1. 2. 3. 4. 5. 6. 7. 8. 9.

1. 2. 3. 4. 5. 6. 7. 8. 9.

Materials Planning Purchasing Receiving -Inward Materials Check Handling and Transportation Storage and Inventory Control Standardization and Cost Control keeping proper records Analyzing and reporting Scrap and surplus Disposal

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Save cost wherever possible! Accelerate inventory turnover! Ensure Continuity of supply! Insist consistency of quality! Utilize the resources efficiently! Reduce damages and obsolesce! Standardize and improve Products ! Maintain harmony with

Measure everything! Use what is exactly Required! Reducing wastage is equal to creating values!

There is a science for everything and only one best way of doing things.

=

The average time required to convert materials into finished goods and then in to Cash. Inventory conversion period = Inventory/Sales per day For Temple Bay ICP = 60,00000/10,00000= 06 days

% of total annual consumption value

100 In Most of the organization 80% of the consumption 90 value is Represented only by 15 to 20% of the items, 80

Better to control this A class items first

70

Policies for A Items

60 50 40 30 20 10 0

A

Only exact quantities to be procured Have more than one source Centralize procurement Individual postings , accurate records Continuous checks, low safety stock Reduce Lead Time: Regular follow 10 up20 30 40 50 60 70 80 90 Very B strict consumptionCcontrol Very % accurate of total requirement number of items forecasting!

100

High, Low Medium value

Assess storage and security requirements To keep control over consumption at the departmental head level Determine the frequency of stock verification To evolve buying policies to control purchases To delegate authorities to different buyers to make petty cash purchases.

Vital, Essential Desirable Based on criticality. Vital – production would come to halt. Essential – whose stock out cost is very high. Desirable – items which do not cause any immediate loss of production

o o o o o o o

Scarcity-Short in supply Longer lead time Geographical location of suppliers Available but not easy to procure Reliability of suppliers Best to procure once in a year Reduce the effort and expenditures

Important assumptions Demand is known, constant, and independent Lead time is known and constant Quantity discounts are not possible Only variable costs are setup and holding Stock outs can be completely avoided

Q *= optimal order quantity Q = order quantity, D = annual demand quantity of the product P = purchase cost per unit C = fixed cost per order H = annual holding cost per unit

Use duly identified color codes -Search Free Follow Banking Method in postings Issue physical using FIFO method. Costing weighted average Methods. Verify stock of ten items daily random Verify stock of ten items fast moving weekly Verify stock of every item monthly.

A supply chain in a organization will comprise of a network of facilities to 





Procure the material from the vendors Transform the material to the end product Distribute the finished product to the Consumer

Standardization More the suppliers more the variations! Two unreliable suppliers are worse than One Reliable supplier! Overcome feeling of insecurity! Initiate key supplier acct management! Develop the reliable supplier! Develop self-certified suppliers to reduce the inspection levels.

Moreover If you cut the payroll cost employee will cry

But if you cut material cost material will not cry… And it is very difficult to cut the overheads!

Reduce scrap inventory Dispose scrap at regular intervals Segregate scrap properly to generate more value Take care for the environment