BIRLA INSTITUTE OF TECHNOLOGY

Kolkata Extension Centre

Name : Amit Murmu

Roll No:BBA/3519/07

Semester: Vth

Course: BBA

Subject: Project-I (BBA 620)

1

A

Project Report

On

“Inventory Analysis”

External Project Guide

Mr. Suhas Mahadeokar

Manager– Purchasing Process & IT Projects

Internal Project Guide

By:

2

Mrs. Sraboni Dutta

Amit Murmu

BBA/3519/07

Table of Contents Page no

1. Acknowledgment 4

2. Executive Summary 5

3. Introduction 6

4. Certificate 6

5. Scope & Objective 8

6. Brief Review of Plants 11

7. Vision 15

8. Lafarge Products 16

9. Important Definitions 17

10. Item Master & Supplier Master 19

11.Approach 20

12.Working at Eastern Operation Office, Kolkata 21

13.Evaluation on Jojobera Cement Plant 22

14.Recommendations 28

15.Suggestions 29

3

16.Key Learning 30

17.Conclusion 31

Acknowledgement

I am thankful to Mr. R T Goswami , Faculty In charge BIT Mesra Kolkata

Extension Centre and Mr. Mohit Kapoor,V.P. Logistics Lafrge Cement

EOO kolkata for giving me an opportunity to work for Lafarge India Pvt. Ltd.

My sincere thanks to Mr Suhas Mahadeokar Manager– Purchasing

Process & IT Projects for extending his full support and valuable guidance

throughout my project duration.

I am also thankful to respective HODs and Users of Lafarge for extending

their cooperation towards the successful completion of my project.

My sincere thanks to my Internal Guide Mrs. Sraboni Dutta, Lecturer

BIT Mesra Kolkata extension Centre for extending all the support and for her

ideas and knowledge which acted as preliminary information for all the

project work.

Finally, I would thank my faculty and friends for their valuable suggestions and inputs that proved to be of invaluable assistance, and constantly motivated me to learn as much as possible.

4

Amit Murmu

BBA/3519/07

Executive Summary

The main aim of this project is to identify movable and immovable items , slow moving items and the inventory currently in use and

identifying obsolete items. The Summary Report includes positive comments about the Lafarge cement industry and the evaluation of jojobera cement plant inventories .The observation also

includes the areas where the company would like to see improvement. There are areas where the industry has to look upon its inventories and its

different plants have to, share similar perspectives. There are also a number of areas

where Industry differ by quality, quantity i.e. stock, and or rank i.e. proper use of stocks.,

given that Lafarge cement Industry has experience both on market performance, position

an gaining customer loyalty.

The project summarizes the work and experience gained at Lafarge Eastern Operation Office and a brief overview of different items (moving, non-

moving, disposable ) ,and a evaluation on jojobera plant has also been done.

5

INTRODUCTION

In line with its strategy to develop its Aggregates & Concrete business in emerging markets, Lafarge acquires 66 highly efficient concrete plants located across India. It has key markets in Delhi, Kolkata, Mumbai and Bangalore, with total estimated volumes of 4.1Mm3 in 2008 and a market share of approximately 25%. Lafarge has established itself as the leader in the Indian ready-mix concrete market.

 

The ready-mix concrete market is still in an early stage of its development in India, but offers strong growth and value creation potential. The Indian construction market is developing to meet

6

significant demand for new housing, urbanization and infrastructure.

 

India offers strong potential for introducing innovative products. Lafarge boasts the world's leading research facility in building materials and has developed innovative, value-added concrete products over the last ten years which contribute to improving construction methods and working conditions on building sites. One of Lafarge's key strategic focuses today is innovation in concrete, which translates into an accelerated roll-out of value-added concrete products in both developed and emerging markets. Lafarge will be aiming to offer the Indian market its most advanced and value creative solutions for construction.

"Lafarge was the first in its industry to move into Aggregates and Concrete in a significant way, over 10 years ago, and to develop a unique expertise in creating value in the Concrete business."

