kirlosker working capital management
TRANSCRIPT
ABSTRACT
Every organization in this present competitive world is striving to achieve higher market share
with the customer satisfaction through improved internal and external trading entities. Hence the
concept of Logistics gains a considerable importance in the present business environment. In this
paper, a brief analysis on the process of Supply Chain Management and Logistics adopted by one
of the top ten manufacturing companies in India namely Kirloskar Electric company Ltd,
Bangalore is studied , and the impact of that process in managing working capital , Inventory and
production cycle is analyzed. The required data has been collected from the industry records and
company personnel. Efforts have been made to analyze the correlation between transportation and
inventory management.
1.1SCOPE OF THE RESEARCH:
Here I have selected Logistics management as my topic, as it covers the entire core operations of
the company and with the cooperation of department heads I am conducting this research with the
help of appropriate tools and literatures. Here I am analyzing the operations of Procurement of raw
materials, Plant Layout, transportation, Warehouse, Inventory management, working capital, and
production cycle and distribution channel. Here an analysis of various strategies of the company is
carried and interpretation of the data is done with the help of analytical tools.
STATEMENT OF THE PROBLEM:
This study is undertaken to analyze the procedures followed by Kirloskar Electric Company Ltd in
the selection of vendors, steps followed at the time of selection of the inventory management
techniques, production methods and distribution network.
Along with this, the study will be explored with the effectiveness of logistics on working capital,
inventory management production cycle and sales. And the other aspect that will be taken into the
study is the role of Intermediaries in the channel of distribution.
Location of the Study: Kirloskar Electric Company Ltd, Bangalore.
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LIMITATIONS OF THE STUDY:
The study is conducted only for the Govenahalli (Bangalore) branch. So, the company
cannot take major decisions based on my feedbacks.
Interaction of the study was limited because of their busy work schedule.
The results of the study are based on the present conditions.
Limited time period for the study.
Most of the numerical data are approximate value.
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Chapter 1
INTRODUCTION:
Logistics
The term Logistics originally comes from the Greek word ‘logistikos’. In Latin it is
‘logisticus’ meaning calculation and reasoning in the mathematical sense.
Logistic start before physical distribution and means strategically procuring right input
( raw material, component and capital equipment) converting them efficiently in to
finished product, and dispatching them to final destinations.
Logistic includes planning the infrastructure to meet demand, then implementing and
controlling the physical flows of material and final goods from point of origin to point
of use, to meet customer requirements at a profit.
Steps in logistic:
Deciding on the companies value position to its customers. ( what on – time
delivery standard should we offer?)
Deciding on the best channel design and network strategy to reaching the
customers.
Developing operational excellence in sales forecasting, warehouse management,
transportation management and materials management.
Implementing the solution with the best information system, equipment, policies
and procedures.
Logistics is “The process of planning, implementing and controlling the efficient, cost
effective flow and storage of raw materials, in-process inventory, finished goods and
related information from point of origin to point of consumption for the purpose of
meeting customer requirements”
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The material flows from supplier to the manufacturer are referred as Inbound
Logistics
The material flows from manufacturer to customer are referred as outbound
Logistics.
Logistics objective:
“Getting the right goods to the right place at the right time for the least cost”
Logistic decisions:
The firm must make 4 major decisions about its logistics:
1. How should we handle orders? ( order processing )
2. Where should we locate our stock? ( warehousing)
3. How much stock should we hold? ( inventory )
4. How should we ship goods? ( transportation )
Introduction to the sector:
Electrical and Electronic Equipment (EEE) Sector Overview:
Electricity is a vital input for economic and social development of our society. The
Government’s Mission is to provide quality and reliable power to all by 2012.
The Installed Generating Capacity in the country which was only 1,358 MW at the
time of Independence has reached a level of 1,27,673 MW, comprising 83,982 MW thermal,
33,600 MW hydro, 3,900 MW nuclear and 6191 MW from wind and other renewable energy
sources. There has been corresponding growth in transmission and distribution network too.
The target set for capacity addition during the 10th Plan was 41,110 MW. However it is
expected that about 30,641 MW would come up in the 10 th Plan out of which about 17,743
MW has already been commissioned till date. As per the tentative 11th Plan capacity addition
programmed about 66,463 MW capacity addition is required during 11 th Plan and about
86,500 MW during 12th Plan.
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Electricity in India:
Unlike other technological developments in the West, which were introduced in India after a
time lag, electricity was introduced in India in the form of galvanic electricity (both electro
chemical and electro magnetic) through telegraphy. The first experimental line was set up in
Kolkata in 1839 at the Botanical Gardens along the river Hooghly.
Electricity in the form of lighting arrived 35 years later with the former princely state of
Bikaner introducing electricity in the subcontinent. In 1886 Jamsetji Tata installed a dynamo
driven power plant in his residence, which was later extended to the adjacent Gymkhana
Chambers ten years later. When the Taj Mahal Hotel was built in 1903, it was equipped with a
modern power generator.
The Government of India invited Crompton to help in the preparation of an Electric
Lighting Act in 1896. Subsequently, the Indian Electric Company Ltd. Was registered in
London in January 1897, which changed its name to become the Calcutta Electric Supply
Corporation (CESC). A CESC power station started its operation on April 17, 1899.
The first major hydroelectric project (4.5 MW) in India was on the Cauvery river at
Sivasamudram, commissioned by the Maharaja of Mysore in 1899. It commenced power
supplies to the Kolar Gold Mines in 1902. The capacity was increased to 42 MW in stages by
1927. In 1903, the Madras Electric Supply Corporation of India Ltd. installed a power plant
and subsequently set up power plants in different cities including Karachi, Kanpur, Allahabad,
Nagpur, Rangoon and Tibet.
The Tata Hydroelectric Power Supply Co. was registered on November 7, 1910 and
the license obtained by the syndicate for power generation was transferred to the Company.
The country’s largest hydropower station was commissioned in 1911 with a 32 MW capacity
which transmitted power to Bombay on a 110 kV transmission line. To meet the increased
load demand, Tata Sons Ltd. promoted a new Company - Andhra Valley Power Supply Co. in
1916 and commissioned a 72 MW power plant at Shivpuri in 1922. A third company – Tata
Power Co. Ltd. was incorporated in 1919 and set up a 88 MW generating station at Bihar in
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1927. During this decade major railway workshops, defence installations, ordnance
factories, collieries, dockyards, oil, flour, jute and textile mills were equipped with diesel or
steam driven generators and electric drives.
The following product / equipment categories comprise heavy electrical equipment:
➢ Power and Distribution Transformers
➢ Switchgears
➢ Electric Motors
➢ Generators
➢ Alternators
➢ Turbines
➢ Capacitors
➢ Energy Meters
➢ HT Circuit Breakers
The difference between AC & DC machine
The difference between AC and DC is that AC is an alternating current (the amount of
electrons) that flows in both directions and DC is direct current that flows in only one
direction. AC requires a neutra point which has to be attached to a live wire fro the circuit to
complete, so we have 2 pins at our homes one is live point from where they electrons will
flow to the neutral point when we switch it on. Another difference is DC will degrade over
some distance, so if ur home is 100km away from the power station, much of the electricity
will be lost by the time it reaches ur house, but AC does not degrade. One more difference is
that DC if relayed at perticular voltage say 500 V then it has to be utilised at that level, but our
household appliances require 220 V so the AC is normally converted down to 220 V by the
transformars posted on the poles to 220 V and then relayed to our holmes...
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Electricity flows in two ways; either in alternating current or AC and in direct current or DC.
The word electricity comes from the fact that current is nothing more than moving electrons
along a conductor, like a wire, that have been harnessed for energy. Therefore, the difference
between AC and DC has to do with the direction in which the electrons flow. In DC, the
electrons flow steadily in a single direction, or "forward." In AC, electrons keep switching
directions, sometimes going "forwards" and then going "backwards." The power that comes
from our wall outlets is AC, the more common, efficient kind.
Everone knows that a battery cell gives "d.c." or "direct current" which means that a steady
voltage is available to drive your radio or whatever. Less well understood is "a.c." which
stands for "alternating current". However, it's important to understand the difference because
it could cost you money! You wouldn't dream of connecting your 12 volt radio directly to a
mains power plug because you know that it gives at least 230 volts. But do you know that a
12 volt a.c. transformer can do almost as much damage? The reason is that electronic
equipment needs not only LOW voltage but low D.C. voltage. Let's take a quick look at the
method of making electricity.
Advent of manufacturing of electrical equipment in India:
In the beginning, no overseas company set up a manufacturing facility in India. They were
merchandising and contracting through their local agents in India like Kilburn & Co., Martin
& Co., KEClick Nixon, F&C Osler & Co. Ballmer Lawrie, Jessop & Co., John Fleming etc.
Anticipating the growing demand for electricity, particularly in the textile mills, Greaves
Cotton, the biggest group of spinning mills, set up its electrical engineering department in
1904 while F&A Parkinson and Verity & Co. holding Agency for Crompton took up contract
jobs for electrification.
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After commissioning, the Calcutta and Madras power plants, Crompton established its
offices in the two cities in 1899 and 1904 respectively. GEC (India) Ltd. came to India in
1911 as a distributing company, Siemens in 1922 and AEI (India) Ltd. In 1924. Indian Cable
Co. set up a manufacturing plant in Jamshedpur in 1923, Westinghouse Brakes & Signals in
Calcutta in the late 1920s, Crompton Parkinson in Bombay in 1937, Philips Electrical Co.
(India) Ltd.
In Calcutta in 1931, Union Carbide (India) Ltd. for batteries (National Carbon Products) in
1934 and AEI Manufacturing Co. Ltd. in Calcutta in 1939. Among the Indian companies,
Bengal Lamps was established to manufacture electric lamps in 1932, India Electric Works
Ltd. started an integrated design ceiling fan factory in Calcutta around the same time. Other
important companies include Larsen & Toubro (a partnership of two enterprising young
Danes) in 1938, Bajaj Electricals (1938), Ess Ess Kay Engg. (1935), Jyoti Ltd. (1943),
Mysore Electricals
(1945), Kirloskar Electric (1946) and GFM Manufacturers, Punjab (1946) etc.
India produces the full range of electric power generation and transmission machinery. The
electrical machinery industry consists of four key product categories, based on their use.
• Generation machinery - Key products in this category include generators, boilers and
turbines
• Transmission machinery – This primarily includes different types of transformers and
transmission towers
• Distribution machinery – Circuit breakers, switch gears and control gears are key products
in this category.
