2

Prepared by:

ANURAG SHARMA B.E,8thSEM.

2

[2009-10]
College: LUKHDHIRJI ENGINEERING COLLEGE,MORBI-2.

Submitted to: HR DEPARTMENT(ULTRATECH)

DECLARATION
I undersigned ANURAG SHARMA student of BE 8th semester declares that I have prepared this project report on SUPPY CHAIN MANAGEMENT at Ultra Tech Cement Limited under Mr. RAVI SHAHI.
I also declare that this project report is my own preparation and not copied from anywhere else.

(SIGNATURE)
Anurag Sharma 3

ACKNOWLEDGEMENT
I would like to give my sincere thanks to Mr. BHAVESH PATHAK who permitted me for training. I would like to thank Mr. MILIND.J.PARIKH for his friendly co-operation during my training. My sincere thanks also go to Mr. UPENDRA JHUNJHUNVALA for providing me the necessary technical information & guidance regarding my case study about stores department. I would also like to thank Mr. RAVI SHAHI for information regarding Purchase. Finally, I would like to thank all the employees of UltraTech LTD. who shared their knowledge with me with utmost pleasure.

Signature of student (8th SEM BE)

SYNOPSIS
The men have passed from several stages right from the evolution of humanity to this high-tech developed era. As soon as progressive changes took place in Stone Age, it also affected to their man three needs: Food, Cloth & Shelter. Finally, these progressive changes resulted in the invention of CEMENT.

The evolution of Cement was as important for the pilgrims as the invention of fire. Cement is the substance, which walks with them from ages to ages. It has been used as a building material since ancient times, e.g. the classic structure of Rome, Pyramids etc. Therefore, we can say that the single component of this revolution is CEMENT which can be truly considered as the basic need of our rapid development. In the field of cement manufacturing, Gujarat Cement Works Asias largest producer of cement, which is located at Kovaya, district Amreli in Gujarat, the western state of India, is a coastal-based plant with an overall capacity of 5.4 MillionTone of cement p.a. Gujarat Cement Works is the identity of Indian Cement Industry. It has always adopted latest techniques in the field of cement manufacturing. Consumer satisfaction is the first aim of GCW. They make only those products that make India proud. However, to fulfill the aim and to set an ultra modern plant on a least cost, they never compromise with quality, environment, social responsibility, employees facilities etc.

Therefore, we can say that this cement industry of Ultra tech in Kovaya is doorstep to modernization.

CONTENTS

PARTICULRS 1. Industry Profile 2. Company Profile 3. Mfg. Process of Cement 4. Supply Chain Management 5. SCM in Ultratech Cement Ltd. 6. Research & Methodology 7. Findings 8. Inventory control at Ultratech Cement Ltd.. 9. Case study & Recommendations 10. Limitations & Bibliography.

PAGE NO.

PREFACE
A Glimpse of an BE The world is becoming smaller day by day. It is converting into a city. Today there are number of ways for a man to position himself in this world. But from these ways selecting the most beneficial option is very difficult today. A very crucial for a man is to pick the suitable career option. There are plenty of study courses which have been opened for us and new and new are emerging. But form these bundle of courses, there are some courses which are considered as the top most option for the best career. BE is one of them. BE is the most suitable course for those who want to develop and explore their skills in the techfull world. We are glad by selecting this option for our better future.It helps to develop your technical & managing skills and intelligence. The most and very important thing in this course is practical studies and most of practical aspect is covered in the Industrial project. So lets have some brief about this project. What is Industrial Project about? A Industrial Project is practical study having the duration of about 2 months. It is the platforms where a BE student gets the opportunity to show his or her different skills. Industrial project is considered as the object of 8 th semester in the four year BE program. It is very helpful to the students when they have to face real world, rather than theoretical world. In Industrial Project what the students have to do is that they have to select a particular topic regarding subjects from the study that they are doing in BE. Then they have to select a specific company or industry according to that topic and they have to make a research proposal.

CEMENT INDUSTRY - INDIA (OVERVIEW)

1. Indian cement industry dates back to 1914 - first unit was set-up at Porbandar with a capacity of 1000 tones 2. Currently, India is ranked second in the world with an installed capacity of 114.2 million tones. Industry estimated at around Rs.18, 000 cores. 3. Current per capita consumption is 85 kgs. As against world standard of 256 kegs 4. Cement grade limestone in the country reported to be 89 Bt. a large proportion however is unexploitable. 5. 55 - 60% of the cost of production is government controlled 6. Cement sales primarily through a distribution channel. Bulk sales account for < 1percentage of the total cement produced. 7. Ready mix concrete a relatively nascent market in India

HISTORY
Soren Kristian Toubro, a civil engineer and Henning Holck Larsen, a chemical engineer, the founder of Larsen & Toubro Company were schoolmates, later attended the same engineering college in Denmark. After becoming engineers both joined, the firm named F. L. Smidth & Company, which was Cement machine manufacturing Company. Then both came to India in 1935 to assess the value of various cementmanufacturing groups on behalf of F. L. Smidth & Company M/S Copenhagen. These groups later merged into the Associated Cement Companies. After completing this task, they searched for proper places for F.L. Smidths local offices in India. In the course of their work, both visited India, observed Indian people, and decided to start their own business here. They started a partnership concern on 1st May 1938 and started undertaking repair jobs on the imported machinery like pasteurizes, butter Chuns, creams separators since supply of these machines were stopped due to world war II. Gradually, they began to develop and manufacture several of these and other types of dairy equipments. Very soon, L & T was acknowledged as a reliable fabricator with high standards. L & T has entered in Cement business in 1980. L & T established its first plant at Awarpur, Mahrashtra in 1983. Second plant was established in 1991 at Hirmi, M.P. Third and largest plant was established in 1996 at Kovaya, Gujarat. The fourth plant was established at Tadipatri, A.P. in 1998. GCWs operations started from 2 April 1996. It became Asias largest cement producing unit with the capacity of 4.2 million-tone per annum.

GENERAL INFORMATION
Cement and concrete might be synonymous as household terms, but are by nature different: cement, an ultra-fine gray powder, binds sand and rocks into a mass or matrix of concrete. Indeed, cement is the key ingredient of concrete. Semantics aside, concrete is the signature material in driveways, patios, basements, and a host of other American household items. It is also the world's most widely used building material. Annual global production of concrete hovers around 5 billion cubic yards, a volume approximated by yearly cement production levels of about 1.25 billion tons. Concrete's global appeal is not accidental - the ubiquitous, stone-like material is produced from some of the world's most abundant resources, as is cement.

A BRIEF HISTORY OF CEMENT

Cement is invented/developed by Joseph Aspelin of U.K. in 1824. place in England. That is why it was named as Portland Cement. In 1948, Mr. William Aspdin manufactured cement as a commercial product for selling. The cement has been in the existence for a long time in the historical monuments. The evidence of this fact can also be seen in civilization of Mohan-JoDoro. In India, Portland cement was first manufactured in 1904 by south India industrial limited. In 1914, new company named India Cement Co. was established at Porbandar, which is even today in operation as ACC. Since 1904, cement production is continued and expanded. Since

hardened cement plaster resembled Portland stone found in Portland, which is a

To define cement, we can say cement is a mixture of these main following raw materials: Limestone Bauxite Iron ore Marl Sweetener Clay Mineral Gypsum In other way, when we add gypsum in clinker and refine it in small particles it is called cement.

Types of cement:

Ordinary Portland cement

(A) Blended cement 1. Portland pozzolan cement 2. Portland blast furnace slag cement (B) Special cement 1. Sulfate resisting Portland cement 2. Low heat cement 3. Rapid hardening cement 4. Oil well cement 5. White cement

SWOT ANALYSIS OF INDIAN CEMENT INDUSTRY

OPPORTUNITIES
Huge infrastructure demand Rapid urbanization Increasing demand for consumer durables Untapped rural demand Increasing interest of foreign producers

THREATS
Slow growth in infrastructure demand Global economic slow down

STRENGTHS
Abundant resources Low cost and efficient labour force Strong managerial capability Strong globalize industry and emerging global competitiveness Modern new plant & modernized old plants

WEAKNESSES
High cost of energy Higher duties and taxes Infrastructure Labour laws Slow statutory clearness for development of mines

CHAPTER 1 COMPANY PROFILE

VISION To be INDIAS largest cement manufacturing unit at a single location, producing premium quality cement with clear focus on all stake holders.

MISSION

GCW will be a vibrant enterprise focusing on bench marking, sustainable development, expectation and aspiration of stakeholders and society.

1.1 INTRODUCTION
Ultra Tech Cement Limited (Formerly known as L & T Cement Ltd.) is a very well known name in the field of cement. The registered office and head office of the company is at Mumbai. This companys reputation is based on a strong customer orientation, the technological sophistication that characterizes its products, and an impressive record of achievements. Ultra Tech has initiated a transformation process to ensure that it emerges as a knowledge-based premium conglomerate in the shortest possible time. Ultra Tech is Indias cement leader, with over 17 Million-Ton p.a. installed capacity. Each of its plants incorporated state-of-art technology. Ultra Tech Cement has strong brand equity and commands a price premium in most markets. Ultra Tech is committed to a high growth trajectory that will deliver significant value to its customer and shareholders. Out of six cement plants of Ultra Tech, GCW at Kovaya is the largest cement plant in Asia. There are two phases in the plant, which are almost identical in layout and production capacity. The reason for laying such a big plant near a small village like Kovaya can be justified by the fact that this region is very rich of limestone resources, which is the chief raw material for cement production. The estimated resources of limestone mines are enough to supply raw material for next 40 years to GCW. Ultra Tech is Indias largest manufacturer of premium quality cement. Ultra Tech has nationwide network of factories, offices and sales centers. Authorized stockiest dealing in the companys product line, including cement, is located directly or indirectly in every district of the country.

Board of Directors
Mr. Kumar Mangalam Birla, Chairman Mrs. Rajashree Birla Mr. R. C. Bhargava Mr. Y. M. Deosthalee Mr. A. R. Gandhi Executive President & Chief Financial Officer
Mr. K. C. Birla

Manager and Chief Executive Officer

Mr. Saurabh Mishra

Chief Manufacturing Officer

Mr. S. K. Maheshwariv

Chief Marketing Officer

Mr. O. P. Puranmalkav

Executive Vice President International Business

Mr. Deepak Razdanv

Company Secretary
Mr. Sanjeeb Chatterjee

Auditors
S.B. Billimoria & co., Mumbai G.P. Kapadia & co., Mumbai

Solicitors
Amrachand & magaldas& suresh a shroff & co., Advocates & solicitors, Mumbai

1.2 AWARDS AND ACHIEVEMENTS

The company is doing a marvelous business in the entire field where it can put its hand which is a great aspect related to any company. The company is also able to achieve many awards from the Government of India as well as other institutions at national and international level, which are as follows; (1) The company has secured ISO 9002 certificate, which has been given for the best quality and best production process capabilities. (2) The joint venture between L&T and Ceylinco helps them to achieve the SLSI (Sri Lanka Standard Institution) from the Sri Lankan Government. (3) L&T has achieved Top Export Award from CAPEXIL (Chemical & Allied Products Export Promotion Council) in the category of cement, clinker and asbestos cement products for the year 1999-2000. (4) L&T has achieved the Highest Export Award for cement from CAPEXIL in the non-mineral sector for the year 2000-2001. (5) L&T has achieved the International Award in the 52nd International Calendar Show for their best calendar with the theme of Brides of India for the year 2002. Export awards Worldwide, clients have consistently endorsed Ultra Techs highest quality standards. The list of export awards it has won is testimony to Ultra Techs uncompromising standards on product quality. We have been on the roll call of top exporters of the Chemicals & Allied Products Export Promotion Council (Capexil), year after year. Ultratech won the Capexil Certificate of Export Recognition - Top Exporter - Cement, Clinker, Asbestos and Cement Products for the years 2000, 2002 and2003.

Highlights of some of the other awards of GCW plant are given below: 2004: Bhartiya Udyog Ratan Award presented to Sh. KYP Kulkarni By Indian Economic Development & Research Association (IEDRA), New Delhi

2002-03:

Greentech Gold Safety Award By Greentech Foundation, New Delhi

2002:

Gujarat State Safety Award By Gujarat Safety Council (GSC), Vadodaras

2001-02:

Greentech Environment Excellence Award By Greentech Foundation, New Delhi

2001:

Awards for Excellence in "Industrial Relations" By Federation of Gujarat Industries (FGI), Vadodara

UNIQUE CHARACTERISTICS
UltraTech cement units are state -of- art technology dry process plants in corroborating pre-calumniation technology. Advance instruments system; computerized process control along with online quality control by x-ray ensures consistently high quality. Process parameter are monitored and controlled by computer-based systems. UltraTech cement plants are Eco-friendly with elaborate pollution

control facilities like electronics precipitators, bad and dust filters.

Captive mines adjusted to the factories supply high grade limestone Infrastructure includes all weather roads, and rail sidings as well as port handling facilities at Gujarat plant. All cement plants are based on the design of F.L. Smith & Co., Denmark.

SIZE OF UNIT & FORM OF ORGANISATION

UltraTech cement Ltd. Is large-scale industry according to new industrial policy 1991,which defines that the firm having investment more than 5crores and more than 100 employees is consider under large scale industry. GCW is having investment more than 2600 crores and 600 employees, so GCW is considered as a large-scale industry. Public ltd means the company, which has an association not less than 7 members and registered under the Company Act. Public company must add the word limited at the end of its name. A public limited company must have at least three directors.

Plants of UltraTech LTD

(1) GUJARAT CEMENT PLANT (GCW)

The plant GCW is located at southwestern coast of Saurashtra in Gujarat. It is 150 kms from Bhavnagar & 75 kms from Diu. It has received ISO 9002 certificate in October 1997 for its better quality system in manufacturing and dispatching of clinker and cement. Clinker and cement are exported to Sri Lanka, Saudi Arabia and a few European countries. This unit is largest and high production unit of Ultra Tech. This unit has made record in production and quality of cement.

