SUMMER INTERNSHIP

Project Report

On

Inventory Management through SAP

AT

Faculty Guide

Prof.Kuldeep ChoudharyCompany Guide

Ms Nisha Taank

Deputy Manager

Mr. Vipul Jain

Manager

DECLARATION

I, Jaspreet Kaur of E-MBA(II), the bonafide student of Bharati Vidhyapeeth,Pune University declare that this work previously has not formed part of any basis for the award of any degree or diploma offered by any institution or university.

This is a record of bona fide and original work submitted by me in partial fulfilment of the requirements for the award of Masters degree.

Jaspreet KaurE-MBA (II Year)ACKNOWLEDGEMENT

I express my sincere gratitude to Mr. Sandeep Mathur, General Manager for granting me the permission to do the Summer Internship Project in this most prime and prestigious organization of the country.

My heartfelt and sincere thanks to the Ms Nisha Taank who guided me in each step of the project by providing adequate data and valuable suggestions in spite of their busy schedule.

Im also extremely thankful to the other officers of Accounts Departments who have provided appropriate guidance and support which enabled me to complete the project successfully.

Im grateful to all the people and staff of the Organization who directly or indirectly contributed to the successful completion of the project.

TABLE OF CONTENTS

S.noParticulars

1.Industry Profile

2.Aim And Objective

3.Introduction To Topic:

Inventory Management through SAP

4.Introduction to SAP

5 Integrated Inventory Management System

6SAP R/3 System

7.Logistic procedure

8.Detailed SAP understanding

9.Conclusion

10.Bibliography

INDUSTRY PROFILE

WORLD SCENARIO

Electrical Hardware includes an extensive range of electrical hardware products, components and accessories that are used for the distribution, supply and usage of electricity. It includes everything from electrical cable, wire and meters to lighting fixtures, bulbs and fans.

Electrical Hardware Products

Some of the important electrical hardware products types are listed below:

Electrical cable, Electrical socket, Electrical Wire, Electric Cord, Switch Gears, EarthingAccessories,Cable&WireFittings,ElectricalPlug,Adapters,Busbars,ElectricMeters, Lighting Fixtures, Electrical box, Light bulbs, Electric Fans.

World electric transmission and distribution equipment demand will rise 4.4percent annually through 2011.The industrial and commercial sector will see the strongest gains as cogeneration proliferates and products such as high voltage transformers become more common outside of the utility sector.

Electrical Hardware Products Applications

Electrical hardware products have found uses in a variety of industrial applications, including

Electric power distribution and supply

Vehicle systems

Production and manufacturing

Communication systems

Large scale transportation and equipment

Electrical Hardware Industry

The electrical industry provides an important service to modern life. It provides people with the most prevailing form of energy known to mankind-electricity. Electrical industry supports the economic-growth and productivity, promotes business development and expansion and generates vast employment opportunities for people across the world. The industry includes establishments primarily engaged in the manufacturing, supply trade and retaining of electric hardware products.

Electrical Industry

The electrical industry uses a number of applications of petrochemicals to help the industry perform better and improve manufacturing processes. These petrochemical products are very essential for the manufacturing of several of the electrical equipments as it helps in insulation, prevention of loss of energy and safety.

Electrical Industry Trends

a. Increasing construction activity driving the demand for electrical hardware products

According to the recent market studies, the office construction in 2007 had an advanced growth and this trend will continue till 2010.In the long run growth in the office construction market is expected between 6% and 7% annually till 2011 and it will reach $75.1billion by then.

This forecast could prove to be profitable for electrical fittings and cable industry worldwide. The demand for automation solutions will only continue to grow as industry continues to seek the most flexible and efficient power and control devices to increase system.

b. Increased employment-In recent times, employment in the electrical hardware industry has gone up globally.

INDIAN SCENARIO

The Indian Electrical industry is now finding a good response for its products in the international markets. What has brought this about? The industry has invested in upgrading technology and improvements in quality systems so that it is able to offer products/systems contemporaneous to what the developed countries make at much lower price.

Electricity has become an inseparable part of our daily life. In homes, offices, industries and hospitals they are myriad systems, equipment and sophisticated appliances that depend on electrical energy.

Electrical equipment such as motors, transformers, switchgears etc. are used by all sectors of the Indian economy. Some major areas where these are used are the multi-crore projects for power generation including nuclear power stations, petrochemical complexes, chemical plants, integrated steel plants, non-ferrous metal units etc.

Indian electrical industry

a. Prospects of the Indian Electric Industry.

