2015

SHARMA
Anurag

ANSP03 Integrated Project

Management (Part B)
AAI Inventory Management

AAI!Inventory!Management
A
  
   
   
June 18th 2015

Contents

P!vs.!Operations
N!of!Inventory!Management
W!is!Inventory!Management
I ! "!Management!in!AAI
P#$ !of!Spares
S%P"ERP
D&#& 

Operations!vs!Projects

O'()*+,-./!are!for!routine,!ongoing!and!repetitive!tasks!in!an!
organization.
T0(!key!objectives!of!operations!are!to:
1234567!the!existing!business!of!the!organization!and
M589!the!existing!operations!more!and!more!efficient.
:)-;(<+/!are!Temporary!endeavor!undertaken!to!create!a!unique!
product!or!service.
T0(!key!characteristics!of!Projects!are:
=9>?@B5BC!(Time!bound)
U76E29!(For!attainment!of!specific!goal)
FB@GB9336H9!elaboration!(Sequence!of!Interrelated!activities)

Projects!versus!Operations
KLQRVXYZ

Operations

[\]^_`a`b
cdefg\
he]!is!to!achieve!the!objectives!of!

Project!and!then!close!Projects.
igjg`\!Orientation
k`\aje_d!of!new!things

Ongoing
Repetitive
Objective!of!operation!is!to!sustain!
the!business
Present!Orientation
Maintenance!of!existing!things

l\`m_`]\n!by!people
k_doj`aed\n!by!limited!resources
lpadd\nq!executed!and!controlled

Performed!by!people
Constrained!by!limited!resources
Planned,!executed!and!controlled

CNS!Discipline

r-sst.,<*+,-. u*v,w*+,-. x yt)v(,zz*.<( { ruy ,/ +0( |(} ~,/<,'z,.(

of Airports Authority of India (AAI) responsible for planning,
procurement, operations and maintenance of the Communication,
Navigation, Surveillance and ATM infrastructure required for provision
of Air Traffic Services.
.<,zz*)} /}/+(s/ /t<0 */ :y T(/+ t,'s(.+ */+()yz*v( rz-<|
systems, Lightning and Surge Protection System etc. are also procured
and maintained for continuation of operations.
~,)(<+-)*+( - ruy"Planning
F57767G FB@2B9>974 >?9>974546@7 @ 1=M 67B534B242B9
FB@94 @B69749
~,)(<+-)*+( - ruy" Operations & Maintenance
?9B546@73 M567497579 57 123497579 @ 1=M 3C349>3
?9B546@73 @B69749

Inventory!Management!" Definitions
I ! "!Management!is the!practice!of!planning,!directing!
and!controlling!inventory!so!that!it!contributes!to!the!business'!
profitability. Inventory!management!can!help!business!be!
more!profitable!by!lowering!their!cost!of!goods!sold!and/or!by!
increasing!sales.
I ! "!Management!is!making!sure!that!items!are!
available!when!customers!call!for!it,!but!not!too!much!stock!so!
that!inventory!turnover!goals!are!met
" Juhi Gonzales,
I ! "!Management!and!Systems!Consulting"
Inventory!Management!is!the!art!and!science!of!managing!to!
have!the!RIGHT!PRODUCT,!at!the!RIGHT!TIME!and!PLACE,!in!
exactly!the!RIGHT!AMOUNT,!at!the!BEST!POSSIBLE!PRICE.

Why!Inventory!Management

I !efficiency
!Data!Management:!Knowing!where!your!inventory!is.
"time!Updates
!to!Cyclical!and!Seasonal!Demands
& &$&!downtime!of!facilities
&& !and!Orderly!Replenishment
 $&!of!Scale!in!Procurement
#!Cost!and!Transit!Times

Inventory!Management!Overview!

Economic!Order!Quantity!(EOQ)
!is!a!mathematical!tool!for!determining!the!order!quantity!
that!minimizes!the!costs!of!ordering!and!holding!inventory.!It!
attempts!to!minimize!total!inventory!cost!by!answering!the!
following!two!questions.
_!much!should!I!order?!(!Economic!Order!Quantity!)
_!often!should!I!place!each!order?!(!Cycle!Time!)!

