Executive SummaryRajagiri Business School Page 1 The project deals with the detailed study about the Finished Goods Inventory at Apollo Tyres Ltd, Perambra. The company at Perambra unit has been facing the problem of having excess inventory of tubes and flaps when compared with tyres. The Perambra unit produces only tyres and they acquire tubes from their own subsidiary company named Classic Auto Tubes, Pune and flaps from approved suppliers. The allotment of tubes and flap to the Perambra unit is done at Head Office level and at times these incoming stocks exceed the required level of inventory at the plant. This leads to the situation where there is excess stock of tubes and flaps at the warehouse and results in stock being held idle. The company should take proper control over the finished goods inventory and in the transfer of tubes and flaps from company’s own subsidiary tube plant and other suppliers so as to avoid the excess inventory. The tyres are being produced based on the monthly production plan which is given from the Head Office. The possible combinations of tubes and flaps for the tyres produced were analyzed and the actual stock of tubes and flaps stored in the company were observed. Based on the monthly production plan the actual requirement of tubes and flaps are known. The disparity in the level of inventory stored and actual required level were found out. An information system can help to overcome this problem. Information system is created using Excel and by entering the tyre stock detail the system will displays the actual requirement of tubes and flaps. Managers or the person who operates the system can take a decision about the number of tubes and flaps required to be stored in order to opitmise the finished goods inventory. Rajagiri Business School Page 2 Introduction Rajagiri Business School Page 3 This project has been done on “Management Information System for Optimising Finished Goods Inventory” in Apollo Tyres Ltd, Perambra. It is the mother plant of Apollo and it has the reputation of being the 6th fastest growing company in the world because of the goal orientation and clear vision of the top level management. Vehicle transport has become a part of our day to day activities. The growth of transport sector has become linked to economic development of a nation. Tyre thus plays an important part in economic development. Inventory for any manufacturing or business firm is an important part that needs attention. The actual reason why people keep inventory is to protect themselves from the day to day fluctuations in the market. The uncertainty of the future is the fear that makes people to hold on or save something for the future. The concept of inventory in any industry is also the same. So it is like higher the inventory, the less chance of noticing any of the fluctuations. So it actually means keeping an inventory avoids from any of the fluctuations from being any kind of immediate problem for the company or firm. Inventory helps the firm to sail smoothly and continue with the day to day activities. It is similar to boat sailing in high tide instead of low tide. In high tide the rocks in the water won’t be seen and the sailor can sail smoothly. In low tide the rocks are visible and if the sailor is not careful he may end up in sinking his boat. According to Motorola’s Six Sigma the very concept of inventory is waste. Why do they consider so? Since keeping a higher inventory will always help in smoothening the company’s activities; why inventory is considered to be waste? The reason is simple. Stocking of Raw materials for predetermined period involves investment. That much money of the firm is being locked in those materials. So the same money that could be used in other productive purposes is being used to store materials as safety for emergencies that may happen for future. Keeping a high inventory is blocking the firm’s working capital. It is due to this reason inventory is considered to be a waste. It is based on this concept that systems like Just-in-time have arisen; where materials arrive in the right moment, when it is needed for production. Rajagiri Business School Page 4 Industry Profile Rajagiri Business School Page 5 . But the scenario is quite different now.Thomson invented the pneumatic tyres of modern age and by this the tyre industry has grown to one of the largest industries in the world. Most modern technologies like steel radial tyres have added a lot in tyre industry and now it is experiencing rapid improvement with the advent of more and more technologies. International Scenario The world tyre industry is worth around US$ 85 billion. The key milestone in the history of tyres is the invention of the wheel by the Sumerians 5000 years ago it was refined over the ages.W.There was a time when a tyre used were a piece of rubber placed at four corners of one’s vehicle. chemically a composition of long chain macro molecules usually different types of rubber.1% 18. In 1946 R.5% 01. which holds air that carried the load of the vehicle with which it is attached to.9% 03. Market Share (International) COMPANY Michelin Bridgestone Goodyear Pirelli Continental Sumitomo Yokohama Kumho Others Source: CRISIL 20.4% 16. The industry is marked by the presence of around half a dozen major players who together occupy 70% of the world market share. fabrics etc. mechanically a pressure container.5% Table 1 MARKET SHARE Rajagiri Business School Page 6 .9% 03.9% 10. A tyre is an annual round shaped part made up of elastic material forced by textile material and tightened by metal rings.1% 04. Tyres now hide chips in their bellies.7% 20. Geometrically it is a torus. chemicals. The tyre industries were classified under three heads. The raw materials constitute 70% of the cost of production. If you consider the total cars that exist in the market and the new cars that arrive in India. Most of the raw material involved in the production of tyres like rubber and other petrochemicals etc have highly fluctuating prices. The tyre industry is growing rapidly and today its turnover is 1.3500 crore per annum for exports. So tyre industry has to adapt itself to these volatile fluctuations. The first generation industries viz. you can see that there exists a vast potential for tyre industry in India. The first Indian company Dunlop Rubber company was incorporated in 1926.5 million tyres. Apollo Tyres and Modi Rubber. The combination of both generally in terms of natural rubber to synthetic worldwide is 30:70. The second generation companies then come up in 60’s are MRF Tyres. Rajagiri Business School Page 7 . The tyres produced consist of a combination of natural rubber and synthetic rubber. But the tyre industry is highly sensitive to market fluctuations.5-2 billion for a cross ply tyre plant of a capacity to manufacture 1. The industry is highly capital intensive. MRF. Premier and CEAT at various locations in the country carried out the domestic production of the tyres.5 million tyres and around Rs 1. That’s why natural rubber constitutes 25% of the total raw material cost of the tyres. Dunlop and firestone (new Bombay tyre international limited) were setup in the last 30’s and early 40’s. The third generation companies that were setup in 70’s are JK Tyres. CEAT. Goodyear Tyres and Premier Tyers.000 million and earning an income of Rs. Vikrant Tyres. 