Like every other industrial sector in India, the Indian Electrical Industry too is slowly emerging from out of its protective cover. Since the last decade, India has witnessed what global players have achieved and what they are capable of achieving. We are becoming aware of competition on our turf. Many organisations in this industry are looking overseas to develop the export markets owing to reduced demand at home.

b. Future Prospects

The domestic market in India is itself large, and one must firstly satisfy this market with products that meet international quality standards. With increasing globalisation, every international player is now operating in India, providing goods and services complying with international quality. The Electrical Industry in India is growing to its full potential in the coming years and no doubt India will soon come to be recognised for quality products and services which in turn, will bring this industry to a position of true leadership.

Factors Governing the Growth of this Industry

Research and development played an important role to the increased productivity and higher-value added electrical products. Foreign investments accelerated growth in production and export as well. Global industries like medical, telecommunication, etc have been cordially supported by electrical industry. Increase in income changed living standards of the common mass. As a result, it increased the demand of electronics. Asia pacific region is emerging as the most spinning place for the consumer electronics industry.

COMPANY PROFILE

About the company

QRG Group, a billion-dollar-plus group which ranks among the top electric product conglomerates in the worlds and is a major domestic and global player in the production and sales of an impressive range of electrical products. The group comprises of 4 companiesHavells India Ltd (the flagship company with Havells and Crabtree Brands), Standard Electricals Ltd, Havells-Sylvania and QRG Healthcare.

With 19 state-of-the-art manufacturing plants, 91 branch offices and a strong backing of over 8000 professionals across the globe, the group has achieved rapid success in the past few years.

The flagship company, Havells is acknowledged as a manufacturer & supplier of the widest range of low voltage electrical equipment and has become a name synonymous with excellence and expertise in the industry.

Driven by a philosophy of dreaming big, empowering team members, a culture based on transparency, honesty, a high focus on ethical values and entrepreneurship at every level, the QRG Group of today is literally a dream come true-a world class company which is one of the most admired organisations in India. With a number of strategic alliances in place, QRG Group has shown phenomenal growth rate with the help of various joint ventures, acquisitions, mergers and takeovers. The group, catering to the needs of residential and industrial market globally, has 10 manufacturing units in India.

Following its philosophy of thinking big, the groups product basket offers end-to-end electrical solutions. The company manufactures a wide range of high quality electrical products suitable for domestic and industrial use.

QRGs International Business Division (IBD) is a dynamic team of professionals who are committed to fulfil the aspirations of the organization in the international markets. IBD caters its international clientele spread over 51 countries with offices in Dubai, China, Nigeria and distribution networks in all major countries.

Innovation is the hallmark of every vital development at QRG. New ideas, inventions deepen scientific knowledge and give its workforce a new impetus towards technical progress. The responsibility of providing its customers the best products and zero defect services to enable them to be comfortable and secure in usage of electricity.

HAVELLS INDIA LTD

Havells India Ltd. is a billion-dollar-plus organization which commenced its operations in 1982. It one of the largest & India's fastest growing electrical and power distribution equipment manufacturer with products ranging from Industrial & Domestic Circuit Protection Switchgear, Cables & Wires, Motors, Fans, Power Capacitors, CFL Lamps, Luminaries for Domestic, Commercial & Industrial applications, Modular Switches, & Bath fittings covering the entire gamut of household, commercial and industrial electrical needs.

Havells owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Luminance, linolite, & SLI Lighting.

With 91 branches / representative offices and over 8000 professionals in over 50 countries across the globe, the group has achieved rapid success in the past few years. Its 8 state-of-the-art manufacturing plants in India located at Haridwar, Baddi, Noida, Sahibabad, Faridabad, Bhiwadi, Alwar, Neemrana, and 7 state-of-the-art manufacturing plants located across Europe, Latin America & Africa churn out globally acclaimed products. Havells is a name synonymous with excellence and expertise in the electrical industry. Its 20000 strong global distribution network is prompt to service customers.

The company has acquired a number of International certifications, like BASEC, CSA, KEMA, CB, CE, ASTA, CPA, SEMKO, SIRIUM (Malaysia), SPRING (Singapore), TSE (Turkey), SNI (Indonesia) and EDD (Bahrain) for various products. Today, Havells and its brands have emerged as the preferred choice of electrical products for discerning individuals and industrial consumers both in India and abroad.

In an attempt to transform itself from an industrial product company to a consumer products company, Havells launchedconsumer electrical products such as CFLs, Fans, and Modular Switches & Luminaries. The company has been consistent in its brand promotion with sponsorship of Cricket events like T20 World Cup, India-Australia Series and IPL Season 1 and 2. The company has also taken the initiative to reach directly to the consumers through "Havells Galaxy" a one stop shop for all electrical and lighting needs.

