Introduction to Inventory

CHAPTER-I

INTRODUCTION

INTRODUCTION TO INVENTORY

The materials means and includes the goods an services being sold by the firm and the raw materials are other components being used in the manufacturing of such goods and services. A retail shop keeper keeps an inventory of finished goods to be offered to customers when ever demanded by them. On the other hand, a manufacturing concern has to keep a stock pile of not only the finished goods it is producing, but also of all physical ingredients being used in the production process.

“inventories are assets of the firm, and as such they represent an investment. Because such investment requires a commitment of funds, mangers must ensure that the firm maintains inventories at the correct level. If they become too large, the firm loses the opportunity to employee those funds more effectively. Similarly, if they are too small, the firm may lose sales. Thus, there is an optimal level of inventories and there is an economic order quantity model for determining the correct level of inventory.”

DEFINITIONS:

• Inventories are the “stock of the product, a company is manufacturing for sale and the components that make up the product.”

• An inventory can also defines as, “a stock of goods which must be carried out in order to ensure smooth and efficient running of business”.

NEED FOR THE STUDY:

There has been an increase in net profit, gross margin, gross profit gross sales, internal resources generation, export earnings & contribution to the exchequer 04. A detailed analysis of the public sector, industry wise profitability, reveals that 50% of the PSUS are loss making and another 50% are highly profitably like SAIL, GAIL, BALCO, HPCL & BHEL.

The main reason attributed for loss making in financial in discipline in managing the resources particularly in inventory management.

For an organization, the product profitability considering standards and budgets is of paramount importance need less to say that in this context, inventory management assumes lot of significance. It is observed that most of the public sectors are in losses due to holding of huge inventories and became white elephants for the Govt. as such an attempt has been made to study the inventory management with reference to ZUARI

Inventory management software helps create invoices, purchase orders, receiving lists, payment receipts and can print bar coded labels. An inventory management software system configured to your warehouse, retail or product line will help to create revenue for your company. The Inventory Management will control operating costs and provide better understanding.

TYPES OF INVENTORY

OBJECTIVES OF PROJECT STUDY:

Inventory management in public sector under taking assumes lot of significance. This work become more complex when there are number of products division and less common, items of inventory.

It is observed that generally PSUS in some cases, are loaded which high volumes of inventory leading to obsolescence with consequent charging to profit / loss a/c resulting in reduction of the profits. Non-moving and obsolete inventories would affect liquidity and result in blockage of funds there by drastically affecting the performance of an organization.

In the backdrop of above, it is proposed to take a project study on inventory management in a leading public sector – ZUARI,. The above study is aimed at analyzing the inventory management practices prevalent in ZUARI

This is to followed by critical analysis and assessment of performance on this by company. At the end of the project work it is proposed to sum up providing conclusions, making suggestion for improvement.

Analysis of the performance would focuses on application of standard tools of measurement like turnover ratios etc., to trend analysis and structural analysis.

SCOPE AND METHODOLOGY:

The project report on inventory management covers collection of data, analysis of the data, interpretations @ suggestions.

Inventory statements are prepared on the basis of the financial statement ofZUARI

LIMITATIONS:

As stated else where,ZUARIis under a strategic ministry of Government of India dealing with Nuclear power, defense, and etc. the very nature of the organization place certain limitation on the collection of the data and analysis there of . It was not possible to collect total information.

PERIOD OF STUDY:

The proposed project study will cover financial five years. Depending upon the data availability.

METHODOLOGY:

For the preparation of a project the collection of data is very essential. They are primary data @ secondary data.

SOURCES OF DATA:

• Primary data

• Secondary data

Primary data:

From direct personnel and oral investigation.

Secondary data:

The secondary data is obtained from the

1. Annual reports of the unit.
2. Other reports of unit.
3. Broachers
4. house magazines of the unit and
5. Internet.

CHAPTER-II

REVIEW OF LITERATURE

PRESENT SCENARIO OF INVENTORY MANAGEMENT IN INDIA

The success of a venture depends on its ability to provide services to customers or users and remain financially viable. For an organization which is supplying goods to its customers, the major activity is to have suitable products available at an acceptable price within a reasonable timescale. Many parts of a business are involved in setting up this situation. Initially these are the marketing and design departments. Then purchasing, and in some cases, manufacture is involved. For an item, which is already in the marketplace, the main activity is providing a continuity of supply for the customers.

Inventory control is the activity, which organizes the availability of items to the customers. It co-ordinates the purchasing manufacturing and distribution functions to meet the marketing needs. This role includes the supply of current sales items, new products, consumables, spare parts, obsolescent items and all other supplies.

Inventory enables a company to support the customer service, logistic or manufacturing activities in situations where purchase are manufacture of the items is not able to satisfy the demand. Lack of satisfaction could arise either because of the speed of purchasing or manufacturing is to protected or because quantity cannot be provided without stocks.

Stock control exists at a cross roads in the activity of a company.

Many of the activities depend on the correct level of stock being held. but the definition of the term “correct level” varies depending open which activity is defining the stock. Stock control is definitely balancing a act between the conflicting requirements of the company, and the prime reason for the development of the inventory management to resolve this conflicting best interest of the business. A conventional supply organization will have many departments including sales, purchasing finance, quality assurance, contracts and central

administration. In some cases there will also be manufacturing, distribution or support services or a variety of industry specific active. Each of these has a particular view of the role of stock control.