50. as it requires around Rs 4 billion to setup a radial tyre plant with a capacity of 1. The tyre industry has witnessed a CAGR of 11% over the last decade mainly fuelled by the strong growth in the domestic auto industry. the transportation needs and the production of vehicles. The tyre industry’s growth is dependent on many factors like agricultural and industrial performance of the economy. but in Indian context it is 80:20.Indian Tyre Industry The Indian tyre industry dates back to 1930 when multinationals like first one Goodyear and Dunlop entered the market. JK Indutries and CEAT and enjoys more than 70% of the total market share. APOLLO Tyres and CEAT Table 2 Rajagiri Business School Page 8 . The companies have lined up further expansion plans to meet the increasing demand.apollotyres. OEM is about 22% and export market for about 5%. Bus and Car tyres. JK. With demand increasing at a steady pace.22500 crores 43 Estimate of 89% MRF. The industry is dominated by four players viz MRF. Market for tyres can be broadly classified or segmented into 3 categories. Indian Tyre Industry in 2008-09 Industry turnover Total number of companies Industry capacity utilization Major players Source: www. The fortunes of the industry are linked to the trend in the domestic auto industry. trend in road transportation and spending on road infrastructure. rethreading. Original Equipment Manufacture Replacement Market Export Market The major segments are Truck. the industry is expected to go through a consolidation phase.The industry has high entry barriers because of its capital intensive nature and low operating margins. The raw material to sales ratio in the industry is around 65%. Apollo Tyres.com/corporate Rs. Replacement market forms largest segment about 58%.The profitability of the industry has high correlation with the prices of key raw materials such as rubber and crude oil as they account for more than 70% of the total costs. Value share of truck and bus segment is about 73%. Salient Features of Indian Tyre Industry Adaptability and Absorption Exports Innovations Indigenous and ready availability Technology progression Wide product range for diverse usage Self sufficiency and vibrant marketing setup Indian Scenario Indian tyre industry comprises 12 major companies.0% 10% 10% Table 3 MARKET SHARE Rajagiri Business School Page 9 . There are top players in this field having 69% of market share. Market share (India) COMPANY MRF JK APOLLO CEAT BIRLA GOOD YEAR OTHERS Source: CRISIL 23% 14% 21% 16% 6. 13 minor companies and 34 minor plants manufacturing low technology products such as small tubes and flaps. the scenario is quite different. In India. Moreover one also has to content with suspensions and bad road conditions. JK TYRES LIMITED 5. The unhealthy condition of the Indian roads has resulted in radial tyre accounting for only 5% of the tyre industry as against a global trend of 60% with two-third of all major tyre manufacturers being reserved for radials. MRF TYRES LIMITED 2. The reinforcing mediums used in these are polyester. In these tyres. This has placed the re-traders in a better position than the tyre manufacturers.Ranking of Indian Tyre Companies on the Basis of Production 1. GOOD YEAR TYRES LIMITED 6. CEAT TYRE LIMITED 4. These tyres can be rethreaded twice during their life time and are hence preferred by Indian transport operators who normally overloaded with double the capacity. Rajagiri Business School Page 10 . Re-trading is booming over the tyre industry as a colossal threat. BIRLA TYRES LIMITED Source: CRISIL Sector Trends Table 4 Cross ply tyres has been used in India for several decades. No wonder. Outlook Globally the OEM segment contributes only 30% of the tyre exports and the balance from the replacement market. the ply cords run across each other or diagonally to the outer surface of the tyre and nylon tyre cords are used as the reinforcing medium. APOLLO TYRES LIMITED 3. Nearly 85% of the total tyre demanded in the country is for replacement. Hence these tyres are 40% more expensive than cross plies. Radial tyres have their cords running rapidly from bead at 90 degrees angles to the rim or along the outer surface of the tyre. nylon. fiberglass and steel. But they have a longer life and provide lower fuel consumption. 95% of the tyre used in India is cross plies. this is a real cause for concern. MRF Ltd. The biggest threat will be from global majors like Bridgestone and Michelin. It has signed on to be the sole supplier for auto giants like General Motors. boasts of an enviable track record. These MNC have deep pockets and can easily withstand losses for 2-3 years. Fiat and Ford in India. The industry is also facing severe threat of dumping of cheap tyres from South Korea. The vast growth potential of the Indian market is becoming them towards India.Indian tyre exports cater to over 40 countries. As far as exports are concerned. The company caters to a host of impressive clients. Details of the Competitors MRF A leading company in the tyre industry. The company is also renowned for its exports. which have also been Rajagiri Business School Page 11 . Performance of the company has been commendable in light of the fact that the user industry is facing a slowdown. the export benefits to the Indian tyre industry. The exports and the average exports prices of bus. Carbon. The improved performance of Chinese tyres coupled with 40-50% lower prices is threatening the market share of Indian companies in the export market. Thus the future of the industry will swing with the supply of crude oil. Continental. there financial muscles also permit