List of Graphs Page No. 1. 1: Trend line showing voluntary labour turnover………………………………12 1. 2 Market Share of major steel producers in India………………………………15 4. 1: ABC Classification of inventory items in ATPL……………………………. 58 List of Figures 1. 1 The four factors of production………………………………………………. 10 1. 2 The Channels of distribution used by ATPL…………………………………20 1. 3 The Production Process………………………………………………………27 1. 4 The line diagram of a Tube-Mill…………………………………………….. 30 1. 5 The layout of Cold Rolling Mill at Baddi Works……………………………31 1. The drivers of quality………………………………………………………… 34 4. 1 Inventory Control Model……………………………………………………. 46 4. 2 Value Chain Analysis……………………………………………………….. 51 4. 3 ABC Analysis……………………………………………………………….. 57 Contents Page No. List of Graphs & Figures…………………………………………………5 Executive Summary…………………………………………………….. 7 Chapter 1Introduction……………………………………………………………8 1. 1 Background of the problem…………………………………………. 9 1. 2 Overview of Steel Sector in India……………………………………13 1. 3 About the Organisation………………………………………………16 1. A brief about metal working…………………………………………21 1. 5 Quality Control………………………………………………………32 1. 6 Ordering Strategy……………………………………………………. 36 Chapter 2 Literature Review……………. ………………………………………. 37 Chapter 3 Research Methodology………………………………………………. 39 Chapter 4 Data Analysis………………………………………………………… 42 Chapter 5 Recommendations…………… ………………………………………59 Chapter 6 Limitations…………. ……………………………………………….. 62 Chapter 7 References……………………………………………………………64 Annexure : Questionnaire……………………………. ………………….. 65 Executive Summary
Every organization, big or small, depends on materials and services from other organizations to varying extents. Various materials used as inputs, such as raw materials, consumables & spares, are required to be purchased and made available to the shops / users as & when needed to ensure uninterrupted production. Therefore, efficient management of input materials is of paramount importance in a business organization for maximizing materials productivity, which ultimately adds to the profitability of the organization.
Labour as a factor of production plays very crucial role in the company’s success. The quality of labour can make or break an organisation. In many manufacturing organisations, the cost of materials alone happens to range from 40 % to 60 % of the total expenditure. Obviously, a better management of material is expected to ensure reduction in overall cost of operation and smoothness in supply of inputs. This requires well coordinated approach towards various issues involving decision making with respect to materials.
All the materials related activities such as material planning & indenting, purchase systems & procedure, variety reduction through standardization & rationalization, reducing uncertainties in demand & supply, handling & transportation, inspection, proper storage & issue of materials to the internal customers, inventory management, vendor management & finally disposal of obsolete, surplus & scrap materials etc. taken together is termed as “Supply Chain Management & Logistics”.
Supply Chain Management as such is a key business function that is responsible for co-ordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre-decided service to the customer at a minimum cost. CHAPTER 1 INTRODUCTION 1. 1 Background to the problem The objective of studying this organization during my Summer Internship Training as a part of MBA Entrepreneurship program was to (a) Gain some knowledge about my Family Business and (b) Know about the problems present in the organization.
The knowledge about my Family Business as well as the problems prevalent in it will help me know what actually I need to research upon and learn during the 3rd and 4th Semesters of my MBA program in Amity Business School. This, I believe, will help me find solutions to the problems present in my Family Business and grow it to newer heights, which my purpose of doing MBA actually is. I purposely chose to study Operations of the organization as I believe that it plays a very crucial role in any manufacturing business like ours.
Operations management focuses on carefully managing the processes to produce and distribute products and services. Usually, small businesses don’t talk about operations management, but they carry out the activities that management schools typically associate with the phrase operations management. The overall activities often include product creation, development, production and distribution. These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product — that is, a product line.
Operations management is in regard to all operations within the organization. Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization, for example, retail, manufacturing, wholesale, etc.
During my summer training, I tried to evaluate the four factors of production of the organisation. The four factors of production I. Land Figure [ 1 ]. 1: The Four Factors of Production ATPL has abundant land both for production as well as storage purpose at all the three locations viz. Chandigarh, Baddi and Derabassi. The land area in Chandigarh, Baddi and Derabassi is about 5000 sq yards each which are sufficient to produce and store the required inventories of both raw material goods and finished good. ATPL also has a blessing in disguise- CITCO (Chandigarh Industrial ; Tourism Corporation) for emergency storage needs.
CITCO provides storage facilities to its customers. ATPL being its one of the important customers enjoys this facility to the full. The rates for storage charged by CITCO are as follows: Upto 30 days – Rs 100 per ton| 30 – 45 days – Rs 250 per ton| More than 45 days – Rs 500 + Rs 10 per day per ton| The potential to grow further can be seen as the Management at ATPL has made many investments in Industrial lands, which will be helpful in future expansion. II. Entrepreneur ATPL has three generations of a family working dedicatedly towards the growth of the organisation.
The management believes in backward integration and therefore having started with a Tube Mill in 1998, have established three Rolling Mills up till 2010. The management also believes that diversification is the key to success; as a result it has ventured out in the plastic sector as well by manufacturing corrugated flexible pipes and have established a name for themselves in the furniture industry for nearly 25 years. III. Capital Capital has never been a problem with ATPL. Its bankers Oriental Bank of Commerce highly values its creditability and has funded the company’s financial needs since its inception in the year 1998.
ATPL gets its funding at a rate 75 basis point lower than what banks grant to other players in the industry. IV. Labour An organisational hierarchy in place, still ATPL faces a lot of problems in the personnel department. The voluntary labour turnover is about 50%, which is quite high taking into account that a lot of time and money is invested in training of the workforce. The company believes that if the labour problems are sorted out, it can increase its production manifold. Graph [ 1 ]. 1: Trend line showing the voluntary labour turnover My Industry Guide, Mr.