&!model!assumes!that!the!demand!equation!faced!by!the!
firm!is!linear.!In!other!words,!the!rate!of!demand!is!constant!or!
at!least!nearly!constant.!

EOQ
!goal!is!to!minimize!total!inventory!cost.!Inventory!costs!are!
made!up!of!Holding!and!Ordering!cost.!Holding!cost!include!the!
cost!of!financing!the!inventory!along!with!the!cost!of!physically!
maintaining!the!inventory.!These!costs!are!usually!expressed!as!
a!percentage!of!the!value!of!the!inventory.!
& !cost!include!the!cost!associated!with!actually!placing!
the!order.!These!include!a!labor!cost!as!well!as!a!material!and!
overhead!cost.!The!equation!for!total!inventory!cost!is!
developed!as!follows:!
!Inventory!Cost!(TIC)!=!Holding!Cost!+!Ordering!Cost!
I!=!(Average!Inventory)(Holding!cost!per!unit)!+!(Number!of!
orders!per!year)(Ordering!cost!per!order)!

Assumptions!of!Basic!EOQ!Model

\]adn!is!known!with!certainty!
\]adn!is!relatively!constant!over!time!
_!shortages!are!allowed!
\an!time!for!the!receipt!of!orders!is!constant!
[\!order!quantity!is!received!all!at!once!

Regulatory!Requirements!for!Logistic!Support

k!AVIATION!REQUIREMENTS!SECTION!9! AIR!SPACE!AND!AIR!TRAFFIC!
MANAGEMENT!SERIES!'D',!PART!I!ISSUE!II,!8th!January!2010!!(Subject:!
Requirements!of!Maintenance/!inspection!of!Communication,!Navigation,!
Landing!and!other!equipment!installed!at!Airports!and!en"route.)

[k!SUPPORT:!In!order!to!ensure!that!the!maintenance!of!a!facility!is!not!
delayed!for!lack!of!spares.!The!stock!of!spare!units,!modules,!PCBs!and!
components!etc.!shall!be!maintained!at!the!site!of!facility!or!at!a!place!from!
where!the!required!spares!can!be!transported!to!the!site!without!any!avoidable!
delay.!The!storage!facility!shall!be!subject!to!inspection!at!any!time!by!an!officer!
designated!by!DGCA!for!this!purpose,!

Procurement!of!Spares!for!Equipment/System

!spares!are!procured!along!with!the!supply!of!equipment!by!CNS(P)!
directorate!to!cater!for!failure!of!modules!:

!installation.
!warranty!period!to!take!care!of!turn!around!time!for!repair!of!faulty!modules.

!on!the!experience,!spares!for!mid!term(up!to!5!years)!and!long!

term(beyond!5!years)!is!projected!by!field!stations/RHQ!to!provide!post!
warranty!maintenance!support!so!that!highest!degree!of!availability!of!
CNS/ATM!infrastructure!is!ensured.

!of!Bulk!procurement!of!Spares!:

"availability!of!spares!in!future!due!to!obsolescence.

!of!spares!due!to!fast!change!of!technology!both!hardware!and!S/W.

!effectiveness/Economy!of!Scale

!comply!with!CAR!of!DGCA.
!consuming!process.

14

Consolidation!of!!Spares!!Requirement!&!Mode!of!
procurement

d ao\ _m j\ `\fge`\]\dj _m o^a`\o ]_ngp\oco _d app dnea aoeoq gp

Requirement of spares is consolidated through inputs received from stations and

regional offices and Specialized Maintenance Units (SMUs). Consolidated
requirement is reviewed during workshop for the particular equipment/system
with a view to arrive at appropriate and justified quantity of spares.

