Meaning of Inventory
Total Page:16
File Type:pdf, Size:1020Kb
AN ANALYSIS ON INVENTORY MANAGEMENT AT WHIRLPOOL OF INDIA LIMITED, PUDUCHERRY SUMMER PROJECT REPORT Submitted by R.GOPAL REGISTER NO: 27348312 Under the Guidance of Mrs. R. HEMALATHA, MBA., Faculty, Department of Management Studies in partial fullfilment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION DEPARTMENT OF MANAGEMENT STUDIES SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE PONDICHERRY UNIVERSITY PUDUCHERRY SEPTEMBER- 2007 SRI MANAKULA VINAYAGAR ENGINEERING COLLEGE MADAGADIPET, PUDUCHERRY DEPARTMENT OF MANAGEMENT STUDIES BONAFIDE CERTIFICATE This to certify that the project work entitled “AN ANALYSIS ON INVENTORY MANAGEMENT AT WHIRLPOOL OF INDIA LIMITED, PUDUCHERRY” is a bonafide work done by R.GOPAL [REGISTER NO: 27348312] in partial fulfilment of the requirement for the award of Master of Business Administration by Pondicherry University during the academic year 2007 – 2008. GUIDE HEAD OF DEPARTMENT Submitted for Viva-Voce Examination held on EXTERNAL EXAMINER ACKNOWLEDGEMENT First and foremost, I thank the God for his substantial blessing and mercy at all stages in the completion of the project. I take this opportunity to express my deep sense of gratitude to SHRI N.KESAVAN, Founder Chairman, SHRI M.DHANASEKARAN, Managing Director and SHRI S.V.SUGUMARAN, Vice-Chairman of our college for their good wishes for this project. I express my immense gratitude to our Principal DR. V.S.K.VENKATACHALAPATHY for his support and encouragement for the completion of my project. I extend the immense gratitude to the Head of the Department MR. S.JAYAKUMAR for his motivation, inspiration, and encouragement for the completion for my project. The valuable and unflinching requital support in this Endeavor MRS. R.HEMALATHA my internal guide, Department of Management Studies whose assistance was immeasurable to the completion of this project. I am sincerely thankful to MR. N.RAMESH, Finance Manager, Whirlpool of India Limited (WOIL) for his help and support throughout the project. I extend my thanks to MR. K.VIJAY GANESH, Manager of Materials Planning for his help. I extend my sincere thanks and my deep sense of gratitude to MR. L.GANESH KUMAR, Deputy Manager-Material Planning for his kind assistance and MR. R.VISHNU PRATAP, Executive-Finance, who were also my External Guides. I would also like to thank all the staff of the organization for helping me directly and indirectly to conclude this work. Last, but not the least, my heart felt gratitude to my parents, relatives and my friends for their constant encouragement, support, help and valuable advice to make this project a success. ABSTRACT Every organization needs inventory for smooth running of its activities. It serves as a link between production and distribution processes. The investment in inventories constitutes the most significant part of current assets/working capital in most of the undertakings. Thus, it is very essential to have proper control and management of inventories. The purpose of inventory management is to ensure availability of materials in sufficient quantity as and when required and also to minimise investment in inventories. Raw materials, goods in process and finished goods all represent various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Because of the large size of the inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is therefore absolutely imperative to manage inventories efficiently and effectively in order to avoid unnecessary investments. A firm neglecting the management of inventories will be jeopardizing its long run profitability and may fail ultimately. The reduction in excessive inventories carries a favorable impact on the company’s profitability. The study starts with an introduction to inventory management, Company’s profile, its Vision & Mission, Achievements and also the need for study, review of literature and objectives are set out for the study. Research methodology, Data analysis & Interpretation, Findings and Suggestions of the study follow. One of the main areas of the project is the analysis part, where the data are analysed & interpreted, to find out how the inventories were managed. Some of the tools used in inventory are regarding to: Economic Order Quantity Safety Stock ABC Analysis FSN Analysis Trend Analysis and Inventory Turnover Ratio. And then conclusions, limitations & scope for further study were discussed. CONTENTS CHAPTER TITLES PAGE NO. LIST OF TABLES LIST OF CHARTS INTRODUCTION 1 I PROFILE OF THE COMPANY 2 NEED FOR THE STUDY 15 II REVIEW OF LITERATURE 16 III OBJECTIVES OF THE STUDY 31 IV RESEARCH METHODOLOGY 32 V DATA ANALYSIS AND INTERPRETATION 34 FINDINGS OF THE STUDY, VI 49 SUGGESTION AND