Post on 10-Nov-2014
transcript
A
Project Report on
Production & Operation Management
of
IFFCO-KANDLA
Submitted To:
Prof. Hitendra Lachhwani
Submitted By:
Anjali Nair-12035
Kruti Rawal-12040
Khushma Thacker-12051
Grishma Parihar-12018
Pratik Parmar-12037
Debendra Manna-12031
Gujra Rahul-12019
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Acknowledgement
We are thankful to Mr. Dodiya (Employee Trainee) and our faculty Prof.
Hitendra Lachhwani. We are thankful to HR Manager of “IFFCO” who co-operate
with us and they gave proper guidance & necessary information regarding the unit.
We are also thankful to Tolani Institute of Management Studies for providing
us such valuable opportunity of getting the knowledge of real meaning of industry.
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Sr. No.
Content Page No.
1 Introduction 4
2 Core Process 9
3 Corporate Strategy 11
4 Competitive Priorities 14
5 Production Process 16
6 Capital Intensive 21
7 Manufacturing Process 22
8 Production & Inventory Strategy 32
9 Quality & Lean 36
10 Resource Planning 41
11 Analysis 43
12 Conclusion 44
13 Bibliography 45
Introduction
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IFFCO’s NPK plant is located adjacent to Kandla Port Trust Oil jetty. IFFCO was
built at a cost of 30 crores with two streams having a licensed capacity of 1,27,000
tons of P2O5. This plant was designed by MS. Dorr Oilver, to produce three grades of
NPK based on DAP, the plant was commissioned on 26th November 1974 and its
commercial production was started on 1st January 1975.
Due to increased demand for complex fertilizer, the capacity of NPK plant has
been doubled at a cost of Rs. 28.6 crores and thus two streams (i.e. train C and D)
were added with the licensed capacity increasing from 1,27,000 MT P2O5 per annum
to 2,60,000 MT P2O5 per annum.
IFFCO Kandla again went for expansion in 1996-97. Kandla Phase- II NPK/DAP
project conceptualized the setting up of two additional streams (train E and F) with
an annual production capacity of 2, 10,700 P2O5 MTPA of at a cost of 205.30 crores.
Dr. U.S. Awasthi is the Managing Director and Chief Executive Officer of IFFCO who has been vested with the overall responsibility of the affairs of IFFCO's day to day activities.
Mr. M.R. Patel is the Sr. Executive Director at IFFCO
Kandla Unit.
IFFCO Plants:
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Kalol
Kalol unit - the oldest unit of IFFCO is located at 26 km from Ahmedabad on the Ahmedabad Mehasana highway.
Aonla
Aonla is about 28 KM south west of Bareilly on Bareilly-Aonla road.
Phulpur
Situated near Allahabad in Uttar Pradesh.
Kandla
IFFCO's KANDLA PLANT is located on the western bank of Kandla creek adjacent to Kandla Port Trust oil jetties.
Para deep (Orrisa)
Paradeep is located on village Mudsadia, Jagatsinghpur.
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Vision
To augment the incremental incomes of farmers by helping them to increase their
crop productivity through balanced use of energy efficient fertilizers, maintain the
environmental health and to make cooperative societies economically &
democratically strong for professionalized services to the farming community to
ensure an empowered rural India.
Mission
IFFCO's mission is "to enable Indian farmers to prosper through timely supply of
reliable, high quality agricultural inputs and services in an environmentally
sustainable manner and to undertake other activities to improve their welfare"
To provide to farmers high quality fertilizers in right time and in adequate
quantities with an objective to increase crop productivity.
To make plants energy efficient and continually review various schemes to
conserve energy.
Commitment to health, safety, environment and forestry development to enrich
the quality of community life.
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Products
Urea
IFFCO's Urea is not merely a source of 46% of nutrient nitrogen for crops, but
it is an integral part of millions of farmers in India. A bag of IFFCO's urea is a constant
source of confidence and is a trusted companion for Indian farmer.
DAP
Diammonium Phosphate It is the most popular phosphatic fertilizer because
of its high analysis and good physical properties. The composition of pure salt of DAP
is N-21.19% and P205 -53.76%. Fertilizer grade DAP is 18:46:0.
NPK
NPK complex fertilizers produced at Kandla are DAP based grades. At present
two grades Grade I - 10:26:26 and Grade II-12:32:16 are produced.
Granular NPK complexes are free flowing and do not pose any problem during
handling and storage. However, exposure of material for long period to very high
humidity may cause caking. Therefore, NPK complexes are bagged in quality tested
HDPE bags to prevent.
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BIO – Fertilizers
Bio-fertilizers are capable of fixing atmospheric nitrogen when suitable crops
are inoculated with them. Bio-fertilizers are low cost, effective, environmental
friendly and renewable source of plant nutrients to supplement fertilizers.
Integration of chemical, organic and biological sources of plant nutrients and their
management is necessary for maintaining soil health for sustainable agriculture.
