Table of Content Page No.

Executive Summary 3
Company Overview 4
Chapter 1
Introduction 5-8
1. Aims and Objectives of the study 5
1
1. Scope of study 6
2
1. Inventory management and its Essentials 6
3
1. Objectives and Importance of Inventory Management 7-8
4
Chapter 2
Review of Literature 9-17
Chapter 3
Methodology and Analysis 18-19
3. Basic Inventory Management Areas of Textile Mfg. Industry 18
1
3. 5 Qualities of Textile 18-19
2
Chapter 4
Data Analysis 20-21
Techniques for Inventory Management/ control 20-21
Chapter 5 22-23
Conclusion and Recommendation 22-23
 Executive Summary

This report aims to describe the process of inventory management in textile

manufacturing company producing 50,000 meters of cloth of five different qualities.

• Textile is one of the largest manufacturing industries in Pakistan.

• Inventory management in textile industries is a major concern in terms of cost and

efficiency.

• Inventory management is something that distribution managers have been dealing

with for years.

• Inventory management includes the supervision of assets like raw material, finished

good inventory and work in process.

• It dictates every single activity under which the overall inventory of a firm goes

through.

For our selected topic, we selected Gul Ahmed Textile Mills Limited since it is one of the

leading brands in Pakistan Fashion Textile industry with its operations and outlets all

over Pakistan. Our study covers their entire inventory management process including

the methods, techniques, steps, processes, affecting factors as well as con

Company Overview
Company: Gul Ahmed Textile Mills Limited

Manager’s Interview:

Adnan Aslam

Senior Manager (Operations)

Gul Ahmed Textile Mills Limited (Karachi)

Responsibilities:

• Our responsiblities according to this designation includes to seek out the better

performance of operation department including cost, productivity,quality, safety,and

customer service.

• Formulating strategy of department and annual aims and objectives in alignment of

the overall business mission and plant direction.

• Achieve or exceed the Key Performance Indicators on the Plant Scorecard (Safety,

First Quality, Waste Control, Cost, Production). Operate the department in an

efficient, cost-effective manner.

• The maintainace and establishment of Good Manufacturing Practices (GMPs) and

Standard Operating Procedures (SOPs) are their main responsiblities.

Chapter I

Introduction

1.1 Aims & Purpose of The research:

The purpose of this reseach is to understand following concepts regarding inventory
management:

• What is inventory mangement?

• To search for the importance of it?

• The cost of inventory management

• Optimum level of inventory required

• Calculations regarding inventory management

• Inventory control

The purpose of this report are:

• To fulfill the requirement of course and understand the concepts of Inventory

Management in a textile manufacturing.

• And to learn the collection and interpretation of data and draw an appropriate

conclusion.

1.2 Extent of study:

The limit or extent of research is to understand and analyze the process of how

to manage inventory for producing 50,000 Meters of Cloth of Five Different Qualities.

Also, to understand how the knowledge gained in our course “Operation and Product

Management” is being applied in factories and industries first hand. Our reach of

research include different aspects of how to conduct the inventory management and

counts or to the way information of inventory is used. We have assumed throughout the

report that the factory has enough capacity to produce and manage the inventory for
producing 50,000 meters of cloth, while factors remaining constant (e.g. supply of

electricity, full support from dying industries, etc.)

1.3 Inventory Management & Its Essentials:

Inventory management is a science primarily about specifying the shape and percentage of
stocked goods. It is required at different locations within multiple locations of a supply network,
to protect the regular and planned course of production against the random disturbance of
running out of the materials or goods. Inventory management also concerns fine lines between
the replenishment lead time, carrying costs, asset management, inventory forecasting, valuation
of inventory, future inventory price forecasting, physical inventory, inventory visibility, available

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Inventory direction and management is the practice and method of primarily specifying

the percentage and shape of the stocked goods. This practice is essential in different

locations within a supply network, it is needed in order to protect the scheduled and

regular production course from disturbances in running out of goods or material.

