Inventory Control and Replenishment

techniques followed by MG Hector

Dealers
 A Project Report on

“Inventory Replenishment techniques followed by MG Hector

Dealers”

Submitted in partial fulfilment for the

Degree of Master of Fashion Management

Under the guidance of

Professor

Dr Gulnaz Banu

Department of Fashion Management

Studies On

18 April 2020

By

Ayushi

Srivastava

Neha Kabra

Nidhi Sharma

Prerna Sen

Shruti Arora

Department of Fashion Management Studies (2019-2021)

NATIONAL INSTITUTE OF FASHION TECHNOLOGY,

BENGALURU-560102
 DECLARATION

We hereby declare that this project submitted to National Institute of Fashion

Technology, Bengaluru in partial fulfilment for the award of Master of Fashion
Management is the original work carried out by us under the guidance and
supervision of Dr Gulnaz Banu, Department of Fashion Management Studies and
NIFT Bengaluru.

We, further declare that this project or part thereof has not been submitted in any
form for any other degree or diploma. All information included from other sources
has been duly acknowledged.

Ayushi

Srivastava

Neha Kabra

Nidhi Sharma

Prerna Sen

Shruti Arora

Place: Bengaluru

Date:18 April

2020
 ACKNOWLEDGEM
ENT
We would like to take this opportunity to express our sincere gratitude to Dr Gulnaz
Banu for this opportunity to work on this project and guiding us through the entire
process.

Thank You

Ayushi

Srivastava

Neha Kabra

Nidhi Sharma

Prerna Sen

Shruti Arora
 Table of
Contents
MG MOTOR OVERVIEW
Introduction .......................................................................................................................... 1
Products in India ................................................................................................................. 1
Dealers ............................................................................................................................... 1

Supply Chain Management

Supply Chain of Raam 4 Wheelers and Jayalakshmi ........................................................ 2

Inventory Control and Management
Inventory .............................................................................................................................. 5
Inventory Control System .................................................................................................... 6
Inventory Control Methodology ........................................................................................... 6

Inventory Replenishment System ....................................................................................... 8

Warehouse Management… .............................................................................................. 10

Scope of Inventory Management ...................................................................................... 15

Dealer Inventory Management… .......................................................................................15

Order Management........................................................................................................... 24

Software and Procedure for Ordering

Software, Procedure, Emergency Orders ......................................................................... 27

Conclusion ........................................................................................................................... 28
Reference .............................................................................................................................29
 Abstract

Successful compilation of assignment on Inventory Control, management and

replenishment undertaking the supply chain in Automobile sector is done by taking
into account Dealerships of MG MOTOR India which are Jayalakshmi Auto
Enterprises private at Vijayawada district of Andhra Pradesh and Raam 4
Wheelers LLP situated in Hyderabad region of Telangana.
This assignment inculcated the various types of inventory that exist in the retail
sector and reinvigorated the new ideas and knowledge especially on inventory
control and management. Inventory constitutes a major component of working
capital. To a large extent, the success or failure of a business depends upon its
inventory management performances. Proper management and control of inventory
not only solve the problem of liquidity but also increase profitability. Inventory
establishes a link between production and sales.
In the automobile industry, all dealerships work of inventory control is done under
constant supervision and guidance of the company, which is MG Motor here. The
entire process has been carefully understood resulting in the compilation of this
report. Due to unfortunate COVID -19 Pandemic around the world, all the information
is carefully gathered via Telecommunication or Zoom video call as a physical visit is
not possible.
All the best available communication resources have been used to gather primary
data for this report as MG Motor India opened its subsidiary in India in 2017
however, only began its sales & manufacturing operations in 2019. Internet does not
serve ready to copy, easily available information related to this new launch MG
Hector in India. So deep and exhaustive research has been done to extract primary
information on this.
 MG MOTOR OVERVIEW

MG Motor UK Limited (MG Motor) is a British automotive company was started in

1924, headquartered in Long bridge, Birmingham, England, and a subsidiary of SAIC
Motor UK, which in turn is owned by the Shanghai-based Chinese state-owned
automotive SAIC Motor. MG Motor designs develop, and market cars sold under the
MG marque. MG Motor is the largest importer of Chinese made cars into the United
Kingdom.

MG Motor started their operations in India 3 years ago and MG Hector a car
launched by Mg Motor in late July 2019, did capitalize on the mid-size SUV rush by
sweeping 15,930 units till January 2020. In India, they have manufacturing
facilities at Vadodara and is present in 51 cities with around 65 dealers pan India.
Products in INDIA
1. Hector (SUV)
2. ZS EV (Electric Car, available in limited cities only)
3. Vehicle Parts and Accessories
Dealers of MG Motor (Retail End)
There are around 65 Dealers in India. For this assignment, two dealers have been
selected for this assignment who are
1. Jayalakshmi Auto Enterprises Private Limited is a retail outlet incorporated on
31 January 2019. It is classified as Non-govt company and is registered at
Registrar of Companies, Hyderabad. It is situated in Vijayawada district. Its
authorized share capital is Rs. 1,000,000 and its paid-up capital is Rs. 1,00,000.

2. Raam 4 Wheelers India Private Limited is a retail outlet incorporated on 07

March 2012, and further 2018, it was taken over by MG motor for MG Hector. It is
classified as Non- govt company and is registered at Registrar of Companies,
Hyderabad. Its authorized share capital is Rs. 75,000,000 and its paid-up capital is
Rs. 60,000,000. It is involved in Sale of motor vehicles.