(2) AWARPUR CEMENT WORKS (ACW)

ACW is located in Maharastra at Awarpur village, which is 212 km away from Nagpur, and in Chandrapur district. Total capacity of plant is 2.5 MT per annum. It produces OPC at 33, 43, 53 grade and PPC.

(3) ANDRAPRADESH CEMENT WORKS (ACW)

This plant is located in Tadpatri village, district Anantpur, Andrapradesh. This plant is equipped with latest equipment to produce OPC of 33, 43, 53 PPC etc. grades with consistency in the quality. It has its own railway track, which is from Chennai to Delhi.

(4) HIRMI CEMENT WORKS (HCW)

It is located in Madhyapradesh at Hirmi village, which is 65 km away from district Raipur. Its installed capacity is 1.45 MT per annum producing OPC at 33, 43, 53 grade.

(5) JHARSUGUDA CEMENT WORKS (JCW)

HCW located at Dhutra village of jharsuguda district in Orissa, which is 15 km away from jharsuguda. It is producing mainly high quality slag cements according to ISO455-1989 norms. Installed capacity of this plant is 0.7 MT per annum. This plant has sophisticated laboratory to maintain quality control goods.

Besides these plants UltraTech has two grinding units located at

1) Magdalla (Gujarat) 2) Ratnagiri (Maharashtra) Company has two domestic cement terminals at 1) New Mumbai 2) Mangalore

SUBSIDIARIES
Larsen & Toubro ceylinco (Pvt.) Limited. Ceylinco insurance company limited and UltraTech have incorporated this subsidiary in Sri Lanka. Ceylinco is one of the most respected business groups in Sri Lanka with activities in the field of banking, insurance and finance. A bulk Cement terminal has been established near Colombo with annual output of 0.5 MT. Cement in bulk is sourced from Ultra Techs Gujarat Cement works and transported by carriers to Colombo. Narmada Cement Company Limited. The Narmada Cement Company Ltd. At Jafarabad (Gujarat) and two grinding units at Madgalla (Gujarat) & Ratnagiri (Maharastra) all are portbased plants. Clinker is shipped by sea from Jafrabad to the grinding units.

LOCATION OF DIFFERENT PLANTS IN INDIA

ORGANISATIONAL STRUCTURE
EVPS OFFICE

HEAD ACCOUNT MANUFACTURING

ERP-CELL

MATERIALS

PERSONNEL&ADMINISTRATION

STORES IT

PURCHASE

ACCOUNT

PERSONNEL SECURITY

ADMINISTRATION

MEDICAL

PRODUCTION ELECT.&INST. SAFETY PLANT

MINES

MECHANICAL

CPP

DESP.&PACK.

CIVIL

JETTY

PROCESS QUALITY SAFETY

MINES

CRUSHER

MECHANICAL

CPP

DESP.&PACK. PLANT

CIVIL

JETTY

ELECTRICAL

INSTRUMENTATION

CHAPTER 2

MANUFACTURING PROCESS OF CEMENT AT ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS KOVAYA

SECTION 1 *************************************************************************************

INTRODUCTION
The GCW Cement production process is here under: Mines L.S. Crusher Belt Conveyor L.S. Storage Additives Raw Mill C.F. Silo Preheater Kiln Coolax Cooler Clinker Storage

Cement Mill Cement Silo

To Jetty

Packing Plant

SECTION 2 MINES
*********************************************************************

2.1

INTRODUCTION:

The lime stone mine, belonging to the Larson & Toubro Cement Plant is situated 2.5 km. to the west of the plant. On its border, also lies the mines of the Narmada Cement Plant.

2.2

MINING:

Here in the Kovaya Lime Stone Mine mining is done in two methods: 1. Conventional Mining 2. Surface Mining

1.

CONVENTIONAL MINING

These explosives and detonators are stored is called the magazine. No civilization is allowed to occur within the periphery of 500 m. Its walls are made of First of all the top soil is removed with the bulldozer. This soil is transported to the mines only when ordered, otherwise it is heaped at the mines. The drilling machine is used to make holes upto the depth of 10 m and 150 mm diameter. It also takes samples of soil at various levels for the assessment of the soil. According to the kind of earth i.e., soft or hard the placing of explosive is decided. If the soft earth is charge with an explosive, then the gases pass through the porous soil and hole is not blasted, hence explosive is wasted.

It is very important to ram and compact the earth after piling explosive. Otherwise it might explode in the air. Even the rock develops the cracks, so if the drilling machine is used in the area it might get stuck up in crack. The blast explosive is manufactured by IDL Chemicals, Rourkela. It is of 125 mm Diameter. and 83 mm Diameter. It is class 2 explosive weighting 6.25 kg. The 83 mm Diameter explosive is Aqua dyne, also manufactured by IDL Chemicals. It weighs 2.77 kg. The explosive have following compositions: Nitrate - 60 % Ag Powder - 10 % Water - 10 % Nitroglycerine - 20 % These explosive are Nitroglycerine based explosive and they are in a thick paste form and contains salver. The cost is Rs.18/kg. When we observed the blasting there were 19 holes of depth 10 m each, so 35x15x10x1.5 tons of limestone is acquired against the usage of 1500 kg of explosive used. Here the holes blasting affective area are 34 m long and 15 m wide. The power factor ranges from 3 to 5 which are considered less. A detonating chord is used to connect these holes to each other. These are made up to Penta Ethylene Tetra Nitrate [PETN] coater with plastic. A one meter long chord contains 10 gm of PETN. This is used in a chord form so that the contact is not broken. It fires at the rate of 6000 m/sec. A detonator is used to connect these holes and complete the circuit. The wire is made of steel which is covered with plastic. This wire is ignited. An Ohms meter is used to check whether the circuit is completed or not. Then the dynamo is charged and the red light on it lights frequently and fire button is pressed, and blast occurs.

The place where stones and it is 60 cm thick stacking of explosives and detonators are done separately. In the case of accidents if explosives ignite, they just burn, but if detonators ignite, they explode. The explosives are stacked on a wooden platform, 6 inch above the ground, so that no harm is caused by rats also. Special care is taken not to use any iron material in the magazine, instead of iron, Cu is used. The stacking is done only upto 1.2 m. A red line is marked almost about 2.5 m above the ground which marks the maximum storage capacity. A passage is left between the stacks, so that if one starts burning the others might be removed. These magazines have special Z type ventilators for the purpose of security. These are also made from Cu. The vehicle used for carrying the explosives is made from Al. It has a partition between back part and front part and also a silencer in front, so there will not any chance of fire.

Equipments:
No -2 Approx Cost - 35 lacs Make - IBH -10 Power - 210 HP Dia. of drilling rod- 6 inch

Drilling machines

There are 3 rods of 3 m each and hammer of 1.5 m. The hammers have holes, from which air pressure is exerted so the soil is removed. It consumes 20 lts of diesel/hr.

Loading Equipments
Hydraulic Excavators - 3 Approx Cost - 85 lacs

Make Power Bucket capacity Diesel consumption

- L&T 300 CK - 324 HP - 3.8 m3 [5 tons] - 40 lts/hr

Transporting Equipment
BEML Hall pack Approx Cost Make Power Diesel consumption -8 - 55 lakes - LW 35 - 380 HP - 20 lts/hr

Dozers
No -8 Make - BEML D355A3 Engine Japanese

Crushing
Crushing is done after the mining. Crusher is located outside the mining lease area and is about 2.5 km away from stacking site at the plant. The main aim of the crusher is to crush the lime stone to the required size and transport the same to the stock pile through RBC. Lime stone is dumped in the hopper which is of 160 tons capacity by H-35 BEML dumpers of 35 tons capacity. From hopper the material is then transferred into the crusher through an Apron Feeder where the material is finally crushed.

Technical Specification:
1. 2. 3. 4. Type Size Feed size : Single rotor impactor : APPM 1822 : 1400x1300x1100 mm

Mass Flow rate : 950 TPH

5. 6.

End product size : 75 mm Motor : 1425 KW at 1000 rpm

Main Components of L.S. Crusher:

1. 2. 3. Apron Feeder Scraper chain conveyor Impactor

1. Apron Feeder
It comprises of specially fabricated frame on which two heavy duty endless link assemblies are wounded. The apron flights are of rolled steels and are bolted on the chains and are used for conveying the material. The drive arrangement is a D.C. motor and a gear ox connected to the drive shaft of the apron feeder. The link assembly and the flight are supported and guided on the top of the frame by deck rollers. The drive shaft has two sprocket hub assemblies which mesh with the link assemblies and drive the apron feeder. On the return end of the apron conveyor is the tail wheel assembly for guiding the link assembly.

2. Scraper Chain Conveyor

The scraper conveyor consists of a trough assembly within with a scraper chain assembly travels. The round link chain and fabricated scraper flight runs on scraper trough while conveying the spillage load on trough support assemble while returning. Actual conveying of spillage is done by the bottom strand by scraping material alone the trough bottom plate. The drive arrangement consists of an A.C. electric motor and shaft mounted reduction gear box which directly rotates the drive shaft. At the rear end, the scraper tail wheel assembly guides the round ling chain assembly.

3. Impactor
The crusher is Impactor Crusher. Crushing is done by impact and it is a dynamic operation. The main size reduction is carried out by striking i.e., by impact of the impeller bars to the crusher feed. The purpose of the breaker plates arranged inside crusher is to function as deflecting plated. The material thrown against them is reflected back into crushing compartment, where it is again hit by the impeller bars, until it leaves the crusher through slot between rotor and lower edge of breaker plate. By the impact of material against roller plates and material gets crushed and then material is supposed to crush by chunking against each other. The material is ground to the size of 50-60 mm in first phase.

2.

SURFACE MINING

Mining lime stone with surface miner is of very recent origin in India and it has got definite advantages over conventional mining. First of all the mining with surface miner eliminates totally drilling and blasting. Surface miner performs in site crushing while mining, which cases out the problems encountered in transportation of limestone to crusher. The system needs no separate loading arrangement and the machine loads the material directly to the trucks or dumpers. The need for haul road maintenance is drastically reduced, since the mine surface with the surface miner is very gradual and uniform. The biggest advantage with surface miner is that it eliminates primary crushing, since the product size will be maximum 150 mm and 50 % will be less than 75 mm. Surface miner provides scope of selective mining and hence gives greater opportunity for exploiting the reserve where contamination is more and where conventional mining is not possible. The elimination of drilling and blasting provides environmental friendly mining operations with utmost safety for the mine operators.

2.3

CONVEYOR BELT:

The crushed material from mines is transported to plant by a Rubber Belt Conveyor (RBC). This technology is first time in India with longest conveyor belt of length 3.1 km. The width is 1000 mm, belt speed is 1.9 m/s. Degusting rate of belt is 120 m3/min. Such rubber belt conveyor has minimum power consumption. Here the material density is 1.5 kg/m3 and its mass flow rate is 950 t/hr to 1300 t/hr.

SECTION 3 STACKER & RECLAIMER *********************************************** ************************************

3.1

STACKER:

The belt conveyor from mines to stacker contains in the way two another crushers are there and material comes to stacker is grinded upto size 25-30 mm. The stacker type SU is used to stack raw material at the yard. The stacker suns on the rails fixed at the right hand side of the pile in longitudinal direction. The material are stacked with a certain homogenizing effect normally according to Chevron method or longitudinal stack piling method, with help of Boom stacker. Chevron method is a roof like stock piling method. The stacker consists of two main parts: 1. Tripper 2. Jib

1. TRIPPER
Tripper and jibs are linked together and are provided with RBCs. For the traveling of stacker four drive motors of 5.5 KW are provided which are attached with jibs rollers through gear boxes. The tripper is fitted with four wheels which are mounted in wheel casing.

2. JIB
The stacker consists of a mobile rotable frame and a stacker capable of lifting in the vertical plane. The hydraulic equipment serves to move the stacker jib in step from the lower to the upper working position. While the stacker lift the stacker jib according to the height of the pile.

3.2

RECLAIMER:

The bridge scraper is used for homogenization of particular materials at longitudinal store and for conveyance of material from piles to outgoing conveyor belt. Reclaimer has a long scrapper chain through which homogenized material is transported to outgoing conveyor. Horrow carriage has cross conveyors on it and cross conveyors have horrows on it. Horrows move horizontally by horrow carriage. The horrows cut the stack horizontally and material falls down and from the stacker chain material gets collected. The scrapper chain moves ahead and material comes on conveyor belt and further goes to additive silos. Thus, reclaimer has an important role for homogenization of material. And it helps to achieve good quality of final product.

3.3

RAW MILL ADDITIVE SILOS:

The raw mill should contain Al2O3-Alumina Fe2O3-Ferrous content in a proper proportion. If they are not in a right proportion then addition is necessary. So additive silos for Alumina. Fe2O3 and sweetener are kept for addition if required. First, reclaimer raw mix is analyzed and if the alumina and iron is less than addition is done to gain right proportion. For alumina, additive is Bauxite and for iron, Laterite is used. For sweetener Black cotton soil is used, which they getting from their mines, which is the upper level of soil. The sweetener silo have diameter 6500 cm and Iron ore silo have diameter 5000 cm and alumina silo have also 5000 cm diameter.