Inventory management concerns various domains including quality management,

returns of defective goods, available space, inventory capacity, holding costs etc.

Essentials:

An effective inventory control and management should include the following essential

features:

• To ensuring a continuous flow of raw material to facilitate non-stop production.

• Maintainance of stocks of raw materials in short periods supply and predict price

changes.

• Maintain sufficient WIP inventory.

• Maintainance of sufficient finished goods products for smooth flow of operation,sales

and efficient customer service.

• Maintain spare parts and components inventory required for maintenance of the

machinery and warehouse.

• Minimization of the holding cost and time.

• Investment control in inventories and keep it at an nominal level.

• Operate at maximum capacity and maintain overall efficiency.

1.4 Objectives & Importance of Inventory Management:

Objectives:
The primary functions of inventory management is to maintain inventory levels of raw
materials or goods in a way that they are not too low as it may result in loss of sales or

production delays that may be very costly or levels to be too high leading to high level of

capital and space requirements. A high level of tie-up of capital can lead to further

concerns like unnecessary interest expenses, need to borrow excessively or not being

able to purchase other necessary items requires in production or processes. Other than

these primary concerns, there are also other objectives of inventory management as

stated below:

• The availability of materials should ensured.

• Abnormal wastage should avoided.

• Avoidance of out of stock danger should avoided.

• Economy in purchasing

• Nominal investing and efficient use of capital

Importance:
Inventory management is important from the following viewpoints:

• Accurate order fulfillment

• Protect from fluctuation in demand

• Facilitate cost accounting cycle

• Increase in customer satisfaction

• Increase in profitability of company.

Chapter II
 Literature Review

Inventory Management in Textile Manufacturing

Pakistan has approximately 396 textile mills out of which 315 are spinning, 44 weaving

and 37 composite units. These mills of textiles have production related facilities of

texturing,dyeing of yarns and mercerizing. Fabrics are produced in the power loom and

handloom sectors as well in the industry,Yarn is most prominently produced in these

mills.The Pakistani manufacturing industry dominantly based on cotton. As a result, our

textile industry is facing problems in facing competition globally. The present research

aimed to explore the information about inventory keeping in view the textile

manufacturing sector.

Factors Affecting Inventory Management:

When controlling and administrating the inventory processes, there are a variety of

aspects which must be considered. Internal as well as external factors both play an

important role in affecting the managing of inventory. It is important for managers to be

aware of these factors and know how to control them. Some of the main aspects that

can affect inventory processes are:

• Lead Time:
Lead time is defined as the time that it takes from the second an item is ordered from

customer to the moment it which it arrived. Lead time will change if it depends on the

type of product and the according to the many manufacturing processes involved, and

that's why these changes will in turn lead to changes to the inventory management.

• Financials:
Financial actors such as borrowing money cost to stock appropriate amount of
inventory can highly influence the control of inventory. In this case, fluctuation of

finances may occur due to economic condition, and also the company should keep an

eye on changing interest rates of country to help planing of our spending.

• Suppliers:
Suppliers of the firm may have a great influence on inventory management and control.

In order for a businesses to be successful, it is required that reliable suppliers should be

chosen to plan our spending and arrange process of production. Another good measure

would be to ensure that one has a reliable supplier as a backup in order to prevent
demanded products shortages or delays in the production process.

• Management:
Ultimately, responsibility for managing the production inventory goes with the managers

and department heads. The right employees with the right skill set in inventory

management will effect the entire process.

• External Factors:
There are many uncontrolable factors that affect the controlling and managing of

inventory. For example, economic recession may occur and this factor will generally

have less control over. Analyzing and assessing the state of the economy and it’s

current on goings is a necessary step in order to safe oneself against stock outs or by

holding excess inventory.

