Escolar Documentos
Profissional Documentos
Cultura Documentos
Inventory management
b)
Material department
c)
Purchase section
d)
e)
Delay in delivery
f)
Material coding
g)
Packing
h)
Inspection of material
i)
j)
k)
Inventory control
l)
m) Inventory software
n)
Different vouchers
What to purchase
How much to purchase
From where to purchase
Where to store, etc.
IFFCO IS:
1.
2.
3.
UREA
- 4242.2
b.
NPK/DAP
- 4335.4
c.
TOTAL N
- 2628.2
d.
BOARD OF DIRECTORS
The Directors of IFFCO
Chairperson Shri Surinder Kumar Jakhar
Vice-Chairperson- Shri N.P. Patel
DIRECTORS
Shri Chandra Prakash
Shri S.L. Dharme Gowda
Shri Kartick Chandra Sarkar
Shri Harminder Singh Jassi
Shri M.Gopal Reddy
Shri Ankushrao R.Tope
Managing Director Dr. U.S.Awasthi
Dy. Managing Director-cum-Marketing Director Shri D.K. Bhatt
Dy. Managing Director Shri Rakesh Kapur
Director (Technical) - Shri V.K. Bali
Director (Coop. Development) Dr. G.N. Saxena
Director (HRD) Shri S.K. Mishra
BANKERS
India Overseas Bank
State Bank of India
Bank of Baroda
Standard Chartered Bank
The Maharashtra State Co-operative Bank Ltd.
The West Bengal State Co-operative Bank Ltd.
Madhya Pradesh State Co-operative Bank Ltd.
The Karnatake State Co-operative Bank Ltd.
The Punjab State Co-operative Bank Ltd.
The Hongkong and Shanghai Baking Co-operation Ltd.
ICICI Bank Ltd.
IDBI Bank Ltd.
Producing fertilisers.
Promoting the fertilisers distribution system in the co-operative sector.
Ensuring availability of fertilisers at the farmers doorstep.
Creating scientific awareness among farmers.
Promoting nations growth through modern family techniques.
Improving agricultural productivity through balanced fertiliser application.
Strengthening cooperation distribution system.
To promote the activity for enriching the life of the rural.
IFFCO has grown steadily since its inception today. It has emerged
not only as the largest fertiliser producing organization in India but also Asias
largest fertiliser co-operative.
IFFCO started with two modern plants at a cost of Rs. 976 million. One ammonia
and urea complex at Kalol and NPK plant at Kandla both in Gujrat.
Movement by using duly tested and appropriate consultancy, advisory and technological
interventions sourced from within the country and abroad and in accordance of the
Cooperative Principles and in harmony with the law and culture of the land.
Board of Directors
Managing Director
Director
Director
Marketing
Finance
Sr. Executive
Director
Technical
Executive
Director
(P& A)
Executive Dir.
Planning
&
development
: Rs 95 million
Activity
: 19.09 %
Plant Site
: Darou, Senegal
Products
Activity
Production capacity
: 72.64%
Activity
: General Insurance
Corporate Office
: New Delhi
: Rs 2.2 billion
IFFCOs Equity
: Sur, Oman
Products
: Ammonia, Urea
: 70 : 30
IFFCOs Equity
: 76%
: 24%
Activity
: 12%
: Rs. 4 Crore
: 13.33%
Activity
: 70 : 30
IFFCO Equity
: 74%
CSEB
: 26%
Activity
: Rs. 11 Crore*
Location
: Dubai
Activity
* Includes Rs. 9.80 crore towards 9 bonus shares received during 2007-08.
11
VISION
To augment the incremental incomes of farmers by helping them to increase their crop
productivity through balanced use of energy efficient fertilisers; maintain the
environmental health; and to make co-operative societies economically and democratically
strong for professionalized services to the farming community to ensure an empowered
rural India.
MISSION
IFFCOs mission is to enable Indian farmers to prosper through timely supply of
reliable, high quality agricultural inputs and services in an environmentally sustainable
manner and to undertake other activities to improve their welfare
1) To provide to farmers high quality fertilisers in right time and in adequate
quantities with an objective to increase crop productivity.
2) To make plants energy efficient and continually review various schemes to
conserve energy.
3) Commitment to health, safety, environment and forestry development to enrich the
quality of community life.
4) Commitment to social responsibilities for a strong social fabric.
5) To institutionalize core values and create a culture of team building, empowerment
and innovation which would help in incremental growth of employees and enable
achievement of strategic objectives.
6) Foster a culture of trust, openness and mutual concern to make working a
stimulating and challenging experience for stakeholders.
7) Building a value driven organization with an improved and responsive customer
focus. A true commitment to transparency, accountability and integrity in principle
and practice.
8) To acquire, assimilate and adopt reliable, efficient and cost effective technologies.
9) Sourcing raw materials for production of phosphatic fertilisers at economical cost
by entering into joint ventures outside India.
10)
To ensure growth in core and non-core sectors.
11)
A true co-operative society commitment for fostering co-operative
movement in the country.
12
VISION 2010
In order to maintain the sustained pace of remarkable growth being achieved under
mission-2005 the society is in the process of formulating another growth plan VISION
2010 which aims at:
13
APPROACH
To achieve our mission, IFFCO as a Cooperative society, undertakes several activities
Covering a broad spectrum of areas to promote welfare of member cooperatives and
farmers. The activities envisaged to be covered are exhaustively defined in IFFCOs Byelaws.
COMMITMENT
Our thirst for ever improving the services to farmers and member co-operatives is
insatiable, commitment to quality is insurmountable and harnessing of mother earths
bounty to drive hunger away from India in an ecologically sustainable manner is the prime
mission.
All that IFFCO cherishes in exchange is an everlasting smile on the face of Indian
Farmer who forms the moving spirit behind this mission.
14
PERFORMANCE HIGHLIGHTS
(For the year 2007-08)
Production of fertilisers
Plant productivity
IFFCO ASSOCIATES
1. INDUSTRIES CHIMIQUES DU SENEGAL
2. OMAN INDIA FERTILISER COMPANY S.A.O.C.
3. INDIAN POTASH LTD.
4. NATIONAL COMMODITY & DERIVATIVES EXCHANGE LTD.
5. NATIONAL COLLATERAL MANAGEMENT SERVICES LTD.
6. COOPERATIVE RURAL DEVELOPMENT TRUST
7. KISAN SEWA TRUST
8. IFFCO FOUNDATION
9. LEGEND INTERNATIONAL HOLDINGS INC
16
AWARDS GALORE
KALOL UNIT
1) Seven awards received for overall performances from FAI.
2) Two awards for industrial safety from GOI.
3) Award for technical innovation from FAI.
4) Two Rajya Bhasha Shield for promoting Hindi.
5) Award for safety from National Safety Council, Chicago.
