MICON Engineering

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD INTRODUCTION OF COMPANY The latest state of the art, new emerging, powerful and cost effective technologies have been the main reason to set up different kind of industries like, Engineers, Textile, Mining, Food processing, Cement, Constructions, Chemical, Drugs & Pharmaceutical, Petrochemical, Marine, Effluent treatment, left irrigation projects, Power plants, solvent plants, off-shore plants, Sugar, Steel, Automation & Automobile etc. In each and every of the above said industries one device plays a crucial role. This device is called as a VALVE a valve is a device that controls the flow rate of fluid, charges the direction of flow, allows a fluid to flow in only one direction, allows an user to take samples, increase the velocity of the fluid, controls the pressure drop in pipe and for many other application. Thus there would be a tremendous requirement for valve both in domestic and global market. Looking at the global market, it can be realized that 40% of the global valve manufacturers are based in India. Among this 40%, 15-20%is based at Hubli city, which is well connected to all metropolitan cities of India by Road, rail & airways. Hubli city has got a history of valve manufacturing industries. Valves & pumps manufacturing giants like MIRCOFINISH VALVES; BDK VALVES &AKAY INDUSTRIES have made their base at hubli since last 35 year. The main reason for selecting Hubli city for the above activity is, availability of raw materials, finished goods, bought out items, well equipped machine shops, testing facilities, and more over cheap labor with high quality consciousness. All these features have made Hubli an ideal city for valve manufacturing. Thus it is concluded that a valve & gearbox is considered as heart of any type of process industry, thereby making an industry to run smoothly without creating any type of accidents and hazardous environments. “Micon Engineers (Hubli) pvt.Ltd.” A sister concern of “Tec flow valves (India) pvt.Ltd.” Started its operations at Hubli with a set of committed engineers and workmen focusing on

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD supplying of “Aquaria series” valves such as, butterfly valves, dual plate check valves, air release valves, etc, to the Global valves exporter based at Mumbai. Innovation, Reinvention and Diversification are a continuous process at “MICON ENGINEERS” Be it a new product development or enhancement of older product, we at MICON ENGINEERS are constantly striving to give the customers maximum value for their investment, widest product range and most complete solute

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD COMPANY PROFILE Business Type

Exporter , Manufacturer

Import Percentage

25%

Primary Competitive Advantage

Impeccable quality, prompt delivery, competitive prices and customized designs, hands-on technical assistance to customers

Sales Volume

Rs. 5 core

No of Staff

200

Year of Establishment

2002

No of Production Lines

3

Export Markets

Asian continent

Investment Equipment

on

Manufacturing Rs. 50 lakh

OEM Service Provided

Yes

No of Engineers

18

Monthly Production Capacity

10,000 pieces

Product Range



Forged steel gate valves



Forged steel globe valves



Forged steel lift check valves



Cast steel gate valves



Cast steel globe valves



Cast steel swing check valves



Cast steel 2pc. ball valves



Cast steel 3Pc. ball valves



Bar stock ball valves



Custom designed ball valves



2pc. Investment cast ball valves



3pc. Investment cast ball valves

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD BRIEF COMPANY HISTORY:

