MBA project.docx

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AASS INFORMATION TECHNOLOGY

AT

JINDAL STEEL & POWER LTD, RAIGARH

SUBMITTED BY ANAND KUMAR SWAMI

REGD.NO.520920298

In partial fulfillment of the requirement For the award of the degree

Of MBA IN (Operations management) PLACE: - RAIGARH

ANAND KUMAR SWAMI

DATE-10.12.2012 REGD.NO -520920298 STUDY CENTER: AIT CENTER CODE:-02962

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STUDENT DECLARATION

It is hereby declare that the project report entitled “A STUDY ON MATERIAL

MANAGEMENT” AT JINDAL STEEL & POWER LTD, RAIGARH

Submitted in partial fulfillment of the requirement for the degree of master of business administration to Sikkim Manipal University, is my original work and not submitted for the award of any other degree, diploma, fellowship or any other similar title or prizes.

(

)

DATE-10.12.2012 REGD.NO -520920298 PLACE: - RAIGARH

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EXAMINER’S CERTIFICATE

The Project report of

(

)

“A STUDY ON MATERIAL MANAGEMENT”

AT

JINDAL STEEL & POWER LTD, RAIGARH

is approved and is acceptable in quality and form

Internal Examiner External Examiner Name – Name -

Qualification – Qualification -

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BONAFIDE CERTIFICATE

Certified that this project report titled “A STUDY ON MATERIAL MANAGEMENT”

FOR JINDAL STEEL & POWER LTD, RAIGARH is the bonafide work of

“ANAND KUMAR SWAMI” Reg. No 520920298 who carried out the project work under my supervision.

SIGNATURE SIGNATURE

(Faculty) (Incharge)

Dr. Gomti Singh AASS Information Technology

Raigarh (c.g.)

5 Certified that this project report titled “A STUDY ON MATERIAL

MANAGEMENT” FOR JINDAL STEEL & POWER LTD, RAIGARH

Submitted in partial fulfilment of the requirement for the Degree of bachlore of science in information technology of Sikkim manipal university of health ,

medical and Tecnological science.

Students name

Has worked under my supervision and guidance and that No part of this report has been submitted for thhe award of any other degree, diploma, felloship or other similar Titles or prizes and that work has not been published in any journal or magazine

.

REGD.NO -520920298

Students name-

Certified by: Dr. Gomti singh.

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PROJECT EXAMINATION MARKS STATEMENT FOR MBA

UNIVERSITY: SIKKIM MANIPAL UNIVERSITY

DATE OF EXAMINATION: LEARNING CENTRE CODE: 02962

We hereby certify that the project examination has been conducted on the date as indicated above and the information given above has been verified and found correct.

1. Internal Examiner Signature with Date 2. External Examiner Signature with Date

Name : Name :

Center in charge Stamp with signature ROLL

NO

NAME

INTERNAL EVALUATOR EXTERNAL EVALUATOR

Grand Total Marks Synops is Methodo logy Analy sis + findin g Projec t report Viva Total internal evaluat ors marks Syno psis Metho dolog y Analy sis + findin g Proje ct repor t Viv a Total internal evaluat ors marks 5 Marks 10 Marks 25 Marks 25 Marks 35 Mark s 100 Marks 5 Mark s 10 Marks 25 Marks 25 Mark s 35 Mar ks 100 Marks 200 Marks IE1 IE2 IE3 IE4 IE5 IE1+IE

2+IE3+ IE4+IE 5

EE1 EE2 EE3 EE4 EE5 EE1+E E2+EE 3+EE4 +EE5

IE+E E

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ACKNOWLEDGEMENT

I would like to express my gratitude to all the members of vibrant and energetic team of JSPL. JSPL has provided me a unique environment to complete this project. I am deeply indebted to Mr. C. D. Mathew, Sr. GM (HR), and whole team of

HRD to give me this great opportunity of learning and for their valuable guidance.

I grab this opportunity to acknowledge Prof. Dr.Gomti Singh, honorable Director, and my internal guide Prof. College staff under whose guidance and support throughout the project I was able to get a shape and make a valuable report. I want to thank the Department of SMU, AIT, Raigarh for giving me permission to commence this report in JSPL.

I have benefited greatly from the knowledge and guidance of my Project Guide Mr. P T PATRA, AGM, MATERIALS DEPT. JSPL RAIGARH through the project duration.

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PREFACE

Theoretical concepts taught and discussed in the Manager prove useful if they h a v e t o r e ma i n r e l e v a n t . P r a c t i c e o r i e n t a t i o n o f m a n a g e m e n t s t u d e n t i s mu s t generating competence to deal with issues at grass root level it is for this reason that training & project study is prescribed as a part of syllabus for MBA .T h i s t r a i n i n g i s t h e mo d e o f i mp a r t i n g p r a c t i c a l t r a i n i n g t o t h e s t u d e n t . T h e objective is to provide a deep insight into practical aspects of the functioning of the Operation Process. The train apprises the student to the actual function, responsibility and problem faced.

It provides him with the knowledge of the various kind of problem that crop up in the day to day functioning of the Operation process. The way they are solved by the departments and appraisal of the crucial decision taken by the manager at the crucial time. This has given me an altogether new experience, which would be immense help to me in my days to come.

I hope that the report is quite sound to enlighten the Jindal Steel & Power Ltd., Raigarh they will definitely improve if they will adopt any of the suggestion. This will be the best reward for me.

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TABLE OF CONTENTS

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CHAPTER – I

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EXECUTIVE SUMMARY

In any industry various types of equipment are installed and various types of material used so, we need of their spare. For reducing the production losses & problem solving in minimum time.

If we found the problem but we don‟t have any spare then there is a big time loss & production is also very affected.

In this my project shows how material is managed properly in a organization for better production & organization growth.

ANAND KUMAR SWAMI

Reg. No. 520920298 M.B.A IV SEM.

