A REPORT On PRODUCTION PLANNING AND CONTROL IN EICHER TRACTORS, MANDIDEEP

By eNotesMBA

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 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 t o 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 proj ect 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.

...

CERTIFICATE This is to certify that Mr., student of MBA 2nd Semester, Institute of Management, h as completed his Winter Project on Production Planning and control of Eicher Tra ctors, Mandideep, under the guidance of Ms.

Date Signature

Project Title

: Production Planning and Control in Eicher Tractors, Mandideep

Abstract : The project has been developed to identify the need an d importance of PPC i.e. Production Planning and Control in manufacturing indust ry. 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- Materi

als Planning, Purchasing, Raw Material, Inventory Control, Capacity Planning, Sc heduling Machine and People, WIP Inventory Control, Coordinate Customer Orders, Finished Goods Inventory Control. Production planning and control facilitates in various ways like- optimum utiliz ation of capacity, inventory control, ensures quality, and economy in production time. Production Planning is accompanied with Control Mechanism to ensure desired resu lts. Results are compared with plans, if any deviation is found revision of plan is done. Hence, Production Control is an adjusting process, providing correctiv e measures for planned development.

TABLE OF CONTENTS Acknowledgement 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. 4. References Glossary i

INTRODUCTION

1. INTRODUCTION 1.1 Introduction to Eicher Tractors, Mandideep Eicher began its business operations in 1959 with the roll out of India's 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 200 2-03 Eicher tractor has been awarded ISO-14001 Today, Eicher Tractors is unbeatable leader in product range of engines in the 2 2 HP to 32 HP and gensets in the 15 KVA to 30 KVA categories. Eicher Tractors, Mandideep is wholly owned subsidiary of Tafe Motors Tractors Lt d. The Eicher Group started in 1948 when the Goodearth Company was set up to sell a nd service imported tractors in India. Perceiving an urgent need to mechanize In dian agriculture, the Company set up a tractor manufacturing facility i.e. Eiche r Tractors Ltd. in 1959 in 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 prac tices has impact on the efficient utilization of the resources, waste reduction, reduce waiting time and processing, thus contributing to the profitability of t he industry. On these premise the study accentuated to address questions in orde r to achieve the following objectives: (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 fun ction. (c) To know whether production planning and control practices lead to waste reduction and increased profit. (d) To prove that short term production planning and scheduling techniques e mployed by industries, is necessary in minimizing process and customer waiting t ime.

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 ma nagerial principles to the production function in an enterprise. Production is a process whereby raw material is converted into semi finished products and there by adds to the value of utility of products, which can be measured as the differ ence between the value of inputs and value of outputs.

Production function encompasses the activities of procurement, allocation and ut ilization of resources. The main objective of production function is to produce the goods and services demanded by the customers in the most efficient and econo mical way. Therefore efficient management of the production function is of utmos t importance in order to achieve this objective. Production management involves the managerial decisions regarding design of the product and design of the produ ction 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 p roduction processes and system, his next task is to take steps for production pl anning and control, as this function is essentially required for efficient and e conomical production. Planned Production is the ability to look ahead, organize and coordinate and hav ing plenty of driving force and capacity to lead and ability to supervise and co ordinate work and simulates his associates by means of a programme of human rela tion and organization of employees. Production Planning and Control involve generally the organization and planning of manufacturing process. Especially it consists of the planning of routing, sch eduling, 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 re lated activities, in order to bring about the desired manufacturing results in t erms of quality, quantity, time and place. Production planning without production control is like a bank without a bank man ager, planning initiates action while control is an adjusting process, providing corrective measures for planned development. Production control regulates and s timulates the orderly how of materials in the manufacturing process from the beg inning to the end.

1.5 Steps in PPC Production Planning and Control (PPC) is a process that comprises the performanc e of some critical; functions on either side, viz., planning as well as control.

