Mahindra & mahindra- Inventory Categorisation

Roll No. 56
Summer Internship Project Report
Submitted By | Ankur Suyal
Welingkar Institute of Management Development & Research
PGDM-RM 2015– 17 TRIMESTER IV
Specialization: Operations Management
Roll No. 56
MAHINDRA
&
MAHINDRA
INVENTORY ANALYTICS-
DASHBOARD FOR INVENTORY
CATEGORIZATION & ANALYSIS TO
IMPROVE QUALITY OF INVENTORY

July 7, 2016 INVENTORY ANALYTICS- DASHBOARD FOR INVENTORY CATEGORIZATION & ANALYSIS
TO IMPROVE QUALITY OF INVENTORY
SUMMER INTERNSHIP |MAHINDRA & MAHINDRA 2
CERTIFICATE

Acknowledgement
I wish to express my profound gratitude and sincere thanks to my project mentor
Mr. Rakesh Soni, General Manager-SCPC Department, Mahindra & Mahindra Ltd- FES,
Kandivali, Mumbai, Maharashtra, for his sincere exhortation, meticulous guidance and sustained
interest, constant encouragement and constructive criticism and painstaking efforts throughout the
course of investigation and preparation of the project. I am thankful to Mr. K.G. Shenoy, Vice-
President, SCPC Department, Mahindra & Mahindra Ltd- FES, Kandivali, Mumbai,
Maharashtra, for providing necessary facilities to carry out the study.
I would like to make a special mention of Mr. Pranav Malandkar and Mr. Adrian
D’Souza for attending to my innumerable doubts and queries. I would like to thank all the other
members of the CPPC team for taking out time to help me with the finer details of the project.
I would like to thank SCPC members of different plants for providing me with the
relevant data and to the IT Team specially, Mr.Anna Waje-Deputy General Manager-IT
Department, Mahindra & Mahindra Ltd., for the support extended to me during the tenure of my
project.
I would also like to sincerely thank my college mentors Prof.V.V Raghavan,
Associate Dean and Prof. Kavita kalyandurgmath, Operations Management, Welingkar
Institute of Management, Development and Research, Mumbai, Maharashtra for providing
their knowledge on the nuances of Operations management and continuous motivation during and
before the project. At last, special thanks to my parents for their moral support and warm blessings.
Kandivali,Mumbai ANKUR SUYAL (Summer Intern)
7th July, 2016 MAHINDRA & MAHINDRA Ltd.-FES

Contents
Introduction.................................................................................................................................................5
The Mahindra Group................................................................................................................... 5
Farm Equipment Sector............................................................................................................... 5
Inventory Management Concepts ............................................................................................................8
Glossary of Terms………………………………………………………………………………..15
Executive Summary...………………………………………………………………....................16
Process Modeling .....................................................................................................................................17
Inventory Classification……………………………………………………………….................18
Plant-wise Summary……………………………………………………………..........................20
IT Implementation…………………………………………………………………………….....21
Inventory Dashboard Output……………………………………………………….....................22
Conclusion.................................................................................................................................................22
Project Learnings: ....................................................................................................................................23
Appendix ...................................................................................................................................................24

Introduction
The Mahindra Group
The Mahindra Group is a federation of companies with a diversified presence across 18 industries and
operating in more than 100 countries across the world. The federated structure ensures that each business
charts its own future and is simultaneously able to leverage the synergies of the group’s competencies. A
US $16.9 billion multinational group, it employs more than 200,000 people and enjoys a leadership
position in utility vehicles, tractors, information technology and vacation ownership. It also has a growing
presence in areas like automotive industry, aerospace, aftermarket, components, consulting services,
defense, energy, financial services, logistics, real estate, retail, and two wheelers.
In 2013, the Mahindra group received the Financial Times ‘Boldness in Business’ Award in the
‘Emerging Markets’ category. Group Chairman, Mr. Anand Mahindra, was also named the
‘Entrepreneur of the year – 2013’ by Forbes India magazine. In 2012, Mahindra featured on the Forbes
Global 2000 list, a listing of the biggest and most powerful listed companies in the world.
Farm Equipment Sector
Mahindra began manufacturing tractors in the early 1960s for the Indian market. Farm Equipment Sector
(FES) was established as a separate company i.e. International Tractor Company of India Ltd (ITCI) in
1963. This was a Joint Venture between M & M, International Harvester (IH) - UK, a subsidiary of IH-
USA, one of the largest companies in the World then and Voltas Ltd, an Indian company with vast
experience in Marketing and Servicing of Engineering Products. The company was expected to
manufacture Agricultural Tractors as per IH design & these were to be marketed and serviced by Voltas
Ltd. This product, which was very essential for helping the country to become self-sufficient in important
commodity like Food was earlier being imported from abroad.
Nearly 50 years later, it is the number one tractor company in the world (by volume) with a market share
of 40 percent contributing to annual sales above 200,000 and over 2.1 million tractors sold to date. The
products are making farms more prosperous in more than forty countries on six continents. Following
their vision of Farm-Tech Prosperity, the company has also expanded into farm-support services,
including agri-mechanization solutions under Mahindra AppliTrac; seeds, crop protection, as well as
market linkages, distribution, agri-support information and counseling through
the Samriddhi Initiative. Through this network of services, they aim to empower the rural farmer and
transform rural productivity, income, and living standards. Their tractor brands, ranging from the 15 HP
engine to 85 HP, have been designed in close communication with farmers about their day to day tractor

