1. 1
SUMMER PROJECT REPORT
ON
“Inventory Optimization by bifurcating the unique
parts & creating the Nomenclature for part creation
process & Defining Min-Max category items at TCL”
At
TATA CUMMINS LTD
JAMSHEDPUR, INDIA
PREPARED BY
SHUBHAJIT MITRA
Enrolment No – PGDM/2014-16/05/027
Batch – 2014-2016
Under the Guidance of
External Guide Internal Guide
Mrs. Sushree Mishra Mr. Partha Sarthi Pal
Indirect purchase manager Professor IEM College
As a Partial fulfilment of PGDM Degree.
INSTITUTE OF ENGINEERING AND MANAGEMENT
SALT LAKE ELECTRONICS COMPLEX, SEC V, KOLKATA
2. 2
Acknowledgement
The Project undertaken by me during the period of this
summer training was related to the “Inventory optimization by
bifurcating the unique parts & creating the nomenclature
for part creation process & Defining min-max category
items at TCL” and it warranted a lucid data analysis of the same
for successful accomplishment. I had been helped, in this context
to a great extent by my project guide Mrs. Sushree Mishra,
Indirect Purchase Manager. I am grateful to her for guiding me to
successfully complete the project.
I wish to offer my gratitude to the all managers of the
Indirect Purchase department whose valuable guidance and
attention to the project eased the way for its completion.
Last but not the least I would like to express my sincere
gratitude to Mr. Samir Robert Bara (DGM-HR), who gave me an
opportunity to come face to face with real life working challenges
and helped me to develop a deep insight of the current industry
practices.
I am overwhelmed with the support I have received here at
INDIRECT PURCHASE. All of them made my stay at TCL an
enriching learning experience.
3. 3
DECLARATION
I do hereby declare that the project report titled
“Inventory optimization by bifurcating the unique parts &
creating the nomenclature for part creation process &
Defining min-max category items at TCL” Submitted by
me, in partial fulfilment of the Post Graduate Diplomain
Management from Institute of Engineering &
Management, Kolkata is exclusively prepared and
conceptualized by me and is not been submitted to
any other institution or published anywhere before.
Signature NAME: SHUBHAJIT MITRA
Date: REG.NO:PGDM/2014/01/027
4. 4
CERTIFICATE
To whom it may concern
This is to certify that the project entitled ‘Inventory optimization by
bifurcating the unique parts & creating the nomenclature for part
creation process & Defining min-max category items at TCL’
submitted by SHUBHAJIT MITRA of POST GRADUATE DIPLOMA
IN MANAGEMENT in fulfilment of the requirements for summer
Internship for INSTITUTE OF ENGINEERING AND
MANAGEMENT,KOLKATA during the academic year 2014-2016 in
Project under embodies the work done by them under my supervision
from 08-06-15 To 07-08-15.
-------------------------- ----------------------------
Mrs. Sushree Mishra Mr. Samir Robert Bara
Indirect purchase manager DGM HR Tata Cummins Ltd
5. 5
PROJECT
Studying the parts description to identify and
removing duplicityof the parts in Tata Cummins Ltd.-1,
2 & 3.
Segregating all the parts with more than one part
numbers.
Removing the duplicatepart numbers from the
system.
Defining the nomenclatureof the part description and
educatethe Buyers for the creation of part.
Designing the nomenclatureof the part description to
prevent duplicityparts.
Defining the Min – Max Qty for the C-class category
items.
6. 6
TABLE OF CONTENTS
CHAPTER DETAILS PAGES
1. INTRODUCTION TO TCL 7-13
2. SAFETY MEASURES FOLLOWED
IN TCL
14
3. COMPONENTS BEING PRODUCED
IN TCL
15-16
4. INTRODUCTION OF INDIRECT
PURCHASE IN TCL
17-19
4.1. BRIEF DESCRIPTION OF THE
PROJECT
20
4.2. PART CREATION PROCESS IN
TCL
21-23
4.3. RESEARCH & METHODOLOGY 24-37
4.4. RECOMMENDATION BY
CREATING NOMENCLATURE OF
PART DESCRIPTION.
