SUMMER TRAINING PROJECT REPORT

MATERIAL PROCUREMENT PROCESS At HEINZ INDIA PVT. LTD.

Submitted to U.P. Technical Univercity , Lucknow in the partial fulfillmentof the requirementfor the Award of the degree of

Master of Business Administration.

2006-2008

Under the supervision of : Mr. Devendra Bansal

(Astt. Manager Finance)

Submitted By: S.A.Atif salar

ACKNOWLEDGEMENT
A student always carries bouquets and brickbats while preparing a report, if there is any bouquet that I collected during my project I would like to mention.

My whole project was a real exposure of the material procurement process. I had the opportunity to meet each and every link in the channel right from the Planning to purchase to payment of material

I am especially indebted to my project guide Mr. Devendra Bansal (Astt. Manager Finance) who provided all his co-operation for this project. I also owe thanks to Mr. Shyam Sunder (Sr. Asst. H.R. department) for helping me understand the basics of the project. I would like to thank HEINZ INDIA PVT. LTD. And Mr. Rajeev Sharma ( DIRECTOR FMCA , R.B.S. College) for giving me the opportunity to undertake my project with HEINZ INDIA PVT. LTD.

TABLE OF CONTENTS

Sr. No.

CHAPTERS

PART-A
1 2 3 4 5 6 7 Company Profile Aligarh factory Insight Functions of various departments Product Range Introduction to finance Annual Report Induction Chart

PART-B
8 9 10 11 12 Material Procurement Process Project Objective
Research Methodology

Recommendations Bibliography

CHAPTER 1

COMPANY PROFILE

HEINZ INDIA PRIVATE LIMITED

INTRODUCTION
HEINZ
IS

one of the American paradigms. It began near Pittsburgh Pennsylvania in the year 1869.
HENRY JOHN

Its founder,

HEINZ, was a pioneer in food processing and product marketing. He was a

remarkable man, an energetic entrepreneurial boy from a pastor and village near Pittsburgh, who was not only a business genius, but also a man of high moral, principles and personal rectitude, set a new standard for an entire world.

H.J.HEINZ

Company is a well known player in

FMGC

category. It stands second in the world among

food product companies next to nestle. It has been certified by ISO-9000. The company began shortly after the civil war in a family garden near Pittsburgh, Pennsylvania. Its founder,
HENRY JOHN

HEINZ

was a pioneer in a food processing and product marketing. HEINZ is the company known as good place to Work since 1869 and is still known by this name. Heinz follows good food manufacturing practices.

1994 was a significant year in the life of the H.J.HEINZ Company. It marks the 125th anniversary of the Company. It also marks HEINZ in the mid 1990s vigorous and full of beans both executing todays strategies and forgoing those that will become the foundation of HEINZ in the 21st century the HEINZ of tomorrow. HENRY
JHON

treated his factory as his mother and give importance to hygiene and cleanliness. He

also treated his employees as though they were members of his family.

The corporate office of HEINZ INDIA

PVT

LTD is situated at MUMBAI. Succeeding generations

sustained the company and maintained its public following throughout a period of enormous social, political and economic upheaval, the constancy of HEINZ proved a great comfort in time of depression and world war. A global economy is emerging, uneven but inexorable. In the course of the 125 years, HEINZ has grown from an American dream to a global brand.

That achievement is treatment to the universal appeal of the HEINZ ideal of pure food and healthful, affordable nutrition. It is also a tribute to the tenacity, inventiveness world. As a new generation of consumer enters a widening world market place the appeal of the HEINZ ideal remains unceasingly durable and filled with promise.

In September 1993, at the annual meeting

ORELLY

amplified the strategies and shared the good

news to shareholders. A new HEINZ had emerged, poised for substantial growth in 1990s beyond.

HISTORY CHANGING NAME FROM GLAXO TO HEINZ

The
GLAXO

INDIA

LTD

was incorporated in India on November, 1924 as an agency house for

distributing. It was recognized internationally as one of the leading manufactures of the research based pharmaceuticals and food products.

In the early 1990s Glaxo was going in losses in the manufacturing of food products all over the world. Glaxo planned to close all its food products over the entire globe.

However, Aligarh plant was running in profits so it did not want to close the unit and hence they asked the Galaxo Headquarters at Britain to permit them to continue the production. The headquarters agreed on a condition to continue the food products after changing the name. So Glaxo India Ltd changed its name to Glaxo Laboratories India Ltd (GLINDIA).

