MATERIAL HANDLING

AND
STORAGE SYSTEM

OMKAR VILAS SAKPAL

Admission No: HPGD/JL21/3091
Batch: JL21
Course: Operation Management

Welingkar Institute of Management

Development & Research
Year of Submission: July 2023

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 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to WELINGKAR

INSTITUTE OF MANAGEMENT DEVELOPMENT AND RESEARCH who
gave me the golden opportunity to do this wonderful project on the topic “
MATERIAL HANDLING AND STORAGE SYSTEM ”, which also helped me
in doing a lot of Research and I came to know about so many new things I am
really thankful to them. Secondly I would also like to thank all my friends and
family members who directly or indirectly given their kind co-operation and
encouragement. I admit that co-operation and morality are keywords to success.

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 UNDERTAKING BY CANDIDATE

I declare that project work entitled “ MATERIAL HANDLING AND STORAGE SYSTEM ”
is my own work conducted as part of my syllabus .

I further declare that project work presented has been prepared personally by me and it is not
sourced from any outside agency. I understand that, any such malpractice will have very serious
consequence and my admission to the program will be cancelled without any refund of fees.

I am also aware that, I may face legal action, if I follow such malpractice.

Omkar Vilas Sakpal

Place : Mumbai

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 ABSTRACT

The basic function of material handling and storage system includes inventory control, bill of
material processing and elementary scheduling. Material handling helps organizations to
maintain low inventory levels. It is used to plan manufacturing, purchasing and delivering
activities.

Companies need to control the types and quantities of materials they purchase, plan which
products are to be produced and in what quantities and ensure that they are able to meet current
and future customer demand, all at the lowest possible cost. Making a bad decision in any of
these areas will make the company lose money.

“Material handling” is a computer-based production and inventory control system. Material

handling has evolved from an ordering technique to a comprehensive management planning and
control tool for manufacturing organizations. Material handling requires a high degree of
discipline and professionalism not commonly found in manufacturing firms today.

Critical success factors for implementing material handling systems would include: high degree
of record accuracy, top management participation, and formalized education and training
procedures. If properly designed and implemented, material handling can produce significant
benefits as follows: reduced inventory management, improved customer service, and increased
productivity.

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 TABLE OF CONTENTS

CHAPTER 1 - INTRODUCTION...................................................................................................6
1.1 Problem statement:................................................................................................................6
1.2 A real time example is follows:.............................................................................................7
1.3 Material Control and Warehousing....................................................................................13
1.4 Challenges for Material Handling.......................................................................................34
CHAPTER 2 – Literature Review.................................................................................................35
2.1 Introduction..........................................................................................................................35
2.2 Problems and Challenges related to Material Handling Systems........................................36
2.3 Design Principles and Physical Elements............................................................................38
2.4 Information and Software....................................................................................................40
CHAPTER 3 - COMPANY PROFILE..........................................................................................42
3.1Automotive Technology.......................................................................................................45
3.2Industrial Technology...........................................................................................................48
CHAPTER 4 - RESEARCH METHODOLOGY.........................................................................55
4.1 Problem definition:..............................................................................................................55
4.2 Objectives of the study:.......................................................................................................55
4.3 Scope of the study:...............................................................................................................55
4.4 Research Design..................................................................................................................56
4.5 Source of Data:....................................................................................................................56
4.6 Techniques of Data Collection:...........................................................................................57
4.7 limitations of the study:.......................................................................................................57
CHAPTER 5 - DATA ANALYSIS AND INTERPRETATION..................................................58
CHAPTER 6 - FINDINGS, SUGGESTIONS AND CONCLUSION..........................................66
6.1 FINDINGS:..........................................................................................................................66
6.2 SUGGESTIONS:.................................................................................................................66
6.3 CONCLUSION....................................................................................................................67
BIBLIOGRAPHY:........................................................................................................................68
APPENDIX - QUESTIONNAIRE...............................................................................................69

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 CHAPTER 1 - INTRODUCTION

1.1 Problem statement:

As it has been stated earlier, the impact of material handling on the production cost of an
organization with particular reference to the industry forms the basis of the research. This is not
only because materials cost forms the overall 65% of the cost of running any organization
according to some research in material management, but also because materials must be moved
from one processing stage to another. Thus, there is always the need to effectively manage
materials in order to curtail the amount of waste and also enhance maximum service in such
organizations. This particularly calls for effective materials handling and maintaining a standard
in the cost of production.

Another problem is the employment of unqualified personnel to handle the store activities. This
problem often results to poor material handling, deterioration, pilferage, theft and redundancy.
Now that store operation is beginning to receive attention of those in authority, the necessity to
actively coordinate these activities for better performance to create more impact and
subsequently more recognition can not be over emphasized. Effective material handling and its
prime function is a matter of ensuring that sufficient materials are retained in the store to meet all
requirement without carrying unnecessary large stock or too little to ensure efficiency and
profitability.

Materials requirements planning referred to by the initials material planning is a technique which
assists a company in the detailed planning of its production. Recall here that the master
production schedule sets out an aggregate plan for production. Material planning translates that
aggregate plan into an extremely detailed plan.

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1.2 A real time example is follows:

The production manager at ABC Manufacturing wishes to develop a materials requirements plan
for producing chairs over an 8 week period. She estimates that the lead time between releasing
an order to the shop floor and producing a finished chair is 2 weeks. The company currently has
260 chairs in stock and no safety stock (safety stock is stock held in reserve to meet customer
demand if necessary). The forecast customer demand is for 150 chairs in week 1, 70 in week 3,
175 in week 5, 90 in week 7 and 60 in week 8.

Here we have shown the demand in each of the eight weeks, initially we have 260 chairs
available so if these are used to meet the demand of 150 in week 1 we have 260-150 = 110 left
on-hand (i.e. in stock) at the end of the week. Plainly we will need to order some more chairs in
order to meet all of the forecast future demand over the 8 week planning period.

Conceptually therefore we face two related decisions about ordering:

 timing - when to order

 quantity - how much to order

You can think of asking yourself the question, in each and every period, should I order in this
period and if so how much?

If we are to avoid a stockout in week 5 we plainly need to order at least 135 chairs. Now we
know that the lead time between ordering a chair and receiving it is 2 weeks. Therefore to avoid
a stockout in week 5 we must have ordered 135 chairs either in week 3, or in any week before
week 3. In other words ordering

 135 chairs in week 1, or

 135 chairs in week 2, or
 135 chairs in week 3,

would each ensure that we have sufficient chairs available to meet forecast demand in week 5.

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If we order these chairs earlier than week 3 we will be carrying extra inventory (stock) for a
number of periods and, as we know, carrying stock costs money. It would seem appropriate
therefore to order 135 chairs in week 3.

Note that we have no data given here on which to base order decisions in weeks 7 and 8. As we
are at the end of the planning period these are usually taken as zero.

Decisions

Let us be clear about what we have done here with respect to our two decisions of:

 timing - when to order

 quantity - how much to order

With respect to the timing decision we always ordered as late as possible, but never planned a
stockout. This is a driving principle in material handling, never order before you need to, never
plan to stockout.

With respect to the quantity decision we always ordered as little as possible, i.e. just enough to
avoid a stockout. This is known as the lot for lot rule, sometimes called LFL or L4L or LL rule.
This quantity decision rule can be varied in material handling and some other rules are:

 fixed order quantity rule (sometimes called FOQ or FO) - the quantity ordered is an
integer multiple of the same fixed amount each time an order is made
 fixed period requirements rule (sometimes called FPR) - the quantity ordered should be
enough for a fixed number of periods

To illustrate the FPR rule suppose that we decide to order enough for 3 weeks when we make an
order. The situation at the end of week 5 is (from above) repeated below:

Week 1 2 3 4 5 6 7 8
Demand 150 0 70 0 175 90 60 60

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 On-hand 110 110 40 40 - 135 0 225
at end of
week
Order ? ? ? ? ? ? ? ?

To decide the FPR order quantity we continue this table until week 7. The quantity ordered must
then be just sufficient to cover weeks 5 to 7 (i.e. to cover 3 weeks as required for a 3 week FPR).
This is done below:

1 2 3 4 5 6 7 8
Demand 150 0 70 0 175 90 60 60
On-hand 110 110 40 40 135 135 225 225
at end of
week
Order ? ? ? ? ? ? ? ?

Hence the 3 week FPR order is 225 units in week 3, giving the situation below:

1 2 3 4 5 6 7 8
Demand 150 0 70 0 175 90 60 60
On-hand 110 110 40 40 90 90 0 60
at end of
week
Order 0 0 225 ? ? ? ? ?

Plainly we need some order in week 6 to cover the stockout in week 8. As we are at the end of
the planning period we usually order just sufficient (i.e. revert to the LFL rule) and order 60 in
week 6 to give:

Week 1 2 3 4 5 6 7 8
Demand 150 0 70 0 175 90 60 60
On-hand 110 110 40 40 90 90 0 0

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 at end of
week
Order 0 0 225 0 0 60 ? ?

Note here that with the FPR rule applied to cover p periods you make (at most) one order every p
periods (ignoring any order necessary at the end of the planning period).

12.1 Choice of lot size rule

How then are we to choose between different lot size rules (LFL, FPR and FOQ). We could, of
course, redo our calculations with different lot size rules (e.g. a FOQ ordering multiples of 100
each time). We would see their different effects but would still have to choose between them.

