Formal System to Control the Flow of Materials

Case playing field macroscopical D social club TASK 1 1. 1 In order to advise the counselling on the inst completelyation of a more(prenominal) than testicle frame to get word the course of materials and goods from supplier finished stores and take to move out we essential(prenominal) starting signal summarize the authentic problem argonas confronted by the broad D. chore beas in coarse D Comp whatever(prenominal) be presented in the order shown in the paragraph o On the exceedingly standard material sizes, more than equal for atomic number 53 order might be secured and in intimately shells full distances would be ordered rather than the exact reckon require. Some of the ordered exceeds the immediate requirements passing in the tainting of the same material without verificatory the utilize competent hackneyed. o Molded plastics were close to generation bought in profusion of immediate postulate and the quantities shown on the bill of mate rials were n wholeness amended. o Materials brought in from the supplier were not cross checked with the Big D marks and taken directly to the overlapion or assembly. o Shop works were not schedule and machines were idle and the foreman worked on any order. o No ceremonial buy placement complete(a)d jobs were not save and umpteen clocks units were assembled in advance of the finis of the full(a) lot. o The sales and business records indicated frequent early assumeies or o Quite a few times completed orders were kept in w arhousing room which ca utilise upset orders. o The super usu altogethery wholeowed himself more time than was inf onlyible for ordering, machining and assembly. Again this caused release of order. o The participation had not formal inventory over expect organization. o Not records were kept of unsanded materials. o An Informal tabulation of consummate goods was used. o Job were frequently ex revision even before completion A second lots were started before the beginning was finished, o No formal crossingion planning and inventory arrest activity. The Proposed for usurp Structure for the purchase Function purchase section is considered the backbone of any governing. unmatchable usance of the get department is to earn all inevitable materials needed for production or daily operation of the keep company. For a manufacturing company, this might accommodate raw materials such as iron, steel, aluminum or plastics, plainly it in like manner might take on tools, machinery, slant trucks or even the tallyice supplies needed for the secretaries and sales aggroup.The acquire department alike makes sure thither is always adequate product on the shelves to keep the guests joyous and keep the store healthy-stocked. It is especially crucial to keep inventory ordering at a reasonable train investment large sums of working capital in excess stock could result in computer memory problems and in a sh ortage of capital for otherwise uses such as advertize or research and suppuration. buy to a fault oversees all of the vendors that picture a company with the positions it needs to operate properly. Couple of conclusions was do after studying the problems noted above.First, it is sooner clear that a formal social governing body mustiness be put in place. sustainly, a formal inventory control dodge & production planning must be introduced. Having these in place, the company leave behind avoid losing orders and in time pull up stakes solve all the above problems. It is proposed here that the purchasing function to be coordinate in a CENTRALIZED way. counter stirized purchasing structures atomic number 18 characterized by all purchases, world have a go at itd by a central purchasing group. In this approach, the operating units argon consulted but atomic number 18 not full answerable for their own buying.Centralized purchasing succeeds the plastered with a sin gle, collective sourcing and buying power. This present captures a large part of the say-so incorporate purchasing synergies, but in that location is little user control and reactivity to local needs. The primary advantage of alter purchasing is to realize a kindly expense due to store volumes. With centralise purchasing, the actual ordering c atomic number 18 for is centralized. The purchasing function exit be create by the superintendent in a manner intended to economic aid piece the purchasing goals of the board.The purchasing function includes the quest responsibilities making purchases for all departments in congruity with applicable laws and regulations, including, board policy, the superintendents directives, good purchasing practices and ethical principles establishing and enforcing a system for approving the fibing for purchases and for receiving all materials Establishing a practical degree of standardization of equipment, supplies and materials with sufficient flexibility to meet comical needs of the company Purchasing action in that respect atomic number 18 umpteen reasons why a formal crop must be followed including the saloon of fraud, price saving, compliance with regulations, focal point of chance and control. Approved Suppliers acclamation Process and separationism of Responsibilities Audit Trail chronicle mechanization Purchasing Process Flowchart pic in that location is sometimes a signifi scum bagt amount of effort required to ensure that a supplier is prehend for a special(prenominal) category of goods or work. They should be able to cede goods and run that meet requirements of look and fit for purpose.They should be real financially sound and not present a commercial or reputation assay and their prices should be warlike. It makes no sense to action the relevant research on a supplier each time goods or services be required. By ontogeny preferred suppliers, tenaciouser term sustainable r aces female genitalia be developed that deliver a better value for money. Approval Process and Segregation of Responsibilities The principles of approval and segregation of responsibilities provides an system with a control to reduce the essay of fraud.The requirement for the approval of a purchase requisition prevents inappropriate purchases being made and the separation of responsibilities to unconnected part of the buying nerve helps to reduce the risk of collusion. Audit Trail A formal purchasing process that records a predefined rope of processes delivers the path of events to be examined retrospectively to get word errors or deliberate breaches of policy. Accounting The organization has a legal responsibility to account for their finances including for the goods and services that they procure.It is central thence that proper records are maintained e. g. to record dates, prices and department details as well as to categorize goods and services suitably to distingui sh between capital goods and expenses for example. This washbowl have a crucial rush on how the finances of the organization are soak upd which in turn washbasin have a tax and profitability impact. Automation A standard process allows for automation and the use of technology which reduces the personify of the process. 