Inventory Management Hh

7/31/2019 Inventory Management Hh

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ABSTRACT

The project work entitled Inventory Management includes detail study about inventory,

its importance and effectively it should be managed for smooth operations of business.

Inventories are assets of the firm and require investment and hence involve the commitment of

firms resources.

Every firm is required to manage the inventories in such a way as to get the best returns.

The objective of inventory management is to determine the optimum level of the inventory that

is the level at which the interest of all the departments are taken care of.

The inventory management seeks to maximize the wealth of the share holders by

minimizing the cost of procuring and maintaining.

The objective behind the inventory management is maintaining sufficient stock of raw

materials ensuring continuous supply to production process for uninterrupted production

schedule and minimizing the total annual cost of maintaining inventories.

Inventories are assets of the firm and hence involve the commitment of firms resou rces;

managers must ensure that the firm maintains inventories at the correct level.


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INVENTORY MANAGEMENT

INTRODUCTION:

Every enterprise needs inventory for smooth running of its activities. It serves as a link

between production and distribution process. There is, generally, a time lag between the

recognition of a need and its fulfillment. The greater the time lag, the higher requirements for

inventory. It also provides a cushion for future price fluctuations.

In a complex industry like HERO HONDA Industries Limited it studied clearly of how

the thing are being performed and what is the real impact of these on industry and how

effectively the inventory is utilized is interested to be known by researcher because of its great

significance in the research.

IMPORTANCE OF THE STUDY:

Decisions Relating to Inventories are taken primarily by executives in productions,

purchasing, and marketing departments. Usually, raw material policies are shaped by purchasing

and production executives, work-in-process inventory is influenced by the decisions of

production executives, and finished goods inventory policy is evolved by production and

marketing executives. Yet, as inventory management has important financial implications, the

financial manager has the responsibility to ensure that inventories are properly monitored and

controlled. He has to emphasize the financial point of view and initiate programmes with the

participation and involvement of others for effective management of inventories.


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NEED OF THE STUDY:

Every industry on average spends 70% on raw materials (inventory). Therefore there is a

need to know the raw material cost and also there is great importance to understand the inventory

management system of this industry.

The study helps a log to various departments to take steps to control the inventory

process.

OBJECTIVES OF THE STUDY:

1. To examine the organization structure of inventory management in the stores ofHERO HONDA.

2. To discuss pattern, levels and trends of inventories in HERO HONDA.

3. To understand the various inventory control techniques followed by studies in HEROHONDA.

4. To access the performance of inventory management of the HERO HONDA byselected accounting ratios.

5. To know the inventory control techniques of HERO HONDA.


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METHODOLOGY OF THE STUDY:

The study is based on both primary and secondary data.

The primary data has been collected through structured questionnaire reflecting inventory

management practices of HERO HONDA. The collected data is tabulated and suitable

interpretation had been made by considering the data collection through secondary data like

annual reports purchase registers, storage records of the organization.

LIMITATIONS OF THE STUDY:

The study has the following limitations:

1. The study is limited only for a period of 5 years i.e., from 200506 to 200910.2. The study in the organization is 45 days only.3. The limitations of ratio analysis can be applicable of the study.4. There may be approximation in calculating ratios and taking the figures from the

annual reports.


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COMPANY PROFILE

Hero Honda Motors Ltd. is the world's largest manufacturer of twowheelers, based in India.

The company is a joint venture between India's Hero Group and Honda Motor Company, Japan

that began in 1984.

In 2001, the company achieved the coveted position of being the largest two-wheeler

manufacturing company in India and the World No.1 two-wheeler company in terms of unit

volume sales in a calendar year by a single company. Hero Honda has retained that coveted

position till date.

Today, every second motorcycle sold in the country is a Hero Honda bike. Every 30 seconds,

someone in India buys Hero Honda's top-selling motorcycleSplendor.

Vision

The Hero Honda story began with a simple visionthe vision of a mobile and an empowered

India, powered by Hero Honda. This vision was driven by Hero Hondas commitment to

customer, quality and excellence, and while doing so, maintaining the highest standards of ethics

and societal responsibilities. Hero Honda believes that the fastest way to turn that dream into a

reality is by remaining focused on that vision.

Strategy

Hero Hondas key strategy has been driven by innovation in every sphere of activity building a

robust product portfolio across categories, exploring new markets, aggressively expanding the

network and continuing to invest in brand building activities.

Manufacturing

Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities.

Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in

northern India. The third and the latest manufacturing plant is based at Haridwar, in the hill state

of Uttrakhand.


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Technology

In the 1980s Hero Honda pioneered the introduction of fuel-efficient, environment friendly

four-stroke motorcycles in the country. Today, Hero Honda continues to be technology pioneer.

It became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles,

with the launch of the Glamour FI in June 2006.

Products

Hero Honda's product range includes variety of motorcycles that have set the industry standards

across all the market segments. The company also started manufacturing scooter in 2006. Hero

Honda offers large no. of products and caters to wide variety of requirements across all the

segments.

Distribution

The company's growth in the two wheeler market in India is the result of an intrinsic ability to

increase reach in new geographies and growth markets. Hero Honda's extensive sales and service

network now spans close to 4500 customer touch points. These comprise a mix of authorized

dealerships, Service & Spare Parts outlets, and dealer-appointed outlets across the country.

Brand

The company has been continuously investing in brand building utilizing not only the new

product launch and new campaign launch opportunities but also through innovative marketing

initiatives revolving around cricket, entertainment and ground- level activation.

Hero Honda has been actively promoting various sports such as hockey, cricket and golf. Hero

Honda was the title sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi

during Feb-March 2010. Hero Honda also partners the Commonwealth Games Delhi 2010.


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2009-10 Performance

Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent

Total net operating income of Rs. 15860.51 Crores, growth of 28.1 per cent

Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent

Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2

EBIDTA margin for the year 17.4 per cent

EPS of Rs. 111.77, growth of 74.1 per cent

HERO HONDA'S MISSION

Hero Hondas mission is to strive for synergy between technology, systems and human

resources, to produce products and services that meet the quality, performance and price

aspirations of its customers. At the same time maintain the highest standards of ethics and social

responsibilities.

This mission is what drives Hero Honda to new heights in excellence and helps the organization

forge a unique and mutually beneficial relationship with all its stake holders.

HERO HONDA'S MANDATE

Hero Honda is a world leader because of its excellent manpower, proven management, extensive

dealer network, efficient supply chain and world-class products with cutting edge technology

from Honda Motor Company, Japan. The teamwork and commitment are manifested in the

highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership

status

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Inventory Management Hh