INTRODUCTION

In the grand orchestra of any business, material management plays a vital role, akin to the
conductor ensuring a harmonious flow of notes. Just as a captivating melody requires the
precise interplay of instruments, a company's success hinges on the efficient movement and
control of materials throughout its operations. This intricate dance involves a constant tango
between raw materials, work-in-progress (WIP), and finished goods, ensuring the right
materials are available at the right time and place, without unnecessary costs or disruptions.

The symphony begins with the raw materials, the fundamental building blocks of fuel
production. Material management takes center stage here, meticulously planning for
upcoming needs. This involves forecasting demand, analyzing historical data, and
collaborating with departments like sales and production. Through careful calculations,
material managers determine the exact type and quantity of raw materials required.

Next comes the procurement phase, where the conductor raises their baton, signaling the
selection of the best suppliers. This involves negotiating prices, establishing delivery
schedules, and ensuring quality standards are met. Effective procurement strategies not only
focus on cost-effectiveness but also consider factors like supplier reliability and lead times.
Delays or inconsistencies in raw material deliveries can disrupt the production rhythm,
causing costly stoppages and missed deadlines.

Once the raw materials arrive, they enter the warehousing stage. Here, the conductor ensures
proper storage conditions to protect materials from damage or deterioration. Inventory
management becomes paramount, striking a delicate balance between having enough
materials readily available and avoiding excessive stockpiling that ties up capital and incurs
storage costs. Material management utilizes techniques like ABC analysis, which prioritizes
inventory control based on an item's value and usage rate.

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The raw materials then embark on their transformation journey, becoming work-in-progress
(WIP). This stage encompasses everything from partially assembled components to
unfinished products currently on the production line. Material management ensures a steady
flow of materials to each production step, preventing line stoppages and delays. Techniques
like Kanban systems, which utilize visual cues to signal restocking needs, can optimize WIP
levels, minimizing waste and ensuring production efficiency.

Needs of Study in Material Management:

 Demand Forecasting: Understanding how to accurately predict future needs for raw
materials to avoid stockouts or excessive inventory.
 Supplier Management: Developing strategies for selecting reliable vendors,
negotiating competitive prices, and ensuring timely deliveries.
 Inventory Optimization: Implementing techniques like ABC analysis to balance the
need for readily available materials with minimizing storage costs.
 Work-in-Progress (WIP) Management: Developing methods like Kanban systems to
control WIP levels, prevent waste, and ensure production efficiency.
 Logistics and Distribution: Coordinating the movement of finished goods to
customers seamlessly, ensuring on-time deliveries.
 Cost Analysis: Identifying cost-saving opportunities throughout the material
management process, from procurement to storage.
 Technology Integration: Exploring how technology like warehouse management
systems and data analytics can improve material management efficiency.
 Sustainability Practices: Integrating environmentally friendly practices into material
management, such as minimizing waste and utilizing recyclable materials.

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SCOPE OF STUDY

 Analyze current material management processes to identify areas for improvement.

 Evaluate inventory management techniques to optimize stock levels and minimize
costs.
 Assess supplier performance and explore strategies to improve reliability and delivery
times.
 Investigate the feasibility of implementing new technologies for better material
tracking and forecasting.
 Develop recommendations for streamlining the flow of materials throughout
production.
 Analyze the impact of potential solutions on overall production efficiency and cost
reduction.

OBJECTIVES OF STUDY

 Evaluate the average quantity of materials processed routinely.

 Analyze the average monthly sales volume.
 Determine the cost of raw materials utilized in finished goods production.
 Assess the efficiency of Just-In-Time (JIT) implementation.

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RESEARCH METHODOLOGY OF THE STUDY:

The economy of a country is controlled by several factors, viz., population size industrial
activities, agriculture, policies of its government, the culture of the people, educational
system, infrastructure facilities, etc. in the process of satisfying the basic needs of people
engage themselves in various activities such agriculture, housing and each of the above
industries is backed by various other industries

 Exploratory research:

Exploratory research is initial research that analyzes the data and explores the possibility of
obtaining as many relationships as possible between different variables without knowing their
end – applications. This means that a general study will be conducted without having any
specific end – objective except to establish as many relationships as possible between the
variables of the study

Some of the examples of the experience survey are:

• Bidding of tenders

• Technology forecasting

• Materials planning manpower planning

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Data Collection for Material Management at Robert Packaging Pvt Ltd

Sources of Data:

The study relies on a combination of primary and secondary data sources.

Primary Data:

Primary data is collected with the cooperation of the management of Robert Packaging Pvt
Ltd, who have granted permission to conduct the study. This data is obtained through oral
interviews with company employees, allowing for firsthand insights into material
management practices and challenges.

Secondary Data:

Secondary data, focusing on the financial aspects of Robert Packaging Pvt Ltd, is gathered
from various sources including:

1. Annual reports of the company, providing comprehensive financial information and

performance analysis.
2. Brochures available in the company's library, offer insights into product offerings,
market positioning, and corporate strategies.
3. Library books covering relevant topics in material management, inventory control,
and supply chain management.

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LIMITATIONS

1. Since the study covers only the Manufacturing division of the company, it may not
represent the overall scenario of the Cotton Industry.

2. Project duration of time is not sufficient.

3. One of the factors are the study was the lack of availability of sample information.

4. The information is mostly dependent upon the secondary data.

5. The main limitation is due to their busy schedule the employees in the organization
are unable to spend their time with me.

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Material

Material refers to any substance or matter that constitutes the physical components or
elements used in the production of goods or services. In the context of material management,
materials can include raw materials, such as metals, plastics, or textiles, that are used as
inputs in manufacturing

Material Management: Material management refers to the systematic control and

administration of materials used in the production process. It involves managing the flow of
materials from procurement to consumption, ensuring availability, quality, and cost-
effectiveness.

Components of Material Management:

1. Raw Materials: Raw materials serve as the building blocks of a company's products.
These are the fundamental ingredients purchased by the company for transforming into
finished goods. Managing raw materials effectively is crucial for maintaining the quality and
consistency of the final products.

