Developing and auditing of central purchase system; ITW Signode India Ltd.

Abstract

ITW SIGNODE INDIA LTD is a multi-product,multi-division company which works on SBU concept. The core strength of the company is in the area of packaging machinery and packaging materials. With the Indian market growing and demand increasing for mechanized machines, ITW SIGNODE has a vision to become a 1000 Cr. company by the turn of the century. To fulfill this ambitious plan, it's essential that along with tapping new markets and creating new opportunities, the system be standardized and cost reduction is emphasized. A Purchase system is as important to the company as manufacturing or selling because here lies the great opportunity of cost reduction. At present Central Purchase Department , which was formed with effect from 1.1.94 is facing a lot of problems. There is a shortage of required material while the stores are maintaining dead, non moving stock. Thus an efficient system is required which can cater to the needs of all the departments under the purview of the Central Purchase System (CPS). In this report, a new CPS has been suggested, where the roles of each department have been specified. Latest developments and techniques of inventory management have been used to analyze the problems and to suggest appropriate solutions which can be used effectively in all departments. Practical implications of suggested CPS have been discussed at great length. Possibility of application of JIT is also analyzed. It's felt that as demand grows and capacity utilization increases, JIT can be applied reasonably,to get quality assurance and reduction in total inventory carrying cost. On-line computerization of all the divisions under CPs should be done so that all the personnel have access to all the information and data. Password facility is suggested where every division can enter in only the fields assigned to it. Computerisation will also result in a major reduction of paper movement. Thus a new CPS- supported by computers will help ITW SIGNODE tremendously in having proper inventory control and consolidating its position in the Indian market with their quality products.