You can move a mountain and you canWhatever the mind of man can conceive and believe it canachieve. When you believe “I Can Do It, The How to Do ItDevelops!!
Suppliers CustomersCompanySupply Chain ManagementSupply Side Demand SideSupply chain management is a set of approaches used to efficiently integratesuppliers, manufacturers, warehouses, and customers so that merchandise isproduced and distributed at the right quantities, to the right locations, and atthe right time in order to minimize system wide costs while satisfying service-level requirements.
INBOUND LOGISTICS- Demand forecasting and planning- Materials planning and management- Inventory management and control- Vendor development & management- Purchasing and sourcingOUTBOUND LOGISTICS- Dispatch planning and scheduling- Distribution- Warehouse management- Order Fulfillment- Customer ServiceMANUFACTURING LOGISTICS- Capacity planning- Production planning and scheduling- Operations- Manufacturing
Any organisation has several resources these include 4 M’snamely MEN, MONEY, MACHINES, MATERIALS. It is thefunction of Another ‘M’ namely MANAGEMENT optimally plan &utilise these resources within the framework of 2 T’s namelyTIME, TECHNOLOGY & Environmental Forces so as to produceproducts or services of acceptable quality (for customersatisfaction) and a reasonable amount of profit.While any two organisations may have identical resources of 4M’s at their disposal, one may produce good profits and the othermay not do as well or even make losses. What is the ingredientthat is causing this difference?
Inventory (Raw Materials, Components, Work in Process, FinishedGoods, MRO Items) may be defined as “usable but idle resource whichhas an economic values awaiting for further use or process. It contributesanything between 40%-60% of cost of any product. Inventory carryingcost is very high (27%-33% in the Indian Context).Inventory Control is a process of deciding what and how much ofvarious items are to be kept in stock. It also determines the time andquantity of various items to be procured.Why Inventory Control??1. Minimize financial Investments in Inventory2. To Facilitate Production Operations3. To Avoid Losses from Inventory Obsolescence4. To Improve Customer Service
PurchaseGoalsIn Right QuantityAt Right PriceAt Right TimeOf Right QualityAt Right PlaceFrom Right SourceBuying Materials
MDDir Dir Dir COFManager(Import & Export)Accounts PersonnelProductionIn chargeHOD(Stores & Purchase)AdministrativeStaffSupervisor 1Supervisor 2Supervisor 3Supervisor 4Storekeeper 1 Storekeeper 2
Calculation of Material Requirement of upcoming financialyear in advance i.e., first week of January every year based onyearly production schedule. Release of tentative yearly purchase schedule (blanket order)to the supplier. Confirmation of monthly requirement, release of purchaseorders (taking into consideration the stock lying in store,materials in transit or in process with sub contractor andquantity on order) for upcoming month in view of lead time. Weekly review of stock at par with production schedule Daily review of stock level and replenishment
Lead TimeMaximumReorderMinimumTime (in Days)UnitsInStockSafetyInventoryAverage AverageCycleInventory Lot Size Reorder Point Policy Fixed Order Interval Scheduling Policy Optional Replenishment Policy
Inventory Related Cost Ordering Cost Inventory Carrying Cost Stock Out CostEconomical Ordering Quantity (EOQ Model) to minimize ordering cost andinventory carrying costQty Per Order (Q)Total CostInventoryCarrying CostEOQOrdering CostCostofCoverAnnualRequirementofanitemEOQ= 2ASCiWhereQ= Qty per OrderA= Annual Requirementin UnitS = Ordering Cost per OrderC = Cost per Unit or Itemi = Inventory carrying Costexpressed as % of value
Identification and grouping of Items depending upon Value of item(cost per unit) as HML, Criticality as VED, Usage frequency asFSN, Usage Value as ABC, Availability Position as SDE.100907510 25 100ABCCumulativePercentValueCumulative Percent Number
Where are we going wrong?? Vendor Rating Index (Quality) = No. of Lots RejectedNo. of Lots Received Vendor Rating Index (Delivery) = Delivery On ScheduleTotal No. of Deliveries Rush Order Cost (Index) = Price Paid for Rush Order MaterialPrice Normally Paid for this Material Inventory Turnover Ratio = Annual Sales(Finished Goods) Average Inventory Out of Stock Index = No. of Times of Out of StockNo. of Times Requisitioned
The presented Perspective for Year 2010 can only beachieved by TEAM Work!!End ThoughtTogetherEveryoneAchieveMoreSalesFinanceProductionEngg.DesignStoresPurchase