The bacterial organisms present in the Bio-fertilizer either fix atmospheric
nitrogen or solubilise insoluble forms of soil phosphate. The range of nitrogen
fixed per ha/year varies from crop to crop; it is 80 - 85 kg for cow pea, 50 - 60 kg
for groundnut, 60 - 80 kg for soybean and 50 - 55 kg for moongbean.
Our Product - Water Soluble Fertilizer:
Water soluble fertilisers are now set to be produced in the country
with the Indian Farmers Fertiliser Cooperative Limited setting up a manufacturing plant
at its Kandla unit in Kutch district.
At present, 100 per cent water soluble fertiliser is imported. The 50-million-tonne
plant is expected to facilitate easy availability of this fertiliser of urea phosphate, which
is highly in demand for drip irrigation of cash crops. The product has significant impact
on quality and yield of cash crops, horticulture crops, vegetables and grains.
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1. CORE PROCESS:
Supplier Relationship Process:
Over the years IFFCO has developed expertise in its manufacturing
processes as well as developed good supplier relationships. Working
effectively with suppliers has added significant value to the products
of the firm. With the help of procurement of better raw-materials
which is in turn result of efficient supplier relationship, IFFCO has
been able to improve the quality of its products. The demand
forecasting for IFFCO KANDLA unit is done by its head office. The head
office has a vendor list from which it sends raw material requisition to
the vendors. These in turn send tenders to the company and the
company selects those vendors who quote the lowest prices, with
quality material and with a quick delivery time.
New Product Development Process:
With the increasing needs in agriculture and improved technology,
the need for better fertilizers evolved. Thus IFFCO through its sincere
efforts developed new products with the help of its Research and
Development Department. New products like bio fertilizers and water
soluble fertilizers were developed and production for the same
started at IFFCO Kandla unit.
Order Fulfillment Process:
With improved technology and transport facilities, IFFCO has been
able to satisfy its customers by producing top quality products and
delivering them to its customers on time.
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Customer Relationship Process:
With sincere efforts in marketing IFFCO has been able to identify its
potential customers, build relationship with external customers and
facilitate the placement of orders by customers. The distribution of
IFFCO’s fertilizer is undertaken through over 37,000 co-operative societies.
The entire activities of Distribution, Sales and Promotion are coordinated by
Marketing Central Office (MKCO) at New Delhi assisted by the Marketing
offices in the field. IFFCO has its own retail outlets called Farmers
Service Centers. There are 158 Farmers Service Centers available. In
these retail outlets agriculture inputs like fertilizers, seeds, pesticides
and agriculture implements are made available to the farmers. These
centers also provide technical guidance to the farmers. IFFCO has
promoted several institutions and organizations to work for the
welfare of farmers, strengthening cooperative movement, improve
Indian agriculture. Indian Farm Forestry Development Cooperative Ltd
(IFFDC), Cooperative Rural Development Trust (CORDET), IFFCO
Foundation, Kisan Sewa Trust belongs to this category. Thus IFFCO
has maintained efficient Customer Relationships.
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2. CORPORATE STRATEGY:
IFFCO is a CO- OPERATIVE SOCIETY
Corporate strategy provides an overall direction that serves the framework
for carrying out an organization’s functions. It specifies the business or businesses
the company will pursue and opportunity and threats in the related environment
and identifies growth objectives.
Form of any big organization is very important. According to Co-operative Society
Act, IFFCO follow all the rules and regulations of the co-operative society
What is Cooperative Society?
The strength of co-operative movement emanates from its ability to empower people
who are individually weak and often helpless. The spirit of co-operations encourages people
to come together on the basis of equality to achieve their economic interests. Voluntary
association of individuals is the important aspect of any co-operative endeavor. Equality is
assured to all the individuals involved in an unselfish atmosphere. The goal is to achieve the
common economic interests of the group of individuals who have come together for the
purpose.
To decide the corporate strategy and form an organization there has to be some
market survey done. The organization needs to develop core competencies to become
successful.
ENVIROMENTAL SCANNING :
In order to set up of fertilizer plant at Kandla, IFFCO had to do environmental scanning
to understand the availability of resources and facilities. For this purpose IFFCO had to carry
out a market survey regarding the existence of Fertilizer Manufacturing plants, their
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suppliers, customers, prices of raw- materials and end products, Government Policies etc.
Besides these arrangements for efficient transport facilities and storage facilities needed to
be acquired. A detailed study of the atmospheric changes and weather conditions were
conducted to ensure the safety of manufacturing processes and storage facilities as the raw-
materials required were all of hazardous nature. The investments in infrastructure of the
plant, finding efficient sources of energy consumption, efficient production, optimum
utilization of resources and minimum level of pollution were the major concerns for IFFCO.
DEVELOPING CORE COMPETENCIES:
Core competencies are unique resources and strength that an organization
possesses.
Workforce:
IFFCO has a well-trained diverse and flexible workforce. All the workers are
provided with training and development programs. The production process
is carried out continuously and therefore skilled workers are required to
work in shifts. In cases when there is shortage of employees, other workers
are made to work overtime. Incentives and benefits given to employees
motivate them to work more and develop better skills which are the key
success of well trained workforce at IFFCO.