1
 SUPPLY CHAIN MANAGEMENT

The automotive supply chain for manufacturing cars, trucks and other vehicles is one
of the most complexes in the world. It’s becoming more global too, second only to
the electronics sector for the spread of suppliers, manufacturers and other third
parties around the world. Globalization adds some unique complexity to the
automotive supply chain.
Supply Chain Of Raam 4 Wheelers & Jayalakshmi

4. Accessories,
MG Motor

1.Single parts 2. Assembler 5.Car retailer Raam

manufacturer, MG Motor Customer
4 wheelers &
MG Motor (Tier ,Vadodara Jayalakshmi
1)

3.Vendors of
Tyres, Engine oil
etc
Detailed Analysis of Supply Chain Management of Raam 4 Wheeler & Jayalakshmi:
1. Tier 1: The single parts which are later assembled, are being manufactured in MG
Motor, the production is done in MG Motor Shanghai, UK, Chennai, Pune, Halol &
Gurgaon. Dealers if required directly procure the single parts from MG Motor.
Supply of single parts like:
a. Headlam e. Panel i. Retainer
p s j. Body
b. Washer f. Pump k. Nuts bolts
c. Bars s l. Screws
d. Car g. Senso
r
h. Mirror
and many more as listed in the stock/inventory table in the coming pages.
2. OEM (Original equipment manufacturer): MG Motor, Vadodara assembles the
single parts together to make the MG Hector car and supplies it to the car retailers
Raam 4 Wheeler & Jayalakshmi, therefore MG Motor on a whole is an OEM because
apart from producing a car they themselves manufacture the spare/ Accessories of a
car.
3. Vendors: Here the vendors being talked about are the ones which supply extra
batteries, tyres, engine oil directly to the dealers, the vendors being Exide for
2
Batteries, Tyres – Continental, Goodyear, Engine Oil-Total, Petronas. To maintain
the reputation of the

2
company the MG Motor themselves suggests the vendors from where the dealers
can directly fulfil their supply of materials as listed below:
Table 1 Materials supply by Vendors to the Retailers

Part ID Description
23627079 FILTER ASM-PASS COMPT AIR
23635023 GASKET, DRAIN PLUG
23532232 ELEMENT-A/C/L
23567543 BATTERIES
23635022 FILTER, ENGINE OIL
23642796 FUEL FILTERING ELEMENT(DIESEL)
24552829 GASKET-OIL PAN DRM PLUG
24563823 FILTER ASM-OIL
23678567 TYRES
23923951 PLUG-OIL PAN DRN
23635025 PLUG, DRAIN
23594884 FILTER ASM-FUEL

4. Accessories: The accessories used in a car are manufactured by MG Motor and

are sent to the Vadodara plant for assembling. The Dealers can directly also procure
the accessories from MG Motor. Accessories supply to the Dealers
Table 2 List of Accessories supply to the Retailers

Part
Number Marketing Part Name Part Marketing Part Name
Number
A4000001 CHROME TAIL GATE A4000522 AIR VALVE CAPS
A4000002 CHROME REAR TAIL LAMP A4000523 PERFUME AQUA BREEZE
A4000003 CHROME ORVM A4000524 PERFUME VINTAGE AROMA
CHROME DOOR HANDLE w BOWL
A4000004 A4000525 PERFUME AQUA BREEZE
COVER KIT
A4000005 CHROME WINDOW FRAME KIT A4000526 PERFUME VINTAGE AROMA
A4000006 CHROME WHEEL ARCH A4000527 TISSUE BOX
A4000007 CHROME FRONT LOWER SURROUND A4000528 OWNERSHIP FOLDER
CAR FRAME ACRYLIC GODDESS
A4000008 CHROME FRONT GRILL SURROUND A4000529
DURGA
CABIN CARPET FLOOR MAT SET - CAR FRAME ACRYLIC GURU NANAK
A4000009 A4000530
BLACK & RED DEV
CABIN CARPET FLOOR MAT SET -
A4000010 GREY & BLACK A4000531 CAR FRAME ACRYLIC GANESH

A4000011 CARPET BOOT MAT – BLACK & RED A4000532 CAR FRAME ACRYLIC HANUMAN
CAR FRAME ACRYLIC JESUS
A4000012 CARPET BOOT MAT - GREY & BLACK A4000533
CHRIST
CABIN DESIGNER FLOOR MAT - RED
A4000013 A4000534 CAR FRAME ACRYLIC MAKKA
& BLACK
CABIN DESIGNER FLOOR MAT - LIGHT
A4000014 A4000535 CAR FRAME ACRYLIC SAI BABA
GREY & BLACK
A4000015 PVC CABIN & BOOT MAT – A4000536 CAR FRAME ACRYLIC SHIV

2
 TRANSPARENT
A4000016 PVC CABIN & BOOT MAT – BLACK A4000537 CAR FRAME ACRYLIC TIRUPATI
A4000017 3D MAT (CABIN + BOOT) A4000538 METAL HANGING GODDESS DURGA
A4000019 FRONT LINER – SS A4000539 METAL HANGING GURU NANAK DEV
A4000020 REAR GLASS SILL – SS A4000540 METAL HANGING GANESH
A4000021 BUMPER CORNER PROTECTOR A4000541 METAL HANGING HANUMAN
BUMPER CORNER PROTECTOR -
A4000022 A4000542 METAL HANGING JESUS CHRIST
CHROME
A4000024 MUD FLAPS A4000543 METAL HANGING MAKKA
A4000026 ANTI-SLIP MAT A4000544 METAL HANGING SAI BABA
A4000028 WIND DEFLECTOR CHROME A4000545 METAL HANGING SHIV
A4000046 CAR COVER – SILVER A4000546 METAL HANGING TIRUPATI
A4000055 SUN SHADES A4000547 ROOF CARRIER
A4000057 REAR ENTRY SILL PLATE- SS A4000548 AIR ROOF CARRIER
A4000059 NON-ILLUMINATED SILL PLATE - SS A4000549 SIDE STEP BOARD
PET PROTECTION COVER FOR
A4000569 JUMPER START CABLE A4000561
REAR SEAT
A4000502 SWIVEL SEAT A4000573 NUMBER PLATE GARNISH
A4000504 BODYGRAPHICS TOOLMECH A4000574 MICROFIBER CLOTH
BODYGRAPHICS ELEGANT WAVE
A4000507 A4000575 MICROFIBER SPONGE
LIGHT BODY
BODYGRAPHICS ELEGANT WAVE
A4000508 DARK BODY A4000576 TISSUE BOX
SEAT COVER - V QUILT BLACK &
A4000509 A4000577 TRUNK ORGANIZER
WHITE
SEAT COVER - V QUILT BLACK &
A4000510 A4000556 CAR INVERTER
GREY
SEAT COVER - BLACK ORIGINAL
A4000511 PERFORATED A4000557 CAR REFRIGERATOR