Social and environmental responsibility has been at the forefront of Havells operating philosophy and as a result the company consistently contributes to socially responsible activities. For instance, the company is providing mid-day meal in government schools in Alwar district, covering 15000 students per day. Besides this company has acquired land for constructing a larger kitchen with all the modern facilities to serve freshly cooked food to 50000 students in the area. Havells runs a mobile Medical Van, equipped with a trained doctor and necessary medicines in the rural areas of Delhi & NCR for the very poor and needy villagers. We also set up free medical check-up camps. In the past also, the company has generously contributed to the society during various national calamities like the Bihar Flood, Tsunami and Kargil National Relief Fund etc.

The essence of Havells success lies in the expertise of its fine team of professionals, strong relationships with associates and the ability to adapt quickly and efficiently, with the vision to always think ahead.

Vision:

To be a globally recognized corporation that provides best electrical & lighting solutions, delivered by best-in-class people.

Mission:To achieve our vision through fairness, business ethics, global reach, technological expertise, building long term relationships with all our associates, customers, partners, and employees

Values:

Customer Delight: A commitment to surpassing our customer expectation Leadership by example. A commitment to set standards in our business and transactions based on mutual trust.

Integrity and Transparency: A commitment to be ethical, sincere and open in our dealings.

Pursuit of Excellence : A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best in class

PRODUCTS

Building Circuit Protection

Havells India Ltd has emerged as preferred choice for discerning range of individual and industrial consumers. Havells is the largest manufacturer of MCBs in the country and 30% of the MCBs sold in UK are Havells manufactured. The products are approved by international quality bodies such as KEMA,UL, CSA and are as per IEC standards.

Miniature Circuit Breaker (MCB)

Isolator

Changeover Switch

Residual Current Circuit Breaker (RCCB)

RCBO

Distribution Board (DB)

Indicator Light

Automatic change over with current limiter (ACCL)

Industrial Circuit Protection

Havells India Limited is leading manufacturer of low voltage Industrial products for Three Phase and Single Phase power distribution, switching control and protection requirements.

Panel Board system

Changeover Switch

By-pass Changeover Switch

Load Changeover Switch

Automatic Transfer Switch

Switch Disconnector

Load Changeover Switch

Automatic Transfer Switch

Switch Disconnector

Control Gear

Switch Disconnector Fuse

Fuse Switch and Switch Fuse

Chamber System

Fuse Holder

Nylon Fuse Base

Fuse Link and Fuse Base

Motors

Havells is manufacturing three phase LV Motors at Neemrara (Rajasthan).The motors are manufactured with technical collaboration with Lafert who are now the owners of AEG Electric Motors. The plant has a capacity to manufacture over 300000 nos. energy efficient motors per year. The complete ranges of motors are manufactured in- house and the plant and machinery has been procured from AEG Electric Motors.

Foot Mounting

Flange Motor

Foot Cum Flange

Inverter Duty Motors with Forced Cooling

Crane Duty Motors

Brake Motors

Capacitors

Havells capacitors are designed and manufactured using S3 technology. It encompasses product with triple shield with differential disconnector. Advanced technologies adopted in the capacitors offer unmatched safety and outstanding performance under Indian conditions.

Normal Duty

Heavy Duty

Super Heavy Duty

Agriculture Duty

Motor Run Capacitors CFL

The company feels proud and privileged to share with you one fine innovation of making Havells CFLs more environment friendly by introducing Indias first Green CFL, manufactured using Pill Dosing Technology(PDT). Havells is the largest exporter of Lilliput CFL under brand name Havells Sylvania and has been awarded the best CFL in Sweden & France.

Retrofit

Non Retrofit

Higher Range

Liliput

FPL

Modular Plate Switches

Havells Switches are aesthetically designed modular plate switched that are engineered to deliver protection and built to last. They are an architects invention while keeping an Italian flair in his mind. They are one of the best modular switches available in India, both aesthetically and technically

Havells Modular Switches

Crabtree Modular Switches

Lighting

Havells owns a wide range of energy efficient luminaries for domestic and decorative applications .Lighting is important and the quality of light affects every walk of modern life. A better understanding of light will enable you to use it more effectively.