Density Capacity Sweetener -1.4 t/m3 450m3 Iron ore -2.1t/m3 250m3 Alumina -1.4t/m3 250m3

SECTION 4 RAW MILL *********************************************** ************************************

4.1 INTRODUCTION
Lime stone, clay, Iron ore fed into mill. The chemical composition of raw materials is controlled by computer calculations based on analyses of raw materials, as well as actual amount of compositions of meal in the homogenizing silo. During transport to mill inlet, magnetic objects are removed by a magnetic separator, which is mounted over belt conveyor. Metal detectors are also built in as further protection. If a metal is detected, a pneumatically operated gate is activated for discharge of a portion of materials containing metal piece. Another metal detector is placed near box feeder, where belt stops for manual removal if a metal is detected. The box feeder at mill inlet operates as a buffer and as an air sluice to reduce false air intake. After box feeder, raw material drops on rotary grinding table. Here, they are thrown under rollers by rotary movement of table, and ground. The grinding table is driven by mill main motor. The material might contains some moisture upto 4%. This is dried by hot kiln exit gases supplied through nozzle ring surrounding grinding table. The reflected material from mill is returned to mill inlet. The ground and dried materials i.e., raw meal are carried by air flow to dynamic separator. Here, coarse particles are returned to grinding table while finer particles pass for separator in dedusting cyclones. There are a number of oil pumps for Lubrication and cooling of gear unit and bearing of grinding table. Grinding pressure between

three rollers and grinding table. A constant and correct lubrication of bearing in three rollers. There are nozzles installed in front of rollers and on grinding table, for use when temperature or grinding process makes it necessary. Here, in raw mill hot gas blow is taken from kiln string. It helps material to dry and thus to less moisture content. Yet moisture content remains 0.5%, which is necessary for easy operation. The mill is automatically stopped when very strong vibrations occur. The air flow to mill is supplied by fan. A gas recirculation duct with damper is also installed to ensure sufficient constant air flow. The air from mill fan is drawn through bag house for cleaning by filter fan. The raw meal produced is carried by fluxosides and elevators to C.F. silo for storage. The dust precipitated in bag house filter and function box is transported to C.F. silo or directly back to kiln preheater. The most important feature of raw mill is that instead of balls, it has rollers. There are three rollers of 50 tons each around centre shaft. The production of a ball mill cant exceed more than 150 tons, where as the kiln needs 450 tons of raw meal. The production of raw mill is 500 tons/hours.

CONTROLLED FLOW SILO:

FLS have developed a new, continuously operated silo for blending and storage of cement raw mix, called C.F. silo. It extracts material simultaneously at different rates from a number of outlets in silo bottom. The C.F. silo bottom is divided into seven identical hexagonal sectors. Each of these sectors is divided into six triangular sub sectors. Thus, the bottom consists of a total of 42 sub sectors. These sub sectors represent 42 individual areas from which are provided with aerating units. These 42 separate sub sectors represent 42 individual areas from

which material can be extracted accurately to a predetermined program. In actual operation, homogenization is performed by using three of seven discharge outlets simultaneously, each blower aerating only one sub sector at a time. The raw meal flow stream from extraction points of part silos is then blended in a tank placed after silo.

SECTION 5 PREHEATER *********************************************** ************************************ 5.1

PREHEATER AND CALCINER:
dry production was possible to which were not the preheater is A decisive factor in heat economy of cement process was development of preheater. With this, it obtain very low exit gas temperature of about 250oC attainable before. At the L&T, Gujarat cement works of F.L.Smidth Company.

ADVANTAGES OF FLS PREHEATER:

The kiln dimensions can be considerably reduced. The calciner can be supplied with combustion air from clinker cooler at a temperature of approximately 900oC. Since control devices are located in gas stream behind preheater.

The process control allows for a suitable margin of safety against overheating, even at a calciner stage of 90-95%. The high degree of calcinations and regular feeding of kiln ensure stable kiln operation without kiln upset conditions. The characteristic feature of calciner is through blending of raw mix and fuel prior to introduction of combustion air and subsequent initiating of combustion process. The combustion air is drawn from clinker cooler at a temperature of about 900oC. The air flows from inlet to outlet of calciner, with only a low pressure drop. The heat generated in calciner is utilized partly to raise raw mixture temperature to calcining level and to implement actual calcining process. The preheater here has a double string-kiln string and calciner string 6-stage preheater with low pressure type cyclones.

Kiln string: 3x6 m + 3x6.3 m cyclone. Calcining string: 1x2x5.4 m + 1x7.5 m + 2x7.8 m + 2x8 m By using separate strings for kiln and calciner important operational advantage of independent and accurate draught control is obtained. The raw meal feed is extracted from the C.F. silo into feed bin. The feed control is based on schenck impact weigher concept. The feed bin is placed on load cells. After the feeding system, raw meal is transported to the preheater inlet by means of elevators and air slides. At preheater inlet, feed is split into two preheater strings in such a way that outlet temperatures are equalized. The preheater is operating as a counter current heat exchanger with raw meal passing downwards by gravity and air going upwards by the INDUCED DRAUGHT (ID) fans. After fifth stage of the calciner string and sixth stage of kiln string, combined raw meal enters calciner vessel. Here, about 55% of fuel is fired. The combustion for the calciner is hot atmosphere air drawn from coolax cooler through a separate tertiary air duct mixed with combustion has from kiln. The calciner is designed for a gas retention time of more than 3 seconds. In calciner, raw meal will be calcined to about 90-95%. The material from calciner is routed onwards to sixth cyclone stage of calciner string from where it slides into kiln. Part of gases leaving top stage of preheater cyclones is taken to raw mill for drying and transporting raw material before it is taken to bag house.

5.2

BAG HOUSE:

Reversible air bag house has an important role to deal with environmental pollution problems. As the whole preheater system works on the negative draft system by ID Fans, the air goes upward direction. These gases contains material or particle form material and if they are directly send or vented out on the air, then pollution problems will occur and even lot of material loss will be there in the manufacturing process, so it is very necessary to do something with this. The system consists of a sixteen compartments bag houses with associated safety device. A reverse air system And necessary access ladder Walt ways Support structures Each bag house consists of, Bag house casing Filter Bags Bag cleaning system Hopper Conveyor system Dampers

SECTION 6 KILN *********************************************** ********************** 6.1

INTRODUCTION:
The kiln is 75 m long and it have 4.75 m diameter. The kiln is supported on three types of 2 rollers each. It rotates at a speed of 3 to 4 rpm. The burning zone temperature in kiln is around 1400-1500oC. Pulverized coal is used as fuel in kiln and calciner. The fuel supply rate to kiln installation is determined on basis of an evaluation of clinker quality and current status of kiln. The exit gas analysis is done for evaluation of combustion process. The smoke gases must not contain any unburnt substances i.e., C or Co. They may cause fire and also waste latent heat of unburnt part of gases. A certain surplus air is supplied during the combustion process, because of inadequate air is supplied, smoke may contain unburnt gases. There are alarm limits set up to monitor CO and O2 levels in exist gases. If due to any reason there is a blockage in cyclones, kiln is shut down. The lubrication between supporting rollers and kiln type must be provided by means of dry graphite lubrication. Providing an oil bath can prove fatal as kiln is almost floating in air. Usually refractory lining of kiln is replaced if the thickness of bricks is reduces to half of its original size due to wear. Hence, kiln shell must not be overheated. If kiln shell temperature rises above 400-500oC, affected area must be cooled by means of fans. There are 14 fans for this purpose. In event of a further rise in temperature kiln must be shut down for a repair of lining. A radiation pyrometer (scanner) has been

installed for purpose of checking condition of kiln lining during operation. If there are any hot spots observed, kiln motor is run at lowest speed until temperature of hot spot has been reduced. In burning zone, the temperature reaches up to 1400oC and clinkerization occurs.

BURNING PROCESS IN KILN:

For burning purpose firing is done in kiln. The firing is done through nozzle, coal is fired, reaching temperature of flame up to 1800oC and maintaining temperature in kiln up to 1400-1500oC of material.

KILN SPEED:
Slowing kiln will heat kiln up through out its length. It will also increase draft, which will tend to reduce rate of heating in burning zone and increase temperature at feed end. Speeding kiln up will have opposite effect. When a kiln is slowed down for longer period of time, increase in draft should be controlled by regulating damper, to avoid overheating of feed end, fuel rate is decreased. The kiln should be controlled by change in fuel rate, as sight increase in fuel which is not enough to overheat burning zone will, if left on long enough, heat up feed end and correct slowly dropping back end temperature.

CHEMICAL PROCEDURE:
During burning and decarbonation of carbonates of Mg and Ca and removal constitutional water, there are schematically three consecutive stage of clinker mineral formation. During burning of first stage up to 990oC all aluminum oxide reacts with lime, generating monocalcium alluminate silica also starts to combine with lime

generating dicalcium silicate. At this phase of clinker compounds dicalcium silicate concentration is low. At second stage of formation, when the material is heated to a range from 1190oC to 1285oC, monocalcium alluminate formed during first stage is further saturated with lime reacts with iron oxide creating dicalcium alluminoferrit which is also called browmmillerite. Formation of dicalcium silicate which started first stage is now being completed. At third stage, material reaches temperature above 1285oC, at this stage of clinker formation, known exothermal effect occurs, which produces generally 120-150 kcal/kg clinker. The rapid heating of material by this effect causes clinker to behave in this kiln section similar to fluidized material, thus increasing the transport velocity of material which can disturb the regular kiln operation. The partially fused condition of material permits one part of dicalcium silicate to be saturated with remainder of the uncombined lime, and thus be converted to tricalcium silicate. The formation of clinker is completed with third stage.

SECTION 7 COOLAX COOLER *********************************************** **********************

7.1 COOLAX COOLER:
The coolax cooler receives approximately 1450oC. Hot clinker from rotary kiln, cooling clinker down to a temperature which is approximately 80oC at a production of 6500 tone/day. Some of thermal energy contained in clinker is simultaneously recuperated. The thermal energy is transmitted to cooling air which is subsequently utilized in kiln and calciner. Grate-1 is designed as CFG system while grate 2 and 3 are designed as RFT system. From kiln outlet, clinker drops down onto the inclined grate plates, latter being alternately stationary and moveable.

CONTROLLED FLOW GRATE

The airstreams to first grates is very powerful so that clinker is well distributed across the entire width of the grates. This will prevent clinker from being backed together at very high temperature. The air flow is adjusted so that clinker is kept bubbling on surface of layer. Hence, heat recuperation will be optimized. A controlled flow means that air is fed to grates, individually controlled to smaller units of grate. This is accomplished by means of ducts, with damper of adjusting flow and hence air pressure, to single zones. All cooling air is forced upward through narrow gaps in grates to clinker bed. High air velocity will prevent dust and small clinker particles from dropping into gaps of grate while cooler is operating.

As mentioned, air ducts are connected to supporting beams which are also configured as air ducts.

REDUCED FALL ZONE:

In RFT zone, the clinker is cooled further down to the desired temperature. In RFT zone, entire airflow is injected under grates, penetrating up into clinker bed at gap between grates and via openings at bottom of hollow girders. A pressure loss, corresponding to one-third of pressure in the components, is allowed for in design of RFT grates and the hollow girders so as to ensure favorable distribution of air. The grates carry clinker down to outlet where clinker is pushed onto and outlet grate, where clinker less than 25 mm, drops through grate and down into clinker conveying system, whereas remaining others are pushed off grates and they pass under hammers of crusher and down to clinker conveying system.

7.2

CLINKER STORAGE :

The reason for storing clinker is, because kiln operation does not always run simultaneously with finish mill operation. Also, in many cases, high temperature of clinker leaving cooler does not allow direct grinding, because hot clinker causes high grinding temperatures, which impair not only mill operation but also cement quality so, far cooling and as a production buffer clinker is stored in various storage facilities. The storage time of a good quality clinker, stored in protected facilities does not influence grinding process nor the quality of cement. Even clinker stored for many years in dead space of clinker holes did not show a drop in quality. Here, for purpose of clinker storage, they have a clinker yard erected with aluminium sheets and a clinker silo of R.C.C. The bottom diameter of silo is 80mts and capacity is 67,000 tons. From the clinker yard, it is taken to cement mill with help of trucks, whereas from silo, it

is taken via conveyor belt, clinker is also stored in open space. Size of clinker is 2 to 25mm.

SECTION 8 CEMENT MILL *********************************************** **********************

8.1 INTRODUCTION:
Cement clinker and 2-5% raw gypsum is ground together to form cement. The purpose of grinding mills: Creation of larger reactive surface, so that clinker minerals can react with water. Controlling of setting properties of cement by adding gypsum. At L&T, there are four cement mills of capacity 133 t/hr. It consists of two chambers divided by double wall. This wall allows particles of 4 mm size to pass through. About 27 % of volume consists of grinding media. The first chambers has high chrome ball of 60 to 90 mm diameter whereas second chamber has 15-20 mm diameter high chrome balls In first chamber grinding takes place due to impact and in second due to attrition. The product is taken to air separator where coarse particle are recirculated to mill. The mill converts majority of energy input into heat. Gypsum is dehydrated at 130oC at high temperature. Gypsum loses its property as cement setting retarded and becomes false set cement. Hence temperature inside mill is 70-80oC. For this water is injected into hottest part of mill where it evaporates instantly. Water is carried into mill by compressed air through a simple nozzle which breaks up water into very small drops; from where material goes to air separator.

8.2

ELECTOSTATIC PRECIPITATOR:

In plate type electric precipitator, only electrical precipitation is employed. This ESP is used after Coolax Cooler and Cement Mill. In addition to precipitation by action of the electrical dust collection also precipitation of a certain quantity of dust particle by action of gravity as well as direction and by impact. During the elimination of every supply, the electrical precipitator works as the dust settling chamber with collection of 30 to 70 %. The size and velocity with which the dust is attracted by the collecting electrodes is of importance for the collection efficiency. High resistivity and is difficult to remove from the collecting electrodes and often it may cause a detrimental operating condition known as return throw of sparks or as back ionization. ESP is less efficient than bag house, as it fails to work at high temperature.