[eo \\`eo\ eo \oo\djeap j_ _jaed j\ fgadjejb neo_gdj \d\mej adn oa`ed _m

resources among different stations to reduce inventory cost.

d ao\ _m _dog]ap\oq _]^_d\djo adn o]app oap\ ^`_g`\]\djq ojaje_do

respective regions may initiate the procurement action, as per the provisions of
Delegation of Powers (DOP).

co a`\ \]^_\`\n j_ ^`_g`\ _]^_d\djo m_` `\^ae` _m ]_ngp\o ao

appropriate.

_n\ _m l`_g`\]\dj
l`_^`e\ja`b ej\]o j`_g boj\] dj\`aj_`
k[ j\]o j`_g e]ej\n j\dn\` ^\d [\dn\`

Criteria!for!fixing!requirement!of!spares
!criteria!are!generally!considered!for!spares!
requirement!for!various!equipment/systems.

!of!installation!of!equipment.
!life!of!equipment.
!Plan!of!the!equipment/system.!
!stock!of!spares!(modules/LRUs)
!rate!of!modules/LRUs
!threat,!if!any.
"house!repair!capability! whether!SMU!is!set!up!or!not.
!judgment!of!field!experts,!based!on!experience.
!recommendations!given!by!the!original!equipment!manufacturer!
(OEM)/System!Integrator.

Procurement!of!Spares

 && !of!requirement
I "Principle!approval!for!procurement
P#$ !of!COTS!items!through!open!tender
P#$ !of!Proprietary!spares!though!ab"initio!negotiation!

basis.
!the!provisions!of!Delegations!of!Powers!and!ANS!
Procurement!Manual.
I &&& !of!Budget,!Financial!Concurrence,!Approvals!as!
appropriate
P$ !of!Order
%!Dispatch!of!Items,!Transportation,!Customs,!Receipt.

Receipt!of!Stores
I
I
I
S I

 I II 

Supplier are accepted for their performance.

T

I
I 

 

performance are sent for test and return as per instructions of

CHQ.
C 
CI I


 

handing over to equipment section (inventory management)

18

Inventory!Control
EI

 CS 

I
number called VOCAB No. It consists of Section (two letters and
one number), Sub Section (two digit number and a letter) and 5
digit number. There are 13 Sections SA1 to SA7 and SB1 to SB6.
Each Section is sub divided into various sub sections. Example of a
VOCAB No. is SB6"12D"94060
S
 II
I   

19

Issue!of!Spares
C    IR
CS I
 

stations. Whereas discrete components are issued on approval
from GM(CRSD), PCB s/LRU modules are issued on approval from
ED CNS(O&M)
I




 

dispatch section.

20

Insurance!and!Customs

ry~ *))*.w(/ ,./t)*.<( x rt/+-s <z(*)*.<( -) ruy t,'s(.+

involving imports.

    !" ##  $% &'(  )*) +* 

period of 3 years.

~t+} r)(D,+ y<),'+/ ,//t(D +- , t.D() y-~ .O ,u~, /<0(s(
are utilized for custom clearance.

zz +0( D-<ts(.+/ -A+*,.(D )-s /*.| /t<0 */ ,.v-,<( '*<|,.w z,/+
FAT document/ quality assurance certificate, certificate of origin,
insurance document, Bill of Lading/Airway Bill as applicable in the
contract are handed over to CHA for customs clearance purpose.
21

Warranty!Repair!of!Imported!spares

.*tz+}!modules!of!imported!Equipment!are!received!in!CRSD!from!

!No!is!obtained!from!the!Supplier!before!re"exporting!under!

field!stations!for!warranty!repair!and!return.
warranty!repair.

G!waiver!is!obtained!from!LC!issuing!bank!for!re"export!of!faulty!

("export!is!done!by!the!nominated!freight!forwarder!by!the!

modules!to!be!sent!abroad!for!warranty!repair.

equipment!supplier.

