Académique Documents
Professionnel Documents
Culture Documents
Market Exploration Supplier Selection- Sources like Trade Journals, Catalogues, Directories, Industry Directories, Mil Standards, Customer Nomination basis, Govt. Nominated sources, Drawings etc Supplier Registration- Technical, Finance Performance, Quality Standards, Credentials from Customers etc, Vendor Development- Providing support like technical, process, tools, drawings and financial assistance in the form of advance payment. Vendor Evaluation: Categorical method, Weighted-Point Plan and the cost-ratio method Key factors like Delivery, Price, Quality, After Sales Service etc,
Purchasing Strategies and Practices: 1.Make / Buy decisions - Outsourcing Vs In sourcing 2. Single/Proprietary buying and Multiple source buying 3. Centralized buying and De-centralized buying 4. Direct buying and Purchases through Tendering 5. Supplies emanates out of Inter-Governmental Agreements 6. Long Term Business Agreements (LTBA) 7. Petty purchases 8. Spot purchases 9. Joint Ventures(JVs) 10. Director General of Supplies and Disposals(DGS&A) rate contracts
Proprietary Purchases Cost may not be competitive Negotiation becomes difficult/ Not possible Delay in supplies leads to Time overrun and cost overrun Quality can be improved Suppliers are treated as business partners/relationship can be improved Issues related to dependability needs to be considered
Competitive Purchases Cost competitiveness is ensured Negotiation very much possible Delays can be avoided Variation in quality of supplies is possible Suppliers are treated on Commercial angle Since more than one source is available dependability not an issue
Preferred for common items through consolidation Price discount is possible Development of alternate source is possible considering quantities. Indigenization is possible /more meaningful Possibility of Transfer of Technology (ToT) can be explored Best suited for high value / technology driven items
Preferred for unique items Price discount may or may not be possible Development of alternate source may not be viable. Indigenization may not be possible / effective Decision on ToT is difficult. Best suited for varied products enviroment.
Types of Tenders Single /Proprietary Tenders Limited Tenders Open Tenders Global Tenders Pre-qualification Tenders Expression of Interest (EoI)
Bidding Systems Single bid Two bids Three bids Earnest Money Deposit(EMD) Performance Bank Guarantee(PBG) Security Deposit
Negotiations
Process through which all clarifications w.r.t technical, commercial etc are sought out both buyer and prospective supplier. It should not be a platform for either insulting or complaining each other. Negotiating means conferring, discussing or bargaining to reach agreement in business transactions. The Negotiation sessions are: i) Planning for negotiations- Preparation of Agenda ii) Pre-negotiation General business talk, simple straight forward approach as per the agenda iii) Negotiation process iv) Post-negotiation
Negotiation is a process of planning, reviewing, and analyzing used by a buyer and a seller to reach acceptable agreements or compromises. Key objectives of Negotiation: To obtain the quality specified To obtain a fair and reasonable price To set the supplier to perform the contract on time
Negotiating Techniques
i) The Bogey: Describes a tactic whereby a buyer tells a seller that they likes the product, but that Rs.50,000/= is all that can be paid. ii) Take it or Leave it: Describes a tactic whereby the buyer sets the seller know that they are firm on an issue and will not move further. Iii) Best And Final Offer: Describes a risky tactic (also known as the door knob price) that can either help or hinder bargaining power, depending on how it is applied. Iv) Concessions: Refers to the tactic of dropping some demands to produce gains in other areas.
ORDER PROCESSING
Receipt of quotations Identification of the Lowest Price (L1) Preparation of draft Purchase Order Obtaining Financial concurrence / scrutiny Putting up for CFAs approval Divisional approval / recommendation Complex recommendation Corporate Office approval Procurement Sub-Committee (PSC) approval Board approval Government approval wherever required.
Reciprocity- Trade relations ( By giving preference to some suppliers) Compliance to stipulated procedure (Purchase Manual / OSM) Transparent and openness Fair and courteous treatment of suppliers Integrity Being honest and upright in character No conflict of interest Focus on value for money Recording all meetings, documentation and file maintenance Seek approval for Competent Financial Authority (CFA) Dealing only with OEMS/ Dealers, Stockiest etc should be avoided No personal agenda / only organizational objectives
Seasonal Purchase
Concern areas: i) The available warehousing facility ii) The amount of liquid capital at hand. Purchasing policies: i) Conservative policy ii) Hindsight policy
Lease Short term measure Best suited for less efficient piece of equipment Lessee is responsible for everything. Tax benefits Lesser retains full control of the equipment and not the lessee.
Problem:
A company wishes to buy a Capstan Lathe at an initial cost of procurement of Rs. 1,00,000. The M/C has an useful economic life of 10 years and will face a salvage value of Rs.5000 at the end of 10 years. The expected return is Rs.1,20,000 for 10 years. The company has alternative investment opportunity which will bring profit of 10% annually. Should the company buy the lathe?.