6) Indo German greentech environment excellence award.
PHULPUR UNIT
1) Four awards for productivity from NPC.
2) Six national safetys award from GOI.
3) Two awards for overall performance from FAI.
4) Two awards for technical innovation from FAI.
5) FAIs Award for Best Overall Performance of an operating fertiliser unit for Nitrogen
(Ammonia and Urea) Plant jointly with Zuari Industries Limited, Goa.
KANDLA UNIT
1) Twelve safety awards from national safety council Bombay GOI.
2) Twenty-three safeties award from Gujarat.
3) Raj Bhasa award for promoting Hindi.
17
AONLA UNIT
1) Award for best implemented project ( 2nd price) from GOI.
2) Award for conservation of energy from GOI.
57
1974-75
25528
1980-81
26960
1986-87
28134
1992-93
30200
1998-99
35072
2004-05
37381
2007-08
39564
18
LOCATION
State
Uttar Pradesh
State Capital
Lucknow
280 Km.
260 Km.
Nearest Airport
New Delhi
Railway Station
Road
260 Hectares
220 Hectares
YEAR OF COMMISSIONING
INVESTMENT
YEAR OF EXPANSION
: 1996
INVESTMENT
PRODUCT
: Rs.149.2 Crore
CAPACITY
TPD
TECHNOLOGY
TPA
AMMONIA
3480
11,48,400
HALDOR TOPSOE
UREA
6060
19,99,800
SNAMPROGETTI
2788
9,19,908
The IFFCO AONLA Unit is located in the Gangetic Plains of Uttar Pradesh in Bareilly
district about 28 Km. Southwest on Bareilly-Aonla Road. It was set up on 08 January
19
1985 and started commercial urea production at 16 July 1988. The infrastructure of
AONLA unit is very big and constructed on 713 acres of land.
IFFCO Aonla unit is the most efficient and quality-wise as well as environmental
oriented unit so that M/s KPMG Peat Marwick, a quality registrar has certified it as ISO:
9002 unit and M/s BVQI London has accredited it as ISO:14001 unit. The Aonla unit, an
Ammonia- urea complex is comprised of the two phases:
o AONLA-1
o AOLLA-2
AONLA -1 was established in 1988 and it was digested to nation by honourable Prime
Minister of India late Shri Rajeev Gandhi on 17 May 1989.
AONLA-2 was established in1996 December. This unit was designed to nation by
honorable Prime Minister of India Shri I.K. Gujral on 28 Jan 1997.
Aonla-1
Aonla-2
Ammonia
4,45,500MT
4,45,500MT
Urea
7,26,000MT
7,26,000MT
Capacity (P.A.)
30.09.1993
30.11.1996
15.12.1996
18.05.1988
26.11.1996
feedstock
Natural gas
20
Following enhancement in capacity has been envisaged with a total annual increase in
Urea Capacity by 5.115 lakh MT:
Name of Unit
Present Capacity
Proposed
Increase
in
Phulpur-1
Phulpur-2
Aonla-1
Aonla-2
Total
( MTPD)
1670
2620
2620
2620
9530
Capacity (MTPD)
2080
3000
3000
3000
11080
Capacity (MTPD)
410
380
380
380
1550
The installed cost for the Enhanced Capacity is estimated at about Rs. 19 lakh per MTPD
of Urea as against the Rs. 65-70 lakh per MTPD Urea in case of a Grassroots Plant.
Therefore De-bottlenecking of existing Urea Units is the best route to create additional
capacity.
IFFCO has initiated action for De-bottlenecking of its plant at Aonla and Phulpur Units for
Capacity Enhancement. We are awaiting final clearance from DOF. Incidentally this will
also reduce the subsidy to Government vis a vis imported Urea.
21
General Manager
JGM/CM
Production
Ammonia
JGM/CM
Maint.
General Manager
JGM/CM
JGM/CM
JGM/CM
Technical
Utility
Comm.
F&A
F& A
Mechanical
Process
Power Plant
Purchase
Electrical
Design &
Offsite
Store
JGM/CM
Plant
Urea Plant
Drawing
Product
Instrumental
Library &
Handling
Civil
Document
Traffic
Laboratory
Training &
Development
General
Engg.
JGM/CM
JGM/CM
22
Organisation Structure
FINANCE & ACCOUNT
DEPARTMENT
BOOKS/FICC
CELL
FINANCIAL
CONCURRENCE
Supply
Section
Indigenous
supply
BILL
SECTION
PAYROLL
SECTION
Note Sheet
Payment
Imported
supply
PSL
SECTION
Work Order
Work
contract
Service
contract
23
Senior Manager
(F& A)
Senior Manager
(F& A)
Manager
(Account)
Manager
(Account)
Deputy Account
Manager
Deputy Account
Manager
Manager
(Account)
Deputy Account
Manager
Manager
(Account)
Deputy Account
Manager
Account Officers
Junior Account officers
Senior Accountant
Junior Accountant
24
1. BOOKS SECTION
This section basically deals with accounting function, maintenance and keeping of records.
The various functions include:
a. Books: Preparing and maintaining balance sheets.
b. IFCC (Fertiliser Industries Coordination committee)
c. Costing & Pricing Cells
d. Reporting
c. Medical Allowance
d. Conveyance
e. Advances
f. Loans to employees
3. Taxation Section
As per the status and operations of the society, It deals with the following Taxes:a. Central Excise Duty
b. Income Tax
c. Service Tax
d. Sales Tax
26
27
OBJECTIVE OF STUDY
The main aim of study is to check the efficiency and effectiveness of inventory
management system.
Investment in inventory incurs a high cost. Therefore effective management is necessary
to minimize the cost and ultimately increases profitability of an organization.
A part from our main objective our main objectives are:
1) To analyze the level of investment in inventory by IFFCO.
2) To analyze the financial position of the company.
3) To give suggestion if any, regarding effective inventory management.
Or
To give suggestions to ensures smooth and uninterrupted supply without making
unnecessary investment of funds in inventory.
28
HYPOTHEIS
IFFCO is a big organization. It is very typical for it to manage the inventory. This report is
basically concerned on how to manage inventory in a more effective way. There is any
alternative by which it can be managed in a better way or the tradition inventory
management is better.
29
METHODOLOGY
The data has been collected from the primary resources as questionnaire. Then it was
distributed to all the employees of the finance department and purchase department. The
questionnaire is built considering the availability of data and convenience. Data were
collected through the inventory software, databases, net and by asking questions. The
collected data is captured into the questionnaire for the analysis. There is no manual
coding. I have also included some financial data with the help of annual report.
The data is collected with the help of questionnaire and observation. In the
questionnaire all the relevant questions regarding the inventory management are included.
Here we have used convenience sampling that is we have selected the data according to
our convenience. I have followed that results which are quite similar in responses.
