SUMMER PROJECT REPORT

ON

“Inventory Optimization by bifurcating the unique parts & creating the Nomenclature for part creation process & Defining Min-Max category items at TCL”

At

TATA CUMMINS LTDJAMSHEDPUR, INDIA

PREPARED BY

SHUBHAJIT MITRA

Enrolment No – PGDM/2014-16/05/027

Batch – 2014-2016

Under the Guidance of

External Guide Internal Guide

Mrs. Sushree Mishra Mr. Partha Sarthi Pal

Indirect purchase manager Professor IEM College

As a Partial fulfilment of PGDM Degree.

INSTITUTE OF ENGINEERING AND MANAGEMENT

SALT LAKE ELECTRONICS COMPLEX, SEC V, KOLKATA

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Acknowledgement The Project undertaken by me during the period of this summer training was related to the “Inventory optimization by bifurcating the unique parts & creating the nomenclature for part creation process & Defining min-max category items at TCL” and it warranted a lucid data analysis of the same for successful accomplishment. I had been helped, in this context to a great extent by my project guide Mrs. Sushree Mishra, Indirect Purchase Manager. I am grateful to her for guiding me to successfully complete the project.

I wish to offer my gratitude to the all managers of the Indirect Purchase department whose valuable guidance and attention to the project eased the way for its completion. Last but not the least I would like to express my sincere gratitude to Mr. Samir Robert Bara (DGM-HR), who gave me an opportunity to come face to face with real life working challenges and helped me to develop a deep insight of the current industry practices.

I am overwhelmed with the support I have received here at INDIRECT PURCHASE. All of them made my stay at TCL an enriching learning experience.

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DECLARATION

I do hereby declare that the project report titled “Inventory optimization by bifurcating the unique parts & creating the nomenclature for part creation process & Defining min-max category items at TCL” Submitted by me, in partial fulfilment of the Post Graduate Diploma in Management from Institute of Engineering & Management, Kolkata is exclusively prepared and conceptualized by me and is not been submitted to any other institution or published anywhere before.

Signature NAME: SHUBHAJIT MITRA Date: REG.NO:PGDM/2014/01/027

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CERTIFICATETo whom it may concern

This is to certify that the project entitled ‘Inventory optimization by

bifurcating the unique parts & creating the nomenclature for part

creation process & Defining min-max category items at TCL’

submitted by SHUBHAJIT MITRA of POST GRADUATE DIPLOMA

IN MANAGEMENT in fulfilment of the requirements for summer

Internship for INSTITUTE OF ENGINEERING AND

MANAGEMENT,KOLKATA during the academic year 2014-2016 in

Project under embodies the work done by them under my supervision

from 08-06-15 To 07-08-15.

-------------------------- ----------------------------

Mrs. Sushree Mishra Mr. Samir Robert Bara

Indirect purchase manager DGM HR Tata Cummins Ltd

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PROJECT

Studying the parts description to identify and removing duplicity of the parts in Tata Cummins Ltd.-1, 2 & 3.

Segregating all the parts with more than one part numbers.

Removing the duplicate part numbers from the system.

Defining the nomenclature of the part description and educate the Buyers for the creation of part.

Designing the nomenclature of the part description to prevent duplicity parts.

Defining the Min – Max Qty for the C-class category items.