1990 The formidable MR. M.A. Naikwadi & Sons lays the foundation of an industrial success and Perfect Engineering Works takes shape as a manufacturing sub-contractor for supplying of spare parts for valves and valve accessories. 1995 Started Manufacturing of needle valves in the in the name of M/s Tech Flow valves (India). Pvt. Ltd. And taking a positive step ahead for manufacturing and supplying forged steel gate, Globe and lift check valves to one of the leading industrial valves manufacturer at Mumbai. 2003 Establishment of one more Engineering firm Micon Engineers (Hubli) Pvt Ltd. At Hubli with a set of committed engineers and workmen focusing on supplying of Aquaria series valves such as butterfly valves, dual plate check valves air release valves etc., to one of the leading valve exporter located at Mumbai. Achieved a big challenge of manufacturing 1200MM offset disc butterfly valve with electrical actuation supplied to one of the leading steel plants in India through a leading valve exporter from India. 2006 The Micon Engineering (Hubli) Pvt Ltd had established the quality benchmark and achieved the prestigious ISO 9000-2000 certification through BUREU VERITAS-UKAS International certification authority. The Sleeping giant i.e., India awakes and Micon Engineering rises to the challenging of developing ball valves, cast steel gate, Global and swing check valves to the huge needs of process, Petro Chemical, Power and Oil & Gas Industries.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD 2009&2010 Owing to the fact of demanding need of customers in global level, Micon Engineering took a step ahead of the plant expansion of Hubli. Now we have been performing in 20000 square feet wide area, with the state of the art manufacturing facilities and enhancing the manufacturing capacity up to the 24 size with an EOT crane of 5 TON. We have also been re-certified with ISO 9001:2008 in this year. We have been regularly exporting to middle-east countries since 2008. This year became an unforgettable year for us, as we have achieved enlistment in and other prestigious OEM’s thereby enhancing our credentials and quality bench marks. EIL, JACOBE, BHEL, L&T, TATA PROJECTS,PDIL, NPCIL, DAE. 2012&2013 This year we have got the approval for API monogram license API 600 & API 6D. 2013&2014 This year we have a plan for (Unit II) expansion of about 40000 sq ft area for manufacturing higher size and rating valves.

VISION   

To achive100%customer satisfaction, by year 2012 with 15%annual improvement. To be increase sales by 25%each year by improving marketing process. To reduce recurring customer complaints to zero by strengthening corrective action



process. To reduce rejection level 0.3to 20%with annual improvement of annual over previous

 

year rejection level. To enhance productivity by every year. To achive improvement of supplies quality and deliver performance consistence with minimum out of staff situation.

MISSION

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD To, design, manufacture and market quality products that meet the customer requirements and achieve total customer satisfaction through continual improvements.

QUALITY POLICY We the management and all involved in the Micon Engineers (Hubli) Pvt. Ltd. Are committed to design, develop, manufacture, supply and service ‘Industrial Valves and Allied Products’ meant for global applications including oil and gas, by:   

Continually improving our systems Incorporating requirement for API monogram program. Fulfilling quality, quantity and deliver requirement so the customer. Keeping the price reasonable

INTRODUCTION OF THE MICON ENGINEERS

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Micon Engineering is one of the dynamic growth oriented engineering and ISO 9001:2008 Certified Company engaged in manufacturing and marketing industrial Valves. These valves are designed and manufactured to confirm strictly to ASTM, ANSI, API, BS, EN & IS other internationally recognized standards to meet the most stringent, requirements for industrial valves. Owing to growing need of industry, MICON ENGINEERS (HUBLI) PVT. LTD was established in 2004. The company’s headquarters and manufacturing facilities are located at Hubli, Karnataka State (INDIA). We are extremely glad to inform that, Micon has certified approvals and registration with TDC (Technical Development Committee for Indigenous Materials), ISO 9001-2008, EIL, IBR, DNV/TUV/EIL FIRE SAFE, NPCL, UHDE, TOYO INDIA, APGENCO, TATA PROJECT LTD, PDIL, BHEL, L&T, & ECONOSTO MIDEAST, DAE ETC. MICON’s strength is to produce quality products at affordable prices, prompt delivery and the unflinching commitment to excellence. Our product range includes FORGED STEEL GATE, GLOBE CHECK VALVES available in range from 15mm to 50mm and pressure class rating 800, 1500, & 2500 with IBR certification. With seven years of short time frame, Micon Engineers (Hubli) Private Limited has become one of the well-acclaimed Manufacturers, Exporters and Suppliers of precise industrial valves, based in hubli, Karnataka (India). We have been offering a large array of products that includes Steel Gate Valves, Cast Steel Gate Valves, Steel Globe Valves, Butterfly Valves, Dual Plate Check Valves and Air Release Valves. Using high quality raw materials such as carbon steel, stainless steel, alloy steel, & duplex, etc., we have been designing the best products. Our products are designed as per the API, EN, BS, ASTM, ANSI and varied other international standards to match up with the expectations of the clientele. Supported with more than 200 talented employees, we have been setting benchmarks of quality and excellence. Commitment towards work and providing client satisfaction has always been our priority. The latest CNC & Conventional machinery is used in the production to enhance production capacity up to 16000 Valves per Month. Moreover, our fully fledged R&D and

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD quality testing facilities make us the trusted player in this domain. We are an ISO 9001: 2008 certified firm adhering to the strict quality policies. The advanced CAD and CAM amenities are installed in our unit to design custom built products as per the needs of the clients.