4. Dealers/ Retailers: Though MG Motor is serving to 50+ dealer/ Retailers, we

will be discussing Raam 4 Wheelers & Jayalakshmi. They have actively
involved in the sale of the cars to customers and according to the new orders
that the dealers take the stock needs to be replenished by the OEM for the
further production of that particular product. The Dealers are strongly
integrated by MG Motor, for the replenishment of the stock and the further
orders are placed through them by DMS (Dealer manufacturing system)
[Note: Present situation of the Supply Chain, MG Motor India said the company’s production may get affected next
month due to a possible disruption in the supply of components from China following the coronavirus outbreak and
there is a pending order of 16,000 units all over the world of the MG Hector].

3
 INVENTORY MANAGEMENT AND CONTROL

The aim of inventory administration is to hold inventory at the lowest potential

charge, given the objectives to guarantee continual provisions for continuing
operations. While creation, decisions on inventory management must find a
compromise between different cost components. Such as the costs of supplying
inventory, inventory–holding costs and costs resulting from insufficient inventories

Inventory
Inventory is generally the largest current asset or items expected to sell within a time
frame. Inventory is an accounting term that refers to goods that are in various stages
of being made ready for sale, including:

• Finished goods (that are available to be sold)

• Work-in-progress (meaning in the process of being made)
• Raw materials (to be used to produce more finished goods)
Inventory management is essential as it helps to shelter the intended way of
production contrary to the random way of producing or ordering considerable
materials or goods. Inventory management also includes making essential
connections between the re-fill lead time of goods, asset management, the
conveyance cost of inventory, future inventory price forecasting, physical inventory
available space for inventory, demand forecasting and much more
Retail Inventory management is the basis of a well-functioning Auto Mobile retail
outlets which Is Dealership in the automobile industry. It is critical for efficient
operations and effective cash management. It tracks the lifecycle of inventory and
stock as it comes and goes out of a Dealership.
The objectives of Inventory Management in the Automobile Industry:

• To ensure a continued supply of various spare parts not only for production but
also from time to time for car service, Roadside assistance, and other exigencies.

• To avoid the store and underneath stocking because over storage may lead to
increased cost and under storage may lead to procrastination, bitter experience
for customers.

• To keep material cost under control, to keep low cost of production, for instance,
the current unfortunate COVID-19 situation is leading to a slowdown of imports as
80% of parts are imported from China for MG Motors.

• To eliminate duplication in ordering or replacing stocks.

• To minimize losses through, deterioration, pilferage, wastage, and damages.

4
• Designing structures for good inventory management. For maximum use of
minimum space.

• To facilitate data for short- and long-term planning and control of inventory.
Inventory Control System
Inventory control systems are technology solutions that integrate all aspects of an
organization’s inventory tasks as per the following chart

Ware
Inventory Purchase Sales Order house
Order Storage

Deliveries/Tra
Turnover Re- Order
c king

Figure 1: Process Followed for Ordering and replenishment

Inventory Control Methodology:

1. Economic order quantity. 10. Consignment inventory.
2. Minimum order quantity. 11. Perpetual inventory management.
3. ABC analysis. 12. Drop-shipping.
4. Just-in-time inventory 13. Lean Manufacturing.
management.
14. Six Sigma.
5. Safety stock inventory.
15. Lean Six Sigma.
6. FIFO
16. Demand forecasting.
7. LIFO
17. Cross-docking.
8. Reorder point formula.
18. Bulk shipments
9. Batch tracking.

There are two types of Inventory Control System followed by retailers of MG Motor:
1. FIFO Inventory Management System for MG Hector:
FIFO, or First in, first out, assumes the older inventory is sold first. FIFO is a great
way to keep inventory fresh. Customer’s order the product at the Dealers of MG
Motors at various locations in India. In the current scenario Demand of MG Hector
and it’s accessories are more than supply as the brand is newly launched in India
and through various successful

5
market campaigns the company took advance booking of the orders with a minimum
amount of INR 50,000.
The further company generated order numbers to various customers all around India
through various Dealers. Every customer has a different demand with respect to
Colour and Models.
Based on the orders number the company (MG Hector) provides cars to the Dealers
(Jayalakshmi Auto Ent.) based on FIFO Model. The order is fulfilled on a FIFO basis
and in the same ways cars being released for Delivery at Retailer’s Place.
After the car is delivered to the Dealer by the company, if Dealer is already available
with same Specified Model in their warehouse, the existing car is delivered to the
customer. This is how the FIFO system is followed at the Warehouse of the
Dealership for MG Hector.