The recent start-up of operations at Lafarge's first Greenfield ready-mix concrete plant in Raipur, in the state of Chhattisgarh and marks a decisive step in Lafarge's strategy to grow its presence in the Indian ready-mix market.

Lafarge is already present in India in its other businesses and is investing to develop its Indian operations, in order to accompany market

7

growth. In cement, Lafarge has emerged as a major player in the eastern region of India, with a cement production capacity of 5.5 million tons and a strategic plan to more than double its presence in the next five years through Greenfield projects in several regions. In Gypsum, Lafarge is already supplying the Indian market and is currently building a plasterboard plant near New Delhi, Rajasthan, with an annual capacity of around 10 million m².

Lafarge Cement currently holds the leadership position in Eastern Indian markets, producing high performance blended cements in Portland Slag Cement (PSC) and Portland Pozzolona Cement (PPC) variants. Lafarge enjoys high brand equity through its different brands; Lafarge Concreto, Lafarge Duragard and Lafarge Cement.

8

Scope & Objective

The objective of this study is to identify items

which can be declared as disposable items. This

will help in improving working capital, reducing

the storage, handling costs and various indirect

costs being incurred by Lafarge in maintaining

such non-usable Items. The project here by helps

to understand the inventory’s maintained by

Lafarge cement and categorising them as

movable and non movable items. It also helps to

understand the valuation of items, how much the

stock of inventories Lafarge cement maintains

and how it uses them.

9

Company Overview

Lafarge India is a subsidiary of the French

Building Materials major Lafarge. Lafarge is the

world leader in building materials, with top-

ranking positions in all of its businesses: Cement,

Aggregates & Concrete and Gypsum. Lafarge

entered the Indian market in 1999, with the

acquisition of the cement business of Tata Steel.

This acquisition was followed by the purchase of

the Raymond Cement facility in 2001.

10

Lafarge currently has four cement plants in India:

two integrated plants in the state of Chhattisgarh

, one grinding station each in Jharkhand & West

Bengal. Total cement production capacity of

Lafarge in the Indian market currently stands at

around 6.5 million tons. Lafarge India produces

different types cements like Portland Slag

Cement, Portland Pozzolana Cement. Lafarge

Cement is famous all over the world for its

premium quality and has been used to build

many landmark buildings,structures globally. The

company is a leading cement player in Eastern

India. It’s brands Lafarge Cement and Lafarge

Concreto Cement enjoy high brand equity here

and are amongst the highest priced brands.

Lafarge is committed to the Indian market and

has firm plans to expand its capacity in India.

Lafarge cement is available through a large

dealer network, throughout eastern India- in the

states of West Bengal, Jharkhand, Bihar,

Chattisgarh, Orissa and North-East States.

11

Lafarge Cement is also available in parts of

Madhya Pradesh and Maharashtra (Vidarbha

region), Part of Uttar pradesh , Andhra Pradesh &

National Capital Region.

Brief Review of Plants

Lafarge India's current cement operation

comprises a modern split location cement facility

12

located at Sonadih (District Raipur,

Chhattisgarh) , at Jojobera (District Singhbhum,

Jharkhand), at Mejia(District Bankura,West

Bengal) and an integrated cement facility located

at Arasmeta (District Janjgir-Champa,

Chhattisgarh).

All plants are ISO 9001 and 14001 certified.

The plants at Sonadih, Jojobera,Mejia and

Arasmeta are based on the dry process

technology and use energy efficient processes.

The thermal energy of the kiln is optimized by

the use of a multistage pre-heater with in-line

pre-calciner.

13

Lafarge worldwide places a very high emphasis

on protection of the environment. In all its Indian

plants, bag filters and electrostatic precipitators

are used to reduce pollution and ensure

environment friendly plant operations.