Production planning Production planning may be defined as the technique of foreseeing every step in a long series of separate operations, each step to be taken at the right time an d in the right place and each operation to be performed in maximum efficiency. I t helps entrepreneur to work out the quantity of material manpower, machine and money requires for producing predetermined level of output in given period of ti me. 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 wo rked 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 e nterprises, this job is usually done by entrepreneur himself in a rather adhoc manner. Routing procedure involves following different activities. (1) (2) (3) (4) (5) (6) (7) An analysis of the article to determine what to make and what to buy. To determine the quality and type of material Determining the manufacturing operations and their sequence. A determination of lot sizes Determination of scrap factors An analysis of cost of the article Organization of production control forms.

Scheduling It means working out of time that should be required to perform each operation a nd also the time necessary to perform the entire series as routed, making allowa

nces for all factors concerned. It mainly concerns with time element and priorit ies of a job. The pattern of scheduling differs from one job to another which is explained as below:

Production schedule: The main aim is to schedule that amount of work which can e asily be handled by plant and equipment without interference. Its not independen t 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 equip ment and perform the type of work involved. (3) Necessary materials and purchased parts. Master Schedule: Scheduling usually starts with preparation of master schedule w hich is weekly or monthly break-down of the production requirement for each prod uct for a definite time period, by having this as a running record of total prod uction requirements the entrepreneur is in better position to shift the producti on from one product to another as per the changed production requirements. This forms a base for all subsequent scheduling acclivities. A master schedule is fol lowed 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 opera tion of a given job with a given machine or process. Manufacturing schedule: It is prepared on the basis of type of manufacturing pro cess involved. It is very useful where single or few products are manufactured r epeatedly 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 c enter point. As far as small scale industry is concerned scheduling is of utmost importance a s it brings out efficiency in the operations and s reduces cost price. The small entrepreneur should maintain four types of schedules to have a close scrutiny o f all stages namely an enquiry 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 section 2. The operational sequence 3. 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 wo rk places. So loading determines who will do the work as routing determines wher e and scheduling determines when it shall be done. Gantt Charts are most commonl y used in small industries in order to determine the existing load and also to f oresee 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 schedule s therefore they can be successful if they have ability to meet delivery order i

n 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 shoul d be done, where and when thus to leave nothing to chance once the work has begu n. Production control Production control is the process of planning production in advance of operation s, establishing the extract route of each individual item part\ or assembly, set ting, starting and finishing for each important item, assembly or the finishing production and releasing the necessary orders as well as initiating the necessar y follow-up to have the smooth function of the enterprise. The production contro l is of complicated nature in small industries. The production planning and cont rol department can function at its best in small scale unit only when the work m anager, the purchase manager, the personnel manager and the financial controller assist in planning production activities. The production controller directly re ports to the works manager but in small scale unit, all the three functions name ly material control, planning and control are often performed by the entrepreneu r himself production control starts with dispatching and ends up with corrective actions. Dispatching Dispatching involves issue of production orders for starting the operations. Nec essary 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 s heet. 6. Inspecting or supervision of work Dispatching is an important step as it translates production plans into producti on.

Follow up Every production programme involves determination of the progress of work, remov ing 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 fro m the production plans. It helps to reveal detects in routing and scheduling, mi sunderstanding of orders and instruction, under loading or overloading of work e tc. All problems or deviations are investigated and remedial measurer are undert aken 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 ad justing the route, rescheduling of work changing the workloads, repairs and main tenance of machinery or equipment, control over inventories of the cause of devi ation is the poor performance of the employees. Certain personnel decisions like training, transfer, demotion etc. may have to be taken. Alternate methods may b e suggested to handle peak loads.

Inspection This is mainly to ensure the quality of goods. It can be required as effective a gency of production control. Corrective measures Corrective action may involve any of those activities of adjusting the route, re scheduling of work changing the workloads, repairs and maintenance of machinery or equipment, control over inventories of the cause of deviation is the poor per formance 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. 1.6 Methodology The study is carried out at Eicher Tractors, Mandideep. Productions officers ar e likewise selected who serve as the respondents of the study. The study extensi vely explores both the primary and secondary sources of information. Pertinent information is gathered from the respondents using a structured questi onnaire. The structured questionnaire is consists of descriptive questions to ge t the description of various aspects of Production Planning and Control. The ini tial questions are to cover the variables characterizing the various production planning and control practices such as demand forecasting, inventory, capacity u tilization, and scheduling techniques while the last segment will purely on Cont rol practices. Unstructured personal interview is also conducted in order to augment the respon ses that may not be explicitly cleared in the questionnaire. Like this the data is properly collected, organized, and presented.