them to invest in R&D. Over 30% of the country’s exports are going to the US. notwithstanding the winds of recession blowing across the economy. Michelin. truck and LCV tyres from India are under threat from the cheaper Chinese exports. The company has benefited from better productivity and operational efficiency. which is beyond the average Indian tyre manufacturer. Goodyear. Another threat to the industry is the price of its raw materials. synthetic rubber and nylon tyre cord are offshoots of petrochemicals. Pirelli and Bridgestone generate an annual tyre production equivalent to the total demand of the Indian market. Cost competitive of other major exporting countries and the subsidies granted by respective governments. which control 36% of the global tyre market. The company has continued in the same vein and has been posting excellent results. The industry is driven more by volume than by margins and each of the big five in the global tyre industry. the demand in the export market is a function of factors such as exchange rate of domestic currency against US Dollar. Most of which are petroleum by products. MRF Ltd. The performance of the company could further improve with the revival of the auto industry. CEAT caters primarily to the replacement market. Michelin. With a modest track record on the financial front. However. With the advent of multinationals like Goodyear. Bridgestone and Continental. can be expected to retain its position in this segment. Due to the strong growth in the OEM sector. the share of the replacement market in the total revenue of the company has fallen. in collaboration with which CEAT has already promoted South Asia Tyres for manufacturing radial tyres in India. investors can move out of the scrip. a major shakeout in the industry is imminent and the same could result in CEAT. the production growth in the automobile sector over the past few years should provide a boost to the replacement market in the coming years and CEAT could be a major beneficiary thereof. being hived off as a joint venture with Goodyear. The company has recently entered the radial tyre segment and has met with positive response. considering the outlook for the industry as a whole. which is already operating on thin margins. CEAT Being the second largest selling brand in India with a market share of 16%. However. Thus. Rajagiri Business School Page 12 .witnessing positive growth. the forthcoming may not be encouraging. Company Profile Rajagiri Business School Page 13 . Despite incurring heavy losses in the initial years. In South Africa. with 30% market share. It is one of the pioneering tyre manufactures in the world.Apollo Tyres Ltd is US$ 1. Haryana and the registered office at Cochin. Apollo is built around the core principles of creating shareholder value through reliability in its products and dependability in its relationships with its stakeholders. of which over 2500 are exclusive outlets under the brand name ‘Apollo Tyre World’. it had faced losses. Apollo Tyres Ltd is incorporated and registered in the year 1972.2 billion. when hard-nosed MNCs and Indian tyre majors dominated the tyre industry. it has over 900 dealership. Now Apollo Tyres is the market leader in the truck tyre segment. The commercial production process started on March 1977. Apollo came back as a strong player backed by strong production and marketing strategies. Kerala. The main competitors of Apollo Tyres Ltd are MRF. Apollo Tyres had acquired Dunlop Tyres International Ltd. but also in the radial tyre segment. a name to reckon with. The corporate office of Apollo Tyres Ltd situated in Gurgaon. CEAT. Thanks to its state-ofthe-art technology. The Perambra unit has the production capacity of 308 tonnes per day in 2010. The growth rate of last 5 year has been 29%. The first tyre introduced in India was Dunlop Tyres. high performance company that makes India’s most reliable tyres. of which 190 are Dunlop Accredited Dealers. The history of Apollo as a company goes back to the early seventies. Apollo is today. Since 1982 Apollo Tyres has been started to making profit. Rajagiri Business School Page 14 . It has got nearly 6364 employees. goal-oriented people and clear. South Africa in 2006. A team under Onkar worked hard and their strategic policies helped Apollo Tyres to reach this position. son of Raunaq Singh. adventurous vision of the top management. But since 1982. not just in the nylon. During the first stage. JK Tyres. The Perambra plant provides employment to 2500 regular workers and around 1500 contract workers. The company has a network of over 4000 dealerships in India. mainly due to the fact that all tyre majors in those days had high production capacities as compared to the market demand. the controlling power came to Onkar S Kanvar. tubes and flaps with licensed capacity of 4 lakhs tyres and an initial outlay of Rs 36 crores.102.66 crore same quarter last year to Rs. These problems were solved by changing work force. and to become a well known player in the International Tyre manufacturing industry.71% in Q3FY10.5. At the initial stage there was repeated lockouts and labour unrest.Financial Year 2009-2010(April-March) vs. Operating profit margin increased from 5. The unit at Perambra in Thrissur has been enjoying the status of mother plant of Apollo Tyres Ltd.85 (TTM standalone).26 crore in Q3FY09 to Rs. Rs.61% to 7. Rajagiri Business School Page 15 .03 crore in Q3FY10 showing a growth of 1751%.52.50% in Q3FY10 and the Net Profit Margin increased from 0. Financial Year 2008-2009 The revenues of the company have gone up from Rs.11 in the same quarter last year to Rs. of India ministry of power recognized in energy conservation and management on 14th December 2003 at New Delhi by the honorable Union minister for power. The license was first given to ruby rubber works to start a tyre factory at changanassery.43 crore in Q3FY10 showing an increase of 46.52%. It is one of the flagship companies of the Raunaq Group. The Govt.903.205. introduction of new machineries and reducing man power. History of Apollo Tyres Ltd Apollo Tyres Ltd was registered and incorporated in 1972.10 crore in Q3FY10.51 crore in Q3FY09 to Rs. The net profit of the company increased from Rs.83% in Q3FY09 to 15. acquire a predominant position in the Indian tyre industry. In 1975 Raunaq group of companies under chairmanship of Mr. Vision By giving total satisfaction to the customers and increasing share value.1323.Raunaq Singh purchased the license from