Stores ManagementContinued
The function of stores control is perhaps the least glamorous of all aspects of materials management and is yet so necessary and important (Gokaran). The storage of materials as one system can tell whether and to what extent lower manufacturing cost and compensate for higher inventory costs (Peter F.Drucker).
Storage System
Classified systems approaches: - The receipt system - Physical upkeep - Maintenance system Storekeeping - Saving them from all kind of damages and losses - Exercising over all control their movement.
Advising Management
Physical verification and valuation Inspection Replenishment Obsolescence Disposal of scrap
Casher Vs Storekeeper
Casher Storekeeper
To receive and make payments To keep a proper record of all the receipts and payments together the authorizations Safety of cash Exercise control over the cash in possession
Safety of material
Stores Equipments
Steel vs wooden equipments Racks Containers Measuring equipment Ladders and steps Cleaning equipment
Shelving (open/ closed type) Trays Pigeon hole cupboards Pallets Trays Tote boxes
Warehouses
Warehouses are the godowns which take the responsibility of keeping and storing goods and providing ancillary services in order to help the small and medium sized traders and manufacturers who, because of technical and economic reasons may not like to have their own store house.
Outside factors
Size & configuration of site
Site access
Layout models
Two main approaches of the plan of material flows i.e, U flow and Through' flow. U flow: Occurs when the goods receipt and dispatch functions are located at the same end of a warehouse building. Advantages: Excellent utilization of dock resources, facilitating cross docking and yields excellent security Best suited for Cross Docking.
Layout models.Continued
Through flow layout: Through flow happens when separate loading bay facilities for outbound and shipping are provided, often at opposite end of warehouse. Disadvantages: Goods need to travel the full length of the warehouse, even for goods that have a higher throughput level. It is difficult to control the movement and also less flexible.
FIFO
Average Method
LIFO
Inspection of Materials
Purchase Order(PO) Daily Receipt Voucher Inspection Note / Inspection Cum Receiving Report (ICRR) Rejection Note Bin Card Stock Ledger Stock Identification Card
Issue of Materials
Materials Requisition Slip / Stores Requisition(SR)
Verification of Stores
Stock-taking Sheet Stock Valuation Sheet Bin Card Materials Transfer Sheet / Inter Unit Stock Transfer (IUST) Materials Return Note Stock Ledger
Materials Control
Stock Day Sheet Stock Ledger Card Kardex Card Stock Day Card: This is a statement prepared daily by the stores dept for submission to the management giving the daily operations. It also helps in ascertaining the activities of the stores dept.
Materials ControlContinued Stock Ledger Card: Provides information on stock position on daily basis and activities of stores dept. Kardex Card : It is a card used for materials control in a stores dept. It offers knowledge of up-to-date stock position and the action taken in connection with its replenishment, when ever any necessity arises.
Kardex offers a wide range of automated storage and retrieval solutions, each designed to increase productivity and maximize on floor space, allowing companies to become more competitive in their daily operations. Kardex has designed, manufactured and installed more than 140,000 solutions across a broad spectrum of industries.
Materials Handling
The movement of materials (or things) is a wasteful and expensive activity..though objectively it is a technical business function( Ralph Sims, Jr). Materials Handling is the art of preparing, placing, positioning and moving the materials with ease, speed, economy and safety.
Materials Handling..Continued
Materials Handling is the art and science involving movement, packaging, and storing of materials in any form by means of gravity, manual effort or power actuated machinery( American Materials Handling Society). 30-40% materials handling cost is added to production cost. 50% of handling time is added to production time.
Evaluation of MH System
Materials Handling Time Ratio (MHTR) Materials Handling Labor Ratio (MHLR) Materials Handling Cost Ratio (MHCR) Materials Handling Direct Labor Loss Ratio (MHDLLR) Materials Movement Operation Ratio or MMOR
SUPPLY CHAIN MANAGEMENT. The process of planning, organizing, and controlling the flow of materials and services from suppliers to end users / customers. This Integrated approach incorporates suppliers, supply management, integrated logistics and operations (Russell Morey,1997)
Primary logistics activities Transportation Facility Structure Inventory Material Handling Py. Service response logistics activities Waiting time Capacity Delivery
SCMContinued.
Integrated Logistics When logistics activities and service response logistics operate in conjunction with each other, they become Integrated Logistics. Logistics includes: - Transportation - Shipment of goods - Inventory - Warehouse management
TRANSPORTATION
Key factors(Slater,1990,Gattorna & Watters,1996) - Company characteristics - Product characteristics - Customer characteristics - Market structure - Environmental issues Ranking of various modes of transportation
High Low
Characteristics
Low value, high density, bulk products, raw materials, inland containers Small loads, point to point service flexible, more reliable, less damage, more expensive More expensive and fastest mode of freight transport, light weight, small packages, high value, perishable critical goods, less theft
Package delivery
Small packages, fast and reliable, Increased with ebusiness, primary shipping mode for internet companies like Amazon, Dell Computers
Combines several modes of shipping, truck, water and rail, containers Transport oil and products in liquid form, high capital cost, economical use, long life and low operating cost