Study of Production Planning and Control System

Study of Production Planning and Control System - Document Transcript

1. INSTITUTE OF MANAGEMENT A REPORT On PRODUCTION PLANNING AND CONTROL IN EICHER TRACTORS, MANDIDEEP Under the guidance of Prof. ……………Search more Project Reports at eNotesMBA Page 1

2. A REPORT ON “STUDY OF PRODUCTION PLANNING AND CONTROL SYSTEM IN EICHER TRACTORS, MANDIDEEP” By …………. A report submitted in partial fulfillment of The requirement of MBA program of GGITM Search more Project Reports at eNotesMBA Page 2

3. ACKNOWLEDGEMENT It is a great sense of satisfaction and a matter of privilege to me to work with Eicher Tractors, Mandideep. I wish to express my heartiest thanks to Mr. ……….., Head of PPC Department, Eicher Tractors, Mandideep for providing me the opportunity to do this project in the esteemed organization.It is my pleasure to thank Mr……….., Executive PPC Department and Mr……….., Assistant manager, Eicher Tractors, Mandideep to whom I owe a lot for giving me time to do my project in this organization. The project would not be a success without the constant and valuable guidance of Ms……….., my project guide, who is rendering all sorts of help as and when required. ………………...Search more Project Reports at eNotesMBA Page 3

4. CERTIFICATE This is to certify that Mr…………., student of MBA 2nd Semester,Institute of Management, has completed his Winter Project on Production Planning and control of Eicher Tractors, Mandideep, under the guidance of Ms………….Date Signature Search more Project Reports at eNotesMBA Page 4

5. Project Title : Production Planning and Control in Eicher Tractors, Mandideep Abstract : The project has been developed to identify the need and importance of PPC i.e. Production Planning and Control in manufacturing industry. Production planning is done with the objective of coordination of materials with suppliers, efficient utilization of people and machines, efficient flow of materials, and communication with customers.Various activities are supported by Production Planning and Control like- Materials Planning, Purchasing, Raw Material,Inventory Control, Capacity Planning, Scheduling Machine and People, WIP Inventory Control, Coordinate Customer Orders,Finished Goods Inventory Control.Production planning and control facilitates in various ways like-optimum utilization of capacity, inventory control, ensures quality,and economy in production time.Production Planning is accompanied with Control Mechanism to ensure desired results. Results are compared with plans, if any deviation is found revision of plan is done. Hence, Production Control is an adjusting process, providing corrective measures for planned development.Search more Project Reports at eNotesMBA Page 5

6. TABLE OF CONTENTS Acknowledgement i Certificate ii Abstract iii 1. Introduction 1.1 Introduction to Eicher Tractors 1.2 Objective of project 1.3 Production Function 1.4 Introduction to PPC 1.5 Steps in PPC 1.6 Sources and methods 2. Main Text 2.1 Company Profile 2.2 Interpretation of data 2.3 PPC at Eicher Tractors, Mandideep 2.4 Process of PPC 2.5 Findings 2.6 Conclusion 2.7Recommendations 3. References 4. Glossary Search more Project Reports at eNotesMBA Page 6

7. INTRODUCTION Search more Project Reports at eNotesMBA Page 7

8. 1. INTRODUCTION1.1 Introduction to Eicher Tractors, Mandideep Eicher began its business operations in 1959 with the roll out of Indias first tractor. Today the Eicher Group is a significant player in the Indian automobile industry with a gross sales turnover of over Rs. 13,700 million in the year 2002-03Eicher tractor has been awarded ISO-14001Today, Eicher Tractors is unbeatable leader in product range of engines in the 22 HP to 32 HP and gensets in the 15 KVA to 30KVA categories.Eicher Tractors, Mandideep is wholly owned subsidiary of Tafe Motors Tractors Ltd.The Eicher Group started in 1948 when the Goodearth Company was set up to sell and service imported tractors in India. Perceiving an urgent need to mechanize Indian agriculture, the Company setup a tractor manufacturing facility i.e. Eicher Tractors Ltd. in 1959in collaboration with Gebr. Eicher, Germany in India.1.2 Objectives of the Study Objective of the study is to prove that the production planning and control practises has impact on the efficient utilization of the resources, waste reduction, reduce waiting time and processing,thus contributing to the profitability of the industry. On these premise the study accentuated to address questions in order to achieve the following objectives:Search more Project Reports at eNotesMBA Page 8