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RESEARCH METHODOLOGY

 INTRODUCTION

 DEFINING THE RESEARCH PROBLEM

 RESEARCH PROCESS

 RESEARCH DESIGNS

 DATA COLLECTION

 RESEARCH HYPOTHESIS

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INTRODUCTION

Today is changing dynamic field to functional area of management of

increasingly important as compared to other fields. Information in life is important as any research report, which keeps the management in minimizing the risk & uncertainty through systematic decision-making.

“Research is a systematic & objectives for analysis of information relevant to the identification & solution of any problem in any field.”

Research comprises defining & redefining problems, formulating hypothesis or suggested solutions, collecting, organizing & evaluating data, making deduction & reaching conclusions to determine whether they the formulating the hypothesis.

Research seeks answers to certain questions which have not been answered so far & which depend upon human efforts. It seeks to only those questions of which the answer can be given based on this data.

Research is devoted to find the condition under which a certain phenomenon occur & the conditions under which it does not occur in similar circumstances. The term research

14 contains of two words Re+ Search. “Re” means again & “Search” means to find out something new. Thus, research is the process of which a person observes the phenomena again & again collects the data & based on data he draws conclusion. This is clear by the following:-

OBSERVES COLLECTION OF DATA

PERSON PHENOMENA CONCLUSION AGAIN & AGAIN ANALYSIS OF DATA

Thus, research means to observes the phenomena again & again from different dimensions. For example, one finds many theories of learning due to the observation from different dimensions.

DEFINITION

1) “Research is a point of view, an attitude of inquiry or frame of mind”.

R.RAOK

2) “Research is and be honest, exhaustive, intelligent searching for facts and their meanings or implication with reference to a given problem. The product or findings of a given pieces of research should be as authentic, verifiable & contribution to knowledge in the field studies.”

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OBJECTIVES OF RESEARCH METHODOLOGY

The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet.

i) To gain familiarity with a phenomenon or to achieve new insights into it.

ii) To portray accurately the characteristics of a particular individual, situation or a group.

iii) To determine the frequency with which something occurs or with which it is associated with something else.

iv) To test a hypothesis of a causal relationship between variables.

TYPES OF RESEARCH

1) DESCRIPTIVE RESEARCH

Descriptive research design is also called explanatory design. The descriptive study is typically concerned with determining frequency with which something occurs or how two variables vary together. It describes the characteristic of certain groups, e.g. users of a product with different age, sex, education, etc. It

16 estimates the proportion of people in a specified population. Descriptive research includes survey & facts finding enquires of different kinds. The major purpose of descriptive research is descriptive of the state of affairs as it exits at present. It is rigid & formal. Two basic types of research design used in descriptive research are.

a) Case research design

It can be carried out in the areas such as a survey consumer attitude toward a new product concept or it may be conducted in a library by the survey of available secondary data. But it is generally used for collecting cases

b) Statistical design

The statistical method involves study of a few factors in a larger number of cases.

2) EXPLORATORY RESEARCH

In this research, the major emphasis is on the discovery of ideas & insights. It is helpful in breaking broad & vague problem into smaller. The exploratory study may also be used to clarify concept. It is formulating a problem for more precise, establishing priorities, gathering information, increasing the analyst‟s familiarity with

17 the problem. Exploratory study is characterized by flexibility & by flexibility & informality.

Three basic types of research design used in exploratory research are-

a) Literature surveys

One of the most economical & quickest ways to discover hypothesis is the work of others through a literature search. More useful sources of such information are books, newspapers, government documents, trade journals, professional journals & so on.

b) Experience surveys

Individuals with expertise, knowledge, & ideas about research subject may be questioned. Such people include top executives, sales mangers, other relevant people of the company in question & companies making similar products salesman, wholesalers, retailers etc. It reflects an attempt to get all available information from the people who have some particular knowledge of subject under investigation.

18 The arbitrary selection of a few extreme examples and through analyses of these. In some instances, detailed & intensive case analysis of a few Selected individual or organization may particularly be helpful in gaining ideas about possible relationship. A case study is characterized by intensive study.

3) QUALITATIVE RESEARCH

Qualitative research is concerned with qualitative phenomena i.e. phenomena relating to or involving quality or kind. This research is important in the behavioral sciences where the aim is to discover the underlying emotions of human behavior.

4) APPLIED RESEARCH

Applied research aims at finding a solution for an immediate problem facing a society & industrial/ business organization.

5) EMPIRICAL RESEARCH

19 regard for system & theory. Empirical research is appropriate when program is sought that certain variable affects other variables in some ways.

RESEARCH METHODS VERSES METHODOLOGY

It seems appropriate at this juncture to explain the different between research methods and research methodology. Research methods may be understood as all those methods/techniques that are used for conduction of research. All those methods which are used by the researcher during the course of studying his research problem are termed as research methods. Since the object of research, particularly the applied research, is to arrive at a solution for a given problem, the available data and the unknown aspects of the problem have to be related to each other to make a solution possible. Keeping this in view, research methods can be put into the following three groups:

i) In the first group we include those methods which are concerned with the collection of data. These methods will be used where the data already available are not sufficient to arrive at the required solution.

ii) The second group consists of those statistical techniques which are used for establishing relationships between the data and the unknowns.

iii) The third group consists of those methods which are used to evaluate the accuracy of the results obtained.

20 Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research methods/techniques but also the methodology.

For e.g. : an architect, who designs a building, has to consciously evaluate the basis of his decisions, i.e., he has to evaluate why and on what basis he selects particular size, number and location of doors, windows and ventilators, uses particular materials and not others and the like. He has to specify very clearly and precisely what decisions he selects and why he selects them so that they can be evaluated by others also.

Thus, when we talk of research methodology we not only talk of the research methods but also consider the logic behind the methods we use in the context of our research study and explain why we are not using others so that research results are capable of being evaluated either by the researcher himself or by others.