('*,)(D!items!are!custom!cleared!by!the!freight!forwarder!
nominated!by!the!supplier!of!main!equipment!as!consignment!is!
dispatched!by!the!supplier!on!DDP!basis.
22

00!Moving!Forward

SAP"ERP(System!Applications!and!Products!in!Data!processing!Enterprise!
Resource!Planning)

S1"ERP is a software product capable of integrating multiple

business applications, with each application representing a specific
business area. These applications update and process transactions
in real time mode. It has the ability to be configured to meet the
needs of the business. SAP are categorized into 3 core functional
areas:
Logistics: S
 S 2 2 22
Warehouse Management (WM) Production Planning (PP) General
Logistics (LO) Quality Management (QM),
Financial: FI 1II F   E
Controlling (EC) Investment Management (IM) Treasury (TR),
Human Resources:  1
 1 
Development (PD)

SAP!MM!OVERVIEW

34

Inventory!Management!through!SAP

56789!inventory!management!system!allows!to!manage!

ones!stocks!on
Qt*.+,+}!!basis!and!
-*zt(!basis!(which!is!a!pre"requisite!for!cost!accounting)

W:;<!every!goods!movements!the!following!values!are!

updated
T0(!stock!value!for!inventory!management
T0(!account!assignment!for!cost!accounting
T0(!corresponding!G/L!accounts!for!financial!accounting!via!
automatic!account!assignment

Purpose!&!Benefits!of!SAP"ERP!Inventory!
Management

T!increase!efficiency!&!effectiveness
T!reduce!delivery!time
!line!access!at!all!airports!which!are!connected!through!Intranet
!line!search!of!inventory
B!inventory!!management
B
!routine!&!exception!reporting!made!easy

I!verification!of!inventory!made!easy
TIR!of!stocks(stocks!in!transit)
27

Integration!in!Materials!Management!(MM)
1!a!component!of!Materials!Management,!Inventory!
Management!is!directly!linked!with!Material!Requirements!
Planning!,!Purchasing,!and!Invoice!Verification.
7H974@BC!Management!forms!the!basis!for!material!requirements!planning,!

which!takes!into!account!not!only!physical!stocks!but!also!planned!movements!
(requirements,!receipts).
=257464693!and!values!from!the!purchase!order!and!the!goods!receipt!document!
are!checked!to!ensure!conformity!with!those!in!the!invoice.

!Inventory!Management,!there!are!three!stock!types!that!
indicate!a!materials!!usability
U7B934B649"use!stock:!A!companys!own!stock!that!is!physically!located!in!the!

warehouse,!is!valuated,!and!is!not!subject!to!any!restrictions!on!usage.
=2564C!inspection!stock:!A!companys!own!stock!that!is!in!quality!inspection.!
Quality!inspection!stock!is!not!valuated(in!SPD)!and!!is!not!for!unrestricted!use.!
>@89!stock:!This!refers!to!the!quantity!which!is!pending!quality!decision!or!
excess!supplies.!It!is!not!for!unrestricted!use!in!Inventory!Management!and!it!is!
not!valuated.

Goods!Movements!
?
!movements!are!divided!into!goods!receipts,!goods!issues!
and!transfer!postings.
@
!a!goods!movement!is!entered,!stocks!are!updated!on!the!
basis!of!quantity!and!value.!At!the!same!time,!documents!are!
created!to!record!the!event.

Goods!Movement

~(,.,+,-.!of!Goods!Movement
!goods!movement!is!an!event!that!causes!a!change!in!stock
y+-<|!Transfer
=B5739B!of!material!from!one!plant!to!other!plant!or!from!one!storage!location!
to!other!storage!location!(Within!same!plant!or!belonging!to!two!different!
plants)!or!one!company!to!another!company!code

T)*./()!Posting
H57G93!in!stock!type!or!stock!category!of!a!material
@4!necessarily!occur!in!conjunction!with!physical!movement!i.g.!transfer!from!
quality!inspection!to!unrestricted.
JK5>?93!of!transfer!postings!are

L!Postings!from!Material!to!Material
M!from!quality!inspection!stock
L!of!consignment!material!into!company's!own!stock.

Goods!Movement

Discussions!!

Thanks!for!Kind!Attention
NOPUVX YZVU[V\ ]^_`abcdYe
anuragsharma@aai.aero

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