MAIN TEXT

2. MAIN TEXT 2.1 Company Profile Eicher Tractors, Mandideep The Eicher Group started in 1948 when the Goodearth Company was set up to sell a nd service imported tractors in India. Perceiving an urgent need to mechanize In dian agriculture, the Company set up a tractor manufacturing facility i.e. Eiche r Tractors Limited in 1959 in collaboration with Gebr. Eicher, Germany in India. The first Indian tractor rolled out of Eicher's factory at Faridabad in India, in 1960. Today, there are over 4,00,000 Eicher tractors that contribute to the nation's a gricultural development. Eicher's manufacturing and marketing facilities located at Faridabad have been awarded ISO 9001 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 deale rs across India with 15 regional offices and 12 depots. Committed to providing high quality products, Eicher invests significantly in te chnology resources and infrastructure. Our manufacturing facilities are spread a cross 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

2.2 Interpretation of Data Q1. Do you think production planning and control is central to the success o f any manufacturing unit? If Yes, then how? Options Yes Response No 10 0

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 li ne, resources, and other equipments. It helps in waste reduction and leads to in creased profitability. Q2 Capacity planning contributes to the efficient use of facilities and equ ipments? If Yes then how? Options Yes Response No 8 2

Interpretation Most of the respondents i.e. 80% are in favor of the statement that capacity Plan ning contributes to the efficient use of facility and equipments. Proper Capacity planning leads to optimum utilization of capacity reduces idle t ime, under or over utilization of capacity.

Q3.

What are the main objectives of Production Planning? Optimum Utilization of Capacity Inventory control Economy in Production Time Ensure Quality Waste reduction and increased profit b c d E 8 6 4 2 10

a) b) c) d) e) Options A Response

Interpretation All the respondents believe that waste reduction and increased profit is the mai n objective of production planning, some of them also believe that optimum utili zation of capacity is another objective of production planning. The other objective of production planning is inventory control, economy in prod uction time, and quality insurance.

Q4.

Production Planning and Capacity Planning are interrelated?

If yes then how? Options Yes Response No 7

Interpretation Majority of the respondents i.e. 70% believe that production planning and capaci ty planning are interrelated. Long term Production planning becomes the basis of capacity planning. Size of production and type of production depends on capacit y, hence both are interrelated. Q5. Since, capacity cant 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 c) Hurts the ability to satisfy customers d) Other effects Please specify other effects (if any) Options a Response b 0 c 9 d 10 2

Interpretation Almost all respondents believe in the above statement. According to them mismatc h 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 inefficie nt use of capacity, hence, cost of production will increase. As lead time is calculated on the basis of available capacity it has no effect o n lead time. Other effects can be increase in cost by increasing man power and plant maintena nce, and delay in delivery to customers. Q6. On a) b) c) d) what basis do you plan your production? Customer needs (demand) Target of Marketing Dept. Resources available Other factors

Please specify other factors (if any) Options a Response b 8 c 0 d 10 0

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 par ticular 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 pr oduction plans. Q7. Do you feel or experienced hung up and bottlenecks in implementing Productio n Plans. a) Yes b) No If yes then what type of bottlenecks? Options Yes Response No 4 6

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 av ailability of material, and transforming one model to other due to requirement o f specific model. Q8. How do current Production Planning and Capacity Planning methods account for bottlenecks. Interpretation Current production planning and capacity planning highly depends on material ava ilable and material in transit. The non availability of material and delay in tr ansportation of material hinders execution of plans properly. Due to this too ma ny changes in daily and weekly plans takes place. Sometimes lack of coordination between PPC/Store, production department, and Qua lity 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, pro per care is taken of the material providers, transportation of material, and inv entory 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 tak

en? a) Revision of Plan b) Any other measures. Please specify other measures (if any) Options Revision of Plan Response 10 0 Other measures

Interpretation If the results are OK wait until next control period. If not OK, revision of pla n is required to be done. At present people of Eicher Tractors do not have any o ther solution except revision of plan to control deviations in plans and results .