ORGANISATION CHART M.D

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

Purchase manager

Technical

Design Asst

Design Asst

Planning work manager

Account ASST

Productio n HOD Supervis or

G M Quality H O D

Design manager

Store keeper

Finance director

Maintenance supervisor

IMI Quality inspection

Final Quality inspection

Accounting G M

In process

Sales coordinator

Account ASST Marketing executive

Workers

DEPARTMENTS MARKETING

Marketing G M

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

SALES CO-ORDINATION

DESIGN DEVELOPMENT

PURCHASE DEVELOPMENT STORES (INWARD MATERIAL INSPECTION) PRODUCTION PLANNING AND CONTROL QUALITY CONTROL MACHINE SHOP ASSEMBLY & TESTING INSPECTION DESPATCH

MARKETING & SALES DEPARTMENT: This department is a helping hand to market all the products of MICON group of company as well as its sister concerns, it is playing a vital role in realm of marketing the products in a delighting manner, it provides pleasant services for their overall satisfaction.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD MARKETING DEPARTMENT CHART:

HEAD MARKETING

SALES CO-ORDINATION

ASSISTANT MARKETING

MARKETING OBJECTIVE

  

To design develop the quality products which are reliable and economically. To continuous improvement of product’s quality. Cleared products are sent to dispatch section.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

MARKETING STRATEGY:     

Direct marketing Magazines System selling Relationship marketing Website

FINANCE DEPARTMENT Company is a needed reputed manufacturing industry in India. It is largely responsible for economic development of the country. It is actively practicing country's economic goal, and it has given its contribution in solving many of the prevailing problems.

FINANCE DEPARTMENT

G M FINANCE

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

OFFICE ACCOUNTANT

ASSISTANT A/C

ASSISTANT A/C

OBJECTIVES: 1. To provide accurate & complete systematic information of financial Activities 2.

To maintain all the books of accounts & other financial documents.

3. To prepare periodic financial statement of the Company like profit and loss account & balance sheet etc.

FUNCTIONS: 1.

To Preparation of daily Cash books, General ledger& Bank books.

2.

To prepare all Receipts & Payments accounts.

3.

Maintenance of all Sales Ledgers & Purchase Ledgers.

1.

Preparation of Sales Tax Returns & Excise Duty Returns & Income Tax

Returns

QUALITY ASSURANCE DEPARMENT The main function of the QA department is to check whether the raw materials purchased and goods manufactured are better quality or not.

IT OPERATES WHEN THE MATERIALS

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD  In process.  IMI (invert material inspection).  FI & T (final inspection & testing).  Inspection of production planning.

QUALITY ASSURANCE DEPARMENT CHART

GM-QUALITY ASSURANCE

HOD-QUALITY ASSURANCE

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

ENGIENEER I.M.I

INSPECTOR QA

INSPECTOR

INSPECTOR (F.I &T)

INSPECTOR QA

DESIGN DEPARTMENT It is a core section of any manufacturing company. It is section where the design and development of product is carried out. The MICON has a full pledged design and development department.

DESIGN DEPARTMENT:

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD DIRECTOR

S.R ENGINEER

ENGINEER DESIGN

ENGINEER DESIGN

DRAFT MAN

OBJECTIVES  To design and develop the quality products which are reliable, economical predictable and meets the customer requirement.  To continuously improve the quality of all products structure.  Requisition to store for assembly material assembling of material is done at this stage.

 PURCHASE DEPARTMENT It is also one of the important departments in the Company. To control the materials the Company using First in First out Method. & ERP techniques and suppliers are-paid 30 days, days, and 90 days depend upon the nature of materials & they will be paid on installment bases also.

