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  • 1. Presented By :<br />ParneetKaur<br /> MBA 2A<br />Summer training project report<br />
  • 2. COMPANY PROFILE<br />Company: GlaxoSmithKline Consumer Health Limited.<br /> <br />Head office: Gurgaon(Haryana)<br />Registered Office:Nabha (Punjab)<br /> <br />Status:Multinational Company (originally U.K. Firm)<br />Turnover: Rs. 20,251.2 (Millions), 11.5% as compare to<br /> last year  <br />Export to : Bangladesh, Myanmar, Sri Lanka, Middle East<br /> Nepal, Hong Kong, Malaysia, &amp; Fiji<br />
  • 3. INTRODUCTION TO GSKCH<br />GlaxoSmithklineConsumer Healthcare Limited is an Indian associate of GlaxoSmithklinePlc, U.K.<br />Largest players in the health food drinks industry in India<br />Manufacturing plants located in Nabha, Rajahmundry &amp; Sonepat has a total workforce of over 2700 people<br />Flagship product- Horlicks<br />GSKCH has distribution network in India comprising over 1800 wholesalers &amp; direct coverage of over 4,00,000 retail outlets.<br />
  • 4. MISSION <br />“To improve the quality of human life by enabling people to do more, feel better and live Longer.” <br />
  • 5. Historical Background<br />In 1955 Horlicksmanufactured by Horlicks Ltd. Slough, England was being imported, bottled and sold in India<br />On May 31, 1958 Pratap Singh laid the foundation stone of the Company at Nabha.<br />On 24th March 1960, the factory went into production.<br />In 1969 Horlicks Group disposed off their holding in India and U.K. to “BEECHAM GROUP OF INDUSTRIES&quot; which was a multinational <br />In 1979 Beecham India (Pvt.) Ltd. Mumbai merged with Hindustan Milk foodManufacturers Ltd. and the name was changed to H.M.M. Beecham Group ltd.<br />
  • 6. Cont…..<br />SmithKline U.S.A. merged on September 16, 1991 to form Smith Kline Beecham Consumer Brands, Plc. with its registered office in the U.K. H.M.M. became a part of Smithkline Beecham Consumer Brands<br />In 1994 the name was changed to Smithkline Consumer Healthcare Ltd. <br />A merger took place between Smithkline Beecham and Glaxo Welcome and the new company GlaxoSmithkline (GSK) was formed on 27-12-2000 .<br /> In the Indian market GSKCH’s journey began with Horlicks<br /> <br />
  • 7. Business stations of GSKCH ltd.<br />Head office:<br />GURGAON<br />Packing stations:<br />MANGALDOI, GAUHATI (ASSAM)<br /> KOMPALLY<br />BADDI (HIMACHAL PRADESH)<br />Regional Sales Offices (RSO) : <br /> GHAZIBAD<br /> MUMBAI <br /> KOLKATA <br /> CHENNAI<br />Factories<br /> RAJAMUNDREY<br /> SONIPAT<br /> NABHA<br />
  • 8. Main Product of GSKCH Ltd.<br />HORLICKS <br />MOTHER HORLICKS WITH DHA<br />JUNIOR HORLICKS WITH DHA<br />BOOST <br />BISCUITS<br />ENO<br />GOPIKA GHEE (BY PRODUCT)<br />
  • 9. About GSKCH Nabha Plant<br />It is biggest unit of all the three manufacturing units and it is also the registered office of GSK Consumer Health Care.<br />The plant at present employs a work force varying from 1500 to 2000 out of which approximately 1100 are permanent. There is a staff and management of about 140 persons<br />There is a wage agreement for 3 years<br />
  • 10. Cont…<br />The plant runs 24 x 6 and there are 3 shifts from 5.15 a.m. to 1.15 p.m., 1.15 p.m. to 9.15 p.m. &amp; 9.15 p.m. to 5.15 a.m. The office opens for 6 days in a week.<br />Production Capacity of Nabha plant is about 99500 MT pa<br /> <br />There are 7 Milk Collection Centers (MCC’s) around Nabha, to meet the requirement of 70 tones of Milk per day.<br />
  • 11. 5S AT NABHA<br />5S is a tool that aims to create and maintain an organized, clean &amp; high performance workplace. This tool has been efficiently utilized by Nabha Unit and it has lead to reduce the records retrieval time drastically.<br />Sort<br />Store<br />Shine<br />Standardize<br />Sustain<br />
  • 12. Supply chain process<br />
  • 13. Various departments at GSKCH Ltd<br />HUMAN RESOURCES AND ADMINISTRRATION DEPARTMENT.<br />MANUFACTURING DEPARTMENT<br />MILK PROCUREMENT DEPARTMENT<br />QUALITY ASSURANCE DEPARTMENT<br />ENGINEERING DEPARTMENT<br />FINANCE DEPARTMENT<br />
  • 14. FINANCE DEPARTMENT<br />VENDOR PAYMENT<br />DISBURSEMENT OF SALARIES<br />PAYMENT TO GOVERNMENT BODIES<br /> <br />MILK ACCOUNTING<br /> <br />TREASURY &amp; BANKING<br />PAYMENT OF SERVICES<br />CAPITAL BUDGETING<br />
