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A REPORT ON STUDY OF PRODUCTION PLANNING AND CONTROL SYSTEM IN EICHER TRACTORS, MANDIDEEP

TOWARDS FULFILLMENT OF THE REQUIREMENTS OF POST GRADUATE DEGREE IN MASTER OF MANAGEMENT STUDIES OF MUMBAI UNIVERISTY

SUBMITTED BY

Sunil S. Gaikwad

MMS- ROLL NO: M1252

BATCH 2013-2014

UNDER THE GUIDANCE OF

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

FR. C. RODRIGUES INSTITUTE OF MANAGEMENT STUDIES, VASHI

STUDENT DECLARATION
I SUNIL SURYAKANT GAIKWAD, studying in the Second Year of Master of Management Studies Course at Fr. C. Rodrigues Institute of Management Studies, Vashi, Navi Mumbai, hereby declare that I have completed the project titled Production Planning Control as a part of the course requirements for MMS Programme. I further declare that the information presented in this project is true and original to the best of my knowledge.

Date:

________________ Signature of student

Place:

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

CERTIFICATE FROM THE INTERNAL GUIDE

I, <Prof> hereby certify that Mr. < Student Name> a student for the Master of Management Studies Course at Fr. C. Rodrigues Institute of Management Studies, Vashi, Navi Mumbai, has completed a project on <Project Title> under my guidance during this year.

His work and output has been found to be satisfactory.

Date:

________________ Signature of guide

Place:

Vashi

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Acknowledgement
I take this opportunity to sincerely thank and express my gratitude to my guide, Dr. R. C. Walke for him cooperation and inputs throughout the course of this project. It was largely due to him help, support, esteemed guidance and encouragement that this project could take shape and be completed. I thank him for giving direction to this project and imbibing in an organized approach towards tackling the relevant problems. I also thank the Head of our Institute Mr. Prakash Vaithilingam for giving us freedom to work. I am deeply grateful to my co-guide Mr. Srirang Joshi for giving a definite direction to my work and providing crucial inputs throughout the project besides being a constant motivating factor. I thank him for sparing him time in guiding me and assisting me in various aspects of my work. Finally, I would like to thank my family and my friends without whom it would have been tremendously difficult for me to get through this project.

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Executive Summary

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Index
Sr. No.
1 Situation Analysis

Topic

Page No.
1

Problem Definition

Literature Review

Methodology of Study and Data Analysis

PPC Process

10

Conclusion

23

Recommendations

39

Reference

46

51

10

52

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

1. Situation analysis
Eicher Tractors, Mandideep The Eicher Group started in 1948 when the Goodearth Company was set up to sell and service imported tractors in India. Perceiving an urgent need to mechanize Indian agriculture, the Company set up a tractor manufacturing facility i.e. Eicher Tractors Limited in 1959 in collaboration with Gebr. Eicher, Germany in India. The first Indian tractor rolled out of Eicher's factory at Faridabad in India, in 1960.

Today, there are over 4,00,000 Eicher tractors that contribute to the nation's agricultural development. Eicher's manufacturing and marketing facilities located at Faridabad have been awarded ISO 9001 certification. Eicher Tractors has a technology transfer tie-up with Valtra, Inc of Finland. It has an extensive network of over 400 tractor dealers and around 56 engine dealers across India with 15 regional offices and 12 depots. Committed to providing high quality products, Eicher invests significantly in technology resources and infrastructure. Our manufacturing facilities are spread across three states: Highlights

Wide range of tractors, from 61 HP to 24 HP offering the best value for money. Product range includes air-cooled and water-cooled engines. Highly fuel efficient machines, with low maintenance costs. Conforming to international emission norms.

Product range also includes engines in the 22 HP to 32 HP and gensets in the 15 KVA to 30 KVA categories

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

2. Problem definition
The study is to prove that the production planning and control practices has impact on the efficient utilization of the resources, waste reduction, reduce waiting time and processing, thus contributing to the profitability of the industry. On these premise the study accentuated to address questions in order to achieve the following objectives:

(a) To know how the production planning contributes to the efficient use of facilities and equipments.

(b)

To know the effects of Production Planning and Control on Production function.

(c) To know whether production planning and control practices lead to waste reduction and increased profit.