Ashok Goel, directed me to explore the factors that motivate/influence the labour to work in any organisation and to also explore whether the working conditions provided to the labourers are satisfactory to them. This becomes the basis of doing my Research for the said report. Objectives of the Research The objective of the research is to: * Identify and analyze various behavioural aspects that motivate/influence unskilled labour to work * Ascertain whether labour is satisfied with the working conditions available to them 1. Overview of Steel Sector in India The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the starting point of modern Indian steel industry. Afterwards a few more steel companies were established namely Mysore Iron and Steel Company, (later renamed Vivesvaraya Iron ; Steel Ltd) in 1923; Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron ; Steel Ltd) in 1923; and Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron and Steel Co) in 1939. 1 All these companies were in the private sector.
At the time of independence, India had a small Iron and Steel industry with production of about a million tonnes (mt). In due course, the government was mainly focusing on developing basic steel industry, where crude steel constituted a major part of the total steel production. Many public sector units were established and thus public sector had a dominant share in the steel production till early 1990s. Mostly private players were in downstream production, which was mainly producing finished steel using crude steel products.
Capacity ceiling measures were introduced. Basically, the steel industry was developing under a controlled regime, which established more public sector steel companies in various segments. Till early 1990s, when economic liberalization reforms were introduced, the steel industry continued to be under controlled regime, which largely constituted regulations such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the government; foreign nvestment was restricted; and there were restrictions on imports as well as exports. The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.
At present, total (crude) steelmaking capacity is over 62 million tonnes and India, the 5th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious “World Steel Dynamics”, Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. The Republic of China and The European Union have qualified for the top slot, while countries like Japan, USA and Russia share the same class as India.
The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) Exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario. The Indian steel industry have entered into a new development stage from 2005-06, riding high on the resurgent economy and rising demand for steel.
Rapid rise in production has resulted in India becoming the 5th largest producer of steel. It has been estimated by certain major investment houses, such as Credit Suisse that, India’s steel consumption will continue to grow at nearly 16% rate annually, till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The scope for raising the total consumption of steel is huge, given that per capita steel consumption is only 40 kg – compared to 150 kg across the world and 250 kg in China. The National Steel Policy has envisaged steel production to reach 110 million tonnes by 2019-20.
However, based on the assessment of the current ongoing projects, both in Greenfield and Brownfield, Ministry of Steel has projected that the steel capacity in the county is likely to be 124. 06 million tonnes by 2011-12. Further, based on the status of MOUs signed by the private producers with the various State Governments, it is expected that India’s steel capacity would be nearly 293 million tonne by 2020. Price regulation of iron ; steel was abolished on 16. 1. 1992. Since then steel prices are determined by the interplay of market forces.
There has been an up-trend in the domestic steel prices since 2006-07 and the trend accentuated since January this year. However, at the time of preparation of this report, the steel prices have plummeted to a 6 month low. Rise in raw material prices, strong demand in the international and domestic market and up-trend in the global steel prices have been some of the reasons cited by the industry for increase in the steel prices in the domestic market. The mismatch in demand and supply is considered to be the main reason on the demand side for the rise in steel prices. Graph 1. : Market Share of Steel Producers in India 1. 3 About the Organization Ambey Tubes Pvt. Ltd. (ATPL) is one of the largest manufacturers of Cold Rolled Closed Annealed (CRCA) Strips and Pipes in the Northern region of the Country. It is one of the business arms of the VANSER Group. The other business interests of the group are manufacturing of PVC Flexible Corrugated Pipes under the brand name SCHANGLER ; SCHANFLEX and manufacturing and retailing of furniture under the brand name VANSER. VANSER is an abbreviation containing the initials of all the family members of the group.
Sh. Nanoo Ram Goel, the present Chairman of the Group, a creative and courageous man, joined by second and third generations, making a blend of experience and modern business knowledge, manage the business growth and development with assistance of highly qualified team of professionals. Units Ambey Tubes Pvt. Ltd. VANSER- The Furniture Merchants SCHANGLER ; SCHANFLEX Company’s Mission ; Vision ATPL is dedicated to the continuous improvements in producing different types of CRCA Strips and Tubes by providing excellent services through motivated ualified and dynamic team of people. At ATPL it is ensured that the products are produced according to the customer’s requirements and expectations. ATPL is renowned in Local and Regional markets due to its excellent services, timely delivery of quality finished products to their valued customers. ATPL’s philosophy of continues improvements relies on an intensive training programs / regular meetings, discussions which emphasis the employee’s direct involvement. The aim is to respond to the customer’s ever-changing needs in the most effective way. Ambey Tubes Pvt.
Limited Chandigarh with latest “State-of-the-art” machinery and equipment is a complete Steel Rolling and Tube Mill plant. Four Tube mills, three highly productive Rolling Mills and three draw bench units help ATPL command a sizeable share in the regional market. The unit is capable of producing high quality CRCA Strips and Tubes with an installed capacity of producing nearly 25000 metric tonnes of steel annually. Ambey Tubes Private Limited is a Family Managed Business entity. Ambey Tubes Pvt. Ltd. is one of the leading organizations which provide a variety of Steel Strips and Tubes.
It is specialized to produce the above said items and distribute locally and across the Nation through their own distribution channels and Agents. Ambey Tubes Pvt. Ltd. deals with local and National Market. It holds a major share in the Cold Rolled Steel Market and provides its products to many OEMs (Original Equipment Manufacturers). Ambey Tubes Pvt. Ltd’s business volume consists of Rs. 125 Crores annually. Ambey Tubes Pvt. Ltd’s management is very efficient and always looking for new opportunities of development of their business and increases the economic activities in the country.
