An Overview Of MATERIALS MANAGEMENT

By Manoj Sah, AGM (Corp Materials)

An Overview Of MATERIALS MANAGEMENT

ORGANIZATIONAL SET UP Organizational set up

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Based On Location & Function:NTPC Example:

CMD

ED(CC&M)

ED(REGION)
GM

GM(CM)

DGM(C&M)
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An Overview Of MATERIALS MANAGEMENT

Procurement & Works Policy

This policy lays down the broad guidelines to be followed in the procurement of Materials & Services The policy has been formulated for centralized policy making & decentralized execution Sustaining growth and achieving global standards require quality, clarity and speedy decision making in any organization This requires empowerment of executives at various levels DOP is the most important tool of empowerment

Delegation Of Powers

An Overview Of MATERIALS MANAGEMENT

Objectives of Materials Management

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Primary Objectives:

Provision of Materials:Procurement, Storage & Issue Right Materials at the Right Cost at Right Time Optimization of Inventory:High Capital Turn Over Ratio New Supply Sources Process Simplification & Standardization Quality Control Value Analysis Co-Ordination
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Secondary Objectives:

An Overview Of MATERIALS MANAGEMENT

MATERIALS MANAGEMENT FUNCTIONS:

Materials

Planning Procurement Stores Management Inventory Control Risk Management Scrap & Surplus Disposal
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An Overview Of MATERIALS MANAGEMENT

Integration of Materials Management Functions: It is the Coordinated effort to plan, source, procure, move, store and control inventory in an optimum manner so as to provide predecided service to the User Departments at the minimum cost. Various Functional Areas like Purchase, Stores, Inventory Control and Risk Management will thus have to work in tandem to meet to the desired objectives.
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An Overview Of MATERIALS MANAGEMENT

Advantages
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Of Integrated System:

Better Accountability Co-Ordination Performance

An Overview Of MATERIALS MANAGEMENT

MATERIALS PLANNING: Based on forecasts and generation plans : Estimating the requirements of spares & other items: Preparing Materials Budgets Coordinating for implementation of policies & procedures Scheduling Purchase Orders to optimize inventory
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An Overview Of MATERIALS MANAGEMENT

PROCUREMENT FUNCTIONS : Selection of Source Of Supply Finalization of terms of Purchase Placement of Purchase Orders Follow Ups Maintenance of Cordial Relations with Suppliers Vendor Evaluation
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An Overview Of MATERIALS MANAGEMENT

Various Parameters For Effective Purchase Management

Right Price

Proper Planning Tendering Negotiations Proper Specifications Technical Data , Drawing & Quality Plan Sampling Standardization(Item/Product) Re Order Level (ROL) Lead Time Analysis
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Right Quality

Right Time

An Overview Of MATERIALS MANAGEMENT

Various Parameters For Effective Purchase Management

Right Source

Vendor Rating Dependability Purchase Research Standardization (Source) Price Structure & Discounts EOQ Legal Aspects Cost Analysis Of Transportation & Logistics
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Right Quantity

Right Contract

Right Transportation

Right Attitude

An Overview Of MATERIALS MANAGEMENT

Purchase Systems/Procedures

Pre Purchase System:

Purchase Requisition Checking Requisition for Specs ,QAP etc Vendor Selection Calling Tenders Evaluation Of Tenders Timely Order placement on technically acceptable lowest bidder-L1 if necessary after negotiation Detailing Terms & Conditions of the Order Binding On Supplier Accepting the Order

Purchase Order System:

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An Overview Of MATERIALS MANAGEMENT

Purchase System/Procedures
Post

Purchase Order System

Follow Up on selective basis (Critical Items)

Tracking Of Consignments Invoice Checking Coordination with Finance For Retirement Of Bank Documents etc, LC Opening & Payments to Vendors
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An Overview Of MATERIALS MANAGEMENT

Stores Management

Objective:Providing Right Materials to the user in required quantity at the shortest possible time: Responsibilities: Physical Receipt , Inspection & Custody of Materials Issue to Users Preservation Minimization Obsolescence Fixing Transportation Contracts
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Import Clearance Group - CMM

RECEIVE PURCHASE ORDER CATALOUGE, TECH W-UP FROM PROJECT

REGISTRATION & DOCUMENTATION BY

IMPORT

CLEARANCE GROUP & FOLLOW UP WITH

1. I/L, LC, BSI , BRO, CONSOLE 2. INVOICE, HAWB 3. PRE-ALERT, HAWB, MAWB, PO. REF, SUPPLIER SEEK D O

PROJECT SUPPLIER CARRIER

2 DAYS
ARRANGE DUTY FROM NTPC- IF

CMM - ICG
1 DAYS

1 DAYS

SEEK DUTY FROM CUSTOMS

C & F AGENT
TO DEPOSIT DUTY, OBTAIN OUT OF CHARGE FROM CUSTOMS COLLECT CARGO FROM AIRPORT AUTHORITY DOL DO H/O BOE DUTY O/C DOC TOTAL DAYS