2. Work-in-Progress (WIP): Work-in-progress includes items actively undergoing various

stages of the production process. These are partially completed goods within the
manufacturing facility, representing work in transition. Efficient management of WIP helps in
ensuring a smooth flow of production and minimizing delays or bottlenecks.

3. Finished Goods: Finished goods are the end products ready for sale to customers. These
items have completed the manufacturing process and are awaiting distribution or purchase.
Managing finished goods inventory efficiently is essential for fulfilling customer orders
promptly and maintaining customer satisfaction.

Additional Aspects of Material Management:

Inventory Control: Material management involves maintaining optimal inventory levels to

balance supply and demand. It requires careful monitoring of inventory levels, replenishment
strategies, and inventory turnover rates to prevent stockouts or excess inventory.

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Supplier Relationship Management: Effective material management also entails building
strong relationships with suppliers. This involves selecting reliable suppliers, negotiating
favorable terms, and collaborating closely to ensure the timely delivery of materials and
favorable pricing.

Quality Control: Ensuring the quality of materials is a critical aspect of material

management. It involves implementing quality control measures, conducting inspections, and
adhering to quality standards to uphold the integrity of the final products.

Cost Management: Material management is also concerned with cost optimization. This
includes identifying cost-effective sourcing options, minimizing wastage, and implementing
cost-saving measures throughout the procurement and production processes.

IMPORTANCE OF MATERIAL MANAGEMENT:

Material management holds significant importance in every organization, serving as a

cornerstone of its operations. The profitability of an organization is heavily reliant on its
material management practices. Materials represent a substantial portion of the organization's
assets, being the second-largest asset category. They are regarded as liquid assets and current
assets, essential for sustaining day-to-day operations.

Effective storage and management of materials are pivotal activities within the organization,
ensuring seamless operations and meeting customer demands efficiently.

OBJECTIVES OF MATERIAL MANAGEMENT:

The objectives of material management encompass two interrelated aspects:

a) Maximizing the Utilization of Material Resources:

 To optimize the organization's investment in materials.

 To ensure efficient utilization of materials in the production process.

b) Meeting Production and Sales Demands:

 To fulfill the demand for products by organizing production and sales operations
effectively.

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  To maintain a continuous supply of raw materials, facilitating uninterrupted
production schedules.

c) Minimizing Costs and Time:

 To minimize carrying costs associated with excess inventory.

 To reduce the time required for material procurement, storage, and handling.

These dual objectives of material management necessitate a balanced approach, considering

the trade-offs between costs and benefits associated with material levels. Achieving an
optimal level of material inventory requires careful consideration of factors such as
procurement costs, holding costs, and the impact on production and sales operations.

In essence, material management aims to strike a balance between ensuring adequate material
availability for production needs while minimizing costs and optimizing resource utilization.
By effectively managing materials, organizations can enhance operational efficiency, reduce
costs, and maintain competitiveness in the marketplace.

AIM OF MATERIAL MANAGEMENT:

The primary aim of material management is to ensure optimal levels of materials to support
production and sales operations, thereby avoiding both excess and insufficient inventory
levels. Efforts are directed toward maintaining an appropriate inventory balance to facilitate
smooth production and sales activities. This involves timely placement of orders with the
right suppliers to acquire materials of the correct quality, quantity, and at the right location

 Ensuring a seamless and uninterrupted supply of raw materials to sustain continuous

production processes.

 Maintaining adequate stocks of raw materials, especially during periods of short

supply or anticipated price fluctuations, to safeguard against disruptions and fulfill
customer demands.

 Minimizing carrying costs associated with inventory storage and handling, as well as
reducing the time required for material procurement and distribution.

 Implementing effective inventory control measures to optimize material levels and

prevent stockouts or overstock situations.

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  Enhancing supplier relationships to ensure reliable and timely delivery of materials,
while also exploring cost-saving opportunities.
 Utilizing inventory management tools and technologies to streamline processes,
improve visibility, and enhance decision-making

Factors Influencing Material Inventory:

External Influences:

 Customer Demands: Changes in customer preferences, market trends, or demand

fluctuations can impact material inventory levels.

 Supplier Relationships: Variations in supplier performance, reliability, or lead times

can influence material availability and inventory management decisions.

Internal Influences:

 Market Dynamics: Shifts in market conditions, competition, or industry trends may

necessitate adjustments in material inventory levels.

 Organizational Policies: Internal policies, such as procurement guidelines or inventory

management strategies, can affect material inventory practices.

 Production Processes: Factors related to production efficiency, capacity utilization, or

production planning can influence material inventory requirements.

 Supply Chain Management: Coordination and collaboration within the supply chain,
including transportation, warehousing, and distribution, can impact material inventory
levels and logistics.

Problem with high inventory:

 Interests, and insurance costs.

 Quality deterioration.

 Wear and tear.

 Storage and pilferage.

Inventory turnover ratio:

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  ITR=cost of production/inventory

 Higher ITR=low inventories

 Low ITR=high inventories

High inventory reasons:

 Production

 More low-volume products

 Large cycle campaign product

 Non-moving products

Marketing:

 Uncertainty of orders

 Deviating sales forecast

Supply chain management:

 Improper planning

 Excess/short RM supply.

Suggestions:

 Flexible production plans with tight monitoring.

 Min & max inventory levels and their up-to-date revision.

 Cost benefits analysis on carrying costs.

 Review and disposal of non-moving inventory.

 Reliability should improve.

 A dynamic approach is essential.

 Coordination with market and plants.

 Adherence to commitments and time-to-time review is must

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 Selection of site:-

The following are the chief considerations which should determine the selection of a site:

a) The site will be connected by road and rail, or if there is river transport, with water
transport.

b) The existence of facilities for the disposal of water or effluent water is important. For
this purpose some sometimes special arrangements are necessary though sometimes it
may be possible to use existing wasteland. Health authorities will naturally have a say
in the matter.

c) The available land should be sufficient for the unit. In addition to factory buildings, it
is often necessary to provide houses for the staff and workers.

STORES, SPARES AND PURCHASES:

1. Store keeping.
2. Store system.
3. Various store operations.
4. Methods of pricing the material issues.
5. Receiving section and issue department.
6. Purchase department
7. Stores and spares.
8. Purchasing system.
9. Inventory.
STORE KEEPING:

It is a serving facility, inside of an organization responsible for proper storage

of the material and then issuing it to the respective department on proper requisition. those
items, that are not in use for some specific duration example spare parts and raw materials,
are called stores and the building or space where these are kept is known is a store room.

