Operations strategy and startaegic sourcing 0113
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Transcript of Operations strategy and startaegic sourcing 0113
Operations Strategy
bull What is a strategybull Corporate strategy vs operationalbull General tactical short term stratsbull Methodoly of building Op Stratsbull Dynamic markets-lined to Op Stratsbull Productservice profilingbull Op Strats Implementation
Production amp Operations Management
bull Whatrsquos operationsbull What is productionbull What are the prerequisites bull What are the functions
(Departments) required for production
bull Line FunctionService functionObjectives of productionStrategic operation mgt-
Operational strategies
Manufacturing and Service
bull What is the difference Say a dental clinic and Wheat production
bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc
bull Operations management is applicable for both Manufacturing and service
bull Combination of Mftg and Service organisations Give Examples
Manufacturing Services
What is manufacturing Service
Is it different from Service or Operationsproductions
Is it service or operations-Hospitals contract forming doctors hotels
Manufacturing ServiceEg
bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Production amp Operations Management
bull Whatrsquos operationsbull What is productionbull What are the prerequisites bull What are the functions
(Departments) required for production
bull Line FunctionService functionObjectives of productionStrategic operation mgt-
Operational strategies
Manufacturing and Service
bull What is the difference Say a dental clinic and Wheat production
bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc
bull Operations management is applicable for both Manufacturing and service
bull Combination of Mftg and Service organisations Give Examples
Manufacturing Services
What is manufacturing Service
Is it different from Service or Operationsproductions
Is it service or operations-Hospitals contract forming doctors hotels
Manufacturing ServiceEg
bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Manufacturing and Service
bull What is the difference Say a dental clinic and Wheat production
bull Tangible output and intangible output- Like a deed a performance an effort like HealthcareHotelsTrainingconsulting etc
bull Operations management is applicable for both Manufacturing and service
bull Combination of Mftg and Service organisations Give Examples
Manufacturing Services
What is manufacturing Service
Is it different from Service or Operationsproductions
Is it service or operations-Hospitals contract forming doctors hotels
Manufacturing ServiceEg
bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Manufacturing Services
What is manufacturing Service
Is it different from Service or Operationsproductions
Is it service or operations-Hospitals contract forming doctors hotels
Manufacturing ServiceEg
bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Manufacturing ServiceEg
bull Rice millbull Contract Farmingbull Automation-Tractorsbull Extraction of pulsesbull Ploughingbull Forestation-Lease-25 to 99 yearsbull BOT( BuildOperate transfer)
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Definitionbull OPERATIONS MANAGEMENT is the
effective Management of the Conversion process which converts Land Labour Capital(resources) and Management inputs into desired output goods or services
bull OPERATION MANAGERrsquos job is to manage the process of converting inputs to Desired outputs The definition of OM is then the Management of the conversion process
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Systems Approach
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Importance of Strategies
bull Strategies are made based on Basic choices of primary Basis for competition amongst the following Four Charecteristics
bull Quality
bull Cost Efficiency
bull Dependability
bull Flexibility(Response innovation)
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Startegies for Operationsbull Importance of strategies All Operation Managers
in different fields face common challenges- to Improve operations and to do with Planning organising and controlling the operation system and the conversion process (Boston University study)
bull Startegies-Where is the Industry now Where will it be in future What are the exisiting potential markets What Gaps in Market does exist Do we have the strengths in filling the gaps
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
bull Operational Strategy means adding Value to customers
Three Stages of Strategies
bull Starategic Planning- Long term
bull Tactical Planning- Medium term
bull Op Planning amp control- Short Term
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Steps to Strategic mgt
bull Scan-Ext and int environment
bull Formulation-Corporate strategyBusiness unit(SBU) startegy Functional strategy
bull Strategy implementation-ProceduresprogramsBudgets
bull Review and Control-Plan vs Actuals-midcourse corrections-Alternative strategies
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Operational Strategies
bull Operations Management Decisions-
bull Strategic (long-term) decisions
bull Well the relevant points over here are-
bull How will we make the product
bull Where do we locate the facility or facilities
bull How much capacity do we need
bull When should we add more capacity
bull Should we invest when
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Tactical (intermediate-term) decisions
bull How many workers do we need
bull When do we need them
bull Should we work overtime or put on a second shift
bull When should we have material delivered
bull Should we carry out 100 inspection
bull Should we have a finished goods inventory
bull Outsourcing
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Short term strategies(Functional)bull What jobs do we work on today or this
week
bull Who do we assign to what tasks
bull What jobs have priority
bull Leave replacement
bull Overtime for the day
bull Sudden Mc breakdownBundh
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Op strategy-link to Corporate Strategy
bull An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organizational Goals(CorporateVisionMission) Since the goals of the larger organization change over time the operations strategy must be designed to anticipate future needs
