3. 3
ACKNOWLEDGEMENT
I would like to thank all my team mates for their invaluable
contribution which they have made for this project. It would not
be possible without my team members to complete this project
successfully.
We would like to thank Miss. RITIKA NICHANI, for her
invaluable guidance, suggestions and her constant support from
the project budding stage to its current maturity.
She always provides a helping hand and shared her
valuable technical guidance about the project. The smooth
completion of the project would not be possible without her.
We would also like to thank our class mates, friends and
family to support us throughout the project without which this
would have not been possible.
In the end we would also like to thank Bisleri International
Pvt. Ltd. for their efforts without which our industrial visit
would have been impossible. Special thanks to Mr. Atul
Raorane (Logistics Manager) and Mr. Sameer Sahakar (Business
Analyst) who gave us proper guidance throughout our visit.
4. 4
INDEX
SR NO. TOPICS PAGE
NO.
REMARKS
1. INTRODUCTION
2. BISLERI INTERNATIONAL PVT LTD.
3. WHY BISLERI
4. POINTERS
5. TYPES OF INVENTORIES
6. INVENTORY POSITION
7. BUFFER STOCK
8. INVENTORY HANDLING
9. INVENTORY PROCESSING
10. SOURCING OF INVENTORY
11. LAYOUT
12. KIND OF INVENTORIES
13. LOGISTICS
14. NATURE OF INVENTORY
15. INVENTORY COSTS
16. INVENTORY RECORDS
17. STOCK CARD
18. INVENTORY STORAGE
19. KEY MESSAGES
20. BIBLIOGRAPHY
6. 6
ANSARI SUFIYAN
MANISH KANCHANDANI
ALPESH MAJERI
BHARTI NARALE
ROHIT SAMDANI
52
ASHNI SHAH
72
NAMRATA SWETTA
INTRODUCTION
WHAT IS INVENTORY?
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Inventory is defined as the raw materials, work-in-process
goods and completely finished goods that are considered to be
7. the portion of a business’s assets that are ready or will be ready
for sale. It is a complete list of items such as property, goods in
stock or the contents of a building. Inventory represents one of
the most important asset that most business posses, because the
turnover of inventory represents one of the primary sources of
revenue generation and subsequent earnings for the company’s
shareholder or owner.
7
WHAT IS INVENTORYMANAGEMENT?
Inventory management is primarily about specifying the
size and placement of stocked goods. It is required at different
locations within a facility or within many locations of a
supply network to protect the regular and planned course of
production against the random disturbance of running out of
materials or goods. The scope of inventory management also
concerns fine lines between replenish lead time, carry costs of
inventory, asset management, inventory forecasting, inventory
valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space for
inventory, quality management, replenishment, returns and
defective goods. It can
also be defined as the left out
stock of any item used in an
organization.
Inventory management
involves a retailer seeking
8. to acquire and maintain proper merchandise assortment while
ordering, shipping, handling and related costs are kept in
check. It also involves systems and processes that identify
inventory requirements, set targets, provide replishment
techniques, report actual and projected inventory status and
handle all functions related to the tracking and management
of material. This would include the monitoring of material
moved in and out of the stockroom locations and reconciling
of inventory balances. Management of inventories, with the
primary objective of determining/controlling stock levels,
functions to balance the need for product availability against
the need for minimizing stock holding and handling costs.
8
9. 9
BISLERI INTERNATIONAL
PRIVATE LIMITED
Bisleri is a brand of bottled drinking water in India. Bisleri was
originally an Italian company created by Felice Bisleri. He was the one
who brought the idea of selling bottled water in India. In 1965 it was
bought over by Jayantilal Mohanlal Chauhan. Bisleri then was
introduced in Mumbai in glass bottles in two varieties-bubly and still in
1965. Parle bought over Bisleri (India) Ltd. in 19 69 and started bottling
water in glass bottles under the brand name ‘Bisleri’. Later Parle
introduced PET containers. Later in 1995 Ramesh J Chauhan started
expanding in Europe.
Bisleri has 36% of market share in packaged drinking water in India. It
is available in 8 pack sizes for example 250 ml, 500 ml, 2 litre, 5 litres
and 20 litres gallon. Its operations run throughout the subcontinent of
India and are one of the leading bottled water supplying companies in
India. Bisleri has 18 plants, 13 franchisees and 58 contract packers all
over India. The brand name Bisleri is so popular that it is used as
‘generic name’ for bottled water.