Lafarge India has adopted stringent quality

control measures to ensure the highest quality

cement .The plants have the benefit of the strong

technical and R&D set-up of Lafarge group called

DPC which is supported by CTI & CTEO - at Lyon

in France, CTS - at Montreal in Canada, ATC - at

Kuala Lumpur in Malaysia and CTEC - in Austria.

14

Lafarge Group employs more than 500 scientists

and spends more than 100 million euros annually

in developing leading technologies in the area of

building materials and construction technology.

The regular exchange of knowledge and

technological improvements between the

technical centre and the Indian operations has

enabled Lafarge India to improve operational

efficiencies on a continuous basis.

15

Location Facilities Rated Capacities

(as of 2009)

Sonadih

Clinkerisation unit 1.4 MTPA of clinker

Cement Grinding unit

0.5 5MTPA of Ordinary

Portland Cement (OPC) 43

grade

Jojobera Cement Grinding unit with

separate circuits for

clinker and slag grinding

3.4 MTPA of Portland Slag

Cement (PSC) & Portland

Pozzolana Cement (PPC)

Arasmeta

Mejia

Clinkerisation unit

Cement Grinding unit

1.6 MTPA of clinker

1.6 MTPA of Portland

Pozzolana Cement (PPC)

Cement Grinding Unit

1.0 MTPA of Cement

Portland Pozzolana

Cement (PPC)

Vision

To be a leading cement company in India.

Sustained growth that creates value for our shareholders and doubles our turnover every 4 years.

Building strong brands that meet consumer needs and aspirations. 

Embracing safety as a way of life. 

Being a responsible citizen and ensuring sustainable development. 

Being committed to the highest standards of corporate governance by conducting the business with integrity, honesty and transparency.

Fostering a performance culture in an environment of learning that encourages mutual trust and respect, teamwork, customer orientation and sharing of best practices .

16

LAFARGE PRODUCTS

World leader in building materials, Lafarge holds top-ranking positions in all of

its businesses: Cement, Aggregates & Concrete and Gypsum , plaster primer

named “ASTARTEK”.

17

Important Definitions

Inventory - Inventory is the total amount of goods / materials

contained in a store or a factory at a given time.

Non Moving Items – The items lying in the inventory of

Lafarge’s Plants which have not moved since Oct. 2004

Slow Moving Items – The items lying in the inventory of

Lafarge’s Plants which have not moved since July,2006.

Insurance Spares – The spares which have a book value

greater than Rs. 1.6 crores are insurance spares.

Critical Spares – The spares which are essential for

continuous operation of the plant i.e. the plant cannot

continue production if the major equipment running through

these spares are not available at the time of breakdown.

Non Productive Items – Items lying in Lafarge’s inventory

which are fast moving and consumable but are of no

18

economic importance to Lafarge. Such Items included

Stationary, Printed Stationary , Printer Cartridges etc.

S- Tagged Items – The items which are live in nature i.e. they

are suitable to use in there present condition

U- Tagged Items – The items classified as U tagged were

those items which are declared as Obsolete and are not more

suitable to use in plant or the major equipment is not running

due to technological advances.

O– Tagged Items – This category of items represents the dead

items.

M – Tagged Items – This category includes those items, which

are required to be maintained in the inventory within a

minimum permissible limit. The quantity level of such items

should never reach below the allowed minimum permissible

limits. Responsibility to maintain inventory/ availability of

such items is of Plant Inventory Team.

19

Item Master & Supplier Master

Item Master – Item Master gives all the details about the item

that has been procured such as item description, item code

etc.

Supplier Master – Supplier Master deals with all the details of

the suppliers.

Generation of Codes

Any item in the inventory is given a particular code which is

comprised of 9 digits.

Consider the following example:

Suppose a Item Code is 220104A01

The logic behind generation of this code is shown below:

22 represent the class, standard item.

2201 represent the family, bearing.

220104 represent the sub family, ball bearing.

A01 represent the serial number of the particular item.

Similarly, codes are generated for suppliers which comprises of 8 digits.