LED Lighting

Consumer Lighting

Commercial Lighting

Down Lighter

Landscape Bunker Lighting

Industrial Lighting

Area Lighting

Road Lighting

Specialty Lamps

Accessories

Aura Lighting

Fans

Havells entered fan business in mid-2003 and has emerged as one of the fastest growing brand in the market. From premium fans in exquisite antique finishes to fans specially designed for kids to dual colour fans and super speed fans. Havells brought Energy Saver fans (ES50) model which consumes only 50watts of power. Havells is the first company to get 5 star rating in fans from BEE.

Ceiling Fans

Table Fans

Wall Mounting Fans

Air Circulator Fans

Ventilating Fans

Pedestal Fans Cables & Wires

Set up in the year 1996, Havells Cables plant (an ISO: 9000-2000 certified unit) is located in Alwar , in the state of Rajasthan. All cables and wires are manufactured on most modern laser controlled automatic machines, using best raw material from primary manufacturers ensuring perfect quality.

Power Cables Aluminium

Control Cables Copper

Copper Flexible Cables

HAVELLS SHAIBABAD PLANT

In 1990, Havells India expanded its switchgear manufacturing operations by setting up an additional plant at Sahibabad, so as to cater both domestic and international markets.

Presently, this plant is one of the largest manufacturing industrial switchgear plants in north India with all comprehensive in-house tooling and testing facilities. It is also one of the most modern Industrial manufacturing plants in country today which is spread over 10.50 acre area. The main product portfolio in Havells Sahibabad products are:

Air Circuit Breaker (ACB),

Moulded Case Circuit Breaker (MCCB),

Control gear Range

Capacitor

Load bank

GROWTH AND DEVELOPMENT OF THE ORGANIZATION

Milestones

A look at the milestones in over five decades of QRG journey to excellence, maps its emergence as a major industrial force in the country and abroad.

1958 : Commenced trading operations in Delhi.

1976 : Set up the first manufacturing plant for Rewireable Switches and Changeover Switches at Kirti Nagar, Delhi.

1979 : Set up a manufacturing plant for HBC Fuses at Badli, Delhi.

1980 : Started manufacturing high quality Energy Meters at Tilak Nagar, Delhi.

1983 : Acquired Towers and Transformers Ltd. and turned it into a profitably manufacturing Energy Meters Company in 1 year.

1987 : Started manufacturing MCBs at Badli, Delhi in Joint Venture with Geyer, Germany.

1990 : Set up a manufacturing plant at Sahibabad, UP for Changeover Switches.

1993 : Set up another manufacturing plant at Faridabad, Haryana for Control Gear Products.

1996 : Acquired a manufacturing plant at Alwar, Rajasthan for Power Cables & Wires.

Entered into a Joint Venture with Electrums, UK for manufacturing Dorman Smith MCCBs and Crabtree Modular Plate Switches.

1997 : Acquired Electric Control & Switchboards at NOIDA, UP for

manufacturing customized packaged solutions.

1998 : Introduced high-end Ferraris Meters in Joint Venture with DZG, Germany.

2000 : Acquired controlling interest in an industry major-Standard Electricals Ltd.

2001 : Acquired business of Havells Industries Ltd, MCCB of Crabtree India Limited and merged ECS Limited in the company to consolidate its area of core competence.

2004 : 1. Set up manufacturing plantat Baddi,HP for manufacturing of Domestic Switchgear.

2. Set up amanufacturing plant for manufacturing of CFL at existing manufacturing plant in Faridabad, Haryana

3. Set up a manufacturing plant for manufacturing of Ceiling Fans at Noida, UP

4. Set-up our own market in office in London through our wholly owned subsidiary company Havells U.K. Ltd.

2005 : 1. Set up manufacturing plant in Haridwar ,Uttaranchalfor manufacturing Fans.

2006 : 1. Crabtree India merged with HavellsI ndia.

2. Added CFL production unit in Haridwar manufacturing plant.

3. Expansion at Alwar manufacturing plant for increase of production capacity.

4. Expansion at Baddi manufacturing plant and set-up ofa nExport Oriented Unit.

2007 : 1. Set-up of Capacitor manufacturing plantin Noida,UP with the

capacity of 6, 00,000 kVAr per month.

2. Acquired the Lighting business of a Frankfurt basedcompany "Sylvania", a global leader in lighting business and now the company's turnover crosses US$ 1 Billion.

3. WarburgPincus ,a global private equity firm and one of the largest investors in India, invested US $110 million in Havells India Ltd. Havells issued fresh shares to Warburg Pincus, representing approximately 11.2% of the fully diluted share capital of the company.

