Spare parts inventory management system of British American Tobacco Bangladesh

Abstract

The objective of the report is to explore and understand the spare parts inventory management system of BAT Bangladesh. Spare parts are defined as parts that are used to replace machine parts which no longer function satisfactorily through wear or breakage. Departments such as Primary Manufacturing Department (PMD), Secondary Manufacturing Department (SMD), Filter Manufacturing Department (FMD), Quality Service Department (QSD) and many others are in constant need of spare parts. Spare parts such as belts and bearings in machines, wear out very quickly and it has to be replaced as quick as possible to keep the machine running. People smoke millions of cigarettes every day and if the production is stopped for a single day due to any machine failure because of unavailability of spares than it will proof to be a huge loss for the company. The job of R&RS Department is to make sure that spares are always in the inventory and also manage the inventory in such a way that it is as less as possible. BAT Bangladesh is using an Enterprise Resource Planning (ERP) system which is SAP from IBM. This one software has integrated the whole business functions including their spare parts inventory system. This system has included the quantity of more than 15000 stock keeping units, their storage locations, their purchase, issue and inventory holding. All the information regarding every spare part is stored in the software, each having its own unique identification number, and also introduction of new spares is also possible by creating a unique number for it. BAT has an excellent supply chain system where everything is managed efficiently which is the company‟s key competitive advantage but there are some recommendations in the end of this report which may proof to be helpful to manage the inventory more effectively and efficiently.