RECOMMENDATIONS 51 VII CONCLUSION 52 LIMITATIONS OF THE STUDY VIII 53 SCOPE FOR THE FUTHER STUDY 54 BIBILIOGRAPHY 55 LIST OF TABLES TABLE NO. NAME OF THE TABLE PAGE NO. 5.1.1 ECONOMIC ORDER QUANTITY 34 5.2.1 SAFETY STOCK 37 5.3.1 ABC ANALYSIS 41 5.4.1 FSN ANALYSIS 44 5.5.1 CALCULATION OF INVENTORY TREND 45 5.5.2 INVENTORIES PERCENTAGE 46 5.6.1 INVENTORIES TURNOVER RATIO & VELOCITY 48 LIST OF CHARTS CHART NO. NAME OF THE CHART PAGE NO. 5.3.1 ABC ANALYSIS 41 5.4.1 FSN ANALYSIS 44 5.5.2 TREND OF INVENTORY 47 CHAPTER-I 1.1 INTRODUCTION Inventory control is vitally important to almost every type of business, whether product or service oriented. Inventory control touches almost every facets if operations. A proper balance must be struck to maintain proper inventory with the minimum financial impact on the customer. Inventory control is the activities that maintain stock keeping items at desired levels. In manufacturing since the focus is on physical product, inventory control focus on material control. “Inventory” means physical stock of goods, which is kept in hands for smooth and efficient running of future affairs of an organization at the minimum cost of funds blocked in inventories. The fundamental reason for carrying inventory is that it is physically impossible and economically impractical for each stock item to arrive exactly where it is needed, exactly when it is needed. Inventory management is the integrated functioning of an organization dealing with supply of materials and allied activities in order to achieve the maximum co-ordination and optimum expenditure on materials. Inventory control is the most important function of inventory management and it forms the nerve center in any inventory management organization. An Inventory Management System is an essential element in an organization. It is comprised of a series of processes, which provide an assessment of the organization’s inventory. 1.2 PROFILE OF THE COMPANY 1.2.1 WHIRLPOOL CORPORATION Whirlpool Corporation is the world’s leading manufacturer and marketer of major home appliances. The company manufactures in 13 countries on 4 continents namely :-- Canada, United States, Mexico, Argentina, Brazil, Slovakia, Germany, Sweden, France, Italy, South Africa, China and India and markets products in more than 170 countries under major Brands (26 including Affiliates) names such as Whirlpool, Kitchen Aid, Roper, Estate, Bauknects, Ignis, Laden, Inglis, Braotemp, Crolls, Acros and Consul. Whirlpool is also the principal supplier to Searo, Roebuck and company of many major home appliances marketed under the Kenmore brand names. Head quartered at Benton Harbour, Michigan, U.S.A, Whirlpool Corporation is the world’s leading manufacturer and marketer of major home appliances. Washing Machines, Dryer, Dish-washers, Refrigerators, Freezers, Cookers, Micro-wave Ovens, Room air- conditioners, Small Kitchen Appliances, etc., Whirlpool of India Limited, a fully owned by Whirlpool Inc, US, ($12 billion), a leading global consumer durable player. Whirlpool of India limited manufactures and markets refrigerators and washing machines. The company has diversified its product range into Air Conditioners and Microwave Ovens. The growth in the consumer durable industry has slowed down due to lack of demand. The year 2000 has been a bad year for the industry as the overall growth was flat. The refrigerators registered a flat growth; washing machines saw a negative growth while the air conditioner segment performed well exhibiting a growth rate of 20%. Whirlpool Corporation has a management system called WES (Worldwide Excellence System) and a value to aged performance system called HPC (High Performance Culture), which drives, are the actions and initiatives of unit. 1.2.2 WHIRLPOOL CORPORATION TODAY . BUILDING CUSTOMER LOYALTY WORLDWIDE Whirlpool Corporation arrived in the new century and millennium as the world’s leading manufacturer and marketer of major home appliances. Today, Whirlpool’s global platform provides our operations with resources and capabilities no other manufacturer can match and with brands that consumers trust. To sustain the productivity savings that is being achieved by our operations, they have embedded their Operational Excellence Process - based on Six-Sigma and lean manufacturing skills and capabilities - within each of their worldwide manufacturing facilities. The company’s global information technology organization provides Internet tools that cut the complexity and costs of doing business for Whirlpool and its trade partners. Whirlpool’s unique global platform allows the company to transfer key innovations and processes across regions and brands. Based on the continuing success of the company’s global innovation process, which