Ambey Tubes Pvt. Ltd consists of 170 employees in Office, Production and Marketing department. Office and Production section consist of about 150 employees. In which 60 employees are Technical, 30 are Non Technical, and 60 is remaining staff which provide different services. The marketing department of Ambey Tubes Pvt. Ltd consists of 10 employees who are constantly looking for opportunities to expand the market share of Ambey Tubes Pvt. Ltd. Product Mix Ambey Tubes Pvt. Ltd has a variety of products. Following are main products, which are mentioned below Steel Tubes made by Cold Rolled Strips|
Round Steel Tubes| Square Steel Tubes| Steel Tubes for Automotive Applications| Steel Tubes for Bicycle and Motorcycle industry| Steel Tubes for Fitness Industry| Steel Tubes for Cleaning Products| Steel Tubes for Heating ; Design Radiators| Steel Tubes for Light Fittings| Steel Tubes For Furniture Industry| Steel Tubes made by Hot Rolled Oiled ; Pickled Strips| Round Steel Tubes| Square Hot Rolled Tubes| Rectangular Hot Rolled Tubes| Elliptical Steel Tubes| Triangular Steel Tubes| Industrial Steel Tubes| Steel Strips and Steel Coils| Pickled Strips|
HRPO Strips| Cold Rolled Strips| Pricing Strategy There are three pricing strategies are being used in ATPL 1. Customer based price 2. Product based price 3. Credit period based price Customer based price: ATPL has different prices for different customers. The trustworthy customers are always given a special discount. Special discounts are also based upon the quantity demanded by the customers. The customers which regularly purchase huge quantities are given quantity discounts. Product based price: The basic rate fixed by ATPL is for its 22 Gauge range.
For 23 Gauge| Add: 50 paise per Kg | For 24 Gauge| Add: 50 paise per Kg| For 25 Gauge| Add: Rs 1 per Kg| For 26 Gauge| Add: Rs 1 per Kg| For 27 Gauge| Add: Rs 1 per Kg| Credit period based price: Cash Payment( 1- 7 days credit)Basic rate For every week thereafter 25 paise per Kg additional Channels of Distribution used by ATPL There are two ways of distribution adopted in ATPL, 1. Direct channel 2. Indirect channel Direct channel Indirect channel Figure1. 2: Channels of distribution used by ATPL 1. 4 A brief about metal working Steel is an Alloy of Iron and Carbon.
Steel is divided as Low Carbon (Mild Steel), Medium Carbon and High Carbon Steel based on Carbon content ; Killed, Semi killed and Rimming Steel based on de-oxidation process. Application of Steel involves in various Automobile, White Goods and Structural applications In metalworking, rolling is a metal forming process in which metal stock is passed through a pair of rolls. Rolling is classified according to the temperature of the metal rolled. If the temperature of the metal is above its recrystallization temperature, then the process is termed as hot rolling.
If the temperature of the metal is below its recrystallization temperature, the process is termed as cold rolling. In terms of usage, hot rolling processes more tonnage than any other manufacturing process and cold rolling processes the most tonnage out of all cold working processes. There are many types of rolling processes, including flat rolling, foil rolling, ring rolling, roll bending, roll forming, profile rolling, and controlled rolling. Picture [ 1 ]: A Coil of Hot Rolled Steel After the grains deform during processing, they recrystallize, which maintains an equiaxed microstructure and prevents the metal from work ardening. The starting material is usually large pieces of metal, like semi-finished casting products, such as slabs, blooms, and billets. If these products came from a continuous casting operation the products are usually fed directly into the rolling mills at the proper temperature. In smaller operations the material starts at room temperature and must be heated. This is done in a gas- or oil-fired soaking pit for larger work pieces and for smaller work pieces induction heating is used. As the material is worked the temperature must be monitored to make sure it remains above the recrystallization temperature.
To maintain a safety factor a finishing temperature is defined above the recrystallization temperature; this is usually 50 to 100 °C (122 to 212 °F) above the recrystallization temperature. If the temperature does drop below this temperature the material must be re-heated before more hot rolling. Hot rolled metals generally have little directionality in their mechanical properties and deformation induced residual stresses. However, in certain instances non-metallic inclusions will impart some directionality and work pieces less than 20 mm (0. 79 in) thick often have some directional properties.
Also, non-uniformed cooling will induce a lot of residual stresses, which usually occurs in shapes that have a non-uniform cross-section, such as I-beams and H-beams. While the finished product is of good quality, the surface is covered in mill scale, which is an oxide that forms at high-temperatures. It is usually removed via pickling or the smooth clean surface process, which reveals a smooth surface. Dimensional tolerances are usually 2 to 5% of the overall dimension. Hot rolling is used mainly to produce sheet metal or simple cross sections, such as rail tracks.
Cold rolling increases the strength via strain hardening up to 20%. It also improves the surface finish and holds tighter tolerances. Commonly cold-rolled products include sheets, strips, bars, and rods; these products are usually smaller than the same products that are hot rolled. Because of the smaller size of the work pieces and their greater strength, as compared to hot rolled stock, four-high or cluster mills are used. Cold rolling cannot reduce the thickness of a work piece as much as hot rolling in a single pass. Picture [ 2 ]: Cold Rolled Coil
Cold-rolled sheets and strips come in various conditions: full-hard, half-hard, quarter-hard, and skin-rolled. Full-hard rolling reduces the thickness by 50%, while the others involve less of a reduction. Quarter-hard is defined by its ability to be bent back onto itself along the grain boundary without breaking. Half-hard can be bent 90°, while full-hard can only be bent 45°, with the bend radius approximately equal to the material thickness. Skin-rolling, also known as a skin-pass, involves the least amount of reduction: 0. 5-1%.
It is used to produce a smooth surface, a uniform thickness, and reduce the yield-point phenomenon (by preventing Luder bands from forming in later processing). It is also used to break up the spangles in galvanized steel. Skin-rolled stock is usually used in subsequent cold-working processes where good ductility is required. Other shapes can be cold-rolled if the uniform is relatively uniform and the transverse dimension is relatively small; approximately less than 50 mm (2. 0 in). This may be a cost-effective alternative to extruding or machining the profile if the volume is in the several tons or more.
Cold rolling shapes requires a series of shaping operations, usually along the lines of: sizing, breakdown, roughing, semi-roughing, semi-finishing, and finishing. Picture [ 3 ]: Roll Deflection Flat rolling is the most basic form of rolling with the starting and ending material having a rectangular cross-section. The material is fed in between two rollers, called working rolls that rotate in opposite directions. The gap between the two rolls is less than the thickness of the starting material, which causes it to deform. The decrease in material thickness causes the material to elongate.