30
SOURCES OF DATA
There were various sources for collecting the data. But I have collected data from some of
the resources that are as following1) Questionnaire
2) Internet
3) Annual report of IFFCO
4) Accounting manual of IFFCO
5) From the stores
6) By the inventory software (PSL) that is used in IFFCO
31
MATERIAL DEPARTMENT
Material Department is responsible for the proper handling of inputs and controlling of
material inputs. Proper handling of input materials ensures the smooth running of plant.
Material department recognizes the need of the input materials and arranges them for the
plant. It includes the procurement, verification and controls of materials in right quantity
and at right time to facilities the production function.
Material management includes two important functions:
Purchasing
These both sections are interrelated and perform their function on coordination.
All purchases are to be made only by the materials department except purchases of petty
item through some vouchers and Department Managers within the limits prescribed in
purchase procedure. Material purchase indent should give following information:
1) Quantity in stores
2) Average monthly consumption since last purchase for stock items
3) Maximum /minimum level
4) Last purchase order reference
5) Reorder level
34
PURCHASE SECTION
The purchase department is at the interface of internal and external department. Purchase
department do enquiry about the inputs whether it is required or not. This enquiry is done
in two ways that are:
1) Single stage
2) Two stage
After enquiry purchase department invites a tender. After confirmation of all terms and
conditions the department contacts the supplier and orders for the inputs. Thus it is
responsible for purchasing of materials and other raw materials whatever is required by the
organization. Purchase department is responsible for the delivery of right amount of
material at the right time and at the right location to avoid the hampering of the
production.
Purchasing is distinct from buying. Purchasing involves the extra knowledge as the
tenders, various vendors, their prices, comparison between them, after sale service,
dispatching follow up and payment terms.
The purchase department considers various things before purchasing the raw materials.
1. Information about the input material
2. Sources of material- vendor
3. Reasonable price of that material
4. All terms and conditions
Indentor is that person which raises the indent.
35
PURCHASE PROCESS
The purchase process can be expressed as following:
INDENTOR
Two stage
E- Procurement
Manual
(15 days)
(21 days)
Opening
Order
(With approval of competent authority)
36
1) RAISING OF INDENT: First of all the indentor raises the indent. This indentor
may belong to any department. Now the indentor informs to the store. If that
particular material is not available at the particular point of time then store informs
to the purchase department. After it the working of purchase department starts.
b.
c.
Unit
d.
Quantity required
e.
Value
f.
Budget code
g.
MPR No.
h.
Indentor
4) MRP SCRUTINY: Next step involves scrutinizing of the MRP to certified the
genuinely of the need, for this, first approval to given by immediate higher authority
of the indentor. Next, the MRP is send to the stores, to check whether the material is
available or not. If it is not available the MRP goes to the purchase department. For
further action. Here it is scrutinize in three ways :
Approval scrutiny
Budget scrutiny
Technical scrutiny
37
Single stage
Two stage
SINGLE STAGE: Single stage is followed when there is no or very few
chance of technical deviation. Here there is no restriction on supplier or
vendor. This enquiry is done in case of nonproprietary items.
TWO STAGE: Two stage enquiry is followed when there is more chances of
technical deviation. This enquiry is done in case of proprietary items.
Items can be classified in to two categories keeping in view the purchasing function
Proprietary items: These are those items e.g. spares which have to be
bought from particular supplier or vendor.
Enquiry is sent in order to know the prices and other terms and conditions of vendors.
Bidding can be done in three ways-
I.
Proprietary bidding: This is for the proprietary items and is sent to only
one vendor. Here the proprietor is invited to set a competitive price.
II.
Limited tender enquiry: This is done for non proprietary items and bids
are invited from a limited no. of vendors selected from the registered
vendors with the company.
III.
6) Receiving of offers: After all the bids have been submitted the tenders are opened
before tender committee to compare the quotations38
Quotations comparison statement (QCS) is made and bid with lowest quotation is
generally chosen. QCS is also sent to the technical department and in consultation with it
one more than one offer are chosen, giving quality and price the top priority. Quotation
must be technically acceptable. Generally technically acceptable L-1 bidder is chosen.
7) Purchase order: After selecting the best offer, purchase order is sent to that vendor
with all the terms and conditions specified and details of the material to be purchased
are also given. A bank guarantee of performance is taken from the vendor in advance
which is usually 5% of the P.O.A. time limit is set for delivery of consignment and in
case of delay a penalty is imposed @ 5% of P.O. per week.
8) Receipt of materials: After the consignment reaches the stipulated place, the
payment is done by the organization according to the purchase terms agreed upon by
the two parties. The material is checked for quality conditions, quantity and then sent
to the store where the store releases the Stores Receipt Voucher (SRV). From here it
is delivered to the indentor. Normal payment is done after 30 days from the receipt or
acceptance of material.
9) Follow up done for every order: It may be regarding delay in supply, changes
in price, defective or damaged items supplied etc. For every indent, a separate file is
opened and correspondence goes on. For every step, recommendations of indentor,
manager (F& A), materials manager & general manager are sought. In case of
damaged input materials the store does not accept the materials. A rejection report is
prepared in case of damaged items.
39
1.
If both the parties are agreed upon advance payment that is specifically provided in the
contract order, only then advance payment is given. The advance payment to
contractors shall be made against submission of bank guarantee in the Performa
provided by IFFCO. Advance payment against indemnity bond shall not be released as
provided in the purchase procedure.
2.
In case the terms of payment provide for full payment or part payment against dispatch
documents through bank, the supplier will be negotiating the documents through the
bankers. After the documents are received by the bankers, they are forwarding bank
intimation along with a copy of the purchase order to ascertain that the invoice is raised
for the material ordered and conforms to the other terms and conditions of purchase order.
After the intimation from the bank is received the invoice of the suppliers will be
scrutinized by the finance and account department for the following-
i.
ii.
iii.
iv.
Quantity supplied.
v.
vi.
Whether excise duty, sale tax and other taxes are as per the order.
vii.
viii.
40
Where there is delay in supplying the material and the payment through bank is 90% to
95%. It should be ensured that penalty for delay, as provided in the purchase order, is
recovered before releasing the balance payment. Where payment required to be made, a
clarification is to be sought from materials department and proper approval taken for
waiving of penalty or otherwise before retiring documents.
The payments under the contracts must be regulated as per the expressed terms and
conditions. Any payment not covered by the contractual terms and conditions should not
be released.
In case the purchase order provides the 100% payment after receiving of materials and
accepted payment is to be released after the MRR is received from the stores department.
In case the purchase order dispatch documents and the balance payment after receipt of
materials, the balance payment may also to be released after the MRR is received and it is
confirmed that the material has been accepted after inspection and taken on charge.
Before released of the payment, the invoices should be scrutinized as the case of payments
released through bank. In addition it should also be verified whether all the items invoiced
have been received, inspected and accepted per the MRR.
