Operations Strategy

bull What is a strategybull Corporate strategy vs operationalbull General tactical short term stratsbull Methodoly of building Op Stratsbull Dynamic markets-lined to Op Stratsbull Productservice profilingbull Op Strats Implementation

Production amp Operations Management

bull Whatrsquos operationsbull What is productionbull What are the prerequisites bull What are the functions

(Departments) required for production

bull Line FunctionService functionObjectives of productionStrategic operation mgt-

Operational strategies

Manufacturing and Service

bull What is the difference Say a dental clinic and Wheat production

bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc

bull Operations management is applicable for both Manufacturing and service

bull Combination of Mftg and Service organisations Give Examples

Manufacturing Services

What is manufacturing Service

Is it different from Service or Operationsproductions

Is it service or operations-Hospitals contract forming doctors hotels

Manufacturing ServiceEg

bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Production amp Operations Management

bull Whatrsquos operationsbull What is productionbull What are the prerequisites bull What are the functions

(Departments) required for production

bull Line FunctionService functionObjectives of productionStrategic operation mgt-

Operational strategies

Manufacturing and Service

bull What is the difference Say a dental clinic and Wheat production

bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc

bull Operations management is applicable for both Manufacturing and service

bull Combination of Mftg and Service organisations Give Examples

Manufacturing Services

What is manufacturing Service

Is it different from Service or Operationsproductions

Is it service or operations-Hospitals contract forming doctors hotels

Manufacturing ServiceEg

bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Manufacturing and Service

bull What is the difference Say a dental clinic and Wheat production

bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc

bull Operations management is applicable for both Manufacturing and service

bull Combination of Mftg and Service organisations Give Examples

Manufacturing Services

What is manufacturing Service

Is it different from Service or Operationsproductions

Is it service or operations-Hospitals contract forming doctors hotels

Manufacturing ServiceEg

bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Manufacturing Services

What is manufacturing Service

Is it different from Service or Operationsproductions

Is it service or operations-Hospitals contract forming doctors hotels

Manufacturing ServiceEg

bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Manufacturing ServiceEg

bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Definitionbull OPERATIONS MANAGEMENT is the

effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services

bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Systems Approach

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Importance of Strategies

bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics

bull Quality

bull Cost Efficiency

bull Dependability

bull Flexibility(Response innovation)

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Startegies for Operationsbull Importance of strategies All Operation Managers

in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)

bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

bull Operational Strategy means adding Value to customers

Three Stages of Strategies

bull Starategic Planning- Long term

bull Tactical Planning- Medium term

bull Op Planning amp control- Short Term

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Steps to Strategic mgt

bull Scan-Ext and int environment

bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy

bull Strategy implementation-ProceduresprogramsBudgets

bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Operational Strategies

bull Operations Management Decisions-

bull Strategic (long-term) decisions

bull Well the relevant points over here are-

bull How will we make the product

bull Where do we locate the facility or facilities

bull How much capacity do we need

bull When should we add more capacity

bull Should we invest when

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Tactical (intermediate-term) decisions

bull How many workers do we need

bull When do we need them

bull Should we work overtime or put on a second shift

bull When should we have material delivered

bull Should we carry out 100 inspection

bull Should we have a finished goods inventory

bull Outsourcing

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Short term strategies(Functional)bull What jobs do we work on today or this

week

bull Who do we assign to what tasks

bull What jobs have priority

bull Leave replacement

bull Overtime for the day

bull Sudden Mc breakdownBundh

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Op strategy-link to Corporate Strategy

bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Strategy focus- processbull 1048707 An operations strategy involves decisions that

relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the

process bull 1048707 Process design includes

ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Strategy wrt Infrastructurebull Infrastructure decisions involve

bull 1) the logic associated with the planning and control systems

bull 2) quality assurance and control approaches

bull 3) work payment structures and

bull 4) the organization of the operations function

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Methodology of Op Strats

bull Checking The Marketsbull Out come of a Market debate- Marketing

meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on

aspect after analysis)bull Order winners Order qualifiers

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process

External Internal Environmental Legal Safety considerations-Input to General strategies

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

ProductService profiling

bull Company basedplant based profilebull Extension of product to Service to build

USPsbull Downsizingbull Capacity Decisions

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Op Strategy Implementation

bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Strategy Concept

bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase

bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Focus on core Capabilitiesbull While making Strategies-Core strengths

bull These Core capabilities allow the firm to establish its competitive priorities in the market

bull These are skill sets in operations that differentiate itself from competitors

bull Integration of Manufacturing and service

ldquoCreate Value to customersrdquo

CAC concept-Customer activity cycle

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Criteria for Buy

bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Packaging as a Op strategybull Design

bull Statutory markings

bull Ease of handling and Usage

bull ReheatRepack

bull Health amp safety+ Food safety amp standards Authority reqts

bull Transportation

bull Recyclable

bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Aspects of OP Strategies

bull Inventory control

bull Quality Control

bull Production schedulecontrol

bull Productivityop cost control

bull Constructing control systems

bull Implementing and operating control systems

bull Modifying policies and designs

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

STRATEGIC SOURCING

By

Sripathy KR

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Strategic Sourcingbull Difference bw Strategic sourcing and

Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making

bull Long term Medium Term and short termbull Long term-policies cost down make or

buy decisions etc- Done on annualised and or 2 to 3years basis

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Long term mid and short term

bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats

bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Objectives of sourcing mgt

bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome

resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Policies and Procedures

bull Policies to be in line with Vision and Mission of company

bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions

Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Soucing Mgt-Main Objectives

bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific

tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards

bull Effective control of Inventory-smooth cash flow

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-

Invoice+transportation+inspection+ordering costs

bull Purchase order process

bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements

bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS

generation

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Purchase order Review

bull POContractrate contract Work ordersbull Conditions of contract

bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Sourcing Process

bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to

which manufacturedbull Rating-Quality Delivery Ethics promptness

Competitive bidsbull Sustenance capacity-Scale up capability

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Critical Success Factors

bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Objectives Scope Responsibility Limitations

bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance

ndash Diverts influence and domination of other depts lead to greater profitability

ndash Rate contracts can be handled easily

Disadvantages-

- Slower process for distributed production units- Local buying increases

- No flexibility for designdevelopment and cause delays

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

LimitationsChallenges for Smooth function

bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained

conditionsbull StrikesHolidays Weather conditions floods

communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

SCMSourcingpurchase is an Emerging Profession

bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Stores and Inventory Mgtbull Storage devicesmethods

bull Part no-codification

bull Material handling

bull Whatrsquos inventory and why manage

bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit

bull VMI Inventory liability

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file

bull Avoids duplicate stocks

bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control

bull Accuracy in commn and better communication with vendors

bull Easy Computerisationparts search MRPERP

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought

outmftrd import localsemi finished project reqt

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Stores OrganisationTypes of materials

Ease of handling

Ease of retrieval

Conditions of storage

Safety (of people material OA safety)

Geography- warehouses

Geography-Distribution

FIFO LIFO and controls

Input Package Design SPQ issue patterns

Matll Handling friendly

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Inventory Costsbull Ordering Costs

bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs

bull Capital-interest landbldgstorageStorage space- storage conditions

bull matl handling

bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance

bull Inventory risks-storage losses obsolescence damagedeterioration

bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Various MEANS of inventory control

bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Role of IT in SCMbull EDI network-Vendor customer Branch

office Distributors Transportation Retailer Govt agencies etc

bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-

bid online servicing on line inventory status etc- Go Global

bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control

Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg

bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis

bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters

bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation

bull Occupational healthsafety proceduresprograms

bull Emergency preparednessamp Documentation and control