According to Maynard “the duties of stock keeping are i.e. to receive materials are to protect
them while in storage from damage and unauthorized removal, to issue the materials the right
quantities at the right time to the right place and to provide these service promptly at least
cost”.

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It is an establishment fact that more govt of the current assets are invested in stores. Thus for
efficient and economic utilization of fond – the importance of stores cannot be ignored.

FUNCTIONS OF STORE KEEPING:

The main function of storekeeping can be outlined as

 Receiving of goods in stores against damage and pilferage.

 Custodian of goods in stores against damage and pilferage

 Effective utilization of store space.

 To provide service to the organization in the most economical way.

OBJECTIVES OF STORE KEEPING:

 Easy location of the items in store.

 Proper identification of items.

 Speed issue of material, Efficient utilization of space

FACTORS OF PLANT LOCATION:

Primary factors:-

 Raw material

 Market

 Fuel and power

 Transport

 Labor

Secondary factors:-

 Industrial atmosphere

 Special advantage of a place

 Soil and climate

 Personal factors

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  Historical factors

 Political stability

Stages in production control:-

 Planning

 Routing

 Scheduling

 Loading

 Dispatching

 Inspection

Advantages of production planning and control:-

 Efficient service

 Avoidance of rush orders

 Avoidance of bottlenecks

 Inventory control

 Economy in production time

 Equipment utilization

Types of layout:

1. Product or line layout

2. Process of functional layout

3. Combined layout

Factors in plant layout:

 Basis managerial policies and decisions

 Nature of plant location

 Type of industry and processes

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Economies in production:

 Use of automatic machinery

 Division of labour

 Utilization of by-products

 Timely and economical repairs and maintenance.

Approach.

The importance of an integrated approach to material management within the

framework of the Indian environment presents a comprehensive coverage of all aspects of the
subjects, such as the operational details of store systems and procedures and modern
mathematical concepts also featured. Since the theory is based on practical experience and
research projects, it fulfills the need for authentic literature in the field on materials
management.

Purpose of stores.

The store plays a vital role in the operation of a company. It is in direct touch
with the user departments in its day-to-day activities. The most important purpose served by
the stores is to provide uninterrupted service to the manufacturing divisions. Further, stores is
often equated directly with money, money is locked up in the stores.

The function of stores can be classified as follows:-

1. To receive raw materials, tools, equipment, and other items and account for them.

2. To provide adequate and proper storage and preservation of the various items.

3. To meet the demands of the consuming departments by proper issues and account for
the consumption.

4. To minimize obsolescence, surplus and scrap through proper codification,

preservations, and handling.

5. To highlight stock accumulation, discrepancies and abnormal consumption and effect

control measures.

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 6. To ensure good housekeeping so that material handling, materials preservation,
stocking, receipt, and issue can be done adequately.

In India, owing to positions, 4 to 6 months inventories are not uncommon 77 and, in fact, for
certain imported items, it could be as high as 24 month’s stock. In this context, store
management assumes greater importance.

Stores leader:-

The stores leader is very important because this facility the calculations of the
value of goods used for production purpose of materials finished goods. There are several
methods for calculating the issue price of the materials.

1) FIFO:

Under this method is first issued from the earliest consignment on hand and priced at which
that consignment was placed in the stores. In other words, materials received first are issued
first. This method is most suitable in times of falling prices because the issue price of
materials to be jobs work orders will be high while the cost of replacements of materials will
be low.

2) LIFO:

The issues under this method are priced in the reverse order of purchase i.e... The price of the
latest available consignment is taken. This method is sometimes known as the replacement
cost method because materials are issued at the current cost to work orders except when
purchases were long ago. This method is suitable in times of raising prices because material
will be issued from latest consignment at a price which is closely related to the current price
levels.

3. Base stock method:

Each concern always maintains a minimum quantity of material in stock. This minimum
quantity is known as safety or base stock and this should be used when an emergency arises.
The objective of this method is to issue the material according to the current prices.

4)Average method:

In this method, the stock is divided by the quantity.

5)Market price:

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The issues are made at the market prices.

6) Inflated prices:

This method is used for any wastage in the materials.ex:50 units are purchased at Rs. 10. In
50 units will go for wastage. The issue price will be 500/40=12.5

Location and layout:

More often than not, in the matter of locating the stores, materials management is rarely
consulted. The normal practice is to locate the stores near the consuming departments. This
minimizes handling and ensures timely dispatching of store layout, The governing criteria are
easy movement of materials, good housekeeping, and sufficient space for men and materials
handling equipment, such as shovels, racks, pallets, and proper preservation from rain, light,
and other such elements.

These problems are more important in the case of items that have a limited shelf life.

Other important factors governing the location are the number of users and their locations,
the volume and the variety of goods to be handled the location of the central receiving
section, and accessibility to modes of transportation such as rail or road. Since stores have to
be nearest to the sugar, the largest organizations usually have stores near the consuming
department, whereas receiving is done centrally

Items of common usage are stocked in the central stores so that inventory is kept at an
optimum level. These factors are considered at the planning level of the layout. In the case of
warehouses stocking finished goods, factors such as proximity to ports, railway lines, quality
of roads, availability of power, etc., become quite important. It is also important that the
stores are constructed with a futuristic orientation so that sufficient flexibility for expansion
needs is built. The activities of receiving the goods, stocking in appropriate locations,
material handling, and issuing must be done swiftly and economically. The store's building
has adequate facilities for the preservation of stores.

Sometimes facilities, such as cold storage, heating equipment, air

conditioning, and similar facilities may be required. These should be planned in advance.
Comfortable working conditions must be provided to the stores personnel to get maximum
efficiency and morale.

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Factors to Consider in the Design of Store Buildings:

Illumination: Ample and clear lighting is indispensable in a workplace environment. The

choice of wall colors can further enhance lighting effects. Creating a pleasant atmosphere
through proper lighting is crucial for store personnel engaged in various tasks like receiving,
inspecting, stocking, handling, and issuing goods. Any attempt to compromise on these
facilities in the name of cost-saving ultimately proves counterproductive in the long term.