1) ANALYSING DATA

After the data have been collected, the researcher turn to the task of analyzing them. The analysis of data required no closely related operation such as establishment of categories, the application of these categories to raw data through coding, tabulating & then drawing statistical inferences

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DATA COLLECTION

SOURCE OF PRIMARY DATA

 Direct Observation

This method requires that the researcher should personally & directly observe the conditions & incidents of his field of study. Direct observation is the reliable method for gathering informative concerning the life, status, conduct, behavior, language, festivals, customs & traditions etc. In this observation, the observer should be absolutely detached & objective in gathering facts.

 Questionnaire

Under this method, information is gathered through questionnaire, which includes questions concerning different aspects of the subject of study, which is to be filled by the respondents.

 Schedule

These are particular type of questionnaire, which is replied by the researcher himself by questions asked to the informers.

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 Interview

In an interview, the researchers meet people & discuss his social problems, with them & this course of discussion is gathered fact.

The researchers used sample size in his project as follows

The researcher has not used the primary data.

SOURCE OF SECONDARY DATA

 Published sources

International publication U.N.O. publishes a number of journal & periodic, which are the best source of secondary data.

 Government publication

The state govt. publishes data for their use that are very much accurate & reliable.

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 Reports of communities & committees

Various communities & committees of enquiry collect data that can be use by these who are investigating on the related subjects.

 Semi govt. publication

Many semi- govt. publications like municipal corporation board etc. publish data pertaining to birth rate, death rate, literacy rate etc. that can be used for investigation.

 Commercial research, educational institutions, universe, organizations

etc.

These institutions also conduct enquiry & publishes their report through which data can be used for investigation.

 Newspaper, magazines& letter to editors

Newspapers & magazines also provides data for investigation, letters to the editor (of newspaper & magazines both) are published that can be used.

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Personals rewards like bibliography, diaries, letters, memories etc. form an

important source of valid information in social research as a personal document.

 Official records

Most of the organization maintains records of important information, which are important source of data collection for researcher.

 Other sources

Many other sources like film, radio, television, public speeches etc. are some of the important source of information.

According I have define my project as follows-

As secondary data, the researcher has used magazines & officials records

Of “JSPL”.

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RESEARCH HYPOTHESIS

1) The flow of production used in JSPL in to purchase material at a right quality & at a comparative lower prize.

2) EOQ method is used for controlling the inventory.

3) LIFO, FIFO method is used for store-keeping.

4) KODAK digit codification process is used in JSPL

5) The best quality control process is used for materials.

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OBJECTIVES OF THE STUDY

1) To study about procurement of materials in JSPL

2) To know about the inventory control methods.

3) To study about the store-keeping procedure of JSPL.

4) To know about the codification process used in JSPL.

5) To study about the quality used in standardization of materials. 6) To make comparison of data of stock and spares

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CHAPTER – II

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COMPANY PROFILE

Jindal Steel and Power Limited (JSPL) is one of India's major steel producers with a significant presence in sectors like Mining, Power Generation and Infrastructure. With an annual turnover of over US$ 3.5 billion, JSPL is a part of the

US$ 17 billion diversified O. P. Jindal Group and is consistently tapping new

opportunities by increasing production capacity, diversifying investments, and leveraging its core capabilities to venture into new businesses. The company has committed

investments exceeding US$ 30 billion in the future and has several business initiatives running simultaneously across continents.

Mr. Naveen Jindal, the youngest son of the legendary Shri. O. P. Jindal spearheads JSPL and its group companies. The company produces economical and efficient steel and power through backward and forward integration.

From the widest flat products to a whole range of long products, JSPL today sports a product portfolio that caters to varied needs in the steel market. The company also has the distinction of producing the world's longest 121 metre rails and large size parallel flange beams for the first time in India.

JSPL operates the largest coal - based sponge iron plant in the world and has an installed capacity of 3 MTPA of steel at Raigarh in Chhattisgarh. With a 0.6 MTPA wire rod mill and a one million tone capacity bar mill at Patratu, Jharkhand, a medium and light

structural mill at Raigarh, Chhattisgarh and a plate mill to produce upto 5.00 metre wide plates at Angul, Odisha. The company aims for a fast-paced growth so as to contribute substantially to India's long term prosperity.

An enterprising spirit and the ability to discern future trends have been the driving force behind the company's remarkable growth story. The company has scaled

29 new heights with the combined force of innovation, adaptation of new technologies and the collective skills of its 15,000 strong, committed workforce.

And the recognition it has received only further lends credence to this. JSPL has recently been rated as the second highest value creator in the world by Boston Consulting Group; 11th fastest growing company in India by Business World; included in one of the Fab 50 Companies by Forbes Asia, 2009 and 2010; one of the Best Blue Chip companies as well as the Highest Wealth Creator by the Dalal Street Journal. It has also been ranked fourth as per Total Income in the Iron and Steel sector by Dun & Bradstreet.

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COMPANY INTODUCTION

JSPL has a state-of-the-art steel making plant at Raigarh, Chhattisgarh which can produce up to 3 million TPA. Equipped with modern machinery, the plant boasts of world-class production facilities.

Facilities at the plant include:

 DRI Plant - 4 nos. of 500 TPD (0.72 million TPA) and 6 nos. of 300 TPD rotary kilns (0.6 million TPA)

 0.8 million TPA coke oven plant  2.5 million TPA sinter plant

 1.25 million TPA and 0.42 million TPA Blast Furnace  2.0 million TPA and 1.25 million TPA steel melting shop  2 vacuum degassing units

 RH degassing unit

 1 No. single strand slab caster

 1 No. of 6-strand billet-cum-round caster and 1 No. 6 strand billet caster  2 Nos. of 4-strand combi –caster

 Rail & universal beam mill (RUBM) (0.75 million TPA)  Plate-cum-coil Mill (1.0 million TPA)

 Submerged arc furnace (SAF) (0.03 million TPA)  Oxygen plant 37683 Nm3/hr

 Lime and dolomite calcinations plant (0.4165 million TPA)  358 MW captive power plant(CPP)

 0.7 million TPA Medium & Light Structure mill

Coal-based sponge iron plant

JSPL is recognised as a leader in manufacturing coal-based sponge iron in India. First commissioned in 1991, JSPL leads the Indian market in this sector and has the world‟s largest coal-based sponge iron plant, with a capacity of producing 1.32 MTPA DRI. It is the only sponge iron manufacturer in the country with captive raw material resources and power generation.

