An Overview of Materials Management: by Manoj Sah, AGM (Corp Materials)

An Overview Of MATERIALS MANAGEMENT
By Manoj Sah, AGM (Corp Materials)
ORGANIZATIONAL SET UP Organizational set up

*
Based On Location & Function:NTPC Example:

CMD
ED(CC&M)
ED(REGION)
GM
GM(CM)
DGM(C&M)
2
Procurement & Works Policy

This policy lays down the broad guidelines to be followed in the procurement of Materials & Services The policy has been formulated for centralized policy making & decentralized execution Sustaining growth and achieving global standards require quality, clarity and speedy decision making in any organization This requires empowerment of executives at various levels DOP is the most important tool of empowerment
Delegation Of Powers

Objectives of Materials Management

*
Primary Objectives:
Provision of Materials:Procurement, Storage & Issue Right Materials at the Right Cost at Right Time Optimization of Inventory:High Capital Turn Over Ratio New Supply Sources Process Simplification & Standardization Quality Control Value Analysis Co-Ordination
4
Secondary Objectives:

MATERIALS MANAGEMENT FUNCTIONS:

Materials
Planning Procurement Stores Management Inventory Control Risk Management Scrap & Surplus Disposal
5
Integration of Materials Management Functions: It is the Coordinated effort to plan, source, procure, move, store and control inventory in an optimum manner so as to provide predecided service to the User Departments at the minimum cost. Various Functional Areas like Purchase, Stores, Inventory Control and Risk Management will thus have to work in tandem to meet to the desired objectives.
6

Advantages
*
Of Integrated System:
Better Accountability Co-Ordination Performance
MATERIALS PLANNING: Based on forecasts and generation plans : Estimating the requirements of spares & other items: Preparing Materials Budgets Coordinating for implementation of policies & procedures Scheduling Purchase Orders to optimize inventory
8
PROCUREMENT FUNCTIONS : Selection of Source Of Supply Finalization of terms of Purchase Placement of Purchase Orders Follow Ups Maintenance of Cordial Relations with Suppliers Vendor Evaluation
9
Various Parameters For Effective Purchase Management
Right Price

Proper Planning Tendering Negotiations Proper Specifications Technical Data , Drawing & Quality Plan Sampling Standardization(Item/Product) Re Order Level (ROL) Lead Time Analysis
10
Right Quality

Right Time

Various Parameters For Effective Purchase Management
Right Source

Vendor Rating Dependability Purchase Research Standardization (Source) Price Structure & Discounts EOQ Legal Aspects Cost Analysis Of Transportation & Logistics
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Right Quantity

Right Contract
Right Transportation
Right Attitude
Purchase Systems/Procedures
Pre Purchase System:

Purchase Requisition Checking Requisition for Specs ,QAP etc Vendor Selection Calling Tenders Evaluation Of Tenders Timely Order placement on technically acceptable lowest bidder-L1 if necessary after negotiation Detailing Terms & Conditions of the Order Binding On Supplier Accepting the Order
Purchase Order System:

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Purchase System/Procedures
Post
Purchase Order System
Follow Up on selective basis (Critical Items)
Tracking Of Consignments Invoice Checking Coordination with Finance For Retirement Of Bank Documents etc, LC Opening & Payments to Vendors
13
Stores Management

Objective:Providing Right Materials to the user in required quantity at the shortest possible time: Responsibilities: Physical Receipt , Inspection & Custody of Materials Issue to Users Preservation Minimization Obsolescence Fixing Transportation Contracts
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Import Clearance Group - CMM

RECEIVE PURCHASE ORDER CATALOUGE, TECH W-UP FROM PROJECT
REGISTRATION & DOCUMENTATION BY
IMPORT
CLEARANCE GROUP & FOLLOW UP WITH
1. I/L, LC, BSI , BRO, CONSOLE 2. INVOICE, HAWB 3. PRE-ALERT, HAWB, MAWB, PO. REF, SUPPLIER SEEK D O
PROJECT SUPPLIER CARRIER

