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Inventory Management: Mahindra & Mahindra Ltd. IndiaExecutive SummaryInventory Management must be designed to meet the dictates of the marketplace and support the company's strategic plan. The many changes in market demand, new opportunities due to worldwide marketing, global sourcing of materials and new manufacturing technology, means many companies need to change their Inventory Management approach and change the process for Inventory Control. Despite the many changes that companies go through, the basic principles of Inventory Management remain the same. Some of the new approaches and techniques are wrapped in new terminology, but the underlying principles for accomplishing good Inventory Management and inventory activities have not changed.

Mahindra and Mahindra Limited has fluctuations in its production system. Due to this the company needs to maintain a high level of inventory which adds to its costs. Therefore it was decided to study the system and suggest improvements which could be incorporated into the system to reduce the fluctuations in the production system and reduce the levels of the inventory. The data required for the study were mainly collected through website of Mahindra and Mahindra Limited and various articles and journals. This study reveals the following: Inventory Control Method prevalent at Mahindra and Mahindra Limited. Improvements that could be incorporated in the inventory control system. Fluctuations in the present production system of Mahindra and Mahindra Limited. Feasibility for the adoption of a flat production system. Logistic System prevalent at Mahindra and Mahindra Limited and its effect on inventory. Improvements that could be incorporated into the logistic system. Introduction to Inventory ControlOne of the largest costs to any business is that of inventory or stock at hand.

Whether it’s a manufacturer, retailer or distributor, the amount of inventory held directly impacts the bottom line in more number of ways than one can imagine.

Having too much cash tied up by not stocking up on items that customers need, can have a major impact on your business. A product that is in excessive demand is usually extremely difficult to manage. Supplying the right amount of products implies that an accurate demand forecast is essential. This impacts the entire supply chain. A similar situation exists at the warehouse level and even the manufacturer end. Continuous replenishment in a warehouse can become a mammoth task if consumer response is not studied accurately.

To facilitate efficient consumer response based on consumer demands, warehouse data, sales forecasts, and inventory planning, it becomes imperative that such companies consider inventory management seriously. Making accurate demand and supply predictions is an ideal situation that anyone in the supply chain management arena could dream off. Inventory control is the process of managing the time and the quantities of goods to be ordered and stocked, so that demands can be met satisfactorily and economically.

Inventory control policies are decision rules that focus on the trade-off between the costs and benefits of alternative solutions to questions of when and how much to order for each different type of item. The possible reasons for carrying inventories are: uncertainty about the size of future demands; uncertainty about the duration of lead time for deliveries; provision for greater assurance of continuing production, using work-in-process inventories as a hedge against the failure of some of the machines feeding other machines; and speculation on future prices of commodities. Some of the other important benefits of carrying inventories are: reduction of ordering costs and production setup costs (these costs are less frequently incurred as the size of the orders are made larger which in turn creates higher inventories); price discounts for ordering large quantities; shipping economies; and maintenance of stable production rates and work-force levels which otherwise could fluctuate excessively due to variations in seasonal demand.

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