PROCUREMENT OF API &

RAWMATERIAL MANAGEMENT

PREPARED & PRESENTED BY,

q ISHAN.M. SHUKLA.
CONTENTS:
INTRODUCTION
PROCUREMENT &PRODUCTION MANAGEMENT.
RAW MATERIAL MANGEMENT
MATERIAL MANAGEMENT ACTIVITIES.
PROCUREMENT: DEFINITION, PROCESS.
PROCUREMENNT OF API.
IMPORTANCE OF ITEMS & SERVICES PURCHASED.
E-PROCUREMENT:ADV& DISADV.
E-COMMERCE MODELS
TYPES OF E-PROCUREMENT
OTHER MATERIALS MANAGEMENT ACTIVITIES
 IT’S NOT ALWAYS ECONOMICAL FOR THE COMPANIES TO
MAKE ALL THE MATERIALS USED IN MANUFACTURING.
SOME ITEMS ARE PURCHASED FROM
OTHRES
& SOME ARE PRODUCED IN THE COMPANY.
Ø CHOOSING B/W MAKING OR BUYING
AN ITEM IS IMPORTANT DECISION TO BE
TAKEN BY MATRERIAL MANAGEMENT.

REASONS FOR BUYING:

vREASONS FOR MAKING:

 BACKWARD FORWARD
INTEGRATION CURRENT INTEGRATION
PRODUCTION

RAWMATERIAL
BUYERS
STEEL DEALERS

AUTOMOBILE
MATERIAL MANAGEMENT:
IT’S PLANNING, DIRECTING, CONTROLLING & CO-
ORDINATING THOSE ACTIVITIES WHICH ARE
CONCERNED WITH MATERIALS & INVENTORY
REQUIRED FROM POINT OF THEIR INCEPTIONS TO
THEIR INTRODUCTION INTO THE MANUFACTURING
PROCESS.
IT BEGINS WITH THE DETERMINATION OF
MATERIAL QUALITY & QUANTITY ENDS
WITH ISSUANCE TO PRODUCTION TO MEET
COSUMER’S DEMAND AS PER SCHEDULE &
AT THE LOWEST COST
OBJECTIVE OF MATERIAL MANAGEMENT.
FUNCTIONS OF MATERIAL MANAGEMENT
ONE OF THE MAJOR ISSUE THAT
MATERIAL MANAGER MIGHT ENCOUNTER
IS THE METHOD OF PROCUREMENT.
PROCUREMENT:
SIMPLY THE WAY OF ORDERING THE
MATERIAL
IDENTIFY REEVALUATE NEEDS.
DEFINE & EVALUATE USER
REQUIREMENTS
DECIDE WHETHER TO MAKE OR BUY
IDENTIFY THE TYPE OF PURCHASES
CONDUCT A MARKET ANALYSIS
IDENTIFY ALL POSSIBLE SUPPLIERS.
 NEED ANALYSIS
USER REQUIRMENTS

MAKE
MAKE OR BUY DECISION

MAKE OR BUY
BUY SOME
COMPONENTS

PURCHSE TYPE
STRAIGHT BUY
MODIFIED BUY
NEW BUY

SELECT VENDOR
MARKET ANALYSIS
EVALUATE REMAINING SOURCES

PRODUCT OR SERVICE DELIVERY

POST PURCHASE PERFORMANCE EVALUATION

PROCUREMENT
CONTRIBUTES TO THE
COMPETITIVE ADVANTAGE OF THE
FIRM,
TREMENDOUS IMPACT OF MATERIAL
COSTS ON PROFIT- 60 -70% OF SALES
DOLLAR PAID TO MATERIAL
SUPPLIERS
SIGNIFICANT PORTION OF THE
LOGISTICS COSTS
POPULARITY OF JIT MANUFACTURING
Importance of Item and Service Purchased

Products and services purchased by a

company are not all the same.
Some are more important than others
and require greater procurement
attention.
The quadrant technique enables the
supply chain manager to assess the
relative importance of each item based
on the degree of perceived value and
risk.
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Figure 4-3:
Coyle, et al, Supply Chain Management: A Logistics Perspective

12
 Purchasing

Electronic Procurement

Common uses of E-commerce

Research vendor and product information
Electronic check of available stock
Price negotiation
Order products or services
Check on the status of an order
Issue invoice and receive payment

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ITEM PROCUREMENT IMPORTANT MATRIX.

HIGH

RISK

LOW

VALUE/
PROFIT HIGH
LOW
 Purchasing

Advantages of Electronic Procurement

Figure 4-8:
Coyle, et al, Supply Chain Management: A Logistics Perspective

15
 Purchasing

Electronic Procurement

Disadvantages
Security of electronic messages
Lack of face-to-face contact
Other technological concerns
Standard protocols
System reliability

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 Purchasing

Types of e-Procurement
1. Web-based ERP (Electronic Resource Planning): Creating and
approving purchasing requisitions, placing purchase orders and
receiving goods and services by using a software system based on
Internet technology.
2. e-MRO (Maintenance, Repair and Operating): The same as web-
based ERP except that the goods and services ordered are non-
product related MRO supplies.
3. e-sourcing: Identifying new suppliers for a specific category of
purchasing requirements using Internet technology.
4. e-tendering: Sending requests for information and prices to suppliers
and receiving the responses of suppliers using Internet technology.
5. e-reverse auctioning: Using Internet technology to buy goods and
services from a number of known or unknown suppliers.
6. e-informing: Gathering and distributing purchasing information both
from and to internal and external parties using Internet technology.

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OTHER MATERIAL MANAGEMENT ACTIVITIES.

WAREHOUSING
TRANSPORTATION
PRODUCTION PLANNING & CONTROL
QUALITY CONTROL.
 Purchasing

Production Planning and Control

Figure 4-7:
Coyle, et al, Supply Chain Management: A Logistics Perspective
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