  • 15. SWOT analysis of Nabha plant<br />Strengths:<br />They have there own energy conversion projects.<br />GSK has good brand image in the market.<br />High production capacity.<br /> <br />Weaknesses <br />GSK is not using its Working capital properly. <br />GSK don’t recruit the any female staff.<br /> <br />
  • 16. Cont….<br />Opportunities<br />Rising household incomes, increasing urbanization, changing lifestyles, growth in working women’s population should lead to greater demand for processed food products<br /> <br />Threats<br />Limited use of technology in food processing<br />High taxes on branded agricultural products<br /> <br />
  • 17. INVENTORY<br />The dictionary meaning of Inventory is ‘a list of goods’. In a wider sense, inventory can be defined as an idle resource, which has an economical value.<br />KINDS OF INVENTORY<br />Raw materials &amp; parts<br />Consumables &amp; Spares- <br />Work-in-progress- <br />Finished goods- <br />
  • 18. INVENTORY CONTROL<br /> Inventory Control is the art and science of maintaining the stock level of a given group of items. The activities of Inventory control include the following:<br />Determination of limits of inventories to be held.<br />Determination of inventory policies.<br />Setting out of investment pattern and its regulation as per individual and collective requirements.<br />
  • 19. IMPORTANCE OF INVENTORY CONTROL<br />To minimize the idle time caused by shortage of inventory and non- availability of inventories as per requirements, and<br /> <br />To keep down capital investment in inventories, inventory carrying cost and obsolesces losses.<br /> <br />
  • 20.    VARIOUS INVENTORY MANAGEMENT TECHNIQUES <br />Selective Management: In this technique, various items of stores are classified in various classifications<br />Management by Exception: In this technique, items with certain exceptions are tackled on different points of time. <br />Rationalization: Techniques of standardization and variety reduction are used.<br />Value Analysis : Functions performed by the materials are analyzed and alternative raw materials are suggested to achieve the same function at minimum cost. <br />Computerization: Computer outputs can be used for scientific forecast of demand to solve many inventory models.<br />
  • 21. NATURE OF GENERAL INVENTORY <br />Inventories are stock of the product a company is manufacturing for sale and components that make up the product. The various forms in which inventories exist in a manufacturing company are: raw materials, work in progress, finished goods &amp; stores and spares.<br />
  • 22. GENERAL STORE INVENTORY IN GSK<br /> General store is that which the part of the production becomes indirectly. Without such inventory no production will be there. This store inventory includes: -<br />Polythene bags <br />Consumables like diesel etc.<br />Cleaning material like nitric acid, caustic soda etc.<br />Floor cleaning towels<br />Spare parts of the machines<br />
  • 23. Cont…….<br />Inventory required under GMP (Good Manufacturing Practices) like uniform, hand gloves, mouth covers, safety shoes etc<br /> Under the general store inventory total no. of items are 2254, which have the ABC classification. Their total consumption value is Rs. 1,99,02,268.13 .<br />
  • 24. TITLE<br />Inventory management and control at GlaxoSmithkline Consumer Healthcare Ltd.<br />
  • 25. OBJECTIVES OF STUDY<br />To determine overall inventory position of the company.<br />To study the existing inventory control practices and procedures in the company<br />To know that how the recategorization of the inventory is done through the ABC analysis.<br />To know that how other techniques can be better applied on the existing controlling technique.<br />
  • 26. Research Methodology<br /><ul><li>Sources of Data:</li></ul>Primary data<br /> Secondary data<br /><ul><li>Size of Population: </li></ul> Include all the employees presently working either in finance department or procurement department or store department of GlaxoSmithKline Consumer Healthcare Ltd. at Nabha plant.<br /><ul><li>Sample size :</li></ul> Six employees working in Finance department or procurement department or store department of GlaxoSmithKline Consumer Healthcare Ltd. at Nabha plant.<br /> <br />