DELAY IN DELIVERY
In any contract, the time and date of the delivery is the essence of the contract. In the event
of delay in the execution of the order beyond the date of delivery as stipulated in the order,
the project authorities may take following actions
1. Accept delayed delivery at price reduced by a sum equivalent to 0.5 % if the value
goods not delivered for every week of delay or part thereof limited to a maximum
of 5% of the contract value.
41
OR
2. Cancel the order in part or full and purchase such cancelled materials from
elsewhere on account and at the risk of the suppler without prejudice to his right
inspect of goods delivered.
IMPORTED MATERIAL
Materials procured may be either indigenous or imported. For major projects the foreign
contracts are normally finalized at head office level and payment against these contracts
are made by the concerned unit. Where the order has been placed by the unit directly, they
will make the payment to the foreign party by debiting to the appropriate advance account.
If the payments are made through L/C against documents, the same shall be debited to
advances to foreign suppliers account. On receipt of material at site, project engineer shall
prepared the MRR and sent same to project accounts for clearing the suppliers advance
account for material.
Clearing and handling of imported material is the responsibility of material department on
the arrival of ship the materials will be cleared with reference to the invoices and bills. For
any short landing or breakage between the port of dispatch and port of destination, claim
action shall be taken by them.
42
MATERIAL CODING
It is very typical for the every organization to maintain the stock items in case of large
number of items. It will be very typical to identify them at the time of requirement. So the
items are coded to avoid confusion. For the coding of materials the account person assigns
code for every item of store. Thus every item has a code that is called its material code.
Material coding facilitates the account persons and store manager to maintain the
transactions of the items whether of receiving or of issuing.
Every item maintained by its code in the stock as well as in the store accounting section.
The item/material code remains same in stores and accounting section. Whenever a
transaction is done in store for the inventories the full details of that transaction is send to
store accounting section also, because the computers of stores and accounting section are
connected through Local Area Network. (LAN)
In this way it is very comfortable task to maintain the inventories on the inventory
software with the help of material coding.
Advantages of codification
1. Lengthy descriptions are replaced by a simple code.
2. It economizes space in forms and reduces clerical work.
3. Ease in identification of stores.
4. It is comprehensive.
5. It facilitates, mechanized accounting.
6. Secrecy of description can be maintained.
7. It ensures clarity.
43
CODING
Ammonia 11
2.
Urea
3.
Offsite
- 12
- 13
44
3 copies
Packing list
3 copies
Test certificate
3 copies
4 copies
Consignment note
Inspection of Material
The material department shall coordinate with other departments and arrange inspection of
material at vendors shop prior to dispatch. Inspection of materials in other cases shall be
carried out on receipt of materials at site. Only materials those cleared by the inspection
will be taken on charge in stores. The person inspecting the material will sign
on the stores receipt voucher in token of having inspected and accepted the material.
Generally indentor is called upon for the inspection of the material.
45
Sometimes inspection is done at the gate of IFFCO. Only after inspection material
enters into the store. If there is any damage in the material or they are insufficient in
quantity then rejection report is prepared. Its copies are distributed among all the parties
which are involved in it.
Damaged/Short/Rejected Materials
If the materials are received short or in damaged condition, there are some conditions in
this regard.
In cases where the responsibility for the transit insurance is on IFFCO, a claim should
be lodged with insurance company for the value of material plus incidentals. This
insurance is done by IFFCO TOKIO GENERAL INSURANCE COMPANY. As soon
as the shortage per damage of the materials is noticed the material department will
lodge the provisional claim with the underwriters and pass on the relevant papers to
the finance & accounts department for lodging monetary claim.
In respect of transit insurance claims bill section will pass an adjustment
Entry debiting claim recoverable account and credit the Advance to
Vendors account. After the adjustments the bill section sent the copy of journal
voucher along with all necessary details such as P.O. No. , MRR No. quantity and
value, name of the supplier to the insurance section for following up the claim with
the insurance company.
Where the responsibility for short supply or damages in transit is of the suppliers, the
material department should take up the matter with the supplier for arranging
replacement. A report is prepared in this case. Its copies are sent to the supplier,
purchase department and finance and account department.
46
Indigenous Ammonia
The indigenous ammonia is supplied by KRIBHCO / GNFC to Kandla unit. The quantity
received is accounted at the price payable to the party which is fixed by the Govt. of India.
This price is fixed at par with the landed cost of imported ammonia.
Potash
Potash purchase orders are placed by the commercial department time to time depending
on the material requirement. The material received valued at agreed price plus local sales
tax and freight for transportation of material up to plant site.
The finance department at head office ensure that payment
for these raw materials are released on due dates to avoid interest liability. After releasing
47
the payments the inter unit debit advice is sent to plant. On receipt of the payment advices
the suppliers account is adjusted in the plant.
Natural Gas
Kalol and Aonla plant consume as feed stock and fuel. As per the contract with ONGC,
gas is supplied to IFFCO at the price fixed by Govt. of India from time to time.
The meters provided at the inlet point in the plants are the basis for monthly
billing. Meter reading is carried out jointly by ONGC / GAIL and IFFCO representatives.
The unit sends the telex to head office for making payment to ONGC / GAIL after due
certification of bill by the head of technical department about quantity of gas received.
Naphtha
Naphtha is supplied by IOC against advance payment terms. There are excise duty
concessions available for these items provided they are consumed for manufacture of
fertilisers. Accounts department in coordination with production department shall ensure
that all the excise duty requirements are fulfilled that the duty concessions are fully
availed. The inventory is valued based on the quantity received as per MRR received from
production department on monthly basis. The price payable to IOC for naphtha is fixed by
the Govt. by time to time the naphtha is supplied to Kalol unit from Mathura refinery.
48
STORE SECTION
Store of any organization is of vital importance. It is the responsibility of stores to receive
the material required by the organizations operations to keep it properly & to issue it as
when required. The stores are divided in two subsections for greater flexibility like receipt
and custody section. In IFFCO there are two stores.
a. Store A for Aonla-1( this store contains that spares which are used by Aonla-1)
b. Store B for Aonla-2 unit.( it contains mainly catalysts used by Aonla-2 )
Store has the following warehouses:
Main Store
Cement godown
Petrol Pump
Cable yard
Chemical godown
Paint godown
PDIL store
A.
RECEIPT SECTION -
This section is responsible for receiving the materials and inspecting them. The process
involves following steps.
1)
The document regarding the material may be sent to the stores, purchase,
concerned department. But ultimately they have to be send to stores.
The documents may be:
Form
Excise duty
2)
The particulars of the document are noted in the carrier receipt register (CRR).
3)
After the entry in the register, the document is given to an agent termed as handling
contractor. He will collect the material.
