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Report of Project in Sap
Report of Project in Sap
Report of Project in Sap
Traditionally dominated by local players, the industry is seeing a slew of global players
planning to set up new units in India. To match this, intense competition domestic glass
industry has been forced to expand its capacities and diversify into newer areas.
Though there is a great demand for glass, which is growing at around 12 percent, analysts
say, "As far as the glass industry is concerned, the supply will far exceed demand at least till
2015.
The glassware industry is witnessing a boom producing a variety of products ranging from
unbreakable to blended ones and doing a business worth $334 million annually. Harnessing
the latest technologies, the industry offers a wide range of products from toughened,
unbreakable, laminated safety glass, solar control glass to insulating glass which can be used
Though the glass is mostly imported from countries like China, Germany, Belgium and
America, with very few Indian companies involved in the processing business, the industry,
with $478 million in investments in the next five years in the processing segment, is likely to
witness a three-fold increase by 2015, say players in the industry. In the next five years, the
Till recently, the glass segment had been a low involvement commodity as far as the end
consumers are concerned and the knowledge levels are very low in the consumer's mind
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space. The sudden advertising spree has given this industry a new customer face and there is
also an enhanced initiative by the companies to create awareness of the new technologies and
In addition, growing quality consciousness has led to a rapid growth in the float glass
segment, in a market which was pre-dominantly a sheet glass market till six years back. Float
glass currently has 70 percent market share and is driving the growth in the sector. As per
industry estimates, the sector has been growing at 8 percent for the last couple of years and is
The exports market is also looking up for the glass industry. Average growth of exports is
around 37% in glass fiber with 80% of its produce being exported. Given the cheaper cost of
production, India could soon emerge as a major export base for these glass makers, as in the
case of small car manufacturers like Hyundai. For example, Saint Gobain's plant at
Sriperambadur (Chennai) has become the third lowest cost manufacturer among the French
multinational's 29 plants across the world, after Poland and Spain. The engineering cost
under expansion is pegged at half of what it had cost at the time of original investment. This
is because the company now uses Indian engineers, while it had to enlist the services of
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HISTORY:-
Samtel Group's journey began in 1973, with a vision to create a world-class organization.
Today, Samtel Group is India’s largest integrated manufacturer of a wide range of displays
components for displays, machinery and engineering services. The group employs 6000
people in nine world-class factories and has an annual turnover of Rs 12 billion (USD 300M)
Samtel Group has strong design and development skills and is a dependable player with
excellent technological capabilities and a long-term commitment to the display industry. Its
products are known for ruggedness and reliability and conform to the latest relevant quality
standards. The group has excellent relationships with suppliers of key components and the
ability to design new products as well as set up hi-tech manufacturing facilities. Samtel has
registered many patents for developments in display technology and also developed its own
For Samtel, the quest for excellence in all its fields of activity has been a primary objective.
Samtel has been taken to the Pinnacle, is its commitment to Quality in every sphere that
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The success of the group can be largely credited to the Samtel Quality Movement (SQM) in
which the objective is “to create an environment where people strive from within to achieve
customer satisfaction (external & internal) and business excellence with social relevance ".
Coupled with its own efforts and determination, Samtel has maintained high standards by
virtue of its alliances with world leaders like Mitsubishi Electric Corporation, Japan, Corning
Incorporated, USA and Samsung Corning, Korea. The company also lays emphasis on
Progressive Human Resource Management, with a strong focus on training and development
of personnel.
Over the years, the Group has grown to become the largest Indian integrated manufacturer of
a wide range of electronic components like Colour and B&W TV picture tubes, monochrome
display and industrial tubes, Glass parts, Electron Guns, Heaters, Cathodes and Deflection
Yokes.
SAMTEL MISSION:-
Samtel's mission is to be globally the best value provider of Video Display & other chosen
This shall be achieved by creating a culture of self striving with focus on total employee
The approach shall be value based as a responsible member of the society, contributing to its
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SAMTEL VISION:-
excellence impacting nation building & caring for the environment & society.
Here culture will be value driven, self-searching & exploring to develop a mind to their own.
SAMTEL VALUES:-
• TRUST
• TRANSPARENCY
• RESPECT
• CARING
• RISK-TAKING
• AUTONOMY
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SAMTEL BUSINESS PHILIOSOPHY:-
Over the years, Samtel has grown to become a world-class manufacturer of a wide range of
display devices for avionics, medical and industrial applications. Motivated people have kept
spirit of leadership alive – a spirit, which has helped them to capture and sustain a significant
With an eye on future challenges, they have taken initiatives to build their knowledge base.
In addition to this, they are also highly focused on the preservation of our environment – a
systems.
Excellence is the result of hard work and perseverance. Their unquenchable thirst for
excellence has motivated them to set up “The Samtel Quality Movement”. This thirst has
also led them into starting a Six Sigma journey, which is helping them to reduce defects to
negligible levels. A value their customer’s’ appreciate. To provide value to customers, they
to quality in every sphere that determines their existence has helped them to journey on the
road to success.