The friction at the interface between the material and the rolls causes the material to be pushed through. The amount of deformation possible in a single pass is limited by the friction between the rolls; if the change in thickness is too great the rolls just slip over the material and do not draw it in. The final product is either sheet or plate, with the former being less than 6 mm (0. 24 in) thick and the latter greater than; however, heavy plates tend to be formed using a press, which is termed forming, rather than rolling.
Oftentimes the rolls are heated to assist in the workability of the metal. Lubrication is often used to keep the work piece from sticking to the rolls. To fine tune the process the speed of the rolls, the roller resistance, and the temperature of the rollers are adjusted. Roll forming is a continuous bending operation in which a long strip of metal (typically coiled steel) is passed through consecutive sets of rolls, or stands, each performing only an incremental part of the bend, until the desired cross-section profile is obtained. Picture [ 4 ]: A rolling schematic
A rolling mill, also known as a reduction mill or mill, has a common construction independent of the specific type of rolling being performed. * Work rolls * Backup rolls – are intended to provide rigid support required by the working rolls to prevent bending under the rolling load * Rolling balance system – to ensure that the upper work and back up rolls are maintain in proper position relative to lower rolls * Roll changing devices – use of an overhead crane and a unit designed to attach to the neck of the roll to be removed from or inserted into the mill. Mill protection devices – to ensure that forces applied to the backup roll chocks are not of such a magnitude to fracture the roll necks or damage the mill housing * Roll cooling and lubrication systems * Pinions – gears to divide power between the two spindles, rotating them at the same speed but in different directions * Gearing – to establish desired rolling speed * Drive motors – rolling narrow foil product to thousands of horsepower * Electrical controls – constant and variable voltages applied to the motors * Coilers and un-coilers – to unroll and roll up coils of metal
Configurations Mills are designed in different types of configurations, with the most basic being a two-high non-reversing, which means there are two rolls that only turn in one direction. The two-high reversing mill has rolls that can rotate in both directions, but the disadvantage is that the rolls must be stopped, reversed, and then brought back up to rolling speed between each pass. To resolve this, the three-high mill was invented, which uses three rolls that rotate in one direction; the metal is fed through two of the rolls and then returned through the other pair.
The disadvantage to this system is the work piece must be lifted and lowered using an elevator. All of these mills are usually used for primary rolling and the roll diameters range from 60 to 140 cm (24 to 55 in). To minimize the roll diameter a four-high or cluster mill is used. A small roll diameter is advantageous because less roll is in contact with the material, which results in a lower force and energy requirement. The problem with a small roll is a reduction of stiffness, which is overcome using backup rolls. These backup rolls are larger and contact the back side of the smaller rolls.
A four-high mill has four rolls, two small and two large. A cluster mill has more than 4 rolls, usually in three tiers. These types of mills are commonly used to hot roll wide plates, most cold rolling applications, and to roll foils. ————————————————- Picture [ 5 ]: Various Key Configurations ————————————————- Defects ————————————————- In hot rolling, if the temperature of the work piece is not uniform the flow of the material will occur more in the warmer parts and less in the cooler.
If the temperature difference is great enough cracking and tearing can occur. ————————————————- Roll Deflection ————————————————- Maintaining a uniform gap between the rolls is difficult because the rolls deflect under the load required to deform the work piece. The deflection causes the work piece to be thinner on the edges and thicker in the middle. This can be overcome by using a crowned roller, however the crowned roller will only compensate for one set of conditions, specifically the material, temperature, and amount of deformation.
If the flatness defect is great enough the edges will become wavy or the center may produce fractures. ————————————————- Another way to overcome defection issues is by decreasing the load on the rolls, which can be done by applying a longitudinal force; this is essentially drawing. Other methods of decreasing roll defection include increasing the elastic modulus of the roll material and adding back-up supports to the rolls. Surface defects: There are six types of surface defects Lap This type of defect occurs when a flap of is folded over and rolled but not welded into the metal.
They appear as seams across the surface of the metal. Mill-shearing These defects occur as a feather like lap. Rolled-in scale This occurs when mill scale is rolled into metal. Scabs These are long patches of loose metal that have been rolled into the surface of the metal. Seams They are open, broken lines that run along the length of the metal and caused by the presence of scale. Slivers Prominent surface ruptures. Figure 1. 3: The Production Process Pickling ATPL has a state-of-the-art Push-Pull Pickling line with capability to pickle width up to 1550 mm.
Hydrochloric Acid maintained at a certain temperature is used to clean the coils. This process helps remove the rusty layers ; scales from the surface and gives a bright surface finish. This processing is necessary since rust is formed on the surface of the coils at room temperature, whereas scales are formed at a high temperature during rolling in the hot strip mill. Cold Reduction/Cold Rolling: ATPL has three 4-Hi Cold Reversing Mills with Automatic Gauge Control System, Work Roll Bending system. This process helps reduce thickness ; imultaneously maintain the strips profile ; flatness as well as shape ; other dimensions under tolerance levels. Annealing: ATPL has batch-type annealing system with 3 furnaces using HNX atmosphere. It gives bright surface finish, uniform mechanical properties, even temperature distribution. Skin Passing: ATPL has three skin passing mills that can process width up to 2000mm. It helps prevent stretcher/luder lines, impart desired surface finish, control mechanical ; shape as per customer requirements, oiling to avoid rust. This improves the flatness and suppresses the yield point elongation.
Slitting: ATPL has Hi-speed slitting facilities with multi-slit cutting up to width as low as 6mm. These lines ensure no slitting burr as well as maintain close camber tolerances. Coils are slit by length and side trims are removed to obtain a uniform width throughout the coil. Shearing/Cut-to-Length: ATPL has three shearing lines for precision blanking at high speeds. Shearing converts Coils/Strips into sheets as per customer requirements. Job work: ATPL with its state-of-the-art facilities provides job work services to many TS16949 certified companies.