This change in name caused a negative effect on the sales of pharmaceutical products so

GLINDIA

further enquired the headquarter again to allow using the old name of Glaxo India Ltd. The permission was hence forth granted. But due to competition in food products market Glaxo India ltd thought that as the Headquarter is not facilitating R&D programme regarding food products so it would become difficult in the near future to survive in the growing stiff competition. Therefore Glaxo India Ltd thought that they should sell there Aligarh plant at the time when it is making profits so that good value could be earned from it.

Ultimately in 1994 Glaxo India Ltd took a decision to sell its food products manufacturing unit at Aligarh. Heinz India private limited took over from Glaxo India ltd. In October 1994, as Glaxo had decided to concentrate only on pharmaceuticals.

Heinz India private ltd by 1999 has become Deemed Public co. as it has crossed the average annual turnover of Rs.10 corers for three consecutive years. A limit set by companys Act, 1956 which permits a co. to omit writing the word private in its name. So Heinz India private Ltd again renames to Heinz India ltd.

THE NEW HEINZ

In February 1992, a worldwide growth forum attended by the companys top 35 managers, ORELLY and his senior advisors presented the improvement in the market share and profit and implement radical change. A revolutionary idea emerged to replace the company decentralized purchasing system with a centralize negotiation strategy. The leveraging the companys global strength made an eminent financial sense it would save the companys millions over the next decade.

Procurement of key materials was centralized. In the area of marketing, HEINZ began to challenge to conventional wisdom about media spending. Tacking a more fixable and timely approach to trade, consumer and point of purchase promotions as well as media buys, affiliated aimed to move their marketing dollar towards consumer promotions self-pricing. HEINZ already enjoying $2billion business in the European community targeted further growth.

During 1992 and 1993,

ORELLY

and senior management hammered out new reasonable and

demanding goals for each affiliate and successfully led the company out the complacency and mentality that inevitably accompanies two decades of unparallel financial growth and profitability.

In October 1922, with an eye on dynamic Asia Pacific Market, HEINZ made its largest offshore acquisition. HEINZ purchased Wattles Limited in Newzeland for $300 million.

HEINZ CULTURE
Worlds no. 2 food product company, Heinz has a conductive environment which is not only integrates and motivates all the employees towards achieving high standard but also makes sufficient room for everybodys growth. People are a value asset as at Heinz. Efforts are toward satisfying the customers and expanding the market share. A good blend of behavioral and skill development programmes provide stimulus for growth and career development. Over the years Heinz has concentrated on developing internal relationship so that external relationships are enhanced.

HEINZ TODAY A GLOBAL PLAYER

Heinz today a global player in the food business specialized in providing processed food products and nutritional services. Heinz is famous in over 200 Countries. It is well balanced geographic with above 43% of its same coming from non U.S. operations with business and territories, has employees approximately plus thousands of part time workers during seasonal peaks. In fruit business brands dominance is sure. Company earns for quality.

HEINZ VISION
Delivering high quality products. Adhering to standards. Be a company with a strong and motivated workforce. Satisfying customers needs. To become renounced in commercial as well as social sector.

HEINZ PREMIER VALUES

Passion

Risk Tolerance Excellence Motivation Innovation Empowerment Respect

CHAIRMENS FOUR IMPERATIVES

Drive Profitable Growth Remove the Clutter Squeeze out Cost

Measure and Recognize Performance

CHAPTER 2

ALIGARH FACTORY INSIGHT

HEINZ took from Glaxo on 1st October 1994. They continue with the same brand name. It now manufactures Complan and Glucon D at its Aligarh unit. Sampriti ghee being a by- product. Third party manufactures Nycil and Biscuits. Factory is located 10 kms away from Aligarh city at a place known as Manzoorgarhi.

Factory has an area of 41.7 acres. One-third of the area is vacant and rest has permanent infrastructure. Main office is situated in Mumbai. There are no interfaces from outside unions. Its has its three manufacturing units located at Bangalore, Ankleswar and Goa. Milk collected from its centers, bulk suppliers and private contractors. HEINZ centers are locked in a radius of 125kms around. HEINZ has collected 80000-90000 tones of milk/annum costing around Rs.90-100 crores. Its total milk holding capacity is 4 lakh liters. In flush session (April - July) the milk collection is 4 lakh Liters per day. The factory is connected both by both by roadways and railways. It has a turnover of Rs. 468 corers. HEINZ has only one trade union H.S.A. (Heinz Staff Association). For the security purpose, HEINZ has divided the whole plant into different zones which are as follows:

Zone A B C

Department Administration block, MPO office, analytical lab, godown no. 17, officers colony. Engineering office, stores, workshop platforms, and generator house, old and new boiler. Production departments, old lab, spray

D E

drier no.1 and no.2, factory stores. R.P.U.1, 2, 3 all eastern wings godown and acid stores. Change and rest rooms, dispensary, fumigation godown, guest house.