38-44
4.5. MIN-MAX QUANTITY FOR C-
CLASS CATEGORY ITEMS
45-50
5 CONCLUSION 51
6 REFERENCES 52
7 ANNEXURE 54
1. INTRODUCTION TO TATA CUMMINS LTD :-
7. 7
Cummins Engine Company Inc. was founded in Columbus,
Indiana in 1919 when successful banker/investor W G Irwin
supplied the capital for a local self-taught mechanic and inventor
Clessie Cummins to begin manufacturing diesel engines.
Working out of an old cereal mill in Columbus, the first engine
made by Cummins was a Dutch designed, six horsepower, farm
type diesel. By 1925, the company had begun producing its own
design with enough success that operations were relocated to a
new larger site where the Columbus Engine Plant is now located.
It was here that Cummins created the breakthroughs that solved
critical problems of injection timing and introduced a successful
marine engine, originally installed in shrimp boats. The engine
proved so economical that its popularity soon spread to other
applications, including generator sets, drills, power shovels and
air compressors.
8. 8
Fig-Assembly line in TCL
Cummins has been associated with the Indian subcontinent for
five decades. The stage was set way back in 1962, when a
partnership between Kirloskar and Cummins crystallized into a
100-acre manufacturing campus in Pune. Within a span of three
years from commencing operations, the business venture started
to generate profits. There on, the partnership continued to
flourish, up till 1997, when the Kirloskar’s sold their ownership;
resulting in Cummins Inc. increasing its stake to 51% and the rest
being traded on the Bombay Stock Exchange. This led to the
formation of Cummins India Limited, a consolidated subsidiary
of Cummins Inc.
Tata Cummins is a joint venture between these two world
leaders. The agreement was signed in July 1993 with plant
construction starting in the industrial township of Jharkhand-
Jamshedpur in April 1994 and commercial production
commenced on January 1 1996. The entire organization has been
set up from scratch at a Greenfield site. The Rs 300 crore project
widely acknowledged to be the fastest implementation of its size
and nature (within budget) in the industry and within Cummins
family worldwide. The Company has installed capacity to
manufacture 1,20,000 Engines.
9. 9
Today Cummins in India has expanded its businesses across
markets and geographies, spanning 200 locations in the country.
The Group has also commenced production at its 300-acre
Megasite project in Phaltan, Maharashtra that will allow all future
projects to operate from a single location.
Employing close to 14,000 individuals, the Group has
reported combined sales of approximately Rs.10,500 crores in
2011.
Tata Cummins Limited is a 50:50 joint venture between Tata
Motors Limited, India's largest automobile manufacturer and
Cummins Inc., USA, world leaders in design and manufacture of
diesel engines. Manufacturing plants have been set up each at
Jamshedpur and Phaltan in Maharashtra for manufacturing diesel
engines to power commercial vehicles of Tata Motors Limited.
The plant at Jamshedpur manufactures 1,20,000 engines per
annum. The second plant that was commissioned in January 2011
at the Cummins Megasite at Phaltan has a capacity of 60,000
engines per annum with plans to increase to1,20,000 in future.
Our other partner Tata Motors is the largest manufacturer of
commercial vehicles in India. Tata Motors was established in
Jamshedpur in 1945, with the agenda of manufacturing steam
locomotives. In 1954, the company expanded into automobile
manufacturing, through collaboration with Daimler-Benz of
Germany. By the end of the collaboration in 1969, Tata Motors
had fully developed the capacity of designing and manufacturing
Medium Commercial Vehicles– taking the first step towards
indigenization. Tata Motors manufactures an entire range of
Heavy, Medium and Light Commercial Vehicles, Multi-Utility
Vehicles and Passenger cars.
10. 10
The relationship that Tata Cummins has with Tata Motors needs a
mention. Tata Motors is parent to Tata Cummins; it is a supplier,
a customer and also its competitor. This unique relationship is
studied at Harvard University. With the advent of Euro-III norms
in some city of India; Tata Cummins has now started producing
Euro-III engines. The engines produced by other automobile
companies are semi electronic but Cummins came up with fully
mechanical version of the engine. The fully mechanical version of
engine is now the USP of Tata Cummins.
Tata Cummins is ISO 9001, ISO 14001 and TS 16949
certified.
Cummins in India is a Group of complementary businesses
that design, manufacture, distribute and service engines,
generators and related technologies.
