tata -invoice.doc

CHAPTER NO. 1

EXECUTIVE SUMMARY

Executive Summary

Tata Motors Limited is India’s largest automobile company. It is the leader by

far in commercial vehicles in each segment, and the second largest in the passenger

vehicles market with winning products in the compact, midsize car, and utility vehicle

segment. The company is the world’s fifth largest medium and heavy commercial vehicle

manufacturer.

Invoice Verification Process is one of the important processes in Shares Services.

So we have to study and analyze all the risk involved in the process. The main aim of any

invoice-verification process is to ensure that vendors are paid the correct amount at the

right time ( not too late but also not too early) The process should have a high incidence

of First-time matching, to ensure that as little time as possible is spent trying to manually

match invoices that appear to be incorrect.

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CHAPTER NO. 2

OBJECTIVE OF THE

PROJECT

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OBJECTIVE OF PROJECT

Primary Objective to “IMPROVEMENT IN INVOICE VERIFICATION

PROCESS”.

Secondary objective are as follows :-

To Study the Risk Control Matrix & Procurement to Payment Process.

Increase in percentage of automatic invoice verification process and to

reduced manual intervention.

To Understand & study of Invoice verification process.

Cost Control & Cost Reduction.

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CHAPTER NO. 3

THEORETICAL BACKGROUND

THEORETICAL BACKGROUND

WHAT IS INVOICE VERIFICATION ?

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Invoice verification allows you to capture the details of vendor invoices. If the

details of an invoice match the expected details that are specified by any related purchase

order and goods receipts, the invoice can be automatically made available for payment.

Unmatched invoices are excluded from the payment run and need to be investigated and

released before payments can be made. If this process is overly complex or conducted

inefficiently, payments made to vendors will be late. Possible consequences of this

include a loss of cash discounts and even losing the vendor account and having purchase

orders rejected by the vendor. It is essential, therefore, to understand the basic process of

invoice verification before you design or modify it. The standard process provided by

SAP is very likely suitable for most businesses, though this may not appear to be the case

at first. The standard process has many configuration options and is normally more than.

Flexible enough to cater to the needs of an invoice-verification department. You are most

likely to succeed, if you adopt the standard SAP process, rather than trying to alter the

SAP process to your current functionality. Most problems are caused by a

misunderstanding of the standard SAP Invoice Verification process, and this leads to a

design that is a compromise. So we will start with a high level view of the process.

High-Level Process :-

The main aim of any invoice-verification process is to ensure that

vendors are paid the correct amount at the right time ( not too late but also not too early)

The process should have a high incidence of First-time matching, to ensure that as little

time as possible is spent trying to manually match invoices that appear to be incorrect. It

is important to include as few steps as possible in the process, considering that the process

of handling payments does not in itself add value to the company or to the vendor.

The main steps included in the process are as follows:-

The capture of the vendor’s invoice details

The matching of those details to the details that we believe to be correct

The investigation of any mismatches

The release for payment of matched invoices

The accounting entries involved ( including taxes and delivery costs )

The details recorded for audit purposes

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It is important to keep these steps to a minimum and the SAP processes do achieve this.

Additional steps are counter- productive and add little or no additional value. Capture and

matching occur in one transaction (MIRO). This also includes the automatic release for

payment if the match is successful. The handling of mismatched invoices occurs in

transaction MRBR, which also includes the release for payment if the invoice is

successfully matched. The accounting entries are updated when the values are posted (in

both transactions), as are the records of events for audit or inquiry purposes. Effectively

these two transactions are the main steps involved. The only other transactions needed to

manage the process are inquiry or cancellation transactions. If you have built your process

to include more steps than this, you may be adding extra Complexity for little or no extra

value.

INTRODUCTION - INVOICE VERIFICATION PROCESS

Invoice Verification refers to matching the invoice to details of Purchase Order

and goods receipt before a payment on that invoice can occur. Invoices which get

matched get paid through the payment run and unmatched invoices are parked for

investigation. SAP invoice verification process in SAP R3 step by step:

1. The first step is entering vendor invoice details received into SAP. This

process is done using the transaction code "MIRO" Enter Incoming Invoice in

SAP. All invoice details such as basic data, payment details, tax details etc

can be entered using this t-code.

2. The next step involves matching the details of invoices with PO information

and goods receipt information. This step is called matching in the process

invoice verification and is done using t-code MIRO. This step can have two

results. In case, the invoices match, same are automatically released for

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payment in SAP through a scheduled payment run. In case, invoices

verification fails and there is a mis-match, then further investigation is

required.

3. In case invoices do not match with PO and GR details, same can be further

investigated and cleared off using the t-code MRBR. MRBR is the t-code for

releasing blocked invoices for payment once they have been matched. Such

blocked invoices can either be released manually or the same can be released

automatically by activating automatic release flag.

4. Finally, as a last step, the accounting entries for invoice verification are

updated at the time when the transactions MIRO and MRBR are posted to

SAP.

In SAP the invoice has been distinguished as follows :-

1. Invoice received with reference to Purchase Order.

2. Invoice received with reference to goods receipt all such invoices are settled

separately via material document number.

3. Invoice received with reference to Purchase Order which needs to be posted

directly to G/L Accounts or Material Accounts.

Introduction to Shared Services

“Shared Services is collaborative strategy in which subsets of existing business

functions are concentrated into a new, semiautonomous business unit that has a

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management structure design to promote efficiency, value generation, cost savings, and

improved service for the internal customers of the parent corporation, like a business

competing in the open market.”

- By Bryan Bergeron

A direct product of the efficiency of the business unit is increased efficiency,

value generation, and cost savings from the perspective of the parent corporation. The

goal of the Shared Services is to improve the bottom line of the parent corporation, not to

create more efficient, internally streamlined shared business unit.

Aims of Shared Services are to

Enhance Corporate Value;

Focus on partner service and support;

Lower costs and raise service levels;

Make the best use of investment in technology;

Focus on continuous improvement;

Harmonize and standardize common business processes to reduce duplications.

Transfers business units non-core activities in to shared service units.

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IMPROTANT DATA COLLECTION FOR INVOICE VERIFICATION

All the information related to Invoice verification are stored in/retrieved from the

different master records known as central data. There are two types of data for invoice

verification required.

1. Master Data 2. Transaction Data

1). Master Data :-

Master Data

1) Material Data 2) Vendor Data 3) Accounting Data

Master Data :-

Master data is permanent data on objects, for example materials, in the

SAP System. Every object is given a unique number by which it can be identified in the

system.

1) Material Data :-

Material data is information on the materials bought by or produced

in the company. This includes the material number, material name, units of measure,

stock data, over delivery .and under delivery tolerances, reminder keys, price control

data, and prices. Different departments in Materials Management maintain material data.

2) Vendor Data :-

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Vendor data provides information on the suppliers that a company

deals with. Vendor data includes the address, bank data, possibly also the name of the

bank head office, the Currency of the vendor, as well as the terms of payment and terms

of delivery. The Purchasing department and Accounting department maintain vendor

data.

3) Accounting Data :-

Accounting data is used to define G/L accounts. It includes the

account name, the account type, the currency in which the account is managed,

information as to whether an account may be posted to directly, and which financial

budget it is allocated to. The accounting data is maintained in Financial Accounting.