1 DAY 1 DAY

15 ESTIMATED C LEARANCE DAYS ARE BASED ON THE PRESUMPTION THAT ALL RELATED DOCUMENTS ARE COMPLETE & FREE FROM DESCRIPENCIES

2DAYS 1 DAY

2 DAYS 2DAYS

2 DAYS

1 DAY

= 10 DAYS

An Overview Of MATERIALS MANAGEMENT

INVENTORY CONTROL:
Setting

Inventory Levels ABC, XYZ, and other classifying techniques Fixing EOQ(Economic Order Quantity) Setting Safety Stock Levels Conducting Lead Time Analysis Materials Codification & Computerization Management Reporting
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An Overview Of MATERIALS MANAGEMENT

What is risk?

Risk is a chance of loss. Risk is the possibility of loss. Risk is uncertainty. Risk is the dispersion of actual from expected results. Risk is probability of any outcome being different from the one expected. Uncertainty regarding a loss.

Management Organizing of activities and controlling the use of resources in such a manner so as to achieve the companys goal.
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An Overview Of MATERIALS MANAGEMENT

Risk exists whenever the future is unknown.

fire

Risks
lightning

accident

Business

flood

Exposures
Risk Management to efficiently minimize the adverse impact of risks on the achievement of the companys goals.
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RISK MANAGEMENT PROCESS

Identification
NO

IS THERE A RISK
YES HAS IT BEEN MEASURED YES IS IT SIGNIFICANT NO DISREGARD YES AVOID / ELEMINATE YES CAN IT BE AVOIDED OR ELIMINATED NO CAN IT BE REDUCED YES IS RESIDUAL RISK SIGNIFICANT NO YES IS IT A CATASTROPE RISK NO CAN IT BE RETAINED YES YES NO DISREGARD NO

ANALYSE RISK

Evaluation

Control

Financing
RETAIN RISK INSURE

NO TRANSFER OTHER

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An Overview Of MATERIALS MANAGEMENT

RISK MANAGEMENT:
Safety

aspects especially in Storage Insurance

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Mega Risk Policies

Fire All Risks, MBD(Machinery Break Down), FLOP(Fire Loss Of Profit), MLOP(Machinery Loss Of Profit), Burglary

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Marine Special Contingency( Loco & Wagons) CPM(Construction Plant & Machinery)
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An Overview Of MATERIALS MANAGEMENT

Surplus & Scrap Disposal: Identification Of Surplus Materials Identification Of Scrap Materials Fixing up Reserve Price Taking Periodical Disposal Action

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An Overview Of MATERIALS MANAGEMENT

Vendor Development :

Need For Development: to limit dependence especially on overseas OEM to minimize long delivery schedule to minimize the cost to curtail monopolistic practice

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An Overview Of MATERIALS MANAGEMENT

Vendor Development Procedure: Identification of Materials for Development

Imported Spares High Consumption Spares High Value Spares Spares with Long Delivery Schedule Spares phased out by the manufacturer Spares of Non Critical application & of non sophisticated technology Development of Specifications & Drawing And QAP

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An Overview Of MATERIALS MANAGEMENT

Vendor Development Identification Of Source for development

Press

Tenders Market Survey Experience of other Projects Sub Vendors Of Main Supplier (OEM/OES) Organizing Work Shops & Exhibitions

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An Overview Of MATERIALS MANAGEMENT

Vendor Development Submission of Samples by the Vendor & trial run with the samples Feedback to vendor including technical inputs o Final Clearance & Acceptance of Developed Spare
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An Overview Of MATERIALS MANAGEMENT

New Developments e Procurement ERP

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E-Commerce Markets and Applications

Education Electronic Auctions E-Shopping

E-Banking

Internet

E-News Papers

E-Marketing E-Searching Games E-Health Care

Ticketing Movies

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E-Business Mathematical Equation

EB = EC + BI + CRM+ SCM + ERP

Where

EC=E-Commerce BI=Business Intelligence CRM=Customer Relationship Management SCM=Supply Chain Management ERP=Enterprise Resource Planning
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The Building Blocks

Transaction Security Merchant Account Web Site Or Hosting Account Search Engine Optimization Payment Gateway

High Availability

Shopping Cart

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Life Cycle of a Tender in ERP/SAP

Step1: Create Requisition ME 51 Step2: Release of Requisition ME 54 Step2: Create RFQ ME 54 Step4: Release RFQ ME 45 Step5: Maintain RFQ ME 47 Step6: Price Analysis ME 49 Step7: Create PO ME 21 Step8: Release PO ME 28

E Tendering Cum Reverse Auction

Technology for pulling the data from ME-51 and pushing to ME-21 to be detailed out.
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An Overview Of MATERIALS MANAGEMENT

THANKS

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