Facilities:
IFCCO has well located facility in regard to offices, stores and plants. Efficient
storage facilities for raw materials like NPK/ DAP, POTASH, AMONIA, etc.
Market and Financial Know-How :
At the time of incorporation installation of plant, procurement of raw
materials, efficient production process (less wastage) etc. was costly. As time
passed, with changes in technology IFFCO improved its working by gaining
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knowledge of market and financial know-how. This helped IFFCO to give
tough competition to the existing fertilizer manufacturer.
System and technologies :
With improving technology IFFCO had adopted better technological systems,
efficient machineries and better information systems that helped IFFCO to
improve its manufactured process and reduce its cost.
3. COMPETITIVE PRIORITIES:
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Competitive Priorities are the critical operational dimensions a process or
supply chain must possess to satisfy internal as well as external customers,
both now and in future.
COST:
Despite steep rise in prices of raw materials and unprecedented rupee depreciation
in the year 2011, IFFCO had not passed on the increasing cost of fertilizers to farmers. It
always considers benefit of farmers and accordingly sets prices of its products. IFFCO gets
subsidy from Indian Government so that it can continuously provide top quality Fertilizers to
the farmers at the least possible rates.
QUALITY:
Fertilizers manufactured by IFFCO are of top quality. The sole aim of
IFFCO is to enrich the lives of farmers by providing them best quality
fertilizers at the least possible rate. IFFCO tops when compared to its
competitors like Hindalco Corporation, Gujarat State Fertilizers and Chemicals
(GFSC), TATA chemicals etc. IFFCO has won several awards in the year 2011 and also
before that for its performance in manufacturing top quality products.
TIME:
IFFCO follows continuous manufacturing process and therefore it is
always able to produce its products as per the demand in the market. IFFCO
has its own retail outlets known as Farmers Service Centers and therefore it is
able to track the increasing requirements for fertilizers in the market. IFFCO
due to its continuous production process and efficient transport facility
(which includes rail, road and sea) is able to provide On-time Delivery of its
products to its customers.
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Other competitive priorities are the operational capacity of IFFCO
itself. IFFCO Kandla unit has the biggest Zinc Sulphate Monohydrate Plant of
capacity 100(Metric Ton Per Day) MTPD as on date with annual capacity of
30,000 MT. it is a cooperative society and therefore the subsidies received
from Government is a very important factor that helps IFFCO to produce top
quality fertilizers at less costs.
4. PRODUCTION PROCESS :
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PRODUCT
GRANULATOR
DRYER
NH3
SCRUBBER LIQUOR
PHOS.ACID
PRENEUTRALIZER
SLURRYPUMP
CONVENTIONAL
Process Description of Kandla Phase -I (Streams A, B, C & D):
The manufacturing process uses the well known conventional slurry
granulation process. The plant consists of four identical streams with a common
product handling, storage, reclaiming and bagging facilities. .Phosphoric acid
containing 52 to 54 % P2O5 and scrubber liquor containing 20 to 25 % P2O5 at
NH3/H3PO4 mole ratio of 1.2 to 1.3 are fed to a vertical cylindrical reactor called
preneutraliser where it is reacted with anhydrous liquid ammonia to a mole ratio of
1.4 or a pH of 5.6 to produce an ammonium phosphate slurry containing 18 to 20 %
water. About 70 % of the total phosphoric acid requirements are fed to the
preneutraliser. The rest is fed to the scrubber system from where it goes to the
preneutraliser in the form of scrubber liquor at a pH of 8 to 5.2.
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The ammonium phosphate slurry from the preneutraliser is pumped to a
rotary drum granulator where it is sprayed over the rolling bed of recycles fines and
solid raw materials feeds like potash, urea and filler to form granules. Further,
ammoniation upto a mole ratio of 1.8 to 1.85 is carried out inside the granulator by
means of ammonia spargers located below the bed of materials. The granulated
product containing 2.5 % water is then dried in a co-current rotary drum dryer with
hot air produced by combustion of fuel oil/LSHS. The dried product is elevated by
means of continuous discharge type bucket elevators and distributed over double
deck vibrating screen by means of a drag flight conveyor.
Product of the required size (between 1 mm and 4 mm) is separated in the
screen from the oversize and undersize. The on-size product collects in a
compartment in the product bin and is withdrawn at the required rate by a vibrating
pan feeder. Excess product size materials and oversize materials pulverized in a chain
mills are discharged into the recycle flights conveyor.
The undersize material collect in a fines bin and discharge into the recycle
conveyor, where it mixes with the crushed oversize and fresh solid raw material
feeds to form the recycle feed to the granulator. The recycle conveyor, which is a
drag flight conveyor, discharge the material into a continuous discharge bucket
elevator which in turn discharge into the granulator.
The product discharge from the vibrating pan is conveyed to a rotary drum
cooler where the product is cooled from 70 deg. to about 40 deg. The product
discharged from the cooler is elevated by a product elevator in each train which
discharges into the product conveyor common for all four trains.
