PROJECT REPORT

LEARNINGS AS GET

DONE BY
Harish karthik R
Graduate Engineer Trainee
Part sourcing- Purchase department
Brakes
CHAPTER 1
INTRODUCTION ABOUT THE COMPANY

The Mando Corporation is a tier 1 automotive company. The headquarters

of the company is currently located in Seoul, Korea. The company has 3 main
areas of production brakes, suspension and steering. There are totally 3
manufacturing plants in India.

Plant 1 located in Pillaipakkam manufactures Steering and ABS related

products.
Plant 2 located in Sriperumbudur manufactures brakes and suspension related
products
Plant 3 located in Mahindra world city manufactures casting related
components.

In brakes, there are 4 product classifications under brakes.

1. Drum brake
2. Master booster
3. Front calliper
4. EBS
Some major customers for brakes are Hyundai, Mahindra & Mahindra, Maruti
Suzuki, Tata.
The annual turnover of overall Mando Company is increases drastically over
period of time. The company celebrated 25 years anniversary in India and 60
years overall. There are over 12000 employees overall worldwide The total
assets as of 2021 is over 5000 billion KRW.
It is expected that the overall drum brake sales in India is going to increase
gradually as production in other countries is going to stop manufacturing drum
brakes.

ABOUT THE DEPARTMENT AND ORGANISATION STRUCTURE

In any company all department has functions aligned with production

department. Their primary function is to facilitate the production. This is the
reason production department is called heart of a company.

Parts purchasing or parts sourcing is a part of organization which deals with

commercial settlement with the supplier.

FUNCTIONS
The primary function of the department includes cost settlement with the
supplier after [Link] department is responsible for regular supply of
Raw materials for production line.

ROLES AND RESPONSIBILITIES

 Identifying potential suppliers to provide regular supply of part items
required for the assembly.
 Registering the supplier details in the G-Tops after verification.
 Providing support in Audit(Potential supplier Audit)
 Negotiating with the supplier as much as possible and doing price
finalization.
 Acting along with TCI(Total cost innovation) in cost savings .
 Procuring the required items with minimum cost to bring profit to our
company.
 Acting as a connecting link between supplier and MAIL.
  In case of any proposal from R&D for design modification or
material/process/VAVE change, then proper communication to be done
with the supplier for the required modification.
 In case of any new project, procuring modified items from regular
supplier or procuring new items from regular/new supplier.

RISKS AND FAILURES

The payment has to be done without any delay of any kind. Once the service is
done / parts are received then it is our prime duty to ensure payment is done.
Any delay in payments may lead to stop of dispatch by supplier. This finally
leads to stop of production line.

In case of business closure with a supplier then it is our duty to look for
alternate supplier or contingency plan in case of emergency.

In case of new proposal from customer or emergency requirement, then the

production is initiated with foreign imports. But there the cost of high import
and high freight charges, So, localization for parts has to be done as soon as
possible to ensure profitable business.
Localization is done for 2 reasons.
 Ensure cost reduction in parts
 Ensure supply of goods.

There is budget allocated every year for brakes division based on customer
demand and company’s annual business. This budget has to be utilised properly
in this respective year. The budget can’t be transferred to next year. So there is a
high risk of budget getting not utilized completely. So we take responsibility of
proper utilization.
LIMITATIONS
The parts sourcing department has lot of responsibilities and duties in hand. But
there are also equal limitations from our side where we can’t interfere. This
starts with project selection from a supplier. We send RFQ Request for
quotation to the supplier in demand for quotation. The quotation is shared with
the CI Team (Cost innovation) who are the deciding authority if we can project
proceed with the supplier. We can’t take decision in this situation.

Parts sourcing team have complete information regarding financial details of

supplier. We know about payment details of supplier .But we don’t have
complete technical details regarding the customer request. So the technical
knowledge regarding the process and part is not as complete as part
development team. PD team have in depth knowledge from customer
requirement to supplier capacity.