The small and medium size sectors have a significance presence in the electrical machinery
industry, with an estimated share of around 35 per cent. The growth of the electrical
machinery industry is directly related to the development of power generation and
distribution. Excluding the non-utilities, India’s power generation capacity of 2,300 MW in
1950 has expanded to over 128,182 MW at present. This capacity is available through
different sources of power, such as:
• Thermal power
• Hydro- electric power
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• Renewable Energy Sources (RES)
• Nuclear power
India has the capability to manufacture transmission and distribution machinery up to 400
Kilovolts (KV) AC and high Voltage DC (HVDC). Industry players are now engaged in
upgrading transmission to the next higher voltage system of 765 KV and gearing up to supply
transformers and related.
Installed Capacity of Power Generation:
Thermal-66%
Hydro-5%
Renewable Sources-26%
Nuclear-3%
The Engineering sector in India is the largest among industrial sectors and can be broadly
categorized into the heavy engineering and light engineering sectors. The heavy engineering
industry can be further classified into capital goods/machinery and equipment segments. The
capital goods/machinery segment can be further classified into electrical machinery and non-
electrical machinery. The electrical machinery sector in India primarily caters to the power
sector and is poised for growth in view of the Government’s thrust on the power and
construction industries.
Electrical Machinery Classification
Engineering
Light Engineering Heavy Engineering
Capital Machinery Equipment
Electrical Machinery Non-Electrical Machinery
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The main categories of products for which EEE sector guidance is applicable are:
Electro-technical including lighting equipment, electric motors, generators and
transformers, electricity distribution and control apparatus and electrical transmission
equipment
Electrical equipment including electrical ignition equipment for internal combustion
engines, electrical equipment for vehicles, electrical signaling, safety and traffic control
equipment and electrical sound or visual signaling apparatus
Electronic components and manufacturing including electronics, electronic components,
micro-electronics including semiconductors, consumer electronic equipment, personal
computer hardware, electronic office machinery and electronic optical instruments
Electronic systems including opto-electronics, networking equipment, flat panel displays,
computer operating systems, information storage and defence electronics
Electronic services including instrumentation and control equipment, security and fire
protection, auto-identification and data capture and card technologies
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Chapter 3
Overview of company
FOUNDERS:
Laxmanrao Kashinath Kirloskar was a successful industrialist, but his
chief merit lay in the trail he blazed, for the principle in life he depended upon were his
vision and a spirit of pioneering.
Laxmanrao K. Kirloskar ,
Founder, Kirloskar Group of Companies
Ravindra L. Kirloskar was the youngest son of Laxmanrao and Radhabhai Kirloskar, who
later headed KEC operations.
Having a degree in electrical engineering from the Worcester Polytechnic Institute, U.S.A.
he began his professional career in Kirloskar Brothers. In 1942 he designed and built India 's
first electric motor at Kirloskarwadi with his colleague N.K. Joshi. He guided us with the
highest level of quality...
"Quality must go beyond standard tests and procedures. It must be equated with self respect
and personal pride."
Ravindra L. Kirloskar ,
Founder, Kirloskar Group of Companies
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Kirloskar Electric Company Limited (KEC) is one of India 's leading manufacturers of
electrical and power equipment. Established in 1946 by Mr. Ravi L Kirloskar, Kirloskar
Electric manufactures AC Motors, AC Generators, DC Machines, Traction Equipment,
Electronics, Switchgear, Transformers and undertakes turnkey Electrical Projects
In 60 years, the company has built on its core capabilities of prime technological and
engineering skills complemented by world class manufacturing facilities. Kirloskar Electric
products have made more than a significant contribution to India 's rapidly growing
economy. Today, Kirloskar Electric is capable of delivering a wide range of custom
engineered products that meet and exceed global standards at very competitive prices.
KEC started it's manufacturing activity in collaboration with the Brush Electric and
Engineering Company Ltd. Of U.K. They added variety and range of electric motors. KEC
began to manufacture transformers in 1953 other than AC motors.
KEC got into manufacturing of DC motors in 1961. In 1964 the invention of the thyristor
drive gave the DC motor a tremendous new lease of life. Hence KEC signed a collaboration
agreement with Thorn EMI Automation Ltd.
The only constant we know that this world is changing. Change has come to Indian Industry
like a sweeping tornado transforming the industrial environment and giving indigenous
industry some very tough global standards to measure up to. In this testing situation only the
fittest have the wherewithal to survive. And only the best will thrive.
That Kirloskar Electric has not only survived but has grown in confidence, capabilities,
range and were scope is a testimony to the inherent strength of its foundation as a company
that once set out to revolutionized India's agricultural sector with value engineering.
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It all began when our visionary founder Laxman Rao Kirloskar created the first Iron plough
for the Indian farmer.His involvement with agriculture led him to make the first pump then
the prime movers for the pumps. Since then KEC corporate goal has been to look into the
future and engineer products that time would eventually demand.
In order to do this, Ravi L Kirloskar, second generation entrepreneur, son of the visionary,
built a bank of prime technological skills and capabilities. And a state of art facility that has
since then continuously reinvented itself to meet the changing demands of a changing
market – just that one step ahead of time.
Today as a lean, innovative and aggressive power in value engineering, Kirloskar Electric is
well into its tryst with world market with an offering that has strong roots in a traditional
value base and comes with the inherent brand qualities of trustworthiness and complete
customer satisfaction.
Moving smoothly from agricultural sector to industry, to transport, to defense, to power
generation, Kirloskar Electric products have had more than a significant contribution to
make to India 's rapidly evolving economy. With long years of innovative application behind
it, Kirloskar Electric finds itself completely capable of delivering a range of custom
engineered products that meet and exceed global standards at very competitive prices.
The high levels of quality and reliability of products is due to the emphasis on Design,
Engineering and Manufacturing to international standards by acquiring and adapting best
technologies from leading companies along with technology developed in house.
KEC's vision is to become a world-class engineering enterprise, committed to enhancing
stakeholder value.
The company is striving to give shape to its aspirations and fulfill the expectations of the
country to become a global player.
The greatest strength of KEC is its highly skilled and committed 3,000 employees.
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Every employee is given an equal opportunity to develop himself and grow in his career.
Continuous training and retraining, career planning, a positive work culture and participative
style of management have engendered development of a committed and motivated
workforce setting new benchmarks in terms of productivity, quality and responsiveness.
The recent Acquisition of Lloyd Dynamowerke in Bremen,Germany has complemented
and strengthened our core business by adding world class products and Skills that are
accepted around the world as the best.
VISION & STRATERGY:
The power of now is the energy of opportunities that come to
us disguised as challenges. The power of now at Kirloskar Electric is the dynamics of
making opportunities work as by meeting client's tough specifications of cost and quality. At
Kirloskar Electric, we bank on the power of now.
Mission for the process, energy and greater manufacturing Industries
As the most prominent and useful online process, energy and greater manufacturing
industries directory, our mission is to provide suppliers with huge, focused and meaningful
leads at a fraction of the cost of reaching such a group conventionally, and to provide buyers
FREE, quick, easy, and powerful services for locating suppliers worldwide.
Target Market:
The vendors and buyers linked by ProcessRegister.com participate in a wide product range
including valves, pipings, pumps, compressors, turbines, separators, vessels, insulation,
boilers, fired heaters, columns, dryers, filters, heat exchangers, material handling, mixers,
plates, forgings, castings, refrigeration HVAC, rotating equipments, chemicals, construction
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materials, electrical, environmental, instrumentation, control, oil & gas explorations and
much more, resulting in a $5 trillion industry.
STRENGTHS:
Today as a lean, innovate and aggressive power in value engineering, Kirloskar Electric is
well into its tryst with world markets with an offering that has strong roots in a traditional
value base and comes with the inherent brand qualities of trustworthiness and complete
customer satisfaction.
• The ready acceptance of Kirloskar Electric products in USA, Europe, Canada, Hong
Kong, Australia, China, Singapore, South Africa, Malaysia, Pakistan, Bangladesh along
with the hard to earn certification by world's leading companies
• Streamlining, redefining and recreating of process, design and testing parameters to Six
Sigma and other stringent quality measures
• Willingness to take up any challenging customization project and successfully
implement it
AWARDS:
Best Innovative product for Digital drive by IEEMA at the Elecrama exhibition
National award for R&D from the Department of Scientific & Industrial research,
Ministry of Science & Technology , India
CERTIFICATIONS:
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First Electrical Engineering Company to get ISO 9001 certification in India . KEC is also
the first electrical equipment manufacturing company in India to be awarded with certificate
for providing ‘CE' Mark. Kirloskar Electric is a pioneer in export of Electrical and
Electronic goods for the last four decades. KEC is a status holder recognized by Ministry of
Commerce & Industry, Government of India, as an Export House. KEC
The Export House Certificate
Bureau Veritas Quality International (BVQI)
Bureau Veritas Quality
International (BVQI) has certified the
Quality Management System of KEC. We
are also first in electrical industry to obtain
ISO 9001-2000 certification by BVQI.
The ISO 9001-2000 certificates awarded to :
KEC - Bangalore, Hubli, Mysore,
Tumkur
KEMA Certification
‘KEMA'
registered quality B.V.Netherlands, notified
authority have tested our products with
respect to low voltage directive,
EMC(Electromagnetic) directive and
MD(Machinery) directive.
Confirmative Europeenne (CE)
‘CE' stands for ‘CONFIRMATIVE
EUROPEENNE' and confirmity to
European standards meeting basic
requirements of Safety, Health,
Environment & Protection (SHEC).
KEC is entitled to provide 'CE Marking' for
AC motors , AC generators and DC
machines. ‘CE' marking allows the product
un-registered legal access to the European
NVLAP Certification
We are proud of
having established an independant
laboratory duly certified by NVLAP - NIST
, USA for testing of energy efficient 3 phase
Induction motors up to 50 HP.
Kirloskar Electric Test Laboratry (KETL) is
first in India and among few in Asia to get
NVLAP Accreditation.
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market.
Company designs and manufacture products according to the standards of:
ISO (International Organizational for Standardization)
IEC (International Electro technical Commission)
BIS (Bureau of Indian Standards)
BSI (British Standards Institution)
JEM (Japan Electrical Manufacturers Association)
LOCATION IN KARNATAKA:
Bangalore
P. B. No. 5555,
Malleswaram
West,
Bangalore- 560
055
Tel:080-
23572111,
23371771
Fax:080-23372488
Hubli
P.B. 112,
Gokul Road,
Hubli - 580 030
Tel:0836-
2232571,
2232577
com
Tumkur
Plot No. 6,
Hirehalli Industrial Area,
Tumkur - 572 168
Tel:08176 - 2243152-54,
2243104
Govenahalli
Survey No.16,
Govenahalli,
Nelamangala,
Bangalore
Rural Dist.