Its technology and pioneering initiatives bring innovative
solutions and dependable services at the best possible value to
users across the country.
With values of integrity, innovation, delivering superior
results, corporate responsibility, diversity and global involvement
ingrained across the organization, the Vision and Mission are the
solid foundation that define who we are and what we do.
PRODUCT OFFERING:-
The business’s expertise in offering end to end solutions to
the truck and bus market segments, lies in its ability to knit
together diesel and gas engines with related technologies
including filtration, exhaust, turbo, fuel, lube oil and coolant
systems.
11. 11
For its on highway applications, the Automotive Business
markets the B series, ISLe and ISBe engines under the diesel
range, and C series, Stoic and L series engines as part of its lean
burn natural Gas portfolio.
B series : The most promising model from the Company’s
product portfolio , the B 5.9 mechanical engine is designed for
providing lower acquisition and operating cost solutions to
customers for meeting BSIII and BSIV emission standards.
Available in a range of 130 to 180 HP, the engines power rigid
trucks , specialty vehicles and buses.
ISLe : A premium electronic product range from 280 to 375
HP, is equipped with waste gate turbocharger. Also available are
highly flexible power choices with less weight, compact size and
fuel efficient 8.9 litre configuration fitted with high pressure
common rail system. Global design engines are available that
meet Euro 3, Euro 4 and Euro 5 emissions.
C series : Available in 250 and 280 HP, the series with low
ultra emission is an ideal choice for the heavy duty segment. Plus
technology in C gas and Waste gate turbocharged engine capable
of operating on CNG, LNG, renewable natural gas or landfill gas,
finds suitable application in the bus segment.
B Gas : The six cylinder, lean-burn-spark-ignited natural gas
engine provides excellent torque, high fuel efficiency and
reliability. Available from 195 to 230 HP range, the engines come
with added features like ultra low emission and plus technology.
LOCATION:-
The Company is located at Jamshedpur & Presently the
Green Field project has started up at Pune (Phaltan, Satara
District).
12. 12
MANUFACTURING SYSTEM:-
The world class manufacturing systems of Tata Cummins
are benchmarked against the best internationally and comprise
facilities for machining 5 major engine components and facilities
for Assembly, Test and Paint of engines.
Assembly of engines is performed on a state-of-the-art
Automated Electrified Monorail System, which is roof, mounted
for clean floor assembly. The system is fully PLC (Pneumatic
Logic Control) controlled and linked to a computerized Assembly
Management System. It incorporates Falsifying at each station
and In-Process-Verification Systems at critical points for defect
free assembly. Laser Pulse Tools, Pneumatic Manipulators and
Ergonomically designed workstations and facilities are provided
to reduce operator fatigue.
Dedicated Machining lines are commissioned for each of the 5
components which are manufactured in-house viz. cylinder block,
cylinder head, crankshaft, camshaft and connecting rods.
Equipment has been sourced from leading suppliers in India and
overseas to ensure very high levels of capability and reliability.
This includes latest gauges, three Coordinate Measuring
Machines and sophisticated equipments such as CMM machines
and Marposs & Baker Gauges for cylinder bore measurement.
Cummins Vision:-
Making people better by unleashing the power of Cummins.
Cummins Mission:-
Motivating people to act like owners working together.
Exceeding customer expectations by always being first to
13. 13
market with the best products.
Partnering with customers to make sure they succeed.
Demanding that everything we do leads to a cleaner,
healthier, safer environment.
Creating wealth for all stakeholders.
What do we value?
Integrity: Strive to do what is right and do what we say we
will do.
Innovation: Apply the creative ingenuity necessary to make
us better, faster, first.
Delivering Superior Results: Exceed expectations
consistently.
Corporate Responsibility: Serve and improve the
communities in which we live.
Diversity: Embrace the diverse perspectives of all people
and honour with both dignity and respect.
Global involvement: Seek a world view and act without
boundaries.
14. 14
2. SAFETY MEASURES FOLLOWED IN TCL:-
An area marketed by black lines throughout the corridor
serves the footpath for people walking. This marking is to
allow safe movement of persons as company owns 11
‘Forklifts’ which are almost continuous at work throughout
the day.
Use of convex mirrors at blind curves to make people aware
of any moving body coming from another side (forklifts in
the worst case).