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Modern rail and universal beam mill

Commissioned in 2003, the mill has a wide range of products ranging from long rails up to 121 meter to medium and large size parallel flange beams and columns. The product mix includes: Track Rails, Crane Rails, Parallel Flange Beams and Columns and Channels. To enhance its productivity & consistency in quality, the new tandem mill, the first of its kind in India, was purchased from SMS Meer, Germany, and installed & commissioned in Nov. 2006, in which its patent X-H technology is adopted for rolling of beams and

columns. Other sections like rails and channels are also rolled via the universal route.

India's first state-of-the-art plate mill

Introducing newer technologies, JSPL has installed a plate mill, which manufactures the widest plates of 3.5 metre in coil form and coils of 3 meter width. It commenced

commercial production from April ‟07 and has a production capacity of 1 MTPA. The mill has been consistently producing plates and coils in various grades like EN, DNV, BS, ASTM, JIS, LRS and ABS certified by CII.

Medium & Light Structural Mill

Furthering our endeavor to provide a complete product basket and an enhanced structural section range to its customer, JSPL is proud to announce the commissioning of its new state-of-the-art 0.6 MTPA capacity Medium and Light Structural Mill (MLSM). Equipped with advanced rolling mill technology and equipments from DANIELI, ITALY, it has facility of rolling Parallel Flange Beams (100-300 mm), Channels (75-300 mm), Angles (100-200 mm), Flats (50-300 mm) & Rails (30 Ib/y & 24 Kg/m). The mill is ISO 9001 and 14001 certified and also having BIS certifications for most of the sections.

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Source of Raw Materials:

1. Iron Ore …. Barbil Mines , Orissa 2. Lime Stone …. Nandini Mines

3. Manganese …. Balaghat Mines

4. Sinter …. Sintering Plants (SP-2, SP-3) 5. Coke …. Coke Ovens (Coke sorting plants) 6. Converter Slag …. SMS – l l

Requirements for producing of one ton of Hot Metal (Specific Consumption)

Iron Ore …. 459 Kg

Lime Stone …. 850 Kg(Depending on Sinter Usage) Manganese …. 800 Kg(50% in burden)

Sinter …. 35 Kg Coke …. 08 Kg Converter Slag …. 30kg

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Major suppliers

Apollo industrial corporation --- (Mumbai)

Ashok Leyland --- (Chennai state – in.) Bhel --- (Bhopal, Mumbai) Bharat petroleum gas ltd. - (Nagpur)

Birla corporation ltd. --- (Kolkata) Cimmco Birla ltd. -- (New Delhi) Dunlop India ltd. --- (Kolkata) Siemens ltd. --- (Mumbai) Simplex castings ltd. --- (Raipur) H.m.t ltd. --- (Ranchi)

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MATERIALS MANAGEMENT OF JSPL

5.1.1. Material Planning, Programming,& Indenting

Material Planning:

Material planning is the scientific way of determining the requirements of raw

material, components spares and other items that go into meeting the production needs within economic investment policies.

General:

In order to ensure that optimum inventory levels are maintained at all times, it is necessary to plan and regulate the inflow of materials. For this purpose forecasting of future requirements has to be as accurate as possible, the indents are to be correctly prepared taking into consideration the stock and dues in and the deliveries from suppliers are to be so regulated that both excessive holding of stock and stock outs of material are avoided.

System of Material Planning:

A) Plant machinery and other items for capital works b) Iron and steel

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C) Pipes D) Coal tubs

E) Winding and guide ropes F) Power/trailing cables G) Cement and ac sheets

Material Programming:

The system to be followed for planning the procurement of different types of

stores as explained above, incorporate time schedules for actions by various users and purchase department. The time schedules constitute programmers of action to ensure the following.

(a) Even distribution of procurement work throughout the year for all concerned.

(b) Adequate time for purchase department to arrange commencement of supply.

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(c) Effective control on material costs.

(d) Proper timing of purchase of different types of stores to obtain maximum benefits.

(e) Adequate time for general manages and controlling offers of various stores.

(f) Even load of receipts spread over the whole year to enable proper checking, inspection and timely issues by stores depots.

(g) Correct assessment of amount required for purchase well in advance to enable accounts department to make available required funds in time.

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MATERIAL INDENTING

While material budgets dully concurred by financial authorities act as

authority for purchase action, actual purchase action will be taken only on receipt of two copies of formal indents on indent form as shown in annexure 54 by the purchasing agency from the indenters.

Types of Indents

a) Normal Indents: It is to be forwarded to purchase department for capital

items & centralized/deferred revenue items and to purchase cell of respective area for decentralized and rate contract items.

b) Emergent Indents: Emergent indents will be submitted on pink coloured

indent forms only in those cases where procurement under normal circumstances cannot be awaited due to an emergency/ breakdown.

c) Local Purchase Indents: indents for procurement by local purchase will

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a particular centrally procured item could not be anticipated and its purchase becomes urgent or inescapable.

CONCLUSION:

Material planning, programming & indenting are integrated functions of material management involving most of the departments of the subsidiaries and CIL headquarters. Unless every officer/section/department carries out their respective functions in time and with company objectives in mind, problems of overstocking and stock-outs cannot be tackled successfully. Timely actions by all concerned & co-ordination at different levels will ensure optimum utilization of inputs, resulting in reduction in costs and efficiency all round.

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OBJECTIVE AND PURCHASE

 The primary objective is to procure plant and equipment , spares and

other stores and material required by indenters with a view to:

(a) Helping and maintaining continuity of production by correct supplies as per user‟s requirement, in time.