2). Transaction Data:-

Transaction Data

1) Purchasing Document 2) Material Document 3) Accounting Document

Transaction Data :-

Transaction data records transactions in the SAP System.

Whenever you post a purchase order, Scheduling agreement, goods receipt, or invoice,

the system automatically creates a document. The document data of a transaction depends

on the application area that the transaction belongs to. Every document receives a

document number by which it can be uniquely identified.

1) Purchasing Document :-

A purchasing document contains information such as the

vendor number, the purchase order date, the terms of delivery, the material number, and

the order quantity.

2) Material Document :-

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A material document is created when a goods receipt is posted.

It includes the posting date, the quantity delivered, and perhaps also the delivery note

number and the purchase order number that the goods receipt refers to. It documents the

quantity-based changes.

3) Accounting Document :-

An accounting document is created when a goods receipt

(unless the goods receipt is not valuated) or an invoice is posted. It contains details of

the individual postings with the account number, posting key, and the amount. It

documents the value-based changes.

SOURCE OF INVOICE VERFICATION PROCESS

1) The User :- Document date, Purchase Order number, Invoice amount, tax amount,

terms of payment.

2) Purchase Order :- Vendor, terms of payment, currency Invoice items.

3) Purchase Order History :- Quantity, Amount.

4) R/3 System settings :- Rate at which tax is calculated.

5) Vendor Master Record :- Bank Information.

NEED / REQUIRMENTS OF INVIOCE VERIFICATION PROCESS :-

a) To proper co-ordinations of the entire department involved. Viz., finance,

receiving, inspection, storage, excise, accounting & payment.

b) To determining – purchase procedure to see that purchase are made after making

suitable enquires & most favorable term.

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c) To preparation of budget concerning material supplies & equipment to ensure

economy in purchase & uses.

d) To use of standard form placing the order, noting receipt of goods, authority of

issue.

e) To operate of a system of internal check, so that all transaction involving

material, supplies & equipment purchases are approved & automatically

checked.

f) To storage of all the material & supplies in a well designated location with

proper safeguards.

g) To development of the system of controlling account & subsidiary records

which exhibit summary & detailed material cost at the storage of material

receipt & consumption.

h) To regular reports of materials purchase, issue, stock obsolete, goods return,

spoiled & defective unit.

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Top Level Flowchart Accounts Payable

Incorrect

Correct

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Start

Vendor Master Maintenance is updated with details of vendor

Purchase Order is raised & rates of the materials are fixed

Materials recd in TML

Inspection of materials

Utilize materials

Excise Posting

Stores Ack.Invoice data entry

Invoice verification

Invoice processed

Then the bill goes in error.

Manually corrected & then processed

Account Closing Activity

Local cheques

Data transfer from HDFC

A/c. to A/.c Transfer

DUTIES & RESPOSIBILITIES INVOICE VERIFICATION PROCESS

To ensure that Invoice verification is carried out accurately and for all goods receipts.

The Duties & Responsibilities entire process is handled by supervisor / officer:-

Invoice verification is done at consignment CCR-(consignment control reference)

level by using SAP Transaction Code MIRO. At the time of payment (to vendor &

other agencies), the debits are made to the GIT (vendor code is also mentioned in

this ledger account). Such payments made for a particular consignment is

identified in and linked with the bills received.

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Hundi

acceptanc

ePayment Run

(payment made

to

vendors/bank)

Normal

Payment

Hundi

Paymen

t

Advance

Payment

Retrospective

Price Increase. Supplementary payments

Price decrease debit notes recovery

Provide TDS, Interest Reconciliation-Forms.

END

A manual voucher is prepared by the accounts officer and the total value of

consignment in Indian Rupee is worked out for the consignment by adding

customs duty net of CENVAT, freight, if any, & amount paid to foreign vendor.

The total list of payments made to the vendor is obtained through FBL1. This

amount and the freight amount if any is also noted in the manual voucher.

The (foreign currency) amount as appearing in the system is compared with the

hard copy of the invoice. This is to ensure that all amounts paid are considered in

SAP. The freight amount is also recorded in the voucher from the system.

The invoice verification in system is done by using SAP transaction code “MIRO”

and the necessary parameters are entered in SAP. Parameters are invoice date,

amount in INR CCR reference number and vendor total.

During the verification process, the quantity as per the PO and the quantity

actually received are compared and if a shortage is noticed, the proportionate

amount is calculated manually and debited to ledger account Claims recoverable

(117200).

The clearing and inward charges are also included in the same document.

In the process of invoice verification the difference between GR valuation &

actual debits in GIT is debited / credited to Loss / Gain A/C (A/c code 231905 and

281905). The difference is mainly on account of exchange fluctuation and

valuation of custom duty, freight, etc.

If there are any errors messages, the document is put on hold and is attended to later.

On rectification of the errors the entry is posted in SAP.

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INVOCIE VERFICATION DONE BY FOLLOWING MANNER :-

1. STORES ACKNOWLEDGEMENT:-

CONTROL OJECTIVE : To ensure that quantities received are recorded

accurately.

The Stores Department performs in the following stages:-

The materials cleared through CRDO (Central Receipt Documentation Office)

are received at the Stores. Stores in CVBU covers over 50 locations spread

throughout the CVBU / PCBU.

The activities in the Stores in each location are managed by the respective

Department / Division Head. In Chinchwad Foundry, the Stores Officer /

INVOICE VERIFICATION PROCESS

STORES ACKNOWLEDGEMENT

EXCISE POSTING

MIRA (Data Entry) i.e. (invoice data entry)

QUALITY ASSURANCE INSPECTION

FINANACE DEPARTMENT(PAYMENT)

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Personnel physically verify the material and inform the concerned Officer in

CRDO to prepare GIN for the correct quantity.

If the physical quantity received at Stores is different from the quantity for which

GIN is prepared, the Stores Officer / Personnel reverses the GIN in SAP and

forwards the documents back to CRDO for creation of new GIN.

The Stores Officer / Personnel receive the corrected GR tag and other documents

again from CRDO and enter the correct quantity again in SAP.

2. EXCISE POSTING :-

CONTROL OJECTIVE :- To ensure CENVAT is availed accurately and

completely for applicable cases.

The EXCISE Department performs in the following stages:-

Excise Cell- CRDO and Excise cell – finance handle the posting of duties (excise

/ countervailing duty) for domestic, MASOP, Repairs and imports respectively.

After preparation of GIN, excise posting is done for availing of excise credit in

case of excisable goods.

CRDO/GDC personnel select the respective GIN, for which the duties are

calculated by system as per rates in the master. The CRDO/GDC excise cell

verifies the same with the physical copies of the challans and post the excise

invoice.

3. MIRA (Invoice Data Entry) :-

CONTROL OJECTIVE :- To ensure the invoice is recorded accurately and

completely in the system in a timely manner to facilitate payment to vendors.

The MIRA (Invoice Data Entry) Department performs in the following stages:-

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MIRA is performed in SAP in background through program name

ZSRM_BDC_MIRA to automatically populate relevant details to facilitate

accurate preparation of MIRA (Invoice data capture) in SAP if Data is available

through SRM.

MIRA is performed to capture Invoice details in SAP to perform three way

matching and facilitate invoice verification process.

Invoice data is captured by CRDO/ GDC personnel through T_CODE MIRA

where system has not done the Invoice data capture as mentioned above. The

following fields are updated while preparing the MIRA:- Invoice no., date,

amount and vendor code.