SECTION 9 PACKING PLANT *********************************************** **********************

9.1 INTRODUCTION:
A rotary packing machine is used here having 12 filling spouts. This machine completes 2.5 rotates per minute. Hence filling 30 bags/minutes or 1800 kg/hour. The spouts are mounted at the bottom of cylindrical container. The manual work comprises of placing the empty bags on the spouts as they pass it. Fluidized cement flows into the rotating container. At the bottom of the container. Certain amount of fluidized air is added to the cement to increasing flow ability through the filling spouts into the bags. Each spout has its own weighing device. By the time the spout finished one rotation 50 kg of cement is filled into the bag. It is dropped off on the conveyor belt. All the extra cement falls in the hopper from where it is transported to the cement silo. In case of transportation by ship, they are carried to the jetty by 4% less, long belt conveyor; otherwise they are slide down and loaded in to the trucks standing underneath.

3.1 INTRODUCTION
3.1.1. Supply Chain:
The supply chain is the process of moving goods from the customer order through the raw materials stage, supply, production and distribution of products to the customer.

3.1.2. Supply Chain Management:

Managing the chain of events in this process is what is known as supply chain management. It includes: 1. Managing supply and demand. 2. Sourcing raw materials and parts. 3. Manufacturing and assembly. 4. Warehousing and inventory tracking. 5. Order entry and order management. 6. Distribution across all channels and delivery to the customer. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction, while keeping costs down.

3.1.3. A Model of Supply Chain Management

Customers
Product and Material Flow

Retailers Distribution centers Assembly /Mfg.

Information and Financial Flow

1st Tier supplier 2nd Tier supplier

1st tier supplier 2nd Tier supplier

2nd Tier supplier

3.2. WHY TO MANAGE SUPPLY CHAIN?

In recent years it has become clear that many companies have reduced their manufacturing costs as much as is practically possible while manufacturing quality- a long time competitive differentiate is at a high standard across the board. So meeting customers specific demands for product delivery is seen as the next critical opportunity for competitive advantage. By managing the supply chain companies will able to maintain competitive advantage and at the same time significantly reduce costs. Companies had to turn to more advanced supply chain management due to shortened product life cycles, increased competition and heightened expectations of customers. Implementing an effective supply chain management function, usually through software, facilitates enhanced customer services, management of inventories, transportation systems and whole distribution networks in addition to cost savings. Rapid developments in information communications technology has been and is crucial for the development of modern, cost-effective supply chain management through use of databases, communication systems and advanced computer software. By analyzing the supply chain, businesses are able to identify which parts of their supply chain process are not competitive, understand which customer needs are not being met, establish improvement goals and rapidly implement necessary improvements. The supply Chain Council, an independent, not for profit global organization, which is open to all companies that are interested in

applying and advancing the state of the art in supply chain management systems and practices. The SCC founded in 1996 with 69 voluntary members, now has over 650 members world wide and seeks to promote use of one standard model for managing supply chains in order to provide benchmarking capabilities.

3.3. BENEFITS OF AN EFFECTIVE SCM

1. Reduced inventories. 2. Lower operating costs. 3. Product availability. 4. Customer satisfaction. 5. Flexibility.

3.4. SUPPLY CHAIN DECISIONS

There are four major decision areas in supply chain management: Location decisions Production decisions Inventory decisions Transportation decisions

3.4.1. Location Decisions:

The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in the creating a supply chain. The location of facilities involves a commitment of resources to a long term plan. Once the size, number and location of

these are determined, these are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost and level of service. These decisions are determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations etc. Although location decisions are primarily strategic, they also have implications on an operational level.

3.4.2. Production Decisions:

The Strategic decisions include what products to produce and which plants to produce them in allocation of supplier to plants to DCs and DCs to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities but determine the exact path through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production on machines and equipment maintenance. Other considerations include workload balancing and quality control

measures at a production facility.

3.4.3. Inventory Decisions:

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi finished or finished goods. They are also in process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most respondents have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies, determination of the optimal levels of order quantities and reorder points and setting safety stock levels at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

3.4.4. Transportation Decisions:

The mode choice aspect of these decisions is the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipment may be fast, reliable and warrant lesser safety stocks, they are expensive. Meanwhile shipping by a sea or rail may be much cheaper but they necessitate holding relatively large amounts of

inventory to buffer against the inherent uncertainty associated with them. Hence transportation by roads is the common mode of transportation in cement industry. Therefore customer service levels and geographic location play vital roles in such decisions. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key areas in effective management of firms transport strategy.

3.5. INVENTORY MANAGEMENT

Management of inventory has received considerable attention over the years. Managers ascribe different reasons for holding or not holding inventory. Some of the major reasons for holding inventory are: To improve customer service. To hedge against price changes and contingencies. To achieve production, purchase and transportation economies. To protect demand and lead time uncertainties.

3.6. WAREHOSING AND DISTRIBUTION MANAGEMENT:

One of the most important aspects of supply chain design is the selection of go-to-market, i.e. the distribution channel. Traditionally, distribution channels comprising intermediaries were developed with the primary objective of reducing the number of market contact points. Besides this, the intermediaries also took up the functions of sorting, accumulating, allocating and assorting.

Faced with growing complexity in customer preferences, trading partner dynamics, product line expansions and fresh options for interfacing with customers, manufacturers have come up with innovative distribution channels as a tool for business success.

3.7. SUPPLY CHAIN RISKS

Managing supply chain in todays world is increasingly challenging. The greater the uncertainties in supply and demand, globalization of market, shorter product and technology life cycles and the increased use of manufacturing, distribution and logistics partners resulting in complex international supply network relationships, have led to higher exposure to risks in the supply chain. Further, it is essential to understand the risks your company bears versus your suppliers and customers. The supply chain is not necessarily win/win environment. Supply chain risks come in many different forms. First, the financial risks can be huge. Inventory costs due to obsolescence, markdowns and stock outs can be significant. Mismanaged supply chains leading to excessive or mismatched inventory are thus liable to huge financial risks. Financial risks can also present themselves through the risk of reworking stock and penalties for non delivery of goods. The complexity and uncertainties forces of a supply chain can also drive the chaos risks of a supply chain. These chaos effects result form overreactions, unnecessary inventions, second guessing, mistrust and distorted information throughout a supply chain. The well known bullwhip effect, which describes increasing fluctuations of order patterns

from downstream to upstream supply chain, is an example of such chaos. This increased nervousness will of course lead to higher cost inefficiencies through over ordering and squirreling inventory. The existence of nervousness and chaos in a supply chain also means that it is impossible to make the right decisions for every player in a supply chain. Ultimately, the supply chain is exposed to market risks i.e. missing the market opportunities presented. A supply chain cannot be responsive to changing market trends and customer references if the right market signals cannot be obtained. Finally, market opportunities can be missed when customer orders with short order lead times could not be met. A supply chain with high risk exposure cannot be efficient. A manager running a supply chain with these risks lacks confidence in the supply chain.

3.7.1. Lack of Supply Chain Confidence:

No confidence in: Order cycle time. Order current status. Demand forecasts given. Suppliers capability to deliver. Manufacturing capacity. Quality of the products. Service delivered.

3.7.2. The Risk Spiral:

Where do these supply chain risks come from? These are evidently tangible risks in the supply chain which lead to its poor performance, but what are not recognized in the same way are the intangible elements that of the attitudes and perceptions of the users and members of the supply chain. The intangible lack of confidence in a supply chain leads to actions and interventions by supply chain members, which collectively, increases the risk exposure. For example, a sales team believes that order cycle and order fulfillment times are not reliable: they devise their own means of addressing this. They order stock so as to have supplies to report their key customers and put in phantom (i.e. their own private buffer stock) orders to secure supply, all causing inefficiencies.

3.8. DEPLOYMENT CONSIDERATIONS AND QUESTIONS

Following five areas has been considered before deploying an eprocurement solution: 3.8.1. Strategy Have a clear vision of your procurement operations and obtain senior management sponsorship. What are your purchasing needs? With how many of your suppliers can realistically employ automated purchasing processes? Is your purchasing process automated? Is it internet based? Is it secured to protect sensitive financial data? Are you large enough

to require that your partners use e-procurement if they want to do business with you? Does senior management support that initiative? 3.8.2. Process Consider your process and those of your suppliers in the areas of customer service, quality and integration. Do you have product and service standards for the goods bought? Can you easily maintain old supplier relationships while establishing new ones? Can you easily bring in new suppliers to your purchasing process?

3.8.3. People
Training, organizational culture and organizational structure must support the change in purchasing process. Staff support is crucial to success. Who will use the purchasing system? Have you created the appropriate security procedures and policies for controlling who has access information? How web enabled is your purchasing department? Do they have the skills and equipment they need?

3.8.4. Technology

Reliable, scalable, secure, accessible and manageable computer networks, applications and tools are essential to support these activities. Is your existing purchasing system compatible with your suppliers? Do you have any type of an enterprise resource planning, ERP tool? If so, how much of your business does it cover? How well equipped is your network to support purchasing automation? How do these e-procurement systems link to credit and financial authorization systems? 3.8.5. Service and Support In addition to people and technology you have to consider outside services for rapid deployment (planning, design and implementation) and operation of your e-procurement solution. Consider: Can I reduce my time to market and/or costs if I hire service organization one time task? What is the cost to my business if the system is not available? How can I proactively identify and resolve problems? How can I protect my customer/business data, applications and network from ongoing security threat? with expertise and experience deploying eprocurement solutions rather than training staff to perform this

4.1 PROBLEM STATEMENT

What is the role of supply chain management in cement industry?

4.2 OBJECTIVES
To understand the entire network of supply chain and the decision making process. To measure the role of technology and its impact on the players involved in supply chain. To understand the different processes involved in manufacturing and assembly. To analyze the vendor management as the important aspect of SCM.

To study and analyze the methodology adopted by ULTRATECH CEMENT LTD.,GUJARAT CEMENT WORKS for inventory control.

The difficulties if any, which were faced while implementing different inventory techniques.

4.3 RESEARCH METHODOLOGY

Exploratory research and Descriptive research. And I have taken permission from authorities of ULTRATECH CEMENT LIMITED to

carry out my study on pareto analysis for inventory consumption in ULTRATECH CEMENT LIMITED for the year 2009-10. I had studied the consumption of various inventories and arrange them in descending order of their consumption value. Categorize the inventories in A, B, and C category depending on the fact that they constitute 90%, 70-90%, or 10-15% of the total consumption value. For this I had gone through different types of inventories used in ULTRATECH CEMENT LIMITED. I also studied the methodology adopted by ULTRATECH CEMENT LIMITED for implementation of inventory control and progress made in this condition.

4.4 DATA COLLECTION

Sources of data collection Primary Data Through interviews Through observations Secondary data Internet Magazines Newspaper

STRATEGIC INVENTORIES LOCATIONS

SUPP LIERS

PROCUREM -ENT ORDERS

MFG. ORDER S

FACTORY ORDERS

DISTRIBUT -ION ORDER

CUSTOMER ORDER

CUSTOME R-S

5.1 MATERIAL DEPARTMENT

5.1.1 DEPARTMENT STRUCTURE
Material Department is divided into three parts. Purchase, Material Planning and Control and Stores. These three departments work for procurement of the raw material of the right quality, at the right time, from the right source and in the right quantity for the production departments of the company. Responsibility and Authority of HOD (MATL) To specify the responsibilities and authorities for functional positions in the department who have to: Initiate action to prevent any non conformities in the Material department; Identify & record any problem; Initiate, recommend or provide solutions through designated channels; Verify implementation of solutions; Control the situation until the deficiency or unsatisfactory condition has been corrected.

To form, document, establish and implement procedures & instructions for:

Procurement to the extent possible of eco-friendly materials & services from right source, at right time and of right quality & quantity and at right prices.

Coordination with other units for procurement of various materials/services from or through them as and when required.

To ensure proper procedures for specifying conditions defining the procurement of eco friendly materials / services and packaging.

To monitor and evaluate the performance of vendors, to ensure timely supply of proper quality and eco friendly materials & services for uninterrupted operations. Ensuring procedures for proper receipt, issue, storage and handling of materials, and disposal of packaging and scrap. To ensure proper accounting of materials and ensure return of nonconforming materials to respective vendors. To ensure proper classification and codification of materials and replenishment of stock of materials controlled by material control section. To issue guidelines periodically, so as to ensure efficient and proper working of Materials Department. These guidelines

may be in the form of written circulars, procedures or verbal instructions to Materials personnel.

5.2 PURCHASE DEPARTMENT

Purchase department comes under purview of Material Department. Purchase Departments main area of work is to find the suppliers of raw material and spare parts of machinery, then to negotiate the prices and to ensure the quality of material. Purchase Department coordinates with the production department in order to know the requirement of raw material to manufacture the demanded item.

Process followed by the department: 1) Proper Communication with supplier 2) Negotiation 3) To form an Agreement 4) Follow up actions Responsibility and Authority of HOD Purchase The HOD (PUR) shall be responsible for establishing, implementing and maintaining the Instructions of

Materials Department related to Purchase activities, in line with the Quality Procedures and Environmental The HOD (PUR) shall be responsible for procuring Materials and Services, as required by the user departments, in time, of the right quality, at optimum cost and which are eco friendly.

5.3 STORES DEPARTMENT

Stores Department is one of the most important departments for any company because it is the department where the purchased items are stored. The main work of Stores Department is to take the delivery of the purchased goods and to store it in a proper manner. Stores Department also issues this material time by time as per the requirement of every department.

Responsibility and Authority of HOD (STORES)

The HOD (STORES) shall be responsible for establishing, implementing and maintaining and Environmental Procedures Instructions for of Materials activities of the stores in line with the Quality Procedures Department.

He will also be responsible for amending the instructions, as and when required, to ensure continued suitability and effectiveness of the Quality Procedures and Environmental Procedures for Material Department.

He will be responsible for Making available Materials/ Services, as required by the user departments, in time, of the right Quality, and quantity, at optimum cost and without damaging the environment.