BOARD OF DIRECTORS

Mr. Qimat Rai Gupta (Chairman &Managing Director)

Mr. Anil Gupta (Joint Managing Director)

Mr. Surjit Gupta (Director)

Mr. Rajesh Gupta (Director Finance)

Mr. S.B.Mathur (Director)

Dr. Abid Hussain (Director)

Mr. A.P.Gandhi (Director)

Mr. Nitan Malhan (Director)

Maj.Gen.D.N. Khurana (Director)

Mr.V.K.Chopra (Director)

Company Secretary : Sanjay Johri

Auditors : M/s V.P Bansal & Co. Chartered Accountants

Bankers : Canara Bank, IDBI Bank, State Bank of India

, Corporation bank, Yes Bank

Registers and Transfer Agents: MCS Limited (Havells India Ltd)

Listed on : The National stock Exchnage of India Ltd,

The Bombay Stock Exchange Ltd

Corporate office : QRG Towers, Noida

AIMS AND OBJECTIVES

With these basic objectives in mind I started my internship at HAVELLS a leading Electronics company in INDIA on project topic Inventory management through SAP

1) To get familiar with the corporate structure and experience the on-field problems which may include problems related to finance, manufacturing problems, and logistics and inventory issues.

2) To apply the knowledge I gained in the past one year to solve the companys daily problems and prove to be of value.

3) To understand how big companies like Havells work and operate, and what things they need to do daily in order to make everything streamlined making no chance for delay or resource waste.

4) To understand logistics of the company from the point of manufacturing to the sales.

5) To know about the inventory management daily operations and the tools (software-SAP) they used to make the whole process efficient.

6) To know what a company does for the satisfaction and retention of its employees which may include providing them various employee benefits, overtime salary, the cut off in salary for issues like leaves and late attendance, how they deal with it and make sure that such things not repeat in future. Also how they create a company culture and motivate everyone to give them their best.

7) To also get aware about the other departments of the company and how do they co-ordinate with each other and work as a team.

8) To understand how a company like Havells maintains standards related to manufacturing and various other departments including human resources recruitment to maintain their value and brand name in the market.

9) To know what a company does to remain ahead of their competition, what techniques or backup plans do they apply in cases of emergency or crisis.

10) To know what marketing options do a company like Havells applies to make customer aware of their product and also showcase their product better than their competitions.

INTRODUCTION TO TOPIC

Inventory Management

Inventory management or inventory control deals with the company inventory requirements and needs in order to minimize the cost resulting from holding or obtaining inventory.

What is inventory?

Inventory refers to list of goods or materials that is available in stock to a company. It can be classified in different ways like: raw material, goods in transit, finished good, spares or maintenance, repair and operation supplies.

A company's inventory is one of its major assets and it also represents companys investment which is locked up until the product is sold in the market or used in the production of the product which is being sold. Huge costs are involved in storing, tracking and insuring of inventory.

Therefore, it is necessary for every management to have proper inventory management in its system, with due attention. Inventory Management includes proper planning of purchasing, storing, handling, and accounting of inventory. It is an effective system that determines what to purchase, how to purchase, from where to purchase, where to store etc.

Many times there are conflicts between departmental heads like finance department and production department over the issue of inventory. And any mismanagement of inventory can create a major financial problem to the company. So there is a need to have an integrated inventory management system within every company to have a proper record and management of inventories. Inventory management helps in ensuring the supply of material, so that the production does not suffer and customer demand could be met. It avoids under stocking or over stocking of inventory. It minimizes inventory investment by keeping check on operational and sales activities. Thus, inventory management system facilitates proper planning and control of inventory.

For a big manufacturing Companies like Havells, it becomes very complicated to manually manage and efficiently utilize its good and material. Realizing this SAP Enterprise Resource Planning software is introduced in company logistic system that centralizes the management of stock. All the activities of logistic are handled through SAP Software in Havells, which is discussed further.

INTRODUCTION TO SAP

SAP is Enterprise Resource Planning software developed for large manufacturing companies that handles everything from people oriented task to material oriented task. This software was introduced in the market in 1972 for all industry sectors. Later in 1979, SAP released its mainframe product called R/2 and in 1992 it came up with R/3 with which SAP became the gold standard of ERP software. Presently it is the third largest software supplier in the world.

With SAP software, process like

Customer Relationship Management

Supply Chain Management

Product Lifestyle Management and

Supplier Relationship Management

are easily managed. It gives solution to its costumers which enable them to further advance and improve industry practices. It provide competitive advantage to companies in dynamic market conditions.

