Summer Internship Project Report Resource Optimization ...Volvo CE, Bengaluru PGDM (E-Biz) Operations 2016-18, We School, Bengaluru EXECUTIVE SUMMARY This Project report on ‘Resource

Page No.-1 Volvo CE, Bengaluru PGDM (E-Biz) Operations 2016-18, We School, Bengaluru

Summer Internship Project Report

“Resource Optimization study in warehouse”

(Material Management)

SUBMITTED BY

VISHAL THAKUR

PGDM E-BUSINESS 2016-18 TRIMESTER IV

SPECIALISATION: OPERATIONS MANAGEMENT

ROLL NO.-32

UNDER THE GUIDANCE OF:

Mr. Dharmendra Pandey

Deputy General Manager

Volvo CE


Table of Contents

Sr. No. Description Page No.

1. Acknowledgement 03

2. Certificate 04

3. Executive summary 05

4. Company Profile 06

5. Volvo Group Organization 08

6. Volvo Construction Equipment 10

7. Volvo Products 8

8. Volvo Production System (VPS) 9

9 Basics in Material Management 10

10. GRN – Good Receipt Note 12

11. Material Handling Process 15

12. 5S Methodology 30

13. Time Study 35

14. Conclusion 37

15. References and Bibliography 38


ACKNOWLEDGEMENT

The satisfaction and delight that accompanies the successful completion of any task

would be incomplete without mentioning the people who are involved in it, whose

relentless guidance and encouragement crown all our efforts with success.

Therefore, I would like to thank all of them who have supported us in completing

this project successfully.

Our special thanks to Prof. Alex Nero, Professor, Welingkar Institute of

Management Research and Development for granting us permission to carry out our

academic project at Volvo Construction Equipment, Peenya, Phase-1, Bengaluru -

560058.

We express profound sense of gratitude to our respected guide Mr. Dharmendra

Pandey, Deputy General Manager – Material Management head for his valuable

insights and support throughout the tenure of the project.


CERTIFICATE


EXECUTIVE SUMMARY

This Project report on ‘Resource Optimization study in warehouse”’ is the complete

analysis of the Material handling process at the Volvo Construction Equipment’s

shop floor.

All the issues happening in that are completely studied from the process to process

which is described in detail in this report and the issue is rectified using time study

methodology and viable solutions are suggested to avoid and control the issue

thereafter.

We had to do the time study analysis in all stations and to suggest new ideas to

eliminate non value added time.


COMPANY PROFILE - VOLVO GROUP

Volvo Construction Equipment

The Volvo Group is one of the world’s leading manufacturers of trucks, buses,

construction equipment and marine and industrial engines. The Group also provides

complete solutions for financing and service.

The Volvo Group, with its headquarters in Gothenburg, employs about 100,000

people, has production facilities in 19 countries and sells its products in more than

190 markets.

In 2014 the Volvo Group’s net sales amounted to about SEK 283 billion. The Volvo

Group is a publicly-held company. Volvo shares are listed on Nasdaq Stockholm.

Although the two firms are still often conflated, Volvo Cars, also based in

Gothenburg, has been a totally separate company since it was sold off in 1999. The

companies still share the Volvo logo and co-operate in running the Volvo Museum.

Volvo was established in 1915 as a subsidiary of SKF, the ball bearing

manufacturer.


Vision

The Volvo Group's vision is to become the world leader in sustainable transport

solutions by:

Creating value for customers in selected segments

Pioneering products and services for the transport and infrastructure industries

Driving quality, safety and environmental care

Working with energy, passion and respect for the individual

Core Values

Quality

Safety

Environmental care

The values have a long tradition and permeate our organization, our products and

our way of working. Our goal is to maintain a leading position in this area.


Volvo Group Organization

The Volvo Group’s various operations are organized to deliver the greatest possible

focus on customers and their needs, and to exploit and harness the Group’s far-

reaching and shared resources in the best possible way. Truck operations account for

almost two-thirds of the Group’s total turnover

In addition to truck operations there are other business areas:

Construction Equipment - Manufactures a number of different types of

equipment for construction applications and related industries.