He will be responsible for proper collection, movement, storage and disposal of scrap materials in environment friendly manner.

5.4 MATERIAL PLANNING & CONTROL DEPARTMENT Material Planning & Control Department is very much related with the stores department of the company. The main work of this department is to make the strategy of warehousing the goods in such a way that it becomes very easy to issue that material at the time of requirement. For the big companies like UltraTech this department is as valuable as other departments. Responsibility & Authority of Materials Controller: The Material Controller will be responsible for

establishing, implementing and maintaining Instructions for activities of the material control section in line with the Quality Procedures and Environmental Procedure of Materials Department. He will also be responsible for amending the instructions, as and when required, to ensure continued suitability and effectiveness of the Quality Procedures and Environmental Procedures for Materials Department. He will be responsible for classification and codification of all Stores and spares, and maintaining and stock of all materials controlled by him. Co-ordination with users for review of spares Co-ordination with other units for common inventory replenishing

5.5 PRODUCTION DEPARTMENT

Production means creation of utility and the framework within which the creation of utility can occur is termed as production system at one end of system there are input and at the other hands out put. Certain process of operation of activity called as production system links inputs and outputs. The nature production system differs from company to company or from plant to plant in the some concern. UltraTech Cement Limited Gujarat Cement Works is

engaged in manufacturing of Clinker and Cement for dispatch to Domestic & International markets. The raw materials are limestone from captive mine and other additives such as Iron Ore, Bauxite, High-grade limestone, Gypsum and Fly ash procured from other sources. Other products, which are purchased, are spares & consumables for the maintenance of plant and machinery. The manufacturing process for clinker consists of crushing, grinding and preprocessing of raw materials. This clinker is either dispatched as product or further grinded to make cement. Both the products are tested in quality control department, with national and international standards. These products are dispatched either by Road or Rail to destination specified by internal customer i.e., cement

marketing division. Clinker is dispatched in bulk whereas the cement either in bulk or in bags. Major portion of the land under plant and colony was unproductive land without history of any industrial usage. The leased land for the captive mine consists of both agriculture and unproductive land.

5.5.1 MATERIAL HANDLING:

Material handling refers to the moving of materials from store to machine and machine to next machine during production process. It is main and specialized activity of storehouse. It has been estimated that about 50% to 75% of cost production is spent in material and material handling activity and cost can be reduce by proper selection and maintenance of material handling equipment.

RAW MILL
The raw mill plant include Atox mill 45 Dynamic separator Four cyclones Mill fan

KILN
Portland cement clinker is produced from a mixture of typical 70-80% limestone, 10-30% clay and 0-10% corrective materials by burning in rotary kiln. The temperature in burning zone is typical 1600

to 1800 degree Celsius and residence time in the kiln is 10-30 minutes. The raw material is coming from pre-heater, where some 400-450 degree Celsius temperature is given to raw materials. Because these much of temperature is required for kiln. And advantage of this preheater is that, capacity of kiln is increased by 2-2.5 times.

COAL MILL
The operating principal and the equipment are same as of the raw mill. Coal of 50mm is ground into 90by coal mill roller. Raw coal comes in this sheep from foreign and stopped in coal yard by stacker. Through trucks, it is collected in ground hopper and through grid; the big coal is separated out manually. Through RBC circuit, the raw coal is drawn to mill plant. From magnetic separator metal is separated from coal and coal collected into raw coal hopper.

GCW EQUIPMENT CAPACITY Crusher Raw mill Kiln Coal mill Cement mill Packers Cement mill Limestone piles CF silos Clinker silos Cement silos 2*900 TPH 2*450TPH 2*6000 TPH 2*56 TPH 3*133 TPH 5*120 TPH 1*161 TPH 4*6,700M.T 2*28,000 M.T 60,000 M.T 6*6,000 M.T

5.6 QUALITY CONTROL DEPARTMENT

The quality control department works on two following basis. 1. Product Control 2. Process Control

5.6.1 PRODUCT CONTROL

During the whole process of manufacturing of cement in the plant samples are taken at various stages of manufacturing like raw material sample, clinker sample and cement sample, just in order to improve the quality of the product. The sample is bought to laboratory of product control department. In that various physical & chemical tests are performed on the samples. Chemical includes checking chemical composition of raw material & final product. For this process chemical analyzer and other equipments are imported from Denmark, which gives result very fast without much of manpower. The cement, which is exported, is again tested in special laboratory having instruments as per standard of respective countries. Here the total environment is maintained just like the environment of that country where the goods is going to be exported.

5.6.2 PROCESS CONTROL

In the Process Control various technicians check & visit to the various location of plant to observe the process and make necessary changes in it. This task is performed just to improve the process of manufacturing and optimum utilization of resources.

PACKING PLANT
Equipment and their application Equipment 1.extraction screw conveyor 2.bucket screen 3.rotary screen 4.rotary packer 5.discharge conveyor 6.spillage air sluice 7.spillage screw conveyor 8.truck loader Application bucket elevator feeding cement transport cement screening packing of cement cement sacks movement air sluicing spillage cement sacks loading into trucks

OPERATIONS AT PACKING PLANT

The packing plant operations are planned on the basis of dispatch information described from the dispatch section of distribution dept. The sequence of different physical activities starts from extraction of cement from the silos up to discharge of filled cement bag from the nozzle of packer machine. All these activities in the sequence are mechanized and controlled from the packing machine panel and control panel near packer machine. Exception to the above is the placement of bag over the nozzle of packing machine by the operator. The cement extracted from silo is fed into the feed hopper with the help of bucket elevator. The bucket elevator, feed hopper and tank of packing system comprise of jet pulse filters.

Similarly the chamber of packing machine is maintained under a negative pressure for avoiding the dust coming out of packer machine. Hence, the operating criteria for the packer machine shall be the effective functioning of deducting system including the suction pump. In the event of failure of dedusting system including the suction pump, immediate corrective action are initiated to restore the system in the minimum possible time. Despite the provision of this dedusting system, there are other chances of air pollution due to improper placement of empty bags as also release of loaded bags. There are 4 packers and 8 loading points for bagged cement into trucks. This transport system consists of 8 belt conveyors with appropriate transfer chutes.

5.7 MARKETING DEPARTMENT

GCW is production unit of cement and clinker. So, at plant there is no marketing department. Marketing department is working separately than production unit. There are total 9 Cement Branch Offices (CBO) in Gujarat. And head office at Ahmedabad. CBO are as follow

1. Ahemedabad (Head Office) 6.Mehasana 2. Rajkot 3. Vadodara 4. Surat 5. Bhavanagar Management of all nine CBO is performed at head office -Ahmedabad. CBO are responsible for all marketing activities. Moreover, they dispatch bill to customer and collect payment from them. All payments are transferred to metro office. 7.Valsad 8.Anand 9.Kutch

5.7.1 STRUCTURE OF MARKETING DEPARTMENT

CEO President (mark.) Vice president (mark.) S.D.G.M. (mark.) Regional in charge Unit Head Sales officer Distributors Dealers

5.7.2 INTRODUCTION TO MARKETING FUNCTION & ITS ROLES

Marketing is very vital function in any organization. To get high position in market and advantage over competitors, every company has to handle its marketing function very carefully. As the whole world is turning into a global market, marketing function is getting more & more importance in every company. The term marketing is taking new shape in changing world. Now just mere selling the product by advertising is not only a function of marketing but it has to be more customers oriented. Now a day if company produces the products according to the needs of the consumer then it can easily sell its products. Marketing is a social and managerial process by which individuals and groups obtain what they need and want by way of exchanging things for mutual benefits. Marketing means managing markets to bring about exchange and rotation ship for the purpose of creating value and satisfying needs and wants. In simple words, marketing means exchange process involves works. Seller must search for buyer, identify their needs, design good product and service, set price, promote them, store and deliver them. Activities such as Product development, Research, Communication, Distribution, Pricing and after sales Services are included in marketing. Following figure show marketing environment.

Company
Supplier

Marketing Intermediaries Competitors

End user Market

Ultra Tech Cement is marketing its cement in domestic market as well as in export market. Company is the second largest seller in domestic market. Company achieved 24% market share. The company is largest exporter of cement and clinker in India, with remarkable 2.41 MT of cement and clinker export. The companys cement and clinker has good brand image in Western Europe, Middle East and neighboring countries. Ultra Tech is also known as Indian cement giant. Company has obtained accreditation from Bureau varieties quality international Espanasa, Spain which is a perquisites for supply of cement to Europe. Ultra Tech is one of the Asian cement Companies to receive this recognition.

5 Ps for Ultratech Cement ltd. PRODUCT

Ultra Tech Cement Ltd. has two products Cement Clinker Company markets both cement and clinker in domestic market as well as foreign countries also.

PRICE
Company has their own price policy for the Cement and Clinker. Right now price of one bag of cement is 149 Rs.

PLACE
Company has wide distribution channel network in state and within the country. Company has also the dealers outside the country for export market.

PROMOTION
Company is using various promotional methods for enhancing its sales and market share. The company is using various elements of promotion mix like Advertising, Direct Selling

very effectively. This company has a good advantage of mouth publicity by the consumers due to top quality production with good brand equity.

PRICE MIX
Price is the amount of money the consumer has to pay to obtain the product. Price policy is an important tool for marketing the product. Cement price depends upon various components like current market, environment condition, competitor price, companys objective and cost of production. Ultra Tech cements prices are considered as premium prices, based on the good reputation. Company sets its own price and other players follow.

Market share of company

COMPANY NAME
ULTRA TECH AMBUJA HATHI BINANI KAMAL SIDDHI TATA OTHERS

PERCENTAGE
24 % 24 % 19 % 12 % 10 % 03 % 04 % 04 %

In Gujarat, Ultra Tech and Ambuja both secure 24% of total market i.e. almost half of whole market. Therefore, Ultra Tech and Ambuja both are at a first position in Gujarat.

Branding and labeling

Company has its own brand as Ultra Tech. Labeling on the cement bags are also as Ultra Tech. Company uses plastic and paper bags for packing cement. The Metro office purchases these bags. The Metro office also does labeling. Then from the Metro office, only these bags are provided to all plants of Ultra Tech. After branding and labeling the product is delivered to the dealers and through them it reaches to the target audience. Above whole description shows the supply chain of the Ultratech Cement Ltd.

6.1. FACILITY AND LOCATION

 Location is decided on the bases of how dispersed the processing partners, Raw Material suppliers and consumers are. Decentralized locations focusing on suppliers and customers. Optimal capacity utilization by manufactures to serve expected forecasted demand.

6.2. PROCESS
Operational designs to make finished product. At every phase of manufacturing, the wastage is very low. Functional focused operational designs- single function for multiple products. e.g. Packaging of utensils.
6.3.

INVENTORY MANAGEMENT

Inventory management, or inventory control, is an attempt to balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory. There are several schools of thought that view inventory and its function differently. These will be addressed later, but first we present a foundation to facilitate the reader's understanding of inventory and its function. WHAT IS INVENTORY? Inventory is a quantity or store of goods that is held for some purpose or use (the term may also be used as a verb, meaning to take inventory or to count all goods held in inventory). Inventory may be kept "inhouse," meaning on the premises or nearby for immediate use; or it

may be held in a distant warehouse or distribution center for future use. With the exception of firms utilizing just-in-time methods, more often than not, the term "inventory" implies a stored quantity of goods that exceeds what is needed for the firm to function at the current time (e.g., within the next few hours).

The objectives of Inventory Management are:

To identify and track all data processing assets in an Inventory System Repository. To define the process by which assets are identified and maintained in the Inventory System. To provide Inventory System access to all necessary personnel (data entry, update and deletion). To provide a full range of reports that will satisfy informational requirements. To document the Inventory Management System within the Standards and Procedures Manual. To provide training to personnel responsible for supporting the Inventory Management

In this age of cut throat competition material and Inventory control in practical is seen as as a green pasture where cost reduction can production an edge to any company I n competing with its rivals. The materials executive handles a large number of items in actual practice, In any Organization. For example a cement industry has over 40,000 items consisting of spares, Refectories, consumables, components, chemicals, stationary& other items, where as the defense services deal in millions of items. The importance of each item is a major parameter while deciding about its inventory quantity. Some of these items may be very critical or difficult to purchase or may have to be imported while other items may be easily or off the shelf available. Even in every day life we see that housewifes does not pay the same attention to salt as she pays to oil or butter.

Moreover as the number of items increases,the effective time spent on each item diminishes. To overcome this deficiency we adopt selective techniques to improve the overall effectiveness of inventory control function. The fundamental idea behind selective control techniques is to put the efforts where the results are worth it. It is wellknown that even though world consists of millions of people, But only a few of them deter mines the destiny of all human being. Similarili even if any organization uses millions of item, only a few become important from the finance view, Availability considerations, reasonability, criticality of performance etc In the literature of materials management many methods of selective inventory control are available at the disposal of inventory controller i.e. ABC analysis, HML analysis, VED analysis, SDE/SOS/GOLF analysis, XYZ analysis. All of these are explained as follows:

ABC ANALYSIS:
Basis of analytical materials management tool is ABC analysis, in general ABC analysis may be applied to any branch of management. It is an easy method for application and also gives method for effective control. It is a selective inventory control technique popularly known as Always (A), Better (B), Control(C). it controls always the best,then better and finaly the good. Its importance lies in the characteristics distribution of anything which can be measured in monetary terms. The speciality of this analysis lies in the determination of priority, which enables the management to exercise the control over the management subject, on the basis of priority fixed by the analysis. The reason behind the same is that it is neither possible nor worthwhile to extend control over all the management subject of the large organization by giving equal attention to each & every subject. This analysis provides the selective basis for extending control where maximum possible benefit can be derived. This method is based on annual consumption value, which is obtained by the multiplication of unit price by the annual

consumption quantity. ABC classification is obtained by following procedure: A) Obtain the number of items, B) Record unit price & quantityconsumed in a year against each item, C) Obtain annual consumption value by multiplying price and the quantity, D) Arrange the items in a decreasing order of annual consumption value, E) Cumulate the annual consumption value, F) Plot the cumulative percent of consumption value on X-axis and percent number of items on Y-axis, G) The graph shows that initially there is steep increase and finally it levels off to the axis, H) Where the curve turns, the points are marked for A,B and C category,
I)

Alternatively on the basis of experience we can mark items as A class where cumulative consumption value is about 70% of total consumption, B class items for which cumulative consumption value is between 71-90% of total consumption value balance items as C class items. It is normally observed that about 15-20% of items covers 20% consumption value & balance 70-75% of number of items accounts for 10% of total consumption value.