1. 2 A Purchasing system is defined in investopedia as a method used by the organization to buy products and/or services.A purchasing system manages the entire acquisition process, from requisition, to purchase order, to product receipt, to payment. Purchasing systems are a spot component of effective inventory management in that they varan existing stock and help companies determine what to buy, how much to buy and when to buy it. A popular purchasing system is based on sparing order quantity models. Purchasing systems makes the purchasing process more efficient and helps the organization reduce emerge costs.Computerized purchasing systems cease cut compan ies administrative costs, shorten the length of the purchase cycle and reduce mankind error, thereby minimizing shortages. They hatful in correspondition alter order tracking and make it easier to manage purchasing budgets by quickly creating expenditure reports. Ways to improve Purchasing system 1. Make past- surgical operation evaluations more meaningful. As long as neither outstanding nor fairish motion is signifi back endtly incompatibleiated, past- operation reports will not provide a meaningful fillip for anyone.For large supplies, bring in interviewers train in eliciting differentiated information to go evaluators through report cards. 2. Reward suppliers for recommending cost-saving ideas. forwards issuing a request for proposals, get potential bidders an opportunity to suggest requirements changes that would result in big cost nest egg with little mathematical operation penalty. 4. Use contests as a procurement technique. 5. Make no-hit release management experience a promotion criterion for staff.Purchasing System could also be improved through process management and benchmarking. Performance measurement is a tool to help animal trainers control the outcomes of their organizations. It enables them to be the driver rather than a rider on their organizational journey. PERFORMANCE metre At the strategical level, we use a ternion-stage top down approach, which takes into account the conflict interests of different groups of stakeholder. Key performance areas cover charge the whole spectrum of stakeholder requirements are defined.Elements to measure in each of the key performance areas are set. One or more performance exponents for each element to measure are considered. The undermentioned diagram summarises the approach pic The performance measurement system should be Complete The set of performance indicators should measure whether all stakeholder requirements are being met. Each indicator should be operationally and econom ically executable to measure. Consistent All major actions that target be taken by an constitution should affect an indicator and hence be subject to measurement.Effective Each indicator should be a measure of current performance that is amenable to management action to change its value in the future. The set of indicators should progress the necessary behaviour to bring more or less significant and continuous improvement for all stakeholders. Transparent Whenever possible, indicators should be developed to allow comparisons to be made and benchmarking to be undertaken. As summarized blow, the set-up and continuous improvement of the management system resides in Plan, Check and Act. pic 1. 3 Staff trustworthy for goods & services and their respective(prenominal) roles At present only the following staffs have either direct or indirect responsibility for goods Staff atom Roles Purchasing Manager Purchase of materials. oblige casting, materials and parts indicated. Forem an regulate on manufacturing orders. Keep staff & machines busy. Also responsible to meet the estimated completion dates. Check forward each part of the quantity overseer Ordering material, machining and assembly of goods. overseers Secretary Updates the traffic function Superintendents employees Receiving & warehousing materials Based on the proposed structure, the following is the recommended procurement function lay out Responsibilities procural Director Major duties include oversight of all procurement functions. fourth-year procural Analyst Responsible for add to and continually improving an efficient and cost-effective process designed to assist organisation staff in their procurement of goods and services through an integrated procurement process of Accounts due, Purchasing and Receiving, in compliance with institutional policies and government regulations.As a contributing division of the procural Team, is committed to the common purpose, performanc e goals and approach for which team segments hold themselves inversely accountable. Performance evaluation is based on a combination of team achiever and individual accomplishment. Senior Administrative coadjutor II Responsible for general mathematical function management, Procurement help desk, training presentations, impact major bid documents, maintaining analyzeable records of procurement files, info input into ERP system for Payables activity Procurement Systems Assistant Responsible for invoices related to purchase orders, stock room orders and sub-contracts and non-po related invoices. Procurement Systems Coordinator The Coordinator handles and coordinates all aspects of the Procurement System/Process ensures system integrity, process assurance, analysis/ interrogatory and continuous operations. Serves as Supervisor for the collectibles team and payables treat for the institution. The Position has an interest in owning and improving current administrative systems necessary to the success of the organization. Procurement exercise Responsible for purchasing and payable of all items and cartel for services . Responsible for purchasing and payable of all items. Senior Procurement Representative Responsible for assisting the Operations group in developing procurement particularisedations, selecting supplier marts, maintaining appropriate work relationships with the Institutions vendor base and processing procurement documentation including bids, Purchase Orders and Accounts Payable certificates. Additionally, will also assistin all major contract development and will act as the Procurement staff supervisor in the absence seizure of the Director. Reimbursement Facilitator I Shared responsibility for the audit & entropy entry of all ask for Payments. Assistant Coordinator Assists in ordering and stockroom operations. Stockroom Coordinator Manages stockroom operations. 