At Samtel, customer focus took seed during the early years by existing in the minds of all
employees and living through their actions. This resulted in the creation of a pioneering
spirit, which placed them at the cutting edge of technological relevance through the
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launching of new products repeatedly over time, thus leading to the creation of a wide
product range and an ability to maintain regular and timely supplies to customers.
As every day floats away in the mists of time, a new tomorrow is not far away. What they
have achieved so far is only a foundation for tomorrow. With every new dawn, fresh
challenges will emerge and future will depend on ability of employee to create and harness
The objective of the Samtel Quality Movement is to create an Environment where People
strive from within to achieve Customer Satisfaction (external and internal), and Business
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SAMTEL’S DRIVE TOWORDS SIX SIGMA ENVIROMENT:-
DEFINATION OF 6 SIGMA: - The Six Sigma process is capable of giving less than
3.4 defects per million opportunities and helps the company to measure the effectiveness of
Drive towards a Six Sigma environment was launched to align output to the needs of
customers and through these deliver real improvements to our bottom line. At the operational
level, the movement was launched to move the business, product and service attributes at
Samtel within the zone of customer specifications and expectations, by improving the
business systems and processes in an effort to deliver defect free products and services to
customers. This would also considerably reduce rework and waste of both material and
The Six Sigma movement was launched at Samtel in early 2002. The movement is being
implemented in a phased manner across different functions, both technical and commercial.
Many of employees have undergone extensive and rigorous training in Six Sigma techniques
and this has helped them to drive the movement in the company. Here company has taken up
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RESEARCH & TECHNOLOGY:-
Samtel Color is the only Cathode Ray Tube (CRT) manufacturer in India, to have
successfully developed several new display products through an in-house R&D team of
highly qualified and experienced engineers and scientists. The CRT development facility is a
modern, fully equipped tube technology laboratory with its own dedicated pilot line that has
been responsible for the design and launch of a whole range of picture tubes from 14" to 29"
sizes, since 1996. The engineers in the laboratory are now working on the development of
colour avionics tubes. Samtel Color has also developed a capability to design sophisticated
machinery on its own and gained recognition through various awards for indigenization.
To be able to cater to the emerging market for large area flat panel displays, Samtel Color has
set up a dedicated team and facility to develop Plasma Display Panels (PDP). The R&D team
has been aggressively pursuing development of key technologies relevant to thin films, non-
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thermal plasma / gas discharge, microelectronics, power electronics, image processing, video
processing, thermal analysis, materials technology and display electronics to accomplish the
task of development of plasma display panels. The development work on the panels is at an
advanced stage.
Samtel has also invested in the area of emerging technologies for Flat Panel Displays by
setting up the "Samtel Centre for Display Technologies" (SCDT), on the campus of the
Indian Institute of Technology, Kanpur, for the development of Organic Light Emitting
The Samtel Group is also a significant player in the international market for hi-technology
displays for professional applications in the avionics, military, medical and industrial sectors.
avionics CRTs and ruggedized LCD panels for various demanding applications as well as
development of Multi Functional Displays for Avionics. The group is also working to broad
base its product portfolio by migrating from the present scenario in which it supplies only
components to a scenario where it offers its customers reliable and contemporary systems.
The Samtel Group was founded with a vision of building an institution which would achieve
business excellence while contributing to nation building by caring for the society and
environment. In its desire to play a significant role beyond the boundaries of its factories in
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the communities that reside around its plants, the Group founded the Samtel Achrumal
Apart from health services, Samtel has been playing an active role in times of calamity in the
country. Rs. Twenty lakh was donated to the Gujarat Relief Fund after the major earthquake
in the Kutch Region. Medicines worth thousands of rupees were sent to Orissa when that
state was hit by a cyclone. SAMA also supports 'Vijaya', an NGO in Orissa, that is involved
in health care in the tribal belts of the state besides providing safe drinking water to these
Through SAMA, Samtel has provided three mobile medical vans, with trained medical staff,
which are dedicated to providing health care services to the communities around its plants in
SAMA has held a number of medical camps on maternal and child health, immunization,
blood donation and eye care in the last three years because of which over 30,000 people have
benefited.
In collaboration with I Care Hospital, NOIDA and Lion's Eye Hospital, Ghaziabad, the trust
has been conducting eye camps for the detection and surgery of cataracts in patients. In these
camps, patients were also given IOL implants free of cost. In addition to this, SAMA has also
Samtel work continues and their plan to focus their efforts further in the areas of maternal
and child health as well as launch vocational training and income generation programs in the
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ORGANISATION STRUCTURE:-
Satish K. Kaura
Chairman & Managing
Director
Samtel Group
Mr. Lokesh
Upadhyay
Finance
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SAMTEL ACHIEVEMENTS:-
1st to launch 12", 14" and 17" Black & White picture tubes in India.