J) Organization can even fix these categories on the basis of thumb rule, as A class items where annual consumption value is above one lac rupees. These varies between organization to organization,

K) It should be noticed that annual consumption value and not the unit value is the basis for classification.

After making the items as A, B, and C class items, following control measures are exercised: 1. The consumption value A category items should be strictly controlled by the Highest level. 2. The policy for A items should be very low inventory combined with frequent ordering and/or staggered deliveries with effective follow up. 3. Norms of consumption should be tight with materials planning formulated on an accurate and upto date information. 4. A concentrated efforts must be made to apply various cost reduction methods like value engineering, waste reduction, identification of obsolete items, lead time reduction, standardization & vendor rating etc.. 5. The number of sources must be increased with centralized purchase and stores for A category items. 6. Medium control to be exercised for moderate consumption value items very little control on low consumption value C category items. Main problem with this method is that importance is imputed on the basis of consumption value and not on its functional criticality. Hence this classification can lead to over looking the needs of spare parts whose criticality is high but annual consumption is low or vice versa.

HML CLASSIFICATION:
This method is similar to ABC classification, but in this method unit value of item instead of annual consumption value is the basis for items classification. Materials are classified according to the unit price as high, medium, or low value items. The cut off point varies upon the size of organization. For example kerosene will be a low value item for a jeweler, but high value item for a shopkeeper. The focus in this classification is so directed as to control unit price of high value item and to negotiate the price.

FSN ANALYSIS:
Movement analysis forms the basis for this classification. Items are classified as Fast moving(F), Slow moving(S) and Non moving(N) based on consumption pattern of items. If there is a rapid change of technology then this classification will have to be updated more often. FSN analysis is specially used to combat obsolete items particularly for spare parts. The cut of points of three classes are usually in terms of number of issues in the previous few years. For example zero issues in the past five years may be placed in non moving class. Here 80-20 rule is applicable with unit value HML analysis in classical ABC analysis.

XYZ ANALYSIS:
While the ABC analysis has the value of consumption as basis, XYZ has the value of inventory of stores as the basis for differentiation. This analysis is used to review the inventories and their uses at scheduled

intervals, this study is undertaken once a year during annual stock taking exercise. X items are those few items accounting for the major portion of the total inventory value. Where Z items are those items with low inventory value. Obviously Y items fall in between these two categories, this classification helps in identifying the items which are extensively stocked and is also based on the 80-20 rule. This analysis can be applied for work in progress and finished goods as well.

VED ANALYSIS:
VED, defined as Vital, Essential and Desirable is a classification based on the criticality of the component as defined by the users, non availability of the vital parts, may result in closure of the entire factory and is based on consideration such as stock out cost, safety, security, design, functional reliability, maintainability, guarantee, performance etc.

The user has the responsibility to classify these and the temptation to categorise all items as vital must be avoided. This is particularly applicable for machine spares, which has a distinct different behaviors compared to raw materials. The vital category of spares have to be stocked adequately to ensure continuous operation of the plant because by definition non availability of vital spares can cause havoc and stop the wheels of the organization. Some risk can be taken in the essential class of spares can be done away with if the lead time for procurement is low. It is difficult to specify the percent of critical items but the 80-20

rule may be applied to start with, keeping in mind that 205 of spares accounting for 80% of criticality of performance. Just as VED is applied for spare part, machineries can be classified as Vital, Essential, Important & Normal (VEIN). This classification is of particular importance for capital intensive & maintenance intensive industries, for instance a spare part for the generator supplying power to the factory when power cut is imposed is most critical than any other item. VED and VEIN can be combined to give more importance to a vital part in the vital equipment.

SDE/SOS/GOLF ANALYSIS:
Selective inventory control methods discussed earlier are based on value of items or their consumption pattern. There are methods which are directed towards controlling inventory, purchase and supply related problems. It should also not forgotten that inventory levels are also dependent on the source of supply. For instance a scarce item with long lead time, will surely have a higher safety stock than a locally available item for the same consumption level. In SDE classification materials are stored as Scarce to obtain, Difficult to get and Easy to get. GOLF is another system where the materials are classified according to nature and suppliers. The classification is based on source such as Government controlled, Ordinary available anywhere in the country, Locally available items and Foreign items. Based on the above source of supply inventory policy may be decided.

Raw materials for the finished goods can be classified as seasonal and off seasonal items. Agricultural products have a seasonal pattern depending upon the monsoon during the year and the production activity or sales will be at its peak, the prices will be lower during the harvest and the inventory manager will have to balance the holding costs and lower prices in deciding the levels for these classes of items. From all the methods discussed earlier it is evident that these methods of classification help the manager to selectively control the materials & effectively apply his energies to the problem areas. Obviously the executive has to make the best of all methods in the optimum manner and should not be guided by a tunnel vision of pursuing only one method. Some organization uses two or more methods in combination at a time to decide inventory levels.

In ULTRATECH CEMENT LTD.the items can be grouped basically on three considerations i.e.consumption value, criticality and availability. These three considerations are from the view point of finance, maintenance and materials, so there was a need of a system which can take care of all these three considerations at a time and provide suitable guidelines to materials manager to effectively control the inventory. The integerative approach which can take care of these consideration is called MUSIC-3D (MULTI UNIT SELECTIVE INVENTORY CONTROL-THREE DIMENSIONAL).

INVENTORY CONTROL TECHNIQUE AT ULTRATECH CEMENT LTD.: MUSIC 3-D TECHNIQUE

Traditional ABC classification and control of inventorybased on formulae is inadequate for spares, as regular consumption pattern for spares is generally not available. It also does not emphasizes on critical items, whose non availability may cause production loss, significant energy loss or cause unsafe working condition. So need of system which can take care of all these factors was felt. MUSIC-3D inventory control methods can take care of all these aspects. Three dimensions which are taken care simultaneously by classifying the items for inventory control in MUSIC-3D method are: Cost Criticality Availability.

If we adopt three level for each criteria such as ABC, SDE, VDE then 27 groups would be formed. It becomes difficult job in practice to follow up 27 groups. Hence two levels for each criteria can be developed using 8020 rule i.e. low /high consumption value, critical/non-critical items, long/short lead time item. This integrated approach resulting in eight groups is called MUSIC-3D as shown in table:

HIGH VALUE

CONSUMPTION LOW VALUE

CONSUMPTION

LONG LEAD TIME CRITICAL NON CRITICAL

SHORT LEAD TIME

LONG LEAD TIME

SHORT LEAD TIME

The categorization to start may be arbitrary based on technical competence, knowledge and skill. These classifications should be reviewed periodically at least once in a year. It may be ideal to carry out this analysis separately for each class of items i.e. raw materials, spares, etc. This approach has a simple method of fixing ideal stock levels for items as under: IDEAL STOCK LEVEL=K x (LEAD TIME CONSUMPTION) Ideal stock can be defined as the apparent optimum inventory we have to keep to meet production requirements to maintain optimum levels.

Ideal inventory=1+k x (LTC) Minimum inventory=ideal (LTC/2) Maximum inventory=ideal + (LTC/2) Here K is a safety factor varying between 0.5-3.0 which is assigned to each group based on its criticality, consumption value and lead time. In order to optimize the inventory, the key action areas are: 1. LEAD TIME: Internal lead time should be carefully examined, monitored and reviewed periodically and controls exercised.

Attempt should also be made to reduce the external lead time, there by reducing the total lead time.
2.

STORES AND SPARES: Items should be classified as per definition into following categories: a) Insurance b) Critical c) Non critical

3. Strict control on consumption norms for high consumption value items should be exercised.
4.

For optimizing inventory other control measures and action plan are given

So the traditional ABC analysis discusses only the consumption value without considering the criticality or availability and failed to help inventory controller, where as MUSIC-3D, which considers all the three aspects i.e. Criticality, Lead time and Consumption value has been of immense help to inventory controller. Some of the advantages of MUSIC-3D are as follows:

1. This system incorporates all features of selective inventory control methods and divides all items in manageable eight groups.

2.

It provides scientific and logical basis for fixing inventory levels. It is helpful to inventory controller in following areas of operations:a) Setting effective follow up and chasing system. b) Deciding tighter procedure and systems. c) Deciding safety stock and average inventory. d) Delegation of power. e) Designing proper MIS and purchase intelligence system. f) Posting in clerical efforts. g) Vendor development and vendor rating. h) Central purchase and central stores. i) Minimizing obsolescence. j) Deciding service level and implementing JIT(Just In Time)and zero stock. k) Deciding consumption norms. l) Size of working capital required and purchase budget.

So this system can provide proper guidelines and way to design effective inventory control management to inventory controller.

Problems faced and their solutions:During the course of implementation of different methods for materials management, management of ULTRATECH CEMENT LIMITED noticed many problems but these are solved with joint efforts. Some of the problems are:-

Long and time consuming exercise:

Categorization of 18000 items was a very long exercise and too when no. of departments involved were numerous. This problem complicated further more due to incomplete and ambiguous description of items. Codification of materials was not equipment based. Hence to identify place of use of any item itself was very difficult. After proper identification of spares it could be categories as critical/Non critical/ Insurance. Volume of work was very large. List of items has to take two to three times to complete this exercise. But with lot of effort and hard work this exercise was complete.

Difficulty in categorization of items:Categorization of the items into one of the category was very difficult task because definition was very subjective and opinion may differ between one to other person. No one wanted to take risk in declaring any item as non critical because wrong categorization could lead to stock out of that item and can cause stoppage of plant and production losses. Difficulty was also experienced due to incomplete description and lack of information about place of use. But dedicated efforts of user department made this exercise success. Continuous review of flags was also decided.

Difficulty in calculation of lead time and lead time consumption:It was very difficult job to provide lead time to about 18000 items. Database was also not having authenticity of correct indent date.GRN with the help of which actual past lead time could be calculated. It was very difficult to calculate lead time manually from each kardex card and that too taking care of past 2-3 years data. Further it was not made clear in recommendation that while calculating lead time and lead time consumption, minimum lead time is to be considered, maximum lead time is to be considered or average lead time is to be considered.

Past data about lead time of imported items which were earlier restricted items might have later included in OGL and lead time might have decreased or vice versa. Due to liberalization imports become easy, so there has been drastic cut in lead time. So estimation of correct lead time was also difficult. Average lead time was taken to start with continuous efforts of purchase department and EDP department helped in completing this exercise.

Difficulty in deciding High/Low consumption:At the time of introduction of MUSIC-3D many project work also in progress, so deciding High/Low consumption value on the basis of past consumption data could also provide misleading information. So while deciding High/Low flag project job consumption has to be deducted from total consumption. To solve this problem instead of using 80-20 rule through statistical analysis ULTRATECH CEMENT LTD. selected a value limit of Rs.50.000/-on the basis of past experience to start with consumption value flag.

Difficulty in calculating ideal inventory level:When ideal inventory level were calculated on the basis of safety factor and lead time consumption, these were coming on very higher side, so management decided to calculate ideal inventory level on the basis of past experience. This exercise was again very long and difficult exercise. So it was decided that after preparing of ideal inventory, continuous of ideal inventory norms should be done and this resulted in optimizing inventory. Ideal value also varies every month due to changes in rates, addition/ deletion of items in inventory. With lot of efforts ideal inventory was calculated on the basis of experience and was found suitable.

Computerization pre-requisite:
Due to multiplicity of dimensions and lot of permutations and combination it was very difficult to implement, monitor and maintain MUSIC-3D system without online computerization of materials management. So ULTRATECH CEMENT LTD. completed its computerization program.

All the problem enumerated above have been faced by ULTRATECH CEMENT LTD. and any organization who is interested in implementing this system will have to pre[are strategy to overcome this problems. Strong will power, dedicated efforts and hardwork are the key factors in implementation of any system and MUSIC-3D is no exception to it. ULTRATECH CEMENT LTD. also started efforts in this direction simultaneously and was able to do so.

System implementation
To start all item should be provided Critical/Non critical & Insurance category flags based on the definition given afterwards High consumption and Low consumption value flags should be decided by applying 80-20 rule or on adhoc basis i.e. say items with annual consumption value Rs.50,000 and above as high consumption value items and balance items as low consumption value items. This limit can vary according to size/ nature of operations of a unit. By analyzing past data of lead time or on the basis of lead time provided by the purchase department for various classes of items long lead time or short lead time flags should be given to each item. To start with item with lead time more than six months can be decided as long lead time items balance items as short lead time items. Above analysis will enable the inventory controller to identify the items in eight groups of MUSIC-3D. For the purpose better control and fixing responsibilities have been classified into following categories: a) Stores and spares- Departmental requisitioned/ indented.
b)

Stores and spares- Auto indented (Controlled by Materials Department)

c) Insurance items.

STOCKING POLICY:
Departmental indented items:Stores and spares for which definite pattern of consumption can not be established; the requisitioning/indenting may be done by user department based on the consumption of items and stock levels. While indenting, care should be taken to ensure that total of quantity in stock, under purchase order indent quantity should not exceed the ideal stock levels. Indent of these items shall be processed by inventory control cell after interaction with users. Ideal stock levels may be calculated with the help of following method, which takes care of criticality, availability and consumption value. Ideal stock level = K x (Lead Time Consumption) K Factor K is a safety factor, which is decided on the basis of eight group of items formed by taking consumption value, criticality and lead time into account. Proposed K factor is available afterwards. Safety factor is used to avoid position of stock out caused due to fluctuation in supply and consumption.