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TABLE OF CONTENTS

CHAPTER DETAILS PAGES

1. INTRODUCTION TO TCL 7-132. SAFETY MEASURES FOLLOWED

IN TCL14

3. COMPONENTS BEING PRODUCED IN TCL

15-16

4. INTRODUCTION OF INDIRECT PURCHASE IN TCL

17-19

4.1. BRIEF DESCRIPTION OF THE PROJECT

20

4.2. PART CREATION PROCESS IN TCL

21-23

4.3. RESEARCH & METHODOLOGY 24-37

4.4. RECOMMENDATION BY CREATING NOMENCLATURE OF PART DESCRIPTION.

38-44

4.5. MIN-MAX QUANTITY FOR C-CLASS CATEGORY ITEMS

45-50

5 CONCLUSION 51

6 REFERENCES 527 ANNEXURE 54

1. INTRODUCTION TO TATA CUMMINS LTD :-

6

Cummins Engine Company Inc. was founded in Columbus, Indiana in 1919 when successful banker/investor W G Irwin supplied the capital for a local self-taught mechanic and inventor Clessie Cummins to begin manufacturing diesel engines. Working out of an old cereal mill in Columbus, the first engine made by Cummins was a Dutch designed, six horsepower, farm type diesel. By 1925, the company had begun producing its own design with enough success that operations were relocated to a new larger site where the Columbus Engine Plant is now located. It was here that Cummins created the breakthroughs that solved critical problems of injection timing and introduced a successful marine engine, originally installed in shrimp boats. The engine proved so economical that its popularity soon spread to other applications, including generator sets, drills, power shovels and air compressors.

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Fig-Assembly line in TCL

Cummins has been associated with the Indian subcontinent for five decades. The stage was set way back in 1962, when a partnership between Kirloskar and Cummins crystallized into a 100-acre manufacturing campus in Pune. Within a span of three years from commencing operations, the business venture started to generate profits. There on, the partnership continued to flourish, up till 1997, when the Kirloskar’s sold their ownership; resulting in Cummins Inc. increasing its stake to 51% and the rest being traded on the Bombay Stock Exchange. This led to the formation of Cummins India Limited, a consolidated subsidiary of Cummins Inc.

Tata Cummins is a joint venture between these two world leaders. The agreement was signed in July 1993 with plant construction starting in the industrial township of Jharkhand-Jamshedpur in April 1994 and commercial production commenced on January 1 1996. The entire organization has been set up from scratch at a Greenfield site. The Rs 300 crore project widely acknowledged to be the fastest implementation of its size and nature (within budget) in the industry and within Cummins family worldwide. The Company has installed capacity to manufacture 1,20,000 Engines.

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Today Cummins in India has expanded its businesses across markets and geographies, spanning 200 locations in the country. The Group has also commenced production at its 300-acre Megasite project in Phaltan, Maharashtra that will allow all future projects to operate from a single location.

Employing close to 14,000 individuals, the Group has reported combined sales of approximately Rs.10,500 crores in 2011.

Tata Cummins Limited is a 50:50 joint venture between Tata Motors Limited, India's largest automobile manufacturer and Cummins Inc., USA, world leaders in design and manufacture of diesel engines. Manufacturing plants have been set up each at Jamshedpur and Phaltan in Maharashtra for manufacturing diesel engines to power commercial vehicles of Tata Motors Limited. The plant at Jamshedpur manufactures 1,20,000 engines per annum. The second plant that was commissioned in January 2011 at the Cummins Megasite at Phaltan has a capacity of 60,000 engines per annum with plans to increase to1,20,000 in future.

Our other partner Tata Motors is the largest manufacturer of commercial vehicles in India. Tata Motors was established in Jamshedpur in 1945, with the agenda of manufacturing steam locomotives. In 1954, the company expanded into automobile manufacturing, through collaboration with Daimler-Benz of Germany. By the end of the collaboration in 1969, Tata Motors had fully developed the capacity of designing and manufacturing Medium Commercial Vehicles– taking the first step towards indigenization. Tata Motors manufactures an entire range of Heavy, Medium and Light Commercial Vehicles, Multi-Utility Vehicles and Passenger cars.

The relationship that Tata Cummins has with Tata Motors needs a mention. Tata Motors is parent to Tata Cummins; it is a supplier,

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a customer and also its competitor. This unique relationship is studied at Harvard University. With the advent of Euro-III norms in some city of India; Tata Cummins has now started producing Euro-III engines. The engines produced by other automobile companies are semi electronic but Cummins came up with fully mechanical version of the engine. The fully mechanical version of engine is now the USP of Tata Cummins.

Tata Cummins is ISO 9001, ISO 14001 and TS 16949 certified.

Cummins in India is a Group of complementary businesses that design, manufacture, distribute and service engines, generators and related technologies. Its technology and pioneering initiatives bring innovative solutions and dependable services at the best possible value to users across the country. With values of integrity, innovation, delivering superior results, corporate responsibility, diversity and global involvement ingrained across the organization, the Vision and Mission are the solid foundation that define who we are and what we do.