PURCHASE DEPARTMENT CHART

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

PURCHASE MANAGER

PURCHASE OFFICER

PURCHASE OFFICER

PURCHASE OFFICER

PURCHASE ASSITANT

PURCHASE ASSITANT

PRODUCTION DEPARTMENT:

WORKS MANAGER

PLANNING DEPARTMENT

MACHINE

ASSEMBLY SHOP

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

ASSEMBLY PLANNING

MACHINE

R/M

SUPERVISOR

PLANNING

PLANNING

SUPERVISOR

SUPERVISOR

SUPERVISOR

PLANNING

RESEARCH AND DEVELOPMENT

Machinery/Equipment used in R&D Department

Make & Type of Machinery used in our R&D Department SL. No.

Type of Machinery

Capacity/ Configuration

Make

1

17" Monitor Personal

2.66 G Hz. Hard Disc. Pentium-

HCL

Qty. Remarks 3

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Computer

4 CPU

2

17" LCD Monitor Personal Computer

2.66 G Hz. Hard Disc. Pentium4 CPU

HCL

2

3

Print & Copy Type Printer

15, 000 Prints/ Sarridge

TOSHIBA

1

4

Inkjet Printer

30 PPM

HP

1

5

LaserJet Printer

Standard

HP

1

WORKING METHODS The company's mission is to design, manufacture and market quality products that meet the customer requirements and achieve total customer satisfaction through continual improvements. To achieve this, the company has established a well defined quality system and has employed a team of committed engineers, who have been performing to their level of excellence keeping themselves upgraded with the latest innovations, Engineers excellence, precision manufacturing, assuring 100% quality and hands-on technical assistance to the customer. MICON's strength is quality products at affordable prices, prompt delivery and the unflinching commitment to excel. The Group's products have been enjoying a sustained presence in the national markets for over two decades in chemical & and process industries. Innovation, Reinvention and Diversification are a continuous process at “MICON ENGINNERS”

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

PRODUCT PROFILE

NATURE OF PRODUCT UNITS i.

Types of valves a. Gate globe check valve b. Ball valves c. Butterfly valves

THESE VALVES ARE CLASSIFIED AS FOLLOWS: A)

GATE GLOBE CHECK VALVES

Forged steel I. Gate globe check valves

Cost steel I. Gate valves

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD II. Gate lift valve check III. Globe valve check

B)

II. Global valves III. swing check valves

BALL VALVES

Forged steel

Cost steel

1. Forgedsteel ball valves

1. Cast steel ball valves

2. Forged steel glob valves

2. Cast steel glob valves

C)

Flanged type valves

BUTTERFLY VALVES

Wafer type valves

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

PRODUCT PROFILE

Butterfly Valves, Ball Valves, Gate Valves, Globe Valves, Check Valves, Forged Steel Valves

Contact Details Address

:

Plot No. : C-255, M. T. Sagar Industrial Estate, Gokul Road, Hubli, Karnataka - 580030

Telephone No. :

91 - 836 - 2332900

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PORT CONDUIT GATE VALVE Port Conduit Gate Valve is specifically designed and manufactured for the transportation

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Supplier : Fluid line Valves Co. Pvt. Ltd.

UNI-DIRECTIONAL TWO-LUG TYPE KNIFE GATE VALVE Uni-Directional Two-Lug Type Knife Gate Valve is available with two lug single piece ca... Supplier : Vaas International

HOPPER ISOLATED UNI-DIRECTIONAL KNIFE GATE VALVE Hopper Isolated Uni-Directional Knife Gate Valve is ideal for use as isolation valve. Supplier: Vaas International

SQUARE / RECTANGULAR TYPE UNI-DIRECTIONAL KNIFE GATE VALVE Square / Rectangular Type Uni-Directional Knife Gate Valve is ideal for silo / hopper i... Supplier : Vaas International

PRODUCT PROFILE BALL VALVES

Ball valves come in two basic designs: Floating Ball and Trunnion Mounted, with three basic construction variants: Three piece, End Entry and Top Entry with options of either full or reduced bore designs. Principally designed as an on/off isolation valve for a very wide range of temperatures and pressures they have inherent quick opening flow characteristics. Specially