A control report is verified by Officer Shared services to identify duplicate

MIRA and the same are deleted.

4. QUALITY ASSURANCE INSPECTION :-

CONTROL OJECTIVE :- To ensure materials of good quality are accepted and

recorded in a timely manner.

The Vendor Quality Assurance (VQA) Department performs quality

assurance activities in the following stages:

The ADD / VDD which is involved in developing parts finishes the activities

related to development and obtains the sample part from the vendor. The

activities performed by VQA, related to the sample approval is covered in PPM

Domestic Auto Sample Approval process.

After the activities performed in PPM Domestic Auto Process sr no 6 are

completed, the VQA completes any testing and send a report to the ADD/ VDD.

The ADD/ VDD perform additional activities and obtain samples on a larger

quantum to verify the consistency of the supplier to supply parts on a larger scale.

VQA completes an evaluation of the Quality with support from ADD / VDD.

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This documentation is covered in PPM Domestic Auto Production Part Approval

Process.

After the part design, vendor etc are finalized and orders are placed on the

suppliers by Buyers. On receipt of the materials on a regular basis, VQA

performs quality assurance activities at the time of receipt of material.

INVOICE VERIFICATION PROCUREMENT CYCLE

The procurement cycle may consist of eight processes:

8. Payment

3. Requisition assigned to a Vendor

5. Order follow-up

2. Source determination

1. Requirements determination

4. Order processing

Purchase OrderPurchase Order

6. Goods receipt and inventory management

Purchase OrderPurchase Order

7. Invoice verification

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IMPORTANT ACCOUNTS FOR INVOICE VERIFICATION

The following accounts are particularly important for Invoice Verification:-

1) Vendor Accounts :- There is a separate account in the sub-ledger for each vendor that

all amounts concerning this vendor are posted to. Making a posting to the vendor account

is not the same as making a payment; payment is only made when the Financial

Accounting department posts the vendor's payment to a bank account.

2) Stock Accounts :- In the R/3 System, you do not set up a separate account for each

material. Instead, different materials with similar features are grouped together in a

common account (for example, raw materials: acids). The account relevant for a material

is defined in the material master record when a material is created. The system only posts

to the stock account when a price difference occurs for an invoice.

3) GR/IR Clearing Accounts:- The GR/IR clearing account is an “intermediate” account

between the stock account and the vendor account. At goods receipt, the net invoice

amount expected is posted to the stock account. The offsetting entry is posted to the

GR/IR clearing account. This posting is then cleared by an offsetting entry on the vendor

account at invoice receipt.

4) Tax Accounts :- The system makes postings to special tax accounts when invoices

include tax.

5) Price Differences Accounts :- Price differences have to be posted to a price

differences account if price differences have occurred in an invoice and when invoices are

posted net and no posting can be made to the stock account.

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6) Cash Discount Clearing Account :- When you post an invoice net, the cash discount

amount is taken into account in the invoice, it reduces the value of the items; the

offsetting posting is made to the cash discount clearing account, which is then cleared

when payment is made.

7) Freight Clearing Account :- The stock account is debited with the planned delivery

costs at goods receipt and the system makes the offsetting posting to a freight clearing

account. This posting is then cleared by an offsetting entry to the vendor account at

invoice receipt.

INVOICE VERIFICATION PROCESS TYPES

Invoice Verification types are as follows :-

INVOICE VERIFICATION TYPES

1) Automatic Invoice Verification

2) Manual

Invoice Verification

1). INVOICE VERIFICATION PROCESS (AUTOMATIC) :-

CONTROL OBJECTIVE :-

To ensure that automatic invoice verification

performed by SAP is accurate, complete and performed in a timely manner. Officer/

Supervisor-shared services, on a daily basis, performs refreshing of invoices in SAP

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through T_Code MIR6 to offer unprocessed invoices for automatic Invoice

Verification.

The list of invoices pending for verification is displayed. The list contains the

following details:-

The document number [LIV No.]

Items

Entering invoices

Invoicing party

Name of the invoicing party

The amount claimed by the party

The difference amount due to which the bill is in error

The reference [invoice number]

Posting date [LIV creation date]

All the invoices are selected, refreshed & scheduled for background verification.

The system processes the invoices in background where the following activities

are completed :-

MIRA i.e. invoice data entry is done.

Excise posting is completed

Stores acknowledgement is done

Quality Assurance inspection is done

Where anyone of these activities is not performed, SAP ensures that the invoices are not

processed until all the four activities are completed.

Further, SAP performs the three ways checking of invoice with the PO and the GIN.

Three possibilities exist as a result of three way matching :-

Sr.No. Possibilities Treatment

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1 Supplier’s invoice = PO = GIN

Post the invoice and transfer the liability from GR/IR a/c to the vendor a/c. (refer Accounting entry sheet for detailed entries)

2 Difference within defined tolerance limits

SAP throws the invoice in error and Invoice is automatically verified.

3 Difference beyond tolerance limits

SAP throws the invoice in error and Invoice is manually verified

CLEARING OF VENDOR A/C [DOMESTIC] :- AUTOMATIC CLEARING

This process documents the clearing procedure of vendor A/cs are :-

During the generation of accounting entries at various stages like at the time of

preparation of GIN , GL Account 191100 (GRIR- Goods Receipt/ Invoice

Receipt) gets credited and at the time of invoice verification the vendor account

gets credited and 191100 GRIR Debited. This credit and debit for the same

amount gets cleared through automatic route.

Similarly the vendor Account automatically gets cleared wherever the assignment

(inv ref) and amount (debit=credit) are equal.

The automatic clearance of the vendor accounts is carried out on the daily basis.

If the account is not cleared automatically, due to mismatch in assignment

(invoice ref.) or minor amount difference, it is to be cleared through Manual

Route.

Advantages of Automatic Invoice Verification : -

Process efficiencies.

Reduce payables cycle delays.

Reduce approval delays.

Match invoices with Purchase Order automatically.

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Increased productivity.

Reduced invoice processing costs by eliminating paper.

Elimination of manual data entry with higher data quality.

Benefits / Uses of Automatic Invoice Verification : -

Automatic Bill Processing

Round Off

Amount credited to supplier Bank Account directly

A/c. to A/c. transfer for vendor other than BMS (Bill Marketing Scheme)

For Supplier Relationship Management (SRM) vendors, MIRA creation by CRDO

(Central Receipt Documentation Office)

Mails are being sent to the vendor informing them the amount of bill of exchange

generated.

Centralized payment for various Tata Motors Ltd. Location.

Display of invoice data of SRM vendor error clearance.

Recovery of debit notes

Rate increases / decrease provision /recovery entry is generated by the system.

2). INVOICE VERIFICATION PROCESS (MANUAL) :-

Control Objective :-

To ensure that invoices which are not posted through

automatic route are cleared and posted accurately through manual error clearance

route in the correct accounting period. The documents in error are selected

individually for error clearance. The message box appears on the screen in which

system displays error message.