PRODUCT OFFERING:-

The business’s expertise in offering end to end solutions to the truck and bus market segments, lies in its ability to knit together diesel and gas engines with related technologies including filtration, exhaust, turbo, fuel, lube oil and coolant systems.

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For its on highway applications, the Automotive Business markets the B series, ISLe and ISBe engines under the diesel range, and C series, Stoic and L series engines as part of its lean burn natural Gas portfolio. B series : The most promising model from the Company’s product portfolio , the B 5.9 mechanical engine is designed for providing lower acquisition and operating cost solutions to customers for meeting BSIII and BSIV emission standards. Available in a range of 130 to 180 HP, the engines power rigid trucks , specialty vehicles and buses.

ISLe : A premium electronic product range from 280 to 375 HP, is equipped with waste gate turbocharger. Also available are highly flexible power choices with less weight, compact size and fuel efficient 8.9 litre configuration fitted with high pressure common rail system. Global design engines are available that meet Euro 3, Euro 4 and Euro 5 emissions.

C series : Available in 250 and 280 HP, the series with low ultra emission is an ideal choice for the heavy duty segment. Plus technology in C gas and Waste gate turbocharged engine capable of operating on CNG, LNG, renewable natural gas or landfill gas, finds suitable application in the bus segment.

B Gas : The six cylinder, lean-burn-spark-ignited natural gas engine provides excellent torque, high fuel efficiency and reliability. Available from 195 to 230 HP range, the engines come with added features like ultra low emission and plus technology.

LOCATION:-

The Company is located at Jamshedpur & Presently the Green Field project has started up at Pune (Phaltan, Satara District).

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MANUFACTURING SYSTEM:-

The world class manufacturing systems of Tata Cummins are benchmarked against the best internationally and comprise facilities for machining 5 major engine components and facilities for Assembly, Test and Paint of engines. Assembly of engines is performed on a state-of-the-art Automated Electrified Monorail System, which is roof, mounted for clean floor assembly. The system is fully PLC (Pneumatic Logic Control) controlled and linked to a computerized Assembly Management System. It incorporates Falsifying at each station and In-Process-Verification Systems at critical points for defect free assembly. Laser Pulse Tools, Pneumatic Manipulators and Ergonomically designed workstations and facilities are provided to reduce operator fatigue. Dedicated Machining lines are commissioned for each of the 5 components which are manufactured in-house viz. cylinder block, cylinder head, crankshaft, camshaft and connecting rods. Equipment has been sourced from leading suppliers in India and overseas to ensure very high levels of capability and reliability. This includes latest gauges, three Coordinate Measuring Machines and sophisticated equipments such as CMM machines and Marposs & Baker Gauges for cylinder bore measurement.

Cummins Vision:- Making people better by unleashing the power of Cummins.

Cummins Mission:-

Motivating people to act like owners working together.

Exceeding customer expectations by always being first to

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market with the best products.

Partnering with customers to make sure they succeed.

Demanding that everything we do leads to a cleaner, healthier, safer environment.

Creating wealth for all stakeholders.

What do we value?

Integrity: Strive to do what is right and do what we say we will do.

Innovation: Apply the creative ingenuity necessary to make us better, faster, first.

Delivering Superior Results: Exceed expectations consistently.

Corporate Responsibility: Serve and improve the communities in which we live.

Diversity: Embrace the diverse perspectives of all people and honour with both dignity and respect.

Global involvement: Seek a world view and act without boundaries.

2. SAFETY MEASURES FOLLOWED IN TCL:-

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An area marketed by black lines throughout the corridor serves the footpath for people walking. This marking is to allow safe movement of persons as company owns 11 ‘Forklifts’ which are almost continuous at work throughout the day.

Use of convex mirrors at blind curves to make people aware of any moving body coming from another side (forklifts in the worst case).

Use of warning signboards at regular places directing how to be safe in the plant.

Safety shoes are the must to be worn inside the plant while working or moving.

Since very less of overhead work is done in the plant, hence helmets are not required.

Use of safety gloves is necessary while working on the machines or coming in physical touch with the machines.

Safety glasses are a must to be worn by people working or roaming through the plant, as dust particles can easily enter eyes, since blowers are in repetitive use.