(b) Ensuring that items purchased are most economical, taking into account their quality, durability, efficiency etc.

(c) Developing effective and on-going vendor relationships to ensure fair play and equity.

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The Materials Obtained Shall Be:

(a) Of right quality: (b) In right quantity: (c) At the right time: (d) At right prices:

(A) Tender

Tender is the process of ascertaining the availability & prices of material in sealed covers which are opened & scrutinized at a predetermined time by a tender committee. It is implied that the materials covered by the tender should give scope for competition.

Types of Tender:

1) Single Tender 2) Limited Tender

3) Open Or Advertised Tender

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Tender Box:

Separate tender box are kept for different groups of tenders. They will be marked x, y, z & are distinguished by different colors. The boxes are kept locked & all the tenders received are deposited in the appropriate tender boxes by the tenders themselves if delivered by hand or the purchased section if received through post.

Tender Committee:

1) Those decided directly by the head of the purchasing department.

2) Those decided by a tender committee, which may consist of the head of the purchase department, a representative from the accounts & department head against whose purchase requisition, materials are being procured.

3) Those which will be decided by the management or jointly by the tender committee and the management.

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(B) Registration of Suppliers:

In order to have dependable sources of supply of stores, spares and equipment of right quality at the appropriate time, suppliers will be registered after ascertaining certain basic facilities available with them. Performance of such registered suppliers shall be reviewed from time to time.

The list of registered suppliers shall be kept up-to-date by each company by including any additions in the list or removing names of such firms whose performance are not found up to the mark. Each company will maintain the following two lists:

(1) Suppliers priority list indicating the items

(2) Items priority list indicating the name (s) of suppliers

Each subsidiary company will circulate the up-to-date list of registered suppliers together with the list of items for which they are registered to all other subsidiary companies and coal India limited for their information and guidance. This list should be circulated once in a year in the month of April.

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The name of suppliers added/deleted to/from lists should be circulated to all the subsidiary companies.

MATERIAL BUDGET

Budget is an expression of a firms plan in the financial form for a period of time in future. In other words, it is a statement in numerical/ quantitative term expressing the plans, policies and goals of an enterprise for a definite period in the future.

“Budget is an estimate of future needs arranged according to an orderly basis, covering some or all of the activities of an enterprise for definite period of time”.

The Purpose of Material Budget:

(a) To plan the purchase

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(c) To establish control on the consumption of the materials. (d) To establish control on purchase

(e) To make arrangement of finance as per requirements.

(f) To develop plan for the consumption of materials by different departments. (g) To detect the deviations, trace the defect and apply correctives.

(h) To consider production schedule at the time of preparing planning and controlling the consumption of materials.

(i) To suggest ways and means for improvement in the next period budget.

 Factors Governing a Material Budget.

1) The past rate of consumption and , its ratio with production 2) The financial burden and investment pattern.

3) The cost of materials.

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STOCK VERIFICATION

General:

Stock verification is the process of physically counting/ weighing/ measuring all items of stores held in the stores depots and colliery stores and to compare the physical balances with stores recorded in the stock cards/ numerical ledgers. The discrepancies detected if any, will be investigated promptly and adjustment action taken at the earliest.

Object of Stock Verification:

A) Stores and materials held tally with the descriptions and Specifications. B) The actual balances agree with the balances recorded in the stock cards / Ledgers.

C) The discrepancies noticed are investigated and adjusted.

D) Proper arrangements exist for the safe custody, proper storage, accountable proper issue of stores.

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All items of plant & machinery, general and consumable stores, medicines and medical stores, spare parts for mining and earth moving machinery and drilling equipment and all charged off stores held in colliery/consumers units.

Responsibility:

Accounts department (internal audit) will be responsible for stock verification of stores, material, plant and machinery. It will be carried out departmentally under instructions from the chief materials manager by the stores personal of the stores depots / units independently.

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A) To ensure that before commencement of the financial Year, adequate staff is positioned in all the areas and other places for stock verification. B) To prepare 3 copies of annual stock verification Programmed.

C) To obtain progress report on stock verification periodically.

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Stock Verifier:

1) To carry out routine verification of stock comprising of any of the following:

a) Stores in the custody of stores depots/units. b) Plant and machinery in stores ; and

c) Plant and machinery deployed in projects.

2) To carry out surprise verification of stocks wherever ordered by higher

Authorities.

3) To test check the postings on the receipt and Issue side in the bin cards for The items verified by him to ensure that the receipt and issue side

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ISSUE OF MATERIAL

The term issue hereby means supply of materials from stores to the various workshops or departments of an organization.

Generally, tools are issued to workers at the stores counter. Materials such as cotton waste, emery paper, soap, etc, are collected from the stores either by workmen or foremen. Raw material and finished components are delivered to work point either by the progress department or stores.

While Issuing Material Following Points Should Be Kept In Mind:

1) Planning of material requirement:

All requirements of material should be thoroughly planned. The bill of Material gives estimates of different items of stores required.

2) Requisition of material:

Based on the quantities mentioned in the bill of Materials should not be issued in excess of standards. If necessary, an additional bill of material Can be issued by competent authority

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3) Internal audit of issues:

All issues should be audited. Any excess/shortfall in issues should be Explained and accounted for.

4) Control of waste:

Actual wastage should not exceed the standard Wastage fixed. Wastages Should be examined and any variance should be reported.

5) Issue of sundry items:

Certain stores are required in various departments. Either the

Requirements can be budgeted or orders can be Placed strictly on the basis of requirements.

5.1.6- Security And Fire Prevention..

Routine Steps for Security:

a) Security of stores is ensured by the security department through their vigilance.

b) The depot officer and other personnel will ensure that necessary precautions are taken to prevent loss by theft / fraud.

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c) Every day, while opening the store, the depot officer will ensure that the seals on locks are in order.

Some Important Points In Security Of Stores Is:

a) Responsibility & functions of assistant / security

officer.

b) Store gate passes. c) In and out register. d) Visitors.

e) Opening and closing of sheds. f) General precautions.