Types of Manual Invoice Verification Error : -

1. Rate Difference ( Higher/Lower Rate)

2. Sales Tax /Vat Difference

3. Incorrect Mira Multiple Gin

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4. Incorrect Invoice Amount Entered

5. Supplementary Condition PO Type

6. ZM 30/ZM40 PO condition type

7. PO Condition Type

8. BMS Discount In PO But Given By Vendor

9. Calculation Mistake By Vendor

10. Credit Quantity Zero Table Update Problem

11. Excise Duty Difference

12. Excise Duty Not Updated

13. Fright Payment Through MIRO

14. GR Attached To Wrong MIRA Document

15. Incorrect MIRA Punching – Calculation Tax Not Ticked

16. Incorrect MIRA Punching – Transaction. Type

17. Material Shortage

18. PO Locked

19. Part Rejection

20. Process Rejection Materials Sent For Outside Processing

Benefit / Uses of Manual Invoice Verification

Goods Inward Note Generation.

Logistic Invoice Verification Preparation.

A/c. to A/c. transfer is done if there, some error in the automated part of it.

ERROR CLEARANCE - (MANUAL INVOICE VERIFICATION)

Category I reasons for the invoices in error :-

Sr. No Reasons for Variance Treatment

1Wrong Invoice Value feeding while doing (Mira)

· If the invoice date is outside current financial year

The invoice amount is changed as per the physical copy of invoice and invoice is posted

· Calculate tax field is not ticked while doing the MIRA i.e. ( invoice data entry)

· T_Code field is wrongly selected i.e.

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instead of “ Invoice” while doing MIRA· In respect of multiple items in a challan, MIRA is prepared for some items only

2 Rate Difference:

· System value (Basic- as per SAP) > supplier’s invoice amount

Basic amount is changed as per the physical copy of invoice and invoice is posted

3 Discount condition not updated in POBasic amount is changed as per the physical copy of invoice and invoice is posted

4 Wrong Sales Tax Code

The tax code is changed as per the invoice and buyer is informed to update the correct tax code in PO to avoid re-occurrence of this error

5 Wrong excise entry by Excise Cell

Excise department is informed by shared services, GIN is reversed by CRDO and excise posting with correct amount is made by excise cell and invoice is posted

6Invoice consists of freight and misc. charges

The invoice goes into error due to freight and misc charges as the system does not consider supplementary conditions in PO for Automatic IV.

Such invoices are cleared through GOODS / Planed delivery cost option available during Manual IV

Category II reasons for the invoices in error :-

Sr. No

Reasons for Variance

Treatment

1Wrong excise entry by excise cell :

In certain cases (due to system limitations) where GIN cannot be reversed and Excise cell takes credit through manual route and FI document number is informed , based on which IV is done.

2Rate inclusive of excise duty

If the invoice goes into error due to rate inclusive of ED, the variance is debited to loss account 231905 .If the diff is significant then the vendor is debited considering that the excise duty benefit is very low. This can be reversed based on the approval from buyer

3 Rate Difference Vendor is debited by creating a line items through A/c 191140

System value (Basic- as per SAP) < supplier’s invoice amount

4 Other reasons Short qty , partial rejection

Vendor is debited by creating a line item through A/c 191140/ Loss is booked by debiting 231905

Inwarding against incorrect part , PO

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Weighment difference MASOP cases, CST exempt cases

INVOICE VERIFICATION CONTROL BY TOLERANCE GROUP

Tolerance groups are defined based on the following logic, in vendor master, through

which SAP controls the Invoice Verification process.

Tolerance group F001 :-

The difference between the Total value calculated by system

(in SAP) Vs Total value as per vendor’s invoice is +/- INR 10.00/- or 0.10% of invoice

value, the difference is absorbed by Tata Motors Ltd.

Tolerance group is X001 :-


(in SAP) Vs Total value as per vendor’s invoice is > Rs 10.00 upto Rs 50000, the

difference is credited to provision account & includes the logic of tolerance Z001 also.

Tolerance group is Z001 :-


(in SAP) Vs Total value as per vendor’s invoice is < Rs 10.00 upto Rs 500000, the

difference is debited to vendor.

Tolerance group is Y001 :-

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(in SAP) Vs Total value as per vendor’s invoice is upto 1 % of System value, the

difference is absorbed by Tata Motors Ltd.

Introduction On SAP:-

SAP is a world leader in business software solutions, with industry-specific products for

virtually every aspect of your operations. Including best-of-suite solutions that are

targeted for specific business processes and Enterprise Resource Planning (ERP)

solutions that help streaming your entire organization. With SAP, you gain the visibility

to identify inefficiencies, and the resources to help reduce them. The foresight to pinpoint

opportunities, and the agility to seize them. And the collaborative tools to extend your

reach far beyond the enterprise, to the entire value chain. And because SAP solutions are

built on open technologies, you’re assured that they will integrate seamlessly with

virtually any internal or external systems, protecting your Technology investment.

With more than three decades of profitable growth and an exceptionally stable

management team, SAP is a long-term partner you can choose with confidence. SAP

solutions are installed at more than 60,000 customer locations in 120 countries. And they

’re developed, implemented, and supported by 28,700 professionals operating out of a

global network of offices. So you can count on world-class support, when and where you

need it.

Today’s generation of SAP solutions is designed to deliver a better return on your

technology investment. Through their rich, industry-specific functionality, they help you

improve the business processes that matter most to your company. Through their open

29

architecture and virtually unlimited scalability, they help you leverage your existing

technology assets.

And through their easy implementation, they start delivering results more quickly than

ever before.

COMMON VALUES

All SAP solutions share common values, including:

Seamless integration: - Removes the barriers that stand between people, systems, and

information

Scalability :-Accommodates virtually unlimited growth

Adaptability: - Allows easy customization of features and functions and helps you cope

with constant change

Ease of implementation: - Helps you get up and running sooner

Lower total cost of ownership: - Helps minimize long-term costs

Industry expertise: - Supports the real-world processes you employ every day. These

advantages add up to a faster and greater return on investment. And that makes SAP a

wise investment for your company’s future.

“Sap has a clear superiority in the market. It has a large presence and good support, so

we chose the SAP ERP solution for our company .the result have definitely exceeded our

expectations.”

SAP OBJECTIVE

Rationalize business processes across all manufacturing units

Improve efficiency by reduction in effort duplication

Reduction in operational costs

Reach and respond to the customer rapidly

Why SAP

It was the clear leader in the market for such solutions

It was the best package available for automotive industry

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Multiple functionalities were covered

Benefits of SAP

Enterprises integration

Financial benefits of reducing inventories

Better control of receivables

Significant reduction in time taken for financial consolidation

A single unified database

CHAPTER NO. 4

COMPANY PROFILE

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COMPANY PROFILE

HISTRORY OF THE TATA GROUP

Jamsetji Nusserwanji Tata

“What advances a nation or community is not so much to prop up its weakest

and helpless members, as to lift up the best and most gifted, so as top make them of

the greatest service to the country.”

Jamshetji Tata (Founder TATA Group)

A TATA Motors is the part of TATA Enterprises – one of the most successful and

oldest private groups of India. Since the time TATA Motors commenced manufacturing

commercial vehicles in 1954, the company has established a strong foundation in

automotive manufacture, within an enduring commitment to quality. Today TATA

Motors is in production of leadership with an annual production of over 200000 vehicles

in the 2 – 65 ton range. TATA Motors design and manufactures most of its machine tools,

32

processes, equipments, heavy dies, metal patterns and electronic controlling for machine

tools.

THE TATA GROUP comprises 93 operating companies in seven business sectors

information systems and communications, engineering, materials, services energy,

consumer products, and chemicals. The Group was founded in the mid 19th century, a

period when India had just set out on the road to gaining independence from British rule.