CONSUMPTION VALUE
The High/Low consumption value can be determined on the basis of 8020 rule. Its accounting for about 80% of total yearly consumption, which are about 20% of number of items can be classified as high consumption value items and rest 80% of items accounting for 20% of total consumption value can be termed as low consumption value items. This analysis should be carried out every year and classification reviewed accordingly.

AVAILABILITY
It can be defined as High and Low on the basis of location and nature of industry. It may also be decided by rule of thumb to start with.

CRITICALITY
It can be decided by users department by taking into considerations parameters of definition afterwards.

LEAD TIME CONSUMPTION

Lead time for each items can be calculated based on passed data base and can be provided by purchase department where data is not available. Consumption data can be taken from past data bank in case unit is new,to start with anticipated consumption can be considered. Department requisition items can be of two types: a) Items to maintain ideal inventory level. b) Specified items indented for specific job/overhauling/shutdowns and are consumed during a specific period. Ideal inventory for such items are zero.

Auto indented (Controlled by Materials Department):These items would include regular consumption stock items which are being monitored by materials department based on Minimum/Maximum stock levels and reordering level (which can be calculated by users with the help of statistical method given afterwards). Materials department themselves prepares the indents and place orders for these items.

INSURANCE ITEMS
Based on the definition of insurance items the maintenance department will classify items under this category. Any new addition under this category shall be done with approval of unit head. Stock level for such items shall be one unit or one set as the case may be. Insurance spares will have to be stored with special care, as these are not anticipated to be used for a very long time.

REPLENISHMENT POLICY
Replenishment policy suggested for all the three categories of items is as under:

Departmental Indented
The user department will raise indents as per status of stock and pending indents, on receiving feedback from materials department. The suggested frequency for review of stock levels etc for raising indents if required for various groups of items is as under: Critical Items (High consumption value) Very frequency (Daily/ Weekly) Critical Items (Low consumption value) frequently (once in a month) Non Critical items (High consumption) Should be intended on the basis of need and when required. Non Critical (Low consumption value) Less frequently (once in a month) Exception reporting to head of maintenance should be provided by materials department on the monthly basis for following categories of items: a) Critical stock out items.
b)

Critical items below ideal stock and not covered by indent.

Materials department should provide stock position in monthly consumption statement of critical items to user department. Units can also decide frequency and system as per status of computerization in the units

Auto indented (controlled by materials department)

For this category items indents should be raised by materials department on the basis of review of stock position v/s reordering level further following measures can also be used:
1) Yearly/half yearly indented will phase deliveries. 2) Deliveries should be post-ponded / expedited / advanced based

on stock level over max near / below min respectively. 3) For high consumption value items more frequent deliveries shold be asked for.
4) Users should inform materials department for any specific

requirement of this category of items.

Insurance items
Maintenance should review and if required raise indents as soon as an insurance category items is consumed. The user department should review on monthly/ weekly basis for insurance category stocked out items not yet indented. Exception reported to head of maintenance department should be provided by materials department covering issues and stocked out of insurance items. This will facilitate immediate follow up action.

Other measures for optimizing inventory

Following measures can also help in effective control of inventory and better services:1. Users should provide feedback to materials department on continuous basis on following:
a) Regarding materials required on priority, delivery to be

postponed, indent/ order to be cancelled. b) Equipment already modified/ being modify to identify surplus / obsolete items from stock of spares of these equipments. c) Quality of materials received v/s expected quality. d) New vendor identification. e) Development of drawing for OEM spares. f) Changes or addition required in specification of items and function required to be performed by spares, wherever essential. 2. Materials department should provide feedback on following to user:c) Status of P.O/ indents. d) Materials received requirement. in stores, against specific

3. Standardization of equipments/ spares. 4. Review of K factor, criticality, lead time and stock norms on

continuous basis. 5. Proper Storage and Maintenance: Materials are money in physical form, safe storage and prevention, therefore, Safeguard Companys money and ensure delivery of materials for use in the same quantity as received from the suppliers.

6.

Import substitutes: Import substitutes means that if some costly component is purchased by import then it can be made within our country so that it becomes cheaper for us and in this way it reduces the cost.

7. OEM Substitution: Better and cheap import substitutes can be used for the non critical parts of a machine or spares.

Latest trends

Entering into partnership arrangements with vendors. Reduction of supplier base to minimum numbers. Use of quickest mode of transport to reduce transit inventory. Choice of vendors located near to factory. Use of logistics to optimize cost of delivery, packaging, transit etc. Entering into open ended rate contracts. Use of latest information technology by requesting vendor to install modern equipments like FAX or mode which can ensure better communication through computer.

6.4. TRANSPORTATION
Each player has its own logistics management. Transport is through outside transport agencies.

6.5 VENDOR EVALUATION

6.5.1 Evaluation Criteria Vendor evaluation is used to rate the performance of Vendor on various criteria in SAP.

1. Price

2. Quality 3. Delivery 4. Service

S6.5.2. Weightage - Criteria wise.

Main Criteria
Quality(W1)

Sub Criteria
Quantity (Q1) Quantity accepted

Weightage%
accepted 65%

with deviations(Q2) Quantity rejected(Q3) Delivery(W2)

Total supplied(Q)

quantity

Quantity promised to 15% deliver within stipulated time (D)

Actual qty supplied within time (D1) stipulated

Promised time for

delivery full

consignment (T)

Actual delivery time for full consignment (T1)

Service(W3)

Cooperativeness and 10% readiness to help in

emergencies(20) S1

Readiness to replace rejected material(20) S2

Providing supporting document time(20) S3 in

Promptness reply(20) S4

in

Avoiding recurrence of defects/complaints(2 0) S5

EHS Env., Helth, Safety(W4)

Compliance of no 10% child labours & no forced E1 labours(20)

Compliance health and system(20) E2

of safety

Freedom association disciplinary practices(20) E3

of &

Working hours & remuneration(20) E4

Management system(20) E5 100%

Overall Score

Maximum

(W1xQR 100

W2xDR

W3xSR + W4xEHSR) /

6.5.3. Material wise break up of Overall Score

The overall score of the vendor will depend upon the broad category of material supplied by the vendor. The weightages for the overall score for the different class of material shall be as tabled below. Material
Capital goods Spares Raw Materials General stores Fuels

Quality
30 20 30 10 20

Delivery
40 30 30 40 30

Service
20 30 30 40 40

EHS
10 20 10 10 0

6.5.4. Calculating overall score

The SAP system drives the overall score from the scores of various main criteria, taking the weightage factors assigned to each main criterion into account.

Example:
The table below displays the scores for a vendor in raw materials category and their weighting factors.

Main Criteria Quality Delivery Service EHS Total

Score 70 80 20 10

Weightage% 65 15 10 10 100

Criteria wise point 21 32 16 7 76

6.5.5. Classifications of Vendors

Vendor Evaluation Score (points)
100 Above 90 60 to 90 Less than 60

Classification of Vendor
Excellent Very good Good Unsatisfactory

Remarks

Should keep it up Could improve To be delisted

7.1 ADOPTING PULL BASED SYSTEM

In order to make the system more responsive, organizations should adopt pull based systems for inventory replenishment. Though it would be temping to say that a pull system should be followed, it is not possible to follow an entirely pull system in this sector, considering the large volumes sold.

A pure

pull

system

would

increase

transportation

cost

considerably and would not give business advantage. Hence a combination of push and pull system is suggested for this sector.

7.2 FORECASTING &DEMAND MANAGEMENT

As observed error in demand forecasting in this sector is very high contributing to most of the supply chain inefficiencies. Hence there is a need for improving forecasting accuracy. To improve supplier responsiveness, suppliers can be informed about expected demands 2-3 months in advance and in what range demand is expected to vary.

Demand Side
- Strengthening of delivery chain. - Interface between producers, designers of cement intensive products, fabrication ultimate user. - Creating awareness about cost effective and technically efficient end use of cement.

Supply Side
- Enhanced and easy access to critical inputs. - Expansion and improvement in quality of infrastructure. - Well developed financial market. - Increased focus on R&D, training of manpower and integrated information services.

7.3 SHOULD GO FOR ORGANISED RETAILING THROUGH MALLS

Tie up with reputed malls for the marketing and selling of cement.
7.4.

DEPLOYEMENT OF E-PROCUREMENT BY CONSIDERING FIVE ASPECTS.

Strategy Process Services and Support Technology People

MUSIC-3D K factors
SR NO. CATEGORY High Consumption Value Long Lead Time High Consumption Value Short Lead Time SUGGESTED FACTORS 1.5 to 1.8 1.2 to 1.5

1 2

CRITICAL CRITICAL

3 4 5 6 7 8

CRITICAL CRITICAL NON CRITICAL NON CRITICAL NON CRITICAL NON CRITICAL

Low Consumption Value Long Lead Time Low Consumption Value Short Lead Time High Consumption Value Long Lead Time High Consumption Value Short Lead Time Low Consumption Value Long Lead Time Low Consumption Value Short Lead Time

2.5 to 2.8 1.8 to 2.4 0.8 to 1.0 0.5 to 0.8 1.5 to 1.8 1.5 to 1.8

MUSIC-3D GROUPWISWE CONTROL & ACTION PLAN

Sr no.

CATEGORY

CONTROL & ACTION PLAN

CRITICAL

High Consumption Value Long Lead Time

1. Strict control on consumption norms. 2. Use full material intelligence system. (Expediting & follow up efforts maximum) 3. Multiple sources 4. Minimum working capital(stock as low as possible) 5. No stock outs Same as above. 1. Large qty. to be ordered- orders for annual or two years requirement 2. Adequate level of inventory(qtyplenty) 3. No stock out (100% service level) Same as 3 above, however order qty may be for quarter to six months requirement, being short lead time. 1. All cost reduction technique to be applied 2. Stockout possible. 3. Delegation of power- Highest level. 4. Low inventory level. 5. Service level- Moderate Same as 5 above. 1. Purchases on just-in-time basis 2. Zero % inventory or very low inventory 3. Service level- Minimum. 1. Moderate inventory level 2. Stock out possible 3. Routine efforts 4. Service level- Moderate Same as 7 above

2 3

CRITICAL CRITICAL

High Consumption Value Short Lead Time Low Consumption Value Long Lead Time

4 5

CRITICAL NON CRITICAL

Low Consumption Value Short Lead Time High Consumption Value Long Lead Time

NON CRITICAL

High Consumption Value Short Lead Time Low Consumption Value Long Lead Time Low Consumption Value Short Lead Time

7 8

NON CRITICAL NON CRITICAL

DEFINITONS INSURANCE

Insurance spares are those spares of vital equipment/ machineries which are normally not required for routine maintenance, but may be required for unforeseen break down causing stoppage of production or cause unsafe working condition or significant energy losses. Normally these items have high degree of reliability having the same life cycle as equipment itself and are of high value and long lead time.

CRITICAL
Critical items are those spares of vital equipment having reliability lower than insurance spares. Non availability of which could cause stoppage of plant or reduce production level or cause unsafe working condition or significant energy losses. A spare of equipment having stand by will also come in this category as stand by is supposed to come into operation instantaneously in the event of stoppage of the main equipment.

NON CRITICAL
All other spares required for normal maintenance but do not fall into critical category as above .i.e. non availability of which would not cause: I. Stoppage of plant or reduction of production level or II. Unsafe working conditions or III. Significant energy losses.

STATISTICAL METHOD FOR SETTING LEVELS

This method should be adopted for items with a definite pattern of consumption. It shall operate as follows:

MINIMUM LEVEL: It can be defined as the stock to cater to uncertainties at a desired service level on account of variations in consumption & lead time in procurement. Demand and variation in demand shall be derived from the actual past consumption data of past two to three years consumption and current trend may be considered with provision for future refinement. Lead time and deviation to lead time at item level may be taken as suggested by the purchase department where actual past data is not available. FORMULA Min. level: = S Where TD is standard deviation of monthly consumption TK is standard deviation of lead time in months S is safety factor taken at different service level based on criticality of item (e.g. for 95% service level the factor is 1.64) Lead time in months. MAXIMUM LEVEL: Minimum level + Lead time consumption(LTC) IDEAL LEVEL: Minimum level + LTC LEAD TIME: For items with staggered deliveries The duration between two consecutive approved receipts. For items with one time delivery: This can be defined as the duration that lapses between the recognition of the need for an item and its receipt.

NOTE: The above levels can be further refined by taking into consideration. i. Lot size, standard packing quantity, discount rate.

ii.

To account for eventualities requiring quantity needed for replacement in critical services due to plant upset operation.

PREFACE

Case study is the part of our project training which enhances the analytical ability of a student. In line of this, every student has to

undergo in depth case study along with the training program of eight weeks in an organization. With reference to above course I had also gone through a case study in ULTRATECH CEMENT LIMITED, GUJARAT CEMENT WORKS on the topic Pareto Analysis for Inventory Consumption in ULTRATECH CEMENT LIMITED, GUJARAT CEMENT WORKSfor the year 2009-10.