1st to offer the largest range of 14", 21" FST and 21" F&FST colour picture tubes in
India.
1st to manufacture specialty tubes for industrial, military and medical applications,
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SAMTEL GROUP COMPANIES:-
Samtel Color, the flagship company of the group manufactures the widest range of Colour
TV tubes in India – from 14 inches to 29 inches, and has a capacity of over 10 million picture
tubes per annum., it is the largest tube manufacturer and exporter in the country. Its clients
The first privately owned company in India to manufacture B&W picture tubes. Currently
producing special purpose Cathode Ray Tubes for healthcare industry and military purposes.
Single Largest manufacturer and exporter of B&W TV picture tubes in India engaged in
The only Indian company to make its own heaters & Cathodes producing 8 million guns per
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Samtel Glass Limited, Kota
Incorporated in 1989 as a JV with Corning Incorporated, USA & Samsung Corning, Korea.
The company manufactures over 5.5 million B&W glass shells and funnels for color picture
tubes.
Samtel Electron Devices( Electron Gun Division ) manufactures electron guns for Black &
Started commercial production in July, 1999 enabling the division to manufacture 12.19 lacs
Samtel’s first step in the KPO (Knowledge Process Outsourcing) industry, Samtel
Machinery segments.
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Samtel Electron Devices, GmbH Germany
The company has a large share in the world market for displays for Medical Monitors and
SAMTEL MACHINES
Samtel Machines is a key player in the domain of Industrial Automation and Special Purpose
Automation, Material handling, Special Purpose Machines and Assembly lines, which set the
Machines.
Samtel Thales Avionics is a joint venture between Samtel and Thales, and brings Thales'
leading industry players across the world. The JV will work towards the local development,
production, sale and maintenance of Helmets Mounted Sight & Display (HMSD) and other
Avionics Systems destined for the Indian market. Samtel Thales Avionics will become the
design authority for products and equipment developed and manage them through their entire
life cycle.
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SAMTEL HAL DISPLAY SYSTEMS LTD
Samtel HAL Display Systems (SHDS), a joint venture between Hindustan Aeronautics
Limited (HAL) and Samtel, was created to address the avionics requirements of HAL,
especially cockpit displays of all kinds. SHDS is responsible for system design, development,
manufacturing, MRO and obsolescence management of display systems, ATE and IADS for
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MANUFACTURING LOCATIONS:-
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CHAPTER-II
CONCEPTUAL FRAMEWORK
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Supply Chain Management:
Supply chain management (SCM) is the term used to describe the management of the low of
materials, information, and funds across the entire supply chain, from suppliers to component
producers to final assemblers to distribution (warehouses and retailers), and ultimately to the
consumer. In fact, it often includes after-sales service and returns or recycling In contrast to
SCM typically involves coordination of information and materials among multiple firms.
Supply chain management has generated much interest in recent years for a number of
reasons. Many managers now realize that actions taken by one member of the chain can
influence the profitability of all others in the chain. Firms are increasingly thinking in terms
of competing as part of a supply chain against other supply chains, rather than as a single
firm against other individual firms. Also, as firms successfully streamline their own
operations, the next opportunity for improvement is through better coordination with their
suppliers and customers. The costs of poor coordination can be extremely high.
employing many quantitative and qualitative tools. Within the last few years, several
textbooks on supply chain have arrived on the market providing both managerial overviews
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The major components of SCM:
Location
Supply
Inventory
Production
Transportation
Information
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Location:
Location pertains to both qualitative and quantitative aspects of facility location decisions.
This includes models of facility location, geographic information systems (GIS), country
differences, taxes and duties, transportation costs associated with certain locations, and
government incentives. Exchange rate issues fall in this category, as do economies and
diseconomies of scale and scope. Decisions at this level set the physical structure of the
supply chain and therefore establish constraints for more tactical decisions.
It is the strategic placement of the production plants. Distribution and stocking facilities,
understand customer markets, perform locating decisions for production and stocking
facilities.
Supply:
Sourcing and supplier management looks upstream to suppliers. Make/buy decisions fall into
this category, as does global sourcing. The location category addresses the location of a
firm’s own facilities, while this category pertains to the location of the firm’s suppliers.
Supplier relationship management falls into this category as well. Some firms are putting part
specifications on the web so that dozens of suppliers can bid on jobs. GE, for instance, has
developed a trading process network that allows many more suppliers to bid than was
possible before.
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The automotive assemblers have developed a similar capability; and independent Internet
firms, such as Digital Market, are providing services focused on certain product categories.
Determining the number of suppliers and the best way to structure supplier
procurement.
Inventory:
Inventory includes traditional inventory and forecasting models. Inventory costs are some of
the easiest to identify and reduce when attacking supply chain problems. Simple stochastic
inventory models can identify the potential cost savings from, for example, sharing
information with supply chain partners, but more complex models are required to coordinate
multiple locations.