JAYALAKSHMI AUTO
ENTERPRISES
(Dealer)

For Spare
MG Hector SUV parts,Accessories and
(Follows FIFO Inventory) others
(Follows Perpetual
inventory management )

Figure 2: Inventory Control System at Jayalakshmi Auto Ent. For Car and Accessories

6
 2. Inventory Replenishment System- Perpetual Inventory System
Perpetual inventory systems, also known as continuous inventory systems, are
systems where the information about the inventory in a facility is updated in near-
real-time. As an item is bought or used, it will be removed from the inventory
system. As new items are brought in, the system will be updated to reflect this as
well.

When company use a perpetual inventory system, it continually updates inventory

records and accounts for additions and subtractions when inventory items are
received, sold from stock, moved from one location to another, picked from
inventory, and scrap. Perpetual inventory delivers accurate results on a continual
basis when managed properly.
Benefits of a Continuous Inventory System
Continuous inventory systems are quite popular, but they may not be right for every
environment. Learning about the different benefits of this type of inventory
management is a great way for companies to determine whether it is worth the effort
or not. The following are some of the biggest benefits of implementing a perpetual
inventory system:
• Precise Restocking - When a Dealer knows exactly when something comes in
and out of their system, it is easy to manage to restock. Companies can use
these systems to trigger reordering at the right time to ensure they always have
what they need.
• Sales Tracking - A perpetual inventory system makes it easy to track sales
trends. This can help to make effective adjustments to pricing, advertising, and
other important aspects of running a dealership. As dealerships have a wide
option of Customization at their end in the MG Hector
• Minimize Risk of Theft - Dealer that know exactly how much of each item they
have in the system can respond to theft much more quickly and effectively. This

7
applies both to theft from customers, and theft from employees. Knowing what
types of parts are being

8
 stolen can also help to make a loss prevention team more effective than would
otherwise be possible.
• Accurate Financials - Accurate inventory means it is possible to track the
financials of a dealer much more precisely. This can help with reporting, tax
issues, and other essential aspects of running a successful dealer.
• Easier Regulatory Compliance – At dealer side, it will be necessary to know
exactly what is being kept on-site at what times Since there are more than 300
components at Dealer’s warehouse.
MG Motor keeps track of inventory balances continuously that is at the end of every
day, with updates made automatically whenever a spare part/Accessory is received
or sold. Purchases and returns are immediately recorded in the inventory account of
the Dealer Management Tool.

Placin
g
Order Order
Quantity
calculati Expediting
o

Demand Material
Forcasting Receiving

Stock
Analysi Stocking
s
Selling

Figure 3: Inventory Control cycle Followed at Dealer's Place

Inventory Replenishment has three key pieces:

1. When to reorder
2. How much to reorder
3. Creating a Purchase Order

When to reorder, or reorder frequency, tells dealerships the size and amount of an
inventory replenishment order. The most profitable dealerships know what product
the customer wants, how much they will pay for it, and when they want it

9
Warehouse Management-Parts Storage System:
The Warehouse Management System or WMS comes with several features that are
meant to help at every Dealer pan India with the administration of workflow-based
internal, inbound, and outbound warehouse activities. It comes packed with
extensive warehouse functionality. This includes bin ranking, calculated picks and
moves, cross-docking and cycle counting.
It deals with receipt, storage & movement of goods to intermediate storage locations
or to the final customer. In order to keep all small and big spares/accessories
organized application of any standard system is necessary. At Jayalakshmi Auto Ent.
they are effectively and efficiently using WMS and some of the pictures of Stock
management as follows.

Multi-location Stock Management

The inventory of the MG Hectors can be easily managed with SAP DMS, using one
database in all locations. MG Hector is not only managing its own inventory, but also
keeping track of every dealer, and keep asking the retailer to replenish them on time.
The retailer is managing stock at a different location as per their business size.

10
The locations are available as follows:
• Warehouses
• Distribution centers
• Service vehicles
• Showrooms
There are certain standards maintained and followed by dealers who are working for
MG hector. Even to have a retail space, Warehouse, or distribution system. Below
table displays Warehouse Area Management Configuration given by MG Hector.
Table 3: Warehouse Area Management Configuration by MG Hector

Sealing For every Additional

Space Minimu 1 service bays -
Recommend m Floor area Material Ingate Floor
ed Height requir
e
6Ft X 10 Ft (W
3000 Sq. Ft 15 125 Sq. Ft X Kota Stone
Ft. H)
Area % Used For
Storage of all small parts like Hardware parts, bulbs,
Small 12 plugs,
rings, etc
Medium 30 Storage of Radiators, Grills, Lamps, Filters & Trim parts
etc
Storage of Mainly heavy and large parts such as
Large Parts 33 panels, bumper cover, engine & T/m
Receiving
& 15 Loading-Unloading/Packing-Unpacking
Deliveries
Office & Other 10 Office and Temporary Space for unpacked parts

The following basic processes are supported by this functionality:

• Item handling for all internal movements, distributions, and production

• Receiving items at the warehouse and making sure that they are available
• Picking and shipping items to customers and other multiple locations

This recommended system envisaged warehouse performance and included

elements such as the inventory management Key Performance Indicator (KPI) and
warehouse productivity.

11
Rack Designs and configurations for Storage:
The below Rack designs imply the logical storage of goods to make maximum use of
space and resources which in turn would serve better experience and decreased
inventory cost. Also, heavy parts are stored at a low height for security reasons as it
would make its Docking, undocking easy.

Figure 4 Rack Size

12
Bin and Crate Design
Below given table and Bin picture specify the exact configurations of each rack, bin
and crate they are supposed to buy and their effective uses in storing spares and
accessories.

Figure 5: Bin & Crate

Specifications Table 4: Rack

Size and Dimensions

13
 Table 5 Rack Size and Dimensions

RECEIVING
Check every part at LOCATION CONTROL
receiving end. Ensure storing location
If found number at physical store
for all parts.
defective,register
claim asap.

