Supply Chain Management NOTES SLIDES.pptx

Supply Chain Management

1. TOPIC ONE

2. SUPPLY CHAIN MANAGEMENT AND PURCHASING FUNCTION Introduction to supply chain management Internal and External supply chains Elements (Scope) of Supply chain management Supply chain management decisions Meaning of purchasing Importance of purchasing function Objectives of the purchasing department Relationships between purchasing department and production department Internal Organisation of purchasing department

3. INTRODUCTION TO SUPPLY CHAIN MANAGEMENT supply chain is a network of materials, information, and services processing links with the characteristics of supply, transformation and demand. Also, Supply Chain Management can be defined as the management of flow of products and services, which begins from the origin of products and ends at the product’s consumption. It also comprises movement and storage of raw materials that are involved in work in progress, inventory and fully furnished goods.

4. TYPES OF FLOW IN SUPPLY CHAIN MANAGEMENT Material flow Information/Data flow Money Flow

5. SCOPE OF SUPPLY CHAIN MANAGEMENT Minimizes Operating Cost Boosts Customer Service Enhance Financial Position Manages Distribution Bring coordination among partners Inventory Management Supplier Management

6. PURCHASING DEPARTMENT Purchasing is the first phase of Materials Management. Purchasing means procurement of goods and services from some external agencies. The object of purchase department is to arrange the supply of materials, spare parts and services or semi-finished goods, required by the organisation to produce the desired product, from some agency or source outside the organisation.

7. Importance of Purchasing Purchasing function provides materials to the factory without which wheels of machines cannot move. A one percent saving in materials cost is equivalent to a 10 percent increase in turnover. Efficient buying can achieve this. Purchasing manager is the custodian of his firm’s is purse as he spends more than 50 per cent of his company’s earnings on purchases . Purchasing can contribute to import substitution and save foreign exchange. Cont ,

8. Increasing proportion of one’s requirements are now bought instead of being made as was the practice in the earlier days. Buying, therefore, assumes significance. Purchasing is the main factor in timely execution of industrial projects. Materials management organisations that exist now have evolved out or purchasing departments .

9. Objectives of Purchasing To pay reasonably low prices for the best values obtainable, negotiating and executing all company commitments. To keep inventories as low as is consistent with maintaining production. To develop satisfactory sources of supply and maintain good relations with them. To secure good vendor performance including prompt deliveries and acceptable quality . Cont ,

10. To locate new materials or products as required. To develop good procedures, together with adequate controls and purchasing policy. To implement such programmes as value analysis, cost analysis, and make-or-buy to reduce cost of purchases. To secure high caliber personnel and allow each to develop to his maximum ability .

11. TOPIC TWO

12. QUALITY AND QUANTITY DETERMINATION

13. Quality is a measure of excellence or of a state of being. It describes something, either of how it was made, or how if is as compared to others. Quantity, on the other hand, is the extent, size, or sum of something .

14. Perspectives OF Product quality Customer: Product quality to a buyer will refer to its appeal, functionality, durability, and reliability of a product. Manufacturer: Quality will be viewed as engineering, the type of raw materials used and packaging practices used in the production of a specific good. Product: This is more of an objective test of a product’s durability and reliability.

15. Factors affecting product quality Use of production technology Skill set, tools, and experience of labor Availability of needed raw materials Storage facilities Carriage or transport facility.

16. Components of product quality Quality Planning Quality Control Quality Assurance Quality Improvement

17. Fitness for use Features that meet consumer needs and give customer satisfaction Freedom from deficiencies or defects Conformance to standards Value or worthiness for money Reliable and dependable Quality of design Quality conformance to needs and regulations Proper storage Safety Characteristics of product quality

18. Specification A specification often refers to a set of documented requirements to be satisfied by a material, design, product, or service. A specification is often a type of technical standard. There are different types of technical or engineering specifications, and the term is used differently in different technical contexts.

19. Purpose of specifying materials Material specification eliminates ambiguity in sourcing hence minimizing turnaround time. Material specification enables correct materials procurement and delivery. Material specification enables the buyer to have standard baseline for comparing prices and quality. Material specification enables the supplier to easily pick the items from the shelves for distribution or deliver in a timely manner. Cont ,

20. Material specification allows the receiver of the materials easy time to check, verify and acknowledge receipt with minimum time frame. Material specification enables easy inventory or hand count of stocks or materials due clear item grouping as per the brand or specification, example" fanta orange and fanta passion". Material specification enables the buyer to raise correct delivery note and invoicing. Material specification reduces chances of fraud on procurement documentation during delivery and invoicing. Material specification eliminates double supply and double invoicing thus curbing fraud.

21. Features of a good specification Consistent: Sufficient (Maximal Behaviour): Necessary (Minimal Specification): Checkable : Accurate , clear, concise and unambiguous Relevant and objectively support the application or intended use Must allow for measurement, performance testing and acceptance Identify applicable commercial standards .

22. Methods of materials specification Performance Specification Design Specification Industry Standard Brand Name or Equal Combination Specification

23. QUANTITY DETERMINATION Quantity or amount is a property that can exist as a multitude or magnitude, which illustrate discontinuity and continuity. Quantities can be compared in terms of "more", "less", or "equal", or by assigning a numerical value multiple of a unit of measurement.

24. Factors in determining quantity of materials to buy The usual consumption for a particular period is to be decided. The storage space available in the organisation will be given due importance. The amount of finance available should be taken into account before effecting purchase. The minimum and maximum level of stock level will be determined in advance.

25. Keep operations running. Lead time. Hedge . Quantity discount. Unreliable Supply. Smoothing requirements . Meet customers demand.

26. Methods of Purchasing Materials Purchasing by Requirement: Market Purchasing: Speculative Purchasing: Purchasing for Specific Future Period: Contract Purchasing: Scheduled Purchasing: Group Purchasing of Small Items: Co-operative Purchasing:

27. TOPIC THREE

28. DETERMINATION OF PRICE AND RIGHT TIME TO BUY

29. A price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services. A price is influenced by production costs, supply of the desired item, and demand for the product. A price may be determined by a monopolist or may be imposed on the firm by market conditions.

30. Importance of determining price of materials   Flexible Element of Marketing Mix Right Level Pricing Price Creates First Impression Vital Element of Sales Promotion

31. Factors influencing prices of materials Product Cost The Utility and Demand Extent of Competition in the Market Government and Legal Regulations Pricing Objectives

32. pricing objectives of any business Profit Maximization   Obtaining Market Share Leadership Surviving in a Competitive Market   Attaining Product Quality Leadership Marketing Methods Used

33. Methods of pricing materials Market Price Inflated Price Standard Price Fixed Price Discounted cash flow / net present value Value comparison

34. determining right time to buy

35. Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, and into the future.

36. Factors in determining right time to buy Lead Time Location Inventory Trained employees Established customer base Existing cash flow(sufficient to pay expenses and make a living ) Cont ,

37. The industry itself (future market for product/service) Competition Financial records and representations by seller Your plans for improvement

38. TOPIC FOUR

39. SOURCING