9. (a) To know how the production planning contributes to the efficient use of facilities and equipments. (b) To know the effects of Production Planning and Control on Production function.(c) To know whether production planning and control practises lead to waste reduction and increased profit.(d) To prove that short term production planning and scheduling techniques employed by industries, is necessary in minimizing process and customer waiting time.1.3 Production Function After taking decisions about the type of business, its location,layout etc. the entrepreneur steps into the shoe of production manager and attempts to apply managerial principles to the production function in an enterprise. Production is a process whereby raw material is converted into semi finished products and thereby adds to the value of utility of products, which can be measured as the difference between the value of inputs and value of outputs. Search more Project Reports at eNotesMBA Page 9

10. A Typical Manufacturing Systems Materials SUPPLIERS CUSTOMERS Machines People Raw Materials Finished Products Production function encompasses the activities of procurement,allocation and utilization of resources. The main objective of production function is to produce the goods and services demanded by the customers in the most efficient and economical way.Therefore efficient management of the production function is of utmost importance in order to achieve this objective. Production management involves the managerial decisions regarding design of the product and design of the production system i.e. determination of production processes and production planning and control.1.4 Production Planning and Control Once the entrepreneur has taken the decisions regarding the product design and production processes and system, his next task is to take steps for production planning and control, as this function is essentially required for efficient and economical production.Planned Production is the ability to look ahead, organize and coordinate and having plenty of driving force and capacity to lead and ability to supervise and coordinate work and simulates his associates by means of a program of human relation and organization of employees.Search more Project Reports at eNotesMBA Page 10

11. Production Planning and Control involve generally the organization and planning of manufacturing process. Especially it consists of the planning of routing, scheduling, dispatching inspection, and coordination, control of materials, methods machines, tools and operating times. The ultimate objective is the organization of the supply and movement of materials and labour,machines utilization and related activities, in order to bring about the desired manufacturing results in terms of quality, quantity, time and place.Production planning without production control is like a bank without a bank manager, planning initiates action while control is an adjusting process, providing corrective measures for planned development. Production control regulates and stimulates the orderly how of materials in the manufacturing process from the beginning to the end.Search more Project Reports at eNotesMBA Page 11

12. 1.5 Steps in PPC Production Planning and Control (PPC) is a process that comprises the performance of some critical; functions on either side, viz.,planning as well as control. Production Planning and control Production Planning Production Control Planning Dispatching Routing Following up Scheduling Inspection Loading Corrective Production planning Production planning may be defined as the technique of foreseeing every step in a long series of separate operations, each step to betaken at the right time and in the right place and each operation to be performed in maximum efficiency. It helps entrepreneur to work out the quantity of material manpower, machine and money requires for producing predetermined level of output in given period of time.Search more Project Reports at eNotesMBA Page 12

13. 

Routing Under this, the operations, their path and sequence are established.To perform these operations the proper class of machines and personnel required are also worked out. The main aim of routing is to determine the best and cheapest sequence of operations and to ensure that this sequence is strictly followed. In small enterprises,this job is usually done by entrepreneur himself in a rather adhoc manner. Routing procedure involves following different activities.(1) An analysis of the article to determine what to make and what to buy.(2) To determine the quality and type of material(3) Determining the manufacturing operations and their sequence.(4) A determination of lot sizes(5) Determination of scrap factors(6) An analysis of cost of the article(7) Organization of production control forms. Scheduling It means working out of time that should be required to perform each operation and also the time necessary to perform the entire series as routed, making allowances for all factors concerned. It mainly concerns with time element and priorities of a job. The pattern of scheduling differs from one job to another which is explained as below:Search more Project Reports at eNotesMBA Page 13

