DOC

INSTITUTE OF MANAGEMENT

A REPORT
On
PRODUCTION PLANNING AND CONTROL IN
EICHER TRACTORS, MANDIDEEP

Under the guidance of
Prof. ……………

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A REPORT
ON
“STUDY OF PRODUCTION PLANNING AND
CONTROL SYSTEM IN EICHER
TRACTORS, MANDIDEEP”

By
………….

A report submitted in partial fulfillment of
The requirement of
MBA program of
GGITM


ACKNOWLEDGEMENT

It is a great sense of satisfaction and a matter of privilege to me to
work with Eicher Tractors, Mandideep. I wish to express my
heartiest thanks to Mr. ……….., Head of PPC Department, Eicher
Tractors, Mandideep for providing me the opportunity to do this
project in the esteemed organization.

It is my pleasure to thank Mr……….., Executive PPC Department
and Mr……….., Assistant manager, Eicher Tractors, Mandideep to
whom I owe a lot for giving me time to do my project in this
organization.

The project would not be a success without the constant and
valuable guidance of Ms……….., my project guide, who is
rendering all sorts of help as and when required.

………………...


CERTIFICATE

This is to certify that Mr…………., student of MBA 2nd Semester,
Institute of Management, has completed his Winter Project on
Production Planning and control of Eicher Tractors, Mandideep,
under the guidance of Ms………….

Date Signature


Project Title : Production Planning and Control in Eicher
Tractors, Mandideep

Abstract : The project has been developed to identify the
need and importance of PPC i.e. Production Planning and Control
in manufacturing industry. Production planning is done with the
objective of coordination of materials with suppliers, efficient
utilization of people and machines, efficient flow of materials, and
communication with customers.

Various activities are supported by Production Planning and
Control like- Materials Planning, Purchasing, Raw Material,
Inventory Control, Capacity Planning, Scheduling Machine and
People, WIP Inventory Control, Coordinate Customer Orders,
Finished Goods Inventory Control.

Production planning and control facilitates in various ways like-
optimum utilization of capacity, inventory control, ensures quality,
and economy in production time.

Production Planning is accompanied with Control Mechanism to
ensure desired results. Results are compared with plans, if any
deviation is found revision of plan is done. Hence, Production
Control is an adjusting process, providing corrective measures for
planned development.


TABLE OF CONTENTS
Acknowledgement i
Certificate ii
Abstract iii
1. Introduction
1.1 Introduction to Eicher Tractors
1.2 Objective of project
1.3 Production Function
1.4 Introduction to PPC
1.5 Steps in PPC
1.6 Sources and methods

2. Main Text
2.1 Company Profile
2.2 Interpretation of data
2.3 PPC at Eicher Tractors, Mandideep
2.4 Process of PPC
2.5 Findings
2.6 Conclusion
2.7Recommendations

3. References

4. Glossary


INTRODUCTION


1. INTRODUCTION
1.1 Introduction to Eicher Tractors, Mandideep

Eicher began its business operations in 1959 with the roll out of
India's first tractor. Today the Eicher Group is a significant player
in the Indian automobile industry with a gross sales turnover of
over Rs. 13,700 million in the year 2002-03
Eicher tractor has been awarded ISO-14001
Today, Eicher Tractors is unbeatable leader in product range of
engines in the 22 HP to 32 HP and gensets in the 15 KVA to 30
KVA categories.
Eicher Tractors, Mandideep is wholly owned subsidiary of Tafe
Motors Tractors Ltd.

The Eicher Group started in 1948 when the Goodearth Company
was set up to sell and service imported tractors in India. Perceiving
an urgent need to mechanize Indian agriculture, the Company set
up a tractor manufacturing facility i.e. Eicher Tractors Ltd. in 1959
in collaboration with Gebr. Eicher, Germany in India.

1.2 Objectives of the Study
Objective of the study is to prove that the production planning and
control practices has impact on the efficient utilization of the
resources, waste reduction, reduce waiting time and processing,
thus contributing to the profitability of the industry. On these
premise the study accentuated to address questions in order to
achieve the following objectives:


(a) To know how the production planning contributes to the
efficient use of facilities and equipments.

