Inventory Management Systems of Anwar Jute Spinning Mills Ltd. in Bangladesh

41 Pages·2016·0.48 MB·English

Inventory Management Systems of Anwar Jute
Spinning Mills Ltd. in Bangladesh

Dissertation submitted in partial fulfillment of the
Requirements for the Degree of
Masters in Procurement and Supply Management

Submitted to:

DrNazrul Islam
Professor & Dean
School of Business
Uttara University
Uttara, Dhaka

Submitted by:
Md. Nurul Huda
MPSM, Batch IV
ID-13282001

July 2015

BRAC Institute of Governance and Development,
BRAC University
CERTIFICATE FROM SUPERVISOR

Inventory Management Systems of Anwar Jute Spinning Mills
This is to certify that Md. Nurul Huda, MPSM Batch # 4, ID-13282001 has prepared the
Limited in Bangladesh
dissertation entitled “
” under my supervision. I do hereby approve the content of this
BRAC
dissertation. This is for the partial fulfillment of the requirement for the degree of Masters
BIGD BRAC
in Procurement and Supply Management (MPSM) at the Institute of Governance and
Development ( ) in University.

Date
……………………………………………
…………………………………………

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Acknowledgements

Thanks for Almighty Allah for giving me strength and ability to understand learn and
complete this report.

I also admire the help and guidance of Dr. Nazrul Islam, Professor& Dean, School of
Business, Uttara University, Dhaka, Bangladesh.

I am also thankful to Mohammad Sirajul Islam, Lecturer, BIGD, Brac University.
I am also thankful to Managing Director Mr. HossainKhaled (President of DCCI). I am
also thankful toMr. GopalGhosh, (FCA, FCMA) CFO, Anwar Group of Industries for his
help and support throughout the report. I extend my thanks to Mr. Biswa, Head of
Accounts & Finance for his help. I extend my sincere thanks and my deep sense of
gratitude to Mr. TofaelHossain, Head of SCM for his kind assistance.

I would also like to thank all the staff of the organization for helping me directly and
indirectly to conclude this work. Last, but not the least, my heartfelt gratitude to my

parents, relatives and my friends for their constant encouragement, support, help and

valuable advice to make this report a success.

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Table of Contents

Chapter 1 Introduction

1.1 Background
1.2 Objective of the Study
1.3 Rationale of the Study
1C.h4a Spctoepre 2 & C Loimmpitaantiyo nPsr ooff itlhee Study

2.1 Company Profile: Anwar Jute Spinning Mills Limited
2.2 Policy of Anwar Jute Spinning Mills Limited
2.3 Anwar Group of Industries
2.4 Jute (Golden Fibreof Bangladesh
2.5 Mission, Vision & Values of Anwar Jute Spinning Mills Limited
2.6 Objective of the Company
2.7 Global Export Network
2.8 Procurement of Raw Material
2C.h9a Ppatyemr 3enLti tPeorlaictuy re Review

3.1 Introduction
3.2 Objective of Inventory Management
3.3 Key Function
3.4 Types of inventory in AJSML:
3.5 Sources of Raw Material & Packing materials
3.6 The process of Local purchase
3.6.1 Processing Purchase Order
3.6.2 Receiving Material, Goods and Services
3.6.3 Factory sends MRR (Material Receiving Report)
3.6.4 Supplier bill submit& Voucher Entry:
3.7 Necessary documents for Payment of bill:
3.8 Material Receiving Report& Supplier List
3.9 Process Flowchart for Yarn Jute:
3.10 Raw Jute Source Area
3.11 Raw Jute Classification

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Chapter 4 Research Methods

4.1 Research
4.1.1 Research Design
4.2 Data Sources
4.3 Data Collection
4C.h3a Tpotoelrs 5uAsenda liyns tihse & a nInatlyesripsr etation

5.1 Economic Order Quantity
5.2 Safety Stock
5.3 ABC Analysis
5.4 FNS Analysis
C5.h5a Ipntveern 6to Friiensd Tinugrsn,o Cvoenr cRlautsioio ns and Recommendations

6.1 Finding
6.2 Conclusions
67..3 R Seufeggreesntcioens s & Recommendations

8. Appendices

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Chapter 1 Introduction

1.1 Background of the Study

Industries play a main role in the economic development of every country. This is why
industrialization has been adopted as a vital instrument of economic development in
many developing countries. Realizing this, Government of Peoples Republic of
Bangladesh has facilitated the jute Yarn Company by providing necessary loans and
incentive. So, that the company can run their business smoothly. Although the jute
yarns business is potential in our country. That is why their jute yearn manufacturing
company producing jute yarn and exporting them in various country of the world and
making contribution to the national economy of Bangladesh.
Inventory management system has two main concerns. One relates to the level of
customer service, that is, to have the right goods, in sufficient quantities, in the right
place, and at the right time. The other relates to the cost of ordering and carrying
inventories. As a hundred percent export oriented manufacturing company, Anwar Jute
Spinning Mills Limited places a great importance in valuation and management of
inventories.
The management is feeling that their huge amount of obsolescent stock is held up, so
the management wants to know whether they can reduce it through inventory
management systems (IMS). The study was carried to know how inventory
management systems help in proper maintenance of obsolescent stock. So the title of
this study is “Inventory Management Systems of Anwar Jute Spinning Mills Ltd. in
Bangladesh.