14. Production schedule: The main aim is to schedule that amount of work which can easily be handled by plant and equipment without interference. Its not independent decision as it takes into account following factors.(1) Physical plant facilities of the type required to process the material being scheduled.(2) Personnel who possess the desired skills and experience to operate the equipment and perform the type of work involved.(3) Necessary materials and purchased parts.Master Schedule: Scheduling usually starts with preparation of master schedule which is weekly or monthly break-down of the production requirement for each product for a definite time period,by having this as a running record of total production requirements the entrepreneur is in better position to shift the production from one product to another as per the changed production requirements.This forms a base for all subsequent scheduling acclivities. A master schedule is followed by operator schedule which fixes total time required to do a piece of work with a given machine or which shows the time required to do each detailed operation of a given job with a given machine or process.Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved. It is very useful where single or few products are manufactured repeatedly at regular intervals.Thus it would show the required quality of each product and sequence in which the same to be operated Scheduling of Job order manufacturing: Scheduling acquires greater importance in job order manufacturing. This will enable the speedy execution of job at each center point.As far as small scale industry is concerned scheduling is of utmost importance as it brings out efficiency in the operations and reduces cost price. The small entrepreneur should maintain four types of schedules to have a close scrutiny of all stages namely an Search more Project Reports at eNotesMBA Page 14

15. Inquiry Schedule, a production schedule, a shop schedule and an arrears schedule out of above four, a shop schedule is the most important most suited to the needs of small scale industry as it enables a foreman to see at a glance.1. The total load on any section2. The operational sequence3. The stage, which any job has reached. Loading The next step is the execution of the schedule plan as per the route chalked out it includes the assignment of the work to the operators at their machines or work places. So loading determines who will do the work as routing determines where and scheduling determines when it shall be done. Gantt Charts are most commonly used in small industries in order to determine the existing load and also to foresee how fast a job can be done. The usefulness of their technique lies in the fact that they compare what has been done and what ought to have been done.Most of a small scale enterprise fails due to non-adherence to delivery schedules therefore they can be successful if they have ability to meet delivery order in time which no doubt depends upon production of quality goods in right time. It makes all the more important for entrepreneur to judge ahead of time what should bed one, where and when thus to leave nothing to chance once the work has begun.Production control Production control is the process of planning production in advance of operations, establishing the extract route of each Search more Project Reports at eNotesMBA Page 15

16. individual item part or assembly, setting, starting and finishing for each important item, assembly or the finishing production and releasing the necessary orders as well as initiating the necessary follow-up to have the smooth function of the enterprise. The production control is of complicated nature in small industries. The production planning and control department can function at its best in small scale unit only when the work manager, the purchase manager, the personnel manager and the financial controller assist in planning production activities. The production controller directly reports to the works manager but in small scale unit, all the three functions namely material control, planning and control are often performed by the entrepreneur himself production control starts with dispatching and ends up with corrective actions.Dispatching Dispatching involves issue of production orders for starting the operations. Necessary authority and conformation is given for:1. Movement of materials to different workstations.2. Movement of tools and fixtures necessary for each operation.3. Beginning of work on each operation.4. Recording of time and cost involved in each operation.5. Movement of work from one operation to another in accordance with the route sheet.6. Inspecting or supervision of work Dispatching is an important step as it translates production plans into production.Search more Project Reports at eNotesMBA Page 16

17. Follow up Every production programme involves determination of the progress of work, removing bottlenecks in the flow of work and ensuring that the productive operations are taking place in accordance with the plans. It spots delays or deviations from the production plans. It helps to reveal detects in routing and scheduling, misunderstanding of orders and instruction, under loading or overloading of work etc. All problems or deviations are investigated and remedial measures are undertaken to ensure the completion of work by the planned date.Inspection: This is mainly to ensure the quality of goods. It can be required as effective agency of production control.Corrective measures: Corrective action may involve any of those activities of adjusting the route, rescheduling of work changing the workloads, repairs and maintenance of machinery or equipment,control over inventories of the cause of deviation is the poor performance of the employees. Certain personnel decisions like training, transfer, demotion etc. may have to be taken. Alternate methods may be suggested to handle peak loads. Inspection This is mainly to ensure the quality of goods. It can be required as effective agency of production control.Corrective measures Corrective action may involve any of those activities of adjusting the route, rescheduling of work changing the workloads, repairs and maintenance of machinery or equipment, control over inventories of the cause of deviation is the poor performance of the Search more Project Reports at eNotesMBA Page 17