All of the rules ensure forecast demand is meet, i.e. no stockouts, so this is not a distinguishing
feature. The LFL rule (by ordering as little as possible each time) will keep average inventory
levels low, but will result in more orders on average. Both the FPR and FOQ rules will have
higher inventory levels, but will result in less orders on average. Choosing a lot size rule
therefore comes down to balancing the number of orders against the cost of holding inventory,
just as we considered in deriving the EOQ formula in the inventory notes. Hence, given cost
information, it is possible to derive the most effective (least costly) lot rule to use for any
particular item.

1.2.2 Extending the example

Whilst for the example considered above, just a single item, we easily worked out the orders
manually it is obvious that as the number of items increases, a manual calculation becomes too
complicated and we need a computer package. We illustrate this below.

For the chair production problem considered before suppose now that the production manager as
well as planning the production of the chair must also plan the production of the components that

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make up the chair. These are: the seat, a back and four legs. The lead time for seats and backs is
2 weeks and the lead time for legs is one week. The company currently has an inventory of 60
seats, 40 backs and 80 legs. Scheduled receipts are 50 seats in week 1 and 10 backs in week 1.
The lot size rules the production manager has decided to adopt is LFL for for all items.

Now in planning the production of chairs we need also to plan the production of seats, backs and
legs. For example we show below the situation as derived above where in week 3 we issued an
order for 135 chairs.

Week 1 2 3 4 5 6 7 8
Demand 150 0 70 0 175 90 60
On-hand 110 110 40 40 50 40 0
at end of
week
Order 0 0 0 135 ? ? ?

Now to have 135 chairs made we need to have to hand (i.e. currently available) 135 seats, 135
backs and 4(135) = 540 legs. The current inventory of these items (plus scheduled receipts) is
insufficient, so orders must be placed for these items. Just as we did for the chair itself above
these orders must be phased in time so as to ensure that we never stockout.

Now to do all this manually for chairs, seats, backs and legs would just be too time-consuming
and error-prone. It would be far better to do this via as a computr package, such as the package
used in this course.

In order to solve this example using the package, we need to have a better overview of material
handling.

Overview

In material handling two types of information are required:

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  structural; and
 tactical.

Structural information is information about the items (parts/components) that the company uses
and how different items are related to one another. It includes information for each item such as
lead time and lot (or batch) size rule. The key point about this information is that it changes
relatively infrequently.

Tactical information is information about the current state of the company - for example sales
orders (real and forecast) pending, the master production schedule, on-hand inventory levels and
purchase orders. Obviously the key point about this information is that it changes frequently.

The literature review is divided into three parts. They are

• Review of queuing network based manufacturing model,

• Review of lot-sizing and planned lead-time effect on material handling systems, and
• Review of planned lead-time estimation methods.

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1.3 Material Control and Warehousing

1.3.1. Introduction

The purpose of material control and warehousing is to define the standard procedure for receipt,
checking, storing, protection and issue of materials for construction as well as to outline the
administrative procedures for material control. In addition a procedure is included for piping
material control by making use of a computer.

The procedures in this section are written for a fairly large job. On smaller jobs, there may not be
the same numbers or titles of personnel available as are depicted here. Nonetheless, the same
administrative and operating procedures must be followed unless the Project Procedure Manual
calls for something different, or if permission is received from Home Office Construction
Department to vary from the procedure.

1.3.2. Receipt of Material

Prior to arrival of material on site, "advice notices" or other shipping notifications will be
received by the Material Supervisor. He will record the volume and nature of the shipment and
assign a storage location. These documents will be transmitted by the Material Supervisor to the
Warehouse Supervisor with a copy to the related subcontractor(s) (so they can arrange for the
off-loading facilities).

Upon arrival, the material is off-loaded onto the foundation or at the storage location previously
determined, in the presence of one or more checkers.

Whenever material arrives on site without advance notification, the Material Supervisor will (if
necessary in cooperation with the Project Construction Manager), allocate storage and unloading
location without any delay, to avoid demurrage on vendors transport.

All truckdrivers will be directed by the guards to report to the warehouse first. If material is to be
unloaded at a point other than Company Central Storage the Warehouse Supervisor will direct
the trucks to the off-loading location. A Material Checker must be present during off-loading.

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Truckdrivers delivering a large piece of equipment will be met at the gate by warehouse
personnel to guide them to the designated unloading area.

1.3.3. Material Checking

The shipment must first be checked to see whether it conforms with "Packing Lists and the
Marking, Shipping and Invoicing Instructions" issued to vendors by the Home Office
Procurement/Shipping Department, being a part of the Purchase Order. Also the Purchase Order,
Purchase Requisition plus attachments for specific instructions on loading, unloading, delivery,
required official documentation, material certificates, etc., must be checked. On some projects a
Purchase Order has been placed with a Shipping Agent, to what extent the Shipping Agent is
involved must also be checked.

If the shipment consists of unpacked goods, such as structural steel, pipe, etc., each bundle or
piece is checked off the carrier by the Checker. The same applies to boxes, crates or other packed
goods.

The Checker signs for the goods that are actually received, and not necessarily those shown on
the delivery document.

Whenever a subcontractor receives Material/Equipment directly, then a copy of the delivery

ticket signed by an authorized subcontractor's representative must be retained by Company's
Warehouse Supervisor and all administrative work performed as if Material/ Equipment was
received in Warehouse and issued to Subcontractor.

If it is not possible to check materials during off-loading the Material Checker signs carrier
delivery slip for "Material received - unchecked". Materials must be carefully checked as to
quantity, specification, and the condition, immediately after receipt. Before signing carrier's
freight bill, the Checker should count the number of pieces received and examine for evidence of
visible damage. Boxes, crates, and cartons should be carefully inspected before taking delivery.
If material is received damaged or not in accordance with packing list or freight bill the
delivering carrier should be requested to make inspection of damage or discrepancies, and proper

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notation must be made and acknowledged by carrier on original and copy of freight bill or
packing list.

If concealed damage is discovered at a later date, the carrier should be notified immediately and
requested to make an inspection. Materials involved in any claim should be set aside and
redtagged until inspection is completed and liability has been determined. A signed record is to
be drawn up on the result by the parties concerned and an "Over Short and Damage Report" be
made. In the event that the vendor is not responsible for safe custody of goods during transit,
claims shall be processed against the carrier.

The Material Checker is to acknowledge the receipt of the goods only by signing the carrier's
copy of delivery tickets together with the copy for warehouse records, showing date of receipt
and storage location ("Warehouse row G bin 26" or "Material yard row B").

The Material Checker then checks the material thoroughly against the requisition and the
relevant Purchase Order to ascertain that the material meets the specifications and is correct in
quantity.

If there is any doubt as to whether or not specifications are being met the Material Checker must
report this to the Warehouse Supervisor for his action.

Upon receipt as outlined above, the material will be tagged to the extent necessary, reflecting
P.O. number and item number and then stored in the allocated location.

All small loose parts such as gaskets, packing rings, bolts, lubricators, gauges, gauge glasses,
dripwells, ink, charts, adjusting pins/keys, couplings, spare parts, etc., delivered as part of
equipment, should be stored in bins in a separate location in the warehouse and clearly tagged
with the item number and P.O. number of the equipment.

Any drawings, material certificates, catalogues, operating instructions and manuals relating to
equipment are to be marked with equipment and P.O. number and turned over to Warehouse
Supervisor for transmittal to the Site Engineering Department.

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When material arrives at site for which no Requisition or Purchase Order is available, the
Material Checker reports this to the Warehouse Supervisor who in turn checks with the vendor,
Home Office Purchasing Department, or the Field Buyer to see whether material should have
been received. If in order, a Purchase Order number should be obtained.

Upon completion of the above exercise, the Material Checker will turn in delivery tickets, freight
bills, etc., to the Warehouse Administrator for compiling a Material Receiving Notice. When a
carrier demands freight charges for goods that have been ordered on "free at site" delivery, the
freight should be paid from Petty Cash Funds and the Vendor backcharged via Project
Accounting. This procedure is outlined in the Accounting Procedure.

1.3.4. Daily Material Receiving Record

The Material Administrator will enter all materials received (from information on freight bills or
packing lists), in a Daily Material Receiving Record DMRR immediately after receipt.

This information should be available from hour to hour for the benefit of the construction forces.

Copies of this report will be distributed before 09.00 hours the day after the receipt of materials
at site. The description of materials received will be in abbreviated form. Distribution of the
DMRR will be in accordance with the "Document Distribution" or "Construction Coordination
Procedure".

1.3.5. Material Receiving Notice (MRN)

If no shortages, damages or discrepancies are found, a Material Receiving Notice (MRN) is then
prepared to acknowledge the recei0pt of the material against the relevant Purchase Order. For
materials arriving at site not covered by Requisition or Purchase Order a MRN should be made,
after obtaining a Purchase Order number, with note in the remarks column "as no
P.O./Requisition is available we are listing materials as delivered to site". After receipt of P.O.
and requisition, material should be checked against these documents and a revised MRN issued,
if required.

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Material Receiving Notices must be issued and distributed without delay so that payment may be
made and advantage can be taken of any terms of payment.

For Field Purchase Orders the requisition number should be noted on the MRN. If an Over Short
and Damage Report is involved the Over Short and Damage Report number must be noted on the
MRN.

A separate MRN must be used for each shipment

Two or more shipments from one vendor must not be combined, even if they are received the
same day and are applicable to the same order. Materials from two or more packing lists must
not be combined on the same MRN, even if received on the same freight bill. Generally, vendors
invoice for each shipment or packing list separately and the Material Receiving Notice is needed
to support each invoice.