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PRODUCT
GRANULATOR
DRYER
COOLER
NH3
SCRUBBER LIQUOR
PHOS.ACID
DUAL PIPE REACTOR
GPR
DPR
The scrubbing system consists of a fumes scrubber, Dust scrubber, Dryer
scrubber & Cooler scrubber. The first three are venturi cyclonic type. Scrubber liquor
supplemented by fresh phosphoric acid feed is circulated by pumps in all the
scrubbers except the cooler scrubber where only water is circulated. Dust laden air
from the dryer, cooler and other equipments pass through cyclones where a major
portion of the dust is separated before being scrubbed in the respective scrubbers.
Fumes from the preneutraliser and granulator are scrubbed in the fumes scrubber.
Each scrubber is provided with a fan for creating the required draft. The scrubbed
gasses are let out into the atmosphere through a common stack.
Process Description of Kandla Phase-II (Streams E & F ):
Merchant grade Phosphoric acid containing 54% P2O5 is reacted with liquid
Ammonia in dryer pipe reactor (DPR) installed inside the rotary dryer upto a mole
ratio of 1:1.05 (moles of Ammonia to moles of H3PO4 ) and in the granulator pipe
reactor (GPR) installed inside the rotary drum granulator upto a mole ratio of 1:1.4.
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The reaction is highly exothermic resulting in the evaporation of water
content of the phosphoric acid and recycled scrubber liquor. While discharging from
the granuator pipe reactor the pressure is 4 to 5 Kg/cm2 and temperature between
120 to 130 deg C. While discharging from dryer pipe reactor the pressure is between
3 to 4 Kg/cm2 and temperature is between 1200 to 1300 C. The discharge from the
GPR & DPR fall on the rotating bed of recycle fertiliser material in the corresponding
equipments i.e. Granulator & Dryer. Dry raw materials like Urea, Filler & Muriate of
Potash are added into the granulator through independent feeders which discharge
into a common recycle conveyor along with recycle material like crushed oversize,
fines and excess product. The fertiliser material in the granulator is further
ammoniated to a mole ratio of 1:1.8 by sparging ammonia through the bed in the
granulator. The granulated fertiliser containing about 2.5% moisture is then
discharged into the rotary dryer where it is dried with hot air from the fuel oil fired
combustion chamber in a co-current flow. The moisture of the fertiliser material gets
reduced to less than 1%.
The fertilizer material is then screened in double deck vibrating screens. The
separated oversize material (above 4mm) is crushed in roll crushers and forms part
of the recycle sent to the granulator, the product size material (-4mm to 1mm) goes
to a rotary cooler and is the final product, the fines material (less than 1mm) is also
recycled back to the granulator.
The off gases from dryer and cooler are passed through respective dryer and
cooler cyclones and then sent for wet scrubbing. The off gases from the granulator
are first scrubbed in an inclined venturi scrubber followed by a wet venturi type
fumes scrubber. The exit gas from the dryer and granulator scrubbers are once again
passed through a tail gas scrubber for maximum recovery of nutrient from these
gases, before being discharged to the stack. Dusts from various dust generation
points at different locations are sucked by the dust fan through a network of ducting
lines. The dust is then deducted in cyclones and later sent for wet scrubbing. The
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scrubbing medium is weak phosphoric acid solution. The scrubber liquor is
consumed in the granulator pipe reactor and the dryer pipe reactor.
Phosphoric acid & ammonia are reacted in a preneutraliser vessel / pipe reactor
forming ammonium phosphate slurry.
Potash, Urea, Filler & recycled material are fed into the granulator by a system of
elevators & belt conveyors.
Ammonium phosphate slurry is sprayed over the bed of solid materials in the
rotary granulator.
Granulated product is dried in rotary dryers.
Double deck screens separate product material from the oversize & undersize
which is recycled to granulator.
Product material is cooled in rotary cooler & sent to storage or for bagging.
Kandla Phase II plant uses pipe reactors inside the granulator & dryer for
reaction instead of preneutraliser
5. CAPITAL INTENSIVE:
Setting up a manufacturing plant is not an easy task. It involves huge
investment in terms of human resource and financial investment. IFFCO
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started its operations by setting up a plant to produce three grades of NPK
based on DAP. This plant was worth 30 crores with two streams having a
licensed capacity of 1,27,000 tons of P2O5. Further the capacity of NPK plant
was doubled at a cost of Rs. 28.6 crores and thus two more streams were
added with the licensed capacity increasing from 1,27,000 MT P2O5 per
annum to 2,60,000 MT P2O5 per annum. IFFCO Kandla again went for
expansion in 1996-97 this time the plant was of worth 205.30 crores.
Fixed Automation:
IFFCO opted for fixed automation process because of the very nature of the
products to be produced. All the products produced at IFFCO are such that
each product requires specific raw-materials and different production
process. This is the reason as to why the resources used here are not flexible.
