the management function that is responsible for planning, sourcing, purchasing,

8/14/2019 The Management Function That is Responsible for Planning, Sourcing, Purchasing,

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The management function tresponsible for planning, so

purchasing, moving, storingcontrollingmaterials at an olevel so as to provide servic

customer, at a pre-decided l


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1. Materials Planning

2. Purchasing

3. Receiving -Inward Materials Chec

4. Handling and Transportation5. Storage and Inventory Control

6. Standardization and Cost Control

7. keeping proper records

8. Analyzing and reporting

9. Scrap and surplus Disposal


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Save cost wherever possible!

Accelerate inventory turnover!

Ensure Continuity of supply!

Insist consistency of quality! Utilize the resources efficiently!

Reduce damages and obsolesce!

Standardize and improve Products !

Maintain harmony with departments Forecast the future market!


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Measure everything!

Use what is exactly Required!Reducing wastage is equal to creati


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=

There is aThere is a

science forscience foreverything andeverything andonly one bestonly one bestway of doingway of doing

things.things.


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The average time required to c

materials into finished goods

in to Cash.

Inventory conversion period =

Inventory/Sales per day

For Temple BayICP = 60,00000/10,00000= 06 day


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100

90

80

70

60

50

40

30

20

10

10 20 30 40 50 60 70 80 0

% of total number of itemsA B C

Policies for A ItemsPolicies for A Items

Only exact quantities to be procured

Have more than one sourceCentralize procurementIndividual postings , accurate recordsContinuous checks, low safety stockReduce Lead Time: Regular follow upVery strict consumption controlVery accurate requirement forecasting!

In Most of the organization 80% of the consumpt

Represented only by 15 to 20% of the items, Bettethis A class items first


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High, Low Medium valueAssess storage and security requirem

To keep control over consumption adepartmental head levelDetermine the frequency of stock veTo evolve buying policies to controlpurchases

To delegate authorities to different bmake petty cash purchases.


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Vital, Essential Desirable

Based on criticality.

Vital production would come to hal

Essential whose stock out cost is ver

Desirable items which do not causeimmediate loss of production


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o Scarcity-Short in supply

o Longer lead time

o Geographical location of supplie

o Available but not easy to procure

o Reliability of suppliers

o Best to procure once in a yearo Reduce the effort and expenditur


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Important assumptionsDemand is known, constant, and independent

Lead time is known and constant

Quantity discounts are not possibleOnly variable costs are setup and holding

Stock outs can be completely avoided

Q *= optimal order quantityQ = order quantity,

D = annual demand quantity of the productP = purchase cost per unitC = fixed cost per orderH = annual holding cost per unit


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Use duly identified color codes -Sear

Follow Banking Method in postings

Issue physical using FIFO method.

Costing weighted average Methods.

Verify stock of ten items daily random

Verify stock of ten items fast moving

Verify stock of every item monthly.


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Planning isPlanning is an importantan important thinthin

ForecastingForecasting is ais a difficult artdifficult art

Mutual CooperationMutual Cooperation is must witis must witInternal DepartmentsInternal Departments

WholeWhole is moreis more than the sumthan the sum of pof p


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A supply chain in a organization will

comprise of a network of facilitiesto

Procure the material from the vendors

Transform the material to the end

product

Distribute the finished product to theConsumer


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ReRe--duce,Reduce,Re--use,Reuse,Re--cycle !!cycle !!

*Establish a waste Reduction Program*Establish a waste Reduction Program

*Buy Recycled, Repairable materials*Buy Recycled, Repairable materials

*Buy energy efficient equipment, mate*Buy energy efficient equipment, mate

*Reduce use of Plastics*Reduce use of Plastics

*Involve Vendors*Involve Vendors--Is it environmentalIs it environmental

*Ensure Safety, Health & Environmen*Ensure Safety, Health & Environmen* SA* SA--80008000--standards for purchasingstandards for purchasing


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MoreMore thethe suppliers moresuppliers more thethe variationsvariations

Two unreliable suppliers are worseTwo unreliable suppliers are worse thatha

OneOne Reliable supplier!Reliable supplier!OvercomeOvercome feelingfeeling ofof insecurityinsecurity!!

InitiateInitiate key supplierkey supplier acct managementacct management

DevelopDevelop the reliable supplier!the reliable supplier!

Develop selfDevelop self--certified supplierscertified suppliers toto redureduinspection levelsinspection levels..

StandardizationStandardization


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Material

InterestLabour

er

ea

s * Profit

Moreo erI

f you cMoreo erI

f you ccost employee wicost employee wi

But if you cut mBut if you cut mmaterial will notmaterial will not

And it is ery diAnd it is ery dit e o er eads!t e o er eads!


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Reduce scrap inventory

Dispose scrap at regular intervals

Segregate scrap properly to generate

Take care for the environment


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