OPERATION GENERAL
Always follow FIFO for Ensure parts packing
all parts. are clean and dust
freee
Ensure all parts are
kept in MOBIS genuine Have regular cleaning
parts packing Display location,Area and
parts number

Figure 6 Best practices to be followed at every Retailer for the efficient inventory management system.

14
 Scope of Inventory Management by MG Motors

• Support customers at new dealer/ new model launch (IDK)

• Improve Parts availability (ABC/FMS; SOQ Analysis)

• Improve Customer Satisfaction & prevent Parts Lost Sales.

Dealer Inventory Management
Table 6 Stock of Accessories at Jayalakshmi Auto Ent.

Jayalakshmi Auto Enterprises

Private Ltd.
V
DLR MOS to a
NDP
Weighte be r UOM Stock Tota D / Order
Value
Part ID Description Model d Maintaine NDP i Per in l P to be
Withou
Monthly d for PSM a CA Hand PM PM Place
t Tax
Sale Parts n R at S S d
Data t Dealer CA CA
R R
FILTER ASM-PASS
37
23627079 COMPT AIR Hector 814 1.5 153.3 C 1 49 0 0
23635023 GASKET, Drain Plug Hector 633 2.0 54.1 D 1 102 15 0 0
23532232 ELEMENT-A/CL Hector 626 1.5 295.5 C 1 72 37 0 0
23635022 FILTER , Engine Oil Hector 539 2.5 453.0 D 1 28 19 0 0
FUEL FILTERING
49 19
23642796 ELEMENT (DIESEL) Hector 494 2.5 976.2 D 1 30 0 0
GASKET-OIL PAN
43
24552829 DRN PLUG Hector 434 2.5 42.4 P 1 130 0 0
24563823 FILTER ASM-OIL Hector 368 2.5 180.1 P 1 40 43 3 540.3
23923951 PLUG-OIL PAN Hector 213 2.5 71.0 P 1 43 43 3053
DRN
23635025 PLUG, Drain Hector 134 2.0 189.2 D 1 15 15 2838
23594884 FILTER ASM-FUEL Hector 91 2.5 281.3 P 1 38 43 5 1406.5
7,838

15
 Table 7 Stock List from Raam 4-Wheeler LLP

Raam 4- Wheelers
LLP
V
DLR MOS to a
NDP
Weighte be r UOM Stock Tota D / Order
Value
Part ID Description Model d Maintaine NDP i Per in l P to be
Withou
Monthly d for PSM a CA Hand PM PM Place
t Tax
Sale Parts n R at S S d
Data t Dealer CA CA
R R
FILTER ASM-PASS
247
23627079 COMPT AIR Hector 814 1.5 153.3 C 1 51 196 30046.8
23635023 GASKET, Drain Plug Hector 633 2.0 54.1 D 1 46 99 53 2866.24
23532232 ELEMENT-A/CL Hector 626 1.5 295.5 C 1 64 247 183 54076.5
23635022 FILTER , Engine Oil Hector 539 2.5 453.0 D 1 58 124 66 29898
FUEL FILTERING
329 124
23642796 ELEMENT (DIESEL) Hector 494 2.5 976.2 D 1 56 68 66381.6
GASKET-OIL PAN
288
24552829 DRN Hector 434 2.5 42.4 P 1 91 197 8352.8
PLUG
24563823 FILTER ASM-OIL Hector 368 2.5 180.1 P 1 45 288 243 43764.3
23923951 PLUG-OIL PAN DRN Hector 213 2.5 71.0 P 1 61 288 227 16117
23635025 PLUG, Drain Hector 134 2.0 189.2 D 1 47 99 52 9838.4
23594884 FILTER ASM-FUEL Hector 91 2.5 281.3 P 1 77 288 211 59354.3
320,696

Analysis of stock list at Jayalakshmi Auto Enterprises Private Ltd.

The above table is the list of parts that are maintained at a Jayalakshmi Auto
Enterprise limited. The first column represents Part ID. Each dealer has almost 300
products in its inventory. Only some important ones are displayed here like filters
assembly for AC in hector, Gasket Drain plug, Engine oil, Oil drain pan plug etc.
Stocklist details the average monthly sale based on which every dealer calculates an
estimation for three months. As per the policy of MG Motors every dealer has to keep
inventory for three months at a given time. In the current COVID-19 situation, MG
motors are itself unable to procure much of the material from china. As soon as the
lockdown comes to an end these dealers would make use of the existing materials
on the FIFO basis until the supply starts from the company. Dealer maintains
monthly Operational Summary (MOS) reports which are shared with the MG Motors
from time to time.
Dealer maintains the PMS report (Periodic Maintenance Schedule) and its
mandatory to keep a certain amount of each part in inventory which may vary from
dealer to dealer depending on the past sales record.
For instance, with respect to Jayalakshmi Auto Enterprises Private Ltd-
requirement of gasket oil is 15 units but they already have 102 units so there is no
need to make fresh order for this part.