As Material Receiving Notices are made, the requisition or Purchase Order is to be marked up to
reflect receipt of the material.

The exact storage location is to be noted on the MRN. This document is used to update the stock
control system.

When the material received must be inspected by a specialist before an MRN is issued, the
Warehouse Supervisor will send an equipment check sheet to the appropriate specialist (Pumps,
Compressors, Heat Exchangers, etc., Electrical and Instrumentation). A copy of this check sheet
must be sent immediately to the Home Office (Expediting Department and Accounting
Department). This advises them that material has arrived on site and that a MRN will be issued
as soon as inspection is done. After the specialist has inspected the equipment (which must be
done within three working days), the check sheet is returned to the warehouse and a MRN issued
immediately.

When goods being received are fully listed or described upon the packing list, this packing list
can be used as an attachment instead of relisting them all on the MRN.

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The Warehouse Supervisor is responsible that the MRN is checked carefully, location is given,
etc. All Material Receiving Notices will be signed by the Warehouse Supervisor.

Material Receiving Notices are printed in blocks with a white original, and colored copies, and
are to be distributed in accordance with the "Document Distribution List".

1.3.6. Equipment not Completely Acceptable

Occasionally a piece of equipment is received on site with discrepancies which involve

correction costs of a minor nature compared with the total Purchase Order value of the item.

So that Company or Client may take advantage of discounts available for quick payment and
also in order not to antagonize vendors by withholding payment of a large sum because of
comparatively minor discrepancies, a "partial MRN" will be completed with the details of the
discrepancy stated on an Over Short and Damage Report (OS&D Report) with some indication
as to "cost to field" of rectification. This enables the Home Office Purchasing Department to
resolve with the Accounting Department how much of the vendors invoice should be paid.

The Backcharge to Vendor procedure will be followed to ensure that Company does not absorb
any cost relative to rectification.

1.3.7. Material Delivered to Third Parties

When materials are delivered by a vendor to third parties (e.g. motors to pump vendors, panel
mounted instruments to panel vendors etc.) the items are received on site "built together". An
MRN for each separate component must be issued, e.g. one for the motor and one for the pump.

1.3.8. Material Certificates

Piping Materials

Each delivery of piping materials, authority and non-authority, will be accompanied by the
proper material certificates.

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The Material Checker will check the materials against the certificates. Any discrepancies found
on manufacturer's symbol, heat numbers, etc., will be notified to the Materials Supervisor
immediately for action via the H.O. Inspection/Expediting Department.

An O.S.& D. Report will be issued recording the certificate and/or material discrepancies.
Materials are stored in a separate location and labelled with the corresponding O.S.& D. Report
Number.

The O.S.& D Report is cleared upon receipt of the correct certificate or upon replacement of the
material as applicable.

Under no circumstances will materials be released for construction unless the correct certificate
is available.

1.3.9. Material Certificate Register

The register will show:

 Company Certificate Number

 Fabricators Code
 Charge Number
 Short Material Description
 Schedule/Pressure Rating
 Size
 Quantity
 Any other information required by contract

On completion of the project, Home Office will produce a certificate register following Client
requirements from data accumulated from the material certificate register.

1.3.10. Material Receiving Notice Register

An MRN Register will be maintained by the Warehouse Supervisor.

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This register must show:

 MRN sequence number.

 Date materials received.
 P.O. number.
 Vendor.
 Material Description.

1.3.11. Over, Short and Damage Report

In all cases of materials damaged, lost in transit, short or over shipped by vendor, notation must
be made on the Material Receiving Notice and Over, Short and Damage Report (OS&D Report)
completed by the warehouse.

It is imperative that a clear cross-reference is made, i.e. Material Receiving Notice number on
Over Short and Damage Report and Over Short and Damage Report number on Material
Receiving Notice.

In the remarks column of the Over Short and Damage Report, a note must be made as to the
corrective action to be taken. Company Home Office Procurement/Expediting Department is
responsible for this action for Home Office Purchase Orders, including update of Computerized
Material History file if applicable.

In the case of an overshipment on a Home Office Order, this form advises Home Office if the
overshipped quantity can be used by field or if it should be returned to vendor for credit.

Field makes no disposition of this material, either as to use or return until advised by the Home
Office. If to be returned, the Home Office Expediting Department will secure shipping
instructions from the vendor and advise the field by means of an AVO or telex authorizing
shipment.

In some cases, it will be the responsibility of the client to decide if overdelivered items can be
accepted. In such cases an Over Short and Damage Report is not required. The Client approves

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the Material Receiving Notice which should state "Overdelivered quantities will be accepted by
Client".

When a shipment from vendor is short, the Over Short and Damage Report advises Home Office
whether or not materials are needed and the Home Office Expediting Department takes the
necessary steps to secure materials or credit from the vendor. If the shortage is caused by loss in
transit, and the material is not urgently needed, action should be withheld for a reasonable length
of time to allow the carrier to attempt to trace and locate lost items.

When materials/equipment are received damaged or not according to specification, a copy of the
O.S.& D. Report is forwarded to the Site Engineer for the issue of a Non-conformance Report.

When materials/equipment are received damaged, a copy of the freight bill or packing list with
acknowledgement of the carrier (see Item 3.0 Material Checking) should be attached to the Over
Short and Damage Report.

Proper notations on Over Short and Damage Reports advise Home Office of all contingencies
involved, what action is needed, and whether action is up to the Home Office or Field Office.

Claims for concealed damage can be very troublesome and the importance of careful checking as
soon as possible after receipt of material at site cannot be over-emphasized.

Whenever an Over Short and Damage Report is cleared, a Material Receiving Notice should be
issued covering clearance of the Over Short and Damage Report with reference to both the Over
Short and Damage Report and the Material Receiving Notice on which the discrepancy was
originally reported.

If claims on vendors or carrier involve repairs by field forces (after authorization by the Project
Construction Manager or Home Office A.V.O.), costs of materials, equipment and labor must be
accumulated and included in a claim (see Backcharge Procedure).

Over Short and Damage Reports shall be distributed in accordance with the "Document
Distribution List" or "Construction Coordination Procedure".

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The purpose of the register is to maintain a record of all Over Short and Damage Reports to
ensure that the Home Office Expediting and Accounting Departments are informed of all reports.

This register shall be maintained by the Warehouse Supervisor. Once a month a listing of all
open Over Short and Damage Reports shall be mailed to the Home Office Expediting
Department with a copy to the Project Construction Manager (and, when required, to the Client's
Resident Engineer).

All claims on carriers or vendors should be controlled by assigning a Backcharge number and
recording it in the Backcharge Register.

Over Short and Damage Report Register

Register will show:

 Over Short and Damage Report sequence number.

 Date.
 Purchase Order number.
 Material Receiving Notice number.
 Vendor.
 Description.
 Material Receiving Notice clearance number.
 Remarks.
 Non conformance report, if relevant.

1.3.12. Recording of Material Stocks

All materials received shall be entered on Material Stock Record Cards, which reflect particulars
as shown on the Material Receiving Notice, Over-Short Reports and Purchase Orders. The
complete description of the material, item number and the exact storage location shall be
included.

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1.3.14. Storage of Material at Site

Upon receipt, all material not directly delivered to the works or Pipe Fabrication Shop, should be
stored either in the warehouse or material yard.

All small materials, instruments, electrical material, tubing, small pumps, etc., must be stored
inside warehouse.

All large pipe, fittings, valves, etc., will be stored in the warehouse or yard. Materials will not be
stored directly on the ground. An underlayer of wood or suitable material should be used.

All pipe must be stored by type, size and schedule on sleepers with at least 10 cm slope for water
drainage and pipe ends (plain or threaded) checked for satisfactory caps/protection. If not already
done by vendors, the Warehouse Supervisor is responsible that all material stored either in the
warehouse or yard is properly marked and color coded in accordance with the specification.

Hours and materials spent on this marking and coding shall be reported by the Materials
Supervisor for backcharge purposes.

This color coding must be maintained throughout the storage/ construction period. Each member
of the Material Department and Specialist Engineers will be supplied with a copy of the marking
and color coding procedure to facilitate the application of correct marking upon the material
when received and the traceability of the material throughout the construction period.

Corrosion protection is either the Subcontractor's or the Warehouse responsibility. Warehouse

Supervisor shall check regularly that this work is properly done.

The Materials Supervisor will check on a regular basis the handling and storage of the materials
at the subcontractor's shop.

1.3.15. Material Issue at Site

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All materials will be drawn from the warehouse on a Material Requisition which must bear the
signature of the Subcontractor's authorized Supervisor or the Company Specialist.

A list of authorized signatures should be kept and should show the following:

 Name of employee (Printed).

 Function (Title).
 Signature Specimen.

A block of numbers shall be allocated to each subcontractor. Material requisitions shall reflect
relative item numbers, quantity, description, drawing and/or Isometric number, and area and/or
unit number. These requisitions shall be issued in duplicate, the original for the warehouse, the
copy for retention by the drawer of the material.

Material requisitions must be checked carefully before material is issued to assure that specific
allocation is given, and that subject material has not been previously issued.

Whenever material has been previously issued, the Material Administrator should write on
requisition: "Material already issued, see previous requisition number . . . . . . . . .".

Material should never be issued twice. If delivered by error, the Warehouse Supervisor will
collect this material from the Subcontractor.

The Warehouse Supervisor will receive from the Site Engineer a copy of all piping iso/drawings
and their revisions. All issue of material must be marked with red pencil on these drawings. This
is for control purposes and to ensure that no material has been issued twice.