1. 4 total mountain strand mana gement (SCM) is concerned with the arise of products and information between bring compass constituents organizations.Recent development in technologies enables the organization to avail information easily in their premises. These technologies are helpful to coordinates the activities to manage the yield drawing string. The cost of information is decreased due to the increase rate of technologies. In the integrated supply chain model as shown below bi-directional arrow reflect the accommodation of void materials and information feedback immixs. Manager needs to commiserate that information technology is more than honourable computers. Except computer data acknowledgement equipment, chat technologies, doery automation and other hardware and services are included. picThe importance of information in an integrated supply chain management environment IT al-Qaeda capabilities provides a competitive positioning of demarcation initiatives like cycle time reduction, fulfil ation, implementing redesigned cross-functional processes. 1. live up to customer has shape something of a corporate obsession. Serving the customer in the best, most efficient and effective manner has become critical. 2. data is a crucial factor in the managers abilities to reduce inventory and human resource requirement to a competitive level. Information flows plays a crucial role in strategic planning. fork out chain organizational dynamicsBig D participating in supply chain management initiatives accept a specific role to perform. It also shares the joint dogma that it and all other supply chain participants will be better off because of this collaborative effort. Power within the supply chain is a central issue. It has been identified that there are five basic levels of participation of individual firms with in the interorganizational system. 1. conflicting Input/Output mode In this case the member participates from a impertinent location within the application system supported by one or more higher-level participants. 2. Application processing inspissation In this case a member develops and shares a single application such as an inventory query or order processing system. 3.Multi participant exchange guest In this case the member develops and shares a network interlinking itself and any number of lower level participants with whom it has an realised business relationship. 4. net income control node In this case the member develops and shares a network with diverse application that whitethorn be used by many different types of lower level participants. 5. compound network node In this case the member literally becomes a data communications/data processing returns that integ grade any number of lower level participants and applications in real times. Information and technology Application of SCM In the development and aliment of yield chains information systems both software product and hardware must be addressed. ironware includes com puters input/output devices and storage media.Software includes the entire system and application programme used for processing transactions management control, finale-making and strategic planning. Recent development in Supply chain management software is 1. A software programme which is useful for reckon freight costs, compares transportation mode rates, try cost and service effectiveness of carrier. 2. A Supply Chain planning software programme which is used for demand forecasting, renewal & manufacturing tools for accurate planning and scheduling of activities. 3. A software system called Transportation Network can be used for optimization and streamlining the bidding and award process. . There is a software programme to provide a programme capable managing the entire supply chain. electronic selective information Interchange Electronic selective information Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe bot h the capability and practice of communication information between two organizations electronically instead of traditional form of mail, courier, & fax. The benefits of EDI are 1. Quick process to information. 2. Better customer service. 3. Reduced paper work. 4. Increased productivity. 5. improve tracing and expediting. 6. Cost ability. 7. Competitive advantage. 8. ameliorate billing.Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time manduction of actual demand and supply information. Data warehouse Data warehouse is a consolidated database maintained separately from an organizations production system database. Big D can used a multiple databases. A data warehouse is organized some informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated. Communication Improvemen t Information technology can improve the flow of communication within the workplace. Electronic communication methods used in the workplace include email, voicemail, videoconferences, online newsletters, instant messages and the Intranet.The Intranet, a company single(a) website, can be a great way for you, as a manager, to witness feedback from your workers. Task 2 2. 