16
Replenishment of parts:
Hence each part is replenished based on the available stock which is monitored on a
perpetual basis. Plug oil pan drain is not available in inventory which reflects a
severe shortfall of this component while minimum needed availability of this part is
43. An order of 43 would be placed. In case demand of this part comes but this part
is not available in the inventory of dealer than an emergency order is placed and that
part is airlifted on the immediate basis within 48 hours but MG Motors would charge
10% extra surcharge as a penalty on the Dealer because the dealership is not
allowed to keep customer’s car above stipulated time because this may lead to
opportunity cost in terms of loss of the customer.
MG Hector has a special feature in the car named as ICALL button which will
connect the call directly at the customer service center of MG Motor.
Challenges to maintaining inventory at Dealership:

• Cannot be maintained manually

• Require specialized equipment /software that leads to higher cost of implementation
• Daily reporting and upgrades are necessary, which is an engaging process.
Inventory management is a process of tracking the value and quantities of all the
goods a Dealer has in stock. Whereas, warehousing is the act of storing cars, parts,
accessories that will be sold or distributed later
While there is some debate about the differences between warehouse management
and inventory control, the truth is that a good inventory control system does it all by
taking a holistic approach to inventory and empowering organizations to utilize lean
practices to optimize productivity and efficiency along the supply chain while having
the right inventory at the right locations to meet customer expectations. These are
the various inventory control methods-

Challenges with Manual keep up of inventory:

• During the time of inventory counting, normal business activities nearly become
suspended.
• Because of time constraints, workers may hurry in physical counting.
• Does not use inventory trackers, so errors and fraud may be more prevalent
• Amount of labour that is required for periodic inventory control systems makes
them better suited to smaller businesses.
Types of Inventory Management Systems within Inventory Control Systems
recommended by MG Motors
a) Barcode Inventory Systems

Inventory management systems using barcode technology are more accurate and
efficient than those using manual processes. The benefits of using barcoding
inventory management

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processes are barcode scanner numerous and do keep accurate records of all
inventory transactions. Facilitate the movement of inventory within warehouses and
between multiple locations and from receiving to picking, packing, and shipping
b) Radio Frequency Identification (RFID) Inventory Systems
Radiofrequency identification (RFID) inventory systems use active and passive
technology to manage inventory movements. Active RFID technology uses fixed tag
readers throughout the warehouse; RFID tags pass the reader, and the movement is
recorded in the inventory management software. RFID inventory management
systems have some associated challenges. It is far more expensive than barcode
labels.
With respect to MG Hector, the inventory of every dealer throughout India is
overlooked by the MG motors to deliver uniform and seamless services to its End
customers.MG Motors has its specifications for Dealerships and they are expected to
meet and maintain the company’s policies with respect to the Inventory system.
They use following tools to record inventory like- paper logs spreadsheets, periodic
Report submissions and SAP supported DBMS system software that directly ties
inventory to all sales activities and updates information for the requirements.
Inventory Management and Key Performing Indicators
Months of Supply (MOS): Months of Stock is the key point showing how many
months a dealer can operate without buying more stock. Dealer inventory should be
between 2-3 MOS in order to fulfil the parts requirement and not to lose sales

Turn Rate: Turn Rate is the measure which gives an idea about how many times
inventory is rotated in a year. Dealer Turn Rate should be between 4~5 which means
that inventory should be rotated 4~5 times in a year.

First Fill Rate: First fill rate is the number of lines or pieces supplied against the total
no of lines & pieces ordered by the dealer

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 Table 8 Stock Tracking sheet of MG Motor for every Dealer asper their business Size

Stock Tracking sheet @ MG

Motor

Empre Jayalaksh
Weighte DLR MOS to Arise FPL RAAM 4
Remar o mi Auto
Description Model d be Maintained Autoz Vehicle WHEELE
ks Wheel Enterprise
Monthly for PSM Parts Pvt s Pvt RS LLP
s s Privat
Sale (units=Months Ltd Ltd
Private
Data )
Limited
LUBRICANT-A/C Hector 1650 1.25 1000 700 1000 1750 1500
SYS
CLIP-AIR INL GRL Hector 984 2.5 29 91 0 129
PNL
CLIP-L/GATE LWR
MLDG Hector 920 2.5 76 100 152
FILTER ASM-PASS
COMPT AIR Hector PMS 814 1.5 1 19 4 49 51
HOOK-FRT TOW Hector 808 1.25 10 0 21 25 61
SCREW AND
WASHER Hector 746 3.0 50 10 58 30 236
NONE
GASKET, Drain Plug Hector PMS 633 2.5 15 40 14 102 46
ELEMENT-A/CL Hector PMS 626 1.5 8 25 10 72 64
FILTER, Engine Oil Hector PMS 539 2.5 6 6 13 28 58
FUEL FILTERING
ELEMENT (DIESEL) Hector PMS 494 2.5 9 8 16 30 56
GASKET-OIL PAN
DRN PLUG Hector PMS 434 2.5 11 25 39 130 91
FILTER ASM-OIL Hector PMS 368 2.5 9 21 33 40 45
SCREW HEX
FLANGE Hector 367 3.0 40 10 58 30 75
HEAD
SPARK PLUG ASM Hector 305 2.5 4 7 8 16 24
CARPET CLIP -
TOP & Hector 242 1.25 37
BOTTOM
PLUG-OIL PAN Hector PMS 213 2.5 9 14 34 61
DRN
PAD ASM-FRT
DISC Hector 212 2.5 0 3 5 10 11
BRK INR
NUT-FRT S/D Hardwa
A/RST Hector re 196 2.5
BRKT
KIT CLUTCH Hector 170 3.0 7 3 5 3 3
CLIP ASM-RR S/D
LWR MLDG Hector 144 2.5

Analysis of the above stock sheet in lieu of COVID-19 Lockdown:

The above stock sheet is maintained by the Softwares of different Dealers located at
different places and is shared with the company daily as it is supposed to be done in
Perpetual replenishment system of Inventory management. The company compiles
the data of different dealers in a single sheet on a regional basis. These are the

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dealers of Andhra Pradesh and Telangana mentioned in the above list.
The most column in the above sheet is DLR MOS to be Maintained for PSM Parts which is
Dealer ‘s Monthly Operational Summary to be maintained with respect to parts. This list is