PARETO ANALYSIS FOR INVENTORY

CONSUMPTION IN INVENTORY IN ULTRATECH CEMENT LIMITED, GUJARAT CEMENT WORKS FOR THR YEAR 2009-10.
Take care of the pound, the penny wil take care of itself, must be the motto of the inventory controller. This is also known as Vital few and trivial many principle and is the logic of 80-20 rule which implies that 80% of the value is accounted by 20% of items. We observe the prevalence of the 80-20 rule in politics, religion, social status, language, economics, work nature etc. When we here the statement that 20% of people do 80% of work, 20% of people enjoys the 80% of wealth, 20% of executives work is accounted by 80% of total time etc. This is based on the principle that five fingers cannot be equal. This common sense approach to solve any problem is to tackle the important aspect more vigorously. Similarly in inventory management also the 80-20 rule is a major fundamental step. Here classification of items, restored so that a major portion of effective time is spent on those materials, which are more important. The motive behind any selective control is that an equally critical analysis of all items will be very expensive as it is not possible to have an socialistic pattern of society, where all citizen are equal in every aspect. Moreover such a concentration on all items will have a diffused effect regardless of the priorities. Therefore a concept of pareto analysis is used. Pareto analysis is a ranked comparison of factors related to a quality problem. It helps a quality improvement project team to identify and focus on the vital new factors. The quality cost factors are very helpful in telling us whether we have a very big problem or not. They also help us to decide whether we should have to dig deeper or not.

PARETO PRINCIPLE

It states that In any group of factors contributing to a common effect, a relative few account for the bulk of the few. OR In any series of elements to be controlled, only a small fraction in terms of elements will usually account for a large fraction in terms of result.i.e. any assortment of species follows the rule of Vital Few, Trivial Many. For example a relative few of our customers (about 20%) accounts for most of our sales (80%). It is same for different parts of human body also. About 20% of the total number of organs is vital to our life i.e. we could not live without our heart, lungs, or kidneys, but certainly we could live without our eyes, ears, hands or legs.

20% 80%

80% 20%

This relationship prevails widely an application to oppurtinities for cost reduction. This is the Pareto Principle which is identified decades ago and named after the Italian economist who had formulated some mathematical relationships of vital few and trivial many as applied to distribution of wealth.

IMPORTANCE OF PARETO ANALYSIS

Pareto analysis leads a quality improvement team to focus on the vital few problems or cause of problems that have the greatest impact on the quality effect that the team is trying to improve. In Pareto analysis we gather facts and attempt to find the highest concentration of quality improvement potential in the fewest projects or remedies. These offer the greayest potential gain for the list amount of managerial and investigative effort. The main goal of Pareto Analysis is to separate the numerous problems or causes of problems in to two categories i.e. the vital few and the useful many.

OBJECTIVE OF CASE STUDY:Our objective of Pareto analysis is to use the facts to find the highest concentration of quality improvement potential in the fewer number of projects or remedies. These offer the greatest potential gain for the least amount of managerial and investigate effort and highest return on investment in the following ways; 1. To have stocks available as and when they are required. 2. To decide which items to stock and which items to procure on demand. 3. To the enable the management to make costs and consumption between operations and periods. 4. To provide, on item by item basis, for re-order points and order such that quantity as would ensure that the aggregate result confirm with the constraints and objectives of inventory control. 5. To facilitate purchase economies. 6. to utilize available storage space, but prevent stock levels from exceeding space availability. 7. To maintain adequate accountability of inventory assets. 8. To keep all the expenditure within the budget authorizations.

Benefits from the study:

The following list covers the major type of benefits that can be achieved from a well planned, completely administered system of inventory control:-

1. Reduction in manufacturing cost:A well balanced inventory system can reduce the manufacturing costs in the following ways; a) As it reduces raw materials shortage, and so the labour is better utilized. b) The idle times of machines are minimized as the machines are never kept idle for the want of raw materials. c) Constant rescheduling and expensive set up cost are minimized because right quantity of the raw material is supplied at right time and hence production lags and a steady production rate is always maintained. are averted

2. Improvement of customer relations:This is achieved through faster, more reliable delivery service which results from the maintainenance of a better balance among the qualities of finished items at hand.

3. Improvement of labour and community relations:This results from a greater leveling of production peaks and valleys and consequent increase in stability of employment.

4. Increase in effectiveness of key personnel:Effective inventory can save considerable executive time which might other wise be wasted on problems involving raw materials shortage, back order etc.

5. Reduction of purchased material cost:This results from eliminations of overstocking and reduction of inventory costs and inventory losses. These are achieved by: a). By improving the inventory mix and thereby reducing the total quantity of finished goods needed to provide competitive service to customers. b). By maintaining a economical balance between inventory carrying cost and acquisition cost on purchased items. c). By minimizing inventory losses that results from: - decline in market values of raw material and finished goods - spoilage of deterioration - product obsolescence

6. Strengthening of financial position:

Streamlining the inventory results in more working capital and reduced overall capital requirements in storage space and warehouses.

INVENTORY AN OVERVIEW:-

Inventory, its a detailed list of those movable items which are necessary to manufacture a product to maintain the equipment and machinery in good working order. Inventory is actually the money kept in the showroom in the shape of a high speed steel bit, a mild steel rod, milling cutter etc.

TYPES OF INVENTORIES:RAW MATERIAL:- To hold stocks of raw materials, an

organization deploys its primary production sections or process to obtain raw materials from manufacturers and stockists.

WORK IN PROGRESS:- The holding of both raw materials and

stocks of finished goods is generally a planned activity. In process stocks however, are likely to exist in any manufacturing organization, whether they are planned for or not.

FINISHED GOODS:- The stock of finished goods provides a buffer

between customers demand and the manufacturers supplies.

FLABBY INVENTORY:- It comprises of finished goods, raw

materials and store held because of poor working capital management and inefficient distribution.

PROFIT MAKING INVENTORY:- It represents stock of raw

materialsand finished goods held for realizing stock profits.

SAFETY INVENTORY:- It provides for failures in supplies,

unexpected spurt in demand etc. although there may be an insurance cover.

NORMAL INVENTORY:- It is based on production plan, lead time

of supplies and economic ordering levels. Normal inventories fluctuate primarily with change in production plan. Normal inventory also includes a reasonable factor of safety.

EXCESSIVE INVENTORY:- Even an efficient organization may be

compelled to build up excessive inventory for reasons beyond its control as in the case of a strategic import or as a measure of a government price support of a commodity.

Pareto Analysis and Inventory control methods:

All inventory control methods uses the pareto analysis principle based on different criteria of classification:

Methods of Classification 1. ABC Analysis(Always Better Control) 2. HML Analysis(High, Medium, Low)

Criteria : Annual consumption value of items. : Unit price of the item. in relation to the production operation.

3. VED Analysis(Vital, Essential, Desirable): Technical nature of the part or component 4. SDE Analysis(Scarce, Difficult to get, Easy to get) 5. GOLF Analysis(Government, Ordering, Local, Foreign) 6. FSN Analysis(Fast, Slow, Non-moving items) 7. SOS Analysis (Seasonal, Off- Seasonal) 8. XYZ Analysis : The time of availability generally for commodities. : Inventory value of the item stored. : Issue for production from stores. : Source of material supplier. : Purchasing problems and availability

ABC Analysis of Inventory Consumption:

As the size of the organization increases the number of items to be purchased or stored, to maintain the production flow also increase. All

the items to be stored are taken care of, but to give equal importance to all the items stored in a large organization is neither possible nor worthwhile. Similarly purchase of materials is also done in bulk with a predetermined frequency as well as number of different items purchased at a time are also more. To control all the purchases which are in bulk, well in advance before they are issued, for use inside the production department is sometimes uneconomical. Moreover in inventory procurement problems, price fluctuations, blocks in supply and receipt are more. There to reduce the cost of control over the inventory maintained in large organization in such a way is economical. So selective control techniques are adopted and pareto principle is applied. One of the selective inventory control technique for inventory consumption value is ABC Analysis. ABC Analysis segregates the items on the basis of value and tells how much the item is and to what extend it can be controlled. This method takes into account the consumption value of each item and priority is fixed on the basis of consumption value of that item. This method takes into considerations following points: a) b) c) d) Different inventory levels. Order quantities. Monetary value of the material. Extend and closeness of the control desired.

It is generally felt that in an organization most of the inventories have much higher usage values than other inventories. This necessitates the study of the value of the materials to be used before deciding upon the extend and closeness of the control to be exercised. In ABC Analysis the high value item are classified as A Class Item and would be placed under tight control. C Class Item represents relatively very low value and would be under simple control. B Class Items fall in between the two categories and requires reasonable attention of management for effective control.

In general, all inventory control methods results in three type of items .ie. A, B, C. Where A and B class items are vital few and C class items are trivial many. A class items generally accounts for 70 to 80% of the total consumption. B class results for 50-70% & C Class results results for remaining 5 to 10% of total consumption.

RESEARCH FINDINGS AND SUGGESTIONS:1. For A category items:-

a) The high value items or A class items are limited and few in
numbers or quantity needs careful and close control. b) For the control to be effective for A class items, minimum level, maximum level and reorder level are to be set. c) For a class items, the purchase procedures and the quantity are to be thought of well in advance and to be purchase well in time and not only this, handling must also be carried out properly. d) A class items are costly and generally accounts for 70-80% of total inventory. So they are purchased in small quantity but often and just before their use. 2. For B category items:a) B class items are medium valued items and lie between A and C category items. Such items needed moderate control. b) b class items are purchased on the basis of past requirements and according to the planned production schedule. c) B class items are ordered whenever the quantity reaches the re-order point. d) B class items are comparatively less costly than A class items and stock upto three months may be maintained. For C category items :a) C class items constitute major portion of the inventory in quantity with the least value on the total inventory cost. b) Controlling c class items with intensive or moderate care is uneconomical due to the percentage of total items. c) C class items are procured just before they are finish and detail expediting is not necessary for them.

3.

Control Measures:-

1. 2.

The consumption value of A category items should be strictly controlled by the highest level. The policy for A category items should be very low inventory combined with frequent ordering and / or staggered deliveries with effective follow up. Norms of consumption should be tight with materials planning formulate on an accurate and upto date information. A concentrated efforts must be made to apply on various cost reduction methods like Value engineering, Waste reduction, Standardisation and vendor rating. The number of sources must be increased with centralized purchase and stores for A category items. Medium controlled exercised for moderate consumption value items, very little control on low C category items.

3.

4.

5. 6.

SUGGESTIONS ON THE BASIS OF CASE STUDY

By the pareto analysis of the consumption value of inventory in ultratech cement ltd. Gujarat cement works, I concluded that 21872 major items out of 45600 items accounts for 84% of the total consumption. So to control such a large group it is required to control the major A category items by improving the quality and reducing the cost of the items. Following methods can be utilized for this purpose:-

1. Life Value Analysis : Life value analysis of critical items has a

potential to reduce consumption and turn reduction in inventory. It is a meaning ful amalgamation of LIFE CYCLE ANALYSIS and VALUE ANALYSIS.

a). Life Cycle analysis- it is a methodological approach to analyse

and identify the reason for failure, to take corrective measure to improve the life of a component defects and others reasons such as process, lubrication etc.

b). Value analysis- It is a systematic investigation of selected

components with the goal of discovering and eliminating unnecessary costs with out interfering with their function and reliability. Life value analysis results in two major things:- Improve life of component.
-

Reduce cost of component.

2. Reduction in lead time- reduction in lead time can be done by

using quickest mode of transportation for timely supply of materials.

Time to time delivery can reduce the extra blockage of inventories and hence reduce the cost.

3. Vendor Selection and Appraisal:- In todays competitive

environment with a customer oriented approach source development is given highest importance for quality materials, timely procurement at competitive prices.

4. Vendor Rating: - Periodic vendors assessment and performance

monitoring on quality and delivery so that only those vendors who meet companys requirements and standards constantly are retained as vendors in approved vendor list.

CONCLUSIONS

As we all know that all items are not of equal importance. Some of them are more important than others. These more important items constitutes only 20% of the total inventory and results in the 80% of the total inventory and results in the 20% of total consumption. In this way pareto is proved in every case same is the case in ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS. On the basis of pareto analysis of inventory consumables it is concluded that near about 20% of the item is responsible for more than 80% of the total consumption value. So pareto analysis is better proved in case of ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS. The main 20% of the inventory is formed by the A and B category items and the major consumables of these category mechanical spares, DG Sets, Heavy earth moving m/c spares and instrumentation spares. Inspite of good pareto curve of inventory for consumption in ULTRATECH CEMENT LTD., GUJARAT CEMENT WORKS, it is also concluded that there are still options of betterment in this area as only 21872 items are responsible for 84% of the total consumption. So these items can be further easily controlled or improved to reduce the consumption cost.

ITEMS IN DESCENDING ORDER OF CUMULATIVE CONSUMPTION VALUE

Dept Mech Process Electrical Mines Instrument DG SET CPP/TPP

Amount(Rs in lacs) 4420.27 1448.06 796.86 611.68 476.95 105.43 58.5

No of items 8491 921 5018 3080 1116 539 1526 1181

ACTUAL INVENTORY (Rs in crores)

RO Plant

120 100 80 60 40 20

36.56

Total Others Grand total % of total consumption

7954.31 1515.11 9469.42 84%

21872 23728 45600

J F M A M J J A S O N D A E A P A U U U E C O E N B R & Y N L G P T TREND OF STORESR SPARES INVENTORYV C IDEAL 85 85 85 85 85 85 85 85 85 85 85 85 ACTUAL 82 83 85 87 95 10 99 97 90 89 86 85 MONTHS

LIMITATIONS OF STUDY
As the primary data collected through tight scheduled of personal interview, it may happen that bias attitude of the respondents has been entered into data collection. Time constraint: Many of the respondents have given same appointment time to give response. Some of them did not respond very well due to their busy schedule. Research was aimed to study the supply chain but most of the respondents gave response related to sales and marketing. So it was very difficult to bring them on track.

BIBLIOGRAPHY 1. Books MATERIALS MANAGEMENT BY A.K.DUTTA SUPPLY CHAIN MANAGEMENT OF G.K.PUBLICATIONS. 2. Websites

WWW.GOOGLE.COM WWW.ADITYABIRLA.COM WWW.ULTRATECHCEMENT.COM