Safety Measures: Safety stands as a paramount concern in store operations. Given the
substantial volume of goods handled daily, accidents pose a significant threat to both morale
and efficiency. To mitigate risks effectively, the following measures are imperative:

 Cultivating safety awareness among store personnel through training initiatives, visual
aids, and informative materials.

 Providing and encouraging the use of safety gear like goggles and gloves.

 Upholding good housekeeping practices by ensuring clean gangways, adequate space

for smooth movement of equipment like forklifts and trolleys, and strategic stocking
to minimize handling.

 Maintaining all store equipment in optimal condition through regular maintenance

practices, including forklifts, cranes, and conveyors, and ensuring that personnel are
trained in safety protocols.

 Promoting healthy competition by instituting safety awards and cash incentives to

acknowledge and motivate personnel to adhere to safety practices.

 Installing fire-fighting facilities, particularly in areas where flammable materials are

stored, with large organizations typically maintaining well-equipped fire-fighting
systems.

 Maintaining readiness for emergencies by providing fire extinguishers, fire escapes,

alarms, and sprinklers, and ensuring personnel are proficient in their operation.

 Addressing additional considerations such as the provision of restroom facilities,

routine maintenance of equipment, and ensuring safe electrical systems with adequate
warning signs.

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Cost Aspects and Productivity:

Efficient utilization of every cubic meter of space for stocking is crucial for maximizing
efficiency. However, excessive stocking can often impede material movements and create
bottlenecks, compromising overall safety. Costs associated with stores can be categorized
into fixed and variable expenses. Fixed costs, such as land and building expenses, rent,
interest, repairs, maintenance, and insurance, are incurred regardless of space utilization. On
the other hand, variable costs, including handling expenses, damages, deterioration, and
obsolescence, fluctuate with output volume. The aim of the store manager should be to
optimize costs by ensuring high throughput and minimizing total cost per unit.

Challenges and Opportunities for Development:

Store management is often perceived as a less glamorous function within material

management, leading to a lack of talent attraction. However, it is essential to recognize that
the store manager oversees the management of significant current assets and plays a pivotal
role in facilitating smooth production and supporting purchase activities. This presents a
major challenge for store managers today.

Various decisions in-store management, such as the selection of storage systems, handling
equipment, safety protocols, codification, personnel training, and accounting practices,
require thorough consideration and coordination with internal departments and external
stakeholders. Highlighting the critical aspects of store management and appreciating the role
of store managers is essential to elevate the importance of this function within organizations.

Furthermore, areas such as record-keeping, movement analysis to minimize obsolescence and

damage, and scrap yard management, which often fall under the purview of store managers,
are vital for the profitable operation of firms. The store manager faces challenges in
optimizing returns from scrap disposal and ensuring efficient operations in these areas.

In many organizations, the chief store officer oversees various functions, including receipt,
issuance, inventory management (Kardex), and sub-stores. They interact with multiple
internal departments, including production, procurement, maintenance, inspection, and
finance, as well as external stakeholders like suppliers, transport carriers, and bankers. To
meet these diverse challenges, the importance of the store function should be gradually
recognized, and qualified engineers should be appointed as chief store officers, reporting to
the materials manager.

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Role of Financial Manager in Material Management:

Achieving the optimum level of material inventory and addressing challenges such as
Economic Order Quantity (EOQ), reorder points, and safety stock are crucial aspects of
material management. These techniques are essential for optimizing inventory costs and
ensuring efficient resource utilization. Moreover, inventory management techniques play a
significant role in data analysis and decision-making within organizations.

For most companies, materials represent a significant investment, making inventory

management integral to wealth maximization objectives. While the responsibility for day-to-
day material management typically lies outside the financial manager's direct purview, they
have an important role to play in overseeing material investment levels. The financial
manager should possess knowledge of material management techniques and ensure that
material resources are managed effectively. By optimizing material investment levels, the
financial manager can enhance the firm's profitability prospects while reducing unnecessary
inventory costs.

Material Control:

Material control involves the systematic management of materials and parts held in stock,
governed by predetermined limits established in accordance with the material policy set by
management. While material control is an activity-oriented process, material management is
the broader management process that encompasses the firm's overall setup, guiding the
former.

Material control refers to a strategic approach to purchasing and storing materials at the
lowest possible cost without compromising sales schedules. It is a methodical way of
determining what, when, and how much to purchase and stock for a given period.

The Importance of Material Control:

The significance of material control systems cannot be overstated, especially in the Indian
context. The rationale behind this includes:

 Preserving valuable foreign exchange reserves.

 Releasing capital tied up in inventory.

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  Reducing overall costs associated with material acquisition and storage.

MATERIAL CONTROL TECHNIQUES


Selective inventory control Inventory management techniques

1. EOQ (economic order quantity)
 ↓
1. ABC analysis
 analysis A. Ordering cost
2. XYZ
3. FNS
 classification
B.Carrying cost
4. SOS

classification
5. S-D-E Analysis
2. System of Re- ordering
6. HML analysis
7. Ved classification

Economic Order Quantity (EOQ):

One of the key challenges in inventory management revolves around determining the optimal
quantity of inventory to be replenished. When replenishing inventory, firms must decide the
appropriate batch size for purchasing raw materials or supplies.

If a firm is procuring raw materials, it must determine the lot sizes for cash replenishment.
Similarly, if production is scheduled, the firm faces order quantity problems, where the
objective is to ascertain the ideal inventory level. This process involves the consideration of
two primary costs:

1. Ordering Costs: Ordering costs pertain to the expenses associated with acquiring raw
materials or supplies. These costs encompass various activities such as requisitioning,

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 issuing purchase orders, transportation, receiving, inspection, and storage. While
ordering costs increase in proportion to the number of orders placed, certain fixed
costs such as administrative and staff expenses remain constant. From one
perspective, as long as these fixed costs are committed, they need not be factored into
the computation of ordering costs.

2. Carrying costs:
Costs incurred for maintaining a given level of inventory are called carrying costs,
they include storage, insurance, taxes, deterioration, and obsolescence.

