financial accounting presentation by hammad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Presented By: M. Hammad Manzoor
(MBA HRM I)
Roll No. 508195394
Supervised By: Mr. Attique Rehman
(November, 2011)
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
WELCOME
TO THE PARTICIPANTS
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Agenda Items for Presentation
Introduction about Author and Project Introduction to the Topic
Practical Study Cere-e-Noor Ceramics
Data Collection Method / Analysis
SWOT analysis
Conclusions
Recommendations
Q & A Session
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Introduction about Author and ProjectMy Self
Introduction about ProjectSelection Criteria and Uses of an appropriate
Inventory System
Philosophy of the project is,
How to understand the problem and find out a patent
solution
Introduction about Author and Project
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
INTRODUCTION
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadINTRODUCTION
INVENTORY
General Types of InventoryInventory
Management
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadWHAT IS AN INVENTORY
Inventory means
List Record
Account
Register
Catalog
Supply
Stock
Range
Inventory means a list compiled for some formal purpose, such as the details ofan estate going to probate, or the contents of a house let furnished.
The term inventory is a designation for goods that are held for sale in the normal
course of business, as well as for goods that are in production or are to be placed
in production.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
How Inventory Management
fits the Operations Management Philosophy
Operations As aCompetitive WeaponOperations StrategyProject Management
Process StrategyProcess Analysis
Process Performance & QualityConstraint ManagementProcess LayoutLean Systems
Supply Chain Strategy
LocationInventory Management
ForecastingSales and Operations Planning
Resource PlanningScheduling
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Inventory management is the planning and controlling of
inventories in order to meet the competitive priorities of theorganization.
Effective inventory management is essential for realizing the
full potential of any value chain.
Inventory management requires information about expected
demands, amounts on hand and amounts on order for every
item stocked at all locations.
The appropriate timing and size of the reorder quantities
must also be determined.
Inventory Management
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadINVENTORY MANAGEMENT
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadClasses of Inventory
Classes of Inventory
MerchandiseInventory
ManufacturingInventory
RawMaterial
FinishedGoods
Good Inprocess
Direct
MaterialDirect Labor
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadInventory Control Methods
Inventory Controls Methods
Real Time Inventory Physical Inventory
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadInventory Methods
Inventory Methods
PeriodicInventory
System
PerpetualInventory
System
Comparisonbetween Periodic &
Perpetual System
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Perpetual Inventory System
Periodic Inventory System
Large company with professional
management.
Small company, run by owner.
Management and employees want
information about items in inventory and
the quantities in which specific products
are selling.
Accounting records of inventories and
specific products sales are not needed in
daily operations. Such information is
developed primarily for use in annual
income tax returns.
Items in inventory have a high per unit
cost.
Inventory consists of many different kinds
of low cost items.
Low volume of sales transactions or acomputerized accounting system
High volume of sales transactions and amanual accounting system lock of full time
accounting personnel.
Merchandise stored in multiple locations
or in warehouses separate from the sales
sites.
All merchandise stored at the sale site.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadImportant Terms used in Inventory Methods
Special terms used in dealing with inventory:
Stock Keeping Unit (SKU) is a unique combination of all the components that areassembled into the purchasable item. Therefore, any change in the packaging orproduct is a new SKU. This level of detailed specification assists in managinginventory.
Stockout means running out of the inventory of an SKU.
"New old stock" (sometimes abbreviated NOS) is a term used in business to referto merchandise being offered for sale that was manufactured long ago but thathas never been used. Such merchandise may not be produced anymore, and thenew old stock may represent the only market source of a particular item at the
present time.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadImportant Terms used in Inventory Methods
Business Inventory:
The reasons for keeping stockThere are three basic reasons for keeping an inventory:
1.Time - The time lags present in the supply chain, from supplier to userat every stage, requires that you maintain certain amounts of inventory
to use in this "lead time." However, in practice, inventory is to bemaintained for consumption during 'variations in lead time'. Lead timeitself can be addressed by ordering that many days in advance.
2.Uncertainty - Inventories are maintained as buffers to meetuncertainties in demand, supply and movements of goods.
3.Economies of scale - Ideal condition of "one unit at a time at a placewhere a user needs it, when he needs it" principle tends to incur lots ofcosts in terms of logistics. So bulk buying, movement and storing brings ineconomies of scale, thus inventory.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadItems to be added in Inventory Methods
Items to be added in
Inventory Methods
Goods in TransitSegregated
GoodsGoods on
Consignment
Conditional andInstallment Sales
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadInventory As Money
Accounting forInventories
Raw MaterialWork in Progress
(WIP)Finished Goods
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadHow Inventory is Valued?
How inventory isValued?
First In, FirstOut (FIFO)
Last In, FirstOut (LIFO)
AverageCost
Specific Cost
(Actual Cost)
Standard
Cost Method
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadInventory on Balance Sheet
Assets = Liabilities + Equity.