(b) To know the effects of Production Planning and Control on
Production function.

(c) To know whether production planning and control practices
lead to waste reduction and increased profit.

(d) To prove that short term production planning and scheduling
techniques employed by industries, is necessary in minimizing
process and customer waiting time.

1.3 Production Function
After taking decisions about the type of business, its location,
layout etc. the entrepreneur steps into the shoe of production
manager and attempts to apply managerial principles to the
production function in an enterprise. Production is a process
whereby raw material is converted into semi finished products and
thereby adds to the value of utility of products, which can be
measured as the difference between the value of inputs and value
of outputs.


A Typical Manufacturing Systems

Materials
SUPPLIERS CUSTOMERS
Machines
People
Raw Materials Finished Products

Production function encompasses the activities of procurement,
allocation and utilization of resources. The main objective of
production function is to produce the goods and services demanded
by the customers in the most efficient and economical way.
Therefore efficient management of the production function is of
utmost importance in order to achieve this objective. Production
management involves the managerial decisions regarding design of
the product and design of the production system i.e. determination
of production processes and production planning and control.

1.4 Production Planning and Control
Once the entrepreneur has taken the decisions regarding the
product design and production processes and system, his next task
is to take steps for production planning and control, as this function
is essentially required for efficient and economical production.

Planned Production is the ability to look ahead, organize and
coordinate and having plenty of driving force and capacity to lead
and ability to supervise and coordinate work and simulates his
associates by means of a programme of human relation and
organization of employees.

Production Planning and Control involve generally the
organization and planning of manufacturing process. Especially it
consists of the planning of routing, scheduling, dispatching
inspection, and coordination, control of materials, methods
machines, tools and operating times. The ultimate objective is the
organization of the supply and movement of materials and labour,
machines utilization and related activities, in order to bring about
the desired manufacturing results in terms of quality, quantity, time
and place.

Production planning without production control is like a bank
without a bank manager, planning initiates action while control is
an adjusting process, providing corrective measures for planned
development. Production control regulates and stimulates the
orderly how of materials in the manufacturing process from the
beginning to the end.


1.5 Steps in PPC
Production Planning and Control (PPC) is a process that comprises
the performance of some critical; functions on either side, viz.,
planning as well as control.

Production Planning and control

Production Planning Production Control

Planning Dispatching

Routing Following up

Scheduling Inspection

Loading Corrective

Production planning
Production planning may be defined as the technique of foreseeing
every step in a long series of separate operations, each step to be
taken at the right time and in the right place and each operation to
be performed in maximum efficiency. It helps entrepreneur to
work out the quantity of material manpower, machine and money
requires for producing predetermined level of output in given
period of time.

Routing
Under this, the operations, their path and sequence are established.
To perform these operations the proper class of machines and
personnel required are also worked out. The main aim of routing is
to determine the best and cheapest sequence of operations and to
ensure that this sequence is strictly followed. In small enterprises,
this job is usually done by entrepreneur himself in a rather
adhoc manner. Routing procedure involves following different
activities.

(1) An analysis of the article to determine what to make and what
to buy.
(2) To determine the quality and type of material
(3) Determining the manufacturing operations and their sequence.
(4) A determination of lot sizes
(5) Determination of scrap factors
(6) An analysis of cost of the article
(7) Organization of production control forms.

Scheduling
It means working out of time that should be required to perform
each operation and also the time necessary to perform the entire
series as routed, making allowances for all factors concerned. It
mainly concerns with time element and priorities of a job. The
pattern of scheduling differs from one job to another which is
explained as below:


Production schedule: The main aim is to schedule that amount of
work which can easily be handled by plant and equipment without
interference. Its not independent decision as it takes into account
following factors.

(1) Physical plant facilities of the type required to process the
material being scheduled.
(2) Personnel who possess the desired skills and experience to
operate the equipment and perform the type of work involved.
(3) Necessary materials and purchased parts.