Consequently, Jamsetji Tata and those who followed him aligned business opportunities

with the objective of nation building. This approach remains enshrined in the Group’s

ethos to this day.

As much as institution it is a business corporation, the Tata Group is unique in

more ways than one. Established by Jamsetji Tata, the Group has grown into one of

India’s biggest and most respected business organizations, due to its entrepreneurial

vision, its commitment to ideals that put people before profits, and its fortitude in the face

of adversity.

PURPOSE

Our purpose is to improve the quality of life of the communities we serve. We do

this through leadership in sectors of national economic significance, to which the group

brings a unique set of capabilities. This requires us to grow aggressively in focused areas

of business. Our heritage of returning to society what we earn evokes trust among

consumers, employees, shareholders and the community. This heritage is being

continuously enriched by the formalization of the height standards of behavior expected

from employees and companies.

The Tata name is a unique asset representing leadership with trust. Leveraging

this asset to enhance Group synergy and becoming globally competitive is the route to

sustained growth and long- term success.

FIVE CORE VALUES

The Tata Group has always sought to be a value driven organization. These values

continue to direct the Group’s growth and businesses.

Integrity: We must conduct our business fairly, with honesty and transparency.

Everything we do must stand the test of public scrutiny.

33

Understanding: We must be caring, show respect; compassion and humanity fro work

the benefit of the communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards in our

day-to-day work and in the quality of the goods and services we provide.

Unity: We must work cohesively with our colleagues across the group and with our

customers and partners around the world, building strong relationships based on

tolerance, understanding and mutual cooperation.

Responsibility: We must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what comes from

the people goes back to the people many times over.

HISTORY OF TATA MOTORS

Jamsetji Nusserwanji Tata who conceived the very idea of establishing this company was born in a family of Parsi in 1839.

At the age of 29 he started a private trading firm with a capital of just 21,000.

With the share of the profit which he earned from that firm he along with his friends

started a textile mill in Bombay; the modern Mumbai. He sold this mill after 2 years.

In the year 1874 he floated a company named “THE CENTRAL INDIA

SPINNING, WEAVING AND MANUFACTURING COMPANY”. At the age of 47, he

took on the job of making a sick mill healthy. They used to buy sick firms and put life

into it and sold them thereafter.

In 1902, he decided to choose the unknown path to give India steel, hydroelectric

power and technical education of a higher order.

Unfortunately he died in 1904, but the members of his family and his friends

continued to go on and on, they expanded his work and today they are one of the biggest

business empires of the world.

In the year 1907 the “TATA IRON AND STEEL COMPANY” was started in

Jamshedpur Jharkhand.

34

Mr. J R D Tata Mr. Ratan Tata

When the Tata motors started it was known as “THE TATA ENGINEERING

AND LOCOMOTIVE COMPANY”. It started its operations in the year 1945 in an old

workshop of the East Indian Railways at Jamshedpur. Over a period of 15 years a total of

1,155 locomotives steamed out from the workshop as well as 950 road rollers, 5000

railway wagons and several boilers. The company however was heavily dependent on a

single customer; the railways. So TELCO looked for diversification.

After a few years the Tata’s signed an agreement with Dailmer-benz A.G. to start

an assembly and manufacturing plant for commercial vehicles. The chairman and

managing director was chosen to be Mr. S. Moolgaokar.

Over 70% of the medium and the heavy commercial vehicles on the Indian roads

were made by the TELCO. It was able to manufacture 99.8% of its parts in India itself.

TELCO, the child of Tata steels is the largest shareholder of the Tata industries after the

financial institutions.

Mr. Ratan Tata succeeded Mr. Sumant. Moolgaokar as the Chairman of Tata

Motors in the year 1992. In the year 2003, on 29 th of July, on the occasion of the birth

anniversary of J.R.D. Tata the name of TELCO got changed to “TATA MOTORS

LIMITED”.

VISION AND MISSION

“THE LANGUAGES MAY DIFFER, THE SCRIPTS MAY VARY BUT THERE IS

ONE SYMBOL THAT WILL ALWAYS MEAN THE SAME THING” – “TRUST”

35

VISION

To be a world class corporate constantly furthering the interests of all its stakeholders.

MISSION

For Shareholders:- To consistently create shareholder value by generating returns in excess of WACC during the upturn and at least equal to WACC during the downturn of the business cycle.

For Customers:-To strengthen the TATA brand and create lasting relationships with customers by working closely with business partners to provide superior value for money over the life cycle.

For Employees:- To create a seamless organization that incubates and promotes innovation, excellence and the TATA core values.

For Vendors and Channel Partners:- To foster a long-term relationship so as to introduce a broad range of innovative products and services, that would benefit our customers and other stakeholders.

For Community:- To proactively participate in reshaping the country’s economic growth and to take a holistic approach towards environmental protection

COMPANY PROFILE

Type Public (NYSE: TTM)

Founded 1960

Headquarters India

Industry Automotive

Products Commercial Vehicles

Revenue 35651.48 crores (USD 8.8 billion)

Website www.tatamotors.com

TATA MOTORS PROFILE

36

http://en.wikipedia.org/wiki/Image:Tata-logo.gif

http://en.wikipedia.org/wiki/Image:Flag_of_India.svg

Tata Motors Limited is India's largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in each segment, and the third largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer.

The company's 22,000 employees are guided by the vision to be "best in the manner in which we operate best in the products we deliver and best in our value system and ethics."

Established in 1945, Tata Motors' presence indeed cuts across the length and

breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat power trains. The company is establishing two new plants at Dharwad (Karnataka) and Singur (West Bengal). The nation-wide dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world have been looking forward to. A development, which signifies a first

for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. When launched in India later in 2008, the car will be available in both standard and deluxe versions. The standard version has been priced at Rs.100,000 (excluding VAT and transportation cost).

Designed with a family in mind, it has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its safety performance exceeds regulatory requirements in India. In terms of overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India today. The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.

Besides product development, R&D is also focussing on environment-friendly technologies in emissions and alternative fuels. Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations.

True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to Corporate Social Responsibility. It is a signatory to the United Nations Global Compact, and is engaged in community and social initiatives on labour and environment

37

standards in compliance with the principles of the Global Compact. In accordance with this, it plays an active role in community development, serving rural communities adjacent to its manufacturing locations. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

POSITION IN THE GLOBAL MARKET

The collaboration with Dailmer-Benz ended in 1969 and thereafter TATA motors

began marketing vehicles under the TATA brand name carrying the famous ‘T’ emblem.

TATA Engineering one of India’s largest private sector companies with a turnover of

over Rs. 80 billion in the countries leading commercial vehicle manufacturing company

and has significant presence in multi – utility and passenger car segments. The widely

successful TATA Indica, a Euro-3 compliant vehicle, is the country has first indigenously

designed, developed and manufactured passenger car. TATA Engineering followed that

up with the TATA indigo, a sedan that was launched in December 2002. The comp also

makes several other passengers vehicles including Safari, Sumo, and Sierra. The

company’s products have received wide acceptance not only in India but also in the

Middle East, Asia, Africa, Australia, Latin America and Europe.

MANUFACTURING UNIT

Tata Motors owes its leading position in the Indian automobile industry to its strong focus

on indignation. This focus has driven the company to set up world-class manufacturing

units with state of the art technology. Every stage of product evolution-design,

development, manufacturing, assembly & quality control is carried out meticulously.

