Inventory

Group - 7
Akshat Sharma
Anurag Singh Tilara
Ramit Gahlaut
Abhijit Nanda

Inventory to Sales ratio

Declined from 21.77% to 16.31% in 199899

Most of the companies saw decrease in
Inventory to sales ratio because of majorly
two reasons:-

Inventory Management
ZIM - Zero inventoryTechniques
management
MRP - material requirement planninig
DRP - distribution requirement planning
JIT - Just in time
Leading to
fewer supplier/vendors
smaller lot sizes
shorter replenishment cycle times
reduced setup time by avoiding redundancies
total quality management
customer satisfaction

JIT
Is a process in which inventory holding is minimised to
reduce the cost and inventory is ordered just before it is
needed.
Decrease wastes
Invented by toyota in 1960-70
Kanban is one of the ways to achieve JIT, it was also
invented by toyota
Kanban cards return to their manufacturing places as
soon as the product goes out of distribution centre and
as the stack goes up, new inventory is ordered

Challenges faced by MUL

JIT needs high level of automation , resistance from unions
Quality check techniques were low on floor
Non cooperation by production workers
kanban cards led to disruption of production
Other environmental constraints

lack of efficient trabsport services

unreliability of suppliers
infrastructure
Chalta hai attitude in indian context
severe bottlenecks in transportation and communication networks

JIT purchasing Framework

finally JIT in MUL has to abandoned

New 3 step framework was introduced to gradually implement JIT
Step 1:
changing attitudes towards purchasing and achieving improvements which would
set the pace and
prepare change agents for more drastic changes

Step 2:
initiating a pilot programme with few suppliers and parts
identify the problems and eliminate them

Step 3:
modifying the organisational setup to create distinct departments for
handling logistics
materials handling
control and supplier upgradation

Step 1 - (1-2 years)

Obtain top managment support
gradually and consciously move towards

Lower inventory levels

Reduction of wastage
upgrade in house quality
upgrade supplier quality

Step - 2 (6-8 months)

Obtain union leaders' support
initiate a pilot JIT programme
identify a few components and 5-10 transporters and suppliers
provide training on JIT systems to inhouse suppliers and
transporters
discuss and finalize modalities of system with supplier and
transporter
implement pilot programme and observe results and problems
modify system to eliminate problems

Step - 3 (6-12 months)

Training all employees regarding JIT purchase systems
Restructure organisation
Finalize logistics
finalize internal JIT system
Upgrade supplier quality
Network with suppliers and transporters
implement full-fledged JIT purchasing system

Prerequisites of JIT system

Purchasing
Transportation
Warehousing
inventory control
production
quality control
human resources and general management

Thank you