The various processing units involved in the CRM complex and their functions are given below: Continuous Pickling Line (CPL): The HR Coil, which is the basic raw material, is passed through CPL to remove the oxides or scales from strip surface to enable further reduction of thickness to desired level in Cold Rolling Mills. This processing is required since rust is formed on the surface of the coils at room temperature whereas scales are formed at high temperature during rolling in Hot Strip Mill. Cold Rolling Mill
There are three types of Cold Rolling Mills operates, which are 6 Hi Cold Rolling Mill and 4 Hi Cold Rolling Mill. Pickled Hot Rolled Coils of higher gauges are reduced to required thinner gauges by passing through the Mills. In 6 Hi Mill the reduction achieved is up to 0. 13mm ultra thin gauge whereas 4 Hi can reduce the thickness up to 0. 25mm. The computer controlled rolling process ensures closure thickness tolerances and perfectly flat strips. Batch Annealing Furnace: The process of annealing of cold rolled coil is carried out to obtain the desired properties in the finished coils.
For this, the material is heated to predetermined temperature in a protective atmosphere and soaked for a specified time before it is put to room temperature. Optimum condition with annealing atmosphere, annealing cycle, sealing and purging have to be maintained to obtain a finished product with bright surface, desired micro structure and uniform properties throughout the coil. HSD is used for heating the surface. Nitrogen is purged inside the inner cover. Nitrogen is obtained from PSA Unit. Skin Pass Mill: In this process the cold rolled annealed strips are given a desired surface finish.
It improves the flatness and suppresses the yield point elongation. Anti rust oil is used on strip surface as protection from rust. CR Slitter: In slitter CR coils are slitted length-wise and also to remove side trims to obtain uniform width throughout the coil as customer requirement. Cut To Length Line: Figure 1. 4: Line Diagram of a Tube Mill In CTL slitted coils are sheared to the desired length as per customer requirement. There are a total of 4 Cut-to-length Lines in operation. Type of Layout of Cold Rolling Mill A Rolling Mill is a Product Layout. Every raw material goes through the same process.
The only thing that varies is the number of passes required during PINCH PASS to bring it to the required thickness. The whole of the process remains the same. The Mill Operator just needs to fine tune the machines for required sizes and gauges. Figure 1. 5: Layout of Cold Rolling Mill at Baddi Works 1. 5 Quality Control Quality is how the recipient of the product or service views it: before buying, upon delivery, and after the delivery-and use. The meaning of quality differs depending upon circumstances and perceptions. Quality is a different concept when tangible products are the focus versus the perception of a quality service.
The meaning of quality is also time-based or situational. Quality of design versus quality of conformance The organization’s values, goals, mission, policies, and practices reinforce designing into the product or service rather than inspecting it in. Emphasis is placed on doing the right things right the first time. The organization’s aim is to not only meet, to letter, customers’ requirements, but to exceed them wherever possible. Conformance is the norm. The organization’s overriding purpose is to excite the customers with extraordinary products and service.
The focus of organizations is to continually improve their products, services, processes, and practices with an emphasis on reducing variation and reducing cycle time. This dimension implies extensive use of the quality management tools, including cost of quality, process management approaches, and measurement techniques. Little q and Big Q Organizations focusing on quality control and inspection activities (little q) will fail to be fully effective they must transform their thinking to quality across organization (Big Q) Quality, or the absence of it, has a strategic impact on the organization.
Consumers buy certain products and request services based on their knowledge and perception of the organization and what it provides. Few buyers knowingly buy poor quality. Accumulated experiences and perceptions of customers ultimately make or break an organization. Q uality is fitness for use: Quality means the product or service does what it is intended to do. Quality is what a product or service cost users if it doesn’t do what it is supposed to do. Quality is meeting customer expectations: Quality is satisfying the customer.
Quality is whatever the customer says it is. The quality of a product or service is whatever the customer perceives it to be. Quality is exceeding the customer expectations. Quality is the extent to which the customers or users believe the product or service surpasses their needs and expectations. Quality is delighting the customer. Quality is superiority to competitors: Quality is how a company’s products and services compare to those of competitors or how they compare to those offered by the company in the past. Drivers of quality: Figure 1. : The Drivers of Quality Customers In a customer-driven organization, quality is established with a focus on satisfying or exceeding the requirements, expectations, needs, and preferences of customers. Customer-driven quality is a common culture within many organizations. Products / services: A culture of product / service-driven quality was popular in the early stages of quality improvement. Conformance to requirements and zero defect concepts have roots in producing a product / service that meets stated or documented requirements.
In some cases, product / service requirements originate from customer requirements , thereby creating a common link to customer-driven quality, but the focus of the culture is on the quality of the product / service. If the customer requirements is accurately stated and designed into the production / service delivery process, then as long as the product / service meet the requirements, the customer should be satisfied. This approach is common in supporting the ISO 9001-based quality management system. Employee Satisfaction:
This concept is that an organization takes care of employee’s needs so that they can be free to worry only about the customer. Employee satisfaction is a primary measure of success for this type of organization. Organizational focus: Some organizations tend to focus on total organizational quality while others are quite successful at using a segmented approach to implementing quality. What is Benchmarking? “Benchmarking is the process of measuring an organization’s internal processes then identifying, understanding, and adapting outstanding practices from other organizations considered to be best-in-class.
One of the biggest mistakes organizations make when first benchmarking is that they limit their benchmarking activity to their own industry. Benchmarking within your industry is essential. However, you already have a pretty good idea how your industry performs so it’s imperative that you reach outside and above your own industry into other industries that perform a similar process but may have to perform this process extremely well in order to succeed. 1. 6 Ordering Strategy Orders are booked for the next month. Fixed Period Ordering strategy
Inventory is the stock of any item or resource used in an organization. Inventory can exist as raw materials, finished products, components parts, supplies, and work-in process. Organizations keep inventory for a number of reasons including to maintain independence of operations, to meet variation in product demand, to allow flexibility in production scheduling, to provide a safeguard for variation in raw material delivery time, and to take advantage of economic purchase order size. Costs associated with inventory include holding or carrying costs, setup or ordering costs, and shortage or stock-out costs.