Bangalore -
562 123
Tel : 080-
7770550,
Mysore
Belavadi Industrial
Area,
Mysore - 571 186
Tel:0821 - 2402522-
26 / 40-43
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7770189
.com
Name & Designation Products
Vijay R Kirloskar
Chairman and Managing Director
Malik P.S.
Joint Managing Director
RK.Gupta
Chief Finance Officer
P.Y.Mahajan
Company Secretary
E.P.Ramachandra
Unit Chief - Unit-1 GovenahalliAC Motors, AC Generators, DC Motors, Tractions
B D Jain
Unit Chief - Machine ShopComponents Of Electric Machines
C L Krishnaiah
Unit Chief - Unit-4 MysoreElectronics and Switch Gears
K S Paniker
Unit Chief - Unit-2 HubliAC Motors, AC Generators, DG Sets
C L Krishnaiah
Unit Chief - Unit-5 MysoreTransformers
P Suresh Rao
Unit Chief - Unit-7 TumkurAC Motors and components
V Vasan
Unit Chief - Unit-12 BangaloreServicing and Spares
KEY MANAGEMENT TEAM:
BOARD OF DIRECTORS
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As on 30th September 2006, the Board of Directors of KEC comprises Eight Directors. The
Board consists of the Chairman & Managing Director, who is a promoter Director, Two
Executive Directors and Six non-Executive Independent Directors. Details are given below:
Name of Director Category of Directorship
Mr. Vijay R Kirloskar
Chairman and Managing Director
Executive -
Chairman and Managing Director Promoter
Mr. Lakshmanan A.S. Non Executive Independent Director
Mr. Agarwal S.N. Non Executive Independent Director
Mr. Anil Kumar Bhandari Non Executive Independent Director
Mr. Sarosh J Ghandy Non Executive Independent Director
Ms. Mythili Balasubramanian
( IDBI Nominee)Non Executive Independent Director
Mr. Ramesh D Damle
( LIC Nominee)Non Executive Independent Director
Mr. Malik P.S.
Joint Managing DirectorExecutive - Whole time Director
Audit Committee:
The Audit Committee consists of four independent Non-Executive Directors. The terms of
reference to the Audit Committee cover the areas mentioned under Clause 49 of the Listing
Agreement and Section 292A of the Companies Act 1956, besides some other functions as
referred to it by the Board of Directors.
Remuneration Committee:
The Remuneration committee at the beginning of the year consisted of following Directors:
Name Of Director Category
Mr. S.N. Agarwal Chairman
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Mr. Anil Kumar Bhandari Member
Mr. Sarosh J Ghandy Member
Mr. K. Kasturi Rangan Member
Remuneration Policy
The objective of the remuneration policy is to motivate employees to excel in performance,
recognition of contribution and retention. The components of the total remuneration vary for
different levels and are governed by industry patten, qualification and experience of
employees and responsibilities. Remuneration of employees largely consists of basic
remuneration, perquisites and performance incentives. The number of employees working in
the organization is 334.
MILESTONE:
India's first satellite tracked:
Proud scientists celebrated the successful tracking of India 's first satellite. The
meticulously planned event was held in Hassan, Karnataka. The team had finalized the
specifications for AC generators with Kirloskar Electric Co., taking care of intricate details
like transient loading and transient voltage regulation performance.
Missile test fired:
The first ever indigenously built missile was test fired in early 90's, year before; premiere
defense organizations perfected the intricate performance requirement of the power supply
unit. KEC played a key role in building the entire power supply unit. The AC Generators
of KEC were customized for arduous duty.
India explores Antarctica:
India was the first developing country to join the Antarctica explorations. The task team
behind this feat had done the homework right. They carried with them specially designed
AC Generators, developed by KEC that worked perfectly in sub zero temperatures.
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Rajdhani flagged off
The research wing of India Railways worked with specialists from KEC to design highly
reliable AC Generators that would take that heat, dust, smoke and the acceleration of the
bogie and continue to function giving passengers of the Rajdhani greater speed, greater
comfort and increased safety.
Stealth ship launched
On 18th April 2003 , national dailies splashed the launch of the first indigenously designed
stealth ship. The ship has four KEC 1000kW AC Generators which are the result of our
close association with Indian Navy, in the supply of AC Generators, for frontline battle
ship.
Survival in Leh
In the lab the Defense experts drenched it with salt spray, blasted it with sand, vibrated it,
heated it in an oven, and rocked it over the bumps. In the field they hauled it from deserts
of Rajasthan to marshy areas in Assam and yet the KEC AC Generator worked for
decades. They wanted to verify whether the AC Generators bleeds as human do when they
land up in Leh, the highest place inhabited on earth and they did id with success. That is
why KEC remains the most preferred make by the Defense establishments.
Products:
3 core submersible flat cables, 3 Point Locking Mechanism, AC boxes, ac contactor, Ac
Drives, Ac Motors, AC plug & Sockets, ac-dc switching power
supply,acbpanels,Actuators,Adapters, agricultural pump sets, air break switches, aluminum
Page | 21
chokes, alternators , Aluminum Compact Chokes, aluminum crepe paper, Amplifiers , Analog
& Digital Temperature Controllers, anchor switches & accessories, enunciator panels,
Antenna , Auto flush, Auto tap, auto variable transformers, Automatic Generator Panels
[AMF], Automatic power factor control relay, automatic street light switching panels,
automatic voltage stabilizers, Automation Products , Axial Flow Ventilator, Bank Token
Display, battery accessories , battery discharge resistor, battery plates , Bench Drills,
beryllium copper, Bi-metal sheets, BLB Tubes, Boiler Fans, Brass Glands, brass precision
components, brass sanitary ware items, Breakers, bulb caps, Bulbs,
buzzer bell, Cable Accessories, cable blowing machines , Cable Duct, Cable Ends, Cable
Glands, Cable Jointing Machines, Cable Lugs, Cable Networks, cable pulling devices, Cable
Racks, Cable Terminations, Cable Trays, Cables, cadmium copper wire , camcorder batteries,
can spray paint, capacitor panels, Capacitors , Carbon Brush,castresintransformer,CCI,
Ceiling fan stampings, Ceiling Fans, ceiling light, Ceilinglightfixture,CentrifugalPumps,
Centrifugal Ventilator, cfl fittings, change over panels, Change over switch,Changeover
Changers , Chargers ,Chokes, Circuit breaker, Circuit Breakers ,Circuit protector, Co-axial
cable, Compact Fluorescent Lamp, Computer cables, contactor, control & relay panels,
Control Gears , Control Panel Accessories , Control Panels ,control relay, Control
transformers, converter , Copper Cables, copper chokes, Copper Compact Chokes, Copper
Flats, Copper Foils, Copper Lugs, Copper Roll , Copper Strips, copper wire, crepe paper, crgo
lamination, Crimping Tools, cross arms, cubicle, Current Transformer, custom built chargers,
Custom Control panels, cylindrical battery, D.C regulated power supply, D.o.fuses, Dc
Adaptors, dc Drives, Dc Drives, Dc Motors, Decorative Fittings, Decorative Lamps, Delton
telephone cables, demagnetizers, demand controllers, DG SET, diesel generator , diesel
pumps, diesel pump sets, digital camera batteries, digital meters, Digitally Controlled
Industrial Heaters, disc insulators, dispenser pumps, Distribution Boards, Distribution
Transformer, domestic pump sets, Down lights, Dryers , duplex receptacle, Dynamometer,
Earth & Neutral links, Earth Leakage Circuit Breaker, Earthing Plates, Earthing Rods, Earth
pits, Electric Accessories, Electric Cables, Electric Chokes, electric coconut tree, Electric
Equipment , electric generators, electric heating elements, Electric irons, electric kettle,
Electric Laminations, Electric Motors, electric palm tree, Electric Panels, electric water
fountain lights, Electric Welders, electrical ceiling fans, Electrical Fittings, Electrical
Page | 22
Accessories, Electrical Appliances, Electrical Audit, electrical bells, Electrical cables,
Electrical consulting, Electrical Contractor, Electrical Contractors, Electrical Control Panels,
Electrical Design Consultancy, Electrical Distribution System, electrical distribution
transformers, Electrical Heating Equipment, Electrical Instruments, Electrical Insulation
Material, Electrical Items, electrical panels , Electrical Stampings, Electrical Switch boards,
Electrical Switchgear, Electrical work Electrification, electro mechanical impulse counter
timer, Electromechanical Components, Electromechanical Meters, Electronic bell, Electronic
Earth Fault Relays, Electronic Items, electronic meters, Electronic Over Load Relays,
Element Eliminators, elmek cables, emergency lamp, Emergency Light , Enameled wires and
Strips, Enclosures , Encoders, Energy Audit , Energy Meter, Energy Saving Lamp, EPS , EV
Motors, Exhaust fan stampings, Exhaust Fans, Extension socket, fabricated mica parts, Fan
Heaters, fan plates, fan regulators, Fault display enunciators, feeder panel, feeder pillars, fhp
electric motors, fiberglass sleeving, Fire Fighting Panels, firework lights, fish bell, fitting
chokes, Flameproof Chemical Heaters, Flash Lights, flexible cables & wires, Flexible Electric
Conduits, Flood Lights, Florescent Chokes, Fluorescent , Lamps, Frequency Meters, furnace
heater, fuse, Fuse Bases, Fuse careers, Fuse Gear garden light, Gas Lanterns, gas oil pumps,
Gas Water Heater, Gasoline engine, gasoline , generator, Geared Motors, generator spares ,
Generators , Gensets, Germicidal, gibarrel nipple, gi fittings, gi gate valve, Gland, golf cart
chargers,gongbell,grilledsandwichtoasters,Grinder, Grinding wheel machines, hair dryer
elements, halogen flood light, Halogen Free Wires, Halogen Lamp, Hand Blenders, Hand
dryer, Hand Pumps, Hardware , hardware parts, heat shrinkable , cable accessories, Heating
wire, Hg fuses, hi tech heaters, High temperature Cable, High Voltage CR Cable, Hooters,
horn gap fuses, Hose Pumps, House Wiring, hpsv&hpmvballast,hrcfuses,Ht Capacitors, Ht
Switchgears, ht xlpe cable, Humidifiers , Hv and lv components, Hydraulic Motors, Hydraulic
Pumps, ICcutouts,,InductionMotors,IndustrialBatteries, Industrial electrical Motors, Industrial
Heaters , industrial plug & socket, industrial pump sets.