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FIRE PREVENTION

Fire is a great destructive natural force. Majority of fires which effect materials, equipment and property are attributable to carelessness, ignorance and lack of discipline and failure to observe regulations . The prevention of fire is of vital importance and must be the concern of all. Most fires can be prevented by common sense and good discipline and it is vitally important that the highest possible standard of fire prevention is achieved and maintained so that losses by fire may be reduced to minimum..

Some Important Points to Prevent Fire:

a) Smoking

b) Inflammable Materials c) Grass and undergrowth d) Stacking

e) Spontaneous Combustion

f) Storage Of Petroleum Oil and Lubricants g) Storage of gas cylinders

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h) Storage of rubber

i) Electricity firefighting equipment j) Fire practice

k) Water supply

Conclusion:

All fires have small beginning and can be effectively tackled at this stage. Firefighting equipment is readily available. Suitability, serviceability and most important the training in the use of this equipment are equally important for effective control of fires in their initial stages. The persons selected to man firefighting organizations should be carefully selected and properly trained in the use and maintenance of the firefighting equipment.

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DISPOSAL OF STORES

Disposal is a function of liquidating unnecessary Holdings in return for a price. It releases valuable storage space and locked up investment. It is Therefore, necessary to resort to disposal of unwanted holdings, with due regard to economy and administrative convenience.

Unwanted Holdings:

a) Surplus serviceable equipment, stores and spare parts. b) Old and unserviceable plant , machinery and equipment. c) Second hand empties

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STANDARDISATION

Standardization is a process of systematization of stores, based on reduction of Varieties to a controlled workable minimum, leading to economy and efficiency. Standardization is rationalized store keeping and it has great importance in Inventory control as it leads directly to lower holdings and thereby secure a reduction in material cost, without a corresponding reduction in stock cover.

Aims of Standardization:

a) To achieve economy in terms of cost, human effort and conservation of essential & scarce material.

b) To ensure maximum convenience by simplification Rationalization to Increase productivity

c) To adopt best possible solutions to recurring problems consistent with economy & convenience.

d) To define requisite levels of quality so that practical Evaluation of quality and its attainment are made conveniently and economically.

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Advantage of Standardization:

a) Standardizations lead to simplifications.

b) Standardizations lead to specifications and variety reduction.

c) Standardizations go a long way in ascertaining the best possible use of material.

d) Standardizations facilitate the inter-changeability of parts and components.

e) Standardizations facilitate performance evaluation.

f) Standardizations lead to easier, cheaper and quality procurement of materials.

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CLASSIFICATION OF MATERIAL

It is essential for the employees of the material department to know about the important materials being put to use in the organization. The operating Staff, particularly the storekeeper is required to make a close study of the Material during the process of storage, since he is responsible for their safe custody , meticulous handling and storing without exposing them any risk of damage , fire or pilferage.

The person in charge of materials department is also responsible for classifying the material before they are sent for inspection , entered into the stock ledger and kept in different bins. Therefore there is a essential requirement to make the broad classification of material , according to their nature use & service , so that easy handling of inventory may be possible. Several items carried into a store are generally divided into the following major types.

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1) Raw material :

These are the raw materials and other supplies, parts and Sub- assembles which the company purchases from outside sources, Namely suppliers, dealers or manufactures . These items are to be purchased and kept in stock before and during production of goods.

2) Purchased components :

These materials, other than above, purchased from the market and or used in completing a manufacturing process are called components.

3) Work-in-progress :

An inventory not finally produced but still to go to manufacturing process is called Work in progress or semi-finished goods.

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These are complete finished products ready for sale. These products Have been manufactured or assembled from production and in

process inventories.

5) MRO Inventories :

Maintenance, repairs and operating supplies which are consumed During the production process and generally do not form part of The product itself are known as MRO inventories.

6) Spares :

These are also called feed stocks .These are important inventories. The spares are governed by special policies and their problems are of special nature.

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7) Inflammables :

Those items which are highly susceptible to fire, such as petrol

diesel , kerosene , films , paints , paper etc. fall under this category.

8) Packing materials :

These includes all types of packing materials such as paper wood

carvings , saw dust , straw etc.

9) Chemical :

Items like carbide, acids, etc can be classified under this category.

10) General Stores:

This category contains all those materials / items which do not Fall under any of the categories of stores.

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CODIFICATION

Any business organization stores a large number of items, often running into thousands or lakhs. Therefore, there should be some means of identifying them. Several departments use the same item by different names and store them in different places.

Codification is the process of representing each item by a number or alphabet. The digits of which indicate the group, the subordinate, the type and the dimension of the item. Sometimes the location and suppliers name are also included in the codification process.

Many organizations in the government, public and private sectors, have developed their own system of codification.

Thus, codification is a process of representing each item by a number, the digit of which indicates the group, the sub-group, the type, and the dimension of the item.

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 Code for equipment  Code for spare

 Code for check digit

 Major class code of general consumables

 Code for minor class and detail class of general consumables.  Code for SL.no of the items of general consumables.

Advantage Of Codification :

1) Facilities in avoiding long and unwieldy description. 2) Helps in providing accurate and logical identification. 3) Prevents duplication.

4) Makes standardizations of items. 5) Reduces the varieties.

6) Makes purchasing department more efficient.

7) Helps in making efficient recording and accounting. 8) Facilitates the mechanical recording.

9) Facilitates the pricing and costing.

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INVENTORY CONTROL

Inventory control is a system which ensures the provision of the required quantity of inventories of required quality at the required time with the minimum amount of capital investment. Thus, the functions of inventory control are to obtain the maximum inventory turnover with sufficient stock to meet all requirements.

“Inventory control is, then, concerned with the control of the quantities or Monetary values of these items at predetermined level or within Safe limit”.

Essentials Of A Good Inventory Control System :

1) Classification & identification of inventories:

The inventory includes stock of raw materials, semi-finished goods, Finished goods and components etc.