Independent demand items are unrelated to each other and thus needed quantities for these independent items must be determined separately. For dependent demand items, the demand for one item is a direct result of the need for other items. Component parts demand, for example, is dependent on the demand for the final product. Inventory systems can be modeled as fixed-order quantity or fixed-time period. In the fixed-order quantity model, the same amount of inventory is replenished in each order period. Necessary assumptions include: demand is known, constant, and uniform throughout a period.
Lead time is constant and the price per unit and ordering costs are constant. In a fixed-time period system, inventory is counted at fixed time intervals and orders are placed on a periodic basis. This model is desirable in situations when vendors make routine visits to customers and take orders for their complete line of products or when buyers want to combine orders to save on transportation costs. Organizations must make decisions about the amount of safety stock to maintain for protection against stock-outs. The safety stock ensures a firm’s desired service level will be met.
The quantity-discount inventory model applies when the cost of an item varies with the order size. This model, as in all inventory models, computes an economic order quantity (EOQ) to minimize order costs and holding costs CHAPTER 2 LITERATURE REVIEW This chapter contains the review of existing research literature Silverman 2008 discusses the different directions of the study of employee organisational commitment that has taken over the previous decade. This study analysed the various factors that motivate/ influence employees to work hard.
Tamkin 2007 reviews commitment in the literature and highlights an early model by Allen & Meyer (1990) which defines three types of commitments: effective Commitment in which the employee feels attached, Normative Commitment in which the employee feels it his moral obligation to stay in the organisation and continuance commitment in which the employee recognizes the cost involved in learning an organisation. This study reveals that there is an imbalance of the three types of commitments in n employee, one may possess a high degree of a type of commitment but lack the others etc.
Ellis & Sorenson 2007 point to the inconsistent way in which term engagement has been applied by business leaders and HR professional over 20 years. They enclose a 2 dimensional definition of engaged employee as one who knows what to do and what he wants to do. It is their strong view that engagement should always be defined and assessed within the context of productivity and the two elements of engagement noted above are necessary for driving productivity K. Dow Scott Steven E. Markhan and Richard W. Wobers “Rewarding good attendance”.
Comparative study of positive ways to reduce absenteeism “Personnel Administartor, Vol. 30 No. 8” CHAPTER 3 RESEARCH Research Methodology Research is the systematic and objective identification, collection, analysis, dissemination, and use if information for the purpose of improving decision making related to the identification and solution of problems and opportunities in the industry. This research report describes as “A Study on the Issues involved in a Cold Rolling Mill”. This research includes both theoretical as well as practical situations and findings for the same.
Type of Research: This research is basically an “EXPLORATORY research study”. The report includes facts – finding, enquiries of different kinds and exploration of operations involved in a Cold Rolling Mill, features, live examples, various types and behavioural aspects of employees as well as, suggestions that endows employees’ potentials and insights to build better labour productivity. In this research the motivating/influencing factors that drive employees to work have been measured. I purposely chose to interview the employees myself one by one.
The ones that were interviewed were told not to mingle with the ones that were still left to be interviewed so that they don’t discuss the answers and defeat the whole purpose of this research. Features of Exploratory Research: * To provide insight and understanding * The information needed is defined only loosely * Sample is small * Analysis of primary data is qualitative Rationale for using Exploratory Research People may be unwilling or unable to answer to certain questions. People are unwilling to give truthful answers to questions that invade their privacy, embarrass them, or have a negative impact on their ego or status.
Also, people may be unable to provide accurate answers to questions that tap their subconscious. The values, emotional drives, and motivations residing at the subconscious level are disguised from the outer world by rationalisation and other ego defences. Procedure of Exploratory research Depth Interviews Depth Interviews are a method of obtaining qualitative data. These are a direct way of obtaining information, conducted on one to one basis. These are unstructured, direct, personal interviews in which a single respondent is probed by a skilled interviewer to uncover the underlying motivations, beliefs, attitudes, and feelings on a topic.
Sampling design: Type of Universe: The type of universe includes all the unskilled labour working in the industry. Sample Size & Type of Sampling: For this project the type of sampling is deliberate/convenience sampling. The data selected is rational and with an intention to serve the purpose of this research. The sample design is based upon the non probability sampling. The suitable sample type here is Convenience Sampling because I have chosen the sample deliberately. As per my research problem it is not possible to carry out the research on a big volume of companies operations so that I have purposively chosen small sample size.
Instead of carrying out research on a typical huge data, I have preferred the small data for better judgment. Sampling unit is Chandigarh, Derabassi and Baddi Mills of the organisation. The sample size in this research is 50 employees from which it fulfils the requirements of efficiency, representativeness, reliability and flexibility. CHAPTER 4 DATA ANALYSIS Secondary Data Analysis Purchase decision ATPL sources its raw materials need from SAIL, RNRL, Tata Steel and CITCO (Chandigarh Industrial & Tourism Corporation). ATPL has three plants located in Chandigarh, Baddi (Himachal Pradesh) and Derabassi (Punjab).