10. 10
WHY BISLERI?
Bisleri is a potential client.
It is one of those products which need no description at all.
It’s not just a product but has become a brand.
Also because Bisleri is one of the most well known brands,
known for the goodwill in the competitive market, good
quality by/among the customers (being the most preferred)
and for its systematic cautions and organised planning,
processing and handling by staff and workmen.
11. 11
INVENTORY DEFINITION
Inventories consist of raw material, work-in-process and finished goods
which are held by a business in ordinary course of business, either for
sale or for the purpose of using them in the process of producing goods
and services.
TYPES OF INVENTORY
RAW MATERIAL
Raw material is a type of inventory which acts as the basic constituent
of a product. For example cotton is raw material for cloth production
and plastic is raw material for production of toys. Raw material is
usually held by manufacturing companies because they have to
manufacture goods from raw material.
WORK-IN-PROCESS
Work in process is a type of inventory that is in the process of
production. This means that work-in-process inventory is in the middle
of production stage and it is partly complete. Work-in-process account
is used by manufacturing companies.
12. 12
FINISHED GOODS
Finished goods is a type of inventory which comes into existence
after the production process in complete. Finished goods is
ready for sale inventory.
In financial accounting we are usually concerned with merchandise
inventory. The other types of inventories are studied in cost
accounting.
COST OF INVENTORY
When inventory is purchased, the cost of inventory includes the
purchase price, delivery costs, excise and custom duties etc. less any
discount that is obtained. When inventory is manufactured, its cost
includes the production cost plus any cost which is incured on making
the inventory saleable for example packing cost.
13. THE ROLE OF INVENTORY IN SUPPLY CHAIN
Inventory exist s in the supply chain because of a mismatch between
13
supply and demand.
The mismatch is also intentional at a retail store where inventory is
held in anticipation of future demand.
An important role that inventory plays in the supply chain is to
increase the amount of demand that can be satisfied by having
product ready and available when the customer wants it.
Inventory is spread throughout the supply chain from raw materials
to work in process to finished goods those suppliers,
manufacturers, distributors, and retailers hold.
Inventory is a major source of cost in a supply chain and it has a
huge impact on responsiveness. If we think of the responsiveness
spectrum, the location and quantity of inventory can move the
supply chain from one end of the spectrum to the other.
For example, an apparel supply chain with high inventory levels at
the retail stage has a high level of responsiveness because a
customer can walk into a store and walk out with the shirt they
were looking for. In contrast, an apparel supply chain with little
inventory would be very unresponsive.
14. 14
BUFFER STOCK
Buffer stock, also called buffer inventory, excess inventory or safety
stock, is a cushion of supply in excess of forecast demand.
Buffer stock may be found at all stages of the supply chain, and is
intended to reduce the incidence or severity of stock-out situations
and thus provide better customer service.
Buffer stock is used in production or other inventory situations to
ensure that exceptional or out of the ordinary events or demands
can be met with some degree of certainty.
BUFFER STOCK
Physical inventories usually are categorized by position in the value
stream and by purpose. Raw materials, work-in process, and
finished goods are terms used to describe the position of the
inventory within the production process.
Buffer stocks, safety stocks, and shipping stocks are terms used to
describe the purpose of the inventory.
15. 15
LEAD TIME
The time between the initiation and completion of a
production process.
Lead time is the period between a customer’s order
and delivery of the final product.
Lead time is the time elapses between the placing of
an order
For example if a supplier cannot supply the required
goods on demand then the client firm must keep an
inventory of the needed goods.
The longer the lead time the larger the quantity of
goods the firm must carry .
16. 16
INVENTORY CONTROL
Inventory control is concerned with the acquisition,
storage, handling and use of inventories so as to
ensure the availability of inventory whenever needed,
providing adequate provision for contingencies,
deriving maximum economy and minimizing wastage
and losses.
Hence Inventory control refers to a system, which
ensures the supply of required quantity and quality of
inventory at the required time and at the same time
prevent unnecessary investment in inventories.
17. 17
INVENTORY PROCESS
It includes any business process that involves goods going
in or coming out of a firm’s inventory
It generally includes receiving, temporary storage labeling
and storage withdrawal issue and movement of the item
through work in process in routine.
It also involves tracking the items movement at various
stages and maintaining records of those events and their
effects.
For inventory processes almost all the reputed companies
use BARCODE system, by using barcode scanner.