Upon receipt of a revision to a drawing or Isometric materials have to be checked against the
previous issue of the document. In the event more materials are required, Company should
prepare this material and inform the Subcontractor accordingly. Where materials have been
deleted, the Subcontractor shall be requested to return this material to the warehouse if not
necessary for drawings/ requisitions in hand for issue. The Subcontractor is informed in writing
when deleted materials from one drawing/requisition have been allocated to another
drawing/requisition.

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After the relevant materials have been issued, the material requisition is posted in the Materials
Stock Record Card.

All requisitions received in the warehouse must be filed consecutively according to requisition
number and per subcontractor. All finals must be filed together. All partial requisitions must be
filed separately.

If materials requested on a requisition are not in stock, the Warehouse Supervisor should check if
they are on order. If this is the case, the requisition should be filed in an "outstanding
requisitions" file. This file should be periodically checked to see if any requisitions can be
further completed. If outstanding materials are not on order he will send a photostat copy of the
requisition to the Materials Supervisor for further action. Where piping material is required,
other than for an iso/ drawing, e.g. for temporary lines, the requisition shall be approved by the
Project Construction Manager or his delegate.

Under no circumstances will material be issued from the warehouse or storage yard to
Subcontractor without the presence of a member of Company's Material Department and use of
all required material control documents.

1.3.16. Access to Company Warehouse

The following personnel have access to the Company Warehouse at all times during working
hours. They are requested to notify the Warehouse Supervisor before entering the Warehouse:

 Project Manager
 Project Construction Manager
 Area Superintendent
 Site Engineer
 Office Manager
 Material Supervisor
 Safety/Security Officer
 Construction Specialist
 Client's Representatives

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All other personnel entering the Warehouse must be accompanied by the Warehouse Supervisor
or Material Administrator or any one of the personnel mentioned above.

1.3.17. Scrap Control and Disposal

A. Scrap Control

Sub-contractors are responsible for seeing that economical use is made of piping material with a
minimum of scrap. All material moved to the scrap location must be inspected by the Piping
Specialist. No alloy material may be scrapped without the permission of the Piping Specialist.

No fittings may be modified without the permission of the Project Construction Manager e.g. no.
90° elbows will be cut to make 45° elbows. If for some emergency such a modification is made,
the Company Piping Specialist must instantly notify the Material Supervisor in writing giving
full particulars.

In addition, if a repair or change is made, every effort must be made to return flanges and fittings
to the warehouse. Flanges in particular can be sent to an off-site machine shop for machining on
an economical basis for later reuse.

Scrap collection locations will be available at site. Subcontractors and the Company Piping
Specialists will be responsible for a weekly collection of scrap in their respective areas and
dumping at the indicated scrap fill locations. All alloy material shall be kept separated by types.

B Scrap Disposal

On a reimbursable job, scrap disposal will be discussed with the Client and actions to be taken
incorporated in the Construction Coordination Procedure.

On a lump sum job it is the responsibility of the Project Construction Manager to dispose of
scrap in the most economical manner and proper (auditable) records shall be kept.

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1.3.18. Special Piping Materials

A separate storage area in warehouse and yard may be alloated to special piping materials. This
decision is to be made by the Materials Supervisor and approved by the Project Construction
Manager.

Upon receipt, materials are thoroughly checked against the requisitions and the relevant Purchase
Order to ascertain that the material meets the specifications and is correct in quantiy.

Color coding is verified in accordance with proper specification. Paint shall be of good quality
suitable for outdoor use, if not suitable, remedial action will be taken immediately. Color coding
will be checked on a regular basis and upgraded if necessary.

Materials are checked against certificates, manufacturer's symbol and charge numbers are
verified.

Taking into account the long delivery delay on most special types of material, no extra material,
such as for field changes, lost material by Subcontractor, etc. will be issued unless approved by
the Construction Superintendent.

The Materials Supervisor will notify the Home Office immediately of the additional material
requirement even though it might be covered by contingency material.

Pipe Lengths

The charge number will be transferred as required by the specification or applicable authority.
The stamping will be done by an authorized representative from the Mechanical Subcontractor in
accordance with the instructions of the Company Quality Assurance Manager.

Material Administration

The material administration will be handled in the same manner as for other material.

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Page: 28
1.3.19. Equipment Protection During Construction

General

This section covers the minimum requirements for the protection of equipment against
deterioration from the time it is received at the construction site until it is placed in operation. It
should not be applied to equipment handling extremely high purity products, where special
instructions are required. In addition, additional or special procedures may be required to protect
equipment against more aggresive environments such as extreme cold or heat, saltwater, spray,
wind blown dust or sand. These additional requirements will be furnished in the "Construction
Coordination Procedure.

It is assumed that materials and equipment are adequately protected for shipment and storage by
the manufacturer in accordance with Purchase Order specifications or manufacturer's standard
practice.

If not protected by the vendor as specified in the Purchase Order, Company Home Office
Procurement must be notified immediately for the purpose of backcharging.

The field must then provide adequate protection.

Where proper protection is not evident, the field shall notify Company Home Office
Procurement immediately and make sufficient examination to ascertain that the equipment has
not been damaged by the omission. Additional protective measures specified by the equipment
manufacturer shall be performed.

Documentation

Records shall be kept to document the protection given the equipment while the manufacturer's
guarantee is in effect. These records shall be kept from the date of arrival of the equipment at
site, showing dates of application of services of each piece of equipment.

Rust Preventives

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The rust preventives referred to herein are RUST-BAN compounds. Some Clients may produce
their own rust prevent
ives, in which case their equivalent preventives shall be used.

Preventive suppliers can give more information as to coverage, application temperature, method
of application, drying time and method of removal.

All interior and exterior surfaces shall be clean and dry before any rust preventive materials are
applied. For cleaning of surfaces mineral spirits or solvent shall be used. Kerosene or gasoline
shall not be used as cleaning agent.

RUST-BAN 357

Reccommended for bearings and internal faces.

All rotating equipment protected by this compound, shall be turned over once per week, to keep
bearings and other critical surfaces coated. This rotating should be done manually. This must not
be carried out with tools, which will damage or mark motor shafts.

Drain water from all reservoirs once a month and fill up reservoir to the proper level. If the fluid
becomes dirty or contaminated water, reservoir shall be drained, flushed with solvent and
refilled.

RUST-BAN 373

Recommended for exterior surfaces. This preventive has no lubricating properties, thus before
placing protected part in service, it should be removed from bearing surfaces, threads, or areas
that come in contact with lubricants.

MOISTURE ABSORBANTS

Where internals, etc., would be very difficult to protect from rust, moisture absorbants are used
for protection. When equipment arrives at the site, the seals shall be examined and damaged
seals repaired or replaced, and the absorbant replaced, if necessary.

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Seals shall be protected until the equipment is serviced for start-up.

Moisture Absorbants shall be renewed at time intervals as specified by the manufacturer.

Machinery

On receipt at the construction site, casing and internals are to be inspected through piping
nozzles, etc., to see if rust preventive has been applied. Protection to be done as follows:

Turbines, Blowers, Agitators, Gear Cases, Centrifugal Pumps and Compressors.

- Flush bearing brackets and gear cases with solvent until clean. Fill with RUST BAN 357
at least till the shaft and turn shaft several times to apply a protective coat to the entire
shaft and bearings.
- Clean shaft couplings and exposed machine surfaces and coat them with RUST-BAN
373.
- If a pump is shipped with mechanical seals installed, fill the stuffing box with RUST-
BAN 357. When mechanical seals are integral with the pump, and the pump is not
protected by moisture absorbants or a blanketing gas, the entire pump should be filled.
- Turbines shipped with carbon rings installed, fill seal chamber with RUST-BAN 357.
- Vertical pumps shall be filled with RUST-BAN 357 after they are moved to their service
location.
- Intermediate shaft supports, if necessary, are to be provided to protect against shaft sag.
- Spare rotating elements are to be stored according manufacturers instructions.

Motors and Generators

- Motors, designed for indoor use, and generators are to be stored indoors.
- Motors, designed for outdoor use, can be stored outside free from ground with protective
covering, permitting good ventilation.
- If space heaters are furnished within the units, they shall be connected to be continuous
power supply of the proper rating, when stored outside, or installed at their service
location.

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 - Brushes shall be removed from brush holders, and shall be stored in a dry place, where
condensation will not occur.
- Coat couplings and exposed machined surfaces with RUST-BAN 373.
- Measuring and recording of insulation resistance values to be carried out as stated in the
"Construction Coordination Procedure".

Transformers

Transformers intended for outdoor installation can be stored outside.

Large indoor transformers may be stored outside, if raised above grade to prevent any damage
from surface water and if a shed roof and tarpaulin siding are provided.

Where units are supplied complete with insulation liquids/gases, these should be checked on
arrival at site. If level or pressure is not within vendor's tolerances, possible leaks should be
located and rectified. Monthly checks on level/pressure should be made and rectification work
carried out when necessary.

Any separately supplied insulation liquid may be stored outside, without protective covering, if
laid on their side at an angle of 45°, with the large bung downwards.

Switchgear, Starters and Control Equipment

Equipment shall be stored indoors in a dry, warm place where condensation of humidity cannot
occur.

If high relative humidity or large, rapid changes in temperature are expected, heaters shall be
used to maintain the temperature of approximately 5°C above minimum daily temperature.

If space heaters are furnished within the equipment, they shall be connected to a continuous
source of power of the proper rating.