In SAP there are many logistics function components which help in managing key logistics activities such as:

Production Planning (PP) this component helps in managing company's production process. Its function is planning company production, material requirement planning (MRP), and preparing master production schedule (MPS).

Materials Management (MM) this component is the basic foundation for logistics, it includes all information about the material used in the company. It includes inventory movements, purchasing, material file and accounts payable.

Sales and Distribution (SD) this component function includes pricing, packing, and shipping. It covers the whole process from receiving an order from costumer to its delivery.

Quality Management (QM) this component function is to look after the quality of purchased and finished good. It ensures proper inspection of the quality of company's product.

Plant Maintenance (PM) this component function is to focuses on planning and maintenance of all tools and equipment that are used in production process of the company's finished product.

Customer Service (CS) this component looks after the services which are provided to the customers like for repairs and warranties. Any finished product sold with warranties, then this SAP component will help in repair of product with full efficiency.

Warehouse Management (WM) this component aims to maximize the storage capacity in such a way that there is no wastage of time in placing and removing items from the warehouse by suggesting the most efficient way of handling material.

HAVELLS INTEGRATED INVENTORY MANAGMENT SYSTEM

Managing inventory is an integrated function, so it is not possible for a single department to work on it. It involves team work of different department like purchase department, store department warehouse department etc.

The system followed by Havells is all the raw material is initially procured from external or internal sources as per there requirement which is determined by material requirement planning. Then its delivery is entered in the system software SAP as a good receipt. This delivered material is stored in the store department until it is used within the company or delivered to its customer

Havells undertakes SAP R/3 System that represents the enterprise structure.

This diagram shows the organization of an enterprise through SAP covering following organization levels:

Client: It is at the top most hierarchy level, which has its own data, set of table and master records. It represents the corporate group.

Company code: It is the subsidiary company or a corporate member that has an independent accounting with the client and has its own balance sheet and profit and loss statement.

Plant: It is the manufacturing concern that handles logistic, production, plant maintenance, procurement, and material planning. Each plant is assigned to company code and to a purchase organization.

Storage location: It refers to the warehouses that store the company's inventory.

Purchase organization: It is an organizational unit which is responsible for procuring material from different plants and negotiating with vendors for price and delivery term. It assumes legal responsibility for all the external transaction that takes place.

Procedure followed by Havells manufacturing plant in Sahibabad controlling logistic system:

Starting working in SAP

For inventory management, in SAP R/3 system Material Master Record is maintained which is the main source of company's material. This is a material database which has all material description. All material which is used in production or process is given a material code. By using these material codes all the entries are done in SAP.

STEP 1: Purchase requisition

In company, the process begins with sending of purchase order request to purchase department which is called purchase requisition. Which is generated in SAP through APO that is automating production order by receiving notification from different department on items requirement for production? In this description and quantity of goods needed is given. It is passed on to accounting department which look after the amount of money, purchasing department is authorizes to spend. After receiving technical recommendation from all the departments involved purchase order is made.

Purchase requisition SAP window:

STEP 2: Purchase order

After purchase requisitions made, purchase order is initiated by the purchasing department. In SAP automatic mails are send to vendors regarding purchase order which states the description, quantity , date of delivery, price and terms and condition of delivery.

Company issues Form 48(application of national permit) to the vendors. 100 permits per day is restricted by the company. So all the vendors located outside the border uses form 48 to supply goods to the company.

Purchase order SAP window:

Step 3: Good receipt

Good Receipt is the received from vendor as it delivers goods to the company. As soon as goods is received, it is entered into daily receipt book and given a ORB No in register which includes the detail like Number of boxes, Transporter Name, Bill, Date of Delivery, and Purchase Order No. Material is checked with respect of quantity and is inspected then it is sent to store.

This Receipt of the goods is entered in Inventory Management (IM) component in SAP to confirm that the movement of goods has taken place which is carried out automatically by the system.

In SAP 3 type of good receipt:

Goods receipts for Purchase Order

Goods receipts with reference to reservation

Other goods receipts

STEP 4: MIGO (goods receipt entry)

For purchase order

IN SAP R/3 system, MIGO transaction entry is made, which shows goods received from vendor, and placed in store with reference to Purchase order generated. Through this all the departments in the organization are updated with the good received info.

In System: SAP menu> logistics> material management>IM goods movement> good receipt> for purchase order> Purchase order details are entered> and saved.

Different modules are integrated in SAP, so 2 entries are passed. One in MM module (MIGO) and other one in FI module. This is done automatically.