Supply chains, unfortunately, confront the problem of multiple firms, each with its own
decision maker and objectives. The concept of an imputed penalty cost, wherein a shortage
at a higher echelon generates an additional cost. This cost enables us to decompose the
multiechelon system into a series of stages so that, assuming centralized control and the
managers that allow for decentralized control (so that each manager makes decisions
independently), and in certain instances, local information only. The result is a solution that
achieves the same optimal solution as if we assumed centralized control and global
information.
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In this the following decisions are to be taken as how much inventory and where to store,
analysis of fluctuations in demand, identifying the optimal storage location and stock levels
Production:
Production deals with design issues for mass customization, delayed differentiation,
modularity and other issues for product. This deals with the decisions related to the
production like how much to produce, for whom to produce, when to produces. With the
increasing supply chain demands of product variety and customization. One of the most
exciting applications of "supply chain thinking" is the increased use of postponed product
nightmare. Using postponement the product is redesigned so that it can be customized for
local tastes in the distribution channel. The same generic product is produced at the factory
It deals with what customer and market demand, resource management, internal sourcing,
Transportation:
The transportation encompasses all issues related to the flow of goods through the supply
chain, including transportation, warehousing, and material handling. This category includes
vehicle routing . Also included are topics in warehousing and distribution and materials
handling technologies for sorting, storing, and retrieving products Because of globalization
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and the spread of outsourced logistics, this category has received much attention in recent
years.
outsourcing and logistics alliances. Both deterministic (such as linear programming and the
traveling salesman problem) and stochastic optimization models (stochastic routing and
transportation models with queueing) often are used here, as are spreadsheet models and
qualitative analysis. Recent management literature has examined the changes within the
logistics functions of many firms as the result of functional integration and the role of
Mode of Transport
• Road
• Air
• Sea
Information:
Information deals with information flow structure i.e. how the information show be flow
within and outside the organization so that the action can be speed up. It is obtaining, linking
and leveraging information across the supply chain. It can be done by connecting computers
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SAP
Introduction
SAP the company was founded in Germany in 1972 by five ex-IBM engineers. SAP stands
for Systems, Applications, Products in Data Processing. It is product of company SAP AG.
SAP is an acronym for "System Application & Products" which creates a common
centralized database for all the applications running in an organization. The application has
been assembled in such a versatile way that it handles all the functional department within an
organization. Today major companies including Microsoft, IBM, Samtel are using SAP's
R/2, which ran on a Mainframe architecture, was the first SAP version. Sap's products are
generally focused on Enterprise Resource Planning (ERP). Sap's applications are built around
R/3 system which provide the functionality to manage product operations, cost accounting,
assets, materials and personnel. The R/3 system of SAP runs on majority of platforms
particular department. When someone finally realized that benefits could be had by
linking these systems together, interface heaven was born. There are some companies
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2. (assuming of course that there is someone around who understands how they work!).
Sweeping them away and replacing them with an integrated system such as SAP can
save much money in support. Of course, if you have a burning platform as well the
3. Enabling business process change – From the start, SAP was built on a foundation of
process best practices. Although it sounds absurd, it is probably easier (and less
expensive) to change your companies processes to adapt to SAP than the other way
around. Many companies have reported good success from combining a SAP
4. Competitive advantage – The CFO types around have heard this old saying from the
CIO types for many years now. The question still has to be asked … can you gain
• being able to consolidate purchase decisions from around the globe and use
that leverage when negotiating with vendors has gotta help and being able to
place kiosks in stores where individual customers can enter their product
specifications and then feed this data directly into it’s production planning
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Implementing SAP is expensive. No doubt about it. But the potential rewards can dwarf the
costs (and have for many existing customers already). One customer reportedly made enough
savings on the procurement of a single raw material to pay for the entire enterprise-wide SAP
implementation.