Buses - City and intercity buses, coaches and chassis.

Volvo Penta - Market leader in marine and industrial engines

Governmental Sales - Sales to government agencies and organizations.

Volvo Financial Services- Delivers competitive financial solutions to Volvo

Group customers.

The Volvo Group appreciates the value of sound corporate governance as a

fundamental base in achieving a trusting relation with shareholders and other

key parties.


VOLVO CONSTRUCTION EQUIPMENT

Volvo Construction Equipment manufactures equipment for construction

applications and related industries all over the world. The operation includes the

Volvo and SDLG (Lingong)brands. Volvo Construction Equipment is the world’s

leading manufacturer of articulated haulers and wheel loaders and one of the

leading manufacturers of excavator equipment, road development machines and

compact construction equipment. Volvo CE has production plants in ten countries

and offers more than 150 different product models to meet the construction

equipment needs of demanding customers all over the world.

SDLG (Shandong Lingong Construction Machinery Co) is a Volvo Joint Venture in

China owned to 70 percent by Volvo CE. SDLG develops, manufactures and

markets a broad range of products including wheel loaders, excavators, backhoe

loaders and road rollers. The company has a nationwide distribution and service

network in China.


Volvo Products

Volvo Construction Equipment's extensive product range includes loaders,

backhoes, excavators, small excavators, artics, forestry carriers, demolition

machines, high reach demolition machines and pipe layers

Road building machines from motor graders and milling equipment to

compactors, double drum compactors, single drum compactors and pavers,

tracked pavers

Powered by fuel-efficient, environmentally compliant Volvo engines

Simplified service access for fast maintenance and more uptime

All-day comfort, safety and command from legendary Volvo Care Cabs

Equipment built with quality for long life and high residual value


VOLVO PRODUCTION SYSTEM (VPS)

Volvo Production System

Volvo Production System (VPS) serves as the source of common principles and

practices. The overall vision of VPS is: “An organization where we continuously

improve quality, delivery and productivity, in everything we do.”

VPS is also a toolkit, including methods such as Six Sigma – reduction of unwanted

variation in processes, and Lean – elimination of wasted time and material that help

create value for our customers through increased Quality, Delivery Precision and

Cost-efficiency.

With the Volvo core value “Quality” as foundation, the 5 principles of the Volvo

Production System are:


Process stability

Teamwork

Built-in quality

Just-in-time

Continuous Improvement

Teamwork means creating a sound organization where all employees are involved

in the improvement process contributing to achievement of our goals and strategic

objectives. This is where everyone’s experience, knowledge and creativity is put in

play.

Process Stability means reducing all kinds of variability and waste in our processes

to make them predictable and efficient. Deep knowledge and understanding of the

operation is essential for succeeding as we strive for process stability. 9

Built-in Quality means doing things right the first time, detecting and correcting

problems at the point of origin. We move towards zero-defects by having the

mindset of not accepting bad quality, being proactive, and eliminating root causes.

Just-in-Time means producing and conveying what is needed, when it is needed, in

the amount needed in the shortest possible lead-time. The mainstays of the principle

are minimal inventory, customer demand and one-piece flow.

Continuous Improvement is the driving force behind our efforts and requires a

systematic and long-term approach. Generation and implementation of

improvement ideas is essential. It is based on standardization and a clear vision of

the future desired state


Volvo Production System (VPS)

Bill of materials

A bill of materials or product structure (sometimes bill of material, BOM or

associated list) is a list of the raw materials, sub-assemblies, intermediate

assemblies, sub-components, parts and the quantities of each needed to manufacture

an end product. A BOM may be used for communication between manufacturing

partners, or confined to a single manufacturing plant. A bill of materials is often

tied to a production order whose issuance may generate reservations for

components in the bill of materials that are in stock and requisitions for components

that are not in stock.