Sales consider that stock control enables the company to have available any item, which will meet immediate sales for as demanded this requires large stock. For manufacturing companies where parts manufacturing are involved, the control of stock at the customer interface is traditionally left with the person carrying out the manufacture, and this has led to overstocking and poor control. Similarly compromise has to be reached. Inventory control keeps balancing conflicting requirements.

Finance departments have a problem with stock because it consumes vast amounts of working capital and upsets the cash flow. One benefit of stock from a financial standpoint is that provisions can be made in case the stock turns out to be unassailable, and this value can be adjusted to modify the profit figure in terms of good or bad financial results. However, the existence of these provisions in the first place is detrimental to the finances of the company.

Quality management normally has the effect of slowing down the progress of stock while the necessary checks are made. This means that quality and inventory personnel effectively work in opposition. The gradual introduction of formal quality standards for supply and manufacture has reduced this conflict in most organizations. Supplier conformance has been improved enabling intrusive checking to be minimized.

General management sees stock control, rightly, as a source of information. Some managers consider that they should be able to use stock control to give an immediate supply information, statistics and forecasts. This can result in large amounts of unstructured work collecting, analyzing and providing information.

The traditional view of manufacturing companies like ZUARI has been that large batches reduce the direct production costs. Manufacturing management tends to aim more for plant and labor efficiency and allow high stocks in order to avoid the disruptions caused by shortages, breakdowns and changing customer demand.

The responsibility for maintains gig the correct balance is normally left to inventory management. Demand for the product results from changes in market and financial forces and the amount and type of stock control varies. Stock control is a kept right. This requires both communications skills and professional inventory techniques. Operating methods should be continuously revised to reflect the changes and systems should be altered to suit new situations and operating policies.

CHAPTER-III

COMPANY & INDUSTRY PROFILE

Italcementi Group History

Founded in 1864, Italcementi was quoted for the first time on the stock markets, at the Milan Stock Exchange, in 1925, under the name of “Società Bergamasca per la Fabbricazione del Cemento e della Calce Idraulica” and has been operating since 1927 under the name of Italcementi Spa.

Zuari Cement is part of the Italcementi Group, the fifth largest cement producer in the world and the biggest in the Mediterranean region. With net sales over 6 billion Euros in 2009 and a capacity of 70 million tonnes. Italcementi Group combines the expertise, know-how and culture of a number of companies from more than 22 countries in 4 continents. This includes an industrial network of 63 cement plants, 15 grinding centres, 5 terminals, 134 aggregates quarries and 613 concrete batching units. In India, with its inherent strengths, Italcementi Group's Zuari Cement is committed to give the building industry a cement that is truly international.
A commitment to customer satisfaction has seen Zuari Cement grow from a modest 0.5 million tonne capacity in 1995 to 3.5 million tonne today. Zuari Cement is in the process of increasing this capacity to 6 million tonne by 2009 through setting up of a new 5500 tonne per day clinker line at Yerraguntla and a grinding center at Chennai. A captive power plant with a capacity of43 MW has already been set up at the Company's cement manufacturing facility at Sitapuram.
With a 6% market share in the south Indian cement market and sales of about Euro 188 million in 2009, Zuari Cement has chalked out ambitious plans for the future. This includes strengthening its presence in the Maharashtra, Orissa and West Bengal markets. While technology is just one of its strengths, there are many other factors that contribute equally to Zuari's success. These include a high-level organisation and decentralised quality assurance teams to guarantee the full compliance with the customers' expectations.

Our History

Strong foundations for a company of strength.
Zuarientered the Cement business in 1994 to operate the Texmaco Cement Plant. In 1995, Texmaco’s Plant at Yerraguntla was taken over by Zuari and a Cement Division was formed. The fledging unit came into its own in the year 2001 when Zuari Industries entered into a Joint Venture with the Italcementi Group, the 5th largest producer of Cement in the world, Zuari Cement Limited was born. Zuari Cement took over Sri Vishnu Cement Limited in 2002. Today, the Company is amongst the topmost cement produces in South India.
Zuari and Italcementi. The strength of two
Zuari Cement is one of the leading cement producers in South India.A fully owned subsidiary of the Euro 6 billion Italcementi Group, Commitment to customer satisfaction has seen Zuari Cement grow from a modest 0.5 million tonne capacity in 1995 to 3.5 million tones today.And earned a place among the most reliable cement producers in the country.

Thanks to a careful plan of investments and take-overs of other cement producers, the company expanded, quickly reaching a strong position on the market and becoming the leading cement manufacturer in Italy.

After several acquisitions abroad, in 1992 Italcementi achieved important international status with its take-over of Ciments Français, one of the main global cement producer.

In 1997 Italcementi consolidated its verticalisation strategy with the acquisition of Calcestruzzi, thus becoming Italian leader in the ready-mixed concrete sector.

In March 1997, all the international companies of the Group gathered under one single corporate identity.
Since 1998 Italcementi Group has been pursuing its internationalisation strategy by acquiring new cement works in Bulgaria, Kazakhstan, Thailand, Morocco, India, Egypt and the United States.

Our Management:

While professional management and quality workforce ensure superior results, the role played by the core management should not be discounted. With their vision and experience, they make sure that Zuari Cement moves in the right direction. Towards becoming one among the leading cement producers in India.

• Higher compressive strength
• Better soundness
• Lesser consumption of cement for M-20 grade concrete and above
• Faster deshuttering of form work
• Reduced construction time
• Primo Concrete Cement - Concrete Redefined

• Higher compressive strength
• Better soundness
• Lesser consumption of cement for M-20 Concrete grade
• and above
• Faster deshuttering of form work
• Reduced construction time

CHAPTER-IV