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Strategy focus- processbull 1048707 An operations strategy involves decisions that
relate to bull 1048707 the design of a process and bull 1048707 the infrastructure needed to support the
process bull 1048707 Process design includes
ndash 1) the selection of appropriate technology ndash 2) sizing the process over time ndash 3) the role of inventory in the process and ndash 4) locating the process ndash 1048707
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Strategy wrt Infrastructurebull Infrastructure decisions involve
bull 1) the logic associated with the planning and control systems
bull 2) quality assurance and control approaches
bull 3) work payment structures and
bull 4) the organization of the operations function
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Methodology of Op Strats
bull Checking The Marketsbull Out come of a Market debate- Marketing
meets product launch Road showsbull Linked to market-TrendsAnalysisbull Linked to seasonsbull Analysis-Why product sells(Focus on
aspect after analysis)bull Order winners Order qualifiers
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Dynamic marketsGeneral Stratsbull Technology strategiesbull Time to Marketbull Issues in NPINPDbull Strategic nature of process(Restrictions)bull Business Implications of process choicebull Hybrid process
External Internal Environmental Legal Safety considerations-Input to General strategies
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
ProductService profiling
bull Company basedplant based profilebull Extension of product to Service to build
USPsbull Downsizingbull Capacity Decisions
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Op Strategy Implementation
bull Evaluating Various Trade offs Alternatebull Focused Manufacturingbull Product focusprocess focusbull Make or Buy MeritsDemeritsbull Value chain approachbull JIT Leanbull CADCam CIMbull Delivering Value to customer
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Strategy Concept
bull Order qualifiers- Charecteristics of a firm or products to be considered as a source of purchase
bull Order Winners- Charecteristics of a firm that distinguish it from its competition so that it is selected as a source of purchase
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Focus on core Capabilitiesbull While making Strategies-Core strengths
bull These Core capabilities allow the firm to establish its competitive priorities in the market
bull These are skill sets in operations that differentiate itself from competitors
bull Integration of Manufacturing and service
ldquoCreate Value to customersrdquo
CAC concept-Customer activity cycle
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Criteria for Buy
bull High investment reqd to makebull Longer time for creation of new facilitybull Cost considerations-costlier insidebull No skill sets available-longer gestationbull Better top linebottom line with existing facilitybull Customized earlier by customerbull Approvals against standards alreadybull Deviation from core strengthsbull Better demands on flexibility on cost deliverybull Lower inventoryworking capital costsApproach Cost analysis economic analysis break even
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Packaging as a Op strategybull Design
bull Statutory markings
bull Ease of handling and Usage
bull ReheatRepack
bull Health amp safety+ Food safety amp standards Authority reqts
bull Transportation
bull Recyclable
bull Automatedsemiautomatic-CostHealthshelflifesealing(N2 Vaccum)
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Aspects of OP Strategies
bull Inventory control
bull Quality Control
bull Production schedulecontrol
bull Productivityop cost control
bull Constructing control systems
bull Implementing and operating control systems
bull Modifying policies and designs
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
STRATEGIC SOURCING
By
Sripathy KR
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Strategic Sourcingbull Difference bw Strategic sourcing and
Normal Sourcing- Strategic function is Dynamic decision making based on inputs- more inputs and info-better decision making
bull Long term Medium Term and short termbull Long term-policies cost down make or
buy decisions etc- Done on annualised and or 2 to 3years basis
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Long term mid and short term
bull Midterm strats- Qtrly half yearly even monthly-linked to Annual strats
bull Short term- Daily weekly within a month keeps changing depending on dynamic situations- cash purchase alternate transport anticipate strikes bundh etc Keep updated news on a daily basis more input info required more dynamic to meet short term targets etc
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Objectives of sourcing mgt
bull Profit maximizationbull Maximization of Customer servicebull Technology innovations to overcome
resistance to growth and competitionbull Good employer employee relationsbull Meet social objectives
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Policies and Procedures
bull Policies to be in line with Vision and Mission of company
bull Supplier friendlybull Provide for improving relationshipbull To keep users and Suppliers happybull Procedures- Systematic way-transactions
Negotiations PO reviews Vendor rating Receipts Inspection Handling rejections CAPAs Selection of vendors completion of recordshellip
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Soucing Mgt-Main Objectives
bull The five R s(material Qty Place cost time)bull Continuity of suppliesbull Reducing overall cost of buying-use scientific
tools and techniquesbull Establish Buyer-supplier relationship(partner)bull Maintain ethical practicesstandards
bull Effective control of Inventory-smooth cash flow
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
SourcingPurchase Functionbull Selection of suppliersbull Analysis of costsbidtendersbull Price negotiations-Structure of cost-
Invoice+transportation+inspection+ordering costs
bull Purchase order process
bull Follow up- communications-scheduleECOsmodificationsstoppagesinspection arrangements