Signboards with arrows on them indicate the direction to take to ‘exit’ in case of any emergency which take place in the plant.

Use of ‘LOTO’ i.e. Lock Out Tag Out which means to lock out the machines during maintenance or other job different from everyday use, either electrically or pneumatically was an important rule followed strictly by each and every personnel.

3. Components being produced in TCL:-

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Shop Operations is the core function of the company which manages the complete operations in the shop. It holds almost 70% of total company’s manpower.

Shop Operations consists of:- Assembly, Test and paint BU (ATPBU) Cylinder Block BU (CBBU) Cylinder Head BU (CHBU) Crank Shaft BU (CRBU) Connecting Rod and Cam shaft BU (RCBU)

Assembly, Testing & Painting Business Unit (ATP BU):

The Assembly, Testing and Painting Business Unit at TCL houses one of the most sophisticated assembling and testing facilities among the Indian industries. It is at this unit that the various Made in Works (MIW) components and the Bought Out Finished (BOF) components are assembled to produce the engine, which then undergoes through the processes of testing and painting before being delivered to the customer. This unit is the biggest BU in TCL in terms of manpower employed and is broadly divided into three loops as per the operations performed. ATPBU has several unique features which are not found in most assembling units, which include the use of Automated Electric Monorails (AEM), Automated Guided Vehicles (AGV), In-Process Verifications (IPV), Assembly Management System (AMS) etc. The whole layout is essentially line-type and all the loops are further subdivided into stations and each team is assigned the responsibility of a particular group of stations.

Cylinder Block Business Unit (CBHU):

This is the largest business unit in the Tata Cummins limited. Cylinders blocks are manufactured in this unit which are then

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send to assembly line. The raw material used is cast iron, which is bought from Tata Motors Jamshedpur. Due to heavy chip removal intense dust formation is the problem with this line. Most of the operations performed on the block are without using coolant

Cylinder Head Business Unit (CHBU):

In this business unit cylinder heads are manufactured which send to assembly line. CHBU is a fully automated line having least number of associates in TCL. The raw material is Cast Iron casting and it comes from Tata Motors, Jamshedpur. The entire line is divided into different cells depending on similarity of the operations performed on the machines.

Crankshaft Business Unit:

Crankshaft Business Unit (CRBU) of Tata Cummins Limited produces the crankshaft, which is then sent to the assembly for fitting into the engine. Like the connecting rod, the raw material here is also obtained form Bharat Forge, Pune in the form of a forging. A number of crucial and intricate operations on the crankshaft finally give the finished product. The machining operations in CRBU are carried out across 35 machines, which are divided into two lines:

Soft Line Hard Line

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4. INTRODUCTION OF INDIRECT PURCHASE IN TCL

Indirect purchase is the sourcing of indirect goods (which are not getting fitted in the component) and services for a business unit that enable its activity. Or looking at it another way, the goods and services classified under the umbrella of indirect procurement are commonly bought for consumption by internal stakeholders (business units or functions) rather than the external customer or client. Hence in Tata Cummins the Indirect purchase department deals with the requirement of the spare, tools and consumable items for the internal purpose. There is a complete logic flow which is being followed in this department which is being explained below with the flow chart.

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Fig – Logic flow of the process in Indirect purchase

As we can see in the above flowchart that the request for indirect materials whether it’s for spares, tools or consumable items comes from Business unit (BU) or Functional unit (FU).

We have to check whether the issue date is mentioned in the request for the materials or items requested from FU or BU, if no then it will be returned back to that same department from where it was being generated.

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Indirect Material Request

From BU & FU

Arrange At-least 2 Quotes

Raise PR for Spare

Is Price > 50 K

BUL ApprovalNo

Yes

Is Price > 1 Lac

DGM & GMApproval

Yes

Is Issue Date

Mentioned?

Yes

No

Is there a Price Hike >

5%

PR Approval Raise P.O.

P.O. ApprovalP.O. To SupplierMaterial

Receive & QC

MD Approval

Store (Inventory)

No

Issued by User as & when

Required

Quantity or Substitute available?

No

Yes

No

Yes

Spare ToolConsum

able

If yes, then there will be a check whether the required quantity or any substitute is available for that item or not, if yes then required items will be supplied to that department.