18. employees. Certain personnel decisions like training, transfer,demotion etc. may have to be taken. Alternate methods may be suggested to handle peak loads.1.6 Methodology The study is carried out at Eicher Tractors, Mandideep. Productions officers are likewise selected who serve as the respondents of the study. The study extensively explores both the primary and secondary sources of information.Pertinent information is gathered from the respondents using a structured questionnaire. The structured questionnaire is consists of descriptive questions to get the description of various aspects of Production Planning and Control. The initial questions are to cover the variables characterizing the various production planning and control practises such as demand forecasting, inventory, capacity utilization, and scheduling techniques while the last segment will purely on Control practises.Unstructured personal interview is also conducted in order to augment the responses that may not be explicitly cleared in the questionnaire. Like this the data is properly collected, organized,and presented.Search more Project Reports at eNotesMBA Page 18

19. MAIN TEXT Search more Project Reports at MBA eNotes Page 19

20. 2. MAIN TEXT2.1 Company Profile Eicher Tractors, MandideepThe Eicher Group started in 1948 when the Goodearth Company was set up to sell and service imported tractors in India. Perceiving an urgent need to mechanize Indian agriculture, the Company setup a tractor manufacturing facility i.e. Eicher Tractors Limited in1959 in collaboration with Gebr. Eicher, Germany in India. The first Indian tractor rolled out of Eichers factory at Faridabad in India, in 1960.Today, there are over 4,00,000 Eicher tractors that contribute to the nations agricultural development. Eichers manufacturing and marketing facilities located at Faridabad have been awarded ISO9001 certification.Eicher Tractors has a technology transfer tie-up with Valtra, Inc of Finland. It has an extensive network of over 400 tractor dealers and around 56 engine dealers across India with 15 regional offices and12 depots.Search more Project Reports at eNotesMBA Page 20

21. Committed to providing high quality products, Eicher invests significantly in technology resources and infrastructure. Our manufacturing facilities are spread across three states:Highlights • Wide range of tractors, from 61 HP to 24 HP offering the best value for money. • Product range includes air-cooled and water-cooled engines. • Highly fuel efficient machines, with low maintenance costs. • Conforming to international emission norms.Product range also includes engines in the 22 HP to 32 HP and gensets in the 15 KVA to 30 KVA categories Search more Project Reports at eNotesMBA Page 21

22. Interpretation of Data Q1. Do you think production planning and control is central to the success of any manufacturing unit?If Yes, then how?Options Yes No Response 10 0 No 0% Yes 100% Interpretation All the 100% respondents believe that production planning and control is central to the success of any manufacturing unit.Production planning and control gives direction to the best use of capacity with optimum utilization of production line, resources,and other equipments. It helps in waste reduction and leads to increased profitability.Q2 Capacity planning contributes to the efficient use of facilities and equipments?Search more Project Reports at eNotesMBA Page 22

23. If Yes then how?Options Yes No Response 8 2 Yes 80% No 20% Interpretation Most of the respondents i.e. 80% are in favor of the statement that“capacity Planning contributes to the efficient use of facility and equipments.”Proper Capacity planning leads to optimum utilization of capacity reduces idle time, under or over utilization of capacity.Q3. What are the main objectives of Production Planning? a) Optimum Utilization of Capacity Search more Project Reports at eNotesMBA Page 23

24. b) Inventory control c) Economy in Production Time d) Ensure Quality e) Waste reduction and increased profit Options A b c d E Response 8 6 4 2 10 10 9 8 7 6 5 4 3 2 1 0 a b c d e Interpretation All the respondents believe that waste reduction and increased profit is the main objective of production planning, some of them also believe that optimum utilization of capacity is another objective of production planning.The other objective of production planning is inventory control,economy in production time, and quality insurance.Q4. Production Planning and Capacity Planning are interrelated?Search more Project Reports at eNotesMBA Page 24