ATPL uses this to its advantage. For its Chandigarh unit, for example, it sources its raw material needs from CITCO Yard, which is the cheapest. Calculations are shown below: Particulars| Direct Dispatch CITCO| Direct Dispatch SAIL| CITCO Yard| SAIL Yard| Basic| 35. 000| 35. 000| 35. 000| 35. 000| Less: Discount| 0. 000| 0. 000| 0. 200| 0. 200| Add: Excise Duty| 3. 605| 3. 605| 3. 903| 3. 903| Add: Freight & CST| 2. 775| 2. 775| 2. 490| 2. 490| Add: Yard Charges/Local Charges| 0. 100| 0. 100| 0. 600| 0. 600| Gross Total| 41. 480| 41. 480| 41. 793| 41. 793|
Add: VAT/CST| 1. 659| 0. 000| 1. 672| 1. 672| Total| 43. 139| 41. 480| 43. 464| 43. 464| Less: VAT/CST| 1. 659| 0. 000| 1. 672| 1. 672| Actual Costing| 41. 480| 41. 480| 41. 793| 41. 793| Less: Further Discounts| 0. 250| 0. 000| 0. 250| 0. 000| Net Costing| 41. 230| 41. 480| 41. 543| 41. 793| Sale Price(including ED)| 52. 000| 52. 000| 52. 000| 52. 000| Less: Excise Duty| 4. 856| 4. 856| 4. 856| 4. 856| Net Benefit| 9. 519| 9. 269| 9. 504| 9. 254| For Baddi Unit: Particulars| Direct Dispatch CITCO| Direct Dispatch SAIL| CITCO Yard| SAIL Yard| Basic| 35. 000| 35. 000| 35. 00| 35. 000| Less: Discount| 0. 000| 0. 000| 0. 200| 0. 200| Add: Excise Duty| 3. 605| 3. 605| 3. 903| 3. 903| Add: Freight & CST| 2. 775| 2. 775| 2. 490| 2. 490| Add: Yard Charges/Local Charges| 0. 100| 0. 100| 0. 600| 0. 600| Gross Total| 41. 480| 41. 480| 41. 793| 41. 793| Add: VAT/CST| 0. 830| 0. 000| 0. 836| 0. 836| Total| 42. 310| 41. 480| 42. 629| 42. 629| Less: VAT/CST| 0. 000| 0. 000| 0. 000| 0. 000| Less: Excise Duty| 0. 000| 0. 000| 0. 000| 0. 000| Actual Costing| 42. 310| 41. 480| 42. 629| 42. 629| Less: Further Discounts| 0. 250| 0. 000| 0. 250| 0. 00| Net Costing| 42. 060| 41. 480| 42. 379| 42. 629| Sale Price(including ED)| 52. 000| 52. 000| 52. 000| 52. 000| Net Benefit| 9. 940| 10. 520| 9. 621| 9. 371| For Derabassi unit Particulars| Direct Dispatch CITCO| Direct Dispatch SAIL| CITCO Yard| SAIL Yard| Basic| 35. 000| 35. 000| 35. 000| 35. 000| Less: Discount| 0. 000| 0. 000| 0. 200| 0. 200| Add: Excise Duty| 3. 605| 3. 605| 3. 903| 3. 903| Add: Freight & CST| 2. 775| 2. 775| 2. 490| 2. 490| Add: Yard Charges/Local Charges| 0. 100| 0. 100| 0. 600| 0. 600| Gross Total| 41. 480| 41. 480| 41. 793| 41. 793|
Add: VAT/CST| 0. 415| 0. 000| 0. 418| 0. 418| Total| 41. 895| 41. 480| 42. 211| 42. 211| Less: Further Discounts| 0. 250| 0. 000| 0. 250| 0. 000| Net Costing| 41. 645| 41. 480| 41. 961| 42. 211| Sale Price(including ED)| 52. 000| 52. 000| 52. 000| 52. 000| Gross Benefit(including ED)| 10. 355| 10. 520| 10. 039| 9. 789| Sale Price(without ED)| 47. 144| 47. 144| 47. 144| 47. 144| Excise Duty Payable| 4. 856| 4. 856| 4. 856| 4. 856| Excise Duty Credit| 3. 605| 3. 605| 3. 903| 3. 903| Net ED Payable| 1. 251| 1. 251| 0. 953| 0. 953| Gross Profit| 9. 104| 9. 269| 9. 086| 8. 36| Inventory Controlling Techniques in the Organisation Lead Time 45 days Receipt of materials Safety-stock Reorder point Working Quantity 2000 MT Minimum-level 1000 MT Maximum-level 3000 MT Time Inventory Level Figure 4. 1: Inventory Control Model Colour codes used for Cold Rolled Tubes Gauge sizeColour 27 & 22 & 17 26 & 21 & 16 25 & 20 & 15 24 & 19 & 14 23 & 18 Production inventory management differs from general warehouse management because it involves the determination of how quickly to produce a particular product.
The factors involved in many cases are similar, though there are some variances in making the final decision as to how quickly manufacturing should push items through the production line. The first concern in production inventory management is on the front end of the process. If one does not have the materials required for production, then one cannot move forward in providing the products to others. One must make certain that he has all the supplies he needs, from raw materials to factory workers, to complete the production process. One must determine the current demand for the product on the market.
Good production inventory management occurs when one produces just enough material to satisfy customers’ needs without overextending the production line and manufacturing too many of any given product. One does not want an incredible amount of back stock lying around, as this detracts from one’s net profit. On the other hand, one does not want to be in short supply when a large order comes in, so having a little extra on hand is a great idea, and making sure one is prepared to make a production run for such orders is vital. The assumption that everything manufactured will be flawless is a vague one.
An important consideration in production inventory management is to allow room for error. In other words, one should calculate a sufficient amount of product to assume that, even with flaws that get past quality control efforts, there is sufficient stock of the product required. In many instances, even the best production inventory management strategies fail in the long run due to the cost of the production process being overlooked as a factor. It is important to maintain a cost effective production process, and this includes making sure that the inventory is not an overwhelming factor.
This comes back to not overproducing any items that come off the assembly lines. Doing so is a waste of time and materials, costing you excess money to create. Obviously, conservation of the materials, time, and energy consumed in manufacturing unnecessary goods is essential to maintaining a cost effective production inventory management strategy. One should be proactive in keeping close watch on all occurrences in the production or manufacturing facility to make sure that there is no waste, and then it is guaranteed to achieve a greater standard of success and profitability.
Pestel framework P olitical factors, are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bad). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Factors in favor of ATPL are:
The Government of India has removed steel industry from the list of industries reserved for public sector and has exempted it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario. E conomic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions.
For example, interest rates affect a firm’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. ATPL, on account of its strongly financial strength enjoys a rate of interest lower by 75 basis points than given to any other organisation in the industry. The growth rate of ATPL has been tremendous. From starting with just 1800 metric tonnes per annum in 1998 it has reached 20000 metric tonnes per annum in the year ended March 2010.
The compounded annual growth rate has been 24. 6%, which is a feat in itself. S ocial factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company’s products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labour). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).