Master Schedule: Scheduling usually starts with preparation of
master schedule which is weekly or monthly break-down of the
production requirement for each product for a definite time period,
by having this as a running record of total production requirements
the entrepreneur is in better position to shift the production from
one product to another as per the changed production requirements.
This forms a base for all subsequent scheduling acclivities. A
master schedule is followed by operator schedule which fixes total
time required to do a piece of work with a given machine or which
shows the time required to do each detailed operation of a given
job with a given machine or process.
Manufacturing schedule: It is prepared on the basis of type of
manufacturing process involved. It is very useful where single or
few products are manufactured repeatedly at regular intervals.
Thus it would show the required quality of each product and
sequence in which the same to be operated

Scheduling of Job order manufacturing: Scheduling acquires
greater importance in job order manufacturing. This will enable the
speedy execution of job at each center point.
As far as small scale industry is concerned scheduling is of utmost
importance as it brings out efficiency in the operations and s
reduces cost price. The small entrepreneur should maintain four
types of schedules to have a close scrutiny of all stages namely an

enquiry schedule, a production schedule, a shop schedule and an
arrears schedule out of above four, a shop schedule is the most
important most suited to the needs of small scale industry as it
enables a foreman to see at a glance.

1. The total load on any section
2. The operational sequence
3. The stage, which any job has reached.

Loading

The next step is the execution of the schedule plan as per the route
chalked out it includes the assignment of the work to the operators
at their machines or work places. So loading determines who will
do the work as routing determines where and scheduling
determines when it shall be done. Gantt Charts are most commonly
used in small industries in order to determine the existing load and
also to foresee how fast a job can be done. The usefulness of their
technique lies in the fact that they compare what has been done and
what ought to have been done.
Most of a small scale enterprise fails due to non-adherence to
delivery schedules therefore they can be successful if they have
ability to meet delivery order in time which no doubt depends upon
production of quality goods in right time. It makes all the more
important for entrepreneur to judge ahead of time what should be
done, where and when thus to leave nothing to chance once the
work has begun.

Production control

Production control is the process of planning production in
advance of operations, establishing the extract route of each


individual item part or assembly, setting, starting and finishing for
each important item, assembly or the finishing production and
releasing the necessary orders as well as initiating the necessary
follow-up to have the smooth function of the enterprise. The
production control is of complicated nature in small industries. The
production planning and control department can function at its best
in small scale unit only when the work manager, the purchase
manager, the personnel manager and the financial controller assist
in planning production activities. The production controller
directly reports to the works manager but in small scale unit, all the
three functions namely material control, planning and control are
often performed by the entrepreneur himself production control
starts with dispatching and ends up with corrective actions.

Dispatching

Dispatching involves issue of production orders for starting the
operations. Necessary authority and conformation is given for:

1. Movement of materials to different workstations.
2. Movement of tools and fixtures necessary for each operation.
3. Beginning of work on each operation.
4. Recording of time and cost involved in each operation.
5. Movement of work from one operation to another in accordance
with the route sheet.
6. Inspecting or supervision of work

Dispatching is an important step as it translates production plans
into production.


Follow up

Every production programme involves determination of the
progress of work, removing bottlenecks in the flow of work and
ensuring that the productive operations are taking place in
accordance with the plans. It spots delays or deviations from the
production plans. It helps to reveal detects in routing and
scheduling, misunderstanding of orders and instruction, under
loading or overloading of work etc. All problems or deviations are
investigated and remedial measurer are undertaken to ensure the
completion of work by the planned date.
Inspection: This is mainly to ensure the quality of goods. It can be
required as effective agency of production control.
Corrective measures: Corrective action may involve any of those
activities of adjusting the route, rescheduling of work changing the
workloads, repairs and maintenance of machinery or equipment,
control over inventories of the cause of deviation is the poor
performance of the employees. Certain personnel decisions like
training, transfer, demotion etc. may have to be taken. Alternate
methods may be suggested to handle peak loads.

Inspection

This is mainly to ensure the quality of goods. It can be required as
effective agency of production control.

Corrective measures

Corrective action may involve any of those activities of adjusting
the route, rescheduling of work changing the workloads, repairs
and maintenance of machinery or equipment, control over
inventories of the cause of deviation is the poor performance of the


employees. Certain personnel decisions like training, transfer,
demotion etc. may have to be taken. Alternate methods may be
suggested to handle peak loads.