Jamshedpur:-

Established in 1945, the Jamshedpur unit was the company’s first unit and is spread over

an area of 822 acres. It consists of 4 major divisions – Truck Factory, Engine Factory,

Cab & Cowl Factories, and the Novus.

Pune :-

38

The Pune unit is spread over two geographical regions Pimpri (800 acres) and Chinchwad

(130 acres). It was established in 1966 and has a Production Engineering Division, which

has one of the most versatile tool making facilities in the Indian sub-continent.

Lucknow :-

Tata Motors lucknow is one of the youngest production facilities among all the Tata

Motors location and was established in 1992 to meet the demand for Commercial

Vehicles in the Indian market.

Uttarakhand :-

The company has set up a plant its mini truck, ace, etc. at Pant Nagar in Uttarakhand. The

plant will begin commercial production during the course of the year.

ASSOCIATES

Over the years, Tata Motors has made substantial investments in building

companies that add value, facilitate and support its diverse range of business

activities.

Telco Construction Equipment Co. Ltd. (Telcon)

Tata Technologies Ltd. (TTL) and Tata Technologies Ltd., USA (TTUS)

HV Axles Ltd. (HVAL)

HV Transmissions Ltd. (HVTL)

TAL Manufacturing Solutions Ltd. (TAL)

Sheba Properties Ltd. (Sheba)

Concorde Motors (India) Ltd. (Concorde) [formerly known as Minicar

(India) Ltd.]

39

http://www.tatamotors.com/our_world/associates00.php?PageID=7








Tata Daewoo Commercial Vehicle Company Ltd (TDWCV)

Tata Motors Insurance Services Ltd. (TMISL) [formerly known as

Concorde Motors Ltd.]

Tata Motors European Technical Centre plc

Hispano Carrocera

TML Financial Services Limited (TMLFSL)

40





MANAGEMENT GRADE

EXECUTIVE GRADE

BOARD OF DIRECTORS

ORGANIZATIONAL STRUCTURE

CHAIRMAN

MANAGING DIRECTOR

41

PRESIDENT

VICE PRESIDENT

SENIOR GENERAL MANAGER

GENERAL MANAGER

DEPUTY GENERAL MANAGER

DIVISIONAL MANAGER

SENIOR MANAGER

MANAGER

ASSISTANT MANAGER

SENIOR SUPERVISOR

SUPERVISOR

OPERATIVES

Flow Chart Giving An Overview Of Various Section Under TATA MOTORS LTD.

42

Tata Motors Ltd.

Manufacturing Unit Sales Organization Corporate Affairs & Finance

Jamshedpur Pune

ERC

Locally

Purchase

Centrally

Treasury

Production

Shared Services Business Planning

HR

Lucknow Uttarakhand Singur

PRODUCTS

COMMERCIAL VEHICLES

1. Tata Ace 2. Tata Ace Magic

3. Tata TL/Telcoline/207 DI Truck 4.Tata 407

5.Tata 709 E 6.Tata 1109

(Intermediate truck) 7. Tata 1510/1512 (Medium bus)

8.Tata 1610/1616 (Heavy bus) 9.Tata 1613/1615 (Medium truck)

10.Tata 2515/2516 (Medium truck) 11.Tata Novus (Heavy truck)

12.Tata Winger

BUSES1. Star bus 2. Globus

Military Vehicle1. Tata 407

2. Tata LPTA 713TC (4x4)

43

2 Man Power Dept.

1.1.1 Medical & Health

3. Tata LPT 709 E

4. Tata SD 1015TC (4x4)

5. Tata LPTA 1615 TC (4X4)(4X25) 6. Tata LPTA 1621TC (6x6)

PASANGER CARS

INDIGO INDICA INDICA CNG

INDICA V2 PETROL INDIGO MARINA SUMO GRANDE

THE MOST AWAITED PEOPLES CAR “NANO”

44

Concept Vehicles

Passenger Cars Segment also include:-

1. Indigo XL 2. Indica V2 3. Indica Xeta 4. Indica

Turbo

5 Fait Cars 6. Safari 7. Safari Dicor 8. Sumo Victa

Concept Vehicles also include:-

1. Aria Roadster 2000 2. Aria Coupe 2001 3. Tata Indiva 2002

4 Tata Indigo Advant 5. Tata Xover 2002 6. Tata Cliffrider 2006

7. Tata Elegante 2007

MILESTONES

IT HAS BEEN A LONG AND ACCELERATED JOURNEY FOR TATA MOTORS, INDIA’S

LEADING AUTOMOBILE MANUFACTURER. SOME SIGNIFICANT MILESTONE IN THE

COMPANY’S JOURNEY TOWARDS EXCELLENCE AND LEADERSHIP.

1945 Tata Engineering and Locomotive Co. Ltd. was established to manufacture

locomotives and other engineering products.

1948 Steam road roller introduced in collaboration with Marshall Sons (UK).

45

1954 Collaboration with Daimler Benz AG, West Germany, for manufacture of

medium commercial vehicles. The first vehicle rolled out within 6 months of

the contract.

1959 Research and Development Centre set up at Jamshedpur.

1961 Exports begin with the first truck being shipped to Ceylon, now Sri Lanka.

1966 Setting up of the Engineering Research Centre at Pune to provide impetus to

automobile Research and Development.

1977 First commercial vehicle manufactured in Pune.

1985 First hydraulic excavator produced with Hitachi collaboration.

1993 Joint venture agreement signed with Cummins Engine Co. Inc. for the

manufacture of high horsepower and emission friendly diesel engines.

1998 Tata Safari - India's first sports utility vehicle launched.

Indica, India's first fully indigenous passenger car launched.

2003 Tata Indigo station wagon unveiled at the Geneva Motor Show.

On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes

Tata Motors Limited.

2004 Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment

agreement

New Tata Indica, Sumo Victa & Indigo Marina launched

Tata Motors lists on the NYSE

2005 Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility

in Pune.

Branded buses and coaches - Starbus and Globus - launched

Tata Ace, India's first mini truck launched

2006 Tata Motors first plant for small car to come up in West Bengal.

Tata Motors introduces a new Indigo range

2007 Tata Motors' integrated Customer Relationship Management (CRM)- Dealer

Management System (DMS) initiative crosses the significant milestone of

covering 1000 locations in India and abroad.

46

Tata Motors introduces Magic & Winger - creates new segments in urban

and rural passenger transportation.

2008 Tata Motors Ltd. Enters into definitive agreement with the “Ford Motor

Campany” for the purchase of Jaguar & land rover.

Tata Motors unveils Tata Nano, the People’s Car, at the 9th Auto Expo in

Delhi on January 10, 2008

CHAPTER NO. 5

RESEARCH METHODOLOGY

47


WHAT IS RESEARCH?

Research in common parlance refers to a search for knowledge. It is a

SCIENTIFIC and SYSTEMATIC search for pertinent information on a specific topic. It

is actually a voyage of discovery .It can also be said to be a movement on a path from the

known to the unknown. Research is an academic activity and as such the term should be

used in a technical sense.

RESEARCH is thus an original contribution to the existing stock of knowledge

making for its advancements. It is the pursuit of truth with the help of study, observation,

comparison, and experiment. In short the search for knowledge through objective and

systematic method of finding solution to a problem is “RESEARCH”.