Material A/C.........Dr

To GR/IR A/C

For reservation

A reservation is a request to the warehouse to keep materials ready for a goods issue later date and for a certain purpose. A reservation for goods issue can be requested by various departments for various account assignment objects, (such as cost center,order, asset, etc.)

The purpose of a reservation is to ensure that a material will be available when it is needed. It is also to simplify and accelerate the goods issue process and to prepare the tasks at the point of goods issue. Also important is that Material Requirements Planning (MRP), which means that required materials are procured in time if they are out of stock, takes reservations into account. In a reservation, information is stored that is relevant for the goods issue and for MRP,

For example: What? (Which material?)

How much? (In which quantity?)

When? (For which requirement date?)

From where? (From which plant or warehouse?)

To where? (To which recipient or customer?)

When a reservation is entered, the following events occur in the system:

The system creates a reservation document which serves as proof of the request.

In the material master record, total stock and unrestricted-use stock of the material remain unchanged.

Reserved stock is increased by the reserved quantity.

In MRP, available stock is reduced by the reserved quantity. This is visible in the current stock/requirements list. The reservation causes an entry to be made in the requirements planning file.

STEP: 5 MIRO (invoice receipt)

MIRO is handled by the financial department of the company. For all the purchase order made to vendors, invoice is received that is payment is required to be made. In SAP, firstly all invoice details is entered using the transaction code MIRO. Then the system itself matches the details of invoice with good receipt information and purchase order information. If invoice details matches, automatically payment is made to the vendor from company's account. And in case, invoice details does not match then investigation is made using T-code MRBR. This code blocks invoice for payment until it matches.

In system: SAP menu >logistics > Material Master > logistic invoice verification>document entry > MIRO

Here also two entries are made automatically, first in MM module and second in FI module.

On receiving receipt from vendors:G/R A/c.......Dr

To Vendor A/c

Payment to Vendor (automatic payment is made by automatic payment program):

Vendor A/c.....Dr

To Bank A/c

After the process of MIGO and MIRO, material received from vendors is send for inspection Quality check. Were, a team checks the quality of material. As raw material is important for company which is used in further production and Assembly process. If these materials are of good in quality then it is issued for further production process. And If not then material is returned to vendors and good return entry is made in SAP.

STEP 6: goods issue

A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a reduction in warehouse stock. Inventory Management provides for the staging of components for production. You enter withdrawals for production as goods issues with reference to the production orders for which the components are required. Materials can be withdrawn not only for production but also for other purposes (for example, for cost centre, CO order, maintenance order, or asset).Before entering a goods issue, you have to find out whether any reference document or data exists in the system. When you enter a goods receipt, you can reference:

Reservations

Production orders or Bills of material are checked whether reference document (reservation/order) exists, it is important to enter the goods issue with reference to this document, for the following reasons:

The goods issuing department can check whether what was requested is actually issued.

During entry of goods issue, the system can suggest data from the reference document (for example, account assignment, requested material, quantity, etc.). This simplifies both data entry and checking (over deliveries and under deliveries) when entering a goods issue.

After a withdrawal, the quantity withdrawn is updated in the reference document and the reserved quantity is reduced accordingly. Thus,Inventory Management can monitor the withdrawal process and MaterialsPlanning can update the stock/requirements list.If you do not reference the corresponding reference document during the goods issue,the reservation remains open and the requested quantity remains reserved, although the request no longer really exists. Consequently, available stock in Materials Planning no longer corresponds to the stock actually available

STEP 7: Goods Return

When the material received from the vendors are of poor quality or damaged, that is returned to the vendor by making and goods return entry in SAP. All the information like Material document no, vendor no, reason of return, quantity to be returned, movement type is entered. Then the system automatically sends email to vendor initially and then reduces the stock. Then vendor sends the substitute delivery, which is referenced with the return delivery.

STEP 8: Stock Transfer:

In company, goods movements do not only occur in the form of goods receipts and goods issues. Depending on the organization of the company (for example, decentralized storage) and its sales policy, internal stock transfers might also be necessary. Stock transfers can occur at three different levels:

Stock transfer from company code to company code

Stock transfer from plant to plant

From storage location to storage location (in the plant)

Stock Transfer from Company Code to Company Code

A stock transfer from company code to company code corresponds to a stock transfer from plant to plant, with both plants belonging to different company codes.

Stock Transfer from Plant to Plant

A stock transfer from plant to plant not only leads to a change in stock quantity in both plants; if both plants are assigned to different valuation areas, an accounting document is also created. This type of stock transfer can only be carried out from unrestricted-use stock of the issuing plant to unrestricted-use stock of the receiving plant. Stock transfers from plant to plant are relevant for Material Planning, since Materials Planning operates at plant level.