(d) To prove that short term production planning and scheduling techniques employed by industries, is necessary in minimizing process and customer waiting time.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

3. Literature Review
Tractor industry plays an important part as agriculture sector has a major contribution to Indias GDP. Tractors are part of agricultural machinery industry. Tractors came to India through imports and later on were indigenously manufactured with the help of foreign collaborations. The manufacturing process started in 1961-62. Indian tractor industry is relatively young but now has become the largest market worldwide. There are currently 14 players in the industry. Mahindra & Mahindra is the leading player in the industry. Monsoon season is a key driver for sales of tractors. A series of good or bad monsoon can affect the sales. In recent years the industry has registered a good growth in sales, both domestic as well as exports. This is also partly because of the initiative of the government to boost up agriculture and agricultural machinery industry. The tractor penetration level in India is very low as compared to the world standards. Also the penetration levels are also not uniform throughout the country. While the northern region is now almost saturated in terms of new tractor sales, the southern region is still under penetrated. The medium horse power category tractors, 31-40 HP, are the most popular in the country and fastest growing segment.

4. Methodology of study and Data Analysis


Pertinent information is gathered from the respondents using a structured questionnaire. The structured questionnaire is consists of descriptive questions to get the description of various aspects of Production Planning and Control. The initial questions are to cover the variables characterizing the various production planning and control practices such as demand forecasting, inventory, capacity utilization, and scheduling techniques while the last segment will purely on Control practices. Unstructured personal interview is also conducted in order to augment the responses that may not be explicitly cleared in the questionnaire. Like this the data is properly collected, organized, and presented.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q1. Do you think production planning and control is central to the success of any manufacturing unit? If Yes, then how? Options Response Yes 10 No 0

Response

Yes No

Interpretation All the 100% respondents believe that production planning and control is central to the success of any manufacturing unit. Production planning and control gives direction to the best use of capacity with optimum utilization of production line, resources, and other equipments. It helps in waste reduction and leads to increased profitability.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q2

Capacity planning contributes to the efficient use of facilities and equipments?

If Yes then how?

Options Response

Yes 8

No 2

Response

Yes No

Interpretation Most of the respondents i.e. 80% are in favor of the statement that capacity Planning contributes to the efficient use of facility and equipments.

Proper Capacity planning leads to optimum utilization of capacity reduces idle time, under or over utilization of capacity.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q3.

What are the main objectives of Production Planning? a) Optimum Utilization of Capacity b) Inventory control c) Economy in Production Time d) Ensure Quality e) Waste reduction and increased profit

Options Response

A 8

b 6

c 4

D 2

E 10

10 8 6 4 2 0 a
Interpretation All the respondents believe that waste reduction and increased profit is the main objective of production planning, some of them also believe that optimum utilization of capacity is another objective of production planning.The other objective of production planning is inventory control, economy in production time, and quality insurance.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q4.

Production Planning and Capacity Planning are interrelated?

If yes then how? Options Response Yes 7 No 3

Response

Yes No

Interpretation Majority of the respondents i.e. 70% believe that production planning and capacity planning are interrelated. Long term Production planning becomes the basis of capacity planning. Size of production and type of production depends on capacity, hence both are interrelated.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q5. Since, capacity cant always be added or subtracted instantaneously; there will be mismatch of load and capacity. What are its effects? a) Lead time get affected b) Increase in cost c) Hurts the ability to satisfy customers d) Other effects Please specify other effects (if any) Options Response
10 8 6 4 2 0 a b c d

a 0

b 9

c 10

D 2

Interpretation Almost all respondents believe in the above statement. According to them mismatch in load and capacity, leads to customer dissatisfaction and increase in cost. If the capacity is low and demand is high, orders will not be completed on time. If load is less and capacity is more then requirement it will lead to inefficient use of capacity, hence, cost of production will increase. As lead time is calculated on the basis of available capacity it has no effect on lead time. Other effects can be increase in cost by increasing man power and plant maintenance, and delay in delivery to customers.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q6.

On what basis do you plan your production? a) Customer needs (demand) b) Target of Marketing Dept. c) Resources available d) Other factors

Please specify other factors (if any) Options Response A 8 b 0 c 10 D 0

10 8
6 4 2 0

a
Interpretation

According to the data collected from the respondents the production planning of Eicher Tractors, Mandideep is based on customer need i.e. dealers demand for particular models, and also on the basis of resources available. The marketing department reports to the PPC/Store about dealers requirements. PPC/Store communicates with the material department about availability of material. Hence, market demand and availability of resources is considered as base for production plans.

<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q7. Do you feel or experienced hung up and bottlenecks in implementing Production Plans. a) Yes b) No If yes then what type of bottlenecks?

Options Response

Yes 4

No 6

Response

Yes No

Interpretation Majority of the respondents i.e. 60% are in against of the statement, hence, all the department works in integration. Heads of all the department sits together and prepares plans which are properly applicable. There are people who experienced bottlenecks like- sequence change due to non availability of material, and transforming one model to other due to requirement of specific model.