  • 27. Cont..<br />Sample unit:<br />Any one employee working in Finance department or procurement department or store deparrment of GlaxoSmithKline Consumer Healthcare Ltd. at Nabha plant. <br />Research design concepts:<br />For this research descriptive research designis used . <br />The period:<br />The study is supposed to be relating to current year consumption i.e. 2010<br />
  • 28. LIMITATIONS OF THE STUDY:<br />To maintain secrecy the resource person were not providing information on the ground of maintenance of secrecy (Data being collected through MCA procedures).<br />A company generally cannot disclose its internal policies to outsiders. In such case, it is very difficult to find out and gather complete and true information in the forms of figures regarding financial matters as an Intern/Trainee<br />
  • 29. ABC ANALYSIS<br /> It is selective approach popularly known Always (A) Better (B) Control (C). The ABC goes by its name it always the best, then better and lastly the good.<br />Majority of the activity (70 to 80%) is governed by very few (10 to 20) attributes.<br />15 to 20% of total consumption is represented by another 15 to 20% items that may be classified as B category<br />Remaining 5 to 10% consumption is represented by a large no. of small consumption value items, which may be classified as C category.<br />
  • 30. Stock physical verification in GSK<br /> <br />For A category items is carried out every six months;<br />For B category items every year and<br />Once in two years for C category items.<br />
  • 31. Different criteria’s for recategorisationfor ABC analysis<br />Criteria-1<br />Category Average rate Annual consumption<br />A Rs. 7000 and above Rs. 70000 and above<br />B Rs,1250 and above Rs,15000 and above <br /> But less then 7000 But less then70000 <br />C less then Rs.1250 less then Rs. 15000<br />
  • 32. Cont…..<br />Criteria-2<br />Category Average rate Annual consumption<br />A Rs. 10000 and above Rs. 100000 and above<br />B Rs,2500 and above Rs,15000 and above <br /> But less then 10000 But less then 100000 <br />C less then Rs.2500 less then Rs. 25000<br /> <br />
  • 33. Requirement for recategorization process<br />General inventory items.<br />Their unit value.<br />There annual consumption<br />For calculating the unit value any of the following is required <br /> Closing value/Opening value/Consumption value Closing Qty./ Opening Qty. /consumption Qty.<br /> <br />
  • 34. PREPARATION OF PROPOSALS<br /> For preparing the proposals under the different conditions following steps have been taken: -<br />Firstly check that according to the unit value in which category the item is falling.<br />See that according to the consumption value which category is best suited to the item. <br />Then out of the two put the items in the upper category.<br />
  • 35. For example:<br /> According to Unit value it should fall in ‘C’ category but according to Consumption value it should fall in ‘B’ category.<br /> Therefore, it will fall in ‘B’ category.<br /> According to Unit value it should fall in ‘A’ category but according to Consumption value it should fall in ‘B’ category.Therefore, it will fall in ‘A’ category.<br /> <br /> <br />
  • 36. Existing Criteria: per unit value 7000 and consumption value 70000<br />According to No. of items<br /> <br />According to consumption value:<br />
  • 37.  Proposed criteria: per unit value Rs.10000 and consumption value Rs.100000<br />According to No. of items<br />According to consumption value:<br />
  • 38. Comparison between existing and proposed criteria<br />Comparison of items <br />Comparison of consumption value<br />
  • 39.  FSN Classification<br />This classification is done on the basis of consumption pattern of the items under analysis.<br />Fast moving:-Items being issued more than 15 times a year may be placed in ‘F’ category. <br />Slow moving:-Items up to a certain limit say 10-15 issues in a year may be classified as ‘S’ items.<br />Non-moving:-If there is no issues of a particular item during the past few years, naturally they will be classified as ‘Zero issue items’ <br />