Ruby Rubber works. The company has started its operation in 1977 with commercial production of tyres.2. The operating profits also increased by 289% from Rs. The EPS of the company rose from Rs 0. Trade unions contribute a lot for solving problems related to production. A new milestone of Apollo tyres laid down by the collaboration with Michelin Company as Michelin Apollo Tyres Ltd in pune.6.02 in Q3FY10. Haryana – 122001. tubes and flaps Commercial production started Installed capacity (1977) Present capacity Revenue Head office 1977.com Affiliated factories S. Onkar S Kanvar Mr. Neeraj Kanwar Mr. Kumar.apollotyres. Wahal Rajagiri Business School Page 16 .427(USD in Millions) 7 Institutional Area. India www.Company Profile Incorporated & Registered Year of establishment Business 1972 1975 Manufacturing and marketing Automobile tyres. Sector – 32 Gurgaon. N.Kolkata Stallion.Indore TCIL. P.Hyderabad Chairman and Managing Director Chief Operational Officer Company Secretary Mr. March 54 tonnes/day 308 tonnes/day 898. cost effectiveness in all segments High quality technologically superior products Competitive advantage Consistent production through harmonious industrial relation Achievement of customer delight through bench marketing global practices by efficient parameters Quick response for market needs Become market or business focused through forward looking agents. which accounts for more than 70% of sales is most critical. polyester. High consumer loyalty Strengthen supply chain management To enhance companies shareholders value Rajagiri Business School Page 17 . Worldwide. fiberglass or steel cords are arranged perpendicular to the circumference. In radial tyres. Within the tyre industry the trucks and buses ( T & B) segment. steel belted radials are most popular owing to their supervisor performance.Difference between radial and cross ply tyre Tyres are basically of two types – cross-ply and radial. Radial technology is an improvement over cross ply. steel and nylon. In cross-ply tyres. nylon. Production standard Apollo Tyres Ltd was following QS 9000 till 2006. Radial tyres are long lasting and have lower incidence of flats. They can be differentiated on the type of belt used – fiberglass. Objectives Strong brand equity High volume. longer life and lower fuel consumption. Presently Apollo Tyres Ltd has been following TS 16949. Radial tyres provide certain advantages like better vehicles control and road holding. Radial tyres are 10-15% costlier compared to the cross-ply ones. an internationally accepted standard. nylon or rayon tyre cords are arranged diagonally across. high market share. 1976 – Apollo Tyres Ltd was registered.25 Table 5 TURNOVER (in crores) Rajagiri Business School Page 18 . 1995 – Acquired Premier Tyres Ltd. 1974 – The company was taken over by Dr. 2000 – Exclusive Radial capacity established at Baroda. Turnover of Apollo Tyres Ltd in consecutive years YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Source: Annual Report (ATL) 2656. 1982 – Manufacturing of Passenger Car Radial Tyres in Kerala. 2009 .25 3576. 1975 – April 13. Tamil Nadu with initial capacity of 213 tonnes. 2005 – April 13. 2003 – Radial Capacity expanded to 6600 tyres per day. Jacob Thomas and his associates. 1977 – Plant commissioned in Kerala with 49TPD capacities.Raunaq Singh and his associates. Perambra Plant completes 30 years 2006 – January 30.‘ H’ speed rated car radials. Perambra plant foundation stone was laid down.81 4367. 1991 – The second plant commissioned in Baroda. Joint Venture with Michelin 2004 – Launch of Apollo Acelere. in kerala. Dunlop South Africa is acquired. 2008 – Announced a Greenfield manufacturing unit in Chennai.Milestones 1972 – The company’s license was obtained by Mr. it has crossed 3000 crore mark. November 17. Mathew T Marattukalam.81 3002 3234.Apollo acquired Vredestein Banden BV in the Netherlands which has a high end passenger car tyre manufacturing facility and extensive access to the European market.31 3929. the company also provides eco friendly surroundings and a free work practice. Medical checkup etc.Manufacturing units Perambra Baroda Pune Kalamassery Chennai Core values The one word that symbolizes all that company believe is. Ambulance. Rajagiri Business School Page 19 . For this it facilitates Full time doctor. Dispensary. CREATE C – Care for Customers R – Respect for Associates E – Excellent through Team work A – Always Learning T – Trust Mutually E – Ethical Practices Apollo’s key differentiators Superior product quality Committed marketing team Quick response to market need High consumer loyalty Product segmentation in truck tyre Strong brand quality The company provides safety and health for its workers. Product profile Table 6 Products Brands Apollo Truck Loadstar Super Hercules Loadstar Super Loadstar Super Gold XT 7 XT 7 Haulug XT7 Gold XT-9 XT-9 Gold Champion Champion DXL Champion Gold Amar Amar Deluxe Amar Gold Amar AT-Rib Kaizen 50 L 36 L Commando XDT Loadstar Super Amar Deluxe Amar Gold XT-9 27 L 77 R 99 R Plus Light Truck XT-9 Gold Duramile Milestar Champion Car Radials Tube Type (Amazer XL Quantum) 4x4 Radials Hawkz Storm Passenger Car Alloy Wheels Haste Torque Nirvana Frost Quest Tubeless Radials Amazer XL Inspire Slay Multispoke Sphere Cinco Rajagiri Business School Page 20 . Tubeless Radials Acelere Amazer XL Conventional Tyres (Bias Tyres) Car Armour Panther Pure Cultivation Segment Sarpanch Pure Haulage Segment Powerhaul Farm Mixed Application Bias Segment Krishak Premium Mixed Application Radial Segment Farmking Hawkz Jeep Gripper Maha Trooper Krishak Super Jeep Gripper Maha Trooper Rajagiri Business School Page 21 . Organization chart Rajagiri Business School Page 22 . Research Design and Methodology Rajagiri Business School Page 23 . The problem in the warehouse due to excess inventory leads to increase various costs. This study has been carried out to look into this problem. Significance of the Study The inventory system which is being followed in Apollo Tyres Ltd is a fairly robust one. Due to this every organization tries to reduce its cost and to increase its quality to acquire market. modernization and liberalization. Title “Development of Management Information System for Optimising Finished Product Inventory at Apollo Tyres Ltd. Secondary Objectives 1) To know the various functions or activities of Finished Goods Stores department. As the part of globalization. The company should take proper control over the finished goods of the company and in the transfer of tubes and flaps from the company’s own subsidiary tube plant. Perambra” Objectives of the Study Primary Objectives 1) To determine the requirement of tubes and flaps for optimum inventory. Rajagiri Business School Page 24 .Problem Statement Apollo Tyres Ltd is a public limited company and the study focuses on the tyre manufacturing plant of the Perambra unit. the present market becomes more competitive. There has been a lot of difference in the numbers of tubes and flaps stored in the Finished Goods Stores when compared with the tyres. Perambra has been facing a problem with the finished goods inventory. 