3. √2*quantity required*ordering cost

4.
5. EOQ (economic order quantity) = ------------------------------------------------

6. ABC Analysis:
Carrying cost
7.

ABC analysis is one of the widely used inventory control tools. Under this, we have
to classify materials according to their importance and concentrate more on critical
items. The importance of any item arises due to two factors namely, consumption
values and critical in use. Classification of materials according to importance has its
basis in the promise of “vital few and trivial many”.
The classification based on consumption value is called ABC analysis and the
classification based on the criticality of the items is called VED analysis (vital
essential and desirable). periodical consumption values are used as the basis for VED
analysis. ABC is said to denote “always better control”, the method of classification
of material is also known as “selective method control”. The basis of analyzing the
annual consumption cost (or usage cost) goes after the principle “vital few and trivial
many”.
Items held in the stores can grouped into classes A,B, and C respectively based on
their annual consumption values. It has been found in a large number of organizations
that about 20% of the items contribute to 70% of the annual consumption value,
30%of the number of items contribute about 20% of the annual consumption value
and the remaining 50% of the items contribute 10%of the annual consumption value.

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 Hence consumption values need to be controlled at the highest level and these are the
A items. The control of the bottom 50% of the items that contribute only 20% of the
annual consumption value, which are denoted as C items can be delegated to the
lowest decision-making levels while the middle B items can be controlled by the
middle levels of personnel.

“The following figures bring out clearly the concept of ABC analysis”.
Category value items 10% % of annual Consumption
A item 20 70
B item 30 20
C item 70 10

The advantage of the ABC method of inventory control is as follows.

 It becomes possible to concentrate all efforts in areas that need genuine efforts. This
method produces better results and involves minimum control. In the case of an item,
careful attention is paid at every stage i.e., estimates of requirements, purchasing
safety stocks, receipts, inspection, and issues.
 A close watch on high consumption items and their progress of replenishment etc,
maintained. In the case of C items that are numbers and at the same expense are
loosely controlled.
 The items that fall under the B category may be dispensed within the record-keeping
system. This will help save time, money and labor without endangering the
production schedule, it is the most effective and economical method as it is based on
the selective method.
 It helps in placing orders, deciding the quantity of purchasing safety stocks, etc. Thus
saving the organization from unnecessary stockouts or surpluses.

VED Analysis:
VED analysis involves categorizing items based on their criticality. It classifies items into
three groups: vital, essential, and desirable. The "vital" category includes items crucial for
uninterrupted production, without which production would halt. The "essential" group
comprises items whose stock-out would be highly undesirable. Lastly, the "desirable" group
consists of items where stock-out results in minimal production loss and entails minor
disruption for a short duration.

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HML Analysis:
HML analysis is a price-based approach primarily used for spare parts control. Items are
categorized into three groups: high, medium, and low. This classification is determined by
listing items in descending order of their unit prices. For instance, items with a unit price
above Rs 1000 may be categorized as 'high' (H), those between Rs 100 and Rs 1000 as
'medium' (M), and those below Rs 100 as 'low' (L).
F-S-N Analysis:
F-S-N analysis is based on the consumption patterns of items. Items are classified into three
groups: fast-moving (F), slow-moving (S), and non-moving (N). This analysis considers the
last receipt or issue date, whichever is later, and records the elapsed period, typically in terms
of months, since the last movement.
X-Y-Z Analysis:
X-Y-Z analysis categorizes items based on their inventory value. Items with high inventory
values are classified as 'X', those with low values as 'Z', and those with moderate values as
'Y'. This analysis is often used in conjunction with ABC or HML analysis to provide a
comprehensive understanding of inventory management.
S-OS Analysis:
S-OS analysis is centered on the seasonal characteristics of items, dividing them into two
main groups: seasonal (S) and off-seasonal (OS). Seasonal items are those whose demand
fluctuates based on seasonal trends, while off-seasonal items are those with relatively stable
demand throughout the year.
S-D-E Analysis:
S-D-E analysis addresses procurement challenges, focusing on issues such as availability,
security, lead time, supplier location, and reliability. It classifies items into three categories:
scarce, difficult, and easy.
 Scarce: This category includes items that are in short supply and may need to be
imported through government agencies due to limited availability.
 Difficult: Items in this category are available domestically but pose challenges in
procurement, such as long lead times or security concerns.
 Easy: These are items readily available in the market without significant procurement
hurdles.

24
The insights gleaned from S-D-E analysis inform purchasing strategies, guiding decisions on
how to procure each category of items effectively. By understanding the procurement
challenges associated with each category, organizations can develop tailored approaches to
ensure a smooth and efficient supply chain.
LEVEL SETTING:
In order to have proper control over materials the following levels are set:
 Re-order level
 Ordering level
 Minimum level
 Maximum level
 Average stock level
 Danger level
 Safety stock level

1. Re-order Level: The re-order level is a critical threshold in inventory management

that triggers the initiation of a new purchase order. It is calculated based on factors
such as the lead time required for procurement, the rate of material consumption, and
the desired level of safety stock. When the actual inventory level reaches the re-order
point, it signals the need to replenish stock to avoid stockouts and maintain
uninterrupted production.
2. Ordering Level: The ordering level represents the inventory threshold at which a
formal purchase order is placed with the supplier or vendor. It is typically set slightly
above the re-order level to accommodate lead time variability and ensure that the new
stock arrives before existing inventory levels are depleted. The ordering level takes
into account factors such as supplier lead time, transportation time, and any
anticipated delays in procurement processes.
3. Minimum Level: The minimum level signifies the lowest acceptable quantity of
inventory that should be maintained at all times. Falling below this level may lead to
stockouts, production delays, or service disruptions. The minimum level is determined
based on factors such as lead time, demand variability, and safety stock requirements.
It serves as a safeguard against inventory depletion and ensures that adequate stock is
available to meet operational needs.
4. Maximum Level: The maximum level represents the upper limit or ceiling for
inventory levels within the organization. It is set to prevent overstocking, which can