• Process:

The following flowchart explains in detail the various processes through which the fabric

goes through in order to reach it’s final finished form:

• Acquisition Handling Of Raw Material Inventory:
In our perspective Raw Material Inventory is Yarn that we will procure from our

supplier. The quality of yarn has been decided by the manufacturer. However, the

quantity of the yarn is to be decided. It must be stored in a climate-controlled

environment in order to ensure its quality.

• Production & Inspection of Grey Fabric:

Since every manufacturing processes requires on form or another of raw material,
textile manufacturers use grey fabric as their starting raw material. This process is

usually done and collected by the weaving department.

One of the most important activity in this step of inventory management is the inspection

of the raw material that is required. It is inspected as follows:

• Thread Counting (i.e. warp and weft) which also refers to the horizontal and vertical

threads per square inch: In the fabric manufacturing process thread selection is

important to get the proper (grams per square meter) of fabric, it is counted by pick

glass.

• Weight/sq. meter of yarn

• Yarn count: In this process 10 threads of warp and 10 threads of weft are taken and

then they are weighted separately.

• Singeing & De-sizing:

Loose hairy fibres that appear ont the surface of colth is removed by the process of

Singeing, in order to give it a smooth, clean and even looking surface.

De-sizing is the process of removal of sizing material from the fabric, which is applied in

order to increase the qaulity of the yarn which can withstand with the friction of loom.
After these steps, fabric is kept on rotation for 8 to 12 hours continuously to ensure that

the de-sizing agent is in effect.

Blow room
↓
Carding
↓
Drawing
↓
Combing
↓
Drawing
↓
Roving Manufacturing
↓
Ring Spinning

• Bleaching:
Bleaching improves whiteness and cleaning by removing pale coloration and remaining

tree impurities from the fabric.The requirement of whiteness and absorbency for the

following stages of the process determined the degree of bleaching necessary.

• Mercerizing:
Mercerization is the process of treating the fabric and thread in order to give the fabric

or yarn a attractive appearance and to ultimately strengthens both. This

process/treatment can take place directlyon the grey fabric, or after the bleaching.

• Setting:

The setting of the fabric is done on the Stenter machine. Stenter is used for open form
fabric. The reason why setting of the fabric is done is in order to set the width of the

fabric accordingly so that we are able to dye or print it according to the requirements.

• Dyeing:
Dyeing is the process of including colors to textile related products like fibers, yarn and

fabric. It is normally done in special process containing dyes and particular chemicals.

There are two key factors in dyeing process are important that is temperature and time

controlling.

Inspection of grey cloth

↓
Cropping
↓
 Brushing
↓
Singeing
↓
De-sizing
↓
Scouring
↓
Bleaching
↓
Souring
↓
Washing
↓
Drying
↓
Mercerizing
↓
Dyeing

• Washing:

The step which follows dyeing is of washing and then drying of the fabric which is done

until the entire fabric is free of any chemicals or water particles.

• Finishing:

In Textile manufacturing, finishing is the term used for a flow of processes in series to

which all printed, dyed, bleached and certain grey fabric are subjected before they put

in the for sale in market. The objective of textile finishing is to render textile goods that
fits for their purpose or end use and/or improve serviceability of the fabric. This may

also be considered as a sub part of the quality check where the fabric is lastly examined

before cutting.

• Cutting:

Cutting department is one of the most important and most required sections for textile
manufacturing in the apparel/cloth industry. After completinon of the fabric spreading

process the fabric cutting process started. In cutting section, fabrics are cut according to

the pattern/design that is required by each batch. For making quality garments, they

have to follow a working procedure which is defined by the cutting department to

continue their work.

• Folding

The finished garments are then folded according to the specifications and directions of

the buyer. Usually, there are four types of folding in garments which are stated as

below:

• Stand up

• Semi stand up

• Flat back

• Hanger pack.

•
• Packaging:
After the garments are folded, they become ready for packaging and then shipping off.
They are usually packed in polythene bags whose size varies according to the size as
well as the garments quantity. Before packing it needs to be ensured that stickers
placed are in the proper place.