Cables

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Rotate reels of properly insulated lead sheathed cable 90° every two weeks to prevent migrating
oil from collecting at low points.

Measure and record gas pressure in low pressure gas filled cable when received and weekly
thereafter.

If falling pressure indicates a leak in the cable, maintain same with dry nitrogen until leak is
sealed.

Batteries

Batteries should be stored indoors in an inactive area to avoid accidental breakage. Batteries that
have been shipped dry and charged shall have the seals checked regularly and in case of damage,
repaired according to vendor's instructions.

Nickel-cadmium and Lead-acid batteries that have been shipped dry do not require maintenance.
For those shipped wet, electrolyte levels should be checked and filled as required. These batteries
should also be recharged tri-monthly. Watch for over-charging.

Instruments

For instruments a warm, dry and vibration free environment in a secure under cover storage area
is required. Recommended environment conditions are temperature range of 15° to 30° and
humidity between 30 to 40%.

Instruments can be stored in the above environment for up to four months in their shipment
cases. Where cases/packing have been opened the plastic coverings are to be retained and
resealed in the manner they were shipped. Panels to be stored in their shipping cases up-right
until moved into the control house.

Instruments installed in outdoor locations shall be protected from weather and mechanical
damage.

Piping

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Any protective coatings/paintwork on piping shall be maintained throughout the storage and
construction period, as well as the colour coding on piping.

Flanges

Flanges from 2" and up can be stored outdoors on timber floor or palets.

All flange faces to be cleaned with a solvent if required and protective coating applied and
maintained.

When machinal flange face is damaged, remedial work has to be carried out before use.

Flange facings with 125 RMS (for use with spiral wound gaskets) MUST be remachined before
use, if damaged.

Valves

Manually operated valves from 2" and up can be stored outside, on a timber floor or pallets.

Large automatic control valves such as slide valves, motor operated valves may be stored
outdoors, on timber floor and with suitable covering over each valve.

Valves stored outdoors shall be inspected every two weeks and coating or rust preventive
renewed if required. On arrival at the site, when spot check reveals remove all flange covers,
clean flange faces with solvent and coat with a rust preventive. Inspect valve stems and valves
internals. It necessary clean with solvent and apply rust preventive coating seat all manually
operated valves. Plugvalves and soft-seated ballvalves to be stored in open position. Valves to be
stored with spindles in vertical position.

Valve handwheels must not be used for lifting valves, slings etc. must not be passed through
valve bore during handling. Plug any open threaded connection.

Each valve shall be fitted with an aluminium tag securely attached with stainless steel wire.

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Each tag shall be clearly stamped with the valve item number. Tags shall normally be closely
attached to the gland bolting. Tags on valves that do not have gland bolting may be attached to
the handwheel or other appropriate locations. Tags shall not be attached through boltholes of end
flanges or where handling might be subject to damage or loss. If not done so by vendor,
warehouse to take action.

1.4 Challenges for Material Handling

Supply chains by their nature are a series of moving parts. As markets, technologies and
consumer demands continually change, those parts are forced to move faster and faster, which
not only stresses the chain, it often exposes the weak links. Below are the challenges for material
handling.

 SHIPPING: Fast, low-cost delivery is the rabbit everyone is still chasing, and even
though the large carriers continue to invest and scramble (and curse the weather),
delivery that’s good, fast and cheap remains elusive.
 INVENTORY PLACEMENT: Figuring out where to store inventory to meet demand
quickly – while staying within profitability margins – is a growing challenge as the retail
marketplace struggles to balance online and in-store sales channels. Proximity of the
outbound shipping location to the destination affects both shipping speed and costs.
 SUPPLIER PARTNERSHIPS: Strong supplier relationships are key to supply chain
efficiency. Building and maintaining supplier partnerships – and continually identifying
and cultivating new sources of supply – are and will always be vital to maintaining
critical levels of production, distribution and fulfillment.
 RESILIENCE: While risk and uncertainty exist in virtually all operations, the ability to
recover quickly from unexpected change or unforeseen circumstances – a sharp rise or
fall in demand, a supplier’s financial or facility catastrophe, equipment breakdown or
component failure, regulatory or recall issues, political or market upheaval, sabotage,
piracy, weather extremes – ranks among the most important factors in supply chain
success.

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 CHAPTER 2 – Literature Review
2.1 Introduction

The theoretical framework of this thesis is divided into two main parts, and it is illustrated in
below Figure. before investigating MHS features and concepts, how a well functioning MHS
should operate will be defined in terms of having a clear picture of the desired target. Moreover,
possible problems and challenges that can disrupt the system will be explored among relevant
literature. Identified problems will be elaborated according to their direct and/or indirect impact
on delivery performance and buffer levels on the shop floor.

In addition, theory part will discuss MHS design concepts from different aspects and levels in
Section 2.3. Further, several features related to MHS will be elaborated according to Hassan’s
(2010) MHS design framework. Chosen features, in terms of fulfilling purpose of this study, will
be categorized under three main pillars; design principles & physical elements, information &
software, and human & management.

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2.2 Problems and Challenges related to Material Handling Systems

Tompkins et al. (1996) emphasize the importance of understanding the requirements of a MHS
before coming up with different solutions to improve it. To be able to find out what can be the
potential problems or which factors can cause inefficiency in an internal MHS, it is essential to
know how a well-functioning internal MHS operates and what sorts of internal and external
factors can have an impact on the system.

Tompkins et al. (1996) shed lights on that MHS is much more than only handling materials. It is
a comprehensive concept that involves the movement, storage, control, and protection of
material with the aim of providing time and place utility. However, there is no unique definition
that can cover all the features and activities in an internal MHS. Several researchers have been
defined the concept of internal MHS from their point of view. The following represents some of
the definitions of MHS:

For Magad and Amos (1995) in-house MHS is the art and science of moving, storing, protecting
and controlling material.

 Internal MHS is about providing the right amount of material, at the right time, at the
right place and with the right method(s) (Kulwiec, 1985).
 Mattsson (2012) defines in-plant MHS as a system that has material and immaterial
exchanges inside a factory where different departments and features are involved and
working together to create value for the end-users. He points out that despite suppliers
and customers are not involved in an in-house MHS, they do belong to the system’s
environment and can have huge impacts on its effectiveness.
 In Ballou’s (1992) definition, in-facility MHS is a physical process of moving raw
materials in small quantities over relatively short distances.

In the light of definitions above, it can be stated that internal MHS is a physical process inside of
a factory between different departments with material and non-material exchanges (Stock &
Lambert, 2001). In Materials Handling Handbook, Mulcahy (1998) mentions several purposes
that product transportation concepts should achieve:

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  To provide proper material and information flow
 To ensure possible lowest operation costs
 To ensure on-time and accurate delivery
 To minimize material damage and employee injury
 Reuse of the load-carrying surface and also material identification at any time

In addition to that, Tompkins et al. (1996) enumerate nine factors that are essential to be fulfilled
in order to eliminate material handling problems from shop floor:

 Right Amount: The concept of just-in-time inventory management emphasizes the

importance of holding the right amount of material both in manufacturing and
distribution.
 Right Material: An accurate identification system is necessary in order to pick and deliver
the right material to the lines.
 Right Condition: The quality of the delivered material should fulfil the desired
expectations without damages/defects.
 Right Sequence: The impact of the sequence of activities performed in a material
handling operation is very evident. Therefore, it is important to move, store, protect, and
control materials in the right sequence.
 Right Orientation: Physical orientation of materials represents a significant portion of
people’s activities both in manufacturing and distribution. Therefore, regaining the
orientation of material will save valuable time.
 Right Place: The necessary material should be delivered at the point of use which can
save undesired movements.
 Right Time: The need for the material handling system to move, store, protect, and
control materials at the right time is increasingly important due to time-based
competition.
 Right Cost: Right cost does not necessarily mean that a firm should decrease the cost of
MHS. On the contrary, the system should be designed with competitive advantages, so it
can be a revenue enhancer rather than a cost contributor.
 Right Methods: To perform all the mentioned points above in a right way, it is necessary
to use the right methods.

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Hassan (2006) denotes that without a well-designed MHS production could encounter delays,
production time and cost could increase owing to unnecessary movement of products within the
facility, and also products could get damaged or contaminated. On the other hand, a well-
designed MHS would improve manufacturing and logistics operations, enhance delivery
performance and quality on the shop floor, and also reduce work-in-progress inventories. Several
problems and challenges that are related to MHS are summarized according to different
categories in the table above. Even though balancing between high delivery performance and low
buffer levels is the main challenge of MHSs, other categories—operation costs, delivery quality,
information flow and safety— are considered also in terms of their impact on overall MHS’s
efficiency.

2.3 Design Principles and Physical Elements

There are twenty fundamental guidelines and principles that can be used to effectively plan and
control material handling. Originally these principles have been formed by College-Committee
on Material Handling in Pittsburgh USA in 1990, and later these principles have been used and
modified by several authors like Tompkins et al. (1996), Nyman (1992), and Coyle et al. (2008).
The table below shows the principles with their definitions.

1. Planning Principle - Plan all material handling and storage activities in order to achieve
maximum overall operating efficiency.
2. System Principle - Integrate these activities into a coordinated system of operations,
including receiving, inspection, storage, production, assembly, packaging, warehousing,
shipping and transportation.
3. Materials Flow Principle -Provide an operation sequence and equipment layout that
optimizes materials flow.
4. Simplification Principle -Simplify handling by reducing, eliminating, or combining
unnecessary movements and equipment.
5. Gravity Principle -Utilize gravity to move material wherever it is possible.
6. Space Utilization Principle -Make effective utilization of all cubic space.
7. Unit Size Principle -Increase the quantity, size, or weight of unit loads or their flow
rates.