  • 40. In GSK, criteria for FSN<br /> In GSK items, under FSN categorizing is done on the following criteria :-<br />Fast moving :-The items which are very frequently moved in one year are included in the fast moving category .<br />Slow moving :-The items which are moved from stores for a period of one and a half year.<br />Non-moving:-The items which are not issued from stores for more than three years<br />
  • 41. General Stores Inventory Composition Slow/non/fast moving items<br />
  • 42. LEVEL SETTING<br />Re-order Level: <br /> Maximum Consumption *Maximum re-order period<br />Minimum Level:<br /> Re-ordering Level - (Normal Consumption * Normal Re-order Period)<br />Maximum Level:<br />Reordering level + Minimum Re-ordering Quantity - (Minimum Consumption * Minimum Re-ordering Level period)<br />
  • 43. Cont…..<br />Danger Level:<br /> (Average Consumption) * (Maximum re-order period for emergency purchases)<br />Average Stock Level:<br /> Average stock Level = Minimum stock level + ½ of re-order quantity<br />
  • 44. Requirements to set these levels at GSK<br />First of all consumption of the items by different department or according to production pattern.<br />On the basis of lead-time involved on purchase of items.<br /> <br />While fixing minimum stock level employees of purchase department in GSK are consider following factors:<br /> Consumption pattern<br /> Seasonality of raw material <br /> Rejection rate in past<br /> Lead time / manufacturing time<br /> Source of material (import or Indian)<br /> Testing time, replenishment time, fumigation time<br /> Vendor response. <br />
  • 45. ECONOMIC ORDER QUANTITY<br />The quantity to be ordered should be such which minimise the carrying and ordering cost. If the price to be paid is stable, the quantity to be ordered each time can be ascertained by the following formula:-<br /> Economic Order Quantity (EOQ) = √ 2AO/C<br /> Where,<br /> A = Annual Consumption Quantity<br /> O = Cost of placing one order (ordering cost)<br /> C = Annual inventory carrying cost or holding cost<br />
  • 46. The total cost of material usually consist of:-<br /> Total acquisition cost (Purchase Value) + Total carrying cost (Holding Cost) + Total ordering cost<br />Acquisition Cost<br />Holding cost <br /> IN GSK THE RESONABLE ASSESSMENT OF INVENTORY CARRYING COSTS IS ESTIMATED TO 15% PER YEAR OF THE AVERAGE INVENTORY HOLDING<br />Ordering costs-<br /> IN GSK ORDERING COST PER ORDER COMPUTED IS APPROXIMATELY Rs. 25 PER ORDER.<br />
  • 47. Proposal:<br /> <br />STUDY AND ANALYSIS OF THE INVENTORY OF GSK AS PER THE EOQ MODEL TO KNOW THE DIFFERENCE BETWEEN THE TOTAL INVENTORY COST TO THE ORGANIZATION IN COMPARISON TO THEIR ACTUAL (ROQ METHOD) AND TOTAL SAVINGS, IF ANY, CAN BE MADE FROM THE THREE DIFFERENT.<br />
  • 48. FINDINGS OF THE PROPOSAL<br />BENEFITS<br /> <br />IF THE ORGANIZATION STARTS PLACING THEIR PURCHASE ORDERS AS PER THE EOQ METHOD THEY CAN SAVE SOME AMOUNT OF MONEY FROM THEIR ACTUAL TOTAL INVENTORY COSTS, AS THIS CAN HELP THEM IN SAVING THEIR WORKING CAPITAL ALSO<br />
  • 49. FINDINGS:<br />Many items are there in the stores, which although lying in general stores but don’t have any category in spite of having consumption value. <br />Some items have no consumption value but their minimum quantity is more than twice.<br />Some modern techniques of inventory management like VED can help in reducing investment in inventory, is absent. <br />Items, which are written off in the books, are lying in the stores and in any year if again their need arises they are written back in the books.<br />Capital related spares are placed under D99 category. These are those spares the asset value of which becomes zero but their spares have value.<br />
  • 50. SUGGESTIONS:<br />All the general store inventory items should be recategorized especially those, which have the consumption value during the year. <br />Company should have to go for some other controlling techniques like VED<br />The items, which don’t fall under any category, should be treated separately. <br />The company must treat ROQ &amp; EOQ separately on their individual effects on the inventory costs.<br />
  • 51. Thank you<br />

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