1.6 Methodology
The study is carried out at Eicher Tractors, Mandideep.
Productions officers are likewise selected who serve as the
respondents of the study. The study extensively explores both the
primary and secondary sources of information.

Pertinent information is gathered from the respondents using a
structured questionnaire. The structured questionnaire is consists of
descriptive questions to get the description of various aspects of
Production Planning and Control. The initial questions are to cover
the variables characterizing the various production planning and
control practices such as demand forecasting, inventory, capacity
utilization, and scheduling techniques while the last segment will
purely on Control practices.

Unstructured personal interview is also conducted in order to
augment the responses that may not be explicitly cleared in the
questionnaire. Like this the data is properly collected, organized,
and presented.


MAIN TEXT


2. MAIN TEXT

2.1 Company Profile
Eicher Tractors, Mandideep

The Eicher Group started in 1948 when the Goodearth Company
was set up to sell and service imported tractors in India. Perceiving
an urgent need to mechanize Indian agriculture, the Company set
up a tractor manufacturing facility i.e. Eicher Tractors Limited in
1959 in collaboration with Gebr. Eicher, Germany in India. The
first Indian tractor rolled out of Eicher's factory at Faridabad in
India, in 1960.
Today, there are over 4,00,000 Eicher tractors that contribute to the
nation's agricultural development. Eicher's manufacturing and
marketing facilities located at Faridabad have been awarded ISO
9001 certification.

Eicher Tractors has a technology transfer tie-up with Valtra, Inc of
Finland. It has an extensive network of over 400 tractor dealers and
around 56 engine dealers across India with 15 regional offices and
12 depots.


Committed to providing high quality products, Eicher invests
significantly in technology resources and infrastructure. Our
manufacturing facilities are spread across three states:
Highlights

• Wide range of tractors, from 61 HP to 24 HP offering the
best value for money.
• Product range includes air-cooled and water-cooled engines.
• Highly fuel efficient machines, with low maintenance costs.
• Conforming to international emission norms.

Product range also includes engines in the 22 HP to 32 HP and
gensets in the 15 KVA to 30 KVA categories


2.2 Interpretation of Data

Q1. Do you think production planning and control is central to
the success of any manufacturing unit?
If Yes, then how?

Options Yes No
Response 10 0

No
0%

Yes
100%

Interpretation
All the 100% respondents believe that production planning and
control is central to the success of any manufacturing unit.
Production planning and control gives direction to the best use of
capacity with optimum utilization of production line, resources,
and other equipments. It helps in waste reduction and leads to
increased profitability.

Q2 Capacity planning contributes to the efficient use of
facilities and equipments?

If Yes then how?

Options Yes No
Response 8 2

Yes
80%

No
20%

Interpretation
Most of the respondents i.e. 80% are in favor of the statement that
“capacity Planning contributes to the efficient use of facility and
equipments.”

Proper Capacity planning leads to optimum utilization of capacity
reduces idle time, under or over utilization of capacity.

Q3. What are the main objectives of Production Planning?

a) Optimum Utilization of Capacity


b) Inventory control
c) Economy in Production Time
d) Ensure Quality
e) Waste reduction and increased profit

Options A b c d E
Response 8 6 4 2 10

10
9
8
7
6
5
4
3
2
1
0
a b c d e

Interpretation
All the respondents believe that waste reduction and increased
profit is the main objective of production planning, some of them
also believe that optimum utilization of capacity is another
objective of production planning.

The other objective of production planning is inventory control,
economy in production time, and quality insurance.

Q4. Production Planning and Capacity Planning are
interrelated?


If yes then how?

Options Yes No
Response 7 3

Yes
70%

No
30%

Interpretation
Majority of the respondents i.e. 70% believe that production
planning and capacity planning are interrelated. Long term
Production planning becomes the basis of capacity planning. Size
of production and type of production depends on capacity, hence
both are interrelated.