usage and farming practices. From low cost tractors that cater to farmers with marginal landholdings, to
higher performance tractors with superior features, the company has revolutionized the farm equipment
space.
Journey of FES
Year Event
1963 ITCI was incorporated.
1964 The plant at Mumbai was established.
1970 Establishment of Implements Division at Nagpur, to manufacture Farm Implements.
1978 ITCI merged with M & M to become Tractor Division.
1983
FES achieved Leadership position in Indian Tractor Market - a position retained till
today.
1994
The Tractor Division became a Sector (SBU) of M & M, to be known as Farm
Equipment Sector (FES).
Mahindra USA (MUSA) was formed in USA as subsidiary company.
1996 The Business Process Re-engineering (BPR) process implemented at Nagpur.
2000 First Satellite plant established at Rudrapur.
2002 Second satellite plant established at Jaipur.
2003 FES won the DEMING AWARD
2004
Entry in China – JV established
Won the ‘Golden Peacock National Quality Award’
2005 Establishment of Mahindra Australia
2007 Won the coveted “Japan Quality Medal”
2008 Acquired majority stake in Jiangsu Yueda Yanchang in China

Range of Products
FES manufactures different models of Tractors approximately in 22 HP to 60 HP range for Domestic
Market and Tractors in higher HP range, approximately up to 80 HP for the export market. Refer to
Table 1 in the appendix for the details of tractors produced.
Central Production Planning & Control (CPPC)
The Manufacturing Division receives the sales demand from various demand streams. CPPC
department, part of the SCPC (Supply Chain Planning & Control) PU is responsible for forming the
production plan for tractors & aggregates at the four plants of the Farm Division (FES). The sales
demand is received from various demand streams:
 Powerol Engines
 ROW Tractor
 Domestic Tractors
 MUSA Tractor
 PTL Engines
 MGTL Transmission
CPPC takes into account various constraints like In-house capacity, supplier capacity, opening stocks of
Finished Goods & prepares Plant Wise, SKU Wise Production Plans. Since the sales demand is received
from various quarters and is met from various plants, it is essential that the production planning is done
centrally. It helps to avoid the duplication of work & also helps in avoiding omission of demand &
ensures optimal utilization of manufacturing capacity & other resources. It also serves as a single
window for marketing to communicate its requirements thereby ensuring proper flow information.
2009 Nagpur Plant -Frost & Sullivan Asia Manufacturing Excellence Award Gold Category
No. 1 Single Branded Tractor Company in terms of volume
2013 Manufacturing plant commissioned at Zaheerabad

Inventory Management Concepts
Push System
The push system of inventory control involves forecasting inventory needs to meet customer demand.
Companies predict the products and also determine the quantity in which these products will be sold.
These then in turn produce enough goods to meet the forecasted demand and sell, or push, the goods to
the consumer. A push system fairly assures that a company it will have enough product on its hands to
complete customer orders, preventing the inability to meet customer demand for the product.
Disadvantage of a push based inventory control system is that forecasts are often inaccurate as sales can
be unpredictable and vary from one year to the next. In addition, carrying costs related to the excess
stored inventory can increase as a result of decreased sales.
Figure 1: Push System
Supplier
Market Sales Forecast
Demand Forecast
Master Productions
Schedule (MPS)
(MPS)
MRP
Material Processing and
Factory Operations
Inventories of Finished
Products
Customer
Release of Work Order
Purchase Order
Shipment of Material