6. MANUFACTURING PROCESS:
In a manufacturing process, all the resources including man, material, money,
plant and machinery needs to be brought together for production. All the
resources are equally important for manufacturing process. Taking into
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consideration the type of product to be produced, availability of raw-
materials, investment in plant and machinery, the set up time of machinery,
shut down time of machinery etc. the manufacturing firm needs to decide
the type of manufacturing process. There are four types of manufacturing
processes:
1. Job Process
2. Batch Process
3. Line Process
4. Continuous-flow Process
IFFCO follows the Continuous-flow Process for production of NPK/DAP. For this
purpose IFFCO has efficient skilled employees and workers who work in shifts of 8
hours. When at times there are shortage of certain employees in particular shifts,
other employees are made to work overtime.
Layout of K-I Unit at IFFCO Kandla
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Ground Floor – preneutraliser tank
Combustion Chamber
Primary Product Elevator
Secondary Product Elevator
First Floor – Fine Conveyors
Quench Air Fan
Second Floor – Pulveriser
Oversized Pulveriser
Raw material bins (Urea, Potash, Filler, MAP)
Third Floor – Product Cooler
Dryer
Granulator
Cooler Feed Conveyor
Fourth Floor – Vibrating Screens
Cooler Fans
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Fifth Floor – SDF (Screen Drag Feeder)
Dust Fans
Cyclones
Raw Materials, Work in Progress and Finish Goods
RAW MATERIALS
Raw materials required for the production of phosphoric fertilizers:
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Inventory
Raw Material
WIPFinished Goods
Stores and Spares
NPK 1 (10:26:26) & NPK 2 (12:32:16)
Phosphoric Acid (P2O5)
Ammonia (NH3)
Urea (NH2CHNH2)
Potash
Filler
Sulphuric Acid
DAP (18:46:00) & MAP (11:56:00)
Phosphoric Acid (P2O5)
Ammonia (NH3)
Urea
Filler
Sulphuric Acid
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Raw Material Imports:
Name of Raw Material Supplier Country
Ammonia 99% Saudi Arabia, Qatar, OMIFCO (Gulf), Kalol (IFFCO), R.C.F.,
G.N.C.F., KRIBCO.
Potash (MOP) Germany, Canada, Russia, Israel, Jordan, (through Gov.
agencies)
Phosphoric Acid (P2O5) Morocco, U.S.A., Mexico, Senegal, Tunisia, Egypt,
Urea Kalol (IFFCO)
Sulphuric Acid Indian Supplier
De-foamer (Olic Acid, H-601, Nopco-8-5 and
SPAK-81-M)
Locally
Fillers (Silica Sand) Locally
Tendering and placement of orders for above imported raw materials is done at Head Office
(Delhi). Production targets and projected consumption requirement of raw materials, the
commercial section of TS department at Head Office takes the procurement action. Potash
and Urea are procured from M/s. Indian Potash Limited and commercial department at
Head Office from time to time depending on the materials requirements places purchase
orders.
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Raw Material Storage:
For phosphoric acid storage there are 8 tanks and each having capacity of 10000MT and
there are 3 atmospheric ammonia tank, capacity of 15000MT, 10000MT and 5000MT
respectively. There are 2 Horton sphere for the storage of ammonia having capacity of
15000MT each. Potash storage Capacity is 84000MT, for urea and filler storage capacity is
8500MT. for water there are 2 tanks each having capacity of 6000MT.
Sr.no. Raw Material Capacity (MT)
1 phosphoric acid 80000
2 Ammonia 33000
3 Potash 84000
4 Urea & filler 8500
5 Water 12000
Investment in Raw Material :
All manufacturing firm have to carry inventory of raw materials. The level of raw materials
inventory is influenced by the following consideration:
1. Volume of safety stock to have an uninterrupted production.
2. Determining the reorder point.
3. Balancing of cost and risk.
Safety Stocks:
They serve the cost reducing function by minimizing the risk of the production due to the
‘out-of-stocks’. Procurement lead time and condition of supply determine the level of the
safety stocks.
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Transit Time for different Raw Material:
Raw material Average transit time
Phos acid 17 days
Ammonia 5 days
Potash 13 days
Urea 5 days
Filler 1 day
Here lead time cannot be calculated as all raw material purchases are done by Head Office
and here they use transit time instead of lead time. Transit time means time required for
shipment of raw material to reach Kandla while lead time is the time when the need for
more inventories is recognized until the time it becomes available.
The cost of being out of stock may be the cost of closing the production line. The production
loss due to the raw material shortage at IFFCO Kandla unit for the year 2010-11 is given
below.
P205 Urea Potash Ammonia filler
Average per
day
consumption
2747.58 41.44 2300.97 1289.25 131.65
Transit time 17 5 13 5 1
Reorder point
(MT)
46708.86 207.2 29912.61 6466.25 131.65
Therefore safety stocks are needed to be maintained. To determine the reorder point under
certainty, we should know lead time and average usage.
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For the above calculation of reorder point, transit time is used instead of lead time. The
reorder point under certainty is calculated by the formula
Reorder point = Transit time*average per day consumption + safety stock
Storage and Handling of Raw-Materials:
Urea and Filler is stored in 6 numbers long asbestos covered storages.
Phosphoric Acid is imported from Foreign Countries in bulk tankers.
