Supply Chain Procurement Management
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Procuring methods that includes Procuring cycle, warehouse management & it's impact on procurement.
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Supply Chain Procurement Management
- 1. Supply Chain Management PROCUREMENT MANAGEMENT Organized By: T & I Section Cost Control Department Supply Chain Division Pak Suzuki Motors Company Limited
- 2. Contents Of Training • Purpose of Training • Overview of Supply Chain Management • Procurement Cycle ▫ Source Selection ▫ Part Development ▫ Ordering & its parameters ▫ Delivery / 6 Rs • Vendor Performance Evaluation • Real-life supplyability Issues faced By PSMCL ▫ Commitments – Sense of Ownerships/ Responsibility ▫ Competencies – Professional Organization – Resources, Structure & Systems, Training & Development
- 3. Purpose of this Training • To broadly understand Supply Chain Management • To closely look into the supplyability Issues • To interlink shared knowledge with real life challenges in supplyability ~ Improve Delivery Performance ~
- 4. Customerprocesses Supplierprocesses Focal Company DeliverMake ReturnReturn Plan Supply Chain Overview Source
- 5. Supply Chain Module Procurement Management Warehouse & Logistics Production Management
- 6. Procurement Cycle • Existing • New Part Development • As per standards provided by PSMCL Ordering • Ordering Parameters • BOM • MOQ • Safety Stock • Packing Size • Frequency of delivery Delivery • Quantity check • Quality check • Logistics • Warehousing SOURCING PERFORMANCE Source Selection
- 7. Source Selection • Capabilities/ Technology Level • Capacities • Manpower • Financial Health • Market & Customer Base • Acknowledged by customer
- 8. • Existing • New • As per standards provided by PSMCL • Ordering Parameters • BOM • MOQ • Safety Stock • Packing Size • Frequency of delivery Delivery • Quantity check • Quality check • Logistics • Warehousing Source Selection Ordering Procurement Cycle Part Development
- 9. Ordering Key Parameters ▫ Ordering frequency ▫ BOM ▫ MOQ/ Packing ▫ Lead Time ▫ Delivery Frequency ▫ Safety Stock
- 10. Bill Of Material
- 11. Bill Of Material
- 12. Packing Size
- 13. • The time between when new stock is ordered and when it is received and available for use • Logistics managers should evaluate how well a logistics system is performing, and find ways to reduce it Lead Time
- 14. • If you are running in a race and pass the person in second place, what position are you in? Second place
- 15. Delivery Frequency Key Considerations • Buyer-Supplier contract/ concepts • Vendor Responsiveness and Reliability • Vendor’s Credibility • Pricing factors • Inventory & logistic flow planning
- 16. Safety Stock • Safety stock is an additional quantity of an item held in inventory in order to reduce the risk that the item will be out of stock • Sales of an item are greater than planned • Supplier is unable to deliver at the expected time
- 17. Safety Stock - Balance Approach
- 18. • What goes in place of the question mark? 1 3 5 2 4 ? (It’s not 6) R
- 19. Procurement Cycle Source Selection • Existing • New Part Development • As per standards provided by PSMCL Ordering • Ordering Parameters • BOM • MOQ • Safety Stock • Packing Size • Frequency of delivery • Quantity check • Quality check • Logistics • Warehousing SOURCING PERFORMANCE Delivery Part Receiving
- 20. Part Receiving - Delivery Adherence RIGHT PRODUCT RIGHT PLACE RIGHT QUANTITIESRIGHT TIME RIGHT QUALITY RIGHT COSTS
- 21. Customer Distributor LOGISTICS – A COORDINATOR Supplier Manufacturing Receiving Location Assembly plant
- 23. Warehouse Management The function of a firm which stores product (raw material, parts, good in process, finished goods) at and between point of origin and point of consumption. Methods for Material Issuance • FIFO (first in – first out) • LIFO (last in – first out) • HIFO (highest in – first out) • Average
- 24. Function of Warehouse • Ensure packaging • Inbound shipments check • Stocking and retrieving items • To recondition the products to meet customers’ requirements • Ensure quality control • Ticket and label as per customers’ demands • Outbound shipments check
- 25. Example of Warehouses and Logistic Management Vendor 1 Sheet Metal Parts Dealer 2 Lahore Pak Suzuki (Production Line) Mehran, Bolan, Wagon- R etc. Vendor 2 Plastic Parts Vendor 3 Wiring Harness Dealer 3 Rawalpindi Dealer 1 Karachi
- 26. Vendor Performance (Evaluation) “Great Vendors are managed not found.” - Debra Powell-Schaeffer 1996 is a term used in business and refers to the process of evaluating, approving and improving potential vendors’ key performing areas. Key Benefits •Reliability – set high standards of product and service levels - sufficient capacity and business stability. •Efficiency - help customers and suppliers - identify and remove hidden cost drivers in the supply chain. •Continuous Improvement - evaluation of current vendors goes beyond measurement to actual performance improvement by providing feedback to vendors on their performance and working on continuous improvement opportunities.
