A Report on Material Costing & Cost Reduction

In BISLERI INTERNATIONAL PVT. LTD.

Submitted By –Shakshi panwarMBA 3rd sem

Submitted To –Mrs. Smriti sharma

Company Profile

• Bisleri, an Italian mineral water company created by Bisleri feliece , was launched in India in the year 1965 . 

•Mr. Ramesh Chauhan is the current M.D of Bisleri international pvt. Ltd.

•Head quarter – Mumbai.

•Current turnover of Bisleri – 250 crores .

•The slogan of Bisleri is – “The sweet taste of purity”.

•Brand color – blue

• Mission- have world class quality, at the lowest production and distribution cost.

• Vision- the dominant player in the branded water business where the second player is less than 20% of our business.

• Bisleri Powered by 17 owned plants, 33 co-packers, 11 franchisees and a wide distribution India ,bisleri is at the center of the aqua green revolution.

•Bisleri use ERP software for all the material received and issued .

•FIFO method is used by bisleri for costing of material .

•Bisleri is launching a cold drink after 23 years .

•PET used for filling bottles. Pet is safe for storing water.

Products are as follows –

• Bisleri mineral added mountain water

• Urzaa an energy drink

• Bisleri Soda

• Vedica mineral water

• The report title “Material costing & cost reduction” deals with optimum utilization of material with the resources available in the company.

• This project report explains - to identify cost drivers, manage vendor selection. material is the main component in manufacturing project .

• PROJECT Objective - The purpose of the project is to study in the different areas of cost reduction.

Material costing :• The material costs form probably the highest proportion

of the total cost.• The term material is a very broad term and could include:

Direct material

Indirect material

• To maintain a proper availability of raw material there is a need for a proper material management .

• The percentages of costing may differ from industry to industry, but for the manufacturing sector material costs are of greatest significance .

• In accounting terms, material costing involves the determination of the cost of material acquired, the cost of material issued and the cost of the inventory .

• The raw materials include-

Preform , caps, cartons, handles , tapes, labels, holosleves , glue.

Material costing = Direct material + Direct labor + Factory overhead

Cost reduction :• Cost reduction is a planned positive approach to reduce

expenditure incurred.Cost reduction in following critical areas are-

• By Design• By fully utilization in factory layout and equipment.• By changing and improving the plant and machinery in

the production plant.• By proper utilization in utility services. • By proper investing of funds.• By timely availability of the resources.

FINDINGS AND RECCOMENDATION

According to my investigation, the major areas of weakness are :

• Reduction the labor cost• Revising the prices of amount and selection of vendor.• Reducing prepayments and perhaps increasing

inventory levels.• Lack of planning• Problem of funds

• All the work done here through ERP.• The FIFO method is used by the company.• Warehouse problem• High freight cost• Need for procurement savings in manufacturing of a

product because in some cases losses are coming and it is one of the main part & plays an important role in a manufacturing company.

• Careful designs and arrangements of storerooms can result in significant cost savings.

• Price restructuring should be carried out.• It is recommended for the opportunity buying which is help

in purchasing of raw material has a seasonal cycle of prices as they peak and fall in intervals. Hence we can book maximum amount of our requirement when prices are low.

• Use of perpetual inventory method instead of physical counting is recommended.

• The good planning should be to order in just the right quantities so that the situation of over-stocking or under-stocking is avoided.

CONCLUSION

• Control over materials is very necessary to assure a steady supply of each item of material. Materials represent nearly 65-70% of the costs of production .

• cost reduction is an effective tool that can be responsive to a company’s need.

• Importance of cost reduction strategies never changes.

• material management is very necessary and the main aim of material management should be to get right quality of a product; to get right quantities of supply; and to get right time with the reasonable price.