Sometimes they also use counting scales due to their 100%
percent accuracy.
18. 18
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System application products in data processing
No.1 enterprise application software
No.3 in overall worldwide
Market leading software for large n mid sized companies
In this function:
Check the availability of the ordered goods and
Publish the demand in material planning
If the ordered goods are out of stock:
In house production
External production
Third party procurement
rejection
19. 19
LAYOUT
Warehousing was supposed to disappear with Lean
Manufacturing. This has rarely occurred but the nature of
warehousing often does change from storage-dominance
to transaction dominance.
Warehousing buffers inbound shipments from suppliers
and outbound orders to customers. Customers usually
order in patterns that are not compatible with the
capabilities of the warehouse suppliers. The amount of
storage depends on the disparity between incoming and
outbound shipment patterns.
In addition, the trend to overseas sourcing has increased
the need for warehousing and its importance in the supply
chain.
Design Strategies
One key to effective design is the relative dominance of picking
or storage activity. These two warehouse functions have
opposing requirements.
Techniques that maximize space utilization tend to complicate
picking and render it inefficient while large storage areas
increase distance and also reduce picking efficiency. Ideal
picking requires small stocks in dedicated, close locations. This
works against storage efficiency.
20. IMPORTANCE OF INVENTORY MANAGEMENT
Inventory is a highly visible target on balance sheets. While essential to ensuring
customer service and revenue growth, inventory is a drain on capital. Bisleri is
especially challenging, where regional preferences and larger demands increase
inventory holdings. This makes forecasting more difficult than in large
homogeneous markets like the Multinational corporations. Since the quality of
inventory decisions is directly tied to the quality of demand prediction as well as
the quantity to be supplied, getting it right is important. With inventory for
packaged goods companies typically comprising between 25% and 40% of current
assets, it is a carefully watched financial metric.
20
WAYS TO MANAGE INVENTORY
Establish an inventory management policy
Reduce your inventory while improving your customer service
Balance service and safety stock implications
Understand inventory flow of costs and carrying inventory
Better forecast your true inventory needs
Utilize the ordering and planning philosophies that suit your goals
Plan and reduce lead-time cycle components
Attain a higher level of inventory record accuracy
Select the appropriate way to conduct inventory management
21. 21
FACTORS AFFECTING INVENTORY MANAGEMENT
Inventory management depends on several factors. These factors may be
external or internal, controllable or incontrollable. Some of the factors are
listed below:
1. Availability of Raw materials:
It is very essential to have enough raw materials in order to fulfill demands
as well as to have buffer stock needed in case in emergencies. Planning
plays a very important role in this.
2. Nearness to the market :
Location plays an equally important role, sine, if longer distances have to be
covered, more expenses are involved.
3. Availability of power:
If there is no continuous supply of power in case of firms working 24*7, the
firm will face problems in fulfilling demands.
4. Transport:
For transportation, a good number of vehicles should be present to help in
flexible delivery.
5. Suitability of climate:
Climate may not affect all types of units, but, it does affect the supply in
some cases.
6. Availability of labour:
It is very essential for any firm to have a good amount of manpower, since
the different departments in a firm require constant supervision.
7. Civic amenities for workers:
Basic measures should be taken for the safety and requirements of the
workers.
22. 22
REASONS FOR INVENTORY MANAGEMENT
1. Improves customer service :
Inventory management helps in delivering goods on time, hence
enabling the firm to improve customer service.
2. Economies of purchasing:
Reduced costs for larger businesses in buying inputs, such as raw
materials and parts, or of borrowing money because of a larger discount
given to a larger purchase than smaller businesses can make.
Purchasing goods in bulk creates an economy of scale by allowing a
lower cost per unit and contributing to lower production costs.
3. Economies of scale:
They are the cost advantages that enterprises obtain due to size, with
cost per unit of output generally decreasing with increasing scale as fixed
costs are spread out over more units of output.
4. Transportation saving:
If inventory if properly managed it also helps save transportation cost.
5. Hedge against future:
Proper inventory management actually gives us a hedge against the
future since no difficulties can be faced because of pre planning.
6. Unplanned shocks:
Inventory management is of major use at the time unplanned shocks
such as strikes, natural calamities, surges in demand, etc.
7. To maintain independence of supply chain:
To maintain the efficient working of a firm, it is essential to maintain
independent supply chain, so as to not be dependent on others.