25. If yes then how?Options Yes No Response 7 3 Yes 70% No 30% Interpretation Majority of the respondents i.e. 70% believe that production planning and capacity planning are interrelated. Long term Production planning becomes the basis of capacity planning. Size of production and type of production depends on capacity, hence both are interrelated.Q5. Since, capacity can’t always be added or subtracted instantaneously; there will be mismatch of load and capacity.What are its effects? a) Lead time get affected

b) Increase in cost Search more Project Reports at eNotesMBA Page 25

26. c) Hurts the ability to satisfy customers d) Other effects Please specify other effects (if any)Options a b c d Response 0 9 10 2 10 8 6 4 2 0 a b c d Interpretation Almost all respondents believe in the above statement. According to them mismatch in load and capacity, leads to customer dissatisfaction and increase in cost. If the capacity is low and demand is high, orders will not be completed on time. If load is less and capacity is more then requirement it will lead to inefficient use of capacity, hence, cost of production will increase.As lead time is calculated on the basis of available capacity it has no effect on lead time.Other effects can be increase in cost by increasing man power and plant maintenance, and delay in delivery to customers.Q6. On what basis do you plan your production? a) Customer needs (demand) b) Target of Marketing Dept. c) Resources available d) Other factors Search more Project Reports at eNotesMBA Page 26

27. Please specify other factors (if any) Options a b c d Response 8 0 10 0 10 9 8 7 6 5 4 3 2 1 0 a b c d Interpretation According to the data collected from the respondents the production planning of Eicher Tractors, Mandideep is based on customer need i.e. dealers demand for particular models, and also on the basis of resources available.The marketing department reports to the PPC/Store about dealers’requirements. PPC/Store communicates with the material department about availability of material. Hence, market demand and availability of resources is considered as base for production plans. Q7. Do you feel or experienced “hung up” and “bottlenecks” in implementing Production Plans. a) Yes b) No Search more Project Reports at eNotesMBA Page 27

28. If yes then what type of bottlenecks?Options Yes No Response 4 6 No 60% Yes 40% Interpretation Majority of the respondents i.e. 60% are in against of the statement, hence, all the department works in integration. Heads of all the department sits together and prepares plans which are properly applicable.There are people who experienced bottlenecks like- sequence change due to non availability of material, and transforming one model to other due to requirement of specific model.Q8. How do current Production Planning and Capacity Planning methods account for bottle necks. Interpretation Search more Project Reports at eNotesMBA Page 28

29. Current production planning and capacity planning highly depends on material available and material in transit. The non availability of material and delay in transportation of material hinders execution of plans properly. Due to this too many changes in daily and weekly plans takes place.Sometimes lack of coordination between PPC/Store, production department, and Quality control department creates problem of rework and repair.Q9. Previously what measures have been taken to avoid such bottlenecks? Interpretation As the main source of bottleneck is timely not availability of material. So, proper care is taken of the material providers,transportation of material, and inventory of material. Following measures have been taken to avoid such bottlenecks: • Multiple vendors being developed for most of the items. • Proper inventory level is being asked to maintain. • Planning being done with the best availability of material Q10. If results are not according to the plans, what control measures are taken? a) Revision of Plan Search more Project Reports at eNotesMBA Page 29

30. b) Any other measures.Please specify other measures (if any)Options Revision of Plan Other measures Response 10 0 Other Measures 0% Revision of Plan 100% Interpretation If the results are OK wait until next control period. If not OK,revision of plan is required to be done. At present people of Eicher Tractors do not have any other solution except revision of plan to control deviations in plans and results.2.3 Production Planning and Control at Eicher Tractors, Mandideep Search more Project Reports at eNotesMBA Page 30

31. Production plan is crucial to the success of any producing unit; it is an activity which is continues in nature and required to be revised time to time as per the requirements. It can’t be done in isolation by a particular department; rather it is an integrated activity done by Planning and Control Department in collaboration with Material Department, Production Department, and Quality Control Department. The heads of various departments of Eicher Tractors sits together and Plans there monthly, weekly, and daily production.2.4 Process of Production Planning 1. Marketing Department – Monthly details of Market demand Production planning starts from the market details provided by Marketing Department. Marketing Department provides there monthly requirements like- number of tractors, specific models,specific color, capacity etc. 2. PPC/Store – Preliminary Production PlanPPC/Store receives message of monthly requirements from marketing department. PPC studies the requirements and prepare a Preliminary Production Plan. This plan is sent to the Materials Department. 3. Material Department – Material requirements planning A copy of preliminary plan is sent to the material department.Material department studies the plan and prepares a report which shows the availability of material, material in transit, plan of receipt of material in chronological form, expected shortage of Search more Project Reports at eNotesMBA Page 31