- 27. Source Evaluation • Responsiveness - Able to absorb production fluctuations • Efficiency - Productivity, waste minimization • Reliability - Combination of both
- 28. PSMCL Monthly Vendor Evaluation System MONTHLY VENDOR EVALUATION SYSTEM Vendor Quality Performance Defect PPM Level Receiving Rejection Warranty Claims Line Rejection s Respons e Of QDR QA Audit Vendor Supply Performance In-time Supply Pending DI
- 29. PSMCL Yearly Vendor Evaluation System YEARLY VENDOR EVALUATION SYSTEM Design & Development Timely Development Technical Facility Packing Maintenance & Improvement # Of Issuance Of Supply Feedback Report Trolley & Bin Maintenance
- 30. • Some months have 30 days and some have 31 days. How many months have 28 days? All of them
- 31. Need For Issue Resolution • Cognition model • Muslim • Responsibility • Image Development
- 32. Time Management • Slide of arrival timings
- 33. • Sense of responsibility • THINK BEFORE YOU COMMIT Commitment
- 34. Competency
- 35. 7 M Model {Man + Material + Machine + Money + Method + Market} * Management
- 36. Organization
- 37. Manpower
- 38. Lack of planning • Lack of planning (production planning; SC whole cycle)
- 39. Safety Stock • Lack of safety stock
- 43. Packaging Wrong
- 44. Financial Issues • Poor financial controls • Think before you invest • Plan activities • Increase product range • Growth target
- 45. THANK YOU
Editor's Notes
- Under perform but potential vendors, underperform because of low average in-time supplies PSMCL has plan to launch new models frequently so competent SC is required which cannot be possible without competent SC at your end
- Goods/services, information, cash flows and innovation is shared across the chain
- A standard flow of procurement process
- These 6 factors are key components of organization formation & parameters we believe must be followed by you Technology Level Indicator: JV/TA Capacities: Known available capacity, under or over utilized Manpower: Trainings Financials: Debt to equity ratio, liquidity etc.
- We have not kept any slide for part development but key point of consideration is MAKE IT AS PER SPECS. B2B is that type of market where customers know about product better then suppliers
- Tool for communication between manufacturing partners (Shops or sub vendors) There is concept of multi level and single level BOM
- Multi level and single level BOM
- Visual control, light, easy to manage, standard, acceptable by all stakeholders e.g.
- E.g. when we order we take care of timings of consumption for welding components so we order a day earlier then VFA
- Delivery frequency should be tried to make realistic neither too much nor too less
- To absorb the variability in consumer demand, control any problem regarding product flow
- DEMAND SIDE: Anticipated demand and un-anticipated demand SUPPLY SIDE: Supplier performance, lead time shipment to deliver, unforeseen events, natural disasters, transportation issues etc.
- Green channel vendors like in PSMCL, supply feedback report
- Supply should be ready a day earlier 8 – 11 is timings for truck in, if critical then 8:00 in PSMCL door
- This method assumes that the first unit making its way into inventory is the first sold This method assumes that the last unit making its way into inventory is sold first
- Why to resolve the issue? If line is running we are producing and as a family we are making money? COGNITION MODEL: Behavior – Habit – Attitude – Cognition model MUSLIM: As per verse by Usama commitment is necessary to make RESPONSIBILITY: Not about supplyability issue only, Muslim a privileged birth, Pakistani another privileged (2 ideological states), associated to auto industry (25% of world’s country) in another privileged thing, THIS IS OUR RESPONSIBILITY TO UPGRADE OUR BUSINESS, LIFESTYLES, FAMILY, EDUCATION etc. from the level our ancestors has left us. Price of greatness is responsibility IMAGE DEVELOPMENT: Self reliance of the issues (Thailand Tool maker)
- Cognition Model
- Sbha dain gae, early and I went in Ravi and pick parts from truck myself to run line
- Business is enhanced then which competencies should be added? What type of business your organization should opt?
- Training, salary at least equal to minimum wage rate, value to man-power
- All OEMs are sitting for parts at some of the vendors’ premises. It will be explained in detail in production management training
- Should be for all processes not for few. If not possible then safety stock of such processes
- Standard, Light/Convenient, Easy to handle, Visual control, Easy quantity control
- Do not take wrong bins, take your own form PSMCL