Availability of labour, both skilled as well as unskilled is available readily at all the three locations. The only problem ATPL faces is with the voluntary turnover of unskilled labour. Till the time training of an employee is done, he/she switches over to some other Mill in the region. T echnological factors include ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation. The Government of India has abolished all the restrictions in the import of latest technology, which has helped companies like ATPL have the latest “state of art” manufacturing infrastructure. E nvironmental factors include weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness to climate change is affecting how companies operate and the products they offer–it is both creating new markets and diminishing or destroying existing ones.
All the three locations of ATPL are free from any natural disturbances like drought or heavy rain etc. Steel being prone to water, it is very important that the storage sheds of the finished goods i. e. CR Pipes are free from any water logging which may spoil the produce. L egal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. ATPL is a Private Company, which follows all the legal requirements in the utmost right manner.
It has a team of 3 Charted Accountants which keep the Directors of the company aware about the legal obligations to be followed. Value Chain Analysis Figure 4. 2: Value Chain Analysis Primary activities Inbound logistics: Refers to goods being obtained from the organizations suppliers ready to be used for producing the end product. ATPL sources its raw material needs from organizations like SAIL, Tata Steel, JSW, ISPAT, RINL etc. the raw material is available in abundance and there is no problem in procuring raw material. The ordering strategy followed is FIXED period ordering strategy, orders being booked one month in advance and normal lead ime being 45 days. Operations: The raw materials and goods obtained are manufactured into the final product. Value is added to the product at this stage as it moves through the production line. ATPL has three rolling mills and four tube mills working 24 hrs a day producing 20000 metric tonnes of Steel products. The rejection rate is close to 1% which is tolerable. The operational schedules are strictly adhered to in the organization. Outbound logistics: Once the products have been manufactured they are ready to be distributed to distribution centers, wholesalers, retailers or customers.
ATPL has its own fleet of trucks ensuring prompt delivery of its finished good. The delivery schedules are strictly met. Marketing and Sales: Marketing must make sure that the product is targeted towards the correct customer group. The marketing mix is used to establish an effective strategy; any competitive advantage is clearly communicated to the target group by the use of the promotional mix. ATPL follows to types of distribution strategy. It sells the goods directly to its customers as well as has a network of Branches and Agents across the Nation to sell goods.
Services: After the product/service has been sold what support services does the organisation have to offer. This may come in the form of after sales training, guarantees and warranties. ATPL offers its customers strong guarantee. Rate of rejection more than 1% can be returned to the company by its customers, but it has not happened that often, strongly on account of the strict quality controls followed by the company. Support Activities The support activities assist the primary activities in helping the organisation achieve its competitive advantage.
They include: Procurement: This department must source raw materials for the organisation and obtain the best price for doing so. For the price they must obtain the best possible quality. As mentioned earlier, ATPL makes the purchase decisions only after carefully calculating the prices of various suppliers for a particular quality. The management rightly believes that “the wiser the purchase, the fatter are the profits” Technology development: The use of technology to obtain a competitive advantage within the organisation. This is very important in today’s technological driven environment.
Technology can be used in production to reduce cost thus add value, or in research and development to develop new products, or via the use of the internet so customers have access to online facilities. Firm infrastructure: Every organizations need to ensure that their finances, legal structure and management structure works efficiently and helps drive the organisation forward. The value chain encompasses the whole organisation and looks at how primary and support activities can work together effectively and efficiently to help gain the organisation a superior competitive advantage. ATPL uses the latest state of art machinery.
Four Tube mills, three highly productive Rolling Mills and three draw bench units help ATPL command a sizeable share in the regional market. The unit is capable of producing high quality CRCA Strips and Tubes with an installed capacity of producing nearly 25000 metric tonnes of steel annually. Human resource management: The organisation will have to recruit, train and develop the correct people for the organisation if they are to succeed in their objectives. Staff will have to be motivated and paid the ‘market rate’ if they are to stay with the organisation and add value to it over their duration of employment.
Within the service sector eg airlines it is the ‘staff’ who may offer the competitive advantage that is needed within the field. This is the problematic area for ATPL ABC Analysis The ABC classification process is an analysis of a range of objects, such as finished products, items lying in inventory or customers into three categories. It’s a system of categorization, with similarities to Pareto analysis, and the method usually categorizes inventory into three classes with each class having a different management control associated: A – Outstandingly important; B – of average importance;
C – Relatively unimportant as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and still less to C. Popularly known as the “80/20” rule ABC concept is applied to inventory management as a rule-of-thumb. It says that about 80% of the Rupee value, consumption wise, of an inventory remains in about 20% of the items. This rule, in general, applies well and is frequently used by inventory managers to put their efforts where greatest benefits, in terms of cost reduction as well as maintaining a smooth availability of stock, are attained.
Thus, applied in the context of inventory, it is a determination of the relative ratios between the number of items and the currency value of the items purchased / consumed on a repetitive basis: * 10-20% of the items (‘A’ class) account for 70-80% of the consumption * the next 15-25% (‘B’ class) account for 10-20% of the consumption and * the balance 65-75% (‘C’ class) account for 5-10% of the consumption ABC Analysis is the basis for material management processes and helps define how stock is managed.
It can form the basis of various activity including leading plans on alternative stocking arrangements (consignment stock), reorder calculations and can help determine at what intervals inventory checks are carried out (for example A class items may be required to be checked more frequently than c class stores). The ABC classification system is to grouping items according to annual issue value, (in terms of money), in an attempt to identify the small number of items that will account for most of the issue value and that are the most important ones to control for effective inventory management.
The emphasis is on putting effort where it will have the most effect. The ABC concept puts emphasis on the fact that every item of inventory is critical and has the potential of affecting adversely, production, or sales to a customer or operations. The categorization helps in better control on A and B items. In addition to other management procedures, ABC classifications can be used to design cycle counting schemes. For example, A items may be counted 3 times per year, B items 1 to 2 times, and C items only once, or not at all | Suggested policy guidelines for A, B & C classes of items A items (High cons.
Val) B items (Moderate cons. Val) C item (Low cons. Val)| Very strict cons. control | Moderate control| Loose control| No or