GOAL AND POSSIBLE ACHIEVEMENTS

The company is finally credited every year based on the profit. . The company
has a TCI (Total cost innovation) target to achieve every year. There are many
teams working side by side to achieve this target. The same applies for our
team. Here comes our goal to minimize the part cost as much as possible to
bring possible profit to the company. Some of the possible goals within our
scope are as follows -

 VA/VE
 RM decrease
 Material change
 Process cost change
 Drawing change
The TCI target set is set every year. So our team is working very hard to find
possibly ways to do the same. This target is usually reviewed regularly by
conducting various workshops with inter departments and inter divisions as a
chance of knowledge sharing. This workshop helps us to get a glimpse of new
innovations used / about to be implemented in other department ( PD or Central
Pur.) or other business divisions( Steering / suspension). There is immense
scope to learn from this workshop for all employees.
CHAPTER 2

ABOUT THE PROJECT

Some of the major projects I was assigned in recent times are mentioned below.

[Link] TRADE AGREEMENT

This project is regarding import of brake components for SU2id model in

Indonesia. For custom clearance we required the source of raw materal of our
supplier. Thus we collected Foreign trade agreement document from every
supplier mentioning the import percentage (if any) with origin in company letter
head with authorized signature and seal of plant head.

The communication was initiated over mail and tracked continuously for 3 days
over and phone calls. This project was successfully completed gathering all
required information.

[Link] WEIGHT DETAILS

The management required the weight of input and finished part from the
supplier within a short period of notice. But these details are very confidential
and supplier refused to share the details .Basically these details were collected
due to following reasons

 To assess RM consumption

 VA/VE

 Process cost
We had to explain the importance of these details with suppliers and were
required to extract the information as soon as possible.

[Link] X451

This project was raised from a compliant. There is a part called actuator plug in
brake system which converts electrical energy into mechanical energy.

Customer complained that there is water leakage. So 5 design proposals were

made from R & D MAIL and sent to Korea. Out of which Korea asked us to
collect quotation for 5th proposal.

So we received quotation from supplier after negotiation. This quotation was

received by CI team. Now the supplier was asked to develop proto samples for
the part. This proto samples are inspected in MAIL and then send to korea for
2nd level of inspection. After final inspection the supplier is asked to supply the
part regularly with finalized price.

[Link] SUPPLIER UPDATE

G – Tops is our portal which contains all the necessary details of our supplier.
The registration of supplier in the portal is the first step from our side after
assessment. The supplier is asked to update the details regularly without fail.

During Covid times the many suppliers failed to update the information. So a
request came from Korean to inform the suppliers to update the portal
immediately (within given deadline) to prevent delisting of suppliers.

The portal contains many important information such as

 Plant address
  Active Contact persons

 Email IDs

 Company website

 No of employees

 Size of the plant

 Current CEO details

 Annual turnover

 Major customers

 Types of goods produced

 Major customers

 Machineries available

All these details had to be updated immediately within short notice. There were
roughly 90 suppliers altogether in brakes, suspension and steering division. We
successfully completed the task within given time with help of Central
purchasing team (Mr. Shivam and Mr. Gupta) under the guidance of our HOT
(Mr. Thirumalai )

[Link] CLOSING

Whenever a new supplier or new project is selected ,the parts are procured in
sample price category .After finishing all types of inspections the category is
changed to confirmed price upon management approval.
Approval has to be raised mentioning the part numbers and respective suppliers
with the reason for the change. This approval has to get authorization up to
Korea. After approval completion all the part numbers are finalized in MEPS
website .There were over 60 parts from various suppliers to be amended. The
project was completely successfully under the guidance of our HOT

[Link] DRAWINGS

IPCS portal contains all details regarding the parts procured. Some of the
important information present in website are as follows

 Drawing

 Revision change

 EO implementations

 BOM

There was a request to collect all the information for some parts to study the
revision history. So details regarding each part number is gathered and
presented to our HOT.

[Link] CHANGE

Our company R&D team continuously works on bringing any engineering

change in the part to reduce cost. The team studies the possible ways to do the
same by considering following factors

 4M change

 Material change
  Process change

 VA/VE engineering

So we gathered all the details available for various part numbers under current
revision in IPCS portal.