Industrial Wiring, Infra Red Lamp, Innovators, Installation, Instant Start Lamps, Instrument
Enclosures, Instrumentation Panels, Insulating Switches, Interactive Terminals,inverter ,Iron
boxes, iron elements, Isolation Transformer, Kapton wire,
kerosenepumps,kettleelements,lamp components, Lamps And Fittings, Laying, Lead glass
Page | 23
tubing, leader modular switches, leakage dc current sensor, Led lights,
ledtorchlights,LevelGauges,LightFixtures,lightsources,Lightening Arresters,
LighteningProtectionEquipments,lightingfixtures, LightingPoles,Lights,lightweight irons,
load banks, load cell, Locking Handles, low voltage switchgear, lt pvc control cables, lt xlpe
control cables, lt xlpe power cables, Lugs, Magnehelic Guage,Mainswitch,main-line
stabilizers, manual pumps, mcb, MCB boxes, Mcbs, mccb,Mcp,MeasuringInstruments
Medical Heating Pads, mercury lamp, Mercury Vapour Lamp, metal halide,
Competition
Last Price Market Cap.
(Rs. cr.)
Sales
Turnover
Net Profit Total Assets
ABB 756.25 16,025.57 6,946.37 547.41 2,118.96
Crompton Greave 400.60 14,684.66 4,610.66 397.09 1,295.56
Havells India 572.55 3,444.94 2,204.76 145.23 1,004.61
Techno Electric 186.75 1,066.18 486.04 63.06 269.83
HBL Power 36.10 876.49 1,243.90 90.96 752.64
Emco 90.40 531.89 996.26 53.10 795.72
Bharat Bijlee 907.10 512.65 545.90 47.86 211.14
Numeric Power 260.00 262.75 409.24 33.46 177.51
Honda Siel 250.85 254.44 237.60 15.64 194.41
Easun Reyrl 98.90 205.43 139.37 7.53 389.37
Kirl Electric 74.60 376.89 865.97 30.21 312.77
CHAPTER-4
RESEARCH DESIGN
OBJECTIVES OF THE STUDY:
Page | 24
1) To study the process adopted for procurement of raw materials at Kirloskar Electric
Company ltd.
2) To analyze the process of warehousing and inventory management at Kirloskar
Electric Company ltd.
3) To study the process of reverse logistics adopted at Kirloskar Electric Company ltd.
4) To analyze the impact of logistics management on sales.
5)
2Nature of the Research Proposed to be carried out:
This is an Applied Research is undertaken, which is used to discover the applications and
uses of theories, to determine the impacts and why something is failed or succeeded. This
research also includes an Operational research which involves the use of mathematical,
logical and analytical methods to find the solutions. Here the Research method “Experiments”
is also used for studying Cause-and-effect relationships. It helps in analyzing the changes in
one variable, by manipulating another variable. This research also contains ‘Causal Studies’,
where the basic aim is to identify the cause and effect relationship. This research also comes
across dependent, independent and extraneous variables.
3 Overview of the Research planned and expected outcomes/results:
The Research is planned with the help of Questionnaire to company executives. Tools like
Correlation analysis, Regression analysis is used. Departmental reports, production Departmental reports, production
summaries, financial and accounting reports of the company are also used for the research.summaries, financial and accounting reports of the company are also used for the research.
Also Icfai Journals and articles are used for the research and some booksAlso Icfai Journals and articles are used for the research and some books
Research design:
Research Instruments: Questionnaire, Books and Journals of Logistics, operational
management and reverse logistics, Company Websites, Articles related to Logistics,
Company internal sources like Departmental reports, production summaries, marketingDepartmental reports, production summaries, marketing
summaries, financial and accounting reports.summaries, financial and accounting reports.
Research Tools Used: The methods and analytical techniques used are:
Page | 25
Correlation Analysis.
Regression Analysis.
T-Test
Data Collection:
1. Data Sources:
Primary Data :
Primary data is collected directly from the respondent Mr. Subbana, H.R manager Mr.
Mahaveer, Marketing-DC, Mr Ravichandran deputy manager VDD, Mr. Raj Kumar
purchase department and Ms vijaya lakshmi finance department.
Secondary Data:
The secondary information will be obtained from the records and reports available at the
company. The literature on the subject has been gathered from journals, periodicals
books and website.
Data collection Tools:
Secondary Data studies: It will be done by using Internal and External Sources
Internal Sources: process and plant report, Departmental reports, production summaries,
financial and accounting reports, marketing and sales studies.
External Sources: books and periodicals, Computer-retrievable databases, publications, media
sources and special collections.
Personal Interview: Personal interview with H.R manager Mr Subanna and Mr mahavir marketing head, Mr Jayasimha manager VDD and Mr Ravichandran deputy manager VDD. Raj Kumar purchase department and vijaya lakshmi finance department.
CHAPTER5
DISCUSSION OF IMPLICATIONS
Title “An analytical study on the impact of logistics management and its impact on sales at“An analytical study on the impact of logistics management and its impact on sales at
Kirloskar Electric Company Ltd-Bangalore”Kirloskar Electric Company Ltd-Bangalore”
1. Purchase
Page | 26
Objective 1 “To study the process adopted for procurement of raw materials at Kirloskar
Electric Company ltd”
PURCHASE
The KEC is producing Ac machines, Dc motors and generators of more than 1000
k.w. Major raw material required and sources of raw materials
Sl no Raw material Vendors Amount
1 Copper HCL 430 per Kg
2 Stamping materials Importing from Russia 60 per Kg
3 Stator frames EBG india 20,000 per piece
4 CE & NC materials Premier industries 10,000 per piece
5 IP coils Copper metal corporation 450 per Kg
Compiled based on Personal Interview
Status of production at KEC.
Table shows over all production of KEC
Particulars % of production
Out sourcing 40%
Self manufacturing 60%
Total 100
Compiled based on Personal Interview
Percentage of discount available for the company for early payment
Days Percentage
30 2%
60 4%
Immediate payment 5%
Compiled based on Personal Interview
Page | 27
The credit period of KEC is 90 days
In unit one KEC is producing heavy electric motors like more then 1000 K.w DC and
AC motors.
Raw materials are purchased based on orders from clients.
For purchasing of raw materials KEC is adopted JIT technique.
Process of vendor selection in Kirloskar Electric Company
Totally 130 Vendors of the company.
Vendor Development Department (VDD) performs the Vendor selection process.
Steps followed in Vendor selection are:
Step 1: Identification of company requirements.
Step 2: Search for the Vendors.
Step 3: Consideration of Vendor based on Infrastructure, financial status and Good
will of the Vendor
Step 4: Receiving Vendor Profile (based on spare facility, financial status, his
Customers, workers qualification)
Step 5: Final Selection of Vendor based on 3 Trial orders.
Step 6. Vendor rating as A,B,C and feedback and training.
MS-Excel is used to maintain Vendor database.
Telephone and E-Mail are the mode of Communication between the company and vendors.
Quality standards are fixed for each product of the vendor according to Quality Assurance
department.
Rejected raw materials are returned to vendor and vendor has to bare all the costs.
Vendor codes are given for financial transactions.
Company selects new vendors only in the following cases:
Incase of increase in Production.
Incase of New product development- where the existing vendor fails to supply
required raw materials.
Page | 28
Misunderstandings between the company and the Vendor in payments.
Company finds new vendors through the people of purchase department, “Yellow
Pages” and through Internet.
Risks involved in Vendor selection are:
New Supplier Risk- Incase of new suppliers. Vendor has to adjust for the
company standards.
Business Risk- Improper supply of quality raw materials.
Time Risk- Delay in Delivery Time of raw materials. This is the main part of
purchasing.
To reduce the risks involved in vendor selection, company considers few measures
like Vendor’s infrastructure, good will and the employees of the vendor.
Process of Negotiation:
Company is finalizing the price for raw materials.
Calculation of project cost and process cost which forms working cost is calculated
and finalized by Costing department.
Based on the working cost; Negotiation process is carried out.
Vendor Development Department (VDD) is carrying the Negotiation process.
Before receiving the raw materials, negotiation is carried out.
Negotiating price ranges from ‘+‘or ‘-‘10% of the company’s quoted price.
5% is the profit fixed by the company on all its finished goods.
There are two types of payment
Direct Payment-For DC department-90 to 100 days is the payment period.
Letter of Credit-For AC department- 90 days is the payment period.
The process of procurement of raw material
Page | 29
Engineering department
Material management
Analyzing the invoice of customer & draw the sketch
Marketing department
Getting business to company
TRANSPORTATION
In bound logistics
In KEC for other then JIT purchase company will use the private vehicles.
In KEC 95% depend on road transport for receiving and sending of the goods .
Page | 30
Material management
Vendor selection, price fixing & negotiation
Specification, requirement, ordering.
Security and vigilance
In coming quality assurance
Stores
Including transportation cost quotations are prepared by the KEC and suppliers are
responsible for transporting the raw material to the warehouse of the company.
From the warehouse to the layout of production to transport material Cranes are used
which are company owned.
Price will fix by based on distance, weight and type of vehicle or 5% margin.
In KEC stamping materials are importing from Russia.
Major importing costs are.
CIF price- 82.19 ( in lakhs )
Customs – 3.10 ( in lakhs )
Clearing charges-1.83 ( in lakhs )
The Other traveling charges 29.64 ( in lakhs )
Out bound logistics
The KEC has made contract for transport with Babu traders and ARC( Associate
Road corporation)
KEC maintaining certain standard rent for sending finished goods from Govinahalli
unit to Bangalore.
Matador -900
Canter - 1200
Truck (lorry) – 1500
In KEC most of the time customer only takes the delivery from companies dispatching
unit.
The customer only bares the transportation and insurance charges.
In KEC some time company send the goods to customers.
For transporting of finished goods to customer the company will charge 10000 to
25000 depend on distance and Wight.
Objective 2 “To analyze the process of warehousing and inventory management at Kirloskar
Electric Company ltd”
Page | 31
WAREHOUSE AND INVENTORY MANAGEMENT
The KEC has its own warehouse in his plant.
The dimension of warehouse is 40/100ft
Number of warehouse employs are as follow
Officers 3
Clerks 2
Workers 8
Total 13
Compiled based on Personal Interview
Tools using in warehouse
Cranes
Pallet trucks
Handling equipments
Chain, pulleys, roaps
To maintain warehouse equipment and KEC has given contract.
In KEC Microsoft Excel, Microsoft word document and intranet technique has
been adopted for store and calculations.
Different types of materials are storing in stores
Copper
Stamping materials
IP coils
Rubbers
Nuts & Bolts
M/S component
Stator frames and CE & NC covers are directly send to the direct to
production area
The process of receiving raw materials from vendors
Step 1: Cross verification of Invoice
Page | 32
Supervisor1 [indent] Supervisor3 [indent]Supervisor3 [indent]Supervisor2 [indent]
Step2: Materials testing from QAII (Quality Assurance of Incoming
Inspection) by
Inspectors.