25
 tie up excessive capital, increase storage costs, and lead to inventory obsolescence.
The maximum level takes into consideration factors such as storage capacity, carrying
costs, and demand variability. By maintaining inventory levels below the maximum
threshold, organizations can optimize working capital and improve overall inventory
management efficiency.
5. Average Stock Level: The average stock level refers to the mean quantity of
inventory held over a specific period. It provides insights into the typical inventory
levels maintained by the organization and serves as a reference point for evaluating
inventory performance. The average stock level is calculated by averaging the
inventory levels at different points in time, allowing organizations to assess trends,
monitor inventory turnover rates, and make informed decisions regarding inventory
replenishment and stockholding policies.
6. Danger Level: The danger level represents a critical inventory threshold that, if
breached, may pose significant risks to operations. It serves as an early warning
indicator, signaling the need for immediate action to prevent stockouts or disruptions.
The danger level is typically set slightly above the minimum level to provide a buffer
against unforeseen fluctuations in demand, supply chain disruptions, or lead time
variability. By closely monitoring inventory levels relative to the danger level,
organizations can proactively address inventory shortages and mitigate potential risks
to production schedules and customer service levels.
7. Safety Stock Level: The safety stock level is the additional inventory held beyond
normal requirements to safeguard against uncertainties in demand, supply, or lead
times. It acts as a buffer to absorb fluctuations in customer demand, supplier delays,
or production disruptions. The safety stock level is determined based on factors such
as demand variability, lead time variability, and service level objectives. By
maintaining adequate safety stock levels, organizations can minimize the risk of
stockouts, improve customer service levels, and enhance overall supply chain
resilience

26
Robotic Packing Solutions is a pioneering company dedicated to manufacturing and
wholesaling top-notch quality packaging products since its inception in 1981. Headquartered
in Hyderabad, Telangana, India, the company has established itself as a trusted name in the
industry, catering to the diverse needs of customers across the nation.
Company History:
Established in 1981 as a Sole Proprietorship venture, Robotic Packing Solutions embarked on
its journey with a commitment to excellence in manufacturing and wholesaling packaging
products. Founded by Srikanth Gangnam, the company has since grown into a leading player
in the industry, with a focus on meeting diverse customer needs. Operating under the legal
status of an individual proprietorship, Robotic Packing Solutions has achieved an annual
turnover ranging from Rs. 10 to 25 Crore, reflecting its robust performance in the market.
With a dedicated team of 101 to 500 employees, the company has built a reputation for
delivering top-notch quality products.
Infrastructure: Robotic Packing Solutions operates from a state-of-the-art facility equipped
with advanced production machinery and tools. The infrastructure includes dedicated
departments for manufacturing, quality assurance, sales, packing, and logistics, enabling the
company to efficiently meet market demands. Leveraging its hi-tech workplace, the company
ensures the seamless execution of operations, catering to the varied requirements of its clients
with precision and reliability.
Product Range:
The company offers a wide range of packaging solutions, including:
 Corrugated Shipping Box
 Cardboard Corrugated Box
 Flat Corrugated Box
 Corrugated Paper Box
 Colored Corrugated Box
 Automobile Corrugated Box
 Heavy Duty Corrugated Box
 Corrugated Tray Box
 Round Corrugated Box
 Slotted Corrugated Box
 Duplex Corrugated Box
 Large Corrugated Box

27
  Plain Corrugated Box
 Brown Corrugated Box
 Plain Cardboard Box
Payment and Shipment Details:
 Payment Mode: Cash, Cheque, DD, Credit Card, Online
 Shipment Mode: By Road
Why Choose Robotic Packing Solutions?
Adroit team of experts
Fairtrade policies
Competitive-Pricing

Location:
Robotic Packing Solutions is situated at:
D-13 Part, IDA Uppal, Ramanthapur, Hyderabad-500039, Telangana, India

Code of Conduct and Ethics for Directors & Senior Management:

 Preface

 Strict Compliance

 Conflict of Interest

 Honesty and Integrity

 Policy of Business Relationship

 Intellectual Property Policy

 Corporate Opportunities

 Prevention of Insider Trading

 Securities Market Policy

 Confidentiality of Information Policy

 Compliance with Laws, Rules, and Regulations

 Protection and Proper Use of Company's Assets

 Competition Policy

28
  Selecting Suppliers

 Environment, Health, and Safety Policy

 Elimination of Child Labour

 Abolition of Forced Labour

 Gifts & Donations

 Accountability

Compliance with Code of Conduct:

Each Director and senior management personnel must adhere to the code of conduct and

affirm compliance on an annual basis as per the Annexure to the Code. Violation of this Code

will result in appropriate disciplinary action.

29
Industry Profile

Industry Overview: The manufacturing industry encompasses a diverse range of sectors

involved in the production of goods. This includes industries such as machinery, electronics,

automobiles, chemicals, food and beverages, textiles, and more. Manufacturing plays a vital

role in economic development by creating jobs, driving innovation, and contributing to GDP

growth. It provides essential goods for consumers and serves as a key supplier to other

industries.

Market Trends: Recent trends in manufacturing reflect the industry's ongoing evolution

towards greater efficiency, sustainability, and digitization. Automation and robotics are

increasingly integrated into production processes, improving productivity and quality control

while reducing labor costs. Additive manufacturing, commonly known as 3D printing, allows

for rapid prototyping and customized production. Industry 4.0 technologies, including IoT

sensors and data analytics, enable smart factories that optimize operations and supply chains

in real-time.

Key Players: The manufacturing industry is home to a mix of large multinational

corporations and smaller, specialized firms. Major players include companies like Toyota,

General Electric, Siemens, Samsung, and Boeing, which have significant market share and

global operations. Smaller players often focus on niche markets or innovative technologies,

contributing to industry diversity and fostering competition

30
Market Segmentation: Manufacturing can be segmented based on product categories (e.g.,

durable goods, non-durable goods), production processes (e.g., batch production, continuous

production), end-user industries (e.g., automotive, aerospace, consumer electronics), and

geographic regions (e.g., Asia-Pacific, North America, Europe).

Technological Landscape: Technological advancements drive innovation and efficiency in

manufacturing. Materials science innovations lead to the development of lightweight, durable

materials with improved properties. Robotics and automation enhance precision and speed in

production processes, while AI and machine learning optimize resource allocation and

predictive maintenance. IoT devices collect data for real-time monitoring and analysis,

enabling proactive decision-making and optimization.