A BOM can define products as they are designed (engineering bill of materials), as

they are ordered (sales bill of materials), as they are built (manufacturing bill of

materials), or as they are maintained (service bill of materials or pseudo bill of

material). The different types of BOMs depend on the business need and use for

which they are intended. In process industries, the BOM is also known as the

formula, recipe, or ingredients list. BOMs that describe the sub-assemblies are

referred to as modular BOMs


Good Receipt Note (GRN)

Every part has its Quality, Quantity and documentation characteristics known as

GRN (Good Receipt Note) or Quality copy

GOODS RECEIPT NOTE (GRN) is prepared by the Stores /Warehouse

Department for accounting the receipt of goods purchased from suppliers. When

GRN is prepared in a software, Inventory is updated with quantity and value. It will

also update the financial records by debiting Purchases A/c & Crediting the

Supplier's (Vendor's) A/c.

One copy of the GRN (with vendor's invoice , inspection / quality report copy) is

maintained in the location where it is prepared and the original GRN with Original

Invoice of the Supplier will be authenticated by the Warehouse / Stores In-charge

and sent to the Finance/Accounts department for transaction validation, payment

and preservation of the documents for future reference and audit.

Whatever goods comes into a particular warehouse should be recorded through

some sort of document. When the goods come it has to be attached with this

document and the same has to be signed by the gate keeper, store in-charge and the

receiver. The copy of this record will attached with the bill and forward to accounts

dept. for payment. This document is called Goods Receipt Note.

Goods Receipt Note is a document used to record the inward entry of the any goods

received at the premises of the organization. The document normally consists of the

details of Quantity Received, Quantity Rejected and Quantity Accepted, Supplier

Name & P.O. No. The practice of preparing GRNs is important as it promotes

proper inventory control and restricts the unwanted, unauthorized entry of goods in

the organization. The GRN preparation is a part of effective Inventory Control

Management.


Good Receipt Note:


Inventory turnover ratio

The inventory turnover ratio is an efficiency ratio that shows how effectively

inventory is managed by comparing cost of goods sold with average inventory for a

period. This measures how many times average inventory is "turned" or sold during

a period.

This measures how many times average inventory is "turned" or sold during a

period. In other words, it measures how many times a company sold its total

average inventory dollar amount during the year. A company with $1,000 of

average inventory and sales of $10,000 effectively sold its 10 times over.

This ratio is important because total turnover depends on two main components of

performance.

The first component is stock purchasing. If larger amounts of inventory are

purchased during the year, the company will have to sell greater amounts of

inventory to improve its turnover. If the company can't sell these greater amounts of

inventory, it will incur storage costs and other holding costs.

The second component is sales. Sales have to match inventory purchases otherwise

the inventory will not turn effectively. That's why the purchasing and sales

departments must be in tune with each other.

Formula

Inventory turnover ratio = cost of goods sold

average inventory

http://www.myaccountingcourse.com/accounting-dictionary/holding-costs


Cycle time

Cycle time is the time from when the Operation begins to the point-of-time at which

the operation ends.

Cycle time is the maximum time allowed at each workstation to complete its set of

tasks on a unit.

Cycle time = (operating time available / day )

desired output rate

Example.

A customer requests their product on November 6. The company receives the order

instantly, and delivers the product on November 10. He actually starts working on

the product only from the 8.

Therefore, the Lead Time here is 4 days, while the Cycle Time is 2 days.

Lead Time

Lead Time can never be less than Cycle Time. For optimal operations, at best, Lead

Time = Cycle Time.

Lead time = (No of work stations) x (Cycle time)

Takt Time

It is the maximum acceptable time to meet the demands of the customer. In other

words, Takt Time is the speed with which the product needs to be created in order

to satisfy the needs of the customer.

Takt time is the maximum amount of time in which a product needs to be produced

in order to satisfy customer demand

Takt Time = (Net Time Available for Production)

(Customer′s Daily Demand).


Service Example:

The company has a 9 hour work-day for its employees, of which 1 hour is the

allocated break and other idel times.

Available production time = 8 hours & 480 minutes

Assume that the customer sends in 24 accounting forms to be read.

Takt Time = 480/24 = 20 minutes/form.

This means that the staff would have to work at a speed of 20 minutes per form in

order to meet the customer’s needs or demands.

Throughput Time

Throughput time is a measure of the time required for a material, part or sub-

assembly to pass through a manufacturing process following the release of an order

to the manufacturing floor.

