7/28/2019 Supply Chain Management by Nagesh Talekar
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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!!
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Suppliers CustomersCompany
Supply Chain Management
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.
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INBOUND LOGISTICS
- Demand forecasting and planning
- Materials planning and management
- Inventory management and control
- Vendor development & management
- Purchasing and sourcing
OUTBOUND LOGISTICS
- Dispatch planning and scheduling
- Distribution
- Warehouse management
- Order Fulfillment
- Customer Service
MANUFACTURING LOGISTICS
- Capacity planning
- Production planning and scheduling
- Operations
- Manufacturing
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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 2Ts
namelyTIME, 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 othermay not do as well or even make losses. What is the ingredient
that is causing this difference?
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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 Inventory2. To Facilitate Production Operations
3. To Avoid Losses from Inventory Obsolescence
4. To Improve Customer Service
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Purchase
Goals
In Right Quantity
At Right Price
At Right Time
Of Right Quality
At Right Place
From Right Source
Buying Materials
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MD
Dir Dir Dir COF
Manager
(Import & Export)
Accounts Personnel
Production
In charge
HOD
(Stores & Purchase)
Administrative
Staff
Supervisor 1
Supervisor 2
Supervisor 3
Supervisor 4
Storekeeper 1 Storekeeper 2
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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
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Stores & Pur.
Plant A
Production
Material Requisition
Supply of
Material
Supplier
Enquiry
Quotation
Plant B
Stock Transfer
Component Process
Purchase Order
Follow Up
Accounts
H.O.Payment Advise Copy
Stock Statement
GRN, Invoice
PO CopyP
ayment
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HO
Plant
Material Requisition
PO Copy
Domestic
Supplier
Enquiry
QuotationGR
N&
Invoice
Follo
wUp
Purchase Order
Follow
Up
Overseas
SupplierFollow Up
Purchase Order
Quotation
Enquiry
Paymen
t
GoodsArriva
lInfo.
Payment
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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
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Lead Time
Maximum
Reorder
Minimum
Time (in Days)
UnitsInSto
ck
Safety
Inventory
Average Average
Cycle
Inventory
Lot Size Reorder Point Policy
Fixed Order Interval Scheduling Policy
Optional Replenishment Policy
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Inventory Related Cost
Ordering Cost Inventory Carrying Cost Stock Out Cost
Economical Ordering Quantity (EOQ Model) to minimize ordering cost and
inventory carrying cost
Qty Per Order (Q)
Total Cost
Inventory
Carrying Cost
EOQ
Ordering CostCostofCover
AnnualRequire
mentofanitem
EOQ= 2AS
Ci
Where
Q= Qty per Order
A= Annual Requirement
in Unit
S = Ordering Cost per Order
C = Cost per Unit or Item
i = Inventory carrying Cost
expressed as % of value
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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
10 25 100
A
B
C
CumulativePercentValue
Cumulative Percent Number
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Where are we going wrong??
Vendor Rating Index (Quality) = No. of Lots Rejected
No. of Lots Received
Vendor Rating Index (Delivery) = Delivery On Schedule
Total No. of Deliveries
Rush Order Cost (Index) = Price Paid for Rush Order Material
Price Normally Paid for this Material
Inventory Turnover Ratio = Annual Sales(Finished Goods) Average Inventory
Out of Stock Index = No. of Times of Out of Stock
No. of Times Requisitioned
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The presented Perspective for Year 2010 can only be
achieved by TEAM Work!!
End Thought
Together
Everyone
Achieve
More