Interim Report

Topics: Inventory, Supply chain management, Costs Pages: 12 (3379 words) Published: December 17, 2012

Interim Report (IR)

Submitted To: Prof. Seshadri Vishwanath

Submitted By:
Navin Chawla,
Roll No: 106,
MBA (Tech) – 2013,
IT – Mumbai.


Mahindra Construction Equipment (MCE)

This report contains three projects discussed in succession. These ad hoc projects will help MCE to establish improved managerial policies and procedures, maintenance, control and situational analysis. The projects are listed below: 1. Inventory Reduction of Spare parts.

2. Dealer Management System (DMS).
3. Dealer Inventory Health Check – Analysis & Valuation. MCE maintains spare parts for their product, the “EarthMaster”, for servicing the end-customers. Up to 30 % of this inventory is non-moving since the past 12 months, which is the main concern for the spare parts manager. Considering various factors such as criticality, availability, Lead time consumption etc., and using a Multi-unit Selective Inventory Reduction & Control technique, a strategy for reducing this inventory has been formulated. This method aims to reduce the stock level by at least 15-20%. DMS software will help MCE to bridge gap between the dealers and the end-customers. Apart from this, DMS will also automate all operations of dealers, thus reducing time and cost. This software aims to integrate all operations at respective dealers, thus resulting in higher productivity. This software will be developed by “Tally Solutions Pvt. Ltd.” which is M&M’s IT partner. All authorized dealers of M&M’s MCE division need to purchase an Inventory Dealer Kit (IDK) worth Rs. 11 lakhs during establishment, to start operations with MCE. However, recently, many dealers have claimed that this IDK is contributing majorly to their respective non-moving stock. After justification, strategies need to be developed to reduce the excess inventory at dealers caused due to IDK, as well as to make a new IDK by taking various factors into consideration.

Inventory Reduction of Spare parts
MCE maintains spare parts for “EarthMaster” to help its Dealers provide efficient services to the end-customers. These service-related spare parts include 1726 Line Items (out of a total of 3500 parts for “EarthMaster”) having respective Safety stocks. These Line Items also include non-moving stock which accounts for approximately 30% of the total inventory. Non-moving stock being the major problem, has also given rise to numerous derived problems including limited space for excess inventory, labor time and costs, insurance costs, wear-out costs etc. The fact that there is no dedicated inventory manager for spare parts’ inventory management, has given rise to the huge lumps of non-moving stock. Other reasons contributing to the problem scenario include absence of historical data (for forecasting), high demand fluctuation, highly targeted Fill rate (90% for F.Y. 2012-2013) etc. This project attempts to reduce the non-moving stock up to a desired level. To achieve this, the first step is to understand the problem in an analytical manner along with reasons for this problem. This involves defining the scope, gathering stock transfer information (Receipt or Issue) and various MIS reports. The next step is to develop the Action Plan and the various methods to be followed (e.g. HML analysis, ABC analysis). Then, classification of the total stock will help identify the non-moving stock and another combination analysis will help sort the items based on a set of features such as Cost, Availability, Criticality etc. Strategy formulation, the next step, is performed according to the feasibility of each class of stock. Results whatsoever are showcased; and being a Live Project, this method will ultimately be followed after approval from top management.

Dealer Management System (DMS)


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