From Storage Location to Storage Location (in the Plant)

A stock transfer from storage location to storage location in the same plant simply causes an update of the stock quantities in both storage locations. The stock value remains unchanged, and the event is not relevant for accounting. A stock transfer from storage location to storage location is possible for all stock types.

Transfer Postings and Stock Transfers: Differences

You can post both stock transfers and transfer postings in the R/3 System. Transferpostings differ from stock transfers in that transfer postings are not connected with a physical goods movement. They usually involve a change in stock type, batch number, or material number. An example of transfer posting is the release from inspection into the company's own stock. Stock Transfer Procedures There is three different procedures for carrying out a stock transfer:

Stock transfer via stock transfer posting using one-step procedure

Stock transfer via stock transfer posting using two-step procedure

Stock transfer using stock transport order.

STEP 9: Assembly

After all entries in SAP of inventory management, the main process of manufacturing starts were all good and material required by various departments in company are processed and brought together to assemble to constitute one product which is known as finished product.

Know these finished goods are placed in stores and again the entries are made in SAP.

STEP 10: Finished goods to customer

All the finished goods in store are send to the respective customer, from where the purchase order is received. And together process keep on repeating itself again and again as customer demand never dies.

Conclusion

1) To any company LOGISTICS is the heart of the company, and I being deployed in the Logistics department saw it from very close and observed the minute things and accuracies the employees need to deliver in order to make the company run smoothly. Without such an efficient logistics management system and the use of technology to communicate and shorten the time gap its nearly impossible to run such a huge company so efficiently.

2) I realized how minute an error can cause a company such a scale thousands to even lakhs, all because of a human or a technical error sometimes. I understood the various backup plans and planBs the company need to think in advance for such unexpected situations .So a company always needs to deploy such measures in advance as such unexpected situations are bound to occur and no manager can predict them well in advance. A company gets to know about all such situations after some years of experience in the market which HAVELLs had.

3) To any company its employees are its main resources and I at Havells got the opportunity to see the employee culture and commitment towards their work. The employee does not comes to the company in the same good mood everyday and its the duty of the company to understand the problems of his employee and make sure that the employee irrespective of its social conditions feel at a second home in the company and deliver his best. I got to understand the various corporate rules that an employee needs to obey to maintain am image of the company in the market. These small things may vary from the look and uniform of the employee to the employee greeting any potential client or customer. I realized that the employees are the biggest boss in any company and handling them well enough can bring great riches to the company. ALL employees in the company are not 100% dedicated and loyal to the company and may be in search of a better opportunity elsewhere. Its the HR department task to find out such employees understand their problems and needs and provide a WIN-WIN situation. Also with regards to such employees the company needs to formulate some mandatory policies for everyone to follow including the boss. Discipline is a must and must for any company to achieve their targets on time.

4) I realized the importance of being in touch with the other departments constantly and how any fail in communication can make the whole process go down for hours and also I learnt how they sum up the losses incurred during this process. As for the logistics department is the department that connects the inventory to the market a lot of communications happens on stop throughout the day and their maybe possibility of communication gap occurring at some time or another and so they take various measures for information quality assurance as this information is the only thing that should not change throughout.

5) Software and technology has helped people a lot and it will continue to help a lot in future. We should adopt to the changing environment and adopt some softwares practices if they reduce our work to half.SAP is such a software that has taken over the tension of the big companies and is helping them to manage their various pieces of information at one single place and with one single click can get access to any latest information. I cannot think about the running of such huge company without the use of such great software. All the departments were in touch with other through the use of this software as it provided the latest updates, demands to meet, the external materials to order, the product count and every small information that any one wants to see.

6) Also I conclude that any company cant think of making profits from the very first day .its always a process of trial and error, cost cutting, making each process as efficient as possible , learning from the previous market experiences and then the next day considering all those things deliver yet better. It takes a lot of time for a company to establish as a brand and make a name in the market.

BIBLIOGRAPHY

http://www.havells.com/http://logistics.about.com/od/supplychainsoftware/a/Sap-Inventory-Management.htmhttp://logistics.about.com/od/supplychainsoftware/a/SAP.htmPurchase requisition

Purchase Order

Delivery( gate entry)

Goods received in store

MIGO

(goods recieved)

SAP entires

MIRO

(bank enteries)

If Ok, in store

Inspection Quality Check

Purchase return

Issue for production

Assembly

Finished goods to store

Send according to order

requisitions.