CHAPTER 3

FUNCTIONS OF VARIOUS DEPARTMENTS

1.

FINANCE DEPARTMENT
It is concerned with the accounts and budgets Preparation. Its Functions are: Fund management and budgetary control. Purchases and sales account control. Statutory and audit compliance.

 Wages administration. Variance analysis and information technology. Revenue budgeting and sending it to the main corporate office.

2.

PRODUCTION DEPARTMENT
Its functions are: (A) (B)Processing Area To conduct the dairy activities effectively. To separate fat from milk for the preparation of ghee. To dry up the skimmed milk for the preparation of Complan. R.P.U This unit is setup for the purpose of the packing the products.

3. PERSONNEL DEPARTMENT
Its functions are : Selection and recruitment of employees. Maintaining the personnel record Provision of training, promotion and job rotation.

Maintaining the record of temporary casual, contract, and Apprentice Workmen.

4. F.S.U

HEINZ

has a wide range of products, which are mainly the food products. The co. has F.S.U., which

mainly looks after the safe delivery of the goods to the customer since the factory is located at a far away distance from the city. Its functions are: Cleaning the production units, machines, godown and other places in the factory. Pests control and infestation control. To provide fumigation to the raw material and packed products. Maintaining temperature for different goods. Maintaining account for incoming and outgoing materials.

5. ENGENEERING DEPARTMENT
Its main functions are:
To help in the operation and maintenance of various equipment used in Production process. To provide effluent treatment and pollution control.

6. TRANSPORT DEPARTMENT
It chief functions are as follows:

To provide tankers for carrying milk from milk collection Centers.

 Provision of transportation of raw materials and finished products to the Distributor. Provision of contract based conveyance facility to the employees.

7. QUALITY ASSURANCE DEPARTMENT

As the name indicates quality is just not an accident, it is a collective work of intelligent people with a team of well-trained and experienced people in quality assurance department.

Quality Policy :
Heinz India private Ltd. is committed to
1. Procurement, development, production, and marketing of safe clean wholesome foods of high quality, keeping focus on needs of customer by establishing and maintaining

proper facilities necessary for controlled production consistency in a sanitary manner, so as to ensure that customers confidence is generated and maintained consistently.

2. Establishing and maintaining appropriate operating and monitoring procedures necessary for controlled appropriate production. Establishing and maintaining training programmed so that every person responsible for product integrity and safeguarding quality environments competent to carry out his responsibilities.

Activities:-

1:- Analysis of raw material finish goods and semi finish goods. 2:- Cost of comical, glass ware, media, Equipment machines. 3:- Assure of quality of consumer end. 4:- Outgoing & incoming of material complying. 5:-This is responsible for quality of goods in the organization. 6:- It is sampling of material outgoing and incoming. 7:- Require for new equipment & machinery to give the best quality product & safely product for competitive marketing and this requirement is completed by finance department.

3. Achieving high safety, occupations health and environment standards establishing internal review procedures to ensure compliance of applicable laws and regulations.

Its main functions are:

Maintenance of quality assurance department and lab equipments. To conduct quality assurance test of raw materials and packing materials.

8. MILK PROCUREMENT UNIT:Its main functions are:

Collection of milk from the various collecting centers. To conduct milk purity test. To provide storage and refrigeration to the milk. Safe transportation of milk from milk collecting centers to the company.

9. PURCHASE DEPARTMENT
Its main functions are:
Material procurement. Asking for quotations and their evaluation. Order to the suppliers and procurement of order.

10. INVENTORY DEPARTMENT

Its main functions are:
Ensure storage of material under hygienic conditions and meet good food manufacturing practices standards. Ensure compliance of ISO norms. Ensure safe unloading of stocks and no discrepancy with ledger balance.

11. SAFETY AND SECURITY DEPARTMENT

For the purpose of providing safety and security the Company
Every department in the company has been equipped with fire extinguishers and first aid boxes. At the time of any contingency, the security officers appointed for different zones perform there responsibilities.

Their main functions are:

Safety of employee and companys property. Companies own staff is engaged for security. Controlling and guarding the movement of guards at the gate. Security alert around the factory boundary wall area.