2 DAYS
ARRANGE DUTY FROM NTPC- IF
CMM - ICG
1 DAYS
1 DAYS
SEEK DUTY FROM CUSTOMS
C & F AGENT
TO DEPOSIT DUTY, OBTAIN OUT OF CHARGE FROM CUSTOMS COLLECT CARGO FROM AIRPORT AUTHORITY DOL DO H/O BOE DUTY O/C DOC TOTAL DAYS
1 DAY 1 DAY
15 ESTIMATED C LEARANCE DAYS ARE BASED ON THE PRESUMPTION THAT ALL RELATED DOCUMENTS ARE COMPLETE & FREE FROM DESCRIPENCIES
2DAYS 1 DAY
2 DAYS 2DAYS
2 DAYS
1 DAY
= 10 DAYS
INVENTORY CONTROL:
Setting
Inventory Levels ABC, XYZ, and other classifying techniques Fixing EOQ(Economic Order Quantity) Setting Safety Stock Levels Conducting Lead Time Analysis Materials Codification & Computerization Management Reporting
16
What is risk?
Risk is a chance of loss. Risk is the possibility of loss. Risk is uncertainty. Risk is the dispersion of actual from expected results. Risk is probability of any outcome being different from the one expected. Uncertainty regarding a loss.
Management Organizing of activities and controlling the use of resources in such a manner so as to achieve the companys goal.
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Risk exists whenever the future is unknown.

fire
Risks
lightning
accident
Business
flood
Exposures
Risk Management to efficiently minimize the adverse impact of risks on the achievement of the companys goals.
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RISK MANAGEMENT PROCESS

Identification
NO
IS THERE A RISK
YES HAS IT BEEN MEASURED YES IS IT SIGNIFICANT NO DISREGARD YES AVOID / ELEMINATE YES CAN IT BE AVOIDED OR ELIMINATED NO CAN IT BE REDUCED YES IS RESIDUAL RISK SIGNIFICANT NO YES IS IT A CATASTROPE RISK NO CAN IT BE RETAINED YES YES NO DISREGARD NO
ANALYSE RISK
Evaluation
Control
Financing
RETAIN RISK INSURE
NO TRANSFER OTHER
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RISK MANAGEMENT:
Safety
aspects especially in Storage Insurance

*
Mega Risk Policies
Fire All Risks, MBD(Machinery Break Down), FLOP(Fire Loss Of Profit), MLOP(Machinery Loss Of Profit), Burglary
* * *
Marine Special Contingency( Loco & Wagons) CPM(Construction Plant & Machinery)
20
Surplus & Scrap Disposal: Identification Of Surplus Materials Identification Of Scrap Materials Fixing up Reserve Price Taking Periodical Disposal Action
21
Vendor Development :
Need For Development: to limit dependence especially on overseas OEM to minimize long delivery schedule to minimize the cost to curtail monopolistic practice
22
Vendor Development Procedure: Identification of Materials for Development

Imported Spares High Consumption Spares High Value Spares Spares with Long Delivery Schedule Spares phased out by the manufacturer Spares of Non Critical application & of non sophisticated technology Development of Specifications & Drawing And QAP
23
Vendor Development Identification Of Source for development

Press
Tenders Market Survey Experience of other Projects Sub Vendors Of Main Supplier (OEM/OES) Organizing Work Shops & Exhibitions
24
Vendor Development Submission of Samples by the Vendor & trial run with the samples Feedback to vendor including technical inputs o Final Clearance & Acceptance of Developed Spare
25
New Developments e Procurement ERP
26
E-Commerce Markets and Applications

Education Electronic Auctions E-Shopping
E-Banking
Internet
E-News Papers
E-Marketing E-Searching Games E-Health Care
Ticketing Movies
27
E-Business Mathematical Equation

EB = EC + BI + CRM+ SCM + ERP
Where

EC=E-Commerce BI=Business Intelligence CRM=Customer Relationship Management SCM=Supply Chain Management ERP=Enterprise Resource Planning
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The Building Blocks

Transaction Security Merchant Account Web Site Or Hosting Account Search Engine Optimization Payment Gateway
High Availability
Shopping Cart
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Life Cycle of a Tender in ERP/SAP

Step1: Create Requisition ME 51 Step2: Release of Requisition ME 54 Step2: Create RFQ ME 54 Step4: Release RFQ ME 45 Step5: Maintain RFQ ME 47 Step6: Price Analysis ME 49 Step7: Create PO ME 21 Step8: Release PO ME 28
E Tendering Cum Reverse Auction

Technology for pulling the data from ME-51 and pushing to ME-21 to be detailed out.
5/23/2012 30 30

THANKS
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An Overview Of MATERIALS MANAGEMENT

By Manoj Sah, AGM (Corp Materials)