Atmospheric ammonia storage facility consists of three double wall double integrity
design storage tanks having capacities of 5000 MT, 10,000 MT and 15,000 MT at a
temperature of -33 degree centigrade and atmospheric pressure.
Imported potash in the form of crystalline potassium chloride is received in trucks
and stored in a covered storage area which has a capacity to store 80,000 MT
A new concentrate Sulphuric Acid unloading, storage and handling facility has been
constructed at IFFCO Kandla. Storage tank is of Mild steel and vertical cylindrical type
and having a storage capacity of 5000 MT.
Bagging (Packaging) at IFFCO:
Bagging is an important section of product storage. It is process by which finished
good is packed in various sizes. The bagging plant has a total of fourteen slat conveyors,
thirteen of which are fitted each with two Nos. of microprocessor based semi-automatic
weighing machines and stitching machine and each salt is capable of weighing and stitching
at a rate of 900-950 bags per hour. One fully automatic weighing and bagging machine is
also installed along with bag placer which has capacity of weighing at a rate of 1200 bags
per hour.
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There are different signs of colors shown on bag for differentiating the grades of
fertilizer like:
Sr. No. Fertilizer Colors Of Strip On Bag
1 NPK 10:26:26 Red color Strip
2 NPK 12:32:16 Green Color Strip
3 DAP 18:46:00 Red & Green Color Strip
4 MAP 11:56:00 Brown Color Strip
Sr. No. Bags size
1 50 Kg.
2 40 Kg.
3 25 kg.
These different color strips are there on the bags to make identification of the stock
in the warehouse. Information about the type of product, the maximum retail price, and the
information about the offer of the insurance on the each bag purchased by farmer is also
provided on the bag.
The machines do automatic stitching of bags. The bags are reprocessed so no
wastage of bags is seen in the department. The workers working in this department are
having a piece wage system. Space has been provided for storing more that 3 million empty
bags in the bagging plant and the covered platform area can be used for stacking more than
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5000 MT of bagged product. Bagged product is transported by road within the state of
Gujarat and Rajasthan and by railway wagons to places all over the country.
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7. Inventory Management and Control:
For the purpose of production, Budgeted Sales and Production estimates are
prepared by the Head Office at Delhi. IFFCO plant at Kandla prepares list of raw
materials required and sends it to a head office for approval. Once the list is
approved procedure for procurement of raw material is carried out. The head office
at New Delhi finances procurement of all the raw materials. All long term decisions
are taken at Head Office, New Delhi and only operational decisions are undertaken
at this unit. Supplier of raw material are generally fixed and main criteria for their
selection are cost and quality and some other factors also such as payment terms,
services etc.
INVENTORY MANAGEMENT:
Inventory management is the planning and controlling of inventories in order to
meet the competitive priorities of the organization. It is an important concern for
managers in all types of businesses to manage inventory. Inventory management
helps organizations to utilize their capacity and potential to full extent. This type of
efficiency can only happen if the right amount of inventory is flowing through the
supply chain. In order to achieve this efficiency the organizations need to calculate
economy order quantity levels taking into consideration the demand for product,
quantity already available in stock, lead time of suppliers, etc.
The basic objective of inventory control is to reduce investment in inventory and
utilise the saving in more productive processes of the organization. Calculation of
economic order quantity helps the organization to determine what quantity of raw
material needs to be procured and in what time. The organization also needs to
determine the sale forecast, study the production capacity and plan for production
schedules.
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A company needs to maintain adequate stock of materials for a continuous supply to
the factory for an uninterrupted production. The firm may purchase large quantities
of raw materials than needed for the production to obtain quantity discounts of the
bulk purchasing. In IFFCO Kandla they follow Contract method for procurement of
raw materials which is handled by head office.
Economic Order Quantity:
Objective: total cost of inventory is minimized..
The EOQ is used as a part of a continuous review system, in which the level of inventory is
monitored at all times, and a fixed quantity is ordered each time the inventory level reaches
a specific reorder point. The EOQ provides a model for calculating the appropriate reorder
point and the optimal reorder quantity to ensure the instantaneous replenishment of
inventory with no shortage.
Total cost is the sum of 2 costs.
1) Ordering cost
2) Carrying cost
Ordering cost: This is incurred making purchases. This covers cost involved in planning of
requirement, calling tenders, deciding suppliers, issuing purchase orders, follow up. Clerical
cost incurred from various departments is included in ordering cost.
Carrying cost: This is incurred in maintaining the stock. This includes interest on money
locked upon the material stocks, taxes and duties, insurance on goods, obsolescence
(Unusable parts), some materials deteriorate or get spoilt and are unfit for use, Shrinkage or
reduction in volume, evaporation (losses), rentals for space occupied by the stores, labor
cost, and maintenance cost. Carrying cost is worked out in percentage and can be as high as
30% to 35%.
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EOQ is a point where ordering cost & carrying cost are equal (which is seldom
possible) or the point where these two costs meet favorably. If ordering cost is increasing,
the carrying cost will be decreasing and vice versa. At IFFCO the EOQ is decided by the Head
Office and the orders for procurement of raw-material is also done by the Head Office.