If the quantity required or the substitute item is unavailable then the request is being diverted to the buyer who will be buying the item, after getting at least two different quotes from the supplier for price comparison accordingly the material will be purchased.

If the material cost is more than the specific amount then there is approval required from Deputy general manager (DGM) and General manager (GM) of Indirect purchase and if the price is less than the specific amount then their is a approval required from Business unit leader (BUL) from Indirect purchase.

After the approvals being done the purchase request (PR) is being raised for the items.

After the purchased request is being made it is forwarded to DGM or BUL of Indirect purchase for approval according to the price of the item.

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Once the PR is being approved then purchase order(PO) is being made for approval

If there is a price hike of 5% from last purchase price and that too within a year then PO will be transferred to Managing Director (MD) for approval.

After the approval of Purchase order it will be moved to supplier then material will be received and quality check will be done of those materials and finally it will be supplied to the store inventory.

4.1. Brief description of the project

I have done my project in Indirect Purchase. In my project work I have to segregate all the duplicate part numbers with same part description which are still being used i.e. in active status from Tata Cummins 1, 2 and 3 and deactivate it from the system. As the part numbers with description are being created manually in TCL so there are chances of duplicity and due to this duplicity their problem raises of

a) Stock keeping – as there will different part numbers of the same item hence it will increase the inventory.

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b) Pricing – due to different part numbers of the same item there will be a problem of identifying that which part has been bought at what price which will also raise difficulties in comparing the prices from the different price quotes which will create problem in repurchasing the correct item with right price.

c) Inventory – Inventory will always show as high due to this duplicity because of the same item with be entered in the Inventory data with different part numbers.

These above were the few major disadvantages of the duplicity of the part numbers.

Along with this my project work I have to define the nomenclature of the part description and educate the buyers for the creation of the part, designing the nomenclature of the part description to prevent duplicity parts for future & defining the Min – Max Qty for the C-class category items.

4.2. PART CREATION PROCESS IN TCL

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The requirements of the indirect items are being given from BU (Business Unit) and FU (Functional Unit).

22

Inform User about Item

Check for Quantity or Substitute available?

No

Requirement of an Indirect Item for BU & FU

Search for availability of Item in Store through System

If Item is available Get the Item from Store

Yes

No

Fill Item Request Form with Item No& Send to Indirect Purchase

Yes

Arrange the Item

Inform User about Item

If Part Number exists

No

Yes

Check for Substitute available?

No

Fill Item Creation Request Form& Send to Indirect Purchase

Yes

Arrange the Item

The requirements of the indirect items are being checked in the system.

If those items are available then we can get it from the store and if it is not available then we have to check whether that particular number exists or not.

If that part number already exists then fill the item creation request form and send it to indirect purchase to check for its substitute available, if the substitute is available then inform it to the user and if it is unavailable then arrange for the item

As the unique part numbers with part descriptions are being created manually in TCL hence there are possibilities for duplicity or errors which may occur during the part number creation.

For example:-

Part number Part description

0115612588 TOOL.HOLDER.STD.REDUCTION SLEEVE ..MT3- MT2..

0115612598 TOOL.HOLDER.STD.REDUCTION SLEEVES ..MT3-MT2.-.-

In the above example it shows that the part description are different for the same item for the two different part numbers, this is the duplicity of the part which need to be identified and deactivated from the system.

Below figure will show how the part numbers with part description are being created in TCL.

23

Fig- Part number & part description creation tool in TCL

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4.3. RESEARCH & METHODOLOGY

At the beginning I have collected all the data required in the excel format from ITR tool of TCL 1, 2 & 3.

For extracting the data we have put a request through ITR tool mentioning the requirements & why these information’s are required which are as below:-

Organization name – to identify which part is being used in TCL 1, 2, & 3.

Creation date - to check when the part number has been created.

Part number – to identify the duplicity of the part numbers.

Purchase category – to find out in which particular category it lies i.e. in consumable, spares, or tool.

Purchase sub-category – to identify the type of part i.e. gauges, machine, maintenance etc.

Part description – to find out the duplicity of the part numbers by studying the descriptions.