23. 23
INVENTORY COST
The cost of holding goods in stock. Expressed usually as a percentage of
the inventory value, it includes capital, warehousing, depreciation,
insurance, taxation obsolescence, and shrinkage costs.
TYPES OF INVENTORY COST
PURCHASE COSTS
The most basic type of inventory cost is the purchase price. Some
businesses, such as retailers, buy finished goods inventory that is ready
for resale as soon as they receive it. Other companies purchase
component parts and assemble them into new products for sale. Still
others purchase raw materials directly and either resell the materials or
assemble materials into semi-finished or finished goods before sale.
The key to keeping inventory purchase costs low is to develop long-term,
mutually beneficial partnerships with reliable suppliers. Suppliers
can offer you price/volume discounts or price contracts to keep your
costs at a reasonable level.
PROCESSING
Some businesses perform work on inventory they purchase before it is
ready for sale. Consider a computer manufacturer, for example; the
manufacturer is likely to buy component parts such as microchips,
displays and input devices, then assemble various components into
individual machines. Assembly processes incur labor costs for assembly
workers and additional utilities expenses for workspaces.
24. 24
DISTRIBUTION
Inventory items have to be shipped a number of times before they
turn into sales revenue.
Purchased inventory must be shipped from the supplier to your
company, which, while usually covered by the supplier, can
sometimes be the buyer's responsibility.
Larger businesses will generally house new inventory at a warehouse
or distribution center before shipping it on to a specific retail store or
other outlet.
And some inventory must be shipped to consumers, as is the case
with online retailers and businesses with a national or international
reach.
Types of inventory transport costs include freight trucking, shipping
by rail or air transport, as well as light-vehicle deliveries in local
areas.
INVENTORY HOLDING COSTS
Storing inventory either in a warehouse or in a sales outlet incurs
additional costs.
Holding inventory incurs labor costs for handling duties, additional
utilities and rent/mortgage costs due to the physical spaces required.
The just-in-time or JIT inventory purchasing model can reduce
inventory holding costs by ordering inventory exactly when it is
needed, preventing storage backups and freeing up employees' time
to focus on more productive tasks.
SHRINKAGE
Shrinkage refers to anything that renders inventory unfit for sale or return to a
supplier.
Inventory that has already been paid for can disappear due to theft from
employees or consumers.
Perishable inventory items can spoil if not sold on time, making it impossible to
recoup the costs.
25. 25
INVENTORY ACCOUNTING SYSTEMS
Maintaining accurate inventory records is important because
everything else hinges on the ‘on hand’ values being correct.
If your ‘on hand’ values are wrong nothing else works. You stock out
unexpectedly, you overstock your inventory, and you create extra
work for all concerned.
The implications of any of these outcomes can be significant: wasted
money, additional downtime, exorbitant expediting costs, and
inefficient labor to name a few.
.The two most widely used inventory accounting system are the
periodic and the perpetual.
Perpetual: The perpetual inventory system requires accounting
records to show the amount of inventory on hand at all times. It
maintains a separate account in the subsidiary ledger for each
good in stock, and the account is updated each time a quantity is
added or taken out.
Periodic :In the periodic inventory system, sales are recorded as
they occur but the inventory is not updated. A physical inventory
must be taken at the end of the year to determine the cost of
goods
Regardless of what inventory accounting system is used, it is good
practice to perform a physical inventory at least once a year.
26. INVENTORY VALUATION METHODS - PERPETUAL
The perpetual system records revenue each time a sale is made.
Determining the cost of goods sold requires taking inventory. The most
commonly used inventory valuation methods under a periodic system
are:
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1. FIRST IN FIRST OUT (FIFO)
2. LAST-IN FIRST-OUT (LIFO)
3. AVERAGE COST OR WEIGHTED AVERAGE COST
1. FIRST-IN, FIRST-OUT (FIFO):
Under FIFO, the cost of goods sold is based upon the cost of
material bought earliest in the period, while the cost of inventory is
based upon the cost of material bought later in the year. This results in
inventory being valued close to current replacement cost. During
periods of inflation, the use of FIFO will result in the lowest estimate of
27. cost of goods sold among the three approaches, and the highest net
income.
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2.LAST-IN, FIRST-OUT (LIFO):
Under LIFO, the cost of goods sold is based upon the cost of material
bought towards the end of the period, resulting in costs that closely
approximate current costs. The inventory, however, is valued on the
basis of the cost of materials bought earlier in the year. During periods
of inflation, the use of LIFO will result in the highest estimate of cost of
goods sold among the three approaches, and the lowest net income.