WELFARE 1- CANTEEN: canteen here is providing food on

highly subsidies rates co.

almost bears a loss of Rs. 20 lakes per annum. It has different timing for launch of management staff and workers and is situated in one building only. Companie own staff is running Activities are also coordinated by members of canteen it approx, 500 persons daily.

2- REST ROOMS:

There are four rest rooms to facilitate the workers in the

evening and night shift both.

3-SPORTS CLUB: This committee there is 14 members. The committee

coordinates the activities of sports club members like annual

sports, games, picnic tours. Annual function of cultural programmer. V P/director is the president of the sport club.

CHAPTER 4
PRODUCT RANGE OF HEINZ INDIA PRIVATE LIMITED
HEINZ

is ranked as a second largest food company in the world. It has many products in the world

market. In India it offers 6 products:

1. Instant Energy Drink

Glucon-D (plain) Glucon-D (orange) Glucon-D (mango) Glucon-D (lime-lemon)

Glucon-D is manufactured at Aligarh plant.

2. Energy Rich Health Drink

Vitamin rich under the brand name of Complan is available in following three flavors:
Natural Chocolate Mango

Complan is manufactured in Aligarh plant.

3.Ghee
As a by product of milk is manufactured under the brand name of Sampriti. It is manufactured at Aligarh plant.

4.Prickly Heat Powder

Prickly heat powder is manufactured under the brand name of Nycil. This is available in following three fragrances:

Plain Sandal Lavender

Nycil is manufactured by a third party.

5.Heinz ketchup
Recently HEINZ has come up with a new product
HEINZ KETCHUP.

Although

HEINZ

is primary a for Indian

ketchup manufacturing company, this is new first every ketchup produced by market. Heinz ketchup is manufactured at Bangalore.

HEINZ

6.Complan Crunch Timer

Milk cream Chocolate These two flavors are available in these biscuits.

CHAPTER 6

INTRODUCTION TO FINANCE
Finance is an important functional area of business. It deals with timely, procurement of funds and their effective utilization. The finance function of the business is put under the charge of a senior executive known as Financial Manager. The financial manager is concerned with Investment decisions, Financial decisions and Dividend decisions of the business. Finance is the circulatory system of the economic body of a firm. The term finance is used synonymously with money. Financial management is viewed as an integral part of the management. Though all the important financial decisions are taken by the top management; the financial executive is deeply involved in

this process. His main responsibility is to provide all the necessary accounting information, analysis and discuss the various alternatives and to suggest suitable solutions.

Functions of financial manager are:

FINANCIAL FORECASTING
It is the chief responsibility of financial executive to make a sound financial forecast and then to plan for achievement. He sees that the sufficient supply of cash is available at the proper time for the smooth flow of firms activities. He tries for an efficient flow of firms activities. experience financial crisis and defer its payments..

DETERMINING CAPITAL STRUCTURE

Once the requirement of capital funds has been determined, a decision regarding the kind and proportion of various sources of funds has to be taken. For this Financial manager has to determine the proper mix of equity and debt and short-term and long-term debt ratio. This is done to achieve minimum cost of capital and maximize shareholders wealth.

CHOICE OF SOURCES OF FUNDS

Before the actual procurement of funds the financial manager has to decide the sources from which the funds are to be raised. The management can raise finance from various sources like equity shareholders, preference shareholders, debenture holders, and banks and other financial institutions, public deposits, etc.

PROCUREMENT OF FUNDS
The financial manager takes steps to procure the funds required for the business. It might require negotiations with creditors and financial institutions, issue of prospectus, etc. The procurement of funds is dependent not only upon cost raising funds but also on other factors like general market conditions, choice of investors, government policy, etc.

UTILISATION OF FUNDS
The funds procured by the financial manager are to be prudently invested in various assets so as to maximize the return on investment. While taking investment decisions, management should be guided by three important principles, viz., safety, profitability, and liquidity.

DISPOSAL OF PROFITS

Heinz India private ltd. Aligarh is the main manufacturing

unit. The stock is transferred from

Aligarh factory to Varanasi, Ghaziabad and Unnau (near Lucknow) Unnau is now known as Suklaganj, Delhi branch of HEINZ INDIA PRIVATE LTD. Deals with the operations regarding sales. It prepare monthly sales report Regarding 3 locations (Varanasi, Gaziabad and Suklaganj). This report is checked at Aligarh factory. The central sales tax rules, 1975 prescribe use of various Forms for the purpose of central sales tax 1956. If the goods are send to outside U.P. than from c is taken by the company. It is the responsibility of a/c department to receive form c. it form is received then 4% sales charges is taken by the company otherwise 10% is charged if form c is not received. Form f- transfer otherwise then by sale. Form 31- only for entry of purchase of materials. If the purchase is more than 10 lakhs then form 31 also include Entry tax. The financial manager has to decide how much to retain for ploughing back and how much to distribute as dividend to shareholders out of the profits of the company. The factors which influence these decisions include the trend of earnings of the company, the trend of the market price of its shares, the requirements of funds for self-financing the future programmes and so on.