20

Approach

Focused on Items, which have not moved since last one year, which also included Slow Moving and Non Moving Items.

Segregation of Items Department wise

Meeting with Respective Department Heads & Users.

21

Working at Eastern Operation Office

Kolkata

Segregated Items Department wise, Class wise and Family wise.

Analysis of Non Moving Items.

Analysis of Top Items.

Analysis of Non Productive Items.

Classified Items on the basis of Equipment type.

Learned Use of stocks.

22

Valuation of Jojobera Cement Plant

Total Inventory* (MINR)

Jul 2009

Non Moving Items (MINR) (Not Moved since Oct 2004)

Slow Moving Items (MINR) (Not Moved since July 2006)

Moving Items (MINR)

July 2009

No. of Items

9102 1989 3414 5688

Total Value

250.95 8.51 25.76 225.19

Top Items23

Departments Value (MINR) July 2009

Mechanical 58.52

Electrical 10.64

Electrical & Instrumentation 9.71

Mines 14.26

Production 35.73

Instrumentation 8.18

Total 137.04

Non Moving Spares, appearing in inventory, for the following main equipments:

24

Equipment Value (MINR) July 2009

Coles Crane 0.16

Dozer D155 0.16

Dumper BH40 0.22

Dumper LW 35 0.17

IR HP 450 SCU Compressor 0.10

Others 1.59

Total 2.40

Non Productive Items

25

Category No. of Items Value

A 3 0.04

B 142 0.88

C 4 0.03

Total 149 0.95

CATEGORY INCLUDES:

A INVENTORY OF CONSUMABLE ITEMS

BINVENTORY ITEMS RELATED TO : IT,ELECTRONICS,CONSUMABLES,GENERAL ITEMS,STATIONARY & PRINTED STATIONARY

CINVENTORY OF ELECTRONIC ITEMS WHERE THE MAIN EQUIPMENT/METHOD IS OUT DATED.

Observations

There were some rubber items laying in inventory which were

not moved since 2004, which required physical verification.26

Similarly, there were couplings and bearings which also

required physical inspection after not having moved for so

many years.

Many non-productive items are part of Inventory. Maintaining

inventory of such items may have impact on carrying /

handling cost. Ex. stationary, printing stationery, IT related

products such as Printer Cartridges, RAM & Hard Disk etc.

Evaluation on Jojobera Cement Plant

Worked on Inventory as on 11th July, 2009.

Modified our strategy by working on last year non moves items

27

Held a detailed discussion regarding non moving items.

Summary of Disposable Items

Department No. of Items Value(INR)

MINES 307 15,61,407.70

PRODUCTION 4 4,09,406.21

CIVIL, DG, ELECTRICAL AND INSTRUMENTATION 52 2,93,818.37

INFORMATION TECHNOLOGY 21 1,51,197.80

DISPATCH 2 8,014.66

TOTAL 386 24,23,844.74

Recommendations

28

Maintaining healthy relations with suppliers.

Working on Zero Inventory Basis.

Reduce the Purchase Procedure Timing.

Formation of a Centralized Core Committee which will visualize procurement of materials for all the plants.

Suggestions

29

If predictions made by Inspectors can provide specific details about failure of equipments, it can help in reducing inventory by working according to the time limit given by them.

Some Items are doubly coded which results in non- moving items.

Key Learning’s

30

The logic behind generation of codes for various Items.

How are inventories classified and maintained in stores

Purchasing Process

Organizational Structure

Organizational Approach

Art of Management

Conclusion

31

Lafarge is maintaining a huge stock pile of

inventories which causes a great impact on

storage costs, handling costs and other indirect

costs. In order to restore the order of inventory,

Lafarge must redefine the criticality of the

components and must revise the ordering and

purchasing process so that the items are

procured in right manner and in right quantity

and at right time. A total reduction of Rs. 27 Lacs

of inventory was made in Jojobera Cement Plant.

Such analysis should be carried out on a regular

basis to ensure a constant check on the levels of

inventory.

32