2) To ensure adequate inventory levels by avoiding over-stocking and under-stocking of inventories. But Apollo Tyres Ltd. There is a scope of reducing the excess inventory and there by handling cost by developing an efficient management information system. Research Design The type of research is exploratory. Rajagiri Business School Page 25 . Limitations 1) The study was that it was restricted to the finished goods stores alone. annual report for five years and internet. The study has been strictly concentrated on the operations of the store. Little modification is required in the information system for every month as the ‘ticket’ may change for each month. Perambra which is called as the Mother plant. Methods of Data Collection 1. 3) The information system is built on the basis of monthly production plan which is called as ‘ticket’. 4) Some of the information pertained to the project was available only at the Head Office. In this the main area of study was on Finished Goods Stores and the problems faced by them. 2) The information system generated was in Microsoft Excel. However there is a possibility of generating the information system by using separate software. Secondary sources Secondary data were collected from company profile. Secondary sources Primary sources Primary data was collected from management and staff of Finished Goods Stores department by direct interview and observation.Scope of the Study The study was conducted in Apollo Tyres Ltd. The time frame of the project was from 05th April 2010 to 31st May 2010. Primary sources 2. Analysis and Interpretation Rajagiri Business School Page 26 . All the tyres after final inspection are transferred to the warehouse cage. Finished goods inventory for any manufacturing or business firm is an important aspect that needs attention. From the warehouse cage they are transferred to the loading bay for dispatch or they are transferred to the finished goods store (FGS) for the storage. The actual reason why people keep inventory is to protect themselves from the day to day fluctuations in the market. Apollo Tyres Ltd. and from which they will be issued as required.SCM Group Manager . where they are housed for safekeeping. tubes and flaps are stored for future sales. A finished goods store is an area set aside into which all the items after production and final inspection required for sale or distribution are received. Perambra has a well functioned finished goods store department to effectively de-link operations from marketing so that operational efficiencies are maximized without causing any sales opportunity loss. FGS is the place where all the tyres.The study pertained to the finished goods stores of Apollo Tyres Ltd at Perambra.FGS Senior Officer Associate Manager Senior Officer Executives Executives Executives Executives Figure 9 Rajagiri Business School Page 27 . Finished goods stores hierarchy Division Head-Commercial Division Head . flaps. month wise analysis and report generation is possible at ease. Rear tractor and export tyres should be stacked in the outer temporary shed. Finished goods stores have got a storage policy to keep the finished product clean and safe. By doing this size wise. Separate areas are provided for tubes. Each zone is provided with location number. Tyres with highest waiting time is to be stored in high cost zones. first rear tractor and then unpacked tyres to be removed to open areas. Each zone is having a cost allocated to it for the tyres to stack or unstuck. location wise. slow moving and non moving items.The FGS follows First In First Out system (FIFO). Slow moving tyres are taken to rear zones. The objectives of the finished goods stores are: To maximize tyre dispatch To minimize material handling cost To minimize storage cost To ease the process flow in FGS To ensure FIFIO management To maximize planned storage (to achieve 80% planned storage and 20% unplanned storage) Rajagiri Business School Page 28 . The objective of this system is to reduce the age of tyres when it reaches the final customers. Fast moving tyres are stored in front. small tyres and OE tyres. Tyres which are six months and more old must be segregated and kept in separate storage zones. The system ensures the quality of the tyres is not degraded due to storage For the FIFO system to be implemented. When stock exceeds storage capacity. finished goods store is split into small zones. The different zone is based on fast moving. That means the first batch of tyres which is taken to the warehouse for storing has to be taken first for dispatch. Fast moving tyres (waiting time less) to be stored in low cost zones. Also this system allows proper handling of the tyres while it is at FGS. As per the storage policy smaller tyres (passenger and light truck) should be stored in the inner area due to security reasons. Passenger Tyres No Light and Heavy Truck Tyres Yes If OE Tyre Yes No OE Tyre Inspection Packing Tube and Flap Storage Packing Storage LOADING Storage Figure 10 Rajagiri Business School Page 29 . OE. Export.FGS process flow chart Tyre From Production Warehouse Cage Counting of Tyres If Tractor. AIL. which will be countersigned by the staff of FGS/TTF. One staff each from production and FGS/TTF will separately verify the quantity. tubes and flaps are assembled and packed. and storing the tyres in the warehouse etc. The staff of final finishing will prepare a finished goods transfer note in triplicate. Material code Description Quantity The original copy of the transfer. After verification.note will be issued to the central excise wing after entering the details in stock statement. FGS as a store FGS fulfills the role of store such as receiving the tyre from final inspection. and also carries out direct exports. FGS as a distribution center FGS dispatches materials to RDCs. accounting. size ply rating of the finished goods