODInformation gathered from Annual reports and discussions with the employees of various

departments and my project guide/mentor.

SECONDARY METHODSSecondary data is being collected through following methods;

I. Hindalco’s JIT planner and Supply Chain guide.

II. Annual report and manuals available in the training centre.

III. Information from USER software used by hindalco.

IV. Company annual report and other publication.

V. Other training documents available at the training centre.

VI. Company Website

DATA ANALYSISData is analyzed on the basis of available information.

FINDINGS AND LIMITATIONS

PROCUREMENT PROCESS53 Supply Chain Management

SHORTENING OF REGISTRATION PROCESS IN VDQC

As we have gone through the long and very time taking period of New registration under

VDQC cell of purchase dept. We need to find out some ways out of the schedule in the

dept and sort this problem.

Changes needed to shorten the registration process:

Meetings must be organized regularly/bi-monthly

To cut short the time lag we must involve originator from the respective dept which

will decrease the feedback time.

VDQC must specifically focus on Critical Items as they are in Scarce.

Analysis of vendors Comments must be particular, as they can help in placing the

vendor.

IMPROVEMENT IN E-PROCUREMENT

In this Purchase Dept,i came to know the working of effective Supply Chain Management.

I learnt all about Procurement from the user to the Vendor. In this long cycle Hindalco


effectively Implemented MIS using ORACLE1Ii. Requisition is Generated on MAXIMO

by the user Dept/Originator. Then requisition is forwarded to the Inventory Control Cell.

From ICC the requistion is automatically transfered Oracle to the Particular Buyer. Then

Purchase Requisition is generated and forwarded to the Enlisted Vendors with the bidding

date or response. Offer sent by vendors are given to buyer on Due date by the system or

HOD.Then buyer sent it to Originator for approval.After Offer is returned the Bidd is

prepared, and this process of Bidding actually takes around 10 days which make the whole

cycle minimum a month long. Then the Purchase Order(PO) is Aproved and Signed by the

Appropriate Authority.

But as we are using MIS to control the Procurement we can link out System with the

official website www.gyanudaya.com we can officially create a safe space in which we can

Open A Tendor and a Mail /Msg will be forwrded to the Vendors/Suppliers of particular

Item code.

There will be specific Page where Each specific vendor can log in and quote there bid for

the further process. And after last date of of Bidding A comparative bid will be prepared

and forwarded to all Originators and Buyer’s respectively.

After bidding Process each buyer can go to a negotiation page where open negotiation will

take place.Which will lead to Price leadership. And we will get the Cheapest(L1), but as

per Company’s Norms we must ensure the qyuality to be(T1).

So if we make this process more Buyer and vendor friendly then we can save valuable 4-

5days in the procurement cycle.

VENDOR RATING


http://www.gyanudaya.com/

Vendor Rating is Done through a system based on two parameter’s,those are QUALITY &

DELIVERY PERFORMANCE.

Salient features of the system:

Weighted Average of Quality Suppliers,Measured through number of Rejections and

technical Verification by Originator.

Weighted Average of deliveries,Is measured through considering the delivering

period.

In overall rating 65% weight has been assigned to Quality and 35% to delivery

performance.

After Detailed study of Annual Vendor Rating we Found as follows:

Overall Score Grade Percentage of Vendor

85%& Above A 79.7%

65% - 84% B 13.6%

40% - 64% C 5.7%

Below 40% D 1.0%

VENDOR WAIVER56 Supply Chain Management

In our Study of Vendor Waiver we made out many important points,and we know the

importance of Vendor waiver as it will help in shortening the procurement cycle on a

broader sense. As it takes a lot of time in technical scrutnisation when the consignment is

recieved at the Stores. And if we find out a way out in which we give a proper waiver to

the Vendors who fall in our criterion.