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 freshly maintained and circulated at every dealership. While generally, stock for 3
months has to be maintained on the average basis but due to COVID-19 the
company has relaxed the time period and brought down the limits due to shortage of
raw materials due to lockdown situation for instance kit clutch has to be kept in stock
for 3 months and Jayalakshmi Auto Enterprises Private, RAAM4WHEELERS LLP
have stock for 3 months representing adequate supply for this part.
The spark plug is another spare part for which recommended stock is for 2.5 months
citing current situation while most dealers are facing a shortfall for this component so
an immediate supply is needed for this part as soon as the normal business comes
into function.
Table 9 Stock List from Raam 4 Wheeler LLP

Raam 4 Wheelers
LLP
V
DLR MOS to a
NDP
Weighte be UOM Stock Tota D / Order
Value
Part ID Description Model d Maintaine NDP r Per in l P to be
Without
Monthly d for PSM i CA Hand PM PM Place
Tax
Sale Parts a R At S S d
Data Dealer CA CA
n R R
t
FILTER ASM-
PASS 247
23627079 COMPT Hector 814 1.5 153.3 C 1 51 196 30046.8
AIR
GASKET, Drain
99
23635023 Plug Hector 633 2.0 54.1 D 1 46 53 2866.24
23532232 ELEMENT-A/CL Hector 626 1.5 295.5 C 1 64 247 183 54076.5
FILTER ,
124
23635022 Engine Hector 539 2.5 453.0 D 1 58 66 29898
Oil 329
FUEL
FILTERING 124
23642796 ELEME Hector 494 2.5 976.2 D 1 56 68 66381.6
NT
(DIESEL
)
GASKET-OIL
288
24552829 PAN DRN Hector 434 2.5 42.4 P 1 91 197 8352.8
PLUG
24563823 FILTER ASM- Hector 368 2.5 180.1 P 1 45 288 243 43764.3
OIL
PLUG-OIL PAN
288
23923951 DRN Hector 213 2.5 71.0 P 1 61 227 16117
23635025 PLUG, Drain Hector 134 2.0 189.2 D 1 47 99 52 9838.4
FILTER ASM-
288
23594884 FUEL Hector 91 2.5 281.3 P 1 77 211 59354.3

320,696

Though every dealer of an automobile company follows the uniform system and
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same logic hold good for MG Motors too. While stock list and references of two
Dealers are analysed in deep which act as a bridge between MG motor and the end
consumer.

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Above stock, the list is for Ram 4- Wheelers LLP which is a Telangana based
dealership. As already above explained that this list clearly indicates the stock to
order, the current availability of each part and necessary maintenance for any
component.
Ø Availability of filter (part id 23627079) must be in inventory
=247. While stock in hand is 196.
So order to be placed =51 more units.

Ø Availability of PLUG-OIL PAN DRN

(23923951) =288 Stock in hand=61
Order to be placed=227

This way the dealers and companies look into stock sheets for maintaining and
replenishing various parts in inventory.

• Inventory management processes are imperative to succeed if managed

seriously. To ensure Inventory control at the Dealerships over all locations in India,
the MG Motors standardize following critical points:
1. Establish and outline standards for Inventory Management: Draw Standard
Operating procedure detailing warehouse inventory system process, warehouse
operations process. It is important to have process adherence so that MG motors
deliver seamless services to its customers all over.
2. Establish inventory visibility at every location through MIS (Management
Information Systems) Reports: Daily merchandise count procedure to be
carried out at all of the locations and reported a return to the inventory desk. Daily
merchandise count should be able to reflect location accuracy, stock accuracy as
well as transaction summary for the day. It helps to anticipate the stock for
overcoming shortfalls.
In MG Motors, it is important for every Dealership to maintain four reports on a
mandatory basis for Management purposes. The above reports are regularly
monitored to forecast the growth and analyze the performance of a particular
dealer.

• Parts consumption pattern report-This report displays the parts,

which are consumed during any specific repair service.

• Ordering pattern-This report suggests the orders that should be placed

based on previous orders or on an average basis.

• Inventory fund Maintenance Report-This is the minimum base amount that

every dealer, for example, Jayalakshmi Auto Enterprises Dealership has to
maintain while making an order for any parts. For MG Motors, this amount is
around 14 Lakhs INR. They are supposed to maintain stocks for around 3
months.
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 • Dealer’s profitability report-The profitability report is one of the key reports
in Productive. It shows net profit in money and percentage (margin), among
other useful information.
3. Monthly audits and archive: Count should be implemented at all locations
without fail and insist on one hundred per cent adherence. MG Motors
representatives pay periodic visits to take into account that reports submit the
true picture.
4. Central archive team: to be responsible for ensuring review of all reports and
controlling inventories at all locations.
5. Visiting major sites: and being present during physical stock audits on a
periodical or semiannual base is extremely significant.
6. Finally, maintain reviewing processes and ensure training and retraining is
carried out frequently in addition to at all period at the location so that a process-
oriented culture is imbibed, and all operating staff understand the importance of
maintaining processes.
Without control procedure, in place, the various inventory or warehouse departments
can become out stocked or understocked. Merchandise control systems also help
the buyer to recognize the need for ordering or re-ordering to maximize the total sale
for the store. Merchandise shortages and shrinkage can be identified using the
inventory control system. Excessive shrinkage will indicate that more effective
merchandising control needs to the implemented to reduce fatigue, inconvenience to
customers and loss of image for Dealer, Brand name.
Order Management-Supply Chain Management for a Dealer by MG Motors:
The below diagram details the step by step procedure between the Registered
Dealer and the MG Motors which is the supplier for raw materials to the company:
1. A Dealer Initiates the order at the DMS Software (a copy of order format is
attached below) which is confirmed by the MG Motors.
2. The order for a Dealer company is confirmed only after due consideration of Minimum
Credit Availability in the Dealer’s Account which is 14 Lacs for Spare parts.
3. Every Dealer has an assigned day in a week to place order like-Jayalakshmi Auto
Enterprises Private Limited may place an order only on Wednesday of each
week. If the order is placed before 2 pm of the assigned day, it is processed the
same day otherwise the next day.
4. After successful placement of an order at MG Motors, a pickup slip is generated
which comprises of necessary details like the Order number, list of items, Dealers
information etc.