[Link] MOVEMENT

As mentioned earlier, payment is done to supplier under various terms

depending upon the requirement. But the final payment is done only after tool
movement. I conducted various tool movements under supervision of team
members.

[Link] INTERACTION

We were supposed to interact with various other departments to finish our

works completely. During the past 5 months we had lot of oppurtunities to
interact with other departments.

• Part development

• Cost innovation

• Finance team

• R&D

• Production
CHAPTER 4

KEY LEARNINGS

TOOLS USED.

The purchasing activity is not a single [Link] is combination of many

activities. Thus single tool may not be enough to handle multiple tasks. Some of
the important tools used in our sector is mentioned

 G-ERP (Global Enterprise Resource Planning) soon to become SAP

 MECS ( Mando electronic contract system)

  MEPS (Mando electronic procurement system)

 G-TOPS

 I-PCS
RFQ
This is the first procedure from our side for any kind of business. After
getting request from other departments we sent Request for Quotation to the
supplier furnishing all necessary details regarding the requirement.
In return we ask for quotation for our requirement from supplier. The received
quotation reviewed carefully. There is always a target cost before negotiation.
So the difference between target and supplier cost is analysed.

After final negotiation the final quotation which is a highly confidential

document and is directly sent to Cost Innovation team for [Link] team
reviews gives feedback if to proceed or not.

COST
There are different types of cost for same commodity. This difference arises
based on the time of consideration .Some of the common examples are as
follows
 Target cost
 Business cost
 Sample cost
 Finalized cost
 Supplier cost
RETRO PAYMENT
This concept is very usual in purchase. The part price increase / decrease
regularly based on many reasons.
 Raw material cost
 Process cost ( Labour, power)
 Freight cost
 Land cost
 Overhead cost (administrative, employee salary…)
 Other cost (profit etc.)
 Inventory cost.
So there is always a gap between price change date and PO revision date. This
is because PO revision has to get approval from management including finance
and CI team .During this gap the part is procured with old price. Finally the
accumulated cost difference is compensated either by supplier or by us.

BUDGET
The fund of the company is allocated to different projects based on the customer
demand .Thus fund is supposed to be utilized for the respective projects on time
without any delay. This budget changes every year considering many factors.

COMPETITION STUDY
There are many automotive companies in our country manufacturing brakes,
steering and suspension. These companies are active competitors as we both
share same customers. Then it becomes prime duty to study the competitors in
locality to stay ahead in market. There are many factors we may lag or may be
far behind. These factors need to be improved as soon as possible.

NEW SUPPLIER SELECTION

New supplier selection is a very complicated process as it takes lots of time and
effort of the organization to find a potential supplier. There are many categories
based on which the supplier is selected
 Identify any potential suppliers list
 Checking if IATF 16949 road map is available
 Checking if Customer approved or new source
 Conduct PSA (Potential supplier assessment) without any favour.
 Categorizing into 2 groups Pass or Fail based on the assessment
 If more than 80% add to approved supplier list upon HOM
approval
 If not then give suggestions to supplier to improve and achieve the
required score.

DOCUMENTS
Before selecting any supplier there are some standard audits required to assess
the capacity. Then advance is given to consumer to proceed with tool
production .The rest of the payment is done after sample inspection. The
documents related to supplier is listed below.
 PPAP (Production part approval process)
 PSW (Parts submission warrant)
 ISIR (Initial sample inspection report)
APPROVAL
Whenever there is requirement for new amendments. It is our duty to get
permission from management side regarding the amendment. We need to raise a
e-approval in Mando website which allows specified set of employees to view
our approval .Based on the impact of amendment approval line is finalized. All
amendments should be implemented only after approval completion. Only in
case of emergency the amendment is implemented after HOM authorization.
The employees can approve, reject, modify and comment any approval as per
condition.