bull IQC follow up-storingbull Post buying activitiesMaster BOMsMIS
generation
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Purchase order Review
bull POContractrate contract Work ordersbull Conditions of contract
bull FOBCIFFORDDP DDU taxation structure Payment terms delivery date breachcancellation damages ClaimsInspection terms Acceptance criteria Vendor rating Amendments Samples Forms for transithellip
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Sourcing Process
bull Selection of Suppliersbull Analyzing Bids Enquiries float processbull Price Negotiationsbull Budgeting and Master creationbull Issuance of PO-What is needed Termsbull Follow up Actionsbull Cost Analysis and Market studybull Price catalogs information library
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Selection of Suppliersbull Financial Capabilitybull Manufacturing CapabilityCapacitybull Total Value of Businessbull Service Facilitybull Business reputation and other customersbull Production processes and Specifications to
which manufacturedbull Rating-Quality Delivery Ethics promptness
Competitive bidsbull Sustenance capacity-Scale up capability
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Critical Success Factors
bull Selectionbull Old supplier or newbull Long term associationbull Price negotiations Transparencybull Systems and processes from either sidebull Consolidationbull Logistics improvementbull Avoidreduce premium cost
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Objectives Scope Responsibility Limitations
bull Centralized Buying- Advantagesndash Develops specialized Knowledgendash Better performance
ndash Diverts influence and domination of other depts lead to greater profitability
ndash Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units- Local buying increases
- No flexibility for designdevelopment and cause delays
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
LimitationsChallenges for Smooth function
bull Resourcebull Support from other depts for evaluation Quality Impr etcbull Cash FlowSupplier satisfactionAdvance paymentsbull Supplier payments in timebull No proper credits from supplierbull Establish relationship-till such time constrained
conditionsbull StrikesHolidays Weather conditions floods
communication breakdownsHurricanesbull Price limitationsbull Last minute rush By departmentsbull Closures of trading agencies suppliersbull Tier 34 buying from unknown sourcesbull One time requirementsSmall quantum requirements
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
SCMSourcingpurchase is an Emerging Profession
bull Important functionbull Intelligence is requiredbull Market knowledgebull Cost consciousnessbull Business Acumenbull Knowledge of Technology amp updatesbull Ability to get along with peoplebull Negotiating skillsbull Analytical skillsbull Project management knowledgebull Lean Management skills
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Stores and Inventory Mgtbull Storage devicesmethods
bull Part no-codification
bull Material handling
bull Whatrsquos inventory and why manage
bull Production inventory MRO(maintenancerepairampOperating supplies) In process inventoryFG Inventory In transit
bull VMI Inventory liability
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Codificationbull Why codificationclassificationbull Grouping and clear gradingssub classificationsbull Levels in Product file
bull Avoids duplicate stocks
bull Help standardisation and substitutebull Reduction of varieties and sizesbull Faster retrievalAggregate planningbull Proper accounting of issues amp inventory control
bull Accuracy in commn and better communication with vendors
bull Easy Computerisationparts search MRPERP
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Classificationsgroupingbull Raw materialsbull Componentsbull Sparesbull Consumablesbull Toolseqptbull Packing materialsbull WIP FG Hardwaresoftwarebull Mechanical Molded Plastics bull Sub Assembly HLA Systemsubsystem bought
outmftrd import localsemi finished project reqt
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Stores OrganisationTypes of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people material OA safety)
Geography- warehouses
Geography-Distribution
FIFO LIFO and controls
Input Package Design SPQ issue patterns
Matll Handling friendly
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Inventory Costsbull Ordering Costs
bull Carrying costs-obsolescencepilferagewastagedeteriorationfinancialtaxesfrieghtinsuranceimport clearance costs
bull Capital-interest landbldgstorageStorage space- storage conditions
bull matl handling
bull Inventory service-Handling stock levelswarehousingoutsourcingmaintenance
bull Inventory risks-storage losses obsolescence damagedeterioration
bull Out of stock-back ordering premium lost prodnbull Capacity costs-Overtimeidletime
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Various MEANS of inventory control
bull Fixed order Quantity(MOL)bull Fixed interval systembull Two Bin systembull Optional replenishmentbull MRP- monthlyqtrlybull ABC Analysisbull Forecasting based on Trendsbull JIT Kanban Pull Systembull Safety stockBuffer stock incl VMI
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Role of IT in SCMbull EDI network-Vendor customer Branch
office Distributors Transportation Retailer Govt agencies etc
bull ERPbull E- procurementbull E-Commerce-Online mktg e-auctions e-
bid online servicing on line inventory status etc- Go Global
bull Support systems-RFID Barcode Smartcard GPS Condition monitoringhellip
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control
Safety Managementbull Safety policybull Safe work procedures (Precautionscare) storagehandlingbull Safety Training Group Meetings first aid trg
bull Accidentincident reportinganalysis-Also Near Miss accidents logginganalysis
bull In house safety rulesregulationsguide for Sub contractors service providers safety week PPEs DosDonts-posters
bull Safety promotion Facilitation of proper toolsequipmentbull Safety Auditinspectionbull Maintenance regimebull Hazard analysiscontrol mitigation
bull Occupational healthsafety proceduresprograms
bull Emergency preparednessamp Documentation and control