Regulatory Environment: The manufacturing sector is subject to various regulations and

standards to ensure product safety, environmental sustainability, and fair labor practices.

Regulatory bodies oversee compliance with laws related to workplace safety, emissions

control, waste management, intellectual property rights, and international trade agreements.

Companies must navigate complex regulatory landscapes to maintain compliance and

reputation.

SWOT Analysis: A SWOT analysis evaluates the industry's internal strengths and

weaknesses, as well as external opportunities and threats. Strengths may include

technological expertise, a skilled workforce, and established supply chains. Weaknesses could

involve reliance on outdated infrastructure or vulnerability to supply chain disruptions.

Opportunities may arise from emerging markets, technological advancements, or shifts in

31
consumer preferences. Threats may include geopolitical instability, trade barriers, or

economic downturns.

Workforce Implications: Technological advancements and automation reshape the

manufacturing workforce, requiring new skills and job roles. Traditional manual labor is

supplemented by roles in programming, maintenance, data analysis, and robotics. Upskilling

and reskilling programs are essential to ensure workers can adapt to evolving job

requirements and remain competitive in the labor market.

Future Outlook: The future of manufacturing is characterized by continued technological

innovation, sustainability initiatives, and digital transformation. Smart factories equipped

with IoT sensors and AI-driven analytics will optimize production efficiency and resource

utilization. Sustainability concerns will drive the adoption of eco-friendly materials and

processes, while servitization models will offer new revenue streams through integrated

product-service offerings. Geopolitical uncertainties and supply chain disruptions remain

challenges, but opportunities for growth and innovation abound in the dynamic

manufacturing landscape.

32
Inventory and Numerical Data:
Types of Materials:
Robotic Packing Solutions utilizes a range of materials in its packaging production, including
paper reels, gum, ink, stitching wire, kraft paper, and duplex board.
Inventory Status:
 Raw Materials (WIP): The inventory includes liner boards and creased boards
(slotted boards), essential for the manufacturing process.
 Finished Goods: The company maintains a stock of cotton boxes, ready for
distribution to customers.
Monthly and Yearly Sales:
The company records consistent sales volumes, with monthly sales ranging from 80-90 tons
for unseasoned products and 150-180 tons for seasoned products. On an annual basis,
Robotic Packing Solutions achieves sales of 900-1000 tons for unseasoned items and 1800-
2000 tons for seasoned products.
Cost of Raw Materials:
To produce finished goods, the company incurs a raw material cost of Rs. 30 per kg.
Logo Printing:
Robotic Packing Solutions offers logo printing services on cotton boxes to meet customer
preferences. For bulk orders exceeding 50 tons, logo printing is provided free of charge.
Otherwise, the cost ranges from Rs. 3000 to Rs. 5000, ensuring personalized branding
solutions for clients.
Just-In-Time (JIT) Method:
Embracing efficiency in procurement, Robotic Packing Solutions follows the Just-In-Time
(JIT) method. With a procurement lead time of 5-6 days for raw materials, the company
optimizes inventory management, ensuring timely production and delivery of goods to meet
customer demands.

33
Premium Services Offered by Robotic Packing Solutions:
1. Free Logo Printing:
 Provided cotton boxes for bulk orders exceeding 50 tons.
 Enhances brand visibility and customization options for clients.
2. Expedited Delivery:
 2-day delivery service available for high-priority orders.
 Ensures swift and timely receipt of products, meeting urgent client demands.
3. Cash Discounts:
 Offers discounts on bulk purchases or as part of promotional offers.
 Provides cost-saving opportunities for clients, fostering long-term partnerships.

34
Financial Performance:
 Yearly Turnover:
 2019: Rs. 8 crore.
 2020: Rs. 5 crore.
 2021: Rs. 4 crore.
 2022: Rs. 4.5 crore.
 2023: Rs. 6 crore.
The decrease in sales turnover in 2020 can be attributed to the establishment of a new
company with an average turnover exceeding Rs. 25 crore.

Turnover
9
8
7
6
5
4
3
2
1
0
2019 2020 2021 2022 2023

35
Statement 1:-
Calculate the average monthly sales volume for unseasoned products and seasoned products
separately.
For unseasoned products:
 Month 1: 80 tons
 Month 2: 90 tons
 Month 3: 85 tons
 Month 4: 80 tons
 Month 5: 90 tons
(Average monthly sales volume = (Monthly sales volume for unseasoned products) / (Number of
months)
(80 tons + 90 tons + 85 tons + 80 tons + 90 tons) / 5
= (425 tons) / 5
= 85 tons

Monthy Sales
92
90 90
90
88
86 85
84
82
80 80
80
78
76
74
Month 1 Month 2 Month 3 Month 4 Month 5

Monthy Sales

36
For seasoned products:
 Month 1: 160 tons
 Month 2: 170 tons
 Month 3: 165 tons
 Month 4: 160 tons
 Month 5: 170 tons
Average monthly sales volume = (Monthly sales volume for seasoned products) / (Number of months)
(160 tons + 170 tons + 165 tons + 160 tons + 170 tons) / 5
= (825 tons) / 5
= 165 tons

Monthy Sales
172
170
170 170
168
166
164 165

162
160
160 160
158
156
154
Month 1 Month 2 Month 3 Month 4 Month 5

37
Statement 2:
Calculate the total cost of raw materials utilized in finished goods production for the year
2023.

Total yearly raw material cost = (Cost per kg of raw material) * (Total yearly sales volume)
= Rs. 30/kg * (900-1000 tons + 1800-2000 tons)
= Rs. 30/kg * (2700-3000 tons)
= Rs. 81,000 - Rs. 90,000

Statement 3:
Calculate the percentage decrease in sales turnover from 2020 to 2021.

Percentage decrease = [(Turnover in 2020 - Turnover in 2021) / Turnover in 2020] * 100

= [(Rs. 5 crore - Rs. 4 crore) / Rs. 5 crore] * 100
= (Rs. 1 crore / Rs. 5 crore) * 100
= 20%

Statement 4:
Calculate the total cost savings for the year 2023 due to free logo printing for bulk orders.

