22-06-2012, 02:36 PM
A STUDY ON INVENTORY MANAGEMENT AT AMARA RAJA BATTERIES LTD
A STUDY ON INVENTORY MANAGEMENT.doc (Size: 2.74 MB / Downloads: 74)
INTRODUCTION
Inventory Management plays a critical role in the smooth and efficient running of any business. Reducing excess inventory and investing in the right inventories lead to improved customer service, increased inventory turnover, reduced costs and increased profitability.
Inventory is always dynamic. Inventory management requires constant and careful evaluation of external and internal factors and control through planning and review. Most of the organizations have a separate department or job function called inventory planners who continuously monitor, control and review inventory and interface with production, procurement and finance departments.
Defining Inventory
Inventory is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time.
Any organization which is into production, trading, sale and service of a product will necessarily hold stock of various physical resources to aid in future consumption and sale. While inventory is a necessary evil of any such business, it may be noted that the organizations hold inventories for various reasons, which include speculative purposes, functional purposes, physical necessities etc.
COMPANY PROFILE
Amara Raja Batteries Ltd, (ARBL) is the largest manufacturer of Standby Valve Regulated Lead Acid (VRLA) batteries in the Indian Ocean Rim comprising the area ranging from Africa and the Middle East to South East Asia. Based in Chennai, with a fully integrated manufacturing unit for its industrial batteries at Tirupati, Amara Raja has reached a position of leadership in a short span of 7 years.
Amara Raja is in a strategic partnership with Johnson Controls Inc., USA. With this, ARBL is in Global Supply Alliance with Vertas AG of Europe and Enertec, who are joint venture partners of JCI in South America and Mexico. The Business Group of Amara Raja is categorized as Industrial Battery Division, Automobile Battery Division and Power System Division.
INDUSRTRY PROFILE
Lead Acid Battery Industry has seen huge evolution in the last couple of years Worldwide primary and secondary battery demand is projected to rise at a nearly 7 percent annual pace through 2010 to $73.6 billion. China will record the largest gains of any national market, stimulated by healthy economic growth, ongoing industrialization efforts and rising per capita income. Annual demand in the country will climb by more than $7 billion from 2005 to 2010, and China will surpass the U.S. to become the largest battery market in the world. Sales increases are also expected to be strong in India, Indonesia, South Korea, Poland, South Africa, Brazil and Russia for similar reasons.
REVIEW OF LITERATURE
Inventory comprises stock of raw materials, work-in-process, finished products stores and components. “JOHN HAMPTON”-treats inventory as “locked up capital”. Inventory measured by rupee value constitutes, the major element in the “Working capital” (approximately 60% of current assets) of many business undertaking in INDIA.
Inventory management means safeguarding the company’s property in the form of inventories and maintaining it at the optimum level for each item inventory. The reduction in an “an optimum level negatively affects the company’s profitability. Hence, inventory management should be comprehensive enough to cover the flow of materials starting from the products are sold.
CONCLUSION
The company can reduce ordering cost by the following proper inventory management technique like. JUST-IN-TIME(JIT) means It is the philosophy of continuous improvement in which non value adding activities ( or wastes ) are identified and removed for the purpose of Reducing cost, Improving quality, Improving performance, Improve delivery ,Adding flexibility, Increase innovations.JIT is not about automation. It not only eliminates waste but also helps for controlling inventory by providing the environment to perfect and simplify the processes.