The major drivers of the total implementation cost are the Timeframe, Resource
… but this was for a tiny company with very few users and no changes to the
delivered SAP processes. At the other end of the scale you get the multi-nationals
who are implementing SAP over 5 to 10 years. These are not necessarily failures …
many of them are planned as successive global deployments (which seem to roll
around the globe forever). Of course the really expensive ones are those we don’t
hear about! For the most part, you should be able to get your (single instance) project
2. People – The smallest of SAP implementations can get done on a part-time basis
without outside help. The largest swallow up hundreds of people (sometimes over a
thousand) and include whole armies of consultants. This adds up fast. Again, get that
business case out. The types of people you will need run the range from heavy duty
3. Hardware – The smallest of SAP implementations probably use only three instances
(boxes) … one for the production system, one for test, and one for development. The
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largest implementations have well over 100 instances, especially if they involve
Modules of SAP:
3. Controlling (CO)
Sales and Distribution( SAP SD): This is the module which is used to manage
• RFQ
• Sales orders
• Pricing
• Packing
• Shipping
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Some of the main SAP SD transactions are:
Financial Accounting (SAP FI): It is the SAP Module where regulatory or statutory
data is tracked and managed. The SAP FI Module has the capability of meeting all the
accounting and financial needs of an organization. It is within this SAP FI Module that
Financial Managers as well as other Managers within your business can review the financial
position of the company in real time as compared to legacy systems which often times
require overnight updates before financial statements can be generated and run for
management review
Controlling(SAP CO): It is the SAP Module which allows you to perform your
information to Management for the purpose of planning, reporting, as well as monitoring the
operations of their business. Management decision-making can be achieved with the level of
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· Cost Element Accounting
· Internal Orders
· Profitability Analysis
Human Resources(SAP HR): This is the module which helps you optimize your HR
• Employment history
• Payroll
• Training
• Career management
• Succession planning
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Advanced Business Application Programming (SAP ABAP): This is the is the
• Requisitions
• Purchase orders
• Goods receipts
• Accounts payable
• Inventory management
• BOM’s
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Business Warehouse(SAP BW ): and this is the module which delivers the SAP
enterprise data warehousing solution. From SAP Netweaver 7.0 in fact, SAP BW is now
known as SAP BI (or SAP Netweaver Business Intelligence) ... with sub modules Data Mart
(BI-D) and Mixed Load (BI-MXL) ... but most people still use the term SAP BW, which
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CHAPTER-III
MATERIAL MANAGEMENT
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Material Management:
Ø Purchase Management
Ø Contract Management
Ø Sales Management
Ø Inventory Management
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Procurement
Procurement (In flow) is purchasing the material which is required for in the organization.
Identification of Suppliers
Selection of Suppliers
Negotiation
Ordering
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Procurement
-Follow-up with vendor
-Follow up with transporter
Store
-Enter of the inflow material
-Keeping stock of material.
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Material Requirement Planning:
In this planning of the material required is done. The decision depends on the demand of the
1. Raw material: These are the material which is required on every day basis. These
materials are very important for the working of plant if there is no raw material or
So, material like these is to be ensured by the company and the vendor that it will be
supplied regularly in the required amount. In planning of raw material the important
decision to be taken is how much amount of raw material should be stored so that
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there is no time of criticality. By such planning of raw material will ensure uninterrupted
production.
2. Spares Parts: The purchase of the spare parts depend on the requirement of the user. In this
the critical items or parts of the machine are identified which are very important and which
are to be stocked so at the time of break down it can be used and plant can be resumed
This is very important step because in this decision are taken on the amount of inventory
to be stocked if huge amount of material is stocked then much amount of money will be
blocked in the material and if small amount of stock is kept then it can affect the
production of the plant. So, a tradeoff is to be kept between the quantity and money for
uninterrupted production.
Identification of Suppliers:
This step deals with the development or searching of new vendor for the purchase of the
material. For this various sources are used like internet, yellow pages, reference from some
person, magazines.
This step is necessary to decrease dependency on any particular vendor, by searching new
vendor we can increase the quality of the material which we are buying.
Selection of Suppliers:
This step deals with selection of the suppliers or vendor. The selection of the vendor depends
on various things
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2. Material of new vendor is according to the specification and up to the quality
required by user.
3. The amount charged by vendor is appropriate or not. Is there any other vendor
Negotiation:
This is discussion between the supplier and the purchaser. In this they discuss on the terms
and conditions, price of the vendor. In this both the persons try to make enforce conditions
and maximize there own profits. But in this both has to come with terms and conditions that
benefits both.
1. The make(brand) of the products i.e. the products should of the particular brand or
company.
3. Credit terms i.e. money should be given in 100%advance or 50% advance or on credit.
4. Lead time i.e. in how many days the products will be delivered.
6. Delivery terms i.e. product will be delivered to our purchaser office or purchaser has to
arrange transportation.
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Ordering:
When terms and conditions are settled down between both the parties. Then the purchaser
party gives the purchase order (PO) to the vendor. In the PO every settled condition are
mentioned.
Procurement:
When PO is issued to the supplier then a follow up is done to the supplier where it is ensure
Store:
When material is received in the company campus first the gate entry is done and goods
receive note is issued. Then material is send to the store there physical verification is done to
ensure the quantity of the received material and material is passed as ok and send to the
If material received find up to the quality then it is accepted and not then it is rejected.