ASPECTS OF FINANCE
Money is all about goes the famous saying. This is also said about finance that it is the life blood of a business. It is important that this department should work very efficiently. Thus it can be said that success of any organization largely depends upon the optimum Utilization of funds. The main finance department of HEINZ is in Mumbai. Aligarh factory has a finance Department which handles the daily affairs of the factory. Finance and accounts department is the backbone of any Department. Almost all kinds of business activities directly or indirectly, involve the acquisition and use of fund. For example: promotion of employees in production is clearly a responsibility of the production department but it requires payment of wages & salaries and other benefits and thus involve finance department. Similarly, buying a new machine or replacing an old machine for the purpose of productive capacity affects the flow of funds.

The account department at Aligarh factory also controls the computer department. Coding is the soul of computer output. Different companies use different type of coding structure. The coding structure of a company is designed as per their own convenience and the requirement of company. Computer

is an electronic device and it is unable to understand the human language. In order to overcome this problem we use the language, which can be understood by computer, which is called coding.

FINANCE DEPARTMENT

Finance manager operation

Assistant Manager Finance

Account officer

Account officer

Account officer

Account officer

Section head

section head

Clerical staff

Clerical staff

SOURCES OF FUNDS

SORCES OF FUNDS

Increase in decom m .R&D.R&M and capital reserves Depreciation Profit of the year Increase in share capital Decrease in w orking capital Increase in unsecured loans Increase in secured loans

CASH MANAGEMENT IN THE COMPANY

This Company follows the centralized management of cash. Every document relating to the payment of cash needs the official authorization of the accounts executives.

Simplified Cash Cycle

DEBTORS

CASH

INVENTORY

1: FACTS OF CASH MANAEMENT IN THE COMPANY:A.BUDGET PREPARATION: The cash budget is prepared in the Company on the basis of
sales and capital budget. The period of cash Budget is one year. It is prepared usually in the month of February of every financial year. This budget is based on the actual sales up to Dec plus expected sales in the next three months. This budget is a flexible budget which allows the suitable modification from time to time. These changes in the budget are due to the changes in the inventories requirements or due to any emergency. In addition to preparation of cash budget it also prepares. A statement of cash requirement. This statement is prepared on monthly bases. Before the commencement of every month, every department in the company presents its expected funds requirement for the coming month after consolidating these funds requirements pertaining to various departments in the company. The finance department prepares a consolidated

statement of cash Requirement for a particular month. The head office in turn sends the amount required by the company through canara bank. The amount is remitted to the bank twice a week. If the funds come in surplus then the balance is adjusted in the next remittance.

B. F. F: The Control report is also prepared in the company on the monthly bases which facilities
in comparing the actual development with forecast Figures. This report shows the payments and recipients of the company during a particular month, the actual figures are compared with the budget figures and variance is calculated.

C. MONITORING COLLECTIONS AND RECEIVABLES: The Company follows

efficient cash Collection policies. With regard to the collection of receivables from the sales, it has adopted a policy of advance receipts. The sales of goods are made through the carrying and forwarding agents.

D. CONTROL OF PAYABLE: With regard to the payment of goods received. The company
makes the payments only when they fall due.

E. CASH PAYMENTS: whenever, production department requires raw material it asks to the
factory stores/engineering stores. The factory stores/engineering stores issues purchase requisition to the purchase department. The purchase department issues purchase requisition to the purchase department. The purchase department issues purchase order to suppliers, account department and factory stores/engineering stores.

The supplier delivers the goods to the factory Stores/engineering stores and then the factory Stores/engineering stores issues G.R.N (Goods Receipts Notes). After receiving the goods, the concerned stores and sends the same to the users department if the goods are raw material/packing material, the concerned store, sends the sample of the goods to the quality assurance department together with 4 copies of G.R.N, retaining one copy of G.R.N with itself. After receiving the samples together with all 4 copies of G.R.N, the quality assurance test the quality of goods, G.R.N becomes G.A.N (Goods Acceptance Notes). There after Q.A.D sends one copy of G.A.N to accounts department, after receiving the involve from suppliers, G.A.N from the quality assurance department. The accounts department tallies the amount, rates and volume of goods supplied and then makes the final payment to the suppliers.

