STAKEHOLDERS

stock can be consumed in full. The materials manager in turn can freeze further orders for such

materials and try to negotiate with the suppliers to take back the stock. For some items he can

introduce the buy-back clause wherein the suppliers takes back items not consumed within a

specific period. For new items which may be required, he can try to develop sources and place

orders so that changes can be expeditiously introduced. All this highlights that a close coordination

is required in order to avoid stock pilling obsolete and surplus items. Selective control based on

ABC analysis, accurate forecasting techniques and proper preservation minimise such accumulation.

In the case of storage of perishable items the Central Warehousing Corporation has devised

a scheme to enlarge its scope to cover certain specialized lines of storage. The schemes drawn

up by the corporation include setting up a chain of cold storage plants for potatoes, and fruit, and

storage facilities for certified seeds.

Many organizations have introduced formal documentation in introducing changes in design

or product. It is called the ‘Effective Point Advice.’ This is popularly known as EPA. Here, the

proposed changes, details of new materials and products required, details of materials and the

products which will be invalid/obsolete when the change occurs and the approximate date when

the change is expected to be introduced are detailed and circulated to concerned departments.

EPA thereby helps in tapering off the stocks of ‘invalid’ items, cancellation of orders for such

items, placing orders for buying and/or manufacturing new items and related activities. EPA

systems help in better coordination for profitable introduction of changes with minimum ‘side

effects’ such as the accumulation of obsolete items.

The reclamation of scrap has not attracted the attention of the top management in Indian

Industry. Optimal utilization of scrap would allow conservation of the use of scarce natural

resources, such as iron ore. This is because scrap is an important element which goes into the

manufacture of steel and castings.

It is possible to salvage scrap for usage within the firm in some cases. Press parts are normally

made from sheets and plates. The off-cuts generated during such process can be profitably utilized

in making smaller press components such as washers. Rationalizing the supply size, changes in

process such as reversing the dies may result in minimization of scrap. Big organizations have a

full-fledged scrap salvaging department. These departments segregate the scrap into categories, like

turnings, borings, plate cuttings, endpieces of billets, punching etc. Colour coding the scrap is also

done to avoid the mixing of different categories of scrap. It is also advantageous to the end-users

in each category and supply of scrap at the appropriate time for production. Often informing the

production department at the right time about the volume of scrap generated enables prevention of

excessive scrap through timely changes in production methods, tooling and materials

is mixed, the return is even lower than the lowest element in the mixture. This is because the

buyer of scrap will have to segregate it at an extra cost. A cursory analysis of scrap prices will

reveal that sheet and plate cuttings will fetch fewer amounts per a tonne compared to that of

turnings and borings. Also when costly scrap such as copper, aluminium and tungsten are

involved, it is imperative that they are segregated as returns are huge and price levels are

different. Since scrap is generated process-wise, it comes out in a segregated condition and there

should be no difficulty in sorting.

Auction and Tender methods are frequently used for disposal of scrap. Parties in both the

cases are normally required to inspect the scrap in the scrap yard and deposit earnest money. Very

often the company insists on a basic price depending upon the category of scrap. The disposal

section works, in this aspect, in close coordination with the finance department. In many cases the

disposal section may try to enter into a long-term contact with end-users such as steel plants.

Many companies have found to their displeasure scrapped components appearing in the

market and competing with their parts as ‘original equipment’. This is the price which organizations

pay for not dismantling and disfiguring the scrap before disposal. Automobile spare parts and

bearings especially are prone to such dangers. For this purpose some organizations go to the

extent of requesting vehicle users to demolish filters and plugs before scrapping them. This is

very important aspect.

In view of the paucity of raw materials and shortage of credit, it is necessary that optimum

usage of materials is made and funds tied up in obsolete surplus and scrap items minimised. This

is only possible when top management shows commitment and support. The employees of the

organizations are naturally the best people to suggest improvements in materials, processes and new

end users for scrap. It is they who can minimise the accumulation of scrap through coordination.

Therefore, top management should work out formal reward systems to promote employee participation

in this matter. A few organizations have suggestion box schemes which pay rich dividends to the

organization. Employees, too get rewards and recognition in the process