4)
Consignments cases are intact. If not he will ask for open delivery. Then he has to
deliver the goods to stores. In case of damage he has to give a certificate. Some
49
consignment may without document i.e. door delivery and is some cases it may be
face to face delivery.
5)
If any discrepancy is found during checking, the accounts section is informed for
necessary action and getting claim from insurance company. The date of receipt is
filled in CRR.
6)
The next operation is filling the stores receipt vouchers (SRV). Here the quantity
mentioned in challan and purchase order are compared, SRV Has 7 copies, two for
accounts and one for each purchase, stores, indentor, master file & custody section.
7)
for defective ones, information is sent to supplier, accounts, indentor & insurance
company and the particulars noted in rejection register.
If there is some breakage then either item may be replaced by company or claim
B)
CUSTODY SECTION -
This section is responsible for proper keeping of materials and issuing them when required
by different department and contractors. The material received here is first checked as per
SRV for every material there is a card. These cards are located in bins according to code of
material is received in custody the card information is updated.
When someone wants to issue certain material he has to fill the store issue voucher (SIV).
Once the item is issued again information is updated in the kardex. When a particular part
is returned then this received in stores, by internal stores return voucher (ISRV). After
issuing the material the number of issue and the quantity issued is noted in SIV control
registers.
Custody section takes care of spares.
50
SPARES
About 36848 spares of Aonla Unit-1 are housed in store and 17799 spares of Aonla Unit-2
are housed in store. Spares have been classified plant wise. The first digit of the code of
item is numbered according to given criterion
Ammonia
Urea
Product handling
Power
Sp. Equipments
General items
General and
ii.
Spares
General are those inputs which can be used at various sites as wire, pipe etc.
Spare are those inputs which are specific to a particular plant and are of particular size.
51
AONLA UNIT -1
Verified A Class
B Class
C Class
Unclassified Total
in the
General Spare General Spare General Spare General Spare General Spare
year
2000-01
2001-02
2002-03
2004-05
22
20
8323
10381 0
8345
10401
2005-06
72
122
3512
1277
3584
1400
2006-07
49
41
90
2007-08
134
402
384
630
3982
4072
4500
5104
23
112
229
613
523
1876
775
2631
134
403
550
884
16097
16381 523
1876
17304
19544
Total
52
Verified
in
A Class
B Class
C Class
Unclassified
Total
the General Spare General Spare General Spare General Spare General Spare
year
2001-02
110
271
203
393
313
664
2002-03
11
11
2004-05
2713
5353
2713
5353
2005-06
1185
311
1185
811
2006-07
13
13
2007-08
134
389
257
626
1428
2204
1819
3279
159
219
139
1115
298
1334
134
389
367
897
5703
9055
139
1115
6343
11456
Total
53
2.
3.
4.
54
prepare the priced store ledger. Ledger abstract for all items transacted during the
month giving the opening stock, receipts, issues and past closing balance shall also
be prepared. A copy of this statement shall be forwarded to store section for
verification of the bin card balances. Discrepancy if any shall be reconciled by the
store section with the stores accounts section.
m) The price store ledger balance for each category store shall reconciled value wise
with the control account balance in the ledger wherever possible. The accounts
section shall draw out reconciliation on monthly basis. After reconciliation a
monthly material consumption statement, cost center wise, is prepared and
circulated to concerned department by the 10th of following month for verification
of its correctness and for monitoring the budgeted expenditure, if any discrepancy
is reported, the same is adjusted in the ensuring month.
Verification of Inventories
The officer of stores will coordinate the job of physical verification and the accounts
officer in charge shall render all assistance to ensure that the physical verification of
inventories is carried out as per the policy and the policy and the approved program. The
store department will ensure that the posting in the Kardex are updated before the
verification of inventories. Kardex contains all the information that is in the store.
The inventories are classified in three categories for verification purpose.
Finished products
The stocks of raw materials, packing materials and finished products are to be verified on
quarterly basis by an independent surveyor by the society. No adjustments need be carried
out in the books of accounts unless the discrepancies in liquid raw materials and solid raw
material are in excess of 1% to 5% respectively. This is as per guidelines issued by the
head office.
In case of finished goods also the same principle applied except that no adjustments in the
books of accounts shall be made. However the stock registers shall be adjusted on the
basis of actual stock in order to replace the notional figures of stocks by more accurate
estimate based on physical verification.
The inventories for other items such as stores, spares, construction materials etc. are also
verified every year keeping in view ABC analysis of stock items value and exercise of
verification may be completed by March every year.
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For the purpose of verification of stores, chemicals & spare parts shall be classified in to
A, B, C categories.
Categories
Quantum of Verification
100%
10,001 to 50,000/-
70%
25%
A team of stock verifiers shall prepare a stock verification sheet giving the kardex balance
and the physical balance of each item covered in the stock verification. After filling up the
particulars of the value and quality discrepancies with reference to the priced stores ledger
balance, the stock verification sheets shall be forwarded to the materials department for
scrutiny and reconciliation and adjustment in consultation with finance department
accepted shortage shall be processed for the approval of the competent authority.
59
Internal Check
1)
One set of document for receipts, issues and return of materials shall be sent to the
The priced store ledger shall not be maintained for large number of low value
items such as stationery, medicines, canteen stores etc. in this case the expenditure shall
be charged to the appropriate expense account at time purchase. Quantitative record
shall be kept by the concerned department and shall be produced as and when required
for audit purpose.
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Inventory Control
Inventory control is concerned with minimizing the total cost of inventory. The three
main factors in inventory control decision making process are:
a.
The cost of holding the stock (e.g., based on the interest rate).
b.
The cost of placing an order (e.g., for row material stocks) or the set-up cost of
production.
c.
The cost of shortage, i.e., what is lost if the stock is insufficient to meet all
demand.
The third element is the most difficult to measure and is often handled by establishing a
"service level" policy, e. g, certain percentage of demand will be met from stock without
delay.
The Inventory Management system and the Inventory Control Process provides
information to efficiently manage the flow of materials, effectively utilize people and
equipment, coordinate internal activities, and communicate with customers.
Inventory Management and the activities of Inventory Control do not make decisions or
manage operations; they provide the information to Managers who make more accurate
and timely decisions to manage their operations.
Inventory control is a systematic control and regulation of purchase and usage of materials
in such a way so as to maintain an even flow of production at the same time avoiding
excessive investment in inventories. Efficient material control reduces losses and wastage
of materials that otherwise pass unnoticed.
Inventory control is the core of material management. The need and importance of
inventories varies in direct proportion to the idle time cost of men and machinery, and
urgency of requirements. If men and machinery in the factory could wait and so could the
customers, materials good not lie in want for them and no inventory need to be carried.
But it is highly uneconomical to keep the men and machine waiting and the requirements
for modern life are so urgent that they can not wait for materials to arrive after the need for
them has arisen.