F. INVESTMENT OF THE SURPLUS CASH: Surplus cash for the company is a rate
term but, whenever any surplus cash remains with the company, it is adjusted in the next remittance.

RATIO ANALYSIS
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statement so that the strength and weakness of a company as well as its historical and current financial condition can be determined the term ratio refers to the numerical quantitative relationship between the two variables.

The relationship can be express as: Percentage. Fraction. Propionate.

The alternative methods of expressing items which are relative of each other are, for purpose of financial analysis, referred as ratio analysis. Financial ratios have been classified into several bases: for our purpose following ratios are important.

CURRENT RATIO:
It is defined as: Current Assets Current Liabilities

The current ratio measures the ability of the firm to meet its current liabilities, apparently, the higher the ratio the greater the sort term solvency.

ACID TEST RATIO:

It is defined as: Quick Assets Current Liabilities
The acids test ratio is a fairly measures of liquidity. It is based on those current assets which are highly liquid.

INVENTORY TURNOVER:
It measures how fast the inventory is moving through the firm and generating sales.

It is defined as: Cost of goods sold Average Inventory

ACCOUNTS RECEIVBLE TURNOVER:

This ratio shows how many times accounts receivable turnover during the year.

It is defined as:

Net credit sales Average Account Receivable

AVERAGE COLLECTION PERIOD:

The average collection period shows, the number of days worth of credit sales that is locked in debtors.

It is defined as: Average collection period: 468 Accounts receivable turnover

This ratio may be compared with the firms credit terms to judge the efficiency of credit management.

SUPPLY CHAIN MANAGEMENT

A Supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. It not only includes manufactures and suppliers, but also transporters, warehouses, retailers and customers themselves. Whereas marketing channels connect the marketer to the target buyers, the supply chain descries a longer channel stretching from raw material to components to final products that are carried to final buyers. The supply chain represents a value delivery system.

Each company captures only a certain percentage of the total value generated by the supply chain. When a company acquires competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value. A Value network is a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.

Marketers, for their part, have traditionally focused on the side of the value network that looks forward toward the customer. Hopefully, they will increasingly participate in and influence Their companies, upstream activities and become network managers, not only product and Customer managers.

Induction Chart

Incoming Material
Incoming Material Q.A

Factory Store

Production

Others

Fuel

Furnace Oil

HSD

Coal

Husk

Mathura Refinery

Mathura Refinery

Katni (M.P)

Contractors

Bore well

Water

Requirement 20lacs ltr Per day

Water storage tank

Qty-1,

Capacity-4 Lacs ltr

Office

Boiler

Canteen

Gardening &

Other Maintenance

1 Procurement
Incoming Material and Its Procurement Material

Purchase Dept. MPD

Purch Dep

Aligarh Milk Other R.M & Packing material

H.O

MATERIAL PROCUREMENT PROCESS

FINANCE

PLANNING

STORES

PURCHASE

Material procurement process has the above mentioned four steps. This process starts with the planning of material followed by the purchase and ends with the payment done. Four departments are included in the whole process. They are:

Planning Department Purchase Department Stores Finance Department

The functions of these departments are explained separately.

PLANNING DEPARTMENT
Meaning

Planning is that function of a manager in which he decides in advance what he will do. It is an intellectual process in which creative thinking and imagination are essential.

Planning is deciding in advance in what is to be done. It involves the selection of objectives, polices, procedures and programmes from among alternatives.

PLANNING IN HEINZ

Planning in Heinz is divided in two parts:

1. Fuel planning 2. Material Planning

1. Fuel Planning
Two type of fuel planning is done
High Speed Diesel planning Coal and Husk planning.

Planning of fuel depends on the supply and demand of milk. Fuel is used for running the boiler that boiler is used for generation of steam. Steam is used for drying the milk. Drying is done by two methods: By rollers By Spray Coal and Husk are used for running the boiler. Husk is used in summer season because of cheaper price and coal is used in winters.

HSD is used for generation of electricity which is used for running machines and other purposes. One liter furnace oil is used for producing 3.3 KW of electricity. 103 units of electricity are used for processing one tonne of milk. Demand and Stock is seen on daily basis. Minimum stock level is maintained at factory level. Furnace oil comes from Mathura refinery. At least 10 days stock is maintained.