3. WEIGHTED AVERAGE:
Under the weighted average approach, both inventory and the
cost of goods sold are based upon the average cost of all units
bought during the period.
When inventory turns over rapidly this approach will more closely
resemble FIFO than LIFO.
Firms often adopt the LIFO approach for the tax benefits during
periods of high inflation, and studies indicate that firms with the
following characteristics are more likely to adopt LIFO - rising prices
for raw materials and labor, more variable inventory growth, an
absence of other tax loss carry forwards, and large size.
When firms switch from FIFO to LIFO in valuing inventory, there is
likely to be a drop in net income and a concurrent increase in cash
flows (because of the tax savings). The reverse will apply when firms
switch from LIFO to FIFO.
Given the income and cash flow effects of inventory valuation
methods, it is often difficult to compare firms that use different
methods. There is, however, one way of adjusting for these
differences.
28. MISTAKES MADE DURING INVENTORIES (SOLUTIONS)
.So what are the top inventory mistakes made, and how can they be avoided?
1. Inadequate Store Preparation
By and large, this is the most common mistake of all inventories, no matter the
retailer. Preparing for an inventory goes far beyond ensuring that you have
enough people to count. A few questions to ask yourself include: are your
products priced correctly? Are you stores and racks well organized? Is all of your
product out and available for counting? Have you checked your fixtures to ensure
that no product is hidden from view?
Another sign of inadequate preparation is the lack of a floor or stockroom map
which highlights the countable sections, and the order in which they should be
counted in. While this may seem elementary, this small bit of preparation can
save you hours of headaches down the road.
2. Inadequate Counter Preparation
Hand in hand with adequate store preparation is counter preparation. If
employees (or outsourced services) responsible for counting the product were
not appropriately trained on what they are supposed to count, and how they are
supposed to count it, your inventory is almost guaranteed to be inaccurate.
Another common mistake seen is that oftentimes, management counts alongside
employees (or the outsourced provider) in the effort to be helpful and the get the
inventory done. However, store management is more helpful and effective when
they allow their employees to conduct the initial count.
3.Lack of Early Audit Verification
Make sure that you have a process in place to check
your counters at least an hour into the inventory
process to review for errors, questions, or issues that
might affect your count.
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29. 4. Lack of Preparation for Flash Inventories
For those retailers that conduct flash (or burst) inventories, it is crucial for
accuracy that a clear cutoff date is established for the movement of inventory.
Any documents pertaining to the transfer or shipment of inventory should be
closed and resolved prior to the inventory, and should be available for the
reconciliation process afterwards.
5. Relying On Your Hired Service To Know What To Do
For those retailers who rely on outsourced services to conduct their inventories
for them, we recommend to be as prepared as you would be with your own staff
when handling an inventory.
For example, be sure to speak to your service prior to the inventory to confirm all
logistical details, procedures for special circumstances and error resolution, and
more. This is also the time to review any changes made to your inventory
procedures since your last count with the service. As you are the most familiar
with your product and store layout, the inventory service will only benefit from
your input and guidance.
6. Not Controlling Your Inventory Environment
While most of us would prefer to conduct an inventory while the store is actually
closed, it doesn't always happen that way. In any instance where an inventory
must be conducted while the store is open, a control system should be in to
account for items that have not been counted and have been sold.
7. Not Resolving Unmarked Inventory
Last but not least, the resolution of what to do with unmarked inventory
should be worked out prior to the inventory and communicated to the
counters during their training process. To help manage errors, make a
'trouble area' somewhere on your store floor for unmarked pieces, and
assign a counter to be responsible for the items on it.
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30. 30
KEY MESSAGES
Here are a few tips to help make your inventory a better process, every time
around:
• Remember that inventory is truly an everyday event, not a
process that occurs only once or twice a year. Help your
preparation by keeping the stores organized, practice
proper pricing techniques, and establishing a process for
your counters.
• Procedures for your inventory process should be easily on
hand (either through your inventory service or internally)
for reference. These procedures should be reviewed prior
to every inventory to ensure that it is still an adequate
process for your stores.
• Always do a final walk-through of the store prior to closing
an inventory.
• Always check the checker, or rather, always practice count
verification.
• To ensure a smooth inventory process, clearly
communicate the delegation of duties prior to the start of
your inventory