Step3: Unloading
The process of dispatching raw materials from stores
To get raw material from stores supervisor of particular department only have
authority.
In stores without indent raw material has not provide.
The only C category materials are workers can take from stores.
In KEC for each component of C category of raw materials maintain separate rakes .
Table shows repairs and maintenance costs in (lakhs)
Page | 33
STORES
Process dept 1 Process dept 4Process dept 3Process dept 2
Compiled based on Personal Interview
Page | 34
Particulars Costs in
(lakhs)
Costs in %
Building 28.47 37
Machines &
equipments
41.67 53
Other expenses 7.54 10
Total 77.68 100
INVENTORY
The master table shows information about inventory
Sl no Particulars Annual usage Daily
Usage
Safety
Stock
Lead time
in days
% of product
used for
production
1 Copper 200 tons 500 1ton 14 20
2 stamping materials 300tons 833 3 tons 14 30
3 stator frames 4800pieces 10 pieces 300 pieces 30 20
4 CE & NC covers 9600 pieces 20 pieces 250 pieces 14 10
5 IP coils 72000 pieces 200 pieces 500 pieces 14 05
6 Rubber 500 kg 2 kg 50 kg 15 6+7+8+9=15
7 Nuts and bolts 1000 kg 4 kg 100 kg 14
8 Washers 500 kg 2 kg 50 kg 14
9 M/S component 2000 10 250 14
Compiled based on Personal Interview
Opening stock of raw materials -797.71 (in lakhs)
Closing stock of raw materials – 335.15 (in lakhs)
Opening stock of work in process - 931.22 (in lakhs)
Closing stock of raw materials -1406.48 (in lakhs)
Opening stock of finished goods – 233.16
Closing stock of finished goods – 450.28
To reduce the inventory KEC has follow JIT (Just In Time) system for
procurement of raw materials.
In KEC 40% of raw materials of finished goods is outsourcing from other
companies
In KEC based on delivery of final product inventory will order.
Page | 35
The KEC FIFO(First In First Out) method has been adopted for distribution of
inventory in unit.
The KEC has been following ABC technique for maintaining and segregation of
inventory.
A= This group consists 10% of the inventory items that account
approximately 70% of the company rupee is invested.
B= This group consists 20% of the inventory items accounting for 20 %
company rupee invested.
C= This group consists of approximately 70% of all the items of inventory
but accounts for only about 10% of the company rupee invested.
In KEC inventory is segregates based on price of materials and based on
usage of materials.
Table shows ABC system of segregation of inventory at KEC
Group A materials Group B materials Group C materials
Copper Baring components Rubber materials
Barings Still keys Nuts & bolts
Motors Washers
Electric rings M/S components
Compiled based on Personal Interview
Ordering cost
The size of the order and total ordering cost to be incurred by KEC
Page | 36
particular Copper Stamping
materials
Stator frames CE & NC
covers
IP coils
Size of the
order
200 tons 300 tons 4800 pieces 9600 pieces 72000 pieces
No of orders 12 10 10 11 12
Total
ordering cost
@ 150per
order
1800 RS 1500 1500 1650 1800
Compiled based on Personal Interview
Page | 37
Production
The KEC has its own production plant.
The KEC depend up on order accepting by marketing department for production.
In KEC every month production plan is doing.
The installed capacity of KEC is 114.627 MW.
In KEC every month an average 300 units are manufacturing.
Conversion period is 3 months.
Finished goods storage is 2 weeks ( up to 4 weeks).
The KEC electric power has taking from Karnataka power corp ltd 255.14(lakhs) of
worth.
Direct workers cost is 1037.48 lakhs
Indirect workers cost is 741.06 lakhs
The quality control expenses is 211.67 (lakhs)
Tables shows the production overhead of KEC( govenahalli unit)
Compiled based on Personal Interview
Plant layout of KEC (unit 1) Govenahalli
Page | 38
IMPRECATION
TURNING TESTING AREA
COIL SECTION BALANCEING
TESTING BRAZING
STATORWAINDING
ROTAOR WAINDING
Particulars Costs in lakhs % of cost
Power and lighting 255.14 50%
Welfare expenses 135.89 27%
Other 116.74 23%
Total 507.77 100
The process of manufacturing DC motors at KEC
Page | 39
MACHINING BODY
(SHOP)
STATAR
ASSEMBLY(4 HRS)
EMBIDDING
(COIL SECTION)(6
HRS)
POLE
BREAK
(4 HRS)
MPIP + COMPENSAN CONNECTION
(7 TO8 HRS)
DIPPING FOR INSLATION
(24 HRS)
IMPRECATION
TURNING TESTING AREA
COIL SECTION BALANCEING
STATORWAINDING
ROTAOR WAINDING
ROTOR ASSEMBLY
FINAL ASSEMBLY
Objective 3:
Focus: reveres logistics (waste disposing)
Page | 40
STATOR READY
COMMUTOR
SHOP
SUB ASSEMLY (STAMPING) (STAKING)( 20 HRS)
SHAFT & COMMUTOR WILL BE PROSSED
ROTOR WINDING (COIL SECTIO N. 16 HRS) (RESIGLAS
S WINDIN)
TURNING
UNDER CUTTING
BALANCEING
GREL COATSTATOR ASSEMBLYFINAL
ASSEMBLY
ROTOR ASSEMBLY
BEARING ASSEMBLY
ROCKER ASSEMBLY
FINAL ASSEMBLY
ROCKER CONECTION
COMPLETION OF FINAL ASSEMBLY
TESTING
T-BOX ASSEMBLY
PAINTING
COMPLETION
DISPTCHING
PRE HEATING
(8 HRS)
DIPPING
(VPI PROCESS)
(8 HRS)
PRE HEATING
Rotor completion
The KEC have a separate effective quality assurance department for incoming
materials to verify the quality of raw materials.
The KEC adopted JIT technique for purchase it cause very less stock in stores it
reduces the wastage in inventory.
The company does not doing any re cycling activity in unit.
In case of any damages in raw materials company will resend to the vendor or it buys
for discount price.
The over all wastage of company is 2.5%b to 3%.
Maximum wastage comes from production.
The wastage from production department Company will sell to scrapes traders.
For scrap dispose company will call tenders.
The various wastages in production at KEC as follow.
Particular Purchase price Selling price
(scrap)
Wastage per
month
Copper 430 100 500 kg
Stamping materials 60 20 500 kg
Compiled based on Personal Interview
Objective4:
Page | 41
Focus: SALES AND DISTRIBUTION
PAKING
Two types of packing
1. Home market packing : Bangladesh, Nepal, Bhutan
2. Treated route packing ( chemical treatment to protect from fungus): sri lanka,
Indonesia
Materials cost for packing
Wood frames
Plastic and paper
Nuts and bolts
Forwarding paper charges
Labor charges
Transportation charges
Total packing cost is 4585 lakhs
Motor is covered from aluminum foil
Vacuum packing is done for export goods
In KEC all inputs for packing department is from marketing department
The information about marketing and distribution of KEC
In KEC marketing department is very responsible for order accepting and order
delivery
Page | 42
Demand forecasting doing based on experience and present situation
For advertisement KEC participating the pure electrical exhibitions like “Elecrama”
organized by IEEMA.
The KEC have separate department for exports called IMD (International Marketing
Department)
Different types of cost incurred for delivering of goods are
Packing
Transportation
Insurance
The transportation charges and insurance bear by customer
Selling price of the product 30,000 to 12,00,000
The KEC has using maximum road transport
Distribution
Major customer of KEC
Steel industries
Cement industries
Aluminum industries
Mining industries
Printing and paper
Plastics, rubber, cable industries
OEM,s
Intermediaries will plays crucial role in selling the products to the customers. They are
getting products from the company with certain price after that they will fixes the
prices for the products according to their margin.
Table shows the sales of KEC
Year Sales % of sales
2008 22%
Page | 43
1956.4
2007 1775 19%
2006 2097 23%
2005 1819.32 19%
2004 1567.76 17%
Total 9215.42 100
Compiled based on Personal Interview
Chapter 6
Result and analysis
Page | 44
Objective 1.
Table 1 Table shows percentage of different types of risk
Types of risk Percentage
New Supplier Risk 10
Business Risk 30Time Risk 60
Graph no:1
New Supplier Risk10%
Business Risk30%Time Risk
60%
Percentage
Analysis:
The study reveals that, Kirloskar’s Govenahalli branch has 10% of New Supplier Risk, 30%
of Business Risk and 60 % of Time Risk.
Interpretation:
From the analysis it is clear that, major risk for Kirloskar (Govenahalli) in logistics
management is Time risk like late delivery and lead time and these has effects on inventory
and production.
2 Table shows over all production of KEC
Particulars % of production
Out sourcing 40%
Page | 45
Self manufacturing 60%
Total 100
Graph number:2
40%
60%
% of productionOut sourcing Self manufacturing
Analysis: The study shows from above graph is out of 100% of production 40% outsourcing
from other industries remaining 60% is manufacturing in govenahalli only.
Interpretation: from the above graph I can interpret that in KEC 40% of the raw material out
sourced (JIT) & this reduces the ware house cost and increase the working capital. It is
positively responsible for getting good margin.
Implicit cost
Formulae = Rate of discount * Number of dates in year/
1- rate of discount Credit period – discount period
Page | 46
1) 2/60 net 90 days
2) 4/30 net 90 days
3) For immediate -5%
1. 0.02 / 1- 0.02 * 360 / (90 – 60)
= 24.48%
2. 0.04 / 1- 0.04 * 360 / (90 – 30)
= 25 %
3. 0.05 * 360
= 18%
Analysis: The above calculations shows company get discount if credit will pay 30 days
early means 2% commission 24.48%, if 60 days means 25% if company pay immediately
means it get 5% of discount and 15%
Interpretation: from the above analysis we can say that if company pay immediate cash to
Vendors Company can save the cost 18% and it increase the working capital and it indirectly
help to increase the company profit.
Objective 2: To analyze the process of warehousing and inventory management at Kirloskar
Electric Company ltd
3 Table shows repairs and maintenance costs in (lakhs)
Page | 47
Graph no 3
Analysis: from the above table and chart I can analyze the maintenance cost of the warehouse
is building 33%, machines 53%, others 10 %
Interpretation: From the above analysis we can say that in warehouse maintaining machines
and equipment cost is high
4 Table shows ABC system of segregation of inventory at KEC
Page | 48
37%
54%
10%
Table shows repairs and main-tenance costs Costs in (lakhs)
Building Machines & equipmentsOther expenses
Particulars Costs in
(lakhs)
Costs in %
Building 28.47 37%
Machines & equipments 41.67 53%
Other expenses 7.54 10%
Total 77.68 100
Group A materials Group B materials Group C materials
Copper Baring components Rubber materials
Barings Still keys Nuts & bolts
Motors Washers
Electric rings M/S components
Compiled based on Personal Interview
Analysis
From above table clearly showing the classification of materials in to three groups
Group A
materials are Copper, Barings, Motors, Electric rings,
Group B
Baring component, Still keys,
Group C
Rubber materials, Nuts & bolts, Washers, M/S Components
Interpretation:
From the above analysis I can interpret that KEC adopted ABC technique based on Costs and
usage and it is using to maintain the inventory in warehouse it reduces the damages of goods
in warehouse so it increases quality of production and same time it gives information about re
ordering point order delivery period.