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CONTRACT MANAGEMENT:
the terms and conditions in contracts and ensuring compliance with the terms and conditions,
as well as documenting and agreeing any changes that may arise during its implementation or
contract creating, execution, and analysis for the purpose of maximizing financial and
Common commercial contracts include employment letters, sales invoices, purchase orders,
and utility contracts. Complex contracts are often necessary for construction projects, goods
or services that are highly regulated, goods or services with detailed technical specifications,
Contracts
A contract is a legally binding agreement between the parties identified in the agreement to
fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for
the enforcement of a contract, amongst other things, is the condition that all the parties to the
Contracts can be of many types sales contracts (including leases), purchasing contracts,
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• A sales contract is a contract between a company (the seller) and a customer that
where the company agrees to sell products and/or services. The customer in return is
partnership between two legal entities such that they regard each other as 'partners' in
business-expression to reflect the desire of the contracting parties to act 'as if' both are
in a partnership with common goals. Therefore, it might not be the common law
the United States, typically exercises purview over the following business disciplines:
• Baseline management
• Commitment management
• Communication management
• Document management
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• Growth (for Sales-side contracts)
• Transaction compliance
Change management
There may be occasions where what is agreed in a contract needs to be changed later on. A
number of bases may be used to support a subsequent change, so that the whole contract
• A mutual agreement of both parties to vary the contract, outside the framework of the
existing contract. This would be an independent basis for changing the contract.
• A unilateral decision to vary the contract, contemplated and allowed for by the
existing contract. This would normally have notice periods for fairness and often the
enabling the other party to terminate the contract and seek damages.
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• A bilateral decision to vary the contract, within the variation or change control
process outlined in the existing contract. These are often called change control
provisions.
A business contract should be labeled "contract" or "agreement" at the top. These are some
• Date of contract
• Payment amounts
• Payment due dates. Note that payments do not need to be made in a lump sum at the
end of the project. You can make or receive incremental payments for specific
• Deadlines for services due. This is also called a "time is of the essence" clause. You
will probably want to use this phrase in your contract if you have a timeline for a
project.
• Damages for breach of contract. Also called "liquidated damages," this clause can
specify amounts to be paid if services are incomplete or deadlines are missed. A court
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can also award damages if a contract is breached, even if damages and amounts were
• Termination conditions
• Signatures
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CONTRACT MANAGEMENT FOR PROCUREMENT
While procurement is a critical business function for every company, senior management
often misunderstands it. In general, procurement is usually viewed as a cost center, which
The primary function of the procurement professional is to evaluate and select suppliers
based on availability, reliability and price in order to obtain the highest quality products (or
services) at the best possible price. In order to achieve this goal, purchasing personnel need
contract law. They also need to be able to access and interpret large amounts of data in a
procurement function.
The vast majority of these early adopters have focused on ways to automate the procurement
process itself, such as in the areas of high volume-low value purchases, online catalog access,
and internal purchasing approvals. But in reality, improving these processes was the easy
part. These systems have not helped the procurement professional manage suppliers, which is
the heart of the job. Many companies still must deal with numerous problems related to the
procurement function — problems that until recently had no easy solution. The most
• The belief that it is not worth the effort to create a contract when executing a spot buy;
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Lack of easy access to contract information;
• The time required to correct problems that occur when a supplier is not in compliance with
the contract.
A comprehensive contract data repository should be created that allows the procurement
professional to identify the right supplier for the right purchasing need quickly and easily.
This leads to increased procurement efficiency and a reduction in time spent on sourcing a
supplier. It also improves the operation of the company's supply chain as delays associated
A system that identifies off-contract purchasing requests quickly and automates the
establishment of new contracts for spot purchases should be created. This reduces the costs
associated with off-contract spot buys and give the company leverage in case of disputes that
Identify sources of alternative supply quickly. A comprehensive contract data repository and
case of an unanticipated shortage. This leads to the reduction of both costs and time invested
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company's supply chain as delays associated with identifying a supplier are reduced or
eliminated.
By creating a repository with all contract information stored in digital format and the tools to
quickly sort and search this data, the procurement department will no longer have to conduct
current contracts. This improves the department's efficiency and effectiveness as well as
continually measuring supplier compliance to the terms of contracts, companies can identify
problems at an early stage. This gives the procurement department the ability to correct
problems before they become significant, as well as shift purchasing activity to suppliers that
that perform best to contract, the company reduces the cost of multi-supplier.
By creating a repository with all contract information, the procurement department can
monitor contract compliance at the transaction level. Adherence to contract terms such as
pricing breakpoints can be continuously monitored. This minimizes the costs associated with
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Rationalize supplier base
By using supplier execution data generated through procurement activities and comparing
this to contract data, the company can make quantitative supplier performance comparisons.
frequent low to mid-value purchases, the procurement department can devote resources to
more strategic activities. This helps the company realize a better return on investment in
“Contract Management for SAP” is a robust and scalable enterprise contract management
solution. The high level of integration and interaction with existing building blocks make this
“Contract management for SAP” enables organizations to eff ectively manage contracts,
reduce contract management costs, streamline the workfl ow and guarantee proper
assignment of internal responsibilities and costs. In addition, it becomes the corner stone for
It seamlessly integrates as add-on into your existing SAP landscape. Existing SAP elements
such as User Authorizations, Archive Link interface, Organizational Model and existing
(internal orders, cost centers, purchase orders etc.) are reused and tightly integrated.