Status – to check whether the particular part number is (active, inactive & non- purchase), as I have to only work on the active part numbers to identify the duplicity.

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Fig – Dump data collected from ITR tool

5807

37934

21258

Total

CONSUMABLESPARETOOLS

Fig - Pie chart of the total data received

26

Total 65000 data or part number received from the dump in sheet 1, same in sheet 2 and sheet 3.

The data which is being received in excel is in arbitrary manner. For example, if we find a duplicate part number in row one then another will be in row 23000.

Hence I have to arrange the part descriptions in a way that if there is any duplicate part description with different part numbers then it should lie in the next row so that we can manually search the duplicate parts with less time consuming and less error.

As noticed that in all the part descriptions there are unique numbers, so I have run a command in excel so that all the numbers from the part description gets aligned in the ascending manner.

Below steps will show how the sorting and arranging of the part descriptions are being done.

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OPEN THE DATA CONTAINED EXCEL SHEET

28

ALT + F8

MACRO NAME

CLICK ON CREATE

PUT ANY NAME INSIDE THE MACRO NAME BOX

CREATE THE FUNCTION

Function onlyDigits(s As String) As String

' Variables needed (remember to use "option explicit"). '

A

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Function onlyDigits(s As String) As String

' Variables needed (remember to use "option explicit"). '

As per the flowchart first we have to open the excel file containing the dump or data with the part description and all the other details.

After opening the excel sheet we have to press alt+f8 which will a small box which is called macro.

There it will ask to enter a macro name so any name can be selected and then click on create.

Then it will open a blank page where we have to put the string.

The string which we have to put is:-

Function onlyDigits(s As String) As String ' Variables needed (remember to use "option explicit"). ' Dim retval As String ' This is the return string. ' Dim i As Integer ' Counter for character position. '

' Initialise return string to empty ' retval = ""

' For every character in input string, copy digits to ' ' return string. ' For i = 1 To Len(s) If Mid(s, i, 1) >= "0" And Mid(s, i, 1) <= "9" Then retval = retval + Mid(s, i, 1) End If

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Next

' Then return the return string. ' onlyDigits = retvalEnd Function

After entering this string we have go to the file tab which is on the top left corner and the select close and exit.

Then we have to put formula in the main data file which is =onlydigits and select the row (=onlydigits(f1))

Select the data tab at the top and select the sort tab and then select part description.

This above steps will arrange the part descriptions in ascending order hence if there is any duplicate part description it will be next row.

Then we have remove the same part numbers with same part description by selecting remove duplicate from the data tab and selecting only the part numbers as I have to identify and remove only the duplicate part number with the same part descriptions.

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Finally we have to put filter and select only the active parts so that the parts which have been already deactivated or a non purchase item it will removed as I have to only work in active parts.

Fig – Putting string function in macros

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Fig – Sorting of part description after putting string

Fig – Removing duplicate part numbers

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Fig – Removing the inactive and non purchase parts

After sorting out the duplicate part numbers with same description total data remaining 54029 out of 65000.Below pie chart will show the difference after shorting done.

Fig - Pie chart will show the difference after shorting parts

The remaining 58386 parts will be of only one plant, i.e. of TCL 1 from where we have to manually remove the duplicate parts. The above methods we have to use in the other 2 sheets of TCL 2 & 3.

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Fig – Duplicate part description with different part numbers

Below Pie chart will show the duplicate parts from total data of TCL 1

Total 58386Duplicate 205Unique 58181

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DuplicateUnique

Below Pie chart will show the duplicate parts from total data of TCL 2

Total44961

Duplicate 125Unique

44836

DuplicateUnique

Below Pie chart will show the duplicate parts from total data of TCL 2

Total 540

36

30Duplicate 117Unique

53913

DuplicateUnique

Below pie chart will show only the duplicate parts from TCL 1,2 & 3

CONSUMABLE18%

SPARE57%

TOOLS25%

Total

Fig – Duplicate parts in TCL 1

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CONSUMABLE19%

SPARE58%

TOOLS23%

Total

Fig – Duplicate parts in TCL 2

CON-SUMABLE

33%

SPARE56%

TOOLS11%

Total

Fig – Duplicate parts in TCL 3

After Identifying and segregating the duplicate parts from TCL 1, 2 & 3 called a meeting with all the buyers from TCL 1 to discuss and deactivate the duplicate parts from the system.