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD designed ball valves however, may offer good flow control capabilities at High Pressure. All ball valves offer compact actuation due to their rotary quarter-turn operation. Fire safe versions are available for use in the oil and petrochemical industries

BUTTERFLY VALVES

One of the most compact & light-weight valves available are used for a wide range of applications, the choice of seat, lining and disc options has increased significantly over recent years making the valve a popular choice. A wide range of materials, sizes and pressure ratings gives reliable positive isolation and moderate flow control capability over a wide range of applications throughout the industry. The metal seated valve is well established in petrochemical and oil industries being lightweight, fire safe and suitable for actuation. Butterfly valves offer a number of advantages when used for the proper application. They may be used in a wide variety of chemical services, they are available with small dimensions allowing for use in areas where space is limited, and they allow a high coefficient of flow

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

CHECK VALVES

A check valve is a mechanical device, a valve, that normally allows a fluid to flow through it in only one direction. Check valves are two-port valves, meaning they have two openings in the body, one for fluid to enter and the other for fluid to leave. There are various types of check valves used in a wide variety of applications. Although they are available in a wide range of sizes and costs, many check valves are very small, simple, and / or cheap. Check valves work automatically and most are not controlled by a person or any external control; accordingly, most do not have any valve handle or stem. The bodies (external shells) of most check valves are made of metal

DIAPHRAGM VALVES

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

Diaphragm Valves are mainly used in water treatment plants, fertilizer & petrochemicals industries, chemical industries, refineries, thermal power stations, and other process industries. Equally suited to on and off, or flow control applications, a diaphragm valve will handle positive pressures or high vacuum. Due to the wide range of material options it will handle almost all applications within its temperature and pressure ranges (175°C max. and 16 bar max.) and as such is used in almost every industry on both corrosive and abrasive applications. All working parts are isolated from the line media which enhances its reliability. Maintenance is a simple task with the body remaining in the pipe, the valve thus being field serviceable. It has linear flow characteristics which makes it well suited to throttling or modulating duties. On/off and control automation is possible with the use of modern compact actuators and accessories

GATE VALVES

This is the most common and traditional type of valve. The valves are large to accommodate the yoke and stem mechanism, but fully open the full bore design provides an uninterrupted flow path. Generally either used fully open or closed, for on/off isolation, and not

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD used for modulating flow control duties. Variants include Solid and Flexible Wedge Gates, Double Disc Gates, Through Conduit Valves, Parallel Slide Valves and Knife Gate Valves.

GLOBE VALVES

Globe valves are designed for flow control or on/off isolation of fluids. They are manufactured in straight patterns, angle patterns, oblique patterns and needle designs with a large variety of internal seat construction variants to handle High Pressure flow control duties. A wide choice of metal body options and trims means Globe valves are widely used throughout industry.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

OUR PRODUCTS Over the last few years we have been introducing new products on a regular basis, such as air release valves, cast steel gate valves, globe valves, swing check valves, dual plate check valves to name a few. We are on the constant look for innovative products that complement our world class product range. With our well-established network of sales offices and leading industry clientele, we have been able to successfully branch out and gain product acceptance for various ancillary products. Our wide and comprehensive range of products includes:

1.

Forged steel globe valves

2.

Forged steel lift check valves

3.

Cast steel gate valves

4.

Cast steel globe valves

5.

Cast steel swing check valves

6.

Cast steel 2pc. ball valves

7.

Cast steel 3pc. valves

8.

Custom designed ball valves

9.

2pc. Investment cast ball valves

10.

3pc. Investment cast ball valves

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

MAIN COMPETITORS OF MICON ENGINEERS        

AkayIndustries. Audo Industries Cresent Industries. KSB Industries Weir BDK Niton Micro finish Procep.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD

INTRODUCTION TO THE INVENTORY MANAGEMENT “Adequate inventories facilitates production activities and help to customers satisfaction by providing good service.” The basic financial aim of an enterprise is maximization of its value. At the same time, a large both theoretical and practical meaning has the research for determinants increasing the firm value. Most financial literature contains information about numerous factors influencing the value. Among those factors is the net working capital and elements creating it, such as the level of cash tied in accounts receivable, inventories and operational cash balances. A large majority of classic financial models proposals, relating to the optimum current assets management, were constructed with net profit maximization in view. In order to make these models more suitable for firms, which want to maximize their value, some of them must be reconstructed. In the sphere of inventory management, the estimation of the influence of changes in a firm’s decisions is a compromise between limiting risk by having greater inventory and limiting the costs of inventory. It is the essential problem of the corporate financial management. The basic financial inventory management aim is holding the inventory to a minimally acceptable level in relation to its costs. Holding inventory means using capital to finance inventory and links with inventory storage, insurance, transport, obsolescence, wasting and spoilage costs. However, maintaining a low inventory level can, in turn, lead to other problems with regard to meeting supply demands. The inventory management policy decisions, create the new inventory level in a firm. It has the influence on the firm value. It is the result of opportunity costs of money tied in with inventory and generally of costs of inventory managing. Both the first and the second involve modification of future free cash flows, and in consequence the firm value changes.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Inventory changes (resulting from changes in inventory management policy of the firm) affect the net working capital level and the level of operating costs of inventory management in a firm as well. These operating costs are result of storage, insurance, transport, obsolescence, wasting and spoilage of inventory. Maximization of the owners’ wealth is the basic financial goal in enterprise management. Inventory management techniques must contribute to this goal. The modifications to both the value-based EOQ model and value-based POQ model may be seen in this article. Inventory management decisions are complex. Excess cash tied up in inventory burdens the enterprise with high costs of inventory service and opportunity costs. By contrast, higher inventory stock helps increase income from sales because customers have greater flexibility in making purchasing decisions and the firm decrease risk of unplanned break of production. Although problems connected with optimal economic order quantity and production order quantity remain, we conclude that value-based modifications implied by these two models will help managers make better value-creating decisions in inventory management.

INTRODUCTION OF INVENTORY Inventories constitute the most significant part of current assets of a large majority of companies in India. On an average, inventories are approximately 60% of current assets in public limited companies in India. Because of the large size of inventories maintained by firms, a considerable amount of feuds is required to be committed to them. It is therefore, absolutely imperative to manage inventories efficiently and efficiently in order to avoid unnecessary investment. A firm neglecting the management of inventories will be jeopardizing its long run profitability and may fail ultimately. It is possible for fore a company to reduce its levels of inventories to a considerable degree e.g. 10 to 20 percent, without any adverse effect on production and sales, by using simple inventory planning and control techniques. The reduction in excessive inventory carries a favorable impact on a company’s profitability MEANING OF INVENTORY

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Inventory is the physical stoke of goods maintained in an organization for its smooth sunning. In accounting language it may mean stock of finished goods only. In a manufacturing concern, it may include raw materials, work-in-progress and stores etc. in the form of materials or supplies to be consumed in the production process or in the rendering of services. In brief, Inventory is unconsumed or unsold goods purchased or manufactured. NATURE OF INVENTORIES Inventories are stock of the product a company is manufacturing for sale and components that make up the product. The various forms in which inventory exist in a manufacturing company are raw materials, work in progress and finished goods. RAW MATERIALS Raw materials are those inputs that are converted into finished product though the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions. WORK IN PROGRESS These inventories are semi manufactured products. They represent products that need more work before they become finished products for sales. PACKAGING MATERIAL Packaging material includes those items which are used for packaging of perfumery product i.e. cap of the bottle, pump, collar, liver, box etc. FINISHED GOODS Finished goods inventories are those completely manufactured products which are ready for sale. Stock of raw materials and work in progress facilitate production. While stock of finished goods is required for smooth marketing operation. Thus, inventories serve as a link between the production and consumption of goods.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD The levels of four kinds of inventories for a firm depend on the nature of its business. A manufacturing firm will have substantially high levels of all three kinds of inventories, while a retail or wholesale firm will have a very high and no raw material and work in progress inventories. Within manufacturing firms, there will be differences. Large heavy engineering companies produce long production cycle products, therefore they carry large inventories. On the other hand, inventories of a consumer product company will not be large, because of short production cycle and fast turn over.