Use of warning signboards at regular places directing how to
be safe in the plant.
Safety shoes are the must to be worn inside the plant while
working or moving.
Since very less of overhead work is done in the plant, hence
helmets are not required.
Use of safety gloves is necessary while working on the
machines or coming in physical touch with the machines.
Safety glasses are a must to be worn by people working or
roaming through the plant, as dust particles can easily enter
eyes, since blowers are in repetitive use.
Signboards with arrows on them indicate the direction to
take to ‘exit’ in case of any emergency which take place in
the plant.
Use of ‘LOTO’ i.e. Lock Out Tag Out which means to lock
out the machines during maintenance or other job different
from everyday use, either electrically or pneumatically was
an important rule followed strictly by each and every
personnel.
15. 15
3. Components being produced in TCL:-
Shop Operations is the core function of the company which
manages the complete operations in the shop. It holds almost 70%
of total company’s manpower.
Shop Operations consists of:-
Assembly, Test and paint BU (ATPBU)
Cylinder Block BU (CBBU)
Cylinder Head BU (CHBU)
Crank Shaft BU (CRBU)
Connecting Rod and Cam shaft BU (RCBU)
Assembly, Testing & Painting Business Unit (ATP
BU):
The Assembly, Testing and Painting Business Unit at TCL
houses one of the most sophisticated assembling and testing
facilities among the Indian industries. It is at this unit that the
various Made in Works (MIW) components and the Bought Out
Finished (BOF) components are assembled to produce the engine,
which then undergoes through the processes of testing and
painting before being delivered to the customer. This unit is the
biggest BU in TCL in terms of manpower employed and is
broadly divided into three loops as per the operations performed.
ATPBU has several unique features which are not found in most
assembling units, which include the use of Automated Electric
Monorails (AEM), Automated Guided Vehicles (AGV), In-
Process Verifications (IPV), Assembly Management System
(AMS) etc. The whole layout is essentially line-type and all the
loops are further subdivided into stations and each team is
assigned the responsibility of a particular group of stations.
16. 16
Cylinder Block Business Unit (CBHU):
This is the largest business unit in the Tata Cummins limited.
Cylinders blocks are manufactured in this unit which are then
send to assembly line. The raw material used is cast iron, which is
bought from Tata Motors Jamshedpur. Due to heavy chip
removal intense dust formation is the problem with this line. Most
of the operations performed on the block are without using
coolant
Cylinder Head Business Unit (CHBU):
In this business unit cylinder heads are manufactured which send
to assembly line. CHBU is a fully automated line having least
number of associates in TCL. The raw material is Cast Iron
casting and it comes from Tata Motors, Jamshedpur. The entire
line is divided into different cells depending on similarity of the
operations performed on the machines.
Crankshaft Business Unit:
Crankshaft Business Unit (CRBU) of Tata Cummins Limited
produces the crankshaft, which is then sent to the assembly for
fitting into the engine. Like the connecting rod, the raw material
here is also obtained form Bharat Forge, Pune in the form of a
forging. A number of crucial and intricate operations on the
crankshaft finally give the finished product. The machining
operations in CRBU are carried out across 35 machines, which
are divided into two lines:
Soft Line
Hard Line
17. 17
4. INTRODUCTION OF INDIRECT PURCHASE IN TCL
Indirect purchase is the sourcing of indirect goods (which are not
getting fitted in the component) and services for a business unit
that enable its activity. Or looking at it another way, the goods
and services classified under the umbrella of indirect procurement
are commonly bought for consumption by internal stakeholders
(business units or functions) rather than the external customer or
client. Hence in Tata Cummins the Indirect purchase department
deals with the requirement of the spare, tools and consumable
items for the internal purpose. There is a complete logic flow
which is being followed in this department which is being
explained below with the flow chart.
Fig – Logic flow of the process in Indirect purchase
18. 18
As we can see in the above flowchart that the request for
indirect materials whether it’s for spares, tools or
consumable items comes from Business unit (BU) or
Functional unit (FU).
We have to check whether the issue date is mentioned in the
request for the materials or items requested from FU or BU,
if no then it will be returned back to that same department
from where it was being generated.
If yes, then there will be a check whether the required
quantity or any substitute is available for that item or not, if
yes then required items will be supplied to that department.
