AN ANALYSIS ON INVENTORY MANAGEMENT AT WHIRLPOOL OF INDIA LTD (WOIL), PUDUCHERRY
WHIRLPOOL CORPORATION HEADQUARTER BENTON HARBOR MICHIGAN,USA
The Company manufactures in 13 countries : • Canada 10. Italy • United States 11. South Africa • Mexico 12. China and • Argentina 13. India • Brazil • Slovakia • Germany • Sweden • France
Whirlpool Vision Every Home… Every where. With Pride, Passion, Performance Their goal is a Whirlpool product in every home, everywhere. They will achieve this by creating :- Pridein their work and each other Passionfor creating unmatched customer loyalty for their brands Performanceresults that excite & reward global investors with superior returns They will bring this dream to life through the power of unique global & their Outstanding people… working together… everywhere.
Whirlpool Mission They will be Demanding of their selves, so as to care for their consumers, Like no other brand does. They will Serve with pride in every Indian home and bring prosperity to their investors.
OBJECTIVES OF THE STUDY To analyse the efficiency of Inventory Management of Whirlpool of India limited. PRIMARY OBJECTIVE : SECONDARY OBJECTIVE : • To identify optimum level of inventory which minimizes the cost. • To identify the safety stock level for various components. • To classify the various components based on its value and movements. • To identity inventory requirement of the company for the next year. • To understand the efficiency of inventory management.
RESEARCH METHODOLOGY Research is a process in which the researcher wish to find out the end result for a given problem and thus the solution helps in future course of action. RESEARCH DESIGN The research design used in this project is Analytical in nature. TOOLS USED IN THE ANALYSIS • Economic Order Quantity • Safety Stock • ABC Analysis • FSN Analysis • Linear Regression Method • Inventory Turnover Ratio
1. FINDINGS FOR ECONOMIC ORDER QUANTITY Variation in the EOQ & no. of unit purchased. Not following EOQ. SUGGESTIONS & RECOMMENDATIONS If they follow according to EOQ, it will reduce the cost & help to enhance the profit.
2. FINDINGS FOR SAFETY STOCK We can able to determine how much the company can hold the inventory in reserve stock per annum. SUGGESTIONS & RECOMMENDATIONS The company must maintains safety stock in order to avoid stock-out (no inventory) conditions & helps in continuous flow.
3. FINDINGS FOR ABC ANALYSIS A Classes - unit value > Rs.100, constitutes 45% of total items. B Classes - unit value Rs. 25-100, constitutes 35% of total items. C Classes - unit value < Rs.25, constitutes 30% of total items. SUGGESTIONS & RECOMMENDATIONS Since A classes constitutes more % than B & C. There should be tight control in inventories- done through continuous check, order frequently, to avoid over investment of Working Capital.
4. FINDINGS FOR FSN ANALYSIS F items are those which moves fastly - constitutes 43% of total items. S items are those which moves slowly - constitutes 57% of total items. N items are those Non moving- according to the given data there is no Non moving. It is not good the co. maintains low % in fast moving items compared to slow items. SUGGESTIONS & RECOMMENDATIONS The company must not go to the Non-moving items as far as possible- unnecessary blockage of WC.
5. FINDINGS FOR TREND ANALYSIS Inventory shows increasing trend from 9.65 to 18.10 in the year 2003 to 2007, the inventory for the year 2008 is expected to be 23.20. This indicates efficiency of management. SUGGESTIONS & RECOMMENDATIONS The company is expecting more inventories for future i.e., 2008. The management is required to maintain the same inventory trend in the forth coming year also.
6. FINDINGS FOR INVENTORY TURNOVER RATIO The ratio shows increasing trend from 1.46 to 4.5 in the year 2003 to 2007 except in the year 2005 which shows only 0.80 times. Whereas velocity shows less in 2007 as compared to the year 2003 which is 81 days and 250 days respectively. This shows that the inventory are easily converted into sales within the shortest period. SUGGESTIONS & RECOMMENDATIONS It requires to maintain high turnover ratio than the lower ratio. A high ratio implies good and efficient business activities.
CONCLUSION Can follow EOQ to optimize inventory with minimum cost. Tight control exercised on stock levels on ABC & high percentage in Fast moving items on FSN. Since inventory turnover ratio shows the increasing trend, there will be more demand for the products in the future.
LIMITATIONS • The entire analysis applies only to Whirlpool India Ltd, Puducherry. • 2. The study takes into account only the quantitative data and the qualitative aspects were not taken into account. • The assumption made in the EOQ and Safety stock formulas restrict the use of the formula. In practice, unit cost, lead time, requirements of inventory items are not accurately predictable. • 4. ABC analysis is not one time exercise and items are to be reviewed and recategorised periodically.
SCOPE OF THE STUDY • It is useful for deciding operating policy & volume of inventory. • 2. It helps to develop the policies for the executives in inventory. • 3. To give plan to the company what to order, when to order and how much to order. • 4. It helps the company what items goods are categorized. • 5. Project helps to deal with forecasting in inventory.