Because materials constitute a significant part of the total production cost of
the product. Thus, cost is controllable to some extent; proper planning and controlling of
inventories are of great importance. If investment in inventory will be more then the
company has to bear carrying cost and that finance can not be utilized.
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A good inventory management policy should ensure smooth and uninterrupted supply
without making unnecessary investment of funds in inventory. This requires that inventory
management policy must balance the requirements of the following two opposing and
conflicting ends:
i)
ii)
62
Financial ratio analysis groups the ratios into categories which tell us about different facets
of a company's finances and operations. An overview of some of the categories of ratios is
given below.
1.
Leverage Ratios which show the extent that debt is used in a company's capital
structure.
2.
Liquidity Ratios which give a picture of a company's short term financial situation
or solvency.
63
3.
4.
Profitability Ratios which use margin analysis and show the return on sales and
capital employed.
5.
Ratios are always expressed as a decimal value, such as 0.10, or the equivalent
percent value, such as 10%. Financial ratios allow for comparisons
between companies
between industries
As Proportion
64
1) Inventory Turnover- This ratio indicates the number of times the inventory is
rotated during the relevant accounting period. This ratio is also called as stock
turnover ratio or stock velocity. This ratio is calculated to consider the adequacy of
the quantum of capital and its justification for investing in stock or Inventory.
Inventory turnover is used to measure the efficiency of sales. Inventory turnover is
the number of times obtained by dividing cost of sales by inventory.
(Average Inventory/Sales) x 365
for days
(Average Inventory/Sales) x 52
for weeks
(Average Inventory/Sales) x 12
for months
sales
Inventory
( in crore )
Particular
2007-08
2006-07
Sales
5968.47
5554.53
Inventory
1577.10
2283.94
3.78 times
2.43 times
Interpretation: - It is revealed from above table that the stock turnover has been
increased to 3.78 times in the year 2007-08 as compared to 2.43 times in the year 200607. It shows better control over inventory and efficiency in sales. Since IFFCO is in the
business of fertiliser manufacturing and in this sector a huge investment in plant and
machinery is required. Keeping in view the investment in Plant & machinery in this sector
for which number of spares and stores items are required to be maintained for upkeep of
the plant, the above Inventory Turnover ratio is reasonable. However, IFFCO should
efficiently use various inventory management tools to control the stock levels like ABC
65
analysis, monitoring of stock levels i.e. ROL, EOQ, Min-Level, Max-Level system of
verification of inventory etc.
66
2)
Sales
Working Capital
Particular
Sales
Working Capital
Working Capital Turnover
2007-08
5968.47
4404.17
1.35 times
( in crore)
2006-07
5554.53
4870.74
1.14 times
67
68
3)
Current Ratio- The ratio of current assets to current liability is called current
ratio. This ratio is an indicator of the firms commitment to meet its short-term liabilities.
Current assets include cash and other assets convertible into cash during the operating
cycle of the business. Current liabilities mean liabilities payable within a years time. An
idle current ratio is 2:1.The ratio of 2:1 is considered as a safe margin of solvency. A very
high current ratio would indicate the less efficient use of funds while a poor current ratio is
a danger signal to the management.
Particular
2007-08
2006-07
Current Assets
5775.74
6071.97
Current Liability
1371.57
1201.23
Current Ratio
4.21:1
5.05:1
Interpretation: - It appears from the above table that the current ratio of three
consecutive years2004, 2005 and 2006 is 2.84:1, 2.36:1, and 3.49:1. As general rule the
ideal current ratio is 2:1 and we can see that the current ratio for three years is above idea
ratio. So we can say that the liquidity position of the concert is sound and it is able to
meet its short term debts and obligations.
69
Current Ratio
70
4) Cash Ratio - This ratio measures the relationship between cash in hand and
current assets. A very high cash ratio indicates major items of current assets & may be a
poor indicator of profitability because cash by itself does not earn any profit. Ideally the
proportion should be kept as low as possible. But some amount of cash for daily
requirements of the firm should be kept.
Cash Ratio
Cash in Hand
Current Assets
Particular
2007-08
2006-07
Cash in Hand
243.32
330.84
Current Assets
5775.74
6071.97
0.04:1
0.054:1
Cash Ratio
Interpretation:Form the above it can be seen that cash ratio is almost stagnant from year to year. It shows
that the concern is efficiently using and monitoring cash for day to day transactions. But
this increment in ratio is not satisfactory. Thus management should do some efforts to
increase the cash ratio.
71
Cash Ratio
72
5) Solvency Ratio- This ratio highlights upon the long-term solvency of the concern
and this ratio shows the relationship between the total assets and total liabilities of the
concern. This ratio is obtained by dividing total assets by total liabilities. Total assets
include fixed assets and current assets. Total liabilities include both long term and
short-term liabilities.
Solvency Ratio-
Total Assets
Total Liabilities
Particular
Total Assets
2007-08
2006-07
12354.26
11842.07
Total Liability
1795
1717
Solvency Ratio
6.88:1
6.89:1
Interpretation:In the year 2006-07 the total assets and total liability was 11842.07 and 1717 respectively
while in the 2007-08 the total assets and total liability was 12354.26 and 1795
respectively. Form the above it can be seen that the concern is having a sound position. Its
total assets have increased and liability has also increased. Due to it solvency ratio has not
so much impact of it. Therefore the solvency position is good.
73
Solvency Ratio
74
6) Stock to Current Assets Ratio- This ratio expresses the relationship between
Stock and Current Assets.
Stock
Current Assets
Particular
Stock
Current Assets
Stock to Current Assets
2007-08
1577.10
5775.74
0.27
2006-07
2283.94
6071.97
0.37
Interpretation: The following calculation shows that stock to current asset ratio is
decreasing. It shows that current assets and stock both are decreasing. Thus it is not a bad
situation because a company always wants to retain stocks according the requirement. It
does not want to do over investment in stocks. Every company prefers money in liquid
form rather than over investment.
75
76
7) Raw Material Turnover Ratio- The raw material turnover ratio represents the
relationship between raw material consumed and average stock of raw material. Here
average stock of raw material is the average of opening stock of raw material and closing
stock of raw material.
Or
Opening stock of raw material + closing stock of r.m.
Average stock of raw material =
Year
2007-08
2006-07
950.80
551.27
751.035
706.04
1.26
0.780
77
78
Sales
Shareholders fund
Year
2007-08
2006-07
Sales
5968.47
5554.53
Shareholders Fund
3688.66
3641.84
1.61
1.52
Interpretation: In the following table the sales is 5968.47 for the year 2007-08 and
5554.53 for the year 2006-07. Shareholders fund is increasing by 413.94 crores. As a
result the owned capital turnover is increasing by 0.09. it clearly shows that the company
is earning profit.
79
80
9) Profit Before Tax To Sales- The ratio expressed the relationship between Profit
Before Tax and Sales.