2.3 Production Planning and Control at Eicher Tractors, Mandideep Production plan is crucial to the success of any producing unit; it is an activi ty which is continues in nature and required to be revised time to time as per t he requirements. It cant be done in isolation by a particular department; rather it is an integrated activity done by Planning and Control Department in collabor ation with Material Department, Production Department, and Quality Control Depar tment. The heads of various departments of Eicher Tractors sits together and Pla ns 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 Departm ent. Marketing Department provides there monthly requirements like- number of tr actors, specific models, specific color, capacity etc. 2. PPC/Store Preliminary Production Plan

PPC/Store receives message of monthly requirements from marketing department. PP C 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 departme nt studies the plan and prepares a report which shows the availability of materi al, material in transit, plan of receipt of material in chronological form, expe cted shortage of material, and any other problem related to the material. Materi als Requirements Planning (MRP) can be used in more complex systems. MRP determi nes time-phased requirements (period-by-period) for all purchased and manufactur ed parts such as raw materials, components, parts, subassemblies, etc. . This re port is sent to the PPC Department 4. PPCRevision of preliminary Production plan.

On the basis of the report sent by material department, the PPC/Store revises th e preliminary plan. This revised plan is sent to the marketing department. Marke ting department revises the schedule of requirements according to the availabili ty 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 Pr oduction Plan and weekly master production scheduling is done. A copy of main pl an 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 t ogether, discuss there problems, and unanimously prepares a daily production pla n. This daily production plan is displayed on planning board of every departmen t and at every level of assembly line. This daily production plan shows sequence of operations, sequence and schedule of material movement, post pending materia l, pre pending material, and shortage of material. This daily plan is automatica lly 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 revi sed. Daily Production Plan is revised number of times considering the material s hortages, problems with assembly line, etc. if material is post pending i.e. on assembly line its operation cant be changed, but, changes can be made in the sequ ence and scheduling of pre pending material i.e. material in queue. Efforts are made to plan a sequence which minimizes the idle time of assembly line, labour, and other equipments.

2.5 Findings The PPC department of Eicher Tractors, Mandideep believes in making plans and de cisions unanimously, in cooperation with production department, marketing depart ment, material department, and quality control department. So that a feasible pl an can be made, executed properly, and optimum results can be achieved. Hence, p roduction planning and control is an integrated activity and cant be done in isol ation 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 isol ation 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 availabl e 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 ou tput is ensured. To sum up we may say that PPC is of immense value to the entrepreneur in capacit y utilization and inventory control. More importantly it improves his response t ime and quality. As such effective PPC contributes to time, quality and cost par ameters of entrepreneurial success. 2.6 Conclusion After doing this project I am in position to conclude that Eicher Tractors, Mand ideep has well defined and structured production planning system. PPC defines th e sequences and schedules of operations; hence production planning contributes t o the efficient use of facilities and equipments. PPC is done to identify production process which leads to reduced lead time; hen ce customer waiting time is also reduced. PPC ensures optimum utilization of production capacity, material, and other equi pments; hence it leads to waste reduction and increased profits. 2.7 Recommendations The production planning and control of Eicher Tractors, Mandideep, highly depend s 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. b. c. d. Proper Materials Planning done, Materials must be purchased from multiple vendors, Sufficient safety stock must be maintained, Lead time and responsibility must be fixed at the part of vendors.

3. REFERENCES Books: 1. Harris, g, attour, s, 2003 The National advertising practices of multina tional companies; a content analysis study. European journal of marketing volume 37, no ; 154-168

2. MacKenzie, I.2004 English for business studies - A curse for business st udies and economics students. Cambridge, United Kingdom; 3. Nardi, P.2003. Doing Survey Research A Guide to Quantitative Method.

Websites: 1. 2. 3. www.wikipedia.org www.tmtl.com www.eichertractors.in