Total bulk orders = (Total yearly sales volume) / (Bulk order threshold)
= (2700-3000 tons) / 50 tons
= 54 - 60 orders (approx.)
Total cost savings = (Number of bulk orders) * (Cost per logo printing)
= (54 - 60 orders) * Rs. 3000
= Rs. 1,62,000 - Rs. 1,80,000 (approx.)

38
Statement 5:
Calculate the yearly average turnover growth rate from 2019 to 2023.

Yearly average turnover growth rate = [(Turnover in 2023 - Turnover in 2019) / Turnover in 2019] / 4
* 100
Given:
- Turnover in 2019 = Rs. 8 crore
- Turnover in 2023 = Rs. 6 crore
Substitute the values:
Yearly average turnover growth rate = [((Rs. 6 crore - Rs. 8 crore) / Rs. 8 crore) / 4] * 100
= [((-Rs. 2 crore) / Rs. 8 crore) / 4] * 100
= [(-0.25) / 4] * 100
= -6.25%
(So, the yearly average turnover growth rate from 2019 to 2023 is -6.25%.)

39
Statement 6:
Evaluate the efficiency of the Just-In-Time (JIT) implementation by calculating the inventory
turnover ratio for the year 2023.

Inventory turnover ratio = (Cost of goods sold) / (Average inventory)

Cost of goods sold (COGS) = Total raw material cost for finished goods production
= Rs. 30/kg * (2700-3000 tons)
= Rs. 81,000 - Rs. 90,000
Average inventory = (Opening inventory + Closing inventory) / 2
= (Cost of raw materials at the beginning of the year + Cost of raw materials at the end of the
year) / 2
= (Rs. 81,000 + Rs. 90,000) / 2
= Rs. 85,500
Inventory turnover ratio
= (Rs. 81,000 - Rs. 90,000) / Rs. 85,500
= (-Rs. 9,000) / Rs. 85,500 ≈ -0.105
(Since the inventory turnover ratio is negative, it indicates a potential inefficiency in the JIT
implementation for the year 2023.)

40
Statement 7:
Determine the percentage change in the yearly turnover from 2019 to 2020.

Percentage change = [(Turnover in 2020 - Turnover in 2019) / Turnover in 2019] * 100

= [(Rs. 5 crore - Rs. 8 crore) / Rs. 8 crore] * 100
= (-Rs. 3 crore / Rs. 8 crore) * 100
≈ -37.5%
(So, the percentage change in the yearly turnover from 2019 to 2020 is approximately -
37.5%.)

41
 Findings:

1. Sales Volumes: The company experiences consistent monthly and yearly sales
volumes, with unseasoned products averaging around 85 tons per month and seasoned
products averaging around 165 tons per month.

2. Raw Material Costs: The total cost of raw materials utilized in finished goods
production for 2023 ranges from Rs. 81,000 to Rs. 90,000.

3. Sales Turnover: Despite a decrease in turnover in 2020, the company has shown
signs of recovery, with turnover increasing to Rs. 6 crore in 2023.

4. Cost Savings: The company saved significant costs in 2023 due to free logo printing
for bulk orders, amounting to approximately Rs. 1,62,000 to Rs. 1,80,000.

5. Turnover Growth: There has been a negative yearly average turnover growth rate of
-6.25% from 2019 to 2023, indicating a decline in turnover over the period

6. JIT Efficiency: The inventory turnover ratio for 2023 suggests potential inefficiency
in the JIT implementation, as indicated by the negative ratio.

7. Yearly Turnover Change: The company experienced a significant negative

percentage change in turnover from 2019 to 2020, approximately -37.5%.

42
 Suggestions:

1. Enhanced Sales Strategies: Implement targeted marketing and promotional activities

to boost sales, especially during periods of low turnover.

2. Cost Optimization: Explore avenues for reducing raw material costs or improving
production efficiency to mitigate the impact of decreased turnover.

3. JIT Refinement: Review and refine JIT implementation strategies to improve

inventory turnover and operational efficiency.

4. Diversification: Consider diversifying product offerings or expanding into new

markets to reduce dependency on seasonal variations in sales.

5. Investment in Technology: Explore the adoption of advanced technologies for

material tracking, forecasting, and production optimization to enhance overall
efficiency and competitiveness.

6. Customer Engagement: Strengthen customer engagement and loyalty programs to

foster long-term relationships and encourage repeat business.

7. Financial Planning: Develop robust financial planning and risk management

strategies to navigate fluctuations in turnover and ensure sustainable growth.

43
 CONCLUSION

Robotic Packing Solutions, established in 1981 as a manufacturer and wholesaler of

packaging products, has evolved into a renowned entity in the industry. Headquartered in
Hyderabad, India, the company's commitment to excellence is evident in its diversified
product range, encompassing corrugated shipping boxes, cotton boxes, and more. While
facing fluctuations in turnover over the years, from Rs. 8 crore in 2019 to Rs. 6 crore in 2023,
Robotic Packing Solutions has demonstrated resilience in the competitive market landscape.

The company's operational framework is underscored by efficiency-driven practices such as

Just-In-Time (JIT) inventory management. However, challenges persist, as indicated by the
negative inventory turnover ratio observed in 2023. Despite this, Robotic Packing Solutions
continues to prioritize customer satisfaction by offering personalized branding solutions
through logo printing services, particularly for bulk orders exceeding 50 tons.

To sustain and bolster its growth trajectory, Robotic Packing Solutions must focus on refining
its inventory management systems, optimizing sales strategies, and investing in advanced
technologies for enhanced operational efficiency. By addressing these areas, the company can
better navigate market dynamics and reinforce its position as an industry leader. Additionally,
strategic partnerships with suppliers and continuous innovation in product offerings will be
instrumental in solidifying Robotic Packing Solutions' foothold in the packaging sector,
ensuring sustained growth and success in the years to come.

44
 BIBLIOGRAPHY

BOOKS:

Financial Management………. I.M. Pandey

Financial Management………. Prasanna Chandra
Financial Management………. Van Horn
Management Accounting and Control…. S.N.Maheswari
Financial Management……….Khan and Jain

WEBSITE:

www.asianTobacco.com
www.financial management.com
www.pricipals of accounting.com
www.google.com

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