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8. Mechanization Principle -Mechanize handling operations.
9. Automation Principle -Provide automation that includes production, handling, and
storage functions
10. Equipment Selection Principle -While selecting handling equipment, all aspects like
material handling, movement and the used methods should be considered.
11. Standardization Principle -Standardize the handling methods as well as types and size
of handling equipment.
12. Adaptability Principle -Use the methods and equipment that can adapt to the widest
variety of tasks and applications, except where the special methods and equipment are
necessary.
13. Deadweight principle -Avoid unnecessary run of equipment and machines.
14. Utilization Principle -Plan for maximum utilization of handling equipment and labour.
15. Maintenance Principle -Plan for preventive maintenance and schedule repairs of all
handling equipment.
16. Obsolescence Principle -Replace the obsolete handling methods and equipment when
more efficient ones in order to improve the operations.
17. Control Principle -Use material handling activities to control the production, inventory
and order handling.
18. Capacity Principle -Use handling equipment to improve production capacity
19. Performance Principle -Determine the handling performance effectiveness in terms of
expense per unit handled.
20. Safety Principle -Provide suitable methods and equipment for safe handling.

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2.4 Information and Software

Baudin (2004) defines information flow as transaction processing associated with the material
flow, analysis of past activities, forecasting, planning, and scheduling of future activities.
According to Coyle et al. (2008) information is the lifeline of every system, and also one of the
important pillars in making decisions and actions effectively. In addition, to ensure that the
information is valuable and useful through a material flow, it must be accessible, relevant,
accurate, timely, and transferable. It has been argued by Leng and Zailani (2012) that the
accuracy of information sharing will enable different departments to fulfil requests within shorter
cycle times, and that is why it is considered as an important element that reflects cooperation
between different sections inside or outside of a company. The most important benefit of
obtaining an effective information system can be summarized as improved productivity through
higher and accurate delivery performance, reduced uncertainty, and low buffer levels (Fitzpatrick
& Ali, 2010). Huang et al. (2007) state that manufacturing shop floors suffer from lack of real-
time information. Paper-based manual systems are time-consuming, prone to errors, and
frequently lost or damaged. As a consequence, the information cannot accurately reflect the real-
life situations and changes in the system, which makes it impossible to make accurate shop-floor
decisions. In MHSs environment, several identification and control techniques/equipment are
used to collect and communicate the information to coordinate the flow of materials (Arora &
Shinde, 2007) and the ones that are relevant to course of this thesis will be presented below.

2.4.1 Kanban

Kanban is a tool in scheduling system that was mentioned for the first time by Taichi Ohno in
Lean Production and just-in-time concepts. According to its creator it is a physical information
card in manufacturing plants that helps to determine what to produce, when to produce and how
many units to produce (Ohno, 1988). A single implementation of kanban system might be two-
bin system where parts are supplied with containers to production lines. Empty container became
the signal itself, and indicates that it needs to be replenished, after parts are consumed by
production (Hobbs, 2004).

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However, nowadays many companies want to take advantage of increasingly effective computer
and communication technologies (Baudin, 2004), and prefer to implement electronic kanban (e-
kanban) system. E-kanbans can be easily integrated into company’s enterprise resource planning
(ERP) systems; and also by employing them, the common problems such as handling with
manual cards, lost cards, entry errors etc. can be eliminated (Drickhamer, 2005). Additionally,
embedded e-kanbans into company’s software system can provide real time information on the
shop floor. In material handling systems environment, kanban is used along with Just-in-time
concept or two-bin systems while pulling materials of production orders from warehouses (Wang
et al., 2011; Kumar & Panneerselvam, 2007).

2.4.2 Wireless Barcode Scanners and RFID Technology

The need of quickly responding to customer requests and customizing the delivery services are
becoming more and more important for companies (Fuller et al., 1993; Småros et al., 2000). On
the other hand, Holmström and Kärkkäinen (2002) underline that many company are dealing
with the same challenge; finding new solutions for more efficient information sharing; and
thereupon, leaner material handling across the company borders. For this purpose, electronic
information technology, for example, in forms of wireless barcode scanners and RFID
technologies can be very handy. Holmström and Kärkkäinen (2002) define wireless scanner as
product identification system that enables to identify a product or a part automatically without
physical handling. Holmström and Kärkkäinen (2002) divide the major benefits of implementing
wireless communication technology in three main categories, functional benefits through whole
organization, provided visibility and increased control through the whole chain, and the
possibility of restructuring the information systems infrastructure.

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 CHAPTER 3 - COMPANY PROFILE

BOSCH ELECTRICAL DRIVES INDIA PRIVATE LIMITED

In India, Bosch is a leading supplier of technology and services in the areas of automotive and
industrial technology, consumer goods and building technology. Additionally, Bosch also has in
India, the largest development centre, outside Germany, for end to end engineering and
technology solutions.

The Bosch Group operates in India through six companies, viz, Bosch Limited, Bosch Chassis
Systems India Limited, Bosch Rexroth India Limited, Robert Bosch Engineering and Business
Solutions Limited, Bosch Automotive Electronics India Pvt Ltd, Bosch Electrical Drives India
Pvt Ltd. In India, Bosch set up its manufacturing operation in 1953, which has grown over the
years to include 10 manufacturing sites and 7 development and application centers Bosch Group
in India employs over 26,000 associates. In India it generated consolidated revenue of nearly ₨
12,900 crores in 2012.

In India Bosch Limited is the flagship company of the Bosch Group. It earned revenue of over
Rs. 8400 crores in 2012.

Bosch Group

The Bosch Group is a leading global supplier of technology and services. In 2012, its roughly
306,000 associates generated sales of 52.5 billion euros. Since the beginning of 2013, its
operations have been divided into four business sectors: Automotive Technology, Industrial
Technology, Consumer Goods, and Energy and Building Technology.

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The Bosch Group comprises Robert Bosch GmbH and its roughly 360 subsidiaries and regional
companies in some 50 countries. If its sales and service partners are included, then Bosch is
represented in roughly 150 countries. This worldwide development, manufacturing, and sales
network is the foundation for further growth. Bosch spent some 4.8 billion euros for research and
development in 2012, and applied for nearly 4,800 patents worldwide. The Bosch Group’s
products and services are designed to fascinate, and to improve the quality of life by providing
solutions which are both innovative and beneficial. In this way, the company offers technology
worldwide that is “Invented for life.”

The company was set up in Stuttgart in 1886 by Robert Bosch (1861–1942) as “Workshop for
Precision Mechanics and Electrical Engineering.” The special ownership structure of Robert
Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for
the company to plan over the long term and to undertake significant upfront investments in the
safeguarding of its future. Ninety-two percent of the share capital of Robert Bosch GmbH is held
by Robert Bosch Stiftung GmbH, a charitable foundation. The majority of voting rights are held
by Robert Bosch Industrietreuhand KG, an industrial trust. The entrepreneurial ownership
functions are carried out by the trust. The remaining shares are held by the Bosch family and by
Robert Bosch GmbH.

In 2001, Bosch acquired the Mannesmann Rexroth AG which was later renamed to Bosch
Rexroth AG. In the same year, the company opened a new testing center in Vaitoudden close to
Arjeplog in north Sweden. A new developing center in Abstatt, Germany, followed in 2004.

Important inventions in these years were the electric hydraulic brake in 2001, the common rail
fuel injection with piezo-injectors, the digital car radio with a disc drive, and the cordless
screwdriver with a lithium-ion battery in 2003.

Bosch received the Deutsche Zukunftspreis (German Future Prize) from the German president in
2005 and 2008. A new development center was planned in 2008 in Renningen. In 2014, the first
departments moved to the new center, while the remaining departments followed in 2015.

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In 2009, Bosch invested about 3.6 billion Euro in development and research. Approximately
3900 patents are published per year. In addition to increasing energy efficiency by employing
renewable energies, the company plans to invest into new areas such as biomedical engineering.

China has developed into an important market and manufacturing base for Bosch. In 2012,
Bosch had 34,000 employees and a revenue of 41.7 billion Yuan (about 5 billion Euro) in China.

 2012 - Purchased SPX Service Solutions

 2012 - Shanti Auto Electricals, Budaun

 2012 - Bosch sold its foundation brakes activities to KPS Capital Partners, that led

to the establishment of Chassis Brakes International

 2013 - Bosch announced, it will exit its solar business

 2014 – Bosch entered talks to acquire Red Bend Software.[6]

 2014 - Bosch takes over 100% of the shares from the former BSH Bosch and

Siemens Hausgeräte GmbH joint venture [7]

 2014 - Bosch received the 2014 U.S. Smart Partner award for Physical Security

from Ingram Micro Inc.[8]

 2015 - Bosch takes over 100% of the shares of the former ZF Lenksysteme

(Steering Systems) GmbH joint venture (was 50/50 with ZF Friedrichshafen)

 2015 - Bosch purchases Seeo, Inc, a start-up working on solid state lithium ion

batteries.

Page: 45
3.1Automotive Technology

As the world’s largest independent parts supplier to the automotive industry, we significantly
contribute toward making driving ever safer, cleaner, and more economical.

Gasoline Systems

The Gasoline Systems division places competence for the entire drivetrain under one roof.