If the quantity required or the substitute item is unavailable
then the request is being diverted to the buyer who will be
buying the item, after getting at least two different quotes
from the supplier for price comparison accordingly the
material will be purchased.
If the material cost is more than the specific amount then
there is approval required from Deputy general manager
(DGM) and General manager (GM) of Indirect purchase and
if the price is less than the specific amount then their is a
approval required from Business unit leader (BUL) from
Indirect purchase.
19. 19
After the approvals being done the purchase request (PR) is
being raised for the items.
After the purchased request is being made it is forwarded to
DGM or BUL of Indirect purchase for approval according to
the price of the item.
Once the PR is being approved then purchase order(PO) is
being made for approval
If there is a price hike of 5% from last purchase price and
that too within a year then PO will be transferred to
Managing Director (MD) for approval.
After the approval of Purchase order it will be moved to
supplier then material will be received and quality check will
be done of those materials and finally it will be supplied to
the store inventory.
20. 20
4.1. Brief description of the project
I have done my project in Indirect Purchase. In my project work I
have to segregate all the duplicate part numbers with same part
description which are still being used i.e. in active status from
Tata Cummins 1, 2 and 3 and deactivate it from the system. As
the part numbers with description are being created manually in
TCL so there are chances of duplicity and due to this duplicity
their problem raises of
a) Stock keeping – as there will different part numbers of the
same item hence it will increase the inventory.
b) Pricing – due to different part numbers of the same item there
will be a problem of identifying that which part has been bought
at what price which will also raise difficulties in comparing the
prices from the different price quotes which will create problem
in repurchasing the correct item with right price.
c) Inventory – Inventory will always show as high due to this
duplicity because of the same item with be entered in the
Inventory data with different part numbers.
These above were the few major disadvantages of the duplicity of
the part numbers.
Along with this my project work I have to define the
nomenclature of the part description and educate the buyers for
the creation of the part, designing the nomenclature of the part
description to prevent duplicity parts for future & defining the
Min – Max Qty for the C-class category items.
22. 22
The requirements of the indirect items are being given from
BU (Business Unit) and FU (Functional Unit).
The requirements of the indirect items are being checked in
the system.
If those items are available then we can get it from the store
and if it is not available then we have to check whether that
particular number exists or not.
If that part number already exists then fill the item creation
request form and send it to indirect purchase to check for its
substitute available, if the substitute is available then inform
it to the user and if it is unavailable then arrange for the item
As the unique part numbers with part descriptions are being
created manually in TCL hence there are possibilities for
duplicity or errors which may occur during the part number
creation.
For example:-
Part number Part description
0115612588 TOOL.HOLDER.STD.REDUCTION SLEEVE ..MT3- MT2..
0115612598 TOOL.HOLDER.STD.REDUCTION SLEEVES ..MT3-MT2.-.-
In the above example it shows that the part description are
different for the same item for the two different part numbers, this
is the duplicity of the part which need to be identified and
deactivated from the system.
23. 23
Below figure will show how the part numbers with part
description are being created in TCL.
Fig- Part number & part description creation tool in TCL
24. 24
4.3. RESEARCH & METHODOLOGY
At the beginning I have collected all the data required in the
excel format from ITR tool of TCL 1, 2 & 3.
For extracting the data we have put a request through ITR
tool mentioning the requirements & why these information’s
are required which are as below:-
Organization name – to identify which part is being used in
TCL 1, 2, & 3.
Creation date - to check when the part number has been
created.
Part number – to identify the duplicity of the part numbers.
Purchase category – to find out in which particular category
it lies i.e. in consumable, spares, or tool.
Purchase sub-category – to identify the type of part
i.e. gauges, machine, maintenance etc.
Part description – to find out the duplicity of the part
numbers by studying the descriptions.
Status – to check whether the particular part number is
(active, inactive & non- purchase), as I have to only work on
the active part numbers to identify the duplicity.
25. 25
Fig – Dump data collected from ITR tool
Fig - Pie chart of the total data received
5807
37934
21258
Total
CONSUMABLE
SPARE
TOOLS
26. 26
Total 65000 data or part number received from the
dump in sheet 1, same in sheet 2 and sheet 3.