AGREEMENT COPY
This is a very important document created after final negotiation between
Supplier and our team .Agreement copy contains many important information
regarding the business .More importantly it is a mutually signed document with
high degree of confidentiality and importance. Necessary information requied to
raise approval is present as follows
 Part name and number with finalized Price
 Effective date
 Notes discussed during negotiation
 Reflection of mutual agreement with signature from both sides

PURCHASE ORDER
Any kind of procurement activity is supported by a set of legal documents. The
most legal document in our department is called Purchase Order. PO is called
the bible of purchase department. The importance given to this PO is because it
is a signed copy which has sign up to HOM. This is called like the above as it
contains all kind of necessary information regarding the activity.
1. Vendor name
2. Vendor ID
3. Parts procured.
4. Price
 5. Tax details
6. HSN code
7. Payment terms
8. Incoterms
9. Note
[Link] code
[Link] Type

AP INVOICE
This is the final document regarding payment. Here the document is made either
after sample part approval or given in advance depending upon the situation.
The document is highly confidential. It can be shared only with the finance
team. The finance team after getting AP invoice from our side are allowed to
proceed with payments.

PRICE
The goods are procured from supplier based upon various factors kept in mind.
 Cost
 Urgency of requirement
 Impact in business
 Period of requirement
 SOP date
 Fund allocated
So based on above factors the price of the product is classified into 2 types.

DEVELOPMENT OR INTERIM PRICE

Sample price (Adhoc price or Interim price) is usually considered for sample
and emergency requirements. This category is considered when requirement is
as follows
 Immediate customer emergency(usually compensated)
 R & D request
 Until supplier gets approved with master code.
 Low quantities
 High interval time for requirement

CONFIRMED PRICE
This type of price is usually considered when the part is procured regularly after
the supplier completing all inspections on time. This price is usually lower than
sample price .Organization prefers this type of price and always works in
finalizing sample price into confirmed price.

PAYMENT TERMS
Usually supplier receives the payment once we start to receive approved parts
regularly. The payment can be either lump sum or within regular intervals of
time. This payment term is usually mentioned in all POs and approvals. Some
of the common terms in payment are as follows –
 50%Advance + 30 %PPAP + 20 % Sample
 50 % Advance + 50 %PPAP
 100 % PPAP
 100% Advance
 15 Net
 30 Net
 45 Net
PAYMENT TYPE
This is a very important category regarding payments. The type of payment can
vary depending upon the urgency of the issue. The type of payment is usually
decided by finance team. Common payment types are as follows –

 EXPENSE
This type of payment is usually a liability cost to the company. There is no
possible revenue generation due to the payment. This payment is considered as
a loss to the company. The company always tries to minimize this type of cost.
 CAPEX
This type of payment is done when the project is completely under control.
After considering the future revenues and profit values this payment is done.
This payment brings asset to the company.
 CUSTOMER
This type of payment is done when the customer agrees for complete
compensation for the cost. Here the payment is usually done by us in first hand.
Then customer pays us back the amortized cost as required.

TAX DETAILS
Every product procured from supplier is associated with tax amount, This tax
amount can vary depending upon following factors
 Location of supplier
 RM import or local
 Type of part
 Process involved
Considering the above factors Tax is quoted by the supplier. Our finance team
audits the tax quotation and gives the authorization for payment. Some common
tax categories are as follows
 SGST
 CGST
 IGST
 BCD
 SWS

HSN CODE
HSN stands for Harmonized System of Nomenclature. This code is allotted by
our government to simplify taxation .This systematic categorization of products
was initiated by the World Customs Organization to bring uniformity among
manufacturing sectors; every product is associated with a unique HSN code
depending on the type of product.

BPA
Blanket purchase agreement is a open document which contains all the details
regarding the procured goods. BPA is usually mentioned as PO dump as it
contains all necessary details regarding payment done. It gets updated each and
every time procurement is done and is available ERP portal. Some important
details available in BPA is as follows
 Part name & Part number
 Vendor name and ID
 Price
 HSN and tax details
 Type of price
 Master code
  Reason for purchase

MASTER CODE
Any supplier once who is fitting into our category of requirement completely or
partially is called eligible supplier. After getting final approval from team the
registration of supplier in our portal (G-tops) is initiated. There is a unique code
allocated to each supplier from Mando Korea based on PSA Potential supplier
audit .This code generated in called master code. This code contains all the
necessary information regarding the supplier.
The management can get products in finalized price only after generating
master code to the supplier .