Q5. Since, capacity can’t always be added or subtracted
instantaneously; there will be mismatch of load and capacity.
What are its effects?
a) Lead time get affected
b) Increase in cost

c) Hurts the ability to satisfy customers
d) Other effects
Please specify other effects (if any)

Options a b c d
Response 0 9 10 2

10

8

6

4

2

0
a b c d

Interpretation
Almost all respondents believe in the above statement. According
to them mismatch in load and capacity, leads to customer
dissatisfaction and increase in cost. If the capacity is low and
demand is high, orders will not be completed on time. If load is
less and capacity is more then requirement it will lead to inefficient
use of capacity, hence, cost of production will increase.

As lead time is calculated on the basis of available capacity it has
no effect on lead time.

Other effects can be increase in cost by increasing man power and
plant maintenance, and delay in delivery to customers.

Q6. On what basis do you plan your production?
a) Customer needs (demand)
b) Target of Marketing Dept.
c) Resources available
d) Other factors


Please specify other factors (if any)

Options a b c d
Response 8 0 10 0

10
9
8
7
6
5
4
3
2
1
0
a b c d

Interpretation
According to the data collected from the respondents the
production planning of Eicher Tractors, Mandideep is based on
customer need i.e. dealers demand for particular models, and also
on the basis of resources available.

The marketing department reports to the PPC/Store about dealers’
requirements. PPC/Store communicates with the material
department about availability of material. Hence, market demand
and availability of resources is considered as base for production
plans.
Q7. Do you feel or experienced “hung up” and “bottlenecks” in
implementing Production Plans.

a) Yes
b) No


If yes then what type of bottlenecks?

Options Yes No
Response 4 6

No
60%

Yes
40%

Interpretation
Majority of the respondents i.e. 60% are in against of the
statement, hence, all the department works in integration. Heads of
all the department sits together and prepares plans which are
properly applicable.

There are people who experienced bottlenecks like- sequence
change due to non availability of material, and transforming one
model to other due to requirement of specific model.
Q8. How do current Production Planning and Capacity
Planning methods account for bottlenecks.

Interpretation


Current production planning and capacity planning highly depends
on material available and material in transit. The non availability
of material and delay in transportation of material hinders
execution of plans properly. Due to this too many changes in daily
and weekly plans takes place.

Sometimes lack of coordination between PPC/Store, production
department, and Quality control department creates problem of
rework and repair.

Q9. Previously what measures have been taken to avoid such
bottlenecks?

Interpretation
As the main source of bottleneck is timely not availability of
material. So, proper care is taken of the material providers,
transportation of material, and inventory of material. Following
measures have been taken to avoid such bottlenecks:
• Multiple vendors being developed for most of the items.
• Proper inventory level is being asked to maintain.
• Planning being done with the best availability of material

Q10. If results are not according to the plans, what control
measures are taken?

a) Revision of Plan

b) Any other measures.

Please specify other measures (if any)

Options Revision of Plan Other measures
Response 10 0

Other Measures
0%

Revision of Plan
100%

Interpretation
If the results are OK wait until next control period. If not OK,
revision of plan is required to be done. At present people of Eicher
Tractors do not have any other solution except revision of plan to
control deviations in plans and results.

2.3 Production Planning and Control at Eicher
Tractors, Mandideep


Production plan is crucial to the success of any producing unit; it is
an activity which is continues in nature and required to be revised
time to time as per the requirements. It can’t be done in isolation
by a particular department; rather it is an integrated activity done
by Planning and Control Department in collaboration with Material
Department, Production Department, and Quality Control
Department. The heads of various departments of Eicher Tractors
sits together and Plans there monthly, weekly, and daily
production.

2.4 Process of Production Planning
1. Marketing Department – Monthly details of Market
demand

Production planning starts from the market details provided by
Marketing Department. Marketing Department provides there
monthly requirements like- number of tractors, specific models,
specific color, capacity etc.

2. PPC/Store – Preliminary Production Plan

PPC/Store receives message of monthly requirements from
marketing department. PPC studies the requirements and prepare a
Preliminary Production Plan. This plan is sent to the Materials
Department.