Diesel Systems

The Diesel Systems division develops, applies, and manufactures diesel systems which
contribute to making vehicles cleaner and more economical.

Page: 46
Chassis Systems Control

The Chassis Systems Control division develops innovative components, systems, and functions
in the field of vehicle safety, vehicle dynamics, and driver assistance.

Electrical Drives

The Electrical Drives division develops and manufactures mechatronic components and systems
for body applications.

Starter Motors and Generators

The Starter Motors and Generators division develops and produces starter motors and generators
for passenger cars and commercial vehicles.

Page: 47
Car Multimedia

The Car Multimedia division focuses on smart solutions designed to make the in-vehicle
integration of entertainment, navigation, telematics, and driver assistance more flexible and more
efficient.

Automotive Electronics

The Automotive Electronics division develops, produces, and sells microelectronic products for
automotive applications. Further core competencies are systems integration and application
engineering for the vehicle.

Page: 48
Automotive Aftermarket

The Automotive Aftermarket division is responsible for sales and distribution of automotive
parts for vehicle servicing, diagnostics equipment for workshops, technical after-sales service,
and the Bosch Service workshop concepts.

Steering Systems

The joint venture ZF Steering Systems develops, produces, and sells steering technology for
passenger cars and commercial vehicles.

Consumer Goods

This business sector provides a wide spectrum of products and solutions in the areas of Power
Tools and Household Appliances.

3.2Industrial Technology

The Industrial Technology business sector incorporates the divisions Drive and Control
Technology and Packaging Technology.

Page: 49
Drive and Control Technology

Bosch Rexroth is one of the leading specialists worldwide in drive and control technology.

Packaging Technology

Bosch Packaging Technology is one of the leading suppliers of complete systems for packaging
and process technology.

Engineering and IT Services

We develop Embedded Software for Electrical Control Units, Tools and Diagnostics

Page: 50
Gasoline Systems

BOSCH is an extended wing of Bosch Gasoline systems, Germany which develops and
manufactures modern gasoline - engine systems that contribute to making vehicles more
dynamic, cleaner and more economical.

Company’s aspiration is to be the preferred partner in India for gasoline engine management
systems. To this end company offers our customers top class technology, high quality products
and services. Company has a dedicated team experienced to cater to the requirements and needs
of the Indian customer.

Areas of operation

 Technical Sales
 Product development
 Application
 Manufacture
 Product service

Diesel Systems

Bosch in India, is committed to developing innovative diesel fuel injection products, apart from
providing services that will help meet the stringent emission norms of the future. The in-line fuel
injection pumps of Bosch could cater to the full spectrum of diesel engines till BSII. They are
used in a range of engines starting from small fixed installations to large earth movers.

Page: 51
By increasing pressure capability, improving timing control along with combustion optimization,
the in-line pump is able to meet the next level of emission norms of BSIII in major parts of the
country, thereby reducing carbon monoxide (CO) emissions by 50%.

With the introduction of Bharath Standard IV (BS IV) in 13 cities across India, the need for
reduced emissions, and quieter engines are making greater demands on the engine and the fuel-
injection systems. These demands can be met by the Common Rail fuel injection system that
delivers fuel at a high pressure, precise quantity, precise timing, and split in to multiple
injections. Moreover, electronic control in the Common Rail diesel fuel injection system
increases flexibility making the vehicles less polluting, more fuel efficient and capable of
meeting future emission norms for a host of end applications like: Load carriers, Passenger cars,
Light & Medium duty Commercial vehicles.

For the low price vehicle segment, second generation Common Rail System based on single
plunger pump with the very efficient inlet fuel metering control system for the single and two
cylinder engines was introduced. The first generation Common Rail system based on the
principle of high pressure control system is presently in Series production for this segment.

In line with its practice of developing and producing state of the art technology for the market,
Bosch began production of the A4000 pump in 2010. The A4000 meets the requirements, which
is in accordance with BSIII & TREM emission norms. This has contributed significantly in
changing the landscape of the commercial vehicle and off-highway segments in India. These
unique products are a clear testimony to the Company’s strong innovative culture and its focus
on providing value to the customers.

Areas of operations
 Electronic Diesel Control (EDC)
 Air management
 Injection management
 Exhaust-gas management

Page: 52
Chassis Systems Control

Bosch Chassis Systems India Ltd.

Established in 1985, Bosch Chassis Systems India Limited is a subsidiary of the Bosch Group in
India. The Bosch Group holds a 98% stake in the company.

As part of the world’s largest independent parts supplier, we offer our customers advanced
technology, quality and excellent services, all from a single source. Bosch Chassis Systems India
Limited develops and manufactures innovative braking system components and vehicle safety
systems for the automotive industry.

The company uses its system engineering capabilities to suggest the right kind of brake system
for the OEMs. The continual improvement of driving safety and comfort supports our aspiration
to be the preferred partner of our customers.

Bosch Chassis Systems India Limited manufactures products to comply with the stringent
requirements of the leading OEMs in the automobile industry as a manufacturer of brake system
components for 3-wheelers, passenger cars, utility vehicles, and light commercial vehicles.

Its state-of-the-art manufacturing plants are located at Chakan (near Pune) and Manesar (near
Delhi) and the registered office is in Chakan.

Page: 53
Areas of operation – Product portfolio.

 Brake Booster, Tandem Master Cylinder (TMC) and Proportioning Valves

 Antilock Braking System (ABS) and Electronic Stability Program (ESP®)
 Passive Safety Systems like Airbag Electronic Control Units (ECUs)
 Driver Assistance Systems
 Solutions for Electric and Hybrid Electric Vehicles

Electrical Drives

As part of the Automotive Technology business sector, the Electrical Drives division develops
and manufactures mechatronic components and systems for body applications. With innovative
actuators, components and systems for engine thermal management, air conditioning, and
windshield cleaning, we offer new solutions for convenience functions as well as for the basic
equipment of vehicles.

Focusing on customer benefit, quality, and competitive prices, we are market leaders in many of
our business segments. The division includes the business units Actuation Systems, Thermo
Systems, Wiper Systems, and a product group for new business fields. The division’s
headquarters are located at Buehlertal, Germany.

Page: 54
Areas of operation

 Actuators for window lifting, seat adjustment, and sunroof actuation

 Blower modules and drives for engine cooling fans
 Pumps and valves for engine cooling systems
 Components for air conditioning
 Front and rear wiper drives, wiper arms, and wiper blades
 Electric steering motors, motors for ABS, ESP®, and eBikes

Bosch Electrical Drives India Private Limited has been formed since April 2008 with the sole
objective of dealing with Electrical Drives products from Robert Bosch GmbH, Germany, and
also from its affiliated and subsidiary companies in the rest of the world.

Bosch Electrical Drives India Private Limited is engaged in Sales, Manufacturing, Development,
and Application of Wiper Systems including Wiper Motors, Engine Cooling Systems including
fan motors, HVAC blower motors, window lift motors and other system components.

Page: 55
 CHAPTER 4 - RESEARCH METHODOLOGY

4.1 Problem definition:

Holding high inventory in an organisation is very difficult, In order to maintain high inventory
proper material handling and storage is important. There is also a problem on retrieval of the
items from the stores and it occupies more storage area. Need additional cost for material
handling and Inventory. In many organisations, management always unable to follow FIFO
system in order to process the tasks, so that we can implement required material handling process
to get sufficient results.

4.2 Objectives of the study:

The primary objectives of the study are as follows:
 To ensure that material and components are available for production, and final products
are ready for packaging and dispatch in Bosch Electrical Drives.
 To maintain minimum inventory but ensure right quantity of material is available at the
right time to produce right quantity of final products in Bosch.
 To ensure material handling of all manufacturing processes of Bosch, this scheduling of
different job works as to minimize or remove any kind of idle time for machine and
workers.

4.3 Scope of the study:

Scope of the study covers importantly the supply of materials to the production line and Material
handling of Bosch helps to maintain minimum inventory levels. With minimum inventory levels,
material handling also reduces associated costs. Material tracking becomes easy and ensures that
economic order quantity is achieved for all lot orders. Importantly, material handling softens
capacity utilization and allocates correct time to products as per demand forecast.

Page: 56
4.4 Research Design

Research Design if defined as “the blue print for the collection, measurement &
analysis of data”.

The research design is the conceptual structure within which the research is
conducted. It is needed because it facilitated the smooth sailing of the various research
operations thereby making research as efficient as possible yielding maximal information
with minimal expenditure of effort, time & money.

The research design helps the researcher to organize his ideas in a form whereby it
will be possible for him to look out for flaws. The study is Descriptive in nature.

Research Design stands for advance planning of the methods to be adopted for
collecting the relevant data for the techniques to be used in analysis keeping in view the
objective of the research.

4.5 Source of Data:

Both primary & secondary data have been used for the study. Primary data was
gathered by a structured, non-disguised questionnaire. Secondary data is collected through
company web site and internet.

Page: 57
4.6 Techniques of Data Collection:

A structured non-disguised questionnaire was designed to collect data from the operators
& staff. The questionnaires consist of 40 questions. The questionnaire was framed in primary
consideration of important parameters like awareness of employees regarding the pillars of
material handling, Various promotional activities, etc

Population:

A sample size of 50 used in this study were chosen which comprises of 30 operators & 20
employees.

Tools for Analysis:

The statistical tool used for analysis in the study is simple percentage.

4.7 limitations of the study:

 Study is conducted at BOSCH ELECTRICAL only, and result of study is not suitable for
other organization.
 The validity and Reliability of the data obtained depends on the responses from the
respondents.
 Time at the disposal for the research was limited.
 The population size was small.