5 Table shows percentage wise Costs incurred for raw materials
Page | 49
Particulars % of cost
Copper 30%
Stamping 25%
Mild still 15%
Insulation and others 30%
Graph no 4
Copper30%
Stamping25%
Mild still15%
Insulation and others30%
% cost incured for raw material
Analysis
Above pie diagram is showing the cost incurred for the different raw materials. Company is
spending 30% on Copper, 25% on Stamping,!5% Mild still, 30% on Insulation and others.
Interpretation
Organization is spending more money on getting the raw materials of Copper, Stamping and
Mild still from different vendors. And it helps to maintain safety stock in unit.
Page | 50
6 Table shows percentage of raw materials used in production
Particulars % of raw materials used in
production
Copper 20
Stamping materials 30
Stator frames 20
CE & NC 10
IP Coils 5
Mild steel 15
Total 100
Graph 6
Copper
Stamping materials
Stator frames
CE & NC
IP Coils
Mail still
Total
20
30
20
10
5
15
100
% of raw materials used in produc-tion
% of raw materials used in production
Analysis:
The study shows that Kirloskar uses 20% of Copper, 30 % of Stamping Materials, 20% of
Stator Frames, 10% of CE & NC covers, 5% of IP Coils and 15% of Mild steel for production
of one DC Generator
Interpretation:
It Can be interpreted as KEC uses Stamping Materials as a major raw material for its
production and major costs of raw material is incurred for Stamping materials.
Page | 51
7 Table shows major material costs
Particulars 2009 [ Rs in lakhs ] 2008 [ Rs in lakhs ]
steel 676.06 639.68
copper 516.01 1050
Barings 140.12 169.21
Graph 7
steel copper Barings 0
200
400
600
800
1000
1200
2009 [ Rs in lakhs ]2008 [ Rs in lakhs ]
Analysis:
From the analysis it can be considered as Major Raw material costs for KEC in the year 2009
are Rs.676.06L for Steel, Rs.516.01L for Copper and Rs. 140.12L for Barings.
Interpretation:
The Results shows that KEC’s Major Raw material cost is for Steel and the company should
handle these costs in a better manner to gain benefits.
8 Table shows lead time of raw materials
Page | 52
Particulars Lead time in days
Copper 14
stamping materials 14
stator frames 30
CE & NC covers 14
IP coils 14
Rubber 15
Nuts and bolts 14
Washers 14
M/S component 14
Graph 8
Copper
stamping m
ateria
ls
stator f
rames
CE & NC co
vers
IP coils
Rubber
Nuts an
d bolts
Wash
ers
M/S co
mponent
14 14
30
14 14 15 14 14 14
Lead time in daysLead time in days
Analysis:
The graph shows that KEC gets Copper within 14 days of ordering, Stamping materials within
14 days, Stator Frames within 30 days, CE & NC Covers within 14 days, IP Coils within 14
days, Rubber within 15 days, Nuts and Bolts within 14 days, Washers within 14 days and M/S
components within 14 days of ordering
Interpretation:
It can be interpreted as procuring of Stator Frames is consuming more time and the company
has to concentrate on this and should try to reduce the Lead time of procurement of Stator
Frames. If lead time is high its indirectly effects to dispatching of goods and sales.
9 Table shows the inventory cost incurred in KEC
Page | 53
Year Inventory Cost in Lakhs
9-Mar 2191.91
8-Mar 1962.09
7-Mar 2013.12
6-Mar 1568.89
5-Mar 1786.95
9-Mar 8-Mar 7-Mar March – 06 5-Mar
2191.911962.09 2013.12
1568.891786.95
Inventory Cost Rs.LakhsInventory Cost Rs.Lakhs
Analysis:
From the analysis it is clear that KEC incurred the inventory costs of Rs.2191.91 L in the year
2009, Rs.1962.09 L in 2008, Rs.2013.12 L in 2007, Rs. 1568.89 L in 2006 and Rs.1786.95 L
in the year 2005.
Interpretation:
It can be interpreted as due to increase in Inflationary prices in the year 2009, KEC has
incurred more costs on Inventory. So the company can follow some Inventory Techniques to
avoid the effects of Inflationary prices
Calculations
Page | 54
Calculation of working capital management
1 Raw materials storage period
A. Annual consumption of raw materials – [ 2191.91(Rs in lakhs)]
B. Average daily consumption of raw materials = 1/360 – [6.0866]
C. Average stock of raw materials = opening stock + closing stock/2 – [566.43]
D. Raw materials storage period = C/B
566.43/6.0866 = 93 days
Analysis : The above calculations shows the annual consumption of raw material is
2191.91lakhs, average daily consumption 6.0866, average stock of raw material is 566.43
lakhs finally raw material storage period is 93 days.
Interpretation:
From the analysis we can interpret that as the raw material storage period is 93 days, the
conversion time is late because of industrial goods (> 1000WT) so logistics should be
effective so that it caries Raw materials without time delay. Here we can also interpret that,
while procurement Process Company should take great care while Vendor selection process,
so that the vendor supplies raw materials at regular intervals of time with specified quality.
So, we can conclude that Transportation and Procurement of raw materials i.e. one of the
features of logistics has an impact on working capital and Inventory management.
2 Conversion period
Page | 55
A. Annual cost of production = opening stock of WIP + consumption of raw
materials + other manufacturing cost ( salaries, wages, power & fuels) +
depreciation + closing WIP [5535.25]
B. Average daily cost of production = 1/360 – [15.37]
C. Average stock of WIP = opening stock WIP + closing stock WIP / 2 – [1168.85]
D. Average conversion period = C/B
1168.85/15.37 = 76 days
Analysis:
The result shows that Kirloskar keeps an average stock of work-in-process of rs.15.37lakhs,
its annual cost of production is rs.5535.25 lakhs and its average daily cost of production is
rs.2.13 cr. Finally, its average Conversion period is 73 days.
Interpretation:
From the analysis we can interpret that production cycle play its key role in the conversion period. For production, one of the features of logistics i.e. proper plant layout is necessary and proper movements of goods. Key Considerations for proper way of procurement and lead time of raw material plays an important role in production cycle. So, we can conclude that lead time, transportation and inventory i.e. one of the feature of logistics has its impact on Working Capital and Production Cycle.
3 Finished goods storage period
Page | 56
A. Annual cost of sales – [5904.49(in lakhs)]
B. Average daily cost of sales =1/360 – [16.40]
C. Average stock of finished goods = opening stock + closing stock/2 – [683.34]
D. Finished goods storage period = C/B
6834.34/16.40 = 41 days
Analysis:
The results shows that kirloskar’s annual cost of sales is 5904.49 lakhs, average daily cost of
sales is 16.40 lakhs, average stock of finished goods 683.34 lakhs and finally finished goods
storage period is 41 days.
Interpretation:
From the analysis we can interpret that Kirloskar finished products will be stored for 41 days
From this, we can understand the Kirloskar is doing B to .B business it takes more time for
dispatching of goods because companies customers are industries customers.. So, we can
conclude that the Distribution network, one of the features of the logistics has its impact on
Working Capital. Here also the features of logistics like Transportation and Warehouse comes
into picture and shows, these features also have their impacts on working capital.
Page | 57
10 Table shows raw materials ordering cost
Particular Total ordering cost % of cost
Copper 1800 22
Stamping materials 1500 18
Stator frames 1500 18
CE & NC covers 1650 20
IP coils 1800 22
Total 8250 100
Graph 10
Copper
Stamping materials
Stator frames
CE & NC covers
IP coils
Total
1800
1500
1500
1650
1800
8250
22%
18%
18%
20%
22%
10000%
ordering cost
% of cost Total ordering cost
Analysis:
Above graph showing the ordering cost to the company to get the raw materials, organization
is spending Rs 1800 for getting the raw materials of Copper and IP coils. The organization
spending the 1650 Rs as ordering cost to get the CE & NC covers. Stator frames and
Stamping materials ordering cost is 1500. Rs
Interpretation :
Total cost incurred by the company to ordering the materials is 8250.Rs
Page | 58
Re order point
Formulae: Normal usage in lead time + Safety stock
Copper
Annual usage 2, 00,000 (2 tons)
Lead time 14 days
7000+1000 = 8000 kg
Stamping
Annual usage 3, 00,000 (2 tons)
Lead time 14 days
11,662 + 3000 = 15662 kg
Stator frames
Annual usage 4800 pieces
Lead time 30 days
300 + 300 = 600 Frames
CE & NC covers
Annual usage 9600
Lead time 14 days
280 + 500 = 780 covers
IP coils
Annual usage 72000
Lead time 14 days
2800 + 500 = 7800
11 Table shows the re order point of raw materials at KEC
Page | 59
Graph 11
Copper
Stamping m
ateria
ls
Stator f
rames
CE & NC co
vers
IP coils
800011662
600 530
7800
Re ordering pointRe ordering point
Analysis
above graph showing the reordering of raw materials to the vendors. When copper reaches to
the 8000Kgs , Stamping materials reaches 11662Kgs, Stator frames reaches 600 units, CE &
NC reaches to 530 units and IP coils reaches to 7800 units. The company will go for re
ordering point.
Interpretation
Reordering point plays key role to maintain the stock in proper order to avoid the out of stock
in the company.
Page | 60
Particulars Re ordering point
Copper 8000 (in KGs)
Stamping materials 11662 (in KGs)
Stator frames 600 units
CE & NC covers 530 units
IP coils 7800 units
Re order level
Re order level = Average daily usage * Lead time
Copper
500*14 = 7000 kg
Stamping materials
833*14 = 11662 kg
Stator frames
10*30 = 300
CE & NC covers
20*14 = 280
IP coils
200 * 14 = 2800
Page | 61
Objective 3:
Focus: reveres logistics
Calculations
Annual wastage
copper = 500*12 = 6000 kg
Stamping materials = 500*12 = 6000 kg
1) Copper = 6000*430 = 2580000 (purchases)
= 6000*100 = 60000 (selling)
Total (P - S)= 330 2520000 ………………………….. [Loss to company]
2) Stamping material = 6000*60 = 360000 (purchase)
= 6000*20 = 120000 (selling)
Total (P-S) = 40 240000 …………………. [Loss to company]
Total wastage cost = 1 + 2
= 2520000 + 120000 = 2760000
Page | 62
12 Table shows the percentage of wastage of raw materials at KEC
Particulars Percentage of wastage
Copper 3%
Stamping material 2.5%
Graph 12
Copper ; 3.00%
Stamping material; 2.50%
Analysis
Above pie diagram showing the wastage of raw materials in the production unit in the form of
cutting the pieces,
Interpretation
If the organization reduces wastage it leads to reduce the cost of getting the raw materials.