2007-08
2006-07
380.52
251.25
Sales
5968.47
5554.53
P.B.T. to Sales
0.06 %
0.04 %
Interpretation: The following calculation shows that profit before tax to sales ratio is
increasing by 0.02 %. It is due to increase in profit before tax and sales. It indicates that
profit is increasing because of sales. Thats why profit before tax is also increasing. If we
shall do our efforts for increasing the sales then the profit for the shareholders will
increase.
81
P.B.T. to Sales
82
10) Capital Turnover- Sometimes the efficiency and effectiveness of the operation is
judged by comparing the sales with the amount of capital invested in the business.
Capital Employed is either equal to Shareholders Fund plus Long Term Loans or
equal to Total Assets minus Current Liabilities. This is calculated by establishing the
relationship between sales and capital employed.
Capital Turnover-
Sales
Capital Employed
Particular
2007-08
2006-07
Sales
5968.47
5554.53
Capital Employed
5727.62
5752.21
1.04 times
0.96 times
Capital Turnover
Capital Employed = Equity Share Capital + Profit + Long term loan + Reserve & Surplus
= 423.93+3264.73+1781.83+257.13
= 5727.62
Interpretation:From the above it is clear that Capital Turnover ratio has been increased 1.04 from 0.96. It
shows that investment in Total assets as compared to the previous year has decreased even
after that sale is increasing. Though the capital turnover is good in the year 2007-08 as
compared to the year 2006-07. While calculating the return on investment ratio we have
seen that IFFCO has made huge
Investment in the assets in the year 2006-07 against which the return is expected in the
coming years. We hope this ratio will also improve in the coming years when the pay back
of the investment will start.
83
Capital Turnover
84
II.
85
III.
Inventory of spares
Here I have studied the inventory of spares. Because the raw material that
is used in IFFCO are gases and the measurement of its inventory level is
very typical.
6) In the IFFCO the inventory are divided into spares and generals. Generals are those
parts which are used normally in various machines, offsite while spares are unique
to its machines. There are two stores in IFFCO. In one store the inventory of Aonla
Unit 1 is stored while in other catalysts and various chemicals are stored. For the
transfer of spares from one store to another, a voucher is used that is store transfer
voucher (STV).
7) It clears that the person who raises the indent for the required material is known as
indentor. Indentor plays an important role in this. The indentor checks whether that
material that has purchased is according to his requirement or not. Indentor can be
any person.
8) Before the purchasing of the material, firstly enquiry takes place. This enquiry can
be done in two ways. Through the e-procurement or manual. After this enquiry a
QCS (quotations comparative statement) is prepared in which normally technically
acceptable lowest bidder is chosen. Thus the purchasing process completes and the
working of store department starts. Now the storing and issuing is the
responsibility of stores.
9) There is followed a coding pattern in IFFCO that is good for the proper inventory
management. It helps the stores employees in identifying the spares and generals.
This coding is of 12 digits. It avoids the confusion. Hence it is good for the
organization to do coding of the inventory. It highlights the inventory management.
10) There are various formats as STV, ISIRV, DCSRV, SAI, SIV etc which are used for
different purposes as for issuing the material from the store, store receipt voucher
(SRV) is used, for the adjustment of the materials, the store adjustment voucher
(SAV) is used.
11) The whole study shows that there is a good inventory management system but
nothing is perfect that why there are also some limitations. In IFFCO a history
86
book of spares is used. It is prepared in both the form as a soft copy and a hard
copy.
12) For the controlling of the inventory a technique is used in IFFCO that is ABC
analysis. In ABC analysis spares and generals are divided in three categories on the
basis of their values. Some items have 70% value while their quantity is 20%. The
spares whose value comes under 20%, its quantity is present in 70%. While there
are some spares whose value is 20% as well as quantity is also 20%.
13) For the verification of inventories a technique is used in which the material whose
value is more is more than 50000, are verified 100%, the materials whose value
comes under 10001 to 50000 are verified 70% and the remaining materials whose
value is less than 10000 are verified 30%.
14) There is a company IFFCO- TOKIO General Insurance Company which is
responsible for the insurance of damaged and short materials. Firstly there were
different cooperatives which were associated with this task.
15) As we know that with the passage of time, some items becomes outdated or of no
use. They are known as obsolete items. The items which do not move up to 7 years
are not valued according to its original value. Theres 40% value is written off
while they are valued at the 60% of their face value. The items which do not move
up to 7 to 10 years, are valued at 55% of their original value while 45% of its value
is written off. And the items which do not move more than 10 years, are valued at
the 50% of their face value and 50% is written off.
16) In IFFCO to ensure the availability of items or spares, they are inventoried. There
are decided various levels which shows the level of items that are stored in it.
These levels are minimum level, maximum level and reorder level. Re-order level
is that level at which new order is placed. These three levels are different for
different items. The item which are frequently used that is generals have the high
level of reorder.
17) Effective inventory management enables an organization to meet or exceed
customers expectations of product availability while maximizing net profits or
minimizing costs. And the annual report shows that the inventory has decreased. It
87
shows that they are managing inventory in a better way due to which it has
decreased in compare to last year.
18) In IFFCO there is three type of inventory but IFFCO does not preserve the finished
goods inventory. IFFCO is a cost centre. Hence they do production but just after
accomplishing the whole process i.e. after packing the urea, they transfer it in the
rail bogie and send it to its marketing channel. And the responsibility of Bareilly
unit completes. They have owned its own rail bogies and engine.
19) According to balance sheet It was found that the production has increased in
compare to last year because of capacity enhancement and increased demand.
Thats why the consumption of raw material as well as the inventory of raw
material has also increased. It is good for the organization.
20) In IFFCO the stock has decreased and current assets have also decreased. It shows
that the management has handled the inventory in the better and efficient way. It is
good for the organization as well as for the management.
21) Whenever the purchase department raises the tender then the enquiry is done in
two ways. First one is single stage, the items where there is no more chances of
technical deviation then the checking is done before loading the material and
indentor checks it later. While in two stage i.e. the stage where there are more
chances of technical deviation, checking is done before loading and after receiving
the materials. Expert performs this checking.
22) The ideal current ratio is 2:1 while the calculation as per the balance sheet shows
that the current ratio is more than two times of ideal ratio. It shows that
management of IFFCO is handing the all inventory, sales, and machines in a great
way. Even in the current year the current ratio has decreased in compare to
previous year but the organization is even in a good position.
23) The cost of production of urea is much more than its selling price. This difference
in the cost is provided by the government that is subsidy from government.
The whole report clears that the management of IFFCO is
handling the inventory in efficient ways even there is also some drawbacks but
even after the management is running the organization in a good way. The annual
88
reports shows that the inventory is decreasing in compare to last year and there is
no interruption in the production which shows the unavailability of inventory. It is
a indication that management is handling the inventory in a better way in compare
to previous year. And the investment has decreased in the inventory. This capital
may be used in some other productive work.