But as we have studied the Self-Certifying Vendors. It is a list of vendors who follow some

set of norms. But if we need to implement it in a broader sense then we have to keep a

account of some more points which may act as deciders.\

NEW CRITERION OF VENDOR WAIVER

1. Vendor Must follow Self-Certifying criterion’s.

2. Vendor Overall as well as Quality Grade must be valued.

3. Vendors Consistency must be checked for Last four years and New Vendors must

only waived after four years of continuous business.

4. Cost must be always Preferred in the Procedure of Vendor Waiver.

5. Items like Critical, Import and Special category must not be applicable in the Vendor

Waiver.

6. Local dealers in a Reachable Radius must be Waived after Prolonged Service with

Consistency.

LIMITATION’s


While we talk about limitations, we are talking about our real time problems which

can be faced in implementation of this all distinguished new Formulated idea’s.

One of the main limitation was lack of time as i have undergone only 8 weeks of

training.

Lack of interpersonal communication with Vendors.

In the Improvement of Procurement Process It is not easy to schedule Meeting’s Bi-Monthly.

As the Meeting’s are needed to be arranged in accordance to the Availability

of User dept/Originator.

It is needed to study the whole Documents attached and to verify the

technicality of the item.So this Process takes time and cannot be completed in

a day.

Some Critical Items are very Crucial for the Power Plants they are always

needed for production and so the Vendors are fixed and mostly they are

OEMS.

In the Improvement of E-Procurement It is not easy to develop a safe space for vendor’s as well as Buyers.

Providing large number of ID and Password to vendors is not possible.

Linking huge number of data from Oracle to the Website is not very easy.

It need’s the Vendor must be Computer friendly and can handle it easily.

Proper Database must be maintained and upgraded more frequently which is

tougher.

In the Vendor Rating As the Rating is done taking into accounts many things so it makes it

tougher.

It need’s to be upgraded whenever any kind of changes are found in the

Vendor Database.

Each information is needed to be conveyed to User as well as stores for

Proper grading.


In the Vendor Waiver Items like Critical, Import and Special category may not be applicable in the

Vendor Waiver.

It is really dangerous to Buy any product and receive it without Securitization.

It cannot be provided for many items which are really critical in nature and

Number of such item’s is really very high.

Vendor Waiver if not applied wisely it will become a system where local or

daily or highly consumables are bought without any technical test.


CONCLUSION & SUGGESTION

The process of planning, implementing and controlling efficient cost effective flow and

storage of goods, services and related information from point of origin to point of

consumption for the purpose of conforming to fulfillment of requirements. The Renusagar

Power Plant offers India a change to leap frog from above depression to area of global

competitiveness and prosperity and regain India’s Commercial value. In light of these fact

that the stores of Renusagar is Maintain nearly 35,000 items. And the inventory is reduced

by many folds by applying new policies like TPM,WCM,JIT,KAIZEN and many more

management principles.

So I suggest after a prolonged study all the above plans can be implemented if the

limitations are sorted out. If these plans are put in action then the purchase Process will

become short and more cost-effective. Training Vendors and Buyer’s may make the

Bidding system easy and accessible to each one involved in the Process and will result in

more cost effective Purchases.

So we can say Hindalco ind. Ltd. Renupower division is good place for learning of

efficiency and effectives.

BIBLIOGRAPHY60 Supply Chain Management

Book’s Reffered:

Foundation of Supply Chain Management – Prof. Richardson

Marketing research – Alvin C Burns & Ronald F Bush

Principles of Marketing – Philip Kotler & Armstrong

Purchasing & Supply Management - Donald. W.Dobler & David N.Burt

Website’s Referred

www.adityabirla.com

www.hindalco.com

www.google.com

www.renugyansagar.com


http://www.renugyansagar.com/

http://www.google.com/

http://www.hindalco.com/

http://www.adityabirla.com/

raghvendra singh -scm prject at renupower division

Documents

topic supply chain management

chain management of

chain management erp

supply chains

project work

summer training report

project guide

preparation of project