Material Requirements Planning (MRP)
Materials Requirements Planning, or MRP is an example of push based system. It combines the
calculations for financial, operations and logistics planning. It is a computer-based information system
which controls scheduling and ordering of the finished products. Its purpose is to ensure that raw
materials needed for production are available as and when needed. The basic functions of an MRP system
include: inventory control, bill of material processing, and elementary scheduling. MRP helps
organizations to maintain low inventory levels. It is used to plan manufacturing, purchasing and
delivering activities.
Figure 2: MRP System
Material
Requirement
Planning
(MRP)
Master
Production
Schedule
(MPS)
Bill Of
Material
(BOM)
Planned Order
Release
•Order
rescheduling
•Planned Order
Receipts
Inventory
Status

Pull System
A pull based inventory is a lean manufacturing approach to inventory management based on actual orders.
In contrast to a push inventory which uses forecasting for building inventory, pull-based inventory
management is a just-in-time production system which aims at increasing efficiency by lowering
inventory carrying costs. A major disadvantage of the pull system is that it is possible to run into ordering
dilemmas, such as a supplier not being able to get a shipment out on time. This results in the company
being unable to fulfill the FG orders and contributes to customer dissatisfaction.
Figure 3: Pull System
Estimate
of the
required
production
rate
Supplier
Market
Forecast
Kanban Pull
Sales Forecast
Demand Forecast
Master Productions
Schedule (MPS)
(MPS)
MRP
Material Processing
and Factory Operations
Inventories of Finished
Products
Custome
r
Location of Kanban Material
Release

Just In Time (JIT)
In a just in time environment, the flow of goods is controlled by a pull approach. JITis a production and
inventory control system in which materials are purchased and units are produced only as needed to meet
actual customer demand.
In JIT manufacturing system inventories are reduced to a minimum and in some cases even to zero. It has
the most profound effects on the operations of manufacturing companies which maintain three classes of
inventories, namely: raw material, Work in process, and finished goods. Traditionally, manufacturing
companies maintain large amounts of all three types of inventories to act as buffers so that operations can
proceed smoothly even if there are unanticipated disruptions. Raw materials inventories provide insurance
in case suppliers are late with deliveries. Work in process inventories are maintained in case a work
station is unable to operate due to a breakdown or other reason. Finished goods inventories are maintained
to accommodate unanticipated fluctuations in demand. While these inventories provide buffers against
unforeseen events, they have a cost. In addition to the money tied up in the inventories, experts argue that
the presence of inventories encourages inefficient and sloppy work, resulting in too many defects, and a
dramatic increase the amount of time required to complete a product.
Under ideal conditions a company operating under the JIT manufacturing system would purchase only
enough materials each day to meet the days needs. Moreover, the company would have no goods still in
process at the end of the day, and all goods completed during the day would have be shipped immediately
to customers. As this sequence suggests, “just-in-time” means that raw materials are received just in time
to go into production, manufacturing parts are completed just in time to be assembled into products, and
products are completed just in time to be shipped to customers. Although few companies have been able
to reach this ideal, many companies have been able to reduce inventories only to a fraction of their
previous level. The result has been a substantial reduction in ordering and warehousing costs, and much
more efficient and effective operations. In JIT manufacturing, the traditional emphasis of keeping
everyone busy is abandoned in favor of producing only what customers actually want. Even if that means
some workers or resources remaining idle.

Kanban
Kanban ,literally meaning signboard or billboard in Japanese, is a scheduling system for lean and just-in-
time (JIT) production.[2] Kanban is a system to control the logistical chain from a production point of
view. One of its main benefits of is to establish an upper limit to the work in progress inventory, thereby
avoiding overloading of the manufacturing system.
Kanban cards are a key component of Kanban and signal the need to move materials within a
manufacturing or production facility or move materials from an outside supplier into the production
facility. The Kanban card is, in effect, a message that signals that there is a depletion of product, parts, or
inventory that, when received, the Kanban will trigger the replenishment of that product, part, or
inventory. Consumption therefore drives demand for more production, and demand for more production
is signaled by the Kanban card. Kanban cards therefore help create a demand-driven system. In Oracle
ERP, Kanban is used for signaling demand to vendors through e-mail notifications. When stock of a
particular component is depleted by the quantity assigned on Kanban card, a "Kanban trigger" is created
(which may be manual or automatic), a purchase order is released with predefined quantity for the vendor
defined on the card, and the vendor is expected to dispatch material within a specified lead time.
The proponents of lean production and manufacturing believe that demand-driven systems lead to faster
turnarounds in production and lower inventory levels, thereby helping companies implementing such
systems to be more competitive.
Just in Sequence (JIS) or In-line vehicle sequencing(ILVS)
Just in sequence (JIS) is an advancement of the JIT inventory strategy .It aims at matching and creating a
complete fit in sequence with variation of the assembly line production. Components and parts arrive at a
production line right in time as scheduled before they get assembled. Feedback from the manufacturing
line is used to coordinate transportation to and from the process area. When successfully implemented,
JIS improves a company's Return on Assets (ROA), without loss in flexibility, quality or overall
efficiency. It is mainly implemented in automobile manufacturing.
One major advantage of the just in sequence approach is tremendous flexibility offered. Up until the order
is pulled at the supplier, the company can change it to add elements, reorder the sequence, and so forth.
The familiarity with rapid order pulling and delivery also allows the supplier and shipper to meet