Kandla unit plant provides information about the stock levels in the plant and accordingly
the Head Office makes arrangement for procurement of raw material.
INVENTORY CONTROLS:
One of the primary task in inventory control is determination of stock levels. There
are various levels of stocks at IFFCO plant (kandla unit)
1. Deficiency Level : here stock is inadequate to meet needs.
2. Exhaust bin Level : this is the point known as stock out.
3. Buffer or minimum stock level: it is the insurance stock carried to meet exception
conditions.
4. Reorder level: this is the level at which order has to be placed. This may not be
equal to EOQ, it should be regularly surveyed.
5. Maximum Level: this is the level above which stock should not permit to rise.
Levels of all inventory items except “filler” (low value silica sand ) are not
seasonal.
TWO BIN SYSTEM:
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Physical stock is split into two boxes/bins
1. One bin is called the ‘first bin’ (main bin) which holds the balance stock.
2. Other bin is called ‘second bin’ (Reserve bin or Reorder Point)
Issues are done from the ‘first bin’. When stock of first bin is exhausted issues are
done from the ‘second bin’.
On receipt of stock, ‘second bin’ is filled to minimum stock and the balance stock
is placed in the ‘first bin’. Actual physical separation is not possible or required if
one is careful to take timely replenishment action as soon as the stock drops to
minimum.
Reserve bin should have sufficient stock to last lead period and to take care of
variations in both lead time and consumption. IFFCO Kandla unit follows Two Bin
system and informs the Head Office about the raw-material levels when the
stock reaches minimum level.
STORES AND SPARES:
Stores and Spares again have 5 sub categories.
1. General Stores
2. Spares
3. Loose tools
4. Construction materials-steels
5. Construction materials-cement
8. QUALITY AND LEAN:
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TOTAL QUALITY MANAGEMENT:
Laboratory is another important section where the raw material as well as
the final product is brought to check whether it is up to the mark or not. Laboratory
is divided into six different sections which are as follows:
Hot room: In this section all the work related to heat to creating heat are
being done. Usually the work done here is like checking the moisture content
of the raw materials so that the material becomes useable.
Sampling room: After the product is produced, it is brought to this section
from the production unit. Here the product which is brought after each and
every hour is the granulated product. The sample brought is approximately of
1 kg weight. Then the sample is divided in two equal parts and is ground into
a mixture. The powder is then diluted with acid to a make a solution. This
solution is taken to the auto sampling room.
Auto sampling room: This section is fully automatic and computerized in this
section the solution made in the sampling room is brought every hour for
analysis and is passed through the analyzing machine, where the solution of
the product NPK is automatically divided into 3 parts i.e. N (nitrogen), P
(phosphoric acid), K (potash). As the machine is connected to computer, the
graph can be seen on the computer monitor and accordingly the percentage
of the sample is matched to the standard percentage that is :
Grade 1: 10:26:26
Grade 2: 12:32:16
Dap: 18:46:00
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The graph is also monitored on the computer installed in the production unit
and if any difference is seen in the percentage of the materials used, then
accordingly the changes are made in those materials.
Process control room: Here the process done is of in between material i.e,
the material between the raw material and the production. After removal of
moisture from it, the material is brought here for testing and a report of its
suitability is prepared.
Water testing room: In this section. The water is brought for testing after its
demineralization (the water is dematerialized in the off sit section). If the
water contains any chloride in it, it is sent for mineralization as chlorine water
may not be useful in the boilers.
Bag testing room: Here the NPK as well as other bags are brought for
checking its quality before going to the bagging department.
The checking is done in terms of:
1) No. of stitches in 1 Sq inch
2) length and width according to the weight
3) end stitches
4) thickness
5) breaking strength etc.
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QUALITY CONTROL
Quality control during storage:
The products conveyed from the complex plant are scientifically stored in bulk storage and
never bagged directly. These are reclaimed with scrapper loaders moving continuously
along the length of the bins to get homogenous, blended and composite material for final
dispatch. The blending operation helps in removing non-uniformity in the composition of
the product received at different manufacturing periods from the plant.
The bagged product is analyzed for all the nutrients before dispatch. The process further
improves the nutrient control of the product for compliance of FCO tolerance limit in plant
nutrients.
Field level quality control:
Rigid surveillance measures are exercised by the IFFCO marketing field staff to
ensure that the quality of the product does not deteriorate during transportation, storage
and handling at field level. Samples of the IFFCO product are drawn on random basis by the
field officials and sent back to plant laboratory for nutrient check. These samples are
collected evenly spread over the entire area of marketing operations all over the country.
Thus excellent feedback is available to the plants about the quality of their product in the
field, and appropriate actions are being taken to maintain desired level of nutrients in
product at field level also.
The above Quality Control Measures thus taken at IFFCO - Kandla, have ensured
quality product to the farmers. The cost inherent in the quality control measures adopted, is
being amply compensated by the benefit accruing to the manufacturer and the consumer.