32. material, and any other problem related to the material. Materials Requirements Planning (MRP) can be used in more complex systems. MRP determines time-phased requirements (period-by-period) for all purchased and manufactured parts such as raw materials, components, parts, sub assemblies, etc. . This report is sent to the PPC Department 4. PPC–Revision of preliminary Production plan.On the basis of the report sent by material department, the PPC/Store revises the preliminary plan. This revised plan is sent to the marketing department. Marketing department revises the schedule of requirements according to the availability and sequence/schedule of receipt of material. 5. Production Planning and Master Production Scheduling After the consent of marketing department and material department the monthly Production Plan and weekly master production scheduling is done. A copy of main plan and master production schedule is sent to each department. 6. Daily Production Plan Every day in morning the production head, quality head, and material head sits together, discuss there problems, and Search more Project Reports at eNotesMBA Page 32

33. unanimously prepares a daily production plan. This daily production plan is displayed on planning board of every department and at every level of assembly line. This daily production plan shows sequence of operations, sequence and schedule of material movement, post pending material, pre pending material, and shortage of material. This daily plan is automatically get updated with the completion of operations at every level. 7. Control In results are not according to the Daily Plans, the plan is required to be revised. Daily Production Plan is revised number of times considering the material shortages, problems with assembly line,etc. if material is post pending i.e. on assembly line its operation can’t be changed, but, changes can be made in the sequence and scheduling of pre pending material i.e. material in queue. Effortsare made to plan a sequence which minimizes the idle time of assembly line, labour, and other equipments.2.5 Findings Search more Project Reports at eNotesMBA Page 33

34. The PPC department of Eicher Tractors, Mandideep believes in making plans and decisions unanimously, in cooperation with production department, marketing department, material department, and quality control department. So that a feasible plan can be made, executed properly, and optimum results can be achieved. Hence, production planning and control is an integrated activity and can’t be done in isolation by any particular department. Following are the findings of this project about production planning and control activities of Eicher Tractors: 1. Production Planning is an integrated activity and cannot be done in isolation by a particular department. 2. PPC helps in scheduling tasks and production runs and ensures production capacity does not remain idle and there is no undue queuing of tasks via proper allocation of tasks to the production facilities. 3. Proper PPC helps to resort to just- in- time systems and thereby reduce the overall inventory. It enables to ensure that the right supplies are available at the right time. 4. PPC helps to reduce the cycle time and increase the turnover via proper scheduling. 5. PPC provide for adherence to the quality standards so that quality of output is ensured.To sum up we may say that PPC is of immense value to the entrepreneur in capacity utilization and inventory control. More importantly it improves his response time and quality. As such effective PPC contributes to time, quality and cost parameters of entrepreneurial success.2.6 Conclusion Search more Project Reports at eNotesMBA Page 34

35. After doing this project I am in position to conclude that Eicher Tractors, Mandideep has well defined and structured production planning system. PPC defines the sequences and schedules of operations; hence production planning contributes to the efficient use of facilities and equipments. PPC is done to identify production process which leads to reduced lead time; hence customer waiting time is also reduced. PPC ensures optimum utilization of production capacity, material,and other equipments; hence it leads to waste reduction and increased profits.2.7 Recommendations The production planning and control of Eicher Tractors,Mandideep, highly depends on the material availability. In case of shortage of material the overall plan get disturbed. If such problem prevails the optimum results cannot be achieved. To avoid such problem following measures can be taken: a. Proper Materials Planning done, b. Materials must be purchased from multiple vendors, c. Sufficient safety stock must be maintained, d. Lead time and responsibility must be fixed at the part of vendors. 3. REFERENCES Search more Project Reports at eNotesMBA Page 35

36. Books: 1. Harris, g, at tour, s, 2003 The National advertising practises of multinational companies; a content analysis study. European journal of marketing volume 37, no ½; 154-168 2. MacKenzie, I.2004 English for business studies - A curse for business studies and economics students. Cambridge, United Kingdom; 3. Nardi, P.2003. Doing Survey Research – A Guide to Quantitative Method.Websites: 1. www.wikipedia.org 2. www.tmtl.com 3. www.eichertractors.inSearch more Project Reports a t eNotesMBA Page 36