The data which is being received in excel is in arbitrary
manner. For example, if we find a duplicate part
number in row one then another will be in row 23000.
Hence I have to arrange the part descriptions in a way
that if there is any duplicate part description with
different part numbers then it should lie in the next row
so that we can manually search the duplicate parts with
less time consuming and less error.
As noticed that in all the part descriptions there are
unique numbers, so I have run a command in excel so
that all the numbers from the part description gets
aligned in the ascending manner.
Below steps will show how the sorting and arranging of
the part descriptions are being done.
OPEN THE DATA
CONTAINED EXCEL SHEET
27. 27
ALT + F8
MACRO NAME
CLICK ON CREATE
PUT ANY NAME INSIDE
THE MACRO NAME BOX
CREATE THE FUNCTION
A
28. 28
FunctiononlyDigits(sAsString) AsString
' Variablesneeded(remembertouse "optionexplicit"). '
Dim retval AsString ' Thisisthe return string. '
Dim i As Integer ' Counterforcharacter position.'
' Initialise returnstringtoempty '
retval = ""
' For everycharacterininputstring,copydigitsto '
' return string. '
For i = 1 To Len(s)
If Mid(s,i,1) >= "0" AndMid(s,i,1) <= "9" Then
retval = retval + Mid(s,i, 1)
EndIf
Next
' Thenreturnthe return string. '
onlyDigits=retval
End Function
CLOSE AND EXIT FROM
FILE TAB
=onlydigits(select the
row)
29. 29
As per the flowchart first we have to open the excel file
containing the dump or data with the part description and all
the other details.
After opening the excel sheet we have to press alt+f8 which
will a small box which is called macro.
There it will ask to enter a macro name so any name can be
selected and then click on create.
Then it will open a blank page where we have to put the
string.
The string which we have to put is:-
Function onlyDigits(s As String) As String
' Variables needed (remember to use "option explicit"). '
Dim retval As String ' This is the return string. '
Dim i As Integer ' Counter for character position. '
' Initialise return string to empty '
retval = ""
' For every character in input string, copy digits to '
' return string. '
For i = 1 To Len(s)
If Mid(s, i, 1) >= "0" And Mid(s, i, 1) <= "9" Then
retval = retval + Mid(s, i, 1)
End If
30. 30
Next
' Then return the return string. '
onlyDigits = retval
End Function
After entering this string we have go to the file tab
which is on the top left corner and the select close and
exit.
Then we have to put formula in the main data file
which is =onlydigits and select the row
(=onlydigits(f1))
Select the data tab at the top and select the sort tab and
then select part description.
This above steps will arrange the part descriptions in
ascending order hence if there is any duplicate part
description it will be next row.
Then we have remove the same part numbers with same
part description by selecting remove duplicate from the
data tab and selecting only the part numbers as I have to
identify and remove only the duplicate part number
with the same part descriptions.
31. 31
Finally we have to put filter and select only the active
parts so that the parts which have been already
deactivated or a non purchase item it will removed as I
have to only work in active parts.
Fig – Putting string function in macros
32. 32
Fig – Sorting of part description after putting string
Fig – Removing duplicate part numbers
33. 33
Fig – Removing the inactive and non purchase parts
After sorting out the duplicate part numbers with same
description total data remaining 54029 out of 65000.Below
pie chart will show the difference after shorting done.
Fig - Pie chart will show the difference after shorting parts
CONSUMABLE,
5746
SPARE, 37751
TOOLS, 10532
34. 34
The remaining 58386 parts will be of only one plant, i.e. of
TCL 1 from where we have to manually remove the
duplicate parts. The above methods we have to use in the
other 2 sheets of TCL 2 & 3.
Fig – Duplicate part description with different part numbers
35. 35
Below Pie chart will show the duplicate parts from total data
of TCL 1
Total 58386
Duplicate 205
Unique 58181
Below Pie chart will show the duplicate parts from total data
of TCL 2
Total 44961
Duplicate 125
Unique 44836
Duplicate
Unique
Duplicate
Unique
36. 36
Below Pie chart will show the duplicate parts from total data
of TCL 2
Total 54030
Duplicate 117
Unique 53913
Below pie chart will show only the duplicate parts from TCL
1,2 & 3
Fig – Duplicate parts in TCL 1
Duplicate
Unique
CONSUMABLE
18%
SPARE
57%
TOOLS
25%
Total
37. 37
Fig – Duplicate parts in TCL 2
Fig – Duplicate parts in TCL 3
After Identifying and segregating the duplicate parts from
TCL 1, 2 & 3 called a meeting with all the buyers from TCL
1 to discuss and deactivate the duplicate parts from the
system.
