You can move a mountain and you can Whatever the mind of man can conceive and believe

it can achieve. When you believe I Can Do It, The How to Do It Develops!!

Company Suppliers
Supply Chain Management

Customers

Supply Side

Demand Side

Supply chain management is a set of approaches used to efficiently integrate suppliers, manufacturers, warehouses, and customers so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service-level requirements.

INBOUND LOGISTICS

OUTBOUND LOGISTICS

- Demand forecasting and planning

- Materials planning and management - Inventory management and control - Vendor development & management

- Dispatch planning and scheduling

- Distribution - Warehouse management - Order Fulfillment

- Purchasing and sourcing

- Customer Service

MANUFACTURING LOGISTICS
- Capacity planning - Production planning and scheduling - Operations

- Manufacturing

Any organisation has several resources these include 4 Ms namely MEN, MONEY, MACHINES, MATERIALS. It is the function of Another M namely MANAGEMENT optimally plan & utilise these resources within the framework of 2 Ts namely TIME, TECHNOLOGY & Environmental Forces so as to produce products or services of acceptable quality (for customer satisfaction) and a reasonable amount of profit. While any two organisations may have identical resources of 4 Ms at their disposal, one may produce good profits and the other may not do as well or even make losses. What is the ingredient that is causing this difference?

Inventory (Raw Materials, Components, Work in Process, Finished Goods, MRO Items) may be defined as usable but idle resource which has an economic values awaiting for further use or process. It contributes anything between 40%-60% of cost of any product. Inventory carrying cost is very high (27%-33% in the Indian Context). Inventory Control is a process of deciding what and how much of various items are to be kept in stock. It also determines the time and quantity of various items to be procured. Why Inventory Control?? 1. Minimize financial Investments in Inventory

2. To Facilitate Production Operations

3. To Avoid Losses from Inventory Obsolescence 4. To Improve Customer Service

Buying Materials
Of Right Quality

At Right Place
Purchase Goals From Right Source At Right Price

In Right Quantity

At Right Time

MD

Dir

Dir

Dir

COF

Production In charge Supervisor 1 Supervisor 2 Supervisor 3 Supervisor 4

Manager (Import & Export) Accounts Personnel

HOD (Stores & Purchase)

Storekeeper 1

Storekeeper 2

Administrative Staff

MD Dir

HOD (Stores & Purchase)

Storekeeper (Raw Materials)

Storekeeper (Sub Contracting Comp.)

Storekeeper (Consumables & Misc.)

Storekeeper (Bought out Components)

Asst Asst

Asst

Asst Asst

Asst Asst

Asst

Material Requisition

Enquiry

Production
Supply of Material Quotation

Supplier

Stores & Pur. Plant A

Stock Transfer

Purchase Order

PO Copy GRN, Invoice

Plant B
Component Process

Stock Statement Payment Advise Copy

Accounts H.O.

Payment

Follow Up

Material Requisition

Enquiry

Plant
Goods Arrival Info. Follow Up GRN & Invoice

PO Copy

Domestic Supplier
Payment Follow Up

Quotation

Purchase Order

HO

Enquiry Quotation Purchase Order Follow Up Payment

Overseas Supplier

 Calculation of Material Requirement of upcoming financial year in advance i.e., first week of January every year based on yearly production schedule. Release of tentative yearly purchase schedule (blanket order) to the supplier.

Confirmation of monthly requirement, release of purchase orders (taking into consideration the stock lying in store, materials in transit or in process with sub contractor and quantity on order) for upcoming month in view of lead time. Weekly review of stock at par with production schedule
Daily review of stock level and replenishment

Maximum

Reorder Units In Stock

Average

Average Cycle Inventory Safety Inventory

Minimum Lead Time

Time (in Days)

Lot Size Reorder Point Policy Fixed Order Interval Scheduling Policy Optional Replenishment Policy

Inventory Related Cost

Ordering Cost Inventory Carrying Cost Stock Out Cost

Economical Ordering Quantity (EOQ Model) to minimize ordering cost and inventory carrying cost
EOQ= 2AS Cost of Cover Annual Requirement of an item Ci Where Q= Qty per Order A= Annual Requirement in Unit Total Cost

Inventory Carrying Cost

S = Ordering Cost per Order

C = Cost per Unit or Item i = Inventory carrying Cost expressed as % of value

Ordering Cost EOQ Qty Per Order (Q)

Identification and grouping of Items depending upon Value of item (cost per unit) as HML, Criticality as VED, Usage frequency as FSN, Usage Value as ABC, Availability Position as SDE.
100 90 75 Cumulative Percent Value

C B

10

25 Cumulative Percent Number

100

Where are we going wrong??

Vendor Rating Index (Quality)

Vendor Rating Index (Delivery) Rush Order Cost (Index) Inventory Turnover Ratio

= No. of Lots Rejected

No. of Lots Received = Delivery On Schedule Total No. of Deliveries = Price Paid for Rush Order Material Price Normally Paid for this Material = Annual Sales

(Finished Goods)
Out of Stock Index

Average Inventory
= No. of Times of Out of Stock No. of Times Requisitioned

End Thought
The presented Perspective for Year 2010 can only be achieved by TEAM Work!!

Together
Everyone

Achieve
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