According to Clifford Woody :-

“RESEARCH comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting organizing and evaluating

data; making deductions and reaching conclusions; and at last carefully testing the

conclusions to determine whether they fit the formulating hypothesis.’


Research methodology is a way to systematically solve the research problem. It

comprises of the various steps adopted by the researcher along with the logic behind it.

Following steps were involved:

1. Objectives of study

2. Method of data collection

48

3. Source of data collection

4. Selecting sample size

5. Area and period of study

6. Limitation of study

1. OBJECTIVES OF THE STUDY

Improvement in Invoice Verification Process.

To Study the Risk Control Matrix & Procurement to Payment Process.

2. METHOD OF DATA COLLECTION

The study is based on facts and figures collected by the internal website of

Tata Motors Ltd. (http://cvbubses & mytatamotors on the TATA Motors intranet)

3. SOURCES OF DATA COLLECTION

This data and information collected for the purpose of study is divided into

two forms:

1). Primary Data: - Primary data is that which is not published but it is very

useful data. So, the information was collected by discussion held with the

executives of accounts and finance department.

2). Secondary Data: - Secondary data consist of the information that already exists

or someone has collected it for specific purpose.

4. SAMPLING

In order to collect the reliable information, I have studied all the process of

each plant of Tata Motors.

5. AREA AND PERIOD OF STUDY

The area of my study is within the company Tata Motors Limited,

Commercial Vehicles Business Unit (CVBU). I studied the automatic & manual

invoice verification, Risk Control Matrix & Procurement to payment process.

The study was conducted for the period 25.05.2008 to 25.07.2008.

49

http://cvbubses/

6. LIMITATION OF STUDY

The study is based on the information updated on website. No physical

evidence is verified by visiting each location.

CHAPTER NO. 6

DATA ANALYSIS &

INTERPRITATION

50

DATA ANALYSIS & INTERPRITATION

INVOICE VERIFICATION ERROR01.04.2008 TO 11.06.2008

PLANT – CVBU

SR. NO PARTICULAR VOLUME1 MIRA 6012 STORES 7173 QA 37314 EXCISE 18355 FINANACE 12383

TOTAL 19267

PLANT :- CVBU

13%

24%

319%

410%

564%

1

2

3

4

5

51

INTERPRITATION: - From the above table, it can be seen that, major 64% of the

invoices are pending in Finance Department for Manual Invoice Verification.

DATA ANALYSISINVOICE VERIFICATION ERROR

01.04.2008 TO 11.06.2008

PLANT – PCBU


TOTAL 15565

PLANT : - PCBU

135%

23%3

6%4

8%

548%

1

2

3

4

5

52

INTERPRITATION: - From the above table it can be seen that major 48% of the

invoices are pending in Finance Department for Manual Invoice Verification & 35 %

invoices are pending in MIRA (Invoice Data Entry).


01.04.2008 TO 11.06.2008

PLANT – CVBU - AUTO


TOTAL 10848

PLANT :- CVBU - NON AUTO

124%

215%

329%

411%

521%

1

2

3

4

5

53

INTERPRITATION :- From the above table it can be seen that major 29% of the

invoices are pending in Quality Assurance Department & 21% of Invoices are Finance

Department for manual invoice verification.


01.04.2008 TO 11.06.2008

PLANT – JAMSHEDPUR


TOTAL 20975

54

INTERPRITATION :- From the above table, it can be seen that major 30 % of the

invoices are pending in finance Department for Manual Invoice Verification & 21%

invoices are pending in Quality Assurance.


01.04.2008 TO 11.06.2008

PLANT – CVBU - FOUNDRY


TOTAL 791

55

INTERPRITATION: - From the above table, it can be seen that major 80 % of the

invoices are pending in the finance Department for Manual Invoice Verification.


01.04.2008 TO 11.06.2008

PLANT – LUCKNOW


TOTAL 2461

56


invoices are pending in the Quality Assurance & 18% invoices are pending in Finance

Department for Invoice Verification.


01.04.2008 TO 11.06.2008

PLANT – MAVAL

SR. NO. PARTICULAR VOLUME1 MIRA 222 STORES 203 QA 184 EXCISE 495 FINANACE 934

TOTAL 1043

57


invoices are pending in Finance Department for Manual Invoice Verification


01.04.2008 TO 11.06.2008

PLANT – SPD - DIGHI


TOTAL 6017

58


invoices are pending in the Excise Cell & 26% invoices are pending in Mira (Invoice

Data Entry)


01.04.2008 TO 11.06.2008

PLANT – RECON LKN


TOTAL 2469

59


invoices are pending in Stores Department for invoice verification clearance.


01.04.2008 TO 11.06.2008

PLANT – UTTARANCHAL


TOTAL 3434

60


invoices are pending in finance Department for Manual Invoice Verification & 18 %

invoices are pending in Quality Assurance.


01.04.2008 TO 11.06.2008

PLANT – TATA MARCOPOLO


TOTAL 222

61


invoices are pending in Excise Cell & 24% invoices are pending in Finance Department

for manual invoice verification.

As per the analysis made majority of the errors were of rate difference. The vendors who

are covered under VAT and their tolerance group is Z001, if the tolerance group would

have been X001 then all such errors would have cleared automatically.

The next highest contributors to the error were the invoices of the vendors who supply to

more than one location. In such cases as the vendor is covered under VAT for any one of

the location, the tolerance group updated is Z001. Since the tolerance group is updated at

vendor level and not at per purchase organization level the CST supply also comes under

the same tolerance group and the invoices which would have been otherwise cleared

automatically have to be processed manually.

As per the analysis made around 15% of the errors are due to sales code mismatch. This

means that there are more than thousand such cases for which there is tax code mismatch.

Wrong updating of sales tax code in the purchase order. It was observed that the sales

code was wrongly posted and due to which the invoices are cleared manually. For

Example: - It was found that tax code P4(ED as applicable, 4% CST) was updated instead

of 3A(ED as applicable + 12.5% VAT, Vatable and Cenvatable).

Manual Clearance of the Invoices which would have been cleared automatically.

In the analysis of the errors it was seen that there were invoices which were cleared

manually by the officers even though there was no need of the same, to rectify the same

following should be done:

Firstly, the officers should clear only those invoices for which finance pending report is

generated on daily basis. It was observed that around 30% of the total error population is

due to manual clearance of the GINs if the same is stopped than the hit rate will

automatically increase.

62

Secondly, the invoices which are not cleared or late cleared by excise or quality assurance

department should be made available for automatic IV even though the time limit of 15

days is expired. If the same is done the hit rate will stand automatically increased.