CONSUMABLE
19%
SPARE
58%
TOOLS
23%
Total
CONSUMABLE
33%
SPARE
56%
TOOLS
11%
Total
38. 38
4.4. Recommendation By Creating
Nomenclature of Part Description:-
While Identifying and removing the duplicate part numbers from
the system its being noticed that the duplicity of the part
description majorly occurs because the correct format or
nomenclature is not being followed while creating the part
description.
An Example of Duplicate part description:-
1. SPARE.MECHANICAL.CHAINS.DEMAG CHAIN
HOIST.SWL.250 KG.HOOK PATH.5M
2. SPARE.MECHANICAL.MISC. DEMAG CHAIN HOIST.
SWL 250 KG HOOK. PATH 5M.
As we can see in the above example that both the part
descriptions are same except the letters CHAINS and MISC, due
to these two letters this duplicate part is being mistakenly created.
Hence took Voice of Buyers from TCL 1 & 2 and discussed
about how to remove this type of error in future because these
duplicate part are being created because there is no proper format
or nomenclature being followed while creating the part
description. Post discussion we all moved into the conclusion that
a proper nomenclature should be created to remove part duplicity.
39. 39
The following question being asked by me and discussed from
the buyers of TCL 1 & 2 before creating nomenclature are as
below:-
1) Is there any fault in part description?
Yes No
2) Is the any fault in the process while creating the part
description?
Yes No
3) In order to remove the part duplicity shall we need to define a
nomenclature for part description?
Yes No
4) According to you what should be the nomenclature for part
description?
For Tool For spares For consumable
Item type Item category Item name
Item category Item type Part description
Item name Item sub-category Company make
40. 40
Hence I have to define a Nomenclature of Part description so that
this type of error can be avoided which will result in creating part
descriptions without any duplicity.
As there are three different parts in Business unit which are
Consumable, Spares and Tool so I have to define three different
nomenclatures because in different Business unit’s different types
of parts are being used.
In order to define nomenclature firstly I have to study all the
unique part descriptions from Tool, Spares and Consumable in
order to understand what are the important inputs required for a
part description.
After studying all the part description of Tooling items, it is being
concluded that there should be a sequence which need to be
follow which part creation process.
For Tooling the below mentioned process needs to be
followed for part creation process:-
Item type
Item category
A
41. 41
Item name
Or
Drawing number
Item specification
Supplier code
Or
Company code
(If available)
Company Make/Name (if
available)
Where the required
part will be used in the
organization
43. 43
For Example:-
CONSUMABLE.MAINTENANCE MATERIALS.FILTER
ELEMENT.AIR FILTER SET FGPIN0PREFILSET1 FOR
GODREJ CONTROL.
For Spares the below mentioned process needs to be
followed for part creation process:-
Company make/Name
(If available)
Where the required
part will be used in the
organization
Item category
Item type (Electrical,
Mechanical, Electronic)
A
44. 44
For Example: - SPARE.MECHANICAL.BOLTS HEX BOLT
1/2"X 2" WITH WASHER S.S-UTILITY.
The above process describes the nomenclature of the part
description for Consumable, Spares & Tool.
Item Sub- Category
(Bearing, Bolts, Cylinders,
Etc.)
Item Specifications
Where the required
Part will be used in the
organization
Company Make/Name
(If available)
45. 45
4.5. Min-Max quantity for c-class category
items
The Min – Max quantity of c class items will define the minimum
and maximum quantity of items that can be stored. The Min–Max
is one of the automated Inventory replenishment methods to be
used in an organization dedicated to Inventory management. The
primary benefit of this method is its extreme simplicity of
implementation.