Page | 63
Objective 4
13 The table shows the sales KEC Percentage of sales
Graph 13
85%
15%
The table shows the sales KEL Percentage of sales
Direct marketing Dealers
Analysis:
Above pie diagram showing the percentage of sales out of that 85% of sales from direct
marketing and 15% from the dealers
Interpretation: From the above analysis I can interpret that KEC is more depend on direct
sales because in govenahalli unit manufacturing industrial goods. So in KEC very less
intermediaries.
Page | 64
Particular Percentage of sales
Direct marketing 85 %
Dealers 15%
Total 100
14Table shows the sales of KEC
Year Sales % of sales
2008 1956.4 22%
2007 1775 19%
2006 2097 23%
2005 1819.32 19%
2004 1567.76 17%
Total 9215.42 100
Compiled based on Personal Interview
Graph no14
2008 2007 2006 2005 20040%
5%
10%
15%
20%
25%22%
19%
23%
19%17%
% of sales
Analysis: The above chart shows the sales of KEC in 2008 sales is 22% in 2007- 19% 2006-
23% 2005- 19% and in 2004-17%
Interpretation: from the above analysis I can interpret that sales of KEC is having major
fluctuations because of limited customers and same tine recession affects.
Page | 65
Tools
Correlation & Regression Analysis of Inventory Costs & Sales Of Kirloskar
Hypothesis:
H0= Inventory cost has on impact on sales
H1= Inventory cost has not impact on sales
Table 15 table shows inventory cost and sales
Sl no Inventory Cost
(X) Rs. Lakhs
Sales (Y) Rs.
Lakhs X2 Y2 XY
1 2191.91 1956.34 4804469 3827266 4288121
2 1962.09 1775 3849797 3150625 3482710
3 2013.12 2097 4052652 4397409 4221513
4 1568.89 1819.32 2461416 3309925 2854313
5 1786.95 1567.76 3193190 2457871 2801509
Total 9522.96 9215.42 18361525 17143097 17648165
rxy = ryx = n ∑XY - ∑X ∑Y
√ [n ∑(x2) – (∑x)2 ] [n∑(y2) – (∑Y)2]
= (5×17648165)-(9522.96×9215.42)
√ (5×18361525)- (9522)2 (5×17143097)-(9215.42)2)
= 1811.4 - 1691.2
√(1500)-(1600)(2101.25-1787.5)
= 0.51
Page | 66
rxy=ry
x
0.5125
27
0.4306
97
1500 1600 1700 1800 1900 2000 2100 2200 23000
500
1000
1500
2000
2500
f(x) = 0.430697469814249 x + 1022.78104457154R² = 0.262684124109038
Chart Title
Axis Title
Axis Title
Through the above graph and calculations it is clear that inventory cost has on impact of
51.25% on sales and the magnitude of relation ship between inventory cost and sales is
43.06%
Page | 67
T-Test: single mean
Hypothesis:
H0= Inventory cost has on impact on sales
H1= Inventory cost has not impact on sales
Sl no Inventory Cost
(X) Rs. Lakhs
Sales (Y) Rs.
Lakhs X2 Y2 XY
1 2191.91 1956.34 4804469 3827266 4288121
2 1962.09 1775 3849797 3150625 3482710
3 2013.12 2097 4052652 4397409 4221513
4 1568.89 1819.32 2461416 3309925 2854313
5 1786.95 1567.76 3193190 2457871 2801509
Total 9522.96 9215.42 18361525 17143097 17648165
Sample size (n) = 5
Sample mean = ∑fx
n
= 1810.9
µ= 1843.08
SD= √∑X2
n
= √∑18361525
5
= 1916.32
SX = sx
Page | 68
√n
= 1810.59
2.23
= 811.92
T = X - µ
SX
T= 1810.5-1843.08
811.92
= 0.04
Page | 69
Chapter 7
FINDINGS, SUGGESTIONS AND CONCLUSIONS
Major risk for Kirloskar (Govenahalli) in logistics management is Time risk like late
delivery, lead time, inventory and production
KEC 40% of the raw material out sourced (JIT) it reduces the ware house cost and
increase the working capital. It is positively responsible for getting good margin.
If company pay immediate cash to Vendors Company can save the cost 18% and it
increase the working capital and it indirectly help to increase the company profit.
In warehouse maintenance machines and equipment cost is high
KEC adopted ABC technique based on values and usage and it is using to maintain the
inventory in warehouse it reduces the damages of goods in warehouse so it increases
quality of production and same time it gives information about re ordering point order
delivery period
Organization is spending more money on getting the raw materials of Copper,
Stamping and Mild steel from different vendors. And it helps to maintain safety stock
in unit.
KEC uses Stamping Materials as a major raw material for its production and major
costs of raw material is incurred for Stamping materials.
KEC’s Major Raw material cost is for Steel and the company should handle these
costs in a better manner to gain benefits.
Procuring of Stator Frames is consuming more time and the company has to
concentrate on this and should try to reduce the Lead time of procurement of Stator
Frames. If lead time is high its indirectly effects to dispatching of goods and sales.
Due to increase in Inflationary prices in the year 2009, KEC has incurred more costs
on Inventory. So the company can follow some Inventory Techniques to avoid the
effects of Inflationary prices
Page | 70
As the raw material storage period is 93 days, the conversion time is late because of
industrial goods (> 1000WT) so logistics should be effective so that it caries Raw
materials without time delay. Here we can also interpret that, while procurement
Process Company should take great care while Vendor selection process, so that the
vendor supplies raw materials at regular intervals of time with specified quality. So,
we can conclude that Transportation and Procurement of raw materials i.e. one of the
features of logistics has an impact on working capital and Inventory management.
Production cycle play its key role in the conversion period. For production, one of the features of logistics i.e. proper plant layout is necessary and proper movements of goods. Key Considerations for proper way of procurement and lead time of raw material plays an important role in production cycle. So, we can conclude that lead time, transportation and inventory i.e. one of the feature of logistics has its impact on Working Capital and Production Cycle.
Kirloskar finished products will be stored for 41 days From this, we can understand
the Kirloskar is doing B to .B business it takes more time for dispatching of goods
because companies customers are industries customers.. So, we can conclude that the
Distribution network, one of the features of the logistics has its impact on Working
Capital. Here also the features of logistics like Transportation and Warehouse comes
into picture and shows, these features also have their impacts on working capital.
Total cost incurred by the company to ordering the materials is 8250.Rs
Reordering point plays key role to maintain the stock in proper order to avoid the out
of stock in the company.
If the organization reduces wastage it leads to reduce the cost of getting the raw
materials.
From the above analysis I can interpret that KEC is more depend on direct sales
because in govenahalli unit manufacturing industrial goods. So in KEC very less
intermediaries.
Sales of KEC are having major fluctuations because of limited customers and same
tine recession affects.
Page | 71
The inventory cost has on impact of 51.25% on sales and the magnitude of relation
ship between inventory cost and sales is 43.06%
Suggestions
1. Marketing department to form a team and this team to create need base analysis with
customers based on increasing capacity of motors in watts and new designs with
additional features.
2. There is a lack of proper process layout in DC motor section and this improper layout
is increasing cost concern to cranes and pullis and ropes and increasing the conversion
period. the company has find solution to get better benefits.
3. Company is using JIT technique is affected factor like PEST so company has to make
situation analysis which has its own effects on inventory level and production
Conclusions
As company as well experience and its own brand image in the electric sector they are not
finding much difficulties in manufacturing the goods and the competitors are less in this
sector. This factor has made KEC market leader and the company deriving better benefit in
both cost performance and market performance finally conclude that KEC has good growth in
electric sector.
Page | 72
Chapter 8
LITERATURE REVIEWS
Literature Review : 1
Topic: EFFECTS OF ORGANIZATIONAL LEARNING IN THIRD-PARTY LOGISTICS
Author: Panayides.
January-2007
Journal-Business logistics
Logistics service providers operate in an intense competitive environment that requires
continuous improvement in logistics service quality and firm performance. Key
organizational resources may contribute toward the improvement in performance of logistics
service providers. This paper investigates the effect of organizational learning within
logistics service providers on client relationship orientation, logistics service quality and
firm performance. The study proposes and examines an original concept in logistics research
that contributes to theory in the area, provides the opportunity for further research and
addresses how organizational resources can contribute to performance in logistics.
Abstract
The increasing trend towards outsourcing of logistics activities has contributed to the growth
of third-party logistics service providers (LSPs). An LSP is defined as a provider of
industrial logistics services that performs the logistics functions on behalf of their clients
(Coyle, Bardi, and Langley 1996). Coyle, Bardi, and Langley (2003, p. 425) suggest that
third-party logistics involves an external organization "that performs all or part of a
company's logistics functions". This broad definition indicates that outsourcing of any major
logistics activity (transportation, warehousing, inventory management) can qualify as third-
party logistics (Knemeyer and Murphy 2005).
http://findarticles.com/p/articles/mi_qa3705/is_200701/ai_n21100380/pg_2/?tag=content;col1
Page | 73
Literature Review: 2
Topic: LOGISTICS AND SUPPLY CHAIN MANAGEMENT APPLICATIONS WITHIN A
GLOBAL CONTEXT: AN OVERVIEW
Author: Schoenherr Tobias
March: 2009
Journal: Business Logistics
INTRODUCTION
In a time of accelerating competitive pressures, a global playing field, and rising customer
expectations, companies are faced with a constant quest to streamline their flow of goods
and services (Manuj and Mentzer 2008; Wagner and Bode 2008). An effective means to
gain efficiencies and eliminate non-value added steps in this environment is to focus on
logistics and supply chain management (L&SCM) (Miller and de Mata 2008). While
research investigating L&SCM practices in the U.S. has been proliferating, studies focusing
on companies and environments overseas have also gained attention. Nevertheless, the latter
studies have been scattered and often possessed lower visibility; many of these articles have
appeared in non-disciplinary or non-mainstream journals. The Journal of Business Logistics
is a noteworthy exception, with the publication of this Special Issue on logistics and supply
chain management applications within a global context, as well as special sections
(Gammelgaard 2006, 20)
Conclusion:
In today's global marketplace, sustaining a competitive position is a paramount concern.