Example of Invoice Verification Error:-

Sr.No. Vendor PO No. Description

System Value

InvoiceValue Diff

Difference in Basic Rate1 A71720 1550000720 Basic 155 130

ED 16% 24.8 20.8Cess 2% 0.496 0.416Total 180.296 151.216VAT 12.5% 22.537 18.902 3.635Total 202.833 170.118 32.715

Different VAT Rate Charged i.e. by System 12.5% & by the Vendor 4%2 A71720 1550000720 Basic 155 155

ED 16% 24.8 24.8Cess 2% 0.496 0.496Total 180.296 180.296VAT 22.537 7.21184 15.325Total 202.833 187.50784 15.325

Difference in Basic Rate and Tax Rate, System VAT 4% and Vendor VAT 12.5%3 A71720 1550000720 Basic 155 130

ED 16% 24.8 20.8Cess 2% 0.496 0.416Total 180.296 151.216VAT 7.21184 18.902 -11.69Total 187.50784 170.118 17.39

Difference in Basic Rate and Tax Rate, System VAT 4% AND Vendor VAT 12.5%4 A71720 1550000720 Basic 155 30

ED 16% 24.8 4.8Cess 2% 0.496 0.096Total 180.296 34.896VAT 7.21184 4.362 2.8498Total 187.50784 39.258 148.25

Same Basic Rate but Difference in Tax Rate, system VAT 12.5% whereas Vendor charges 4% CST

63

5 A71720 1550000720 Basic 155 155ED 16% 24.8 24.8Cess 2% 0.496 0.496Total 180.296 180.296VAT 22.537 22.537CST 7.21184Total 202.833 187.50784 15.325

CHAPTER NO. 7

FINDING &

CONCLUSION

64

FINDING

It is a speedy processing, vendor/customer satisfaction increased and manpower

reduces.

In this process every bill is checked for certification, authorization, calculation etc.

this is called as real account verification.

Input time and service time is considerably reduced @30% productivity at

increased by 20%. Once the data is feed to the systems tax is automatically

calculated by system. In short, the overall work of 4 hours has come down to 15

minutes.

The productivity has improved immensely due to Automatic Invoice verification

(AIV) process, where the system processes almost all invoices and those that have

error have to be processed manually (which are very less).

Presently almost 85% of the invoices are cleared automatically and the rest 15% is

cleared manually. As per the analysis made around 70% of the invoices going into

error constitute rate difference, around 15 % of invoice going into error tax code

difference & rest of 15 % are going to Miscellaneous.

65

CONCLUSION

TATA Motors Ltd. is one of the leading companies of TATA Group. TATA is one of

the most successful and oldest private groups of India. Since the time TATA motors

commenced manufacturing commercial vehicles in 1954, the company has established a

strong foundation in automotive manufacture, within an enduring commitment to quality.

The annual production of this company is over 2, 00,000 vehicles.

There are around 25,000 employees (permanent, temporary and trainees) working in Tata

Motors. Only eighteen employees are organizing the Invoice Verification Process

activities of these entire Suppliers. Even though the volume of data entry is high, the rate

of committing error is very low. The aim of this department is to process accurate and

timely invoice to all the Supplier/ Vendors and they are achieving this target successfully.

Improvement in quality of service to various stakeholders in terms of timeliness

and accuracy as confirmed by internal and external customer satisfaction surveys.

Any improvements in the process are now initiated centrally and implemented at

all locations. This results in having standardized and uniform processes company

wide.

Rightsizing of manpower resources – reduction of 25 % headcount.

Reduction in transaction processing costs – better or equal to the best in many

areas as confirmed by the PWC benchmark study.

Improved teamwork due to centralization of processes, leading to reduction in

throughput time for providing feedback to management

Improved data Integrity leading to more reliable MIS reports.

66

Deployment of metrics to monitor performance and identify areas for

improvement.

Manpower development – In order to cater to the ever changing and challenging

needs of the SCC, employees are trained to handle new technology resulting in

their development leading to higher morale and better job satisfaction.

Migration of activities to Shared Services resulted in centralization of several

processes in one location. This greatly facilitated the documentation required for

Sarbanes Oxley compliance.

Continue to identify opportunities to leverage the use of information technology to

achieve higher levels of automation and efficiency as well as accuracy of

transaction processing.

67

CHAPTER NO. 8

LIMITATION

68

LIMITATION

This project is not exhaustive. Company does not disclose the Information to the public

and the information are highly confidential and formed a part of the company’s policy

and hence could not be show in this report.

69

CHAPTER NO. 9

RECOMMENDATIONS &

SUGGESTIONS

70

RECOMMENDATIONS

Supplier Relationship Management (SRM) should be implemented for all the

locations. If scanned copies are available for all the locations, bills can be cleared

easily; no need for waiting for the bills to be submitted at the Help Desk. The

quantum of bills related queries will decrease if the invoice break up details is

seen through SRM.

Document Imaging Services (DIS) can be used to further process documents for

other locations.

All vendors should be covered under Supplier Relationship Management (SRM)

so that, they could provide data in the prescribed format to further streamline the

operations.

To bring automation in clearing of A/C’s.

Use of Voice mail for vendor queries.

Capitalization forms presently received manually are to be made online to reduce

time lag in receiving the forms.:-

a) Up gradation of SAP version from 4.6 c to 5.1.

b) SRM implementation for service vendors,

c) Web based travel system,

d) Try to improve whatever system is in existence.

CVBU departments Invoice verification process needs to be automated, b) Passing

of manual entry of purchase of spare parts to be shown separately as per schedule

VI requirement need to be avoided and system generated entry is expected.

Presently almost 85% of the invoices are cleared automatically and the rest 15% is

cleared manually. As per the analysis made around 43% of the invoices going into

error constitute rate difference i.e. the base rate as per the vendors invoice is

less/more than that as per the purchase order. Out of these around 70% of the

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invoices are vatable invoices falling under the tolerance group Z001. If such

invoices were updated under the tolerance group X001 than such invoices would

have got cleared automatically.

SUGGESTIONS

Use of SAP SRM Module (Supplier Relationship Management) enabled vendors

to electronically upload their invoices thereby facilitating centralization as well as

avoiding receipt of paper documents in SSC and its entry into the system.

A centralized vendor help desk with a toll-free number and a dedicated email ID

was created to ensure quick resolution of vendor queries. Yet another facility of

automatically notifying the vendor of the payments processed on a daily basis

improved the vendor satisfaction level dramatically.

Use of SAP Workflow mechanism to notify the Accounts Payable Manager of

high value payments being processed to facilitate proper control.

Updation and maintenance of Vendor Master for the entire company is done

centrally from the Share Services Centre.

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CHAPTER NO. 10

BIBLIOGRAPHY

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Bibliography

Books Referred:-

Pandey Chandra Prasanna, ‘Financial Management (Theory & Practice)’, Tata

McGraw-Hill Publishing Co. Ltd., New Delhi, Fifth Edition.

‘Financial Management’, Vikas Publishing House Pvt. Ltd., New Delhi, Eighth

Edition.

Kothari C.R., ‘Research Methodology’,Wishwa Prakashan

Websites Visited :-

www.tatamotors.com

www.sap.com

www.google.com

http:/mytatamotors on the TATA Motors intranet

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http://mytatamotors/

http://www.google.com/

http://www.sap.com/

http://www.tatamotors.com/

CHAPTER NO. 11

ACRONYMS

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ACRONYMS

Acronyms are as follows:-

1 SOX Sarbanes Oxley Compliance

2 SAP System, Application & Product

3 ERP Enterprises Resource Planning

4 ERC Engineering Research Centre

5 SRM

Supplier Relationship Management

6 MASOP Material Sent for Outside Processing

7 MIRA Invoice Data Entry

8 MP& P Material Planning & Procurement

9 TPM Total Productive Maintenance

10 SOD Segregation Of Duty

11 UAS Unloading Authorization Slip

12 SRM Supplier Relationship Management

13 CRDO Central & Receipt Dispatch Office

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