Received garments from the finished section

↓
Poly Bagging
↓
Cartooning
↓
Applied adhesive tape on the pack
↓
Bar-coding
↓
Packing complete

Chapter III

Methodology & Analysis

Basic Inventory Management Areas of Textile Mfg.
Industry:
• Raw material inventory: Yarn
• Work in Process inventory: Grey Cloth
• Finished Goods inventory: Cutting, Folding and Packaging.

5 Different Qualities of Textile

5 different qualities of textiles in a textile manufacturing company that we have observed
by the manufacturer are:

• 72*72/40*40 Pure Cotton

• 80*84/40*40 Pure Cotton

• 96*88/60*60 Pure Cotton

• 80*80/60*60 Pure Cotton

• 100*80/52*52 Polyester Viscose

The average EOQ (Economic Order Quantity) of the above-mentioned qualities as per

the demand are:

• 72*72= 15,000 Meter

• 100*80= 15,000 Meter

• 80*80= 5000 Meter

• 80*84= 10,000 Meter

• 96*88= 5000 Meter

 Chapter IV

Techniques for Inventory Management/Control

Managing inventory could save thousand of rupees and improper managing could lose

thousands of rupees. There are several ways or techniques for inventory management

in textile manufacturing industries, some of those techniques are mentioned below:

• Just In Time
Just in time involves having products arrive as soon as the customer orders them. It is a

technique that could be risky since it depends on the behavior of the consumer which is

not always a predictable factor. Using this technique can be risky, if it isn’t implemented

in the right manner, but if it is done right, then it can be highly rewarding. This technique

requires a lot of time since one needs to know the buying habits and research about

them, determine seasonal demands, and be aware of all the factors based on location

in order to have this technique to be effective.

• Stock Review
Stock review is a method of regularly analyzing stock versus the projected future needs

of the stock. This technique can either be done by a manually reviewing the stock or by

using an implemented inventory software. Defining the minimum stock level will allow

the manufacturer to set up regular inspections and reorders of supplies. This will aid you

in using just-in-time ordering, where the inventory is held for a minimum amount of time

before it moves to the next stage in the supply chain.

• ABC Analysis
ABC analysis a popular technique in analyzing and evaluating inventories. In this

method, we classify the inventory into one of three categories, as A, B and C. These

categories (A,B,C) are based on the value of the inventory and the significance of the
cost. Also, the number of items and values of each category are expressed as a

percentage of the total.

• Safety Stock
To avoid running of out of stock suddenly, firms maintain safety stocks of inventory.

Safety Stock is the minimum level of desired inventory for a given item based on it’s

expected time of arrival (Receiving order) and the future expected rate of use.

Chapter V

Conclusion & Recommendations

Conclusion:
Inventory Management is essential part of every manufacturing firm. It varies from firm

to firm that how they undertake their inventory management process. It is not necessary

that every textile manufacturing firm go through each step of inventory management. It
can be done on continuous or periodic basis, it depends on the system under which

textile firm is running.

Recommendations:
• Consider inventory optimization tools:

Optimization tools and techniques for inventory management have been gaining

popularity amongst businesses as more and more companies are seeking to evaluate
their entire network and determine the best inventory policies for each product at each

part in their supply chain.

• Keep an eye on your suppliers:

There are suppliers that don’t necessarily deliver on their commitments. Reliable and

trustworthy suppliers must be selected after careful considerations.

• Be smart about your slow moving and obsolete items:

While it makes sense to focus on your more profitable fast movers, you can’t ignore

your slower-moving merchandise. Every day that these items are not used or sold, they

occupy space, utilize labor and resources, and may get in the way of more popular

items.

• Don’t neglect slotting

Proper slotting not only delivers much needed space, but appropriately locates the

fastest moving items closer to docks and more accessible locations, minimizing travel

distance and maximizing overall throughput and productivity.