DOCUMENTATION
This is very important stage in purchasing where all the necessary data is stored
properly. Mail confirmations and all scanned documents are archived monthly
once to prevent data loss. All documents in hardcopy are filled within their
respective categories and checked regularly. This is because at any time surprise
audit from Anand group or HL group may arise and team is supposed to
showcase required documents on time. Thus 5S concept is properly utilized in
documentation floor to get easy access to any document any time..
EXCEL
The knowledge on Microsoft Office excel is very much important to show
working to management. Some special functions are required to do following
functions.
 Calculation of retro amount,
 Management working in approval
 To create price agreement copy
 Filtering and sorting of required data from large documents.
COST REDUCTION (CR)
During negotiation with the customer initially the finalized price is decided
considering many factors as mentioned above. Then to continue the supplier
company business the supplier agrees to reduce the cost upto to a certain
percentage (For example 1.5% per year).This is clearly mentioned in agreement
copy. The supplier accepts CR considering the open market and vast
opportunities for procurement.

DISCOUNT
Usually when a supplier is in business with the company for a long
period of time, they agree to offer some discount as a [Link] discount is
usually mentioned in price agreement.

RM STUDY
The cost of part is mainly decided by weight of Raw material. The RM cost
changes is not fixed but changes based on worldwide market. So there is a
requirement to have regular update regarding RM cost by referring business
articles
.

LOCALIZATION
In case of new proposal from customer or emergency requirement, then the
production is initiated with foreign imports. But there the cost of high import
and high freight charges, So, localization for parts has to be done as soon as
possible to ensure profitable business. Localization is done for 2 reasons. One is
to ensure cost reduction in parts and other one is to get ensured supply of goods.
CHAPTER 5
FOCUS AREA
Over period of 6 months I realised many areas which needs improvement some
of the important areas which requires improvement is mentioned below.

TIME MANAGEMENT

This area is prime requirement in any sector. There requires knowledge on time
estimation. One needs to predict how much time it will take to complete the
given task. Based on this ability we can predict the future possibilities of given
task. Knowing the difference between value added and non value added activity
is required.

MULTI TASKING

This area is very vital in purchasing sector. There are many tasks given at the
same time. Works can't be done one at a time. Multiple works are done at same
time considering the priority. This we require immense multi-tasking ability to
complete assigned works.

PRIORITY ESTIMATION

Everyone has a pending list when it comes to work. But we should be aware of
priority of the pending work. This knowledge comes over time after knowing
the urgency of each work. This area is very vital in purchasing department.

SUPPLIER NEGOTIATION

As of now i was given 2 projects which required direct supplier negotiations.

We required the supplier to update some details. But supplier didn't the urgency
of this task and asked more time of the process. So in this we require
negotiation skill to get the work done with the supplier

FOLLOW UP

Any task given either in beginning or middle stage requires careful follow up.
Each task should be focused upto the last stage and progress of work should be
regularly updated with our reporting officer.

DOCUMENTATION
In purchasing, documents are very important. A legal document which contains
financial information of a company or business details is very important. It has
to be properly filed as soon a possible. This document may be required during
audit times.

CHAPTER 6

RESULTS / FINDINGS
We had Induction period for about 1 month. This period was very helpful in
understanding corporate environment. We had a glimpse on various
departments present in our company. We were provided chance to interact with
top level employees from all departments.

Department was allocated at the beginning of August. Since then we started

working in their respective departments. This initial period was a great chance
to learn This period was acting as a breathing period to learn from our mistakes.

We were given freedom to ask any doubts any time. All our queries and
concerns were cleared without any type of hesitation.

We made many mistakes during this period without knowing the impact. But
the team corrected all our mistakes immediately. The team was very supportive
in providing us a hospitable working environment and gave us enough breathing
period to understand corporate system understanding our strength and
weakness.

I was able to understand the working process and mistakes done from my side
and possible ways to correct my mistake.