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 5. The order proceeds for packaging in the MG Motors and the same is
simultaneously updated on the WMS (Warehouse Management System).
6. Invoice is created and sent to the Dealer by updating on the software itself.
7. A Printed copy of Invoice is also sent in Transportation so that goods may pass
from one place to another that is generally Interstate transportation, as the
consignments need to pass the necessary checks on the way by the GST
Department.

Inventory funding and claim Management:

The dealer must keep a close eye on the funds status as:

• Parts/Accessories are allocated and dispatched only subject to availability of sufficient

funds in Dealer’s account. (In case of MG Motors and Dealers=Approximately
14 lakhs)

• It is advised to dealers to see fund status while making any order and accordingly
place an order.

• Only after the funds are available, the order will be confirmed.

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All claims are need to be registered in DMS system.

The picture explains the entire order process. There are majorly three types of
orders that are placed by the Dealers
Initial Dealer kit
This is provided to every Dealer at the new launch of any car.
Stock Order Parts
This is for Perpetual inventory system that is maintained by the dealers. The stock is
updated daily by the dealer's side on the software which is shared with MG Motors
too but as explained earlier a day is assigned to every dealer.
Lead Time
It is the time required to deliver the finished product from the date of purchase order. For

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instance –Jayalakshmi Auto Enterprises places an order on every Wednesday
before 12pm and order takes around 5-7 business days to reach the dealer.

Vehicle off-road
This is a condition when an MG Hector comes to a dealer for service or any other
requirement. But due to some reason, the part needed for the car service is
unavailable.
Let us say-Engine oil is needed but not available with dealer. The car takes longer
time for service than expected indicating that the vehicle is off the road due to
dealer’s negligence and procrastination. This may spoil the customer's experience
resulting in inconvenience.
So, this condition is considered as an emergency condition and MG Motors dispatch
the part same day which reaches to the dealer in shortest possible time with an extra
10% surcharge as a gesture of punitive action against dealer.

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 SOFTWARE AND PROCEDURE FOR ORDERING

Software
The company uses the Dealer Management System, or the DMS software for the
ordering of the parts. The DMS is SAP developed software and is an online
monitoring system. A login ID and password is required to access the system. Every
employee has a unique ID and password. There are modules for each employee.
Every module has reports, wherein the available stock can be checked.

Procedure

• Based on the stock available is an option of getting ‘orders house on’.

• To order more stock, the link has to be clicked, a form will be opened and based
on the model number and part name, value has to be added.
• After the quantity is ordered, the order is processed.
• The order placing and processing happens on a live platform.
• The plant in Vadodara gets the order, and accordingly, they process the order.
• Every dealer can place an order on any working day, but the final submission
happens only on the dedicate day i.e. Wednesday.

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Emergency Orders
If a few items from the ordered items are not available, they go into the ‘bad orders’.
As soon as the parts are available, then they will be dispatched from the plant and
separate intimation is given to the dealer about the same.
In case of emergency orders, i.e. the ‘LIOR; Linking of route orders, because of
which the order cannot move, example the engine of the car, the dealer will order it
at depending on the distance and connectivity of the two cities, it takes a maximum
of 48 hours for the part to reach the destination city. For general delivery, it takes
around 3-5 days from the Vadodara plant and around 5-7 days from Vijayawada to
reach the destination city.

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 CONCLUSION

This assignment made us learn the detailed analysis of Perpetual inventory system
and FIFO system as the Dealerships of MG Motor follows these two types of
inventory with them.
Every business undertaking needs inventory in adequate quantity for efficient
processing and in-transit handling. Since inventory itself is an idle asset and involves
holding cost; it is always desirable that investment in this asset should be kept at the
minimum possible level. Inventory should always be available in proper quantity,
neither more nor less than what is required. Inadequate inventory adversely affects
the smooth running of the business, whereas an excess of it involves an extra cost,
thus reducing profits. The primary objective of inventory management is to avoid too
much and too little of it so that uninterrupted production and sales with minimum
holding costs and better customer’s services may be possible.

We feel empowered in learning and progressing with this assignment in this ‘learn at home’
situation while at the same time not compromising with the quality of project and work.
It justifies Desperate times needs desperate measures, making us adapt to the
situation and keep going.
MG has also taken strong measures to combat the impact of the COVID-19 on its
customers. The carmaker has recently launched a Disinfect and Deliver initiative to
ensure car deliveries. The staff at its dealerships have also been trained to take all
the necessary steps to ensure that the service workshops and showrooms are
completely sanitized.

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 REFERENCES

1. Interview with Mr. Ashish SIngh (Manager After Sales- MG Motors)

2. Interview with Mr. Rajendran K (Manager Supply Chain & Logistics- MG Motors)
3. https://fitsmallbusiness.com/retail-inventory
4. https://www.bigcommerce.com/blog/inventory-
management/#examples-of- successful-inventory-management
5. https://www.camcode.com/asset-tags/inventory-control-systems-types/
6. www.mgmotor.co.in
7. https://www.zaubacorp.com/company/JAYALAKSHMI-AUTO-
ENTERPRISES PRIVATELIMITED/U50300TG2019PTC130187
8. https://www.zaubacorp.com/company/RAAM-FOUR-WHEELERS-INDIA-
PRIVATE- LIMITED/U50102TG2012PTC079599

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