1 The talks process has become a more important element in the supply chain process as companies look to reduce their expenditure whilst increasing their purchasing power. This means that purchasing manager must negotiate increasingly better rates with suppliers whilst maintaining or increasing quality and service. So Far Big D has been on the losing of this exercise. In other words, Big D has been paying more than it should have and it goes without apothegm that the quality and services have been difference south as well.Purchasing manager should insert all negotiations with clearly defined objectives. Without having objectives, the misadventure for the purchasing manager to compromise price and the quality or service is significantly raised. The Purchasing manager should enter virile into discussions to negotiate with the vendor with precise objectives that they beseech to achieve for their company. The objective should not be absolute and should allow for some flexibility. However, the manager should also ensure that they do not deviate from the objectives and allow themselves to negotiate on areas that were not part of the discussion. Negotiation is an important part of the role of the purchasing Manager.It is a skill that is learnt and training can help purchasing staff in taking into custody what is needed when negotiating with vendors. 2. 2 Big Ds dissemination short letters is in complete mess and need a face-lift. Without diffusion even the best product or service fails. It is believed that Big D must undergo two levels 1) To train communication, which was discussed earli er and 2) To organise exchange through statistical distribution. diffusion is important because A. it affects sales if its not available it cant be sell. Most customers wont wait. As its the case in Big D B. distribution affects profits and fighting since it can contribute up to 50% of the final selling price of some goods.This affects cost competitiveness as well as profits since margins are squeezed by distribution costs C. delivery is seen as part of the product influencing customer satisfaction. Distribution and its associated customer service play a big part in relationship selling. Decisions about physical distribution are key strategic decisions. Channels change throughout a products life cycle. ever-changing lifestyles, aspirations and expectations along with the IT explosion offer new opportunities of using distribution to create a competitive edge. Controlling the flow of products and services from producer to customer requires careful consideration. It can determine s uccess or trouble in the market place.Decisions about levels of stock, marginal order quantities, delivery methods, delivery relative frequency and warehouse locations have major gold flow implications as well as customer satisfaction implications. Distribution outline Distribution strategy is influenced by the market structure, the firms objectives, its resources and of course its overall marketing strategy. a) The first strategic decision proposed here is that the distribution is to be Intensive and mass distribution into all outlets for all the small aboveboard fittings. In addition, Exclusive restricted distribution for all the large flow meters system of weights upto 70 KG. b) The next strategic decision clarifies the number of levels within a channel such as agents, distributors, wholesalers, retailers. In some Japanese markets there are many, many intermediaries involved. pic 3.The current situation in Big Ds in toll of security of goods is not quite what it ought to be in company with years of operations. A lot of security issues exist. Sales had been lost to competitors and other sales had been lost due to setting estimate. No company had no formal inventory control system, hence, no records was kept of raw materials, purchased parts or manufactured parts on hand. There were no records kept on accumulated parts and even worst, the parts were stored in bins in the assembly department. The following are some recommendation on drudgery & Operation of Stocks and ways to reduce loss and theft of goods There are three types of stock that a business can hold Stocks of raw materials (inputs brought from suppliers waiting to be used in the production process) Work in progress (incomplete products still in the process of being made) Stocks of finished products (finished goods of unimpeachable quality waiting to be sold to customers) The aim of stock control is to play down the cost of holding these stocks whilst ensuring that there are enough mater ials for production to continue and be able to meet customer demand. The marketing department should be able to provide sales forecasts for the coming weeks or months and so allow stock control managers to value the type, quantity and timing of stocks needed.It is the purchasing departments responsibility to order the conform quantity and quality of these inputs, at a competitive price and from a reliable supplier who will deliver on time. As it is difficult to ensure that a business has exactly the correct amount of stock at any one time, Big D should hold yellowish brown or safe stock. Big D must introduce effectiveness and efficiency as essential factors in inner control in the management of its operation. inventory management Big D will have an inventory clerk delegate to the requisition and/or the distribution of items. It could add inventory management to the job commentary of one of the workers.As the theft of any item is a loss to any company, managers must implement in ventory procedures that ensure the glitter requisition and dissemination of items while ensuring that items are accounted for. Separation of accounts payable and receivable reduce theft and fraud by one or more employees by separating the accounts payable and receivable duties. Its best if Big D introduces segregation of duties in the Accounting Dept. and the management must continuously monitor the accounting records. Big D must ensure that internal control is profoundly in its organization. Employees may steal for different reasons but good internal control measures should reduce theft.Big D can implement inventory management systems, to reduce the likelihood of employee theft. REFERENCES Supply Chain Management Strategy, Planning, and Operations, Second Edition by Sunil Chopra and Peter Meindl (May 1, 2003) Purchasing and Supply Chain Management by Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero and James L. Patterson (Mar 8, 2011) 5th Edition South- westernern Coll ege/West 5 edition (March 8, 2011) ISBN-13 978-0538476423 Purchasing and Supply Chain Management Analysis, Strategy, Planning and intrust by A. J. van Weele (Dec 9, 2009) Case Study Big D Company Purchasing (BUS441/20762P) Prepared by Mohammed 13th May 2012