Assets represent a companys resources. Assets can be in
the form of cash or other items that have monetary valueincluding
inventory. Assets are made up of (a) current assets (assets that are in the
form of cash or that are easily convertible to
cash within one year such as accounts receivable, securities, andinventory), (b) longer-term assets such as investments and fixed
assets (property/plant/equipment), or (c) intangible assets (patents,
copyrights, and goodwill).
Liabilities represent amounts owed to creditors (debt, accountspayable, and lease-term obligations).
Equity represents ownership or rights to the assets of the
company (common stock, additional paid-in capital, and retained
earnings).
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Inventory on Income Statement
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadFIFO Inventory
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadLIFO Inventory
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, IslamabadAverage Cost Inventory
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Practical Study of
www.cera-a-noor.com
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Cera-e-Noor plant located in the industrial area of city ofHub in Lasbela, Balochistan province of Pakistan
It was acquired by the Hashoo Group in the year 2000.
It is a state-of-the-art facility for the manufacture ofcrockery (tableware).
The plant was designed and commissioned with thecollaboration of French ceramic giant, Bernardaud Liamogesand technical/engineering expertise from other majorplayers in the French ceramic industry such as Ceric and
Cerlim.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Turn Over Targets To achieve a target of PKR 222 million (2 million pieces) within the 1st year To achieve a target of PKR 400 million (4 million pieces) within the 2nd year To achieve a target of PKR 1 billion (8 million pieces) within the 3rd year
Profit Oriented Targets To achieve profit at the rate of 2% within the 1st year 2007-08 To achieve profit at the rate of 4% within the 2nd year of 2008-9 To achieve profit at the rate of 8 % within the 3rd Year of 2008-09
Sales Targets To achieve a target net sales of Rs. 222 million within the1st year of 2007-08
Expand the number of dealers by 10 % To achieve a target net sales of Rs. 400 million within the 2nd year of 2008-09 Expand the number of dealers by 30 % To achieve a target net sales of Rs. 1billion within the 3rd year of 2009-10 Expand the number of dealers by 50 %
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Inventory control Methodology
Used by Cere e Noor
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Inventory methods Used by Cere e Noor:
Inventory Methods used by Cere e Noor are as follows;
Periodic Inventory Method Used by Cere e Noor:Periodic Inventory method is used by Cere e Noor. They generally carry outthe periodic inventory byphysical inventory at the end of each month. Inperiodic Inventory methodology of the Cere e Noor, the store department isresponsible for maintain all the records for the material received and issued by theStore Department.
FIFO (First In & First Out) Method Used by Cere e Noor:Another method used by Cere e Noor is the First In & First Out (FIFO)method). This method is worked out for the items that are to utilize at theearliest as we can. In the FIFO technique, the sensitive material holds by
the store department is to utilized first.The utilization of the different colors for the ceramics preparation,generally few color brands are very sensitive for utilization, due totemperature and light exposure. FIFO technique is sometime applied insuch cases.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Merits & Strengths:Premier local manufacturer of porcelain tableware.
Part of the elite Hashoo group -the owners and operators of two leadingchains of hotels namely Marriott and Pearl Continental
Ability (knowledge, skills and facility) to manufacture hard porcelain.
Demerits and Deficiencies:Inventory management system is not equipped with the advance technologies,
like modern instruments to maintain the sensitive material (paints).No modern alarming system has yet been installed with Hashoo group; the oldalarming system in use generally generates the request which is not required bythe purchaser.Plant is geared towards small volumes and labor intensive manufacturing resultinghigh. Cost of manufacturing
Quality is acceptable but consistency needs to be ensured. Further improvementin quality is necessary to compete with top International brands.Lack of Decal Development Facility.Lack of original designsLack of brand awareness in relevant marketsLack of planning strategy for Inventory Management.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Opportunities: Huge growing domestic market Growing purchasing power of people within the economy More and more consumers are becoming brand conscious Modern lifestyles markets are growing.
Threats: Growing Manufacturing Power of China (they can do
reasonable quality at low cost) Increasing energy costs.(Oil & Electricity) Increasing prices of raw material Political stability is at a decline.
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www.aiou.edu.pk M. HAMMAD MANZOOR, MBA HRM - IRoll No. 508195394, Karachi Campus
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Recommendations:Enhance the planning strategy for inventory management.
Better alarming system should be installed.Receiving management should be improved enough, so that no illegal storekeeping could be made at arriving place (main gate)Enhance the manufacturing plant capacity to get the maximum numberEnhance the brand designEnhance HRD to meet the appropriate professional needs for onward
competitionAdministration department needs to address for of hiring experiencedprofessionals of the relevant trade.The emphasis of the company emphasized is work progress, nor on thepersonality grooming of an individual, which could be helpful for companyoperation smooth conduction and helping out for better prospectivity in the
form of his personal growth and motivation to company. Sophisticated inventory plan should be prepared to meet the order in amore proficient way.
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i d k M HAMMAD MANZOOR MBA HRM I
Department of Admin Sciences,
Allama Iqbal Open University, Islamabad
Thanks for your patience ,,,,,,
Q & A Session
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