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Trained SAP users will notice some additional transactions and naturally start working with
them. The contract management platform can be extended with user-fi elds and is built to
predetermined conditions. These are valid for a certain period of time and cover a predefined
In Specific dates or quantities for individual deliveries are not set out in the outline
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schedules (comprising a number of individual schedule lines), depending on the type of
Quantity contract – this type of contract is regarded as fulfilled when the agreed total
quantity has been supplied on the basis of individual release orders issued against the
contract.
Value contract – this type of contract is regarded as fulfilled when the agreed total value has
been supplied on the basis of individual release orders issued against the contract.
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• The items of a contract can relate to a single plant or all the plants covered by a purchasing
• Distributed contracts are centrally agreed contracts that are made available to other R/3
• Contracts are outline agreements. They do not contain details of the delivery dates for each
of the items.
• To inform vendors of which quantities you need for which date, you enter contract release
orders for a contract. A release order is a purchase order that references a contract.
• If an info record with conditions exists for the material and the vendor, the system
automatically suggests the net price according to these conditions when you create the
contract item.
performance of services.
• You can create contracts manually. When doing so, you can reference other contracts,
• One of the things you define in the contract header is the validity period.
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SALE:
Sale (out flow) of material is the delivery of the product manufactured in the plant. For this
there is a dedicated department called sale and logistic department. The main function of this
department is:
Production
Quality Check
Packing
Transportation
Sales invoice
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INVENTORY MANAGEMENT
Inventory to many business is one of the more visible and tangible aspects of doing
business. Raw materials, goods in process and finished goods all represent various forms of
inventory. Each type represents money tied up until the inventory leaves the company as
purchased products. Likewise, merchandise stocks in a retail store contribute to profits only
stocks represent a large portion of the business investment and must be well managed in
order to maximize profits. In fact, many small businesses cannot absorb the types of losses
arising from poor inventory management. Unless inventories are controlled, they are
INVENTORY MANAGEMENT
Inventory management involves balancing the costs of inventory with the benefits of
inventory. Many small business owners fail to appreciate fully the true costs of carrying
inventory, which include not only direct costs of storage, insurance and taxes, but also the
cost of money tied up in inventory. This fine line between keeping too much inventory and
! Maintaining a wide assortment of stock -- but not spreading the rapidly moving ones too.
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! Obtaining lower prices by making volume purchases -- but not ending up with slow-moving
inventory; and
! Having an adequate inventory on hand -- but not getting caught with obsolete items.
The degree of success in addressing these concerns is easier to gauge for some than for
others. For example, computing the inventory turnover ratio is a simple measure of
managerial performance. This value gives a rough guideline by which managers can set goals
and evaluate performance, but it must be realized that the turnover rate varies with the
function of inventory, the type of business and how the ratio is calculated (whether on sales
or cost of goods sold). Average inventory turnover ratios for individual industries can be
One of the most important feature of inventory control is to have the items in stock at the
moment they are needed. This includes going into the market to buy the goods early enough
to ensure delivery at the proper time. Thus, buying requires advance planning to determine
inventory needs for each time period and then making the commitments without
procrastination.
For retailers, planning ahead is very crucial. Since they offer new items for sale months
before the actual calendar date for the beginning of the new season, it is imperative that
buying plans be formulated early enough to allow for intelligent buying without any last
minute panic purchases. The main reason for this early offering for sale of new items is that
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the retailer regards the calendar date for the beginning of the new season as the merchandise
date for the end of the old season. For example, many retailers view March 21 as the end of
the spring season, June 21 as the end of summer and December 21 as the end of winter.
Part of your purchasing plan must include accounting for the depletion of the inventory.
Before a decision can be made as to the level of inventory to order, you must determine how
For instance, a retail firm must formulate a plan to ensure the sale of the greatest number of
units. Likewise, a manufacturing business must formulate a plan to ensure enough inventory
Well planned purchases affect the price, delivery and availability of products for sale.
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CONTROLLING YOUR INVENTORY
necessary to establish adequate controls over inventory on order and inventory in stock.
There are several proven methods for inventory control. They are listed below, from simplest
to most complex.
! Visual control enables the manager to examine the inventory visually to determine if
used, records may not be needed at all or only for slow moving or expensive
items.
! Tickler control enables the manager to physically count a small portion of the inventory
each day so that each segment of the inventory is counted every so many days
on a regular basis.
! Click sheet control enables the manager to record the item as it is used on a sheet of paper.
! Stub control (used by retailers) enables the manager to retain a portion of the price ticket
when the item is sold. The manager can then use the stub to record the item
As a business grows, it may find a need for a more sophisticated and technical form of
inventory control. Today, the use of computer systems to control inventory is far more
feasible for small business than ever before, both through the widespread existence of
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computer service organizations and the decreasing cost of small-sized computers. Often the
justification for such a computer-based system is enhanced by the fact that company
! Point-of-sale terminals relay information on each item used or sold. The manager receives
! Off-line point-of-sale terminals relay information directly to the supplier's computer who
buyer/inventory manager.