and compare against the entry in transfer-note. The functions of finished goods stores Receipt of Finished Goods All finished goods after final inspection are kept at the transferring area in each shift.FGS has got multiple roles as a store. DEPOS. finished goods transfer-note will be serially numbered and have the following details. duplicate will be given back to production as their file copy and triplicate will be issued to production planning. OEMs. FGS as an assembling center FGS functions as an assembling unit where tyres. Rajagiri Business School Page 30 . C&F agents. assembling centre and a distribution centre. The suppliers of flaps are: Rajagiri Business School Page 31 . In case a consignment is rejected. tube and flaps shall be packed as a set. Ahmadabad Vilas Polymers. Hyderabad Bhagavati Ltd . as per the specification applicable for domestic supply. Packing HDPE ( High Density Ply Ethylene) bags containing tubes and flaps shall be identified with the month of production. The suppliers of tubes are: Classic Auto Tubes. Tubes and Flaps (TTF) Upon receipt of goods for TTF. Flaps are supplied by outside suppliers. Pune Excel Rubbers Ltd. FGS shall prepare brought-out goods receipt report (BGRR) and it shall be forwarded to the heads of QA department. QA department will return the BGRR with status of inspection marked. For tubes and flaps supplied by outside suppliers after GR preparation stock will appear in Quality Inspection till it is cleared in SAP by QA. QA department shall organize for sampling and inspection of the goods received. Coimbatore FGS on receiving the material will first prepare GR (Goods Receipt). Assembling Tyres. Upon acceptance/rejection the consignment. Hyderabad Agarwal Tubes Ltd.Receiving of Tubes and Flaps Tubes are mainly supplied by company’s own subsidiary tube plant and sometimes from outside suppliers. For tubes supplied by Pune plant material will get directly updated in stock on preparation of GR. A consignment of goods shall be used for the packing after obtaining approval for the use from QA department. Ahmadabad Nagappa Rubber Factory. Tyre. On acceptance by QA stock will get updated. the same shall be tagged as “Rejected” by the QA department. After preparing the stock statement. Inflate the tube carefully up to the pressure just sufficient to hold the tube inside the tyre. ply and quantity. after preparing the transferring-notes. will be removed to the loading bay and balance will be removed to stores for storage. Proper passage is left for access for periodical inventory. It is basically an R&T (Research and Technology) department. after completing packaging for required item. reducing tyre shape problems etc.Handling and Storage Finished goods store is fully covered and protected from sunlight and rainwater. Staff of FGS/TTF security and representatives of the transporters will check the load. Distribution of Finished Goods Marketing co-coordinator gives dispatch schedule on day-to-day basis. The floor is cleaned to remove dust. All the tyres to be stored are rolled from transferring area to stores and stored size-wise. Rajagiri Business School Page 32 . Removal of Finished Goods The finished goods required for dispatch kept at the transferring area. kept separately size. finished goods transfer notice handed over to factory excise wing for recording and filing. The technical coordination committee will consist of members from marketing field also. Store-man will keep the loads as per the load slips at the loading bay. Ensure that the tube does not come out from the assembly. Procedure Clean the inside of the tyre properly and insert the tube and flap inside the tyre. Marketing coordinator arranges the destination to which trucks are required one day in advance. Technical coordination meeting take place once in every 5 months. Load slips are prepared as per plan made. The technical department plays a very crucial role in the organization. Technical department is mainly concerned with improving quality of tyres by methods like reduction in curing cycles. A stock statement is made as of the closing of the day. After checking the load slip will be signed by the staff and given for preparing transport documents and finished goods will be loaded on to the Lorries. Apollo Tyres Ltd at Perambra handles more than 48 different varieties of tyres. the plant need to utilize its warehouse for anticipating the domestic market. The tubes and flaps are intended for different categories of tyres such as truck type.A detailed study about the finished goods inventory was made. It is sufficient to store the tubes and flaps required for the number of tyres. batch. But after studying the finished goods inventory. light commercial vehicle type and passenger and car type and in goods receipt note they are recorded accordingly. and 8 different flaps. it is supplied from their own tube plant which is situated in Pune. tube and flap in order to sell them in the market. Once they are counted and verified goods receipt note are prepared and recorded by the FGS staff. In order to obtain the stock levels of tubes and flaps for each month for the last one year. Also the tube plant is supplying to few domestic customers. It needs to be a tyre set which is a combination of tyre. rear tractor type. planning and control department were analyzed and were able to observe excess stock levels of tubes and flaps. The total number of different types of tyres to be produced in a month is readily available from the ticket where as the daily production rate for each type of tyres and the number of tubes and flaps have to be obtained from the goods receipt note. the goods receipt notes for the entire one year were analyzed. Goods receipt note will consist of details such as material code. The company also has some approved suppliers for the tubes and flaps supply. 