2. Material Planning:
Annual operating plan is planned at the head office by the central planner. This annual operating is made according to the Manpower Capacity Freights

The central planner see the manpower availability of different plants before it make any plan.

He also sees for the capacity of its plants to produce. It will not make the plan beyond the capacity of the plant.

Plan is also made according to the freights. Sometimes the co packers provide the finished goods to the company at the lesser price. This is because the co packer is located at the place where different type of subsides is provided by the government and they also save there taxes like in Uttranchal.

If the planner see that co packer will provide for less price than he will make plan accordingly.

Area Sales Manager has the authority to approve the plan.

He can make modification in the annual operating plan or can make the new plan or can give the same plan also.

ASM make its plan for a month and give this to a branch. From here it goes to the head office. The head office posts this plan in SAP.

Through SAP all the factories receives the plan and then they work according to the plan. They purchase the raw material from vendors according to the plan.

Process of purchase requisition:

Purchase Requisition is made and then it is approved by departmental head and then this PR is forwarded to Purchase department.

PURCHASE DEPARTMENT
Purchase department is the 2nd important step in the Material procurement process.

Purchase department gives order to supplier on the basis of purchase requisition made by the different departments.

Requirement of engineering equipment is generated by user (a person who operated the machine) and he makes a slip called as indent slip according to the demand.

Manager check the indent slip and then forwarded to engineering store but if item is more expensive then forward to the H.O.D.

H.O.D checks this indent slip and if any item is more costly then he find the optimal solution of worker or user requirement with the discussion.

H. O.D of the engineering stores forwarded the indent slip to purchase department and purchase department select the vendor then from whom to purchase the material out of various vendors available in the market.

Purchase department prepare a requirement later on and then sent back the requirement to user for getting the conformation from the user.

After receiving the conformation from the user purchase department give order to the supplier.

Almost 90% of the purchase of raw material is made from Delhi and 10% from Aligarh.

Various discounts were also given by Aligarh and Delhi vendors.

Types of Requirement:

Raw material requirement

Engineering equipment requirement

Other requirements.

Raw material requirement:

Various raw materials that are required are as under:
Sugar crystal Ground nut oil Sodium bicarbonate Pamolive oil Acid casiney Castic soda Minerals and vitamins Malto toxin powder

Sugar crystal and ground nut oil is purchased by Aligarh branch and other raw materials are purchased by head office situated in Mumbai.

Normally 21% sugar is needed in preparation of complan and 45% is needed for preparing glucon d

400 to 450 tonne of sugar is required every month.

Engineering equipments requirement:

More then 7000 various types of machinery items are used in engineering stores.whenever there is a requirement

Other requirements:
All types of requirements other then raw requirements and engineering stores came under other requirement like packing requirements, staff dress, and canteen requirements.

Packing material include

Ghee tin Bags Hdp bag Fevicol

Types of item

Proprietary Item

General item

Proprietary item:
Proprietary item are those items which are purchased only from a single vendor or supplier. Mainly these items belong to a machine manufacturing company because certain specific items are available to that company only.

General item:
General item are those items which are purchased from open market, seeing the prices of various vendors.

STORES
Stores are a place where items are kept and then it is given to various departments according to the requirement. There are basic three functions:

Receiving the material Storing the material Issuing the material

It is divided into 2 parts:

1. Factory stores 2. Engineering stores

STORES

FACTORY STORES

ENGINEERING STORES

Factory stores:
Factory store is a place where all the material other then engineering stores are stored such as

Vitamins Sugar Packing material Stationary Minerals Carbohydrate

Factory stores is divided into 4 parts

1. Raw material 2. Intermediate 3. Packing material 4. General (LINEN)

Every segment has different in charge. How to store the material: 1. Raw material:
The raw material is stored in AC conditions at the temperature which is maintained at 8 degree Celsius to 10 degree Celsius. All the major ingredients are stored in this segment.

2. Intermediates:
These intermediates are also called as semi finished goods. These are kept under ac conditions at the temperature which is maintained at 22 degree Celsius to 25 degree Celsius.

There are 3 type of material which is stored here

CCPM (colored complan premix) IMF (infant milk food) PMO (phase modified oil)

All these are normally protein content items. Factory store is following the GFMP (Good Food Manufacturing Practices).

Factory stores procedure:

As the material enters the factory gate the PCI (Pest Control of India) team checks it for the possible infestation. They check the outer physical part of the material. They also examined the truck where the material is placed.

If the material is passed by the PCI team then all the material is counted or weighted.

A GRN (Goods Received Note) is made by the factory store.