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For proper inventory control standardizations of material products as well as simplification of the production is necessary.

3) Adequate storage facilities:

Adequate and well organized warehouse facilities with well equipped Proper handling facilities must be there.

4) Setting different levels & reorder points:

Just to avoid the chances of over and under investment as well as running short of an item during the course of production.

5) Fixing economic reorder quantity:

In determining the economic order quantity (EOQ), the two opportunity

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6) Adequate inventory records & reports:

Information about quantity in hand or in transit or on plants location, E.O.Q, reordering points, safety level etc. should designed in such a way that the clerical cost of maintaining these records must be kept at minimum.

7) Experienced personnel:

The last but not the least important requirement of a successful inventory Control system is the appointment of intelligent and experienced personnel in purchasing , production , and sales department.

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Objectives of Inventory Control:

1) To minimize the financial investment in inventories:

The main objective of a system of inventory control is to minimize the capital blocked in the inventories.

2) To ensure that the value of material consumed is minimum :

The inventory control has to ensure provision of the required quantity of

Material of the required quality at the required time with the minimum amount of capital.

3) To meet demand fluctuations:

Flucations in demand are a rule rather than an exception in real life

Situation.

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4) To allow flexibility in production scheduling :

The maintenance of higher level of finished goods inventory relieves the pressure on production system and gives them scheduling flexibility.

5) To reduce surplus stock:

Reduction of surplus stock is one of the essential requirements of effective inventory control.

6) To maintain the stock within the desired limit:

Inventory control facilitates in maintaining timely records of inventories of all items.

7) To protect from various types of losses:

Inventory control protects the inventories from pilferage, theft, waste loss, damages and unauthorized use .

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8) To provide scientific base:

Inventory control provide scientific base for short-term and large-range planning of inventory requirements.

9) To standardize information on stock level:

Inventory control standardizes and centralists and centralizes information on stock levels & progress of stock issue.

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INSPECTION OF STORES

Inspection is an essential tool of quality control of all goods and materials Purchased and received in the stores. Where there is no separate inspection Department or where that department deals only with a limited number of items of stores , the storekeeper may be required to undertake the Examination of goods for quality as well as sum total of the number of related characteristics or properties. A qualitative product should have the following:

 Shape  Colour

 Dimension and weight  Composition

 Strength

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SAP

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SAP

The R/3 System consists of a number of components that are completely integrated with one another. This integration allows the various departments and units of an enterprise to share and maintain the same information.

The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification.

PURPOSE

The blueprint design for the SAP R/3 system for TEGA started on Sept 2004. The discussions between representatives of TEGA & PwC resulted in crystallizing the organisation structure and the processes that are to be configured in the SAP system. The design agreed to is documented here.

The expectation is that this document, after being signed off by the process owners identified by TEGA, will be taken as the basis for all configurations required to be done in the realization stage and all development work required to go live on SAP. This document tries to achieve the following.

 To spell out the scope of configuration and development work to be undertaken before SAP goes live.

 To spell out the organisation structure designed for TEGA Industries Ltd. To enumerate the master data elements required for the processes.

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MATERIALS MANAGEMENT ORGANISATION STRUCTURE:

Pro cess ID

Process Name

Existing Process Process

Recommende d Mode 3.1 Compa ny Code

A Company is an organizational unit in

Accounting, which represents a

Business Organization according to the requirements of commercial law in a particular country. In the organizational structure Plants, Storage locations,

Purchasing Organizations and

Purchasing Groups come under a Company

In SAP one company code

will be

created

1.2 Plant A Plant is an organizational logistics unit that structures the enterprise from

the perspective of production,

procurement, plant maintenance, and materials planning.

Plants will have following attributes:  Valuation area is at plant level.  A plant has a definite address.

 A plant is assigned to a company code.

 More than one plant can be assigned to a company code In SAP for JSPL , plants will be created as shown in the Annexure - 01

74 Pro cess ID Process Name

Existing Process Process

Recommende d Mode 1.3 Storage Locatio n

An organizational unit that allows the differentiation of material stocks within a plant. Storage locations are always created for a plant. A storage location is the place where stock is physically kept within a plant. This field in SAP is four-digit code.

The storage locations will have the following attributes.

 There may be one or more storage locations within a plant.

 A storage location has a description.  It is possible to store material data

specific to a storage location.

 Physical inventories are carried out at storage location level.

 A storage location can be assigned

to a number in Warehouse Management. The list of storage locations and their assignment is as shown in the Org Structure: Annexure–01 1.4 Purcha sing Organi sation A Purchasing organization is an organizational level that negotiates conditions of purchase with vendors for one or more plants. It is legally responsible for completing purchasing contacts. Refer Annexure - 01 1.5 Purcha sing Group

A Purchasing group is the key for a buyer or a group of buyers responsible for certain purchasing activities.

Refer

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Process Flow

Determination of Requirements

The user department responsible is manually passing a requirement for materials to the purchasing department via Purchase Requisition. Purchase requests are generated when business runs the MRP and Request are also

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generated based in Consumption based planning (CBP) for Production and Engg.Stores.

Determination of Source of Supply

The purchasing component helps the buyer determine the sources of supply. User use the determination of the source of supply to create Requests for quotation (RFQs) and then to enter quotations. User is accessing the existing Purchase Orders and Conditions in the System.

Vendor Selection and Comparison of Quotations

The System is capable of simulating pricing scenarios and simplifies the selection of vendors by making price comparisons between the various quotations.

Purchase Order Processing

The purchasing system adopts information from purchase requisition and the quotation to help to create Purchase Orders. They are also creating manual purchase order directly for stock, non-stock items, services etc.

Purchase Order Monitoring

The buyer monitor the processing status of the purchase order online at any time and determine whether goods or an invoice have been received for the relevant purchase order item.

Goods Receipt and Inventory Management

The Goods receiving requester confirms the receipt of the materials by simply entering the Purchase Order Number. The system compares the goods receipt quantity with the purchase order quantity. By specifying permissible tolerances, buyers can limit over deliveries and under deliveries of ordered materials.