23 different types of tubes. Tubes from the Classic Auto Tubes are stored in the Perambra unit which leads to excess inventory and this created the problem in the warehouse. The study also revealed that only tyres are manufactured by the company on the basis of monthly production plan which is called as ‘ticket’ and it has been send from the head office. Since the Apollo tube plant has been facing space constraints in the warehouse. Since the company is not producing tubes and flaps. The sum of tubes and flaps for all the categories will give the total stock for a day and similarly month wise Rajagiri Business School Page 33 . they need to supply it to the other plants immediately after the production. quantity and material type for different types of tyres. The records of the details of stocks with the production. The tyres are counted once they are manufactured and the transfer note is handed over to FGS staff. it is found that there has been facing excess storage in the number of tubes and flaps when compare with the tyres. The tubes and flaps are counted immediately after the delivery from the suppliers. the number of tubes and flaps is substantially more than the number of tyres and the company is unnecessarily wasting a lot of space for the tubes and flaps storage. The daily transfer note will give the details about day wise tyre production and from which the production details of each month for last one year were calculated. Managers or the Rajagiri Business School Page 34 . The project is based on the excess inventory problem and finds a solution to it.data were calculated for the past one year. An information system can help to overcome this problem. The last one year’s stock description is as shown: Stock Description of Tyres. Tubes and Flaps (2009-2010) MONTH April May June July August September October November December January February March TYRES 32954 31102 26152 24865 35277 26475 40614 30400 20892 25798 28432 20050 TUBES 96600 86679 80958 66143 65731 69037 71911 95370 89875 109454 132251 151122 FLAPS 42724 42373 43382 71850 63462 53320 82201 82784 64542 57462 61581 48615 Table 7 So it is very well clear that in all the months. 00-20 16PR AMAR GOLD -D 10.00-20 TUBESTAR -D 10. The possible combination of tyres.00-20 16PR XT7 GOLD -D 10.00-16 8PR KRISHAK PREMIUM (N)-D Nil Rajagiri Business School Page 35 .00-16 TF TUBE -D 6.25-20 TUBE -D 8. 23 different types of tubes and 8 different types of flaps.25-20 16PR XT7 –D 6. Tube and Flap Combination Table 8 TUBE 10.00-20 16PR XT9 –D 10.00-20 16PR XT7(N)-D 10.00-20 16PR AMAR –D 10.00-20 16PR CHAMPION DXL -D FLAP 20 N SUPER FLAP 20 N SUPER FLAP 20 N TSP SPECIAL FLAP 20 N FLAP 20 N FLAP 20 N FLAP 20 N FLAP 20 N FLAP 20 N FLAP 10.00-20 16PR XT9 GOLD -D 10. The management information system was developed in Microsoft Excel.00-20 16PR AMAR DELUXE -D 10.50/6. tubes and flaps were analyzed first.00-16 HD TUBE -D 5.00-20 16PR XT7 HAULUG -E 10.00-20 16PR XT 100K-D 10. The company deals with more than 48 different types of tyres. Here the tyre.00-20 TUBESTAR GOLD -D 10.person who operates the system can take a decision about the number of tubes and flaps required to be stored in order to opitmise the finished goods inventory.00-20 18PR LOADSTAR SUPER GOLD(S) –D 10.00-16 8PR MAHA TROOPER -D 20 M FLAP 20 M FLAP Nil 6.00-20 16PR AT RIB –D 10. tube. flap combination are given below.00-20 TUBESTAR PLATINUM -D TYRE 10.25-20 16PR AMAR DELUXE -D 8. Tyre.00-20 18PR MINE LUG -D 20 N FLAP 20 N FLAP 20 N FLAP 20 N FLAP 20 N FLAP 8.00-20 16PR XT7 HAULUG -D 10. 25-16 16PR AMAR DELUXE -D 12.00-20 16PR KAIZEN 99R PLUS -D 10.9-28 TUBE -D 7.00-20 14PR AMAR EXPRESS -D 16 N FLAP 16 N FLAP 16 N FLAP 16 N FLAP 16 N FLAP 16 N FLAP 16 N FLAP 20 RR FLAP 20 N FLAP 20 N FLAP 7.50-16 TUBE -D 8.6-28 TUBE -D 13.00-16 12PR AMAR DELUXE -D 7.00-20 18PR KZ .00-20 16PR AMAR DELUXE -D 9.00-16 TUBE -D 7.00-15 12PR MILESTAR GOLD-D Nil Nil Nil Nil 7.50-16 16PR MILESTAR -D 8.00-15 10PR AMAR (N) 7.25-16 18PR LOADSTAR SUPER -D 8.50L 10.25 -16 TSP TUBE -D 8.00-20 KAIZEN TUBE 4.00-20 TUBE -D 9.9-28 12PR KRISHAK PREMIUM -D 7.00-15 12PR AMAR (N) 7.6 -D 10.00-20 16PR KAIZEN 77R -E 10.25-16 TUBE -D 12.4-28 TUBE -D 14.6-28 12PR POWERHAUL -D 12.6-28 12PR KRISHAK PREMIUM -D 13.25-16 16PR MILESTAR(D) -D 8.00-15 TUBE -D 14.00-20 KAIZEN TUBE -D Rajagiri Business School Page 36 .00-16 14PR AMAR DELUXE -D 7.00-20 16PR KAIZEN XDT -D 20 N KZN TSP FLAP 20 N KZN FLAP 20 N KZN FLAP 20 N KZN FLAP 20 N KZN FLAP 10.50-16 16PR AMAR DELUXE -D 7.00-20 16PR KAIZEN 77R -D 10.340/85 R28 TUBE -D 340/85 R28 A8 12PR FARMKING -D Nil 13.00-20 18PR MINE LUG -D 9.00-20 TUBE -D 10.4-28 12PR KRISHAK PREMIUM -D Nil Nil Nil 12. The front end of the information system is given below Rajagiri Business School Page 37 . Then a separate worksheet for tyre. separate worksheets have been created for tubes and flaps and corresponding tyres have entered in the worksheets. The stock statement for tyres. A separate worksheet for monthly production plan have been created which is given by the head office at Gurgaon and commonly known by Ticket. Separate spreadsheets are created to display the results for Tube Summary and Flap Summary which would describe the disparity between the optimum stock and actual stock.4 R28 TUBE -D 12. tube and flap combination.4 R28 12PR FARM KING -D nil 420/85 R28 TUBE -D F78-15 TUBE -D 11. tubes and flaps are prepared by the FGS staff and it will be posted in SAP immediately after the handover of transfer note from the final inspection to FGS. Ticket gives the information about the number of different types of tyres to be manufactured for a particular month.20 TUBE -D 420/85 R28 A8/A7 12PR FARMKING -D F78-15 8PR PANTHER –D 11.00-20 18PR XT7 –D 11.00-20 18PR MINE LUG -D nil nil 20 RR FLAP 20 RR FLAP Based on the tyre. tube and flap stock position have generated so that the information system can be updated each day by simply posting the stock statement for that particular day.12. 6-28 TUBE -D 9.00-20 TUBESTAR GOLD -D 8.50/6.00-20 TUBESTAR PLATINUM -D 10.00-15 TUBE -D 7.50-16 TUBE -D 8.Tube Summary OPTIMUM STOCK 4298 4733 4366 1550 0 1060 2 199 0 0 1144 619 332 386 272 378 425 779 209 866 0 0 ACTUAL STOCK 25502 6374 58541 2632 1389 5126 713 27 28 922 6304 5261 7408 3373 297 4597 1223 7713 5117 5117 976 115 Table 9 EXCESS STOCK 21204 1641 54175 1082 1389 4066 711 -172 28 922 5160 4642 7076 2987 25 4219 798 6934 4251 4251 976 115 Page 38 TUBE SIZE 10.00-20 TUBESTAR -D 10.00-20 TUBE -D 12.00-16 TUBE -D 7.00-16 HD TUBE -D 5.00-20 KAIZEN TUBE -D 13.9-28 TUBE -D 7.00-16 TF TUBE -D F78-15 TUBE -D 420/85 R28 TUBE -D 340/85 R28 TUBE -D 10.25-20 TUBE -D 6.4 R28 TUBE -D Rajagiri Business School .6 -D 10.25 -16 TSP TUBE -D 8.4-28 TUBE -D 14.00-20 TUBE -D 12.00-20 KAIZEN TUBE 4.25-16 TUBE -D 12. he can tell the vendors to hold back the supply for some days.The negative amount of excess stock represents the tubes and flaps quantities which are below the optimum stocking level. If found to be negative. So we calculated optimum stock by the equation Optimum stock = Safety stock + (4* Daily rate) Excess stock is calculated by subtracting actual stock from optimum stock. The functions used for the design of Management Information System are i. the manager can ask to expedite the order and if there is a large amount of excess stock. average lead time is fixed as 4 days. VLOOKUP This function will copy the required item quantity from specified spreadsheet to the required sheet otherwise it becomes tedious to look for individual item quantities. To cover the unforeseen events such as strikes and vehicle breakdown. The flap summary is also made. Rajagiri Business School Page 39 . ii. CONCATENATE This function merges the tyre code and batch code into one cell. Findings and Suggestions Rajagiri Business School Page 40 . Since the monthly production plan for tyres is given by the Head Office. it was found that:1. The huge inventory of tubes and flaps can be minimized by increasing the capacity of the warehouse in the tube plant of Apollo. Though the quality is an important aspect. 