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Kandla-ISO 14001:
Kandla unit initiated the process of obtaining ISO 14001 certification.
National Productivity Council was the consultants for the same and M/S BVQI is the auditors. The
final audit for assessment of issue of certificate was carried out.
IFFCO Kandla has been certified as Environmental Standards ISO 14001:1996 company by
M/S BVQI for the operational scope of "Manufacture of DAP and NPK Fertilizers" with effect from
27th Nov'2000.
LEAN MANAGEMENT
REUSE OR DISPOSE WASTES AND EFFLUENTS:
The waste materials produced from the manufacturing process is effectively disposed at
a safer place. In IFFCO, bio waste (hospital waste) and canteen waste is disposed by burning
or burying them in the pit. Industrial waste (scrap) is sold to Companies or NGO. Plastics are
either sold or disposed of by proper procedure. Waste water is recycled and reused. Dust
fumes arising from the manufacturing process is processed and made harmless then
allowed to pass from the chimney into the atmosphere.
OPTIMUM UTILIZATION OF RESOURCES:
The potash and other raw-materials in powder or granule form are stored in big storage
areas under huge sheds. These raw-materials are in the form of bulk storage therefore they
are spread across the entire storage area. Yet these raw-materials are not allowed to go
waste as the workers are made to accumulate these and reuse them in the production
process.
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Five S Methodology:
Proper arrangement for every process and storage facilities is a part of lean. “Everything
should have a place and everything should be in its place.”
1. Sort (separate, scrap, sift) – Separate the necessary from the unnecessary and
get rid of unnecessary.
2. Set in order (straighten, store, simplify) – Organize the work area and put
everything in its place.
3. Shine (scrub, sweep) – Sweep, wash, clean, and shine everything around working
area.
4. Standardize – Use standard methods to maintain the work area at a high level so
that it is easy to keep everything clean for a constant state of readiness.
5. Sustain (systematize, self-discipline) – Ensure that all 5S policies are followed
through the entire organization by means of empowerment, commitment, and
accountability.
Thus on the basis of above mentioned factors and the observations we found that
IFFCO follows the Lean Management though most of the employees are following it
without knowing this Management term.
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9. RESOURCE PLANNING:
BILL OF MATERIALS:
The entire business process depends on planning and scheduling. From
demand forecasting to final dispatch of product to the customers require a
detailed planning procedure. IFFCO follows a very systematic process when it
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Forecast demand
Bill Of Materials
Check Inventory
Capacity Plan
Material Plan
Purchase Requisition
Production order
Calculati on of Schedule
Issue of Tender
Production Process
Bagging StorageDispatch
comes to resource planning. This includes preparing material budgets,
production budgets, sales budgets, financial budgets and above all the master
budget. When the business firm forecasts demand for its product, it prepares a
purchase requisition and issues tender. The firm needs to prepare a Bill of
Materials (BOM) to verify the available stock quantity and the stock quantity
needed to be procured. Bill of Materials contains detailed information regarding
the raw-materials required and the specific quantity of raw-materials needed.
Then after considering the production capacity and materials availability
scheduling is done for every activity to be conducted. Production order is given
to the manufacturing unit. Production process is carried out and the raw-
materials are converted into Work-in-progress goods (WIP) and then into
finished goods. The finished goods are sent to storage warehouses where they
are stored in bulk and then sent to the bagging department where the fertilizers
are bagged in different sized and coloured bags according to the variety of
fertilizers. Finally the fertilizers are dispatched to various parts of the country to
its customers through road, rail and sea transport.
ANALYSIS
IFFCO follows the best possible methods to reduce wastage and to make optimum
utilization of its scarce resources. This is because the raw-materials are very costly and also
the investment in such huge plants is also huge. There is no scope to waste the financial or
other resources as this will affect the functioning of the firm. It undertakes an efficient
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production process. IFFCO is not an entirely profit making firm. It operates with a noble
objective of serving the farmers with best possible products and thus enriching their lives.
The procurement and storage of such hazardous raw-materials is very difficult task yet IFFCO
has succeeded in its operations with minimum reported accidents till date. It also takes care
of its employees and their benefits. Various training and development programs are held for
its employees and other welfare activities are carried out by IFFCO in the interest of its
employees. Thus the success of a business firm is not profits alone, but an efficient and
willing flexible workforce working day and night not only for their own benefits but also for
the benefit of the society.
CONCLUSION
In the overall success of a manufacturing firm, the application of best practices of
production as well as best Human Resource practices is essential. With the adoption of
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latest technologies and optimum utilization of resources any business firm can reap benefits
not only for the firm but also for the entire society. As it is said that business earns from the
society and therefore it is the responsibility of business firm to provide the society with
benefits in return. IFFCO evidently proves to be the best example of this.
BIBILOGRAPHY
http://www.iffco.coop/
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http://www.clamshellbeachpress.com/html/book1_sample.pdf
http://www.iffco.nic.in/applications/brihaspat.nsf/
0/0215e21f284706aae525677800325184/$FILE/doc_7.pdf
Some information’s taken from the material provided by the organization official.
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