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q8. How do current Production Planning and Capacity Planning methods account for bottlenecks. Interpretation Current production planning and capacity planning highly depends on material available and material in transit. The non availability of material and delay in transportation of material hinders execution of plans properly. Due to this too many changes in daily and weekly plans takes place.

Sometimes lack of coordination between PPC/Store, production department, and Quality control department creates problem of rework and repair.

Q9.

Previously what measures have been taken to avoid such bottlenecks?

Interpretation As the main source of bottleneck is timely not availability of material. So, proper care is taken of the material providers, transportation of material, and inventory of material. Following measures have been taken to avoid such bottlenecks: Multiple vendors being developed for most of the items. Proper inventory level is being asked to maintain. Planning being done with the best availability of material

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

Q10.

If results are not according to the plans, what control measures are taken?

a) Revision of Plan b) Any other measures. Please specify other measures (if any)

Options Response

Revision of Plan 10

Other measures 0

Response

Yes No

Interpretation If the results are OK wait until next control period. If not OK, revision of plan is required to be done. At present people of Eicher Tractors do not have any other solution except revision of plan to control deviations in plans and results.

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

5. Production Planning and Control at Eicher Tractors, Mandideep

Production plan is crucial to the success of any producing unit; it is an activity which is continues in nature and required to be revised time to time as per the requirements. It cant be done in isolation by a particular department; rather it is an integrated activity done by Planning and Control Department in collaboration with Material Department, Production Department, and Quality Control Department. The heads of various departments of Eicher Tractors sits together and Plans there monthly, weekly, and daily production.

5.1 Process of Production Planning at Eicher


1. Marketing Department Monthly details of Market demand Production planning starts from the market details provided by Marketing Department. Marketing Department provides there monthly requirements like- number of tractors, specific models, specific color, capacity etc.

2. PPC/Store Preliminary Production Plan PPC/Store receives message of monthly requirements from marketing department. PPC studies the requirements and prepare a Preliminary Production Plan. This plan is sent to the Materials Department.

3. Material Department Material requirements planning A copy of preliminary plan is sent to the material department. Material department studies the plan and prepares a report which shows the availability of material, material in transit, plan of receipt of material in chronological form, expected shortage of material, and any other problem related to the material. Materials Requirements Planning (MRP) can be used in more complex systems. MRP determines time-phased requirements (period-by-period) for all purchased and manufactured parts such as raw materials, components, parts, subassemblies, etc. . This report is sent to the PPC Department

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

4. PPCRevision of preliminary Production plan. On the basis of the report sent by material department, the PPC/Store revises the preliminary plan. This revised plan is sent to the marketing department. Marketing department revises the schedule of requirements according to the availability and sequence/schedule of receipt of material.

5. Production Planning and Master Production Scheduling After the consent of marketing department and material department the monthly Production Plan and weekly master production scheduling is done. A copy of main plan and master production schedule is sent to each department.

6. Daily Production Plan Every day in morning the production head, quality head, and material head sits together, discuss there problems, and unanimously prepares a daily production plan. This daily production plan is displayed on planning board of every department and at every level of assembly line. This daily production plan shows sequence of operations, sequence and schedule of material movement, post pending material, pre pending material, and shortage of material. This daily plan is automatically get updated with the completion of operations at every level.

7. Control In results are not according to the Daily Plans, the plan is required to be revised. Daily Production Plan is revised number of times considering the material shortages, problems with assembly line, etc. if material is post pending i.e. on assembly line its operation cant be changed, but, changes can be made in the sequence and scheduling of pre pending material i.e. material in queue. Efforts are made to plan a sequence which minimizes the idle time of assembly line, labour, and other equipments.

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

6. Conclusion

After doing this project I am in position to conclude that Eicher Tractors, Mandideep has well defined and structured production planning system. PPC defines the sequences and schedules of operations; hence production planning contributes to the efficient use of facilities and equipments.

PPC is done to identify production process which leads to reduced lead time; hence customer waiting time is also reduced.

PPC ensures optimum utilization of production capacity, material, and other equipments; hence it leads to waste reduction and increased profits.

7. Recommendations

The production planning and control of Eicher Tractors, Mandideep, highly depends on the material availability. In case of shortage of material the overall plan get disturbed. If such problem prevails the optimum results cannot be achieved. To avoid such problem following measures can be taken:

a. b. c. d.

Proper Materials Planning done, Materials must be purchased from multiple vendors, Sufficient safety stock must be maintained, Lead time and responsibility must be fixed at the part of vendors.

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<Name>, MMS (2012-14)


Fr.C.Rodrigues Institute of Management Studies, Vashi

8. REFERENCES
1. 2. 3. 4. www.wikipedia.org www.tmtl.com www.eichertractors.in www.researchandmarkets.com

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