4. The execution of information system needs to be closely observed at the initial phase for any error. Rajagiri Business School Page 41 . 2. It has been found that the stocks of tubes are greater than flaps. 4. This is due to the space constraints in the tube plant. In Apollo Tyres Ltd. the company can convey the requirement of tubes and flaps in advance for optimising the finished goods inventory by looking at the information system. Some suggestions for the further improvement of inventory management are given below:1. the tubes and flaps are not rechecked for the quality once they are stored. Since the information system has the ease of operating by any personnel as it is built with the simple functions which is incorporated in Excel. 15 days stock is kept as safety stock against unexpected events. 3. they have to transfer the tubes and flaps to Perambra unit and this lead to huge inventory. 3. 2. Since the tube plant need to utilize its warehouse for anticipating the domestic market. Apollo tyres can optimise tubes and flaps inventory with that of tyres by operating an efficient management information system. There has been a lot of difference in the numbers of tubes and flaps stored in the Finished Goods Stores when compared with the tyres. the company stores its tubes in the Perambra unit.On studying the finished goods stores department of Apollo Tyres Ltd. Conclusion Rajagiri Business School Page 42 . Apollo Tyres can reduce the disparity among tyres. The information system is designed with the simple function that is incorporated in the Microsoft Excel. tubes and flaps. By looking at the information system the manager can ask to expedite the order and if there is a large amount of excess stock. he can tell the vendors to hold back the supply for some days.This study was aimed to optimize the finished goods inventory of the Apollo Tyres Ltd. This makes the information system unique as it can be operated by any personnel. An efficient information system will helps to optimize the inventory. Perambra. Rajagiri Business School Page 43 . Since the FGS staff prepares stock statement daily and our information system needs only the prepared stock statement as input. Hence Apollo Tyres can maintain a satisfactory level of inventory by following the information system. But there is a huge disparity of tubes and flaps stock when compare with tyres and lead to high inventory. Here the system of inventory management was studied by conducting direct interview with relevant officials of the concern and by observation. Further data are collected from published reports of the company and it was found that the inventory management used by the company is fairly a robust one. Based on the information system if followed. the developed information system will be very useful. Bibliography Rajagiri Business School Page 44 . S.aspx www. (1964). Allied Publishers.aspx Rajagiri Business School Page 45 .apollotyres. 2) Agarwal.com/investor-relations. Delhi. Kanishka Publishers.aspx www. Websites www. Bombay.apollotyres. Inventory Management in India.1) Chadda R.com/corporate/manufacturing-process. Inventory Management Concept and Dynamics.com/corporate/human-resource. Krishna Kumar (1993).apollotyres.aspx www.apollotyres.com/corporate/corporate. Annexure Rajagiri Business School Page 46 . 00-20 14PR AMAR EXPRESS -D 9.4-28 12PR KRISHAK PREMIUM -D 13.00-20 18PR LOADSTAR SUPER GOLD(S) – D 10.00-20 16PR KAIZEN XDT -D 10.00-20 16PR XT7 HAULUG -D 10.00-20 16PR KAIZEN 99R PLUS -D 9.00-20 16PR XT7 HAULUG -E 10.00-20 18PR XT7 -D 11.00-20 16PR XT9 -D 10.00-15 12PR MILESTAR GOLD-D 7.00-20 16PR XT7 GOLD -D 10.00-20 16PR KAIZEN 21L-D 10.00-20 16PR XT 100K-D 10.TICKET FOR THE MONTH APRIL 2010 10.00-16 14PR AMAR DELUXE -D 7.00-20 16PR XT9 GOLD -D 10.9-28 12PR KRISHAK PREMIUM -D 13.00-20 16PR AMAR DELUXE -D 10.00-20 18PR AMAR DELUXE -D 10.00-20 16PR XT7(N)-D 10.00-20 16PR ST5 -D 10.00-24 12PR ROADGRADER PREMIUM-D 14.00-16 12PR AMAR DELUXE -D ( ker) 7.00-24 12PR ROADGRADRPRM TL .6-28 12PR KRISHAK PREMIUM -D 13.00-20 18PR MINE LUG -D 12.50-16 16PR AMAR DELUXE -D 7.25-16 16PR MILESTAR(D) -D RTA1JJLSG1A02 RTA1JHXT71A03 RTA1JHX7G1A01 RTA1JHX1K1A01 RTA1JHXTD1K01 RTA1JH21L1K01 RTA1JHXT91A01 RTA1JHX9G1A01 RTA1JHHLG1A0A RTA1JHHLG1A01 RTA1JHTX01A01 RTA1JJMNG8A01 RTA1JHST52A01 RTA1JHAMR3A01 RTA1JHADX3A01 RTA1JJADX3A01 RTA1JHAMG3A01 RTA1JHARB3A01 RTA1JH99S3K01 RTA1KGAXP3A01 RTA1KHADX3A01 RTA1LHXT71A01 RTA1LHADX3A01 RTA1FJXT71A01 RTA1FJMNG8A01 RTC4MFKPR1A01 RTC4NFKPR1A01 RTC4NFPWH1A01 RTC4PFKPR1A01 RTM7AFRGP1A01 RLM7BFRGP1A01 RTM7HLTRX0AE1 RTA1CFBLT6A01 RTDTFFFMK1AA1 RTDTGFFMK1AA1 RTDTEFFMK1AA1 RTE3EFMSG1A01 RTE3EFAMR3A01 RTE3EEAMG3A01 RTE3DFADX3A01 RTE3DGADX3A01 RTE3CHADX3A01 RTE3CHMLT1A01 RTE3BHMSR1A02 1500 22000 8000 2500 3000 1200 0 6000 0 20000 0 4000 1200 15000 2000 4000 12000 4000 5000 1800 3000 5500 5400 500 600 2500 3500 0 1800 100 100 250 1000 0 550 600 2500 0 3000 0 2500 3500 2000 3200 Rajagiri Business School Page 47 .00-20 18PR MINE LUG -D 10.D 14.00-20 16PR AT RIB -D 10.25-20 16PR XT7 -D 8.00-25 20PR E-3 XTRAX-D 15.00-20 16PR CHAMPION DXL -D 10.00-21 12PR BULLET -D 340/85 R28 A8 12PR FARMKING -D 380/85 R28 A8 12PR FARMKING -D 420/85 R28 A8/A7 12PR FARMKING -D 7.25-20 16PR AMAR DELUXE -D 11.00-15 12PR AMAR (N) 7.00-20 16PR AMAR -D 10.6-28 12PR POWERHAUL -D 14.00-15 10PR AMAR GOLD-D 7.00-20 16PR AMAR GOLD -D 10.50-16 16PR MILESTAR -D 8.00-20 16PR AMAR DELUXE -D 8. 25-16 16PR AMAR DELUXE -D 8.00-16 8PR KRISHAK PREMIUM (N)-D 3000 1500 7500 Rajagiri Business School Page 48 .RTE3BHADX3A01 RTE3BJLSS1A01 RTN5EDKPR3A02 8.25-16 18PR LOADSTAR SUPER -D 6.