Technological innovations and economic uncertainties have literally changed the face of the
competitive arena. Many industries have progressed from slow moving, stable oligopolies to
hypercompetitive environments characterized by intense and rapid competitive moves, in
which competitors strike quickly, unexpectedly, and unconventionally and advantages are
rapidly created and eroded (D'Aveni 1994, 1998). Recent research has gone further and
indicates that, in general, periods of sustained competitive advantage have grown shorter over
Page | 74
time (Wiggins and Ruefli 2005, McNamara, Vaaler, and Devers 2003). This new reality,
therefore, challenges most industries (Wiggins and Ruefli 2005) and even the most seasoned
executives (D'Aveni 1998).
Literature Review: 3
Topic: LOGISTICS LEARNING CAPABILITY: SUSTAINING THE COMPETITIVE
ADVANTAGE GAINED THROUGH LOGISTICS LEVERAGE.
Author: Esper, Terry L, Fugate , Brian S
January- 2005
Journal – Business Logistics
Many firms now place emphasis on leveraging logistics capabilities as a source of
competitive advantage. This manuscript suggests that the key to sustaining this competitive
position is through adopting learning principles in logistics. As such, a logistics learning
capability framework is presented, including the components of an effective learning-based
logistics organization. Research propositions, an in-depth case study and implications are
presented to further support the learning capability framework suggested and highlight the
importance of learning in today's hypercompetitive global supply chain environment.
Abstarct:
In response, many companies looking to compete embraced such strategic initiatives as
price manipulation (Zarley and Rosa 1997), product improvement (Woodruff and Gardial
1996), and reduced design-to-shelf cycle time (Camp 1989), only to find these strategies
copied quickly by competitors (Porter 1985). Today however, organizations have focused on
delivering customer value through logistics as a means of remaining competitive (Mentzer,
Flint, and Hult 2001), since changes in promotion and price may be more quickly duplicated
(Bowersox, Mentzer and Speh 1995). In essence, companies have started to leverage their
logistics capabilities as a source of competitive advantage (Daugherty, Stank, and Ellinger
1998; Bowersox, Gloss, and Stank 1999; Lynch, KECler, and Ozment 2000; Zhao, Dr ge,�
and Stank 2001).
com/p/articles/mi_qa3705/is_200701/ai_n21100377/?tag=content;col1
Page | 75
http://findarticles.com/p/articles/mi_qa3705/is_200701/ai_n21100380/pg_2/?tag=content;col1
Literature Review: 4
Title: The Impact of Logistics on the Demand for Mature Industrial Products
Authors : William R. Darden, Grant M. Davis, John Ozment European
Journal of MarketinYear: 1989
Volume: 23 Issue: 2 Page: 47
Managers usually dread the prospect of dealing with products in the mature stage of their life
cycle. At this stage, products become generic in nature leading to little gain from promotion
and the extensive use of discounts and other price-sensitive competitive ploys because of
intensive competition. Ultimately, profits fall drastically. Frequently overlooked as an element
in the overall marketing strategy is what we call the Logistics Mix. This article presents a
model that includes dimensions of logistics service that are hypothesised to impact on the
demand for industrial products, and it suggests that there are advantages in competing on
these dimensions.
Abstract:
Logistics leverage has been defined as the achievement of excellent and superior logistics
performance, which, when implemented through a successful marketing strategy, creates
recognizable value for customers (Mentzer and Williams 2001). Leveraging logistics allows
organizations to achieve customer satisfaction through inventory availability, timely
delivery, and less product failure (Bowersox and Closs 1996; Day 1994; Morash, Droge, and
Vickery 1996; Mentzer and Williams 2001; Olavarrieta and Ellinger 1997). As such,
logistics leverage represents a "positional advantage" for the company. It is a value added
service that the customer recognizes as imp
http://www.emeraldinsight.com/Insight/viewContentItem.do?
contentType=Article&hdAction=lnkpdf&contentId=853099
Page | 76
Chapter 9
ANNEXURE
Questionnaire
1) What are the raw materials required for the production process?
2) How many vendors are supplying the raw materials and name the materials supplied
by them.
3) What is the process of vendor selection adopted in the company?
4) What is the process of procurement of raw materials?
5) How the negotiation process with the vendors are carried out.
6) What is the process of ordering for raw material? What are the cost incurred per order?
7) What is the mode of payment for vendors?
8) What is the credit period available to the company from its vendors?
9) Which is the mode of transportation used for procurement of raw material and delivery
of finished goods?
10) What are the cost incurred for the process of transportation?
11) What is the process of receivables management process adopted in KEC?
12) What is the basis of calculating Quantity to be ordered ? what is the process of placing
an order?
13) What is the minimum and maximum level of storage of raw material?
14) What is the process of material handling?
15) Explain the procedures of internal and external orders
16) What are the software used for warehousing and inventory management?
17) What are the various costs involved in ware house and inventory management?
18) Explain the mode of transportation used in KEC
19) What are the various costs involved in transportation ?
20) Transportation process is
a. Contract basis
b. Owned
Page | 77
c. Rented
21) Explain the process of exporting the finished good
REFERENCES:
LIST OF BOOKS:
1) “Logistics and supply chain management ”
Editors- G. Raghuram and N Rangaraj
Published By- Macmillan india ltd
First Edition: 2000
ISBN:0333933427
2) “marketing management”
Editors team- Philip kotler, K.L KECler, Abraham koshy, M Jha
Edition – 13
Published By- Dorling Kindersley[india] pvt ltd
ISBN: 978-81-317-1683-0
3) “Marketing channels”
Editors team- Pelton, Lumpkin
Edition – 2
Published by : McGraw-Hill Higher Education
LIST OF WEBSITES:
1) <a:clrMap mlns:a="http://schemas.openxmlformats.org/drawingml/2006/main"
bg1="lt1" tx1="dk1" bg2="lt2" tx2="dk2" accent1="accent1" accent2="accent2"
accent3="accent3" accent4="accent4" accent5="accent5" accent6="accent6" hlink="hlink"
folHlink="folHlink" />
2) Kirloskar Electric Co Balance Sheet, Kirloskar Electric Co Financial Statement &
Accounts.htm
3) http://www.processregister.com/register/seo.asp
4): http://kirloskarelectriccoltd_ww.indiabizclub.com - [Visit Website]
5) http://power.indiabizclub.com/products/list
6)www.kirloskar-electric.com/pdf/kecbalancesheetfinal.pdf
Page | 78
7)www.eworldtradefair.com/kirloskarelectriccompanyltd//
8)power.indiabizclub.com/.../1665500~kirloskar_electric_co.ltd~bangalore
9)http://www.kirloskar-electric.com/founders.shtml
A THESIS ON
“An analytical study on the impact of logistics management and its impact “An analytical study on the impact of logistics management and its impact
on sales at Kirloskar Electric Company Ltd-Bangalore”on sales at Kirloskar Electric Company Ltd-Bangalore”
T U M K U R
Submitted by
YAHYA KHAN H.I
8NBTM014
INC-TUMKUR
Under the Guidance
Ms. SAHANA.G.R
Finance Faculty
INC TUMKUR
ICFAI National College
V.S Sabha Bhavan, 1st Floor, Renuka Theatre Compound,
Page | 79
Shettihalli main Road, Tumkur -572102.
ICFAI National College
V.S Sabha Bhavan, Shettihalli main Road, Tumkur -572103.
[Affiliated to Icfai University, Dehradun]
MASTER OF BUSINESS ADMINISTRATION
T U M K U R CERTIFICATE
This is to certify that the Management Thesis-I entitled
“An analytical study on the impact of logistics management and its impact on sales atAn analytical study on the impact of logistics management and its impact on sales at
Kirloskar Electric Company Ltd-BangaloreKirloskar Electric Company Ltd-Bangalore”
Has been carried out successfully by
YAHYA KHAN H.I
8NBTM014
In partial fulfillment of the requirement for the completion of III semester Master Of Business
Administration by the Icfai University during the academic year 2008-10
CENTRE CO-ORDINATOR THESIS GUIDE
Ms.Divya.K Ms. Sahana.G.R
Page | 80
INC-Tumkur Finance Faculty
INC-Tumkur
CERTIFICATE
This is to certify that the Management Thesis-II title “An analytical study on the impact ofAn analytical study on the impact of
logistics management and its impact on sales at Kirloskar Electric Company Ltd-logistics management and its impact on sales at Kirloskar Electric Company Ltd-
BangaloreBangalore ” Submitted by Yahya khan H.I , Enrollment no. 8NBTM014during 4th-semester
of MBA Program of the batch 2008-10 embodies original work done by him.
Signature of Faculty Supervisor
Name: Ms. SAHANA.G.R
Designation: Finance Faculty
Campus: INC-Tumkur
Page | 81
DECLARATION
I am Yahya khan, a student of ICFAI National College, here by declare that this
Management Thesis-II entitled“ An analytical study on the impact of logistics
management and its impact on sales at Kirloskar Electric Company Ltd-Bangalore” has
been prepared by me and has not been submitted to any other university or institution
for the award of any degree or diploma.
The findings and conclusion of the data for this report is based on the information
gathered through the interaction with the departmental heads of Kirloskar Electric
Company Ltd-Bangalore and Thesis guide.
DATE:
PLACE: Tumkur (YAHYA KHAN H.I)
Page | 82
Acknowledgment
A Student collects accolades in the form of grades for the success in his endeavors and
this success depends on adequate preparation and indomitable determination and the most
important of all the support he/she receives from his/ her guides. So the accolades I earn for
this project, I would like to share with all those who have played a notable part in its making.
In this few months that I have worked on it, I feel indebted to many and extend my heart
full gratitude and profusely thank those people who not only gave assistance to me but also
participated in making of this project. I sincerely thank our Campus Co-ordinator
Ms.Divya.K, our Thesis guide Ms. Sahana.G.R Mr. Subbanna and Mr. Mahaver and all for
their valuable advice, assistance, guidance and unending support provided.
And last, I do thank all my friends who have directly and indirectly helped me in
completion of this Thesis.
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Content table
Chapter no` Content Page. No
1 Abstract 1
Scope of the study 1
Statement of the problem 1
2 Introduction 2
3 Overview of company
Organizational chart
4 Research design
Objectives
Nature of the study
Overview of the Research planned and expected
outcomes/results
Research design
5 Discussions of implications
6 Result and analysis
7 Findings, suggestions and conclusions
8 Literature reviews
9 Annexure
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T able and graphs
Sl no
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