INVENTORY MANAGEMENT As the cost of logistics increases the manufacturers are looking to inventory management as a way to control costs. Inventory is a term used to describe unsold goods held for sale or raw materials awaiting manufacture. These items may be on the shelves of a store, in the backroom or in a warehouse mile away from the point of sale. In the case of manufacturing, they are typically kept at the factory. Any goods needed to keep things running beyond the next few hours are considered inventory. "Inventory" to many small business owners is one of the more visible and tangible aspects of doing business. Raw materials, goods in process and finished goods all represent various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a retail store contribute to profits only when their sale puts money into the cash register. In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profits. In fact, many small businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled, they are unreliable, inefficient and costly. Inventory management simply means the methods you use to organize, store and replace inventory, to keep an adequate supply of goods while minimizing costs. Each location where goods are kept will require differen t methods of inventory management. Keeping an inventory, or stock of goods, is a necessity in retail. Customers often prefer to physically touch what they

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD are considering purchasing, so you must have items on hand. In addition, most customers prefer to have it now, rather than wait for something to be ordered from a distributor. Every minute that is spent down because the supply of raw materials was interrupted costs the company unplanned expenses

DEFINITIONS OF INVENTORY MANAGEMENT 1.

Policies, procedure and techniques employed in maintaining the optimum number or

amount of each inventory item. 2.

Systems and processes that identify inventory requirements, set targets, provide

replenishment techniques and report actual and projected inventory status. 3.

Handles all functions related to the tracking and management of material. This would

include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances. Also may include ABC analysis, lot tracking, cycle counting support etc. DEFINITIONS OF INVENTORY 1. Inventory: - goods that businesses intend to sell to their customers or raw materials or in process items that will be converted into salable goods. 2. “Inventory is the stock of idle resources which has economic value and is maintained to fulfill the present and the future needs of an organization”. 3. “In manufacturing organization: Inventory can be as raw materials, spare parts, components and finished goods etc… 4. In Service Organization: Inventory of any banks can be broachers, forms, pamphlets, and also can be currency notes and coins. Hospitals can have inventory as syringes, glucose bottles, medicines etc.

IMPORTANCE OF INVENTORY

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.

The word 'inventory' can refer to both the total amount of goods and the act of counting them. Many companies take an inventory of their supplies on a regular basis in order to avoid running out of popular items. Others take an inventory to insure the number of items ordered matches the actual number of items counted physically. Shortages or overages after an inventory can indicate a problem with theft or inaccurate accounting practices. Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. However, possessing too little inventory isn't good either, because the business runs the risk of losing out on potential sales and potential market share as well. OBJECTIVES OF INVENTORY MANAGEMENT The basic managerial objectives of inventory control are two-fold; first, the avoidance over-investment or under-investment in inventories; and second, to provide the right quantity of standard raw material to the production department at the right time. In brief, the objectives of inventory control may be summarized as follows: A.

OPERATING OBJECTIVES:

(1) Ensuring Availability of Materials: There should be a continuous availability of all types of raw materials in the factory so that the production may not be help up wants of any material. A minimum quantity of each material should be held in store to permit production to move on schedule. (2) Avoidance of Abnormal Wastage: There should be minimum possible wastage of materials while these are being stored in the godowns or used in the factory by the workers. Wastage

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD should be allowed up to a certain level known as normal wastage. To avoid any abnormal wastage, strict control over the inventory should be exercised. Leakage, theft, embezzlements of raw material and spoilage of material due to rust, bust should be avoided. (3) Promotion of Manufacturing Efficiency: If the right type of raw material is available to the manufacturing departments at the right time, their manufacturing efficiency is also increased. Their motivation level rises and morale is improved. (4) Avoidance of Out of Stock Danger: Information about availability of materials should be made continuously available to the management so that they can do planning for procurement of raw material. It maintains the inventories at the optimum level keeping in view the operational requirements. It also avoids the out of stock danger. (5) Better Service to Customers: Sufficient stock of finished goods must be maintained to match reasonable demand of the customers for prompt execution of their orders. (6) Highlighting slow moving and obsolete items of materials. (7) Designing poorer organization for inventory management: Clear cut accountability should be fixed at various levels of organization.