89
SUGGESTIONS
1) Every week a report should be produced listing the status of every product that has
been in stock for less than six months. The report should list the following
informationa. Items number and description
b. Total consumption of items ( in units)
c. Current-on-hand quantity
d. Minimum stock level of the item
e. Maximum stock level of the item
f. Re-order level of the item
g. Any new item that is required
h. Reason why that item was added to stock
2) Detailed record should be maintained by the management of store as well as
purchase department, for new stock items that do not meet six months
consumption. Because in the organization the number of obsolete items has
increasing because of outdated technology. Due to which the store department has
to bear the maintenance cost and carrying cost of obsolete items.
Thus the management should review the record time to time.
3) The management of IFFCO should conduct some development programmes for the
knowledge of employees. IFFCO conduct various programmes for the farmers
knowledge and their awareness but not for their employees. As I have observed
that there were some managers who do not know the operation of inventory
software due to which the working was hampering. And the remaining employees
have to take extra load of that work. It should not be there.
90
4) The management should not add new inventory. If it is deciding to store any new
inventory then the management should give the reason why management is going
to add new inventory. Thus the reason should be clearly stated.
5) If the cost of any inventory is high, then the management should find the substitute
material to decrease the cost of inventory.
6) The management should provide the necessary information to the supplier. As I
have noticed that the management of IFFCO tries to reserve its all information.
Thus the management should provide the necessary information to the supplier so
that the supplier can send the materials according to the requirement.
7) The business owner will need to do an initial count of everything in stock. The
count of all items in stock should be completely documented as well as all items
that are ready for sale. A recount can ensure accuracy. This will give the business
owner a starting point for inventory tracking. At this point, it may prove to be an
advantage for the business owner to use some kind of inventory tracking software
application.
8) When new inventory is added to existing inventory, the first thing a business owner
should do is to check it for quality. Are any of the items dented or damaged? If so,
they will need to be returned so that the business can get appropriate credit
damaged items do no good sitting on storeroom or warehouse shelves.
9) The new inventory should be added to the count of the existing inventory,
particularly in the business documentation. This will help the business owner to
keep an adequate count of what is in stock.
10) When ordering it is advised not to over order or to under order stock; however, this
does not mean that the business owner shouldnt take full advantage of whats
available to them in terms of sales and discounts. If items bought in bulk are less
expensive, it is sometimes a good idea to purchase them that way. Essentially, the
business owner will need to make a judgment call and take the perish-ability of the
product into consideration.
11) When ordering stock it is important that a business owner does not substitute
quality for quantity. In other words, cheap inventory is not necessarily good
91
inventory and buying less expensive products to increase ones inventory could
result in profit loss. No matter what measures of inventory control that one puts in
place, its always imperative that quality products remain the first and foremost
concern of the business.
12) Getting the right amount of inventory is going to require a bit of speculative
projection on behalf of the business owner. The business operator is going to need
to guess how much they think they may sell in the coming months in order to order
the amount they need. By tracking inventory on a weekly or monthly basis, the
business owner will be able to identify predictable patterns of product use and sale.
They can then base their ordering process on such predictions. The end result is
that over stock and under stock of inventory is minimized.
13) Diligent and regular tracking of inventory is recommended at all times. Further,
when counting inventory in a warehouse or business location it is imperative that
all counts are accurate. What good is inventory tracking if the calculations are all
wrong? Essentially, inaccurate calculations of inventory result in significant losses
of time and money for a business.
Thus the calculation should be accurate and right. There should not
be any deviation.
14) With so many other things that the business owner should be responsible for how
will they manage the time for inventory control? Small inventories are usually
fairly easy to manage, but what about warehouses and larger supplies? So the
owner and the store manager should take care of it.
15) Inventory management is not a process that can or should be avoided; it may be a
good idea for business owners to hire someone to be responsible for large
inventories. The management should hire one inventory consultant. Because he can
give better suggestion for inventory control. Inventory consultants know in a better
way how to handle and in how much quantity they should be stored.
16) The manager should be responsible for weekly or monthly stock counts and for
ordering and reordering products. This allows for the business owner to focus on
other aspects of the business operation. Thus the manager should take care of it.
92
17) The management should follow all the rules and instructions. Documents should be
released at the issuing and other formalities. The management including the
employees should be aware of all functions of software.
18) The management should do contract with the inventory consultancy. An inventoryconsulting agency can provide a business owner with a complete print out of their
current inventory. Thus, business owners have access to vital business documents
and the information they provide. When it comes time to insure the business or to
run an inventory check, a business owner can feel confident in knowing precisely
what they are expected to have.
Some inventory consulting agencies will actually handle all of the
ordering for the business. While this may seem like too much control to give to
another agency, some business professionals like they idea of relying on a
company to manage inventory. It leaves the business operator free to manage other
aspects of the business.
19) Another factor that every business owner must consider is the cost to insure
inventory. Lets face it; the bigger the inventory the higher the premiums are for
insurance. Paying out additional funds for inventory can prove rather costly in the
long run. Again, to save businesses money, good inventory and warehouse
management are a must. Thus the management should take care that they should
not order too much heavy inventory. If yes then it should be insured.
20) The store manager must decide firstly what products they will need in the future
and precisely how much product to order. Thus they should order according to the
requirement.
21) As we know that there is coding system in the IFFCO. They make the process of
inventory simple. Items that are sold can be automatically subtracted from the
existing count. Some software applications automatically create and print a
reordering document. This type of software should be installed in IFFCO. Even
there is PSL inventory software but the entry should be renewing time to time.
22) The consumption of all materials do not remain same overall the year. Thus the
maximum level, minimum level and reorder level should be review time to time.
Depending on the situation these levels should be flexible.
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23) The purchasing process is directly related to the consumption and it can be easily
recognized only by reviewing their level in the store time to time. Before
purchasing any material first of all the purchase department should conduct
enquiry to know whether that material is present in the store or not. If present then
in which amount that material is present. It will help the management to reduce the
overinvestment in the inventory.
24) The materials which are not in use due to outdated technology, they should not be
kept because they cover the unnecessary place of the stores. I have seen that there
was a crane in the IFFCO and it was of no use because of outdated technology. But
even after that they have kept it. They should sell it to get some money to reduce
its maintenance and carrying cost.
If the management of IFFCO will follow these instructions then it
can handle or manage the inventory in a better way.
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BIBLIOGRAPHY
1)
www.businessin.com
2)
www.mapxl.com
3)
www.invatol.com
4)
www.inventorymanagement.com
5)
www.effectiveinventory.com
6)
www.toolwatch.com
7)
www.opsinventory.com
8)
9)
Business today
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QUESTIONNAIRE
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