Throughput time or manufacturing cycle time consists of

Process time

Inspection time

Move time

Queue time.

Process time is the time period during which work is performed on the product

itself.

Inspection time is the time during which the quality of the product is confirmed.

Move time is the time during which materials or works-in-process are moved from

one workstation to another.


Queue time is the period of time during which the product awaits transfer to a

workstation, undergoes further inspection and subsequent manufacturing processes.

Material handling process:

Total Number of Forklift –> 9 Forklift

No of forklifts Capacity (tons) Usage area

3 5 Paint shop, fab. Shop and

Receiving area

2 3 Receiving area

1 2.5 Excavator line

2 2.5 Road Machinery line

1 Stacker 1.5 Bay 6

1 8 Paint shop and Receiving area

Material classification (ABC)

A -> Heavy – Big frame, Radiator

B -> Moderate – Kitting tools

C -> Light – Hardware


Material storage by frequency

ABC analysis (or Selective Inventory Control) is an inventory categorization

technique. ABC analysis divides an inventory into three categories- "A items" with

very tight control and accurate records, "B items" with less tightly controlled and

good records, and "C items" with the simplest controls possible and minimal

records.

Examples of ABC class are

‘A’ items – 20% of the items accounts for 70% of the annual consumption

value of the items.

‘B’ items - 30% of the items accounts for 25% of the annual consumption

value of the items.

‘C’ items - 50% of the items accounts for 5% of the annual consumption value

of the items.


Number of people required in each process:

Binning 3 people

Kit Preparation 3 people

Issuing Hardware 2 people

Receiving 2 people

Back flushing Line – Station 7

Total manpower available in Excavator Assembly:

Apprentice (A) 21

Trainees (T) 5

Employees (E) 12

Total 38

Material handling

Material handling is a large part of a company´s internal work and represents

between 15 % and material consist of 70 % of the total cost of a manufactured

product.

By improving the internal handling of material, more efficient distribution and

manufacturing flows are possible.

The material handling process is an input to the production and assembly

process that has to be defined and mapped so that it can be improved.

The material handling process studied at Volvo CE includes goods receiving,

storage as well as the order/delivery process to assembly, and will finish with

the material transport to the assembly line.


Material management

Material management is a scientific technique, concerned with Planning,

Organizing &Control of flow of materials, from their initial purchase to destination.

Procurement:

Procurement is the process of finding, agreeing terms and acquiring goods, services

or works from an external source, often via a tendering or competitive bidding

process. The process is used to ensure the buyer receives goods, services or works

at the best possible price, when aspects such as quality, quantity, time, and location

are compared.

Inventory control: One of the powerful ways of controlling the materials is

through Inventory control.

It covers aspects such as setting inventory levels, doing various analyses such as

ABC , XYZ etc. ,fixing economic order quantities (EOQ), setting safety stock

levels, lead time analysis and reporting.

It means stocking adequate number and kind of stores, so that the materials are

available whenever required and wherever required. Scientific inventory control

results in optimal balance.

Inventory Management

Inventory management is the practice overseeing and controlling of the ordering,

storage and use of components that a company uses in the production of the items it

sells.

Two common inventory-management strategies are the just-in-time (JIT) method,

where companies plan to receive items as they are needed rather than maintaining


high inventory levels, and materials requirement planning (MRP), which schedules

material deliveries based on sales forecasts.

Material requirements planning (MRP)

Material requirements planning (MRP) is a production planning, scheduling,

and inventory control system used to manage manufacturing processes. Most MRP

systems are software-based, but it is possible to conduct MRP by hand as well.

An MRP system is intended to simultaneously meet three objectives:

1) Ensure materials are available for production and products are available

for delivery to customers.

2) Maintain the lowest possible material and product levels in store

3) Plan manufacturing activities, delivery schedules and purchasing activities.

The MRP inventory management method is sales-forecast defendant. This means

that manufacturers must have accurate sales records to enable accurate planning of

inventory needs and to communicate those needs with materials suppliers in a

timely manner.