Then all the material which is stored is checked by the Quality Assurance Department. Sampling method is followed for the purpose of checking the material. Under Root N+1 th product is taken as the sample.

All the material is matched with the standards set by the company.

The Quality Assurance Department can either pass the whole lot conditionally pass Reject or or the material.

If the material is passed by the quality assurance department then the GAN (Goods Acceptance Note) is formed by the factory stores.

This GAN is passed to the finance department for the purpose of payment.

Now the material is issued to the various departments according to the demand.

Engineering stores:
All the engineering material which comes on demand is stored in the engineering stores.

All the engineering material is issued from this store as per the demand.

FINANCE DEPARTMENT
Functions of finance department:
Finance department receives a bill by the supplier.

The bill is matched with the goods acceptance note (which is received by the factory stores) and with purchase order (which is received by the purchase department).

If the bill is matched with purchase order then booking is done and when the due date comes the cheque is printed and dispatched to supplier.

All the payment made to supplier is done through cheque.

Internal payment like salaries and other miscellaneous expenses which is below than Rs. 20000 is done in cash.

All the funds come from Mumbai head office.

Financial Year of Heinz India is based on the American financial year which is started from first week of May and ends in April.

Cash payment The supplier delivers the goods to the factory Stores/engineering stores and then the factory Stores/engineering stores issues G.R.N. (goods receipts notes). After receiving the goods, the concerned store sends the same to the user department if the goods are raw material/packing material, the concerned store, sends the sample of the goods to the quality assurance department together with 4 copies Grns. .Retaining one copy of G.R.N. with itself, after receiving the samples together with all 4 copies of G.R.N. the quality assurance tests the quality of goods. When the Q.A.D. assured itself with regard itself with regard to the quality of goods, G.R.N. becomes G.A.N. (goods acceptance notes) . Thereafter Q.A.D. sends one copy of G.A.N. to accounts department one copy to purchase department, one to concerned store and retains one copy with itself. After receiving the involve from suppliers, G.A.N. from the quality assurance department and purchase order from the purchase department. The accounts department tallies the amount. Rates and volume of goods supplied and then makes the final payment to the suppliers.

PROJECT OBJECTIVES
Project Objective:

Study the Material Procurement Process of Heinz India Private Limited.

Phases:

Project was undertaken in four phases:

1. Study of the functions of the planning department. 2. Study of the functions of the purchase department. 3. Study of the functions of the stores. 4. Study of the functions of the finance department.

Project Guide:

Mr. Devendra Bansal Assistant Manager Finance Heinz India Private Limited

RESEARCH METHODOLOGY
The methodology employed for the study of project Material Procurement Process is through the collection of primary and secondary data. Primary data is obtained through the observation, interviews and discussion with the officers of the Heinz.

Secondary data is derived from the published and unpublished sources, like company publications such as annual reports, annual plan, magazines and publications from Department Of Heinz Ltd.

RECOMMENDATIONS
Company name should be promoted as brands of the company are more popular. Canteen should be modified in terms of infrastructure. Company should open recruitment at Heinz India, Aligarh and give chance to the new candidate according to the requirement of the company.

 Periodic reviews should be carried out in estimating the revised estimates, and the results should be communicated to the company, at large to bring in transparency and credibility to the system.

CONCLUSIONS
The Heinz is one of the leader in food processing. It has

sustained a solid financial footing , strong balance sheet and a clean sense of independently

owned one of the most profitable major company in the world.

The organization has a very good planning system and all the plans of various sections are well maintained here by office members. As discussed above various vouchers and documents are prepared to regulate the day-to-day work of the organization

Heinz has an effective procedure of receipt, storage and issue of material, control of quality records or work instruction for storage, handling, preservation and delivery of material.

The company in general does not go for external credit, its own resources are sufficient to meet its requirement for short term finance.

It ensure that brand of Heinz remain the first choice of consumer today and for generation to come.

Periodic reviews should be carried out in estimating the revised estimates, and the results should be communicated to the company, at large to bring in transparency and credibility to the system.

BIBLIOGRAPHY
REFERENCES:-

1.

Company Records
2. Data from the past record from the company. 3. Company web Sites. (1) www.heinz.com

Procurement
Incoming Material and Its Procurement Material

Purchase Dept. MPD

Purchase Dept.

Aligarh Milk Other R.M & Packing material

H.O

Entire Milk is supplied by Milk Procurement Department Aligarh which they purchase Mostly from U.P and from Rajasthan. Some of the raw material is procured by Aligarh Department and other by H.O