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4.4. Recommendation By Creating Nomenclature of Part Description:-

While Identifying and removing the duplicate part numbers from the system its being noticed that the duplicity of the part description majorly occurs because the correct format or nomenclature is not being followed while creating the part description.

An Example of Duplicate part description:-

1. SPARE.MECHANICAL.CHAINS.DEMAG CHAIN HOIST.SWL.250 KG.HOOK PATH.5M

2. SPARE.MECHANICAL.MISC. DEMAG CHAIN HOIST. SWL 250 KG HOOK. PATH 5M.

As we can see in the above example that both the part descriptions are same except the letters CHAINS and MISC, due to these two letters this duplicate part is being mistakenly created.

Hence took Voice of Buyers from TCL 1 & 2 and discussed about how to remove this type of error in future because these duplicate part are being created because there is no proper format or nomenclature being followed while creating the part description. Post discussion we all moved into the conclusion that a proper nomenclature should be created to remove part duplicity.

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The following question being asked by me and discussed from the buyers of TCL 1 & 2 before creating nomenclature are as below:-

1) Is there any fault in part description?

Yes No

2) Is the any fault in the process while creating the part description?

Yes No

3) In order to remove the part duplicity shall we need to define a nomenclature for part description?

Yes No

4) According to you what should be the nomenclature for part description?

For Tool For spares For consumableItem type Item category Item nameItem category Item type Part descriptionItem name Item sub-category Company make

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Hence I have to define a Nomenclature of Part description so that this type of error can be avoided which will result in creating part descriptions without any duplicity.

As there are three different parts in Business unit which are Consumable, Spares and Tool so I have to define three different nomenclatures because in different Business unit’s different types of parts are being used.

In order to define nomenclature firstly I have to study all the unique part descriptions from Tool, Spares and Consumable in order to understand what are the important inputs required for a part description.

After studying all the part description of Tooling items, it is being concluded that there should be a sequence which need to be follow which part creation process.

For Tooling the below mentioned process needs to be followed for part creation process:-

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Item type

Item category

Item name

Or

Drawing number

A

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Item name

Or

Drawing number

Item specification

Supplier code

Or

Company code

(If available)

Company Make/Name (if available)

Where the required part will be used in the organization

For Example:-

TOOL.HOLDER.SPARE.DIFFERENTIAL SCREW.SB060-02.INGERSOLL.H/F -S/F MILLING DIA250.CB

For Consumable the below mentioned process needs to be followed for part creation process:-

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Consumable category

Item name

Item specification

(If applicable)

Part description

Company make/Name

(If available)

A

For Example:-

CONSUMABLE.MAINTENANCE MATERIALS.FILTER ELEMENT.AIR FILTER SET FGPIN0PREFILSET1 FOR GODREJ CONTROL.

For Spares the below mentioned process needs to be followed for part creation process:-

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Where the required part will be used in the organization

Item category

Item type (Electrical, Mechanical, Electronic)

Item Sub- Category (Bearing, Bolts, Cylinders, Etc.)

A

For Example: - SPARE.MECHANICAL.BOLTS HEX BOLT 1/2"X 2" WITH WASHER S.S-UTILITY.

The above process describes the nomenclature of the part description for Consumable, Spares & Tool.

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Item Specifications

Where the required Part will be used in the organization

Company Make/Name

(If available)

4.5. Min-Max quantity for c-class category items

The Min – Max quantity of c class items will define the minimum and maximum quantity of items that can be stored. The Min–Max is one of the automated Inventory replenishment methods to be used in an organization dedicated to Inventory management. The primary benefit of this method is its extreme simplicity of implementation.

This method tracks the current total stock level, which is typically the sum of the stock – on – hand plus the stock – on – order for every single stock keeping unit. When the total stock reaches the Economic order quantity, reorder is triggered. The reorder quantity targets the Maximum value for new total stock level, hence the reorder quantity is the difference between Max and Min (i.e. Max minus Min).Since we are planning the Inventory level of machinery spares and consumption pattern is not fixed, hence reordering or ROL is calculated as below:-

ROL / Ordering point = (Max - Min) + Yearly consumption / 12.