PURCHASING

Purchasing Functionality is integrated with Inventory Management and Invoice Verification within MM.

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Purchase Requisitions

Requisition documents have been classified into :

• 1. Normal (Delivery date is as proposed by system based on planned delivery time, or a date after this)

MRP generated requisitions will also be treated as normal PR‟s.

• 2. Urgent (Required Delivery date is before the delivery date proposed by the system based on the planned delivery time)

• Release strategy applicable is determined based on the following criteria: • 1. Document type

• 2. Total Requisition value • 3. Material group

• 4. Plant

• 5. Requisitioner

NORMAL PR –

Every material code in the material master has a specified LEAD TIME and as and when a requistioner is creating a PR, system will automatically calculate the delivery date for that material as per the lead time maintained and the delivery date field will be unchangeable.

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URGENT PR –

When a requistioner require a material in lesser days other then specified the he/she will use urgent type of PR and specified their required delivery date, here the delivery date field will be changeable

Introduction of WORK FLOW

 Work flow is introduced in system for batter tracking and prompt information of the every action to the end user

 Release of PR and PO will happen via WORK FLOW

 Work flow will inform each and every end user about their respective

action so that lead time to perform a work will be laser and the efficiency will improve

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WORK FLOW PROCESS FLOW CHART

PR/PO CREATION BY END

USER

A Email will trigger to Respective HOD’s

As and when PR will release by HOD a Email Will trigged to PR creator.

As and when a PO will placed for particular PR A email will trigger to end user

After PO release mail will trigged to purchaser/po creator for PO release information

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Vendor Creation

Every vendor is identified with the code in SAP. It is called Vendor master record.

Vendor master record contains details of

 Address

 _{Payment terms}

 Delivery terms

 _{Lead time to supply}

 _{GL Account for reconciliation}

Each vendor record will be created at company code and purchase organization level.

Normally vendor master contains the details of both accounts related and also purely purchasing related, hence it is created in consultation with FI team.

Purchase Order

Purchase order is an agreement between the vendor and a company to supply the goods at an agreed rate and at an agreed duration of interval.

Purchase order is a legal document between a vendor and a company. It covers the payment terms and terms of delivery also.

Goods Receipt against PO

There are three types of main material movements in SAP. They are

 _{Goods Receipt}

 _{Good Issue}

 _{Transfer Posting}

Through MIGO transaction entire above three types of transactions can be performed. There are many options with MIGO transaction code.

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Goods receipt is the process of receiving materials in to the storage location.

Example receiving goods with reference to PO, customer returns, from production. When goods are received, inventory will be increased and relevant other documents will be adjusted.

During the material movement, material document is generated for all movements. Relevant accounting and controlling documents are also created for relevant movement types.

Create Contract

Contract is an agreement between the vendor and the company to supply goods and services as per the agreed terms and condition.

At the time of negotiating, it may not be clear as of how much is required and when it is required. In such a situation, an open contract can be released on the vendor.

Every contract must be followed by a release order which is nothing but a normal PO with reference to the contract.

Contracts can be release centrally or with specific to plant. In case of multiple plants, central contract can be released and release order specific to each plants can be released.

83 28 Raising of PRs by user Preparation of STO by purchase Arrangement made by logistic for processing of delivery Excise Invoice to be raised by marketing Materials dispatch to required indented Dept. Receipt acknowledgement by user Hand over of documents to store for GR. By Marketing Gr and issue posting by store Hand over of excise docu.to Excise for modvate

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Procurement Process (Procure-to-Pay)

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SAP P2P CYCLE

DEPARTMENT ACTION CREATE

CHANGE /

DELETE DISPLAY REPORT

NEED OF MATERIAL IF STOCK EXIST

USER DEPT STOCK CHECK MMBE MB52

USER DEPT RESERVATION MB21 MB22 MB23 MB25

RESERVATION PRINTOUT ZRES

STORE MATERIAL ISSUE MB1A MIGO MIGO MB51

IF STOCK DOES NOT EXIST

USER DEPT PR CREATE ME51N ME52N ME53N ME5A/ME5J USER DEPT PR PRINTOUT ZMM_PR

USER DEPT PR RELEASE ME54N/ ME55

PURCHASE PR -TO - RFQ ME41 ME42 ME43 ME4S PURCHASE RFQ PRINTOUT ME9A

PURCHASE QUOTATION MAINTAIN ME47 ME47 ME48 PURCHASE COMPARATIVE ZMMCOM

PURCHASE PO WRT TO RFQ / PR ME21N ME22N ME23N ME2N/ME2J PURCHASE PO RELEASE ME29N/ME28

PURCHASE PO PRINT ME9F

PURCHASE DOWN PAYMENT ADVICE F-47 FB08 FB03 FBL1N PURCHASE

PRINT DOWN PAYMENT

ADVICE ZPADV

FINANCE DEPT POST DOWN PAYMENT F-48 FBRA FB03 FBL1N

GATE

GATE ENTRY WRT PO AT

GATE ZMM_GP_IN ZMM_GP_CNG ZMM_GP_DTL

WEIGHBRIDGE WEIGHMENT ZMM_GP_WB

STORES GOODS RECEIPT ZMM_GP_GRN MIGO MIGO MB51

STORES VEHICLE GATE PASS ZMM_GP_RMR ZMM_GP_DTL

GATE VEHICLE EXIT ZMM_GP_EX ZMM_GP_VFO ZMM_GP_DTL

USER DEPT GR INSPECTION ZGRCHK ZGRCHK ZGRCHK

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FINANCE DEPT INVOICE RECEIPT MIRO MR8M MIR4 MIR5 FINANCE DEPT IR RELEASE MRBR

FINANCE DEPT POST OUTGOING PAYMENT F-53 FBRA FB03 FBL1N FINANCE DEPT CHECK PRINTING FBZ5

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