The final method for inventory control is done by an outside agency. A manufacturer's
representative visits the large retailer on a scheduled basis, takes the stock count and writes
the reorder. Unwanted merchandise is removed from stock and returned to the manufacturer
A principal goal for many of the methods described above is to determine the minimum
possible annual cost of ordering and stocking each item. Two major control values are used:
1) The order quantity, that is, the size and frequency of orders
2) The reorder point, that is, the minimum stock level at which additional quantities are
ordered.
The Economic Order Quantity (EOQ) formula is one widely used method of computing the
minimum annual cost for ordering and stocking each item. The EOQ computation takes into
account the cost of placing an order, the annual sales rate, the unit cost, and the cost of
carrying inventory.
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INVENTORY MANAGEMENT IN SAP
and value basis, as well as the planning, entering, and proof of goods movements. It
Logistics.
Invoice Verification.
ü In the standard procurement process, you purchase a material from a vendor and it is
then delivered to you. Once they have been delivered, the goods belong to the
customer, i.e. your company. In special procurement, goods do not necessarily flow
from the vendor to the customer. The R/3 System supports various forms of special
ü If you have created a purchase order to procure a material, it is important for all
departments concerned that the goods receipt references this purchase order. The
system can check, for example, whether the material delivered is the same as the
material ordered, whether the purchase order quantity corresponds to the goods
receipt quantity or whether the shelf life is still guaranteed for highly perishable
goods (when the shelf life expiration date check is active for the associated material).
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ü The purchase order history for a purchasing document item is also updated when a
goods receipt is posted with reference to a purchase order. This enables the buyer to
ü Several goods receipt items can be entered for a purchase order item in one
operation. This is advisable if, for example, the material is delivered in batches or is
distributed between several storage locations. You enter the goods receipt data in a
ü If the delivery note accompanying the goods receipt does not contain a purchase
order number, you can, for example, use the material number or the vendor number
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ü The movement type is a three-digit key to differentiate between goods movements in
the R/3 System. Examples of these goods movements are goods receipts, goods
System. Together with other influencing factors, the movement type determines,
among other things, which stock or consumption accounts are updated in Financial
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Accounting. The movement type also determines the structure of the screen when
the proof that a transaction involving stock changes has taken pla ce. Documents are
stock changes.
ü If internal or external accounting are affected by the material movement, then at least
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ü As soon as a goods movement is posted, the quantities, material, movement type and
organization level can no longer be changed. You can only change the text. If you want
to correct errors, you must create a new document. You can reverse or cancel the
incorrect document.
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CHAPTER-III
RESEARCHMETHODOLOGY
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RESEARCH METHODLOGY
Firstly a project on the material management with reference to Samtel Glass Ltd. was
research methodology:
DATA COLLECTION:-
Primary data
Secondary data
Ø Books
Ø Internet
Ø Manuals
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LIMITATIONS:-
• Some confidential Data are removed as per the company polices like agreement
Global glass market trend presently show that the demand supply gap has shrunk due to shut
down major glass plants all over the world. The decline in global CRE market has now
Samtel Glass team under the leadership of Mr. Uttam Bose able to grab the opportunities
available in external market by drawing on its internal strength to swiftly adopt itself to meet
The need for conceiving & pursuing a turnaround strategy was focused on both the
enhancement of value & production volume. In an environment in which the price of major
inputs
STRENGTH:-
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WEAKNESS:-
v Marginal profits.
v Increasing trend in price of major raw material like Litharge, neck tubing.
OPPORTUNITIES:-
THREATS:-
v Dependency on Samtel color (sell more than 95% of funnel to Samtel color.
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CHAPTER-V
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FINDINGS:-
Ø The amount of material depends on the requirement of the user and store.
ü Quality of material
ü Quantity of material
ü Payment terms
ü Price of material
ü Unavailability of funds
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Ø Accept raw material, material are not stocked for more than two days
ü Urgency of material
SUGGESTIONS:-
Ø The work in purchase department should be divided on the basis of the work like
Ø User should interact with only one person in purchase department which will ensure
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CHAPTER-VI
APPENDIX
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DATA COLLECTION FORM / QESTIONNAIRE
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REFERENCES:
1. Supply Chain Management: Concepts, Techniques and Practices by Ling Li, PhD,
2. Study material provided by the SAP R/3 System TAMM40 Materials Management
3. http://www.answers.com/topic/inventory
4. http://searchcio.techtarget.com/supplychainmanagement.html
5.http://en.wikipedia.org/wiki/supply_chain_management#supply_chain_management_
problems
6. http://lcm.csa.iisc.ernet.in/scm/coimbatore/node2.html
7. http://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html
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