The “Min” value represents a stock level that triggers when the total stock reaches the Economic order quantity, reorder is triggered and the “Max” value represents a new targeted stock level following the reorder. The difference between the Max and the Min is frequently interpreted as the EOQ (Economic Order Quantity).

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Under this topic I have to find the Min-Max of the C- class category items as it is very important to identify the stock and reordering level from time to time to avoid any stock out or excessive of stock which will affect the inventory. As I will be defining the Min – Max and ROL of the items it will help in optimising the inventory level.The below steps will show the process of finding the Min – Max and ROL:-

At the beginning I have collected all the data required of 2013-14.

For collecting the data we have put a request through ITR tool mentioning the requirements & why these information’s are required which are as below:-

Part numbers:- To find out which parts are being used and in which departments.

Description:- To find out what type of items are being used.

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Issue Date:- To find out when the part or item is being issued.

Segment:- To check in which particular department this part or item is being used.

Unit cost: - To know the cost of the product so that cost efficiency can be checked accordingly.

Quantity: - To find out how many quantity of that part or items is being issued in that particular duration. It will help to show the usage status as how frequently this part is being used and where the consumption is very high.

Fig – Total Raw data received

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As the Raw data collected was in the arbitrary manner hence I have to arrange the data in an order so that it shows which Department it has used what type of parts and how many times in that duration.

Fig – Data after arranging

After arranging the data the part numbers are in first column, part description is in the second column, the next row contains the which Department it has used and how many times in that duration.

After the department’s column’s it will show the yearly consumptions of the parts or items.

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Then User BU (i.e. how many times that particular part or item is being used in that particular department).To find this out the formulae which I have used according to the excel data sheet is:- (=COUNT(C2:CP2))

Then I have to find out the unit price of the item to know the cost of the product. In order to find this out I have used the formulae according to the excel data sheet which is (=VLOOKUP(A2,'<default'!A2:E21409,5,0))

In order to find out Min I have to first assume the Minimum percentage below which the stock should not be less. Hence I have assumed it to be 30%.

The next column will be for Min quantity for the item for which I have used the formulae which is (=CEILING(CQ2*0.3,5)) according to the excel data sheet and 30% min of yearly consumption.

In order to find out Max I have to first assume the Maximum percentage of stock level. Hence I have assumed it to be 70%.

The next column will be for Max quantity for the item for which I have used the formulae which is

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(=CEILING(CQ2*0.7,10)) according to the excel data sheet and 70% min of yearly consumption.

Finally in order to calculate ROL (i.e. Reorder level) the formulae need to be used is (max-min)+yearly consumption/number of months in a year. Which according to the excel data sheet is (=CEILING((CU2-CT2)+CQ2/12,10).

Hence when the stock level reached the ROL, reorder triggers to maintain Inventory optimization.

Below Figure will show the MIN-MAX & ROL

Fig – MIN-MAX AND ROL

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5. CONCLUSION:-

The project on “Inventory optimization by bifurcating the unique parts and creating the nomenclature of the part creation process and Defining Min-Max category items at TCL” has helped me to gain the insight about the complete process of Indirect purchase department in TCL.

During this project, I identified the loopholes due to which the duplicate parts are being created which affect the optimum level of stock Inventory and suggested recommendations by creating the nomenclature of the part description to avoid this type of error in future. Along with this I have also defined the Min-Max quantity and Reorder level (ROL) of the C class item which will help in Inventory Optimization.

From this research I acquired a good amount of knowledge and experience about Microsoft Excel for analysing the data and also learned to calculate the Min-Max & ROL which will in optimizing the Inventory level.

Finally Tata Cummins Pvt. Ltd. (Jamshedpur) helped me a lot to learn practical knowledge about the operations and the process of Inventory optimization.

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6. BIBLIOGRAPHY:-

1) http://www.cumminsindia.com/MAIN/tata_cummins.html

2) https://suratiundhiyu.files.wordpress.com/2012/03/advanced-excel-formulas-and-functions-kd.pdf

3) http://www.lagfoa.org/Advanced-Excel-Tips.pdf

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ANNEXURE

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