unexpected needs quickly. If the company's production needs change, it can quickly meet them with
minimal lag time, since it is already operating on a just in sequence system.
The In-depth Inventory Classification
After successfully implementing the DBM system, the Central Planning and Production Control (CPPC)
want to control the inventory on real time basis as well as generating more information about its usage on
different categorization. These categorizations are as follow:
 On the basis of Domestic, Export & Powerol Items
 On the basis of H1, H2, H3, Compact and Dhruv tractor
 On the basis of Regular, Imported and Peculiar
This classification has to be done with the help of a famous ERP software i.e. SAP system.
SAP System
SAP (Systems, Applications & Products in Data Processing) is a German multinational software
corporation that makes enterprise software to manage business operations and customer relation.
In 2015, the company launched SAP S/4HANA, the newest generation of the SAP Business
Suite.
Query Function
MB51 Used for tracing the item-wise plant-wise consumption
movement.
MB5B Used for tracing the day-wise inventory stock.
MVT_SUMMARY Used for viewing the summarized consumption of a given
period.
MVT_REPORT Used for viewing the item-wise daily consumption
MC.9 For viewing the real time inventory and product heirarchy
MM17 For Data uploading
LSMW(Legacy System
Migration Workbench)
For uploading the data in the table ZZMM_BufferMgmt

Glossary of Terms
S.No. Term Definition
1.
Lead Time Lead time is the time between the initiation of a process and its
completion. In context of this project, it is a summation of the
production lead time and transit lead time
Production Lead Time Time interval between the placement of order at the supplier and the
completion of production.
Transit Lead Time Time interval between the item leaving the supplier site and it being
delivered at the plant
2. Cycle Stock Represents the portion of inventory that caters to planned consumption
need of a business.
3. Safety Stock Represents the extra stock of inventory that is maintained to account for
variation in consumption and inventory replenishment.
4. Service Level Measure of performance of the inventory replenishment policies.
5. Days of Coverage Number of days for which the current inventory will suffice as per the
average consumption.
6. TotStkval It is the sum of cost of total inventory present in the six plants of
Mahindra & Mahindra
7. Average Consumption Inventory consumed by different plant
8. Stkturnover Stock Turnover ratio measures the rate at which inventory is used over a
measurement period

Project Summary
Problem
Recognition
•Means for tracking the qualitative positioning of inventory at
various nodes
•Categorizing on the basis of procuring pattern
•Provides a means for correction and control of the exceptions
•Lead to potential reduction in average inventory
Objective
To ensure the right amount of inventory availability in all the plants of
Mahindra-FES, in accordance with the provided categorization.
Deliverables
• Establish a platform in the form of Inventory Dashboard for
ensuring control over the “Quality of Inventory”
• Identify the scope of improvement of inventory plant-wise by
developing a model for defining target inventory levels
• Study the challenges and future improvement potential of
KANBAN
Scope
Manufacturing facilities : Zaheerabad, Rajkot, Kandivali, Nagpur ,
Rudrapur , Jaipur
Monthly Total Inventory value : 400 crores
Total RM parts covered: 14456
Timelines
S.No. Milestones Planned Duration
1. Understanding the project requirement 2nd – 9thMay
2. Collecting the data from different plants 10th – 24thMay
3. Classifying and assigning coding to each part item 25th May– 8th June
4. Establishing the Inventory dashboard 9th – 19thJune
5. Studying the future potential of KANBAN 20th – 28thJune
6. Handover and Documentation 29st – 07th July

Understanding the Project Requirement
Process Modeling
Inventory Level was to be monitored and measured in terms of:
 Plant Stock
 IUTN Parts
There are 6 plants of Mahindra & Mahindra Ltd- FES sector, with their respective codes,
 Nagpur Plant, F003
 Kandivali Plant, F002
 Jaipur Plant, F007
 Rudrapur Plant, F005
 Rajkot Plant, F016
 Zaheerabad Plant, F023