Supply chain management

Supply chain management has been defined as the "design, planning, execution,

control, and monitoring of supply chain activities with the objective of creating net

value, building a competitive infrastructure, leveraging worldwide logistics,

synchronizing supply with demand and measuring performance globally.

Supply chain management (SCM), the management of the flow of goods and

services, involves the movement and storage of raw materials, of work-in-


process inventory, and of finished goods from point of origin to point of

consumption.

Logistics

Logistics is the management of the flow of things between the point of origin and

the point of consumption in order to meet requirements of customers or

corporations.

Logistics management is the part of supply chain management that plans,

implements, and controls the efficient, effective forward, and reverses flow and

storage of goods, services, and related information between the point of origin and

the point of consumption in order to meet customer's requirements.

Logistics management involves identifying prospective distributors and suppliers,

and determining their effectiveness and accessibility.

Process involved in material handling:

Gate entry

Checking

Unloading

Checking/Counting as per invoice

Checking to buyer –Invoice

GRN

Binning

Location check

Bin


List of Activities – Material Management

The main activities carried out in Material management are as follows:

On time Material orders release through SAP.

Material shipment follow up with suppliers.

Material In-warding.

Physical verification of material with documents.

Confirming quantity with respect to delivery challan.

Material received from suppliers is unloaded on time and moved to sub stores.

GRN Preparation.

Material storage in Designated locations.

Binning of components.

Line feeding through sequencing and kitting.

Perpetual cycle count.

Maintain 5S in Material stores department.

Problem solving and other VPS activities followed.

Annual physical Inventory.

Material handling






Binning Process:

After making GRN, check location of

the component

Define location of the component

physically as well as in the system

Material moved to respective stores

from receiving section after GRN made

Unpack the material

Bin the material in pallets wherever

applicable/Bin the material in respective racks

Stop

Move the packing material waste after binning

to scrap yard

Is location

available


Material Feeding Process:

Receive charging plan from production

planning for Assembly line

Prepare the days plan as per the Takt. Provide

the material feeding plan to material spiders of

Bay 3 & 6 and also to forklift operator

Generate kit list as per production order from

SAP for each machine Serial Number.

Pick the sequential materials in

pallets as per kit list

Pick the material according to kit list

and prepare kit list

Move the sequential material and kitting

trolley to respective workstations

Collect the empty pallets from the stations

and put it at empty pallet locations

Stop



Excavator Assembly:

Feeder 1 Block Sub Assembly

Feeder 2 Bottom plate Sub Assembly

Feeder 3 Boom cylinder & Radiator Sub Assembly

Feeder 4 Cowl frame Sub Assembly

Feeder 5 Swing motor Sub Assembly

Feeder 6 Cabin Sub Assembly

Feeder 7 Boom & Arm docking Sub Assembly

Feeder 8 MCV – Main control valve

Feeder 9 Engine Sub Assembly

Feeder 10, 11, 12, 13 Lower frame Sub Assembly


VOLVO CE STRATEGY


Time Study

Process Flow in material handling:

Receiving area details:

Time taken by local truck (inside campus):


Average time taken by local truck (inside campus):

Time taken for imported material (inside campus):


Average time taken by local truck (inside campus):

Conclusion:

As per the observation from both local and imported material handling time in each

process most of the time is wasted in waiting and gate entry.

Suggestion:

To optimize the total time involved in all the material handling process (inside

campus) we can:

Local truck Check sheet should be updated on monthly basis (log book and

systems)

Excel can be used to fetch the permanent data to fasten the process

Diverting the un-utilized man power to receiving area in early weeks of every

month

Clearing the receiving area on timely basis

Fixed incoming traffic information should be given to security check post in

advance.


REFERENCES AND BIBILIOGRAPHY

1) https://www.volvoce.com/

2) https://books.google.co.in/books/about/Production_and_Operations_Man

agement.html?id=aZkp2Aq46EYC

https://www.volvoce.com/

Documents

Summer Internship Project Report Resource Optimization ...Volvo CE, Bengaluru PGDM (E-Biz) Operations 2016-18, We School, Bengaluru EXECUTIVE SUMMARY This Project report on ‘Resource