A study on inventory management at the bulk activities division of Dr. Reddy's Laboratories Ltd

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A study on inventory management at the bulk activities division of Dr. Reddy's Laboratories Ltd

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Abstract

Materials are equivalent to cash and they make up an important part of the total cost. It is essential that materials should be properly safeguarded and correctly accounted for. Proper control over material can make a substantial contribution to the efficiency of a business. The success of a business concern largely depends upon efficient purchasing, storage, consumption and accounting.

Bulk Drugs is the back bone of Pharmaceutical industry and inventory plays a vital role in bulk drug industry hence the study of Inventory Management in Bulk Actives division of Dr Reddy has been selected for the project.

The data has been gathered through interaction and discussions with the executives working in the division. Some important information has been gathered through a couple of unstructured interviews of executives.

This study provides an insight into the management of High Value items and also draws the attention of the management towards movement of ‘A' class items over period of 4 years.

Introduction.
1. Objectives of the study.
2. Need for the study.
3. Methodology.
4. Scope of the study.
5. Limitations.
Company profile.
Inventory management.
1. Introduction.
2. Types and classification of inventory.
3. Need for inventory control.
4. Valuation of the inventories.
5. Purchase and stores procedure.
6. Issue pricing methods.
7. Techniques of inventory management.
8. ABC analysis.
9. Economic order quantity.
10. VED analysis.
11. The re-order level.
12. Safety stock.
13. Just-in-time inventory.
Findings.
Recommendations.
Bibliography.
Graphs included.

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[...] REDDYS LABORATORIES LTD BULK ACTIVES DIVISION TOTAL INVENTORY TREND: * Rs In millions INVENTORY Stores & Spares (at Cost*) Raw Material (at Cost*) Work in Process (at Cost*) Finished Goods (at Cost*) TOTAL TYPES OF INVENTORIES: Inventories play a major role in a business or company depending on nature of the business. The inventories may be classified as under, Raw materials. The raw materials include the materials, which are used in the production process, and every manufacturing firm has to carry certain stock of raw materials in stores. [...]

[...] ABC Analysis at Bulk Actives Division: Raw MATERIAL (at Cost*) * Rs In millions Interpretation: The Ratio increased to 4.21 in 2004-05 from 4.18 in 2003-04, implying there was a consistent and good management control. Being a Pharmaceutical company, generally the inventory turnovers will be high FINDINGDS OF THE STUDY Area Observation Findings Total Inventory Presently company There was good coordination maintains adequate between the Marketing, inventory turnover planning, procurement, ratio as a production and distribution pharmaceutical functions of DRL, higher company it exhibits inventory turnover was good signs. [...]

[...] reports and other magazines published by the company are used for collecting the required information SCOPE OF THE STUDY The study is done on inventories held by Bulk actives division of Dr. Reddy's Laboratories Ltd The scope of the study includes the ABC Analysis of Raw Materials, WIP and Finished Goods for four financial years. This study provides an insight into the management of High Value items and also draws the attention of the management towards movement of ‘A' class items over period of 4 years LIMITATIONS Since the study covers only Bulk division of Dr Reddy's laboratories limited, it may not represent the over all scenario of the Bulk Industry. [...]

[...] The main advantage is to enable the stores keeper to ascertain at a glace the quantity of materials in stock and remind him to place purchase requisition for further suppliers the ordering level has been reached More over they provide on independent check on stores ledger and anciently a second perpetual inventory. If the Bin card is from three years then the transactions are made in same card .If Bin card does not exist new Bin card to be opened. [...]

[...] Method: Stores and Spares Weighted Raw Materials FIFO Average Method Stores and Spares Weighted All Other Categories FIFO Method Average Cost of Raw Material, Stores and WIP & FG (manf.) FIFO + Spares = Purchase Price + appropriate share of manufacturing Attributable direct cost trade overheads discounts FG traded Cost of Purchase Cost in case of Work in process & Goods in Transit At Actual Cost Finished Goods comprise Material Cost, Direct labour, Purchased overheads Purchase & Stores Procedure: In inventory management the purchase department, stores department plays a major role to be the effective inventory there must be cooperation of various departments such as purchase, receiving and inspections, stores, production and stock control departments. [...]

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