Inventory Classification
Model Description
ABC Model Classifies inventory items based on their overall consumption value. Category A
are goods that contribute to about 80% of the total consumption value, Category
B to the about 15% and Category C to 5%.
HML Model Classifies inventory items based on their value. The norms for the classification
are usually left to management discretion. HML stands for High, Medium and
Low.
VED Model Classifies inventory items based on their criticality to production processes.
VED stands for Vital, Essential and Desirable
SDE Model Classifies inventory items based on their supply scarcity.SDE stands for Scare,
Difficult and Easy- to acquire
FSN Model Classifies inventory items based on their consumption pattern.FSN stands for
Fast moving, Slow moving and Non-moving items.
DEP Model* Classifies inventory items on the basis of their availability. DEP stands for
Domestic, Export and Powerol item
123HDC Model* Classifies inventory item on the basis of its implementation on different
tractors.123HDC stands for H1, H2,H3, Dhruv and Compact
RIP Model* Classifies inventory item on the basis of its consumption as well value. The
norms for the classification are usually left to management discretion.RIP
stands for Regular, Imported and Peculiar
*These models are only implemented in Mahindra & Mahindra Ltd-FES

Classification Norms
DEP
Model
Norms 123HDC
Model
Norms RIP
Model
Norms
Domestic Local
supplier
H1,H2,H3 Data will
be taken
from plant
Regular Inventory items which is being used
daily and easily accessible
Export Long
distance
supplier
Dhruv Data will
be taken
from plant
Import Inventory items which is imported
from overseas
Powerol Raw
material
supplied
from
Powerol
company
Compact Data will
be taken
from plant
Peculiar Inventory specifically applied on a
particular model
Assigning Code to the Items

Plant-wise Summary
Following is a snapshot of the template and the Plant-wise summary:
 Plant Code
 Material No.
 Material Description
 Category 1 (DEP Model)
 Category 2(123HDC Model)
 Category 3(RIP Model)
 Product hierarchy (assigning codes to the part item)
IT Implementation
SAP S/4HANA is used to implement the project on the real time inventory basis:
 MM17 for data uploading
 MC.9 for data execution on real time
The below link shows the SOP of how to upload and execute the system:
SOPs of Inventory classification.docx

Establishing the Inventory Dashboard

Inventory Dashboard Output
Plant-wise Categorization
DEP MODEL
123HDC Model

RIP Model
Conclusion
 Inventory Dashboard established as per plan by June end
 Benefits of the Inventory Dashboard :
 Potential of reducing average monthly inventory by approx. 8 Crs (in 6
plants)
 Provides visibility into the inventory positioning at various nodes
 Draws a comparative picture of actual against norms
 Prompts management response for exception items
 Implementation of inventory dashboard at plant level, to act as a platform for
implementing real time E-Kanban

Project Learnings:
 Challenges
 Understanding complexities of system and related in-place processes
 Timely development of the IT dashboard
 Technical Learning:
 Controlling composition of inventory
 In-depth understanding of KANBAN
 Industry implementation issues of KANBAN
 Functional Learning
• Project Planning :
 Identifying key milestones and prioritizing activities
 Following up with various teams and stakeholders
• Co-ordination with multiple locations & teams:
 learnt different aspects & levels of communication and presentation
 People management and consensus building

Appendix
Table 1: Range of Tractors
HP Range Model Description
15 – 20 HP Yuvraj 215 Designed for farmers with land
holding of less than 5 acres. It comes
at a cost comparable to owing a
bullock and performs a variety of
agricultural and non-agricultural
applications. Owing to it compact size
it’s apt for inter-crop application.
20-50 HP Mahindra 265 DI
Mahindra 265 DI Power Plus
Mahindra 395 DI
Mahindra 475 DI
Mahindra 575 DI
Mahindra 595 DI
Mahindra 275 DI
Mahindra 255 DI Power
These are known for their extreme
fuel efficient engine, high reliability &
value for money offering.
50 – 60 HP Mahindra 605 DI Dlx
Mahindra 555 DI Dlx
Mahindra 605 MAT
These are multi-application tractor
which expand the application
suitability multi - fold. Available in
Arjun DLX, Arjun MAT, Arjun Ultra – 1
covering through the entire crop cycle
these are also experts in agriculture
Land development.
60 – 85 HP Mahindra 8085 Available as Arjun International these
are tractors built with Integrated air
conditioning cabin, built-in music
system, suspended seat and un-
matched comfort driving.
Table 2(B) –List of important SAP Tables used
Table Description
MM17 For uploading and coding data into the SAP system
MARA For checking its product hierarchy
MC.9 For executing the Inventory dashboard

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