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1.2 Objectives of the Study

This report examines the procumbent and inventory management systems police
practiced in Anwar Jute Spinning Mills Ltd. (AJSML. The information about the
operational policy has taken from the entrepreneur, executives, accountants, and other
employee of the company. The objectives of the study are to find out what are using in
manufacturing company, how they are using them what are the suitable policy for the
manufacturing company, how a company can formulated a suitable policy for its
business, how capable they are pursuit suitable policy, how they are dealing with this
policies, what kinds people are needed for formulating suitable policy, the company
who are practicing accurate policy are in what position, the company who are failed to
setup accurate policy for their business is what position & what aspects of a policies
maker need to scrutinize & evaluate of its particular operational policy.
The objectives are summarized as follows:
•
To analyze the efficiency of Inventory Management of Anwar Jute Spinning Mills
Ltd.
•
To identify optimum level of inventory which minimizes the cost.
•
To identify the safety stock level for various components.
•
To classify the various components based on its value and movements.
•
To identify inventory requirement of the company for the next year
•
To get an overall idea about the existing operational, and marketing policy of
Anwar Jute Spinning Mills Ltd. (AJSML);
•
Evaluate the particular existing operational policy;
•
To determine the limitations or problems (if any) of the operational policy;
•
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To recommend necessary steps to overcome such limitations Pag
1.3 Rationale of the Study
Inventory consists of usable but idle resources. The resources may be of any type- human,
materials, machines, etc. For example, if a company purchases a machine or appoints an
expert in anticipation of the requirement of their services in future, these resources work
as inventory. Generally, inventory of men or machines is not carried and managements hire
machines or consult experts whenever required, as an economical alternative. When the
resource involved is material or goods, it is referred is the stock or simply as `Inventory’.
Inventory is the stock kept for future use to synchronize the inflow and outflow of goods in
a transaction. AJSML follows the requirements of Inventory Management.
1.4 Scope of the Study
Inventory Management of Manufacturing public limited company is a broad area. Within
the time period of one month allotted for dissertation, it is virtually impossible to cover all
aspects of Inventory Management. So, the scope of my report is limited only to the
compliance of those as followed by AJSML. In preparing the report, I review and analyze the
information published in the annual budget report for the year 2015. Any change in
Inventory policies in respect of providing information after this period is beyond the scope
of my report.
Limitations of the Study:

1. All the comments made, conclusions reached and suggestions for possible
improvement provided are purely based on my level of understanding, knowledge and

my way of interpreting a particular statement.
2. AJSML follows a policy of not disclosing all the information needed to prepare my

report for obvious reason.
3. Because of the lack of information, I have to make some assumptions that may

cause few errors or personal mistakes in the report.
4. The report is mainly based on the information provided in the annual budget report
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Chapter 2 Company Profile
2.1 Background of the Company

Anwar Jute Spinning Mills Ltd. was established in 1997, Anwar remains as a fully export
oriented organization. Current product range of Anwar consists of high grade jute yarn
ranging from grist count 8 lbs to 28 lbs of 16667 M. tones per annum, with a vision to
attain a production level of 18000 M. tones per annum in jute yarn only by the year
2015. Unique innovations at Anwar has enabled us to process natural jute yarn into
bleached, dyed, coated, water repellant, fire retardant, wrought resistant, and more
diversification’s, their distinctive multi system finishing process provides the flexibility
to their buyers with the option of packing their spools in weight ranging from 500gm in

mini-spools, balls, and corollas spools to 40 kg in jumbo spools with wooden, paper or
plastic centers, and finally packed in cartons, trusses, or pallets.
Mainly their customer s, their suppliers, and personnel engrave their successful
endeavor in jute. It is the close cooperation among them all that has enabled the
development & production of individualized technical and industrial natural jute yarn
for numerous applications. In accordance with specific demands of their valued
customers, the deliver natural jute yarn.
2.2 Policy

Policy means to take some strategic steps to run or operate the whole process of a
company accurately.
Operational Policy:

When the company takes a clear cart, specific and strategic steps to
operate their total operations then it is called operational policy.
Procurement Policy:
Procurement Policy refers to the policy which is used by the
company while purchasing their raw materials, consumable items and so on. Purchase

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policy basically formulated by considering two thinks. One is credit purchase another is
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cash purchase. When a company by their required raw me trials in cash, then they P
follow cash purchase policy. In cash purchase, the company / purchase is more
powerful. Because they purchase in cash. On the other hand, when the company

purchase their requires raw materials in credit, then they follow the credit purchase
policy. In credit purchase, supplies are more powerful.
When the authority formulates the purchase policy, they must consider whether the
company buys their required raw materials cash or credit more.
Anwar Jute Spinning Mills Ltd. follows both types policy to buy their required raw
materials.
Sales Policy:
The specific and strategic steps taken by the company for selling their
products is called sales policy. They alsoneed to consider cash sales or credit sales,
while the company formulates the sales policy for their total sales process. As Anwar
Jute Spinning Mills Ltd. is fully export oriented company, they always follow export
sales policy for their product. Anwar Jute Spinning Mills Ltd. mainly sales their jute yarn

to foreign firms on letter of credit (L/C) when any export is occurred, to banks on behalf
of both parties deal the total payment as this bank are the guaranter of both parties.
2.3 Anwar Group of Industries
While the trading history of the Group and family started from 1834, the Industrial
history of Anwar Group of Industries (AGI) stretches back almost nine decades, when
Late Rahim Buskh set up an ivory button & comb manufacturing plant. In the early
st
Anwar Silk Mills Ltd
forties, they had the privilege of being the 1 Bengalis to setup and operate a textile unit
named . It has been a great honor for the Group to be a part of the
history of industrialization in this country. The Group has diversified into most of the
important industrial and business sectors playing its part in the economic growth of
Bangladesh. Anwar Group foresight and innovativeness has the distinction of being the
first electrical cable, polyester fabrics, corrugated pipes and super enamel copper wire
manufacturer in the country. Anwar Group of Industries also has become one of the

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largest corporate Business conglomerates of the Country. They had never to look back
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