3. Material Department – Material requirements planning

A copy of preliminary plan is sent to the material department.
Material department studies the plan and prepares a report which
shows the availability of material, material in transit, plan of
receipt of material in chronological form, expected shortage of


material, and any other problem related to the material. Materials
Requirements Planning (MRP) can be used in more complex
systems. MRP determines time-phased requirements (period-by-
period) for all purchased and manufactured parts such as raw
materials, components, parts, subassemblies, etc. . This report is
sent to the PPC Department

4. PPC–Revision of preliminary Production plan.

On the basis of the report sent by material department, the
PPC/Store revises the preliminary plan. This revised plan is sent to
the marketing department. Marketing department revises the
schedule of requirements according to the availability and
sequence/schedule of receipt of material.

5. Production Planning and Master Production Scheduling

After the consent of marketing department and material department
the monthly Production Plan and weekly master production
scheduling is done. A copy of main plan and master production
schedule is sent to each department.

6. Daily Production Plan

Every day in morning the production head, quality head, and
material head sits together, discuss there problems, and

unanimously prepares a daily production plan. This daily
production plan is displayed on planning board of every
department and at every level of assembly line. This daily
production plan shows sequence of operations, sequence and
schedule of material movement, post pending material, pre pending
material, and shortage of material. This daily plan is automatically
get updated with the completion of operations at every level.

7. Control

In results are not according to the Daily Plans, the plan is required
to be revised. Daily Production Plan is revised number of times
considering the material shortages, problems with assembly line,
etc. if material is post pending i.e. on assembly line its operation
can’t be changed, but, changes can be made in the sequence and
scheduling of pre pending material i.e. material in queue. Efforts
are made to plan a sequence which minimizes the idle time of
assembly line, labour, and other equipments.

2.5 Findings


The PPC department of Eicher Tractors, Mandideep believes in
making plans and decisions unanimously, in cooperation with
production department, marketing department, material
department, and quality control department. So that a feasible plan
can be made, executed properly, and optimum results can be
achieved. Hence, production planning and control is an integrated
activity and can’t be done in isolation by any particular
department.

Following are the findings of this project about production
planning and control activities of Eicher Tractors:

1. Production Planning is an integrated activity and cannot be
done in isolation by a particular department.
2. PPC helps in scheduling tasks and production runs and
ensures production capacity does not remain idle and there is
no undue queuing of tasks via proper allocation of tasks to
the production facilities.
3. Proper PPC helps to resort to just- in- time systems and
thereby reduce the overall inventory. It enables to ensure that
the right supplies are available at the right time.
4. PPC helps to reduce the cycle time and increase the turnover
via proper scheduling.
5. PPC provide for adherence to the quality standards so that
quality of output is ensured.

To sum up we may say that PPC is of immense value to the
entrepreneur in capacity utilization and inventory control. More
importantly it improves his response time and quality. As such
effective PPC contributes to time, quality and cost parameters of
entrepreneurial success.

2.6 Conclusion


After doing this project I am in position to conclude that Eicher
Tractors, Mandideep has well defined and structured production
planning system. PPC defines the sequences and schedules of
operations; hence production planning contributes to the efficient
use of facilities and equipments.

PPC is done to identify production process which leads to reduced
lead time; hence customer waiting time is also reduced.

PPC ensures optimum utilization of production capacity, material,
and other equipments; hence it leads to waste reduction and
increased profits.

2.7 Recommendations
The production planning and control of Eicher Tractors,
Mandideep, highly depends on the material availability. In case of
shortage of material the overall plan get disturbed. If such problem
prevails the optimum results cannot be achieved. To avoid such
problem following measures can be taken:

a. Proper Materials Planning done,
b. Materials must be purchased from multiple vendors,
c. Sufficient safety stock must be maintained,
d. Lead time and responsibility must be fixed at the part of
vendors.

3. REFERENCES


Books:

1. Harris, g, attour, s, 2003 The National advertising practices
of multinational companies; a content analysis study.
European journal of marketing volume 37, no ½; 154-168

2. MacKenzie, I.2004 English for business studies - A curse for
business studies and economics students. Cambridge, United
Kingdom;

3. Nardi, P.2003. Doing Survey Research – A Guide to
Quantitative Method.

Websites:

1. www.wikipedia.org
2. www.tmtl.com
3. www.eichertractors.in


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