B. FINANCIAL OBJECTIVES: (1) Economy in purchasing: A proper inventory control brings certain advantages and economies in purchasing also. Every attempt has to make to effect economy in purchasing through quantity and taking advantage to favorable markets. (2) Reasonable Price: While purchasing materials, it is to be seen that right quality of material is purchased at reasonably low price. Quality is not to be sacrificed at the cost of lower price. The material purchased should be of the quality alone which is needed. (3)Optimum Investing and Efficient Use of capital: The basic aim of inventory control from the financial point of view is the optimum level of investment in inventories. There should be no

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD excessive investment in stock, etc. Investment in inventories must not tie up funds that could be used in other activities. The determination of maximum and minimum level of stock attempt in this direction

IMPORTANCE OF INVENTORY MANAGEMENT

1. COUNTING CURRENT STOCK All businesses must know what they have on hand and evaluate stock levels with respect to current and forecasted demands. You must know what you have in stock to ensure you can meet the demands of customers and production and to be sure you are ordering enough stock in the future. Counting is also important because it is the only way you will know if there is a problem with theft occurring at some point in the supply chain. When you become aware of such problems you can take steps to eliminate them. 2. CONTROLLING SUPPLY AND DEMAND Whenever possible, obtain a commitment from a customer for a purchase. In this way, you ensure that the items you order will not take space in your inventory for long. When this is not possible, you may be able to share responsibility for the cost of carrying goods with the salesperson, to ensure that an order placed actually results in a sale. You can also keep a list of goods that can easily be sold to another party, should a customer cancel. Such goods can be ordered without prior approval. Approval procedures should be arranged around several factors. You should set minimum and maximum quantities which your buyers can order without prior approval. This ensures that you are maximizing any volume discounts available through your vendors and preventing overordering of stock. It is also important to require pre-approval on goods with a high carrying cost.

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD 3 . KEEPING ACCURATE RECORDS Any time items arrive at or leave a warehouse, accurate paperwork should be kept, itemizing the goods. When inventory arrives, this is when you will find breakage or loss on the goods you ordered. Inventory leaving your warehouse must be counted to prevent loss between the warehouse and the point of sale. Even samples should be recorded, making the salesperson responsible for the goods until they are returned to the storage facility. Records should be processed quickly, at least in the same day that the withdrawal of stock occurred. 4 . MANAGING EMPLOYEES Buyers are the employees who make stock purchases for your company. Reward systems should be set in place that encourage high levels of customer service and return on investment for the product lines the buyer manages. Warehouse employees should be educated on the costs of improper inventory management. Be sure they understand that the lower your profit margin, the more sales must be generated to make up for the lost goods. Incentive programs can help employees keep this in perspective. When they see a difference in their paychecks from poor inventory management, they are more likely to take precautions to prevent shrinkage. Each stock item in your warehouse or back room should have its own procedures for replenishing the supply. Find the best suppliers and storage location for each and record this information in official procedures that can easily be accessed by your employees. Inventory management should be a part of your overall strategic business plan. As the business climate evolves towards a green economy, businesses are looking for ways to leverage this trend as part of the “big picture”. This can mean re-evaluating your supply chain and choosing products that are environmentally sound. It can also mean putting in place recycling procedures for packaging or other materials. In this way, inventory management is more than a means to control costs; it becomes a way to promote your business. SUCCESSFUL INVENTORY MANAGEMENT

A study on the inventory management with special reference to MICON ENGINEERS (HUBLI) PVT LTD Successful inventory management involves balancing the costs of inventory with the benefits of inventory. Many small business owners fail to appreciate fully the true costs of carrying inventory, which include not only direct costs of storage, insurance and taxes, but also the cost of money tied up in inventory. This fine line between keeping too much inventory and not enough is not the manager's only concern. Others include:  Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too thin;  Increasing inventory turnover -- but not sacrificing the service level;  Keeping stock low -- but not sacrificing service or performance.  Obtaining lower prices by making volume purchases -- but not ending up with slow moving inventory; and  Having an adequate inventory on hand -- but not getting caught with obsolete items.  The degree of success in addressing these concerns is easier to gauge for some than for others. For example, computing A BOUT INVENTORY CONTROL