Page: 58
 CHAPTER 5 - DATA ANALYSIS AND
INTERPRETATION
Table-5.1 Table showing the age of the respondents

Age Total Percentage

<20 yrs. - -
21-25 yrs. 16 32
26-30 yrs 17 34
31-35 yrs 17 34
>35 yrs. - -

Grand Total 50 100

Interpretation:
The above table shows that there are 34% of respondents belonging to the age
group of 26 to 30 years. Another34% of the respondents belongs to age group of 31 to 35
years. And finally 32% 0f the respondents belong to the age group of 21 to 25 years. This
shows that there are more respondents between the ages of 26 to 35 years.
Chart-4.1 Chart showing the age of the Respondents

40

35

30

25

20

15

10

0
<20 yrs. 21-25 yrs. 26-30 yrs 31-35 yrs >35 yrs.

Page: 59
Table-5.2 Table showing the Qualification of the Respondents
Qualification Total Percentage
12 th & Below 18 36
ITI & Diploma 22 44
U.G 10 20
P.G - -
Others - -
Grand Total 50 100

Interpretation:

The above table shows that 44% of the respondents belong to the category of ITI &
Diploma. 36% of the respondents belong to the category of 12 th & below. This shows that
there are more respondents with the qualification of ITI & Diploma.

Chart-5.2 Chart showing the Qualification of the Respondents

50
45
40
35
30
25
20
15
10
5
0
12 th & Below ITI & Diploma U.G P.G Others

Page: 60
 Table-5.3 Table showing the experience of the respondents in Roots

Experience Total Percentage

0-5 yrs. 16 32
6-10 yrs. 19 38
11-15 yrs. 12 24
> 15 yrs. 2 4
NR 1 2
Grand Total 50 100

Interpretation:
The above table reveals that there are 38% of the respondents are having 6 to 10
years of experience.32% of the respondents are having 0 to 5 years of experience.. This
shows that there are more respondents with experience between 6 to 10 years

Chart-5.3 Chart showing the experience of the Respondents

40

35
30

25
20

15
10

5
0
0-5 yrs. 6-10 yrs. 11-15 yrs. > 15 yrs. NR

Page: 61
Table-5.4 Table showing the relatedness of the respondents

Relatedness Total Percentage

Grade 1 31 62
Grade 2 1 2
Grade 3 9 18
Others 9 18
Grand Total 50 100

Interpretation:
There are more pillars in Material handling. The above table shows that there are 62%
of the respondents belong to Grade 1 pillar alone. 18% of the respondents belong to both
Grade 3 and other pillars. This shows that most of the respondents belong to Grade 1.

Chart-5.4 Chart showing the relatedness of the respondents

Page: 62
Table-5.5. Table showing the Understandability of the Respondents

Understand Ability Total Percentage

Yes 50 100
No - -
Grand Total 50 100

Interpretation:
The above table shows that all respondents were about the concept of material handling.
This shows that there is 100% understand ability among the respondents about material handling.

Chart-5.5 Chart showing the understandability of the respondents

100

100
90
Percentage

80
70
60
50
40
30 0
20
10
0
Yes No
Understandability

Page: 63
Table-5.6 - Table showing the aim of material handling

Aim Total Percentage

Increase Production 5 10
Increase Employee Morale - -
Restructure corporate culture 9 18
All 36 72
Grand Total 50 100

Interpretation:
The aim of material handling is to increase production, increase employee morale and
restructure corporate culture. From the above table only 72% of the respondents have chosen
the correct option.18% of the respondents have chosen restructure the corporate culture as the
aim of material handling.

Chart –5.6 Chart showing the aim of material handling

80
70
60
50
40
30
20
10
0
Increase Production Increase Employee Restructure corporate All
Morale culture

Page: 64
Table-5.7 Table showing the Appropriateness of material handling

Appropriateness Total Percentage

Yes 44 88
No 6 12
Grand Total 50 100

Interpretation:
The above table shows whether implementing material handling in our country is
appropriate or not because the concept of material handling was originated in American
companies. 88% of the respondents said that implementing material handling in our country
is appropriate.12% of the respondents said that implementing material handling in our
country is not appropriate for our country.

Chart-5.7 Chart showing the Appropriateness of material handling

88
Percentage

90
80
70
60
50
40 12
30
20
10
0
Yes

No

Appropriateness

Page: 65
Table-4.8 Table showing the View about material handling for safety

View Total Percentage

Very Important 35 70
Important 10 20
Not Important 5 10
Grand Total 50 100

Interpretation:
The above table shows that 92% of the respondents view material handling as part of
their industrial life. 8% of the respondents doesn’t view material handling as part of their
industrial life. This shows most of the respondents are ready to transform themselves in the
organization.

Chart-5.8 Chart showing the View about material handling for safety
80

70
60

50
40

30
20

10
0
Very Important Important Not Important

Page: 66
 CHAPTER 6 - FINDINGS, SUGGESTIONS AND
CONCLUSION

6.1 FINDINGS:

 Out of 50 respondents only 36 respondents were aware about the aim of material
handling. This shows the awareness about material handling.
 44 respondents agrees that implementation of material handling is appropriate at the
same time only 34 were fully aware about the idea of material handling.
 Most of the respondents with ITI & Diploma are related to Grade 1. This shows they
are aware towards grades.
 Only 33 respondents have nearly 15 years of experience in roots. This would help the
organization in promoting training activities for others.
 After implementation of material handling contributed by the employees has been
increased.
 After material handling implementation breakdown hours of machines have also been
reduced.
 After implementation of material handling “Total Employee Involvement” has
increased.

6.2 SUGGESTIONS:
 For material handling and for other developmental activities a development team

can be formed.

 For better understanding about material handling, the material handling meetings

can be conducted continuously.

Page: 67
  To find about the awareness of material handling, tests can be conducted

periodically.

 While explaining a concept it is essential to quote examples & display charts.

6.3 CONCLUSION

Material handling and storage system has become popular technique for management control of
manufacturing operations. However, a surprisingly small number of firms really have successful
systems. For many, material handling has been a lengthy, expensive exercise without achieving
their expected benefits of inventory reduction, improved customer service, and improved
productivity.

In addition to requirements, material handling should be used by management as a forward

planning tool to forecast needs for capacity (buildings and machinery), labor requirements, and
cash. Computer-based production and inventory controls provide obvious benefits to the material
handling user, but the financial and long-range planning capability of a good system also
contributes significantly to better management.

Material handling and storage system requires a high degree of accuracy, discipline, and
understanding from all levels of the organization. Material handling is considered a major change
in the way a manufacturing firm operates. A formal approach to education and training should be
installed which would effect all members of the organization. To make material handling work
effectively, all levels of the organization must take an active role in its development and
implementation.

When properly understood, designed, and implemented, material handling will develop a level of
professionalism not currently found in manufacturing companies.

Page: 68
 BIBLIOGRAPHY:

1. Storage and Material Handling Equipment Requirement Factors - Angela Nasir

2. Material Handling Systems: Designing for Safety and Health - Charles Reese
3. Material Handling Handbook - David E. Mulcahy
4. World-Class Warehousing and Material Handling - Edward Frazelle
5. https://en.wikipedia.org/wiki/Material_handling
6. https://en.wikipedia.org/wiki/Material-handling_equipment
7. https://en.wikipedia.org/wiki/Warehouse
8. Guide Jr, V.D.R., and Srivastava, R., 2000, A review of techniques for buffering against
uncertainty with material handling system. Production Planning & Control, Vol.11, No.3,
pp. 223-233.
9. Hoyt, J., 1978, Dynamic Lead Times that Fit Today’s Dynamic Planning (Q.U.O.A.T.
Lead times). Production and Inventory Management, Vol. 19, No.1, pp. 63-71.
10. Karmarkar, U.S., 1987, Lot Sizes, Lead Times and In-Process Inventories, Management
Science, Vol.33, No.3, pp. 409-418.
11. Karmarkar, U.S., Kekre, S., and Kekre, S., 1985, Lot sizing in Multi-Item Multi-Machine
Job Shops, IIE Transaction, Vol.17, pp. 290-298.
12. Kelton, W.D., Sadowski, PR., and Sadowski, D.A., 2002, Simulation with ARENA (New
York: McGraw Hill).
13. Koh, S.C.L., Saad, S.M., and Jones, M.H., 2002, Uncertainty under material handling-
planned manufacture: review and categorization, International Journal of Production
Research, Vol.40, No.10, pp.2399–2421.

Page: 69
 APPENDIX - QUESTIONNAIRE
1. Age of the respondents
 <20 yrs.
 21-25 yrs.
 26-30 yrs
 31-35 yrs
 >35 yrs.
2. Table showing the Qualification of the Respondents
 12 th & Below
 ITI & Diploma
 U.G
 P.G
 Others
3. Table showing the experience of the respondents in Roots
 0-5 yrs.
 6-10 yrs.
 11-15 yrs.
 15 yrs.
 NR
4. Table showing the relatedness of the respondents
 JH
 JH & KK
 JH &PM
 JH & QM
 KK
 KK & PM
 QM

5. Table showing the Understandability of the Respondents

Page: 70
  Yes
 No
6. Table showing the aim of material handling
 Increase Production
 Increase Employee Morale
 Restructure corporate culture
 All
7. Table showing the Appropriateness of material handling
 Yes
 No
8. Table showing the View about material handling
 Yes
 No

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