This method tracks the current total stock level, which is typically
the sum of the stock – on – hand plus the stock – on – order for
every single stock keeping unit. When the total stock reaches the
Economic order quantity, reorder is triggered. The reorder
quantity targets the Maximum value for new total stock level,
hence the reorder quantity is the difference between Max and Min
(i.e. Max minus Min).Since we are planning the Inventory level
of machinery spares and consumption pattern is not fixed, hence
reordering or ROL is calculated as below:-
ROL / Ordering point = (Max - Min) + Yearly consumption / 12.
The “Min” value represents a stock level that triggers when the
total stock reaches the Economic order quantity, reorder is
triggered and the “Max” value represents a new targeted stock
level following the reorder. The difference between the Max and
the Min is frequently interpreted as the EOQ (Economic Order
Quantity).
46. 46
Under this topic I have to find the Min-Max of the C- class
category items as it is very important to identify the stock
and reordering level from time to time to avoid any stock out
or excessive of stock which will affect the inventory.
As I will be defining the Min – Max and ROL of the items it
will help in optimising the inventory level.
The below steps will show the process of finding the Min –
Max and ROL:-
At the beginning I have collected all the data required of
2013-14.
For collecting the data we have put a request through ITR
tool mentioning the requirements & why these information’s
are required which are as below:-
Part numbers:- To find out which parts are being used and
in which departments.
Description:- To find out what type of items are being used.
47. 47
Issue Date:- To find out when the part or item is being
issued.
Segment:- To check in which particular department this part
or item is being used.
Unit cost:- To know the cost of the product so that cost
efficiency can be checked accordingly.
Quantity:- To find out how many quantity of that part or
items is being issued in that particular duration. It will help
to show the usage status as how frequently this part is being
used and where the consumption is very high.
Fig – Total Raw data received
48. 48
As the Raw data collected was in the arbitrary manner
hence I have to arrange the data in an order so that it
shows which Department it has used what type of parts
and how many times in that duration.
Fig – Data after arranging
After arranging the data the part numbers are in first
column, part description is in the second column, the
next row contains the which Department it has used
and how many times in that duration.
After the department’s column’s it will show the yearly
consumptions of the parts or items.
49. 49
Then User BU (i.e. how many times that particular part
or item is being used in that particular department).
To find this out the formulae which I have used
according to the excel data sheet is:-
(=COUNT(C2:CP2))
Then I have to find out the unit price of the item to
know the cost of the product. In order to find this out I
have used the formulae according to the excel data
sheet which is
(=VLOOKUP(A2,'<default'!A2:E21409,5,0))
In order to find out Min I have to first assume the
Minimum percentage below which the stock should not
be less. Hence I have assumed it to be 30%.
The next column will be for Min quantity for the item
for which I have used the formulae which is
(=CEILING(CQ2*0.3,5)) according to the excel data
sheet and 30% min of yearly consumption.
In order to find out Max I have to first assume the
Maximum percentage of stock level. Hence I have
assumed it to be 70%.
The next column will be for Max quantity for the item
for which I have used the formulae which is
50. 50
(=CEILING(CQ2*0.7,10)) according to the excel data
sheet and 70% min of yearly consumption.
Finally in order to calculate ROL (i.e. Reorder level)
the formulae need to be used is (max-min)+yearly
consumption/number of months in a year. Which
according to the excel data sheet is (=CEILING((CU2-
CT2)+CQ2/12,10).
Hence when the stock level reached the ROL, reorder
triggers to maintain Inventory optimization.
Below Figure will show the MIN-MAX & ROL
Fig – MIN-MAX AND ROL
51. 51
5. CONCLUSION:-
The project on “Inventory optimization by bifurcating the unique
parts and creating the nomenclature of the part creation process
and Defining Min-Max category items at TCL” has helped me to
gain the insight about the complete process of Indirect purchase
department in TCL.
During this project, I identified the loopholes due to which the
duplicate parts are being created which affect the optimum level
of stock Inventory and suggested recommendations by creating
the nomenclature of the part description to avoid this type of error
in future. Along with this I have also defined the Min-Max
quantity and Reorder level (ROL) of the C class item which will
help in Inventory Optimization.
From this research I acquired a good amount of knowledge and
experience about Microsoft Excel for analysing the data and also
learned to calculate the Min-Max & ROL which will in
optimizing the Inventory level.
Finally Tata Cummins Pvt. Ltd. (Jamshedpur) helped me a lot to
learn practical knowledge about the operations and the process of
Inventory optimization.
