Documente Academic
Documente Profesional
Documente Cultură
30th May, 2011 Mr. Md. Akram Hossain Lecturer Department of Management Information Systems (MIS) University of Dhaka
Subject: Submission of Internship Report. Dear Sir, I am taking the honor the honor to submit my Internship report on Supply Chain Management of Logistics & Support Services Division in Prime Bank Ltd which is essential requirement for the completion of BBA program at University of Dhaka. This report is the result of Internship Program that I have conducted in Prime Bank Limited, Head Office at Motijheel. All the information presented in this report is done with outmost sincerity and honesty. I have tried my best to make this report holistic and informative. Apart from academic knowledge gained, this internship program and preparation of this report have given me the opportunity to know about Logistics & Support Services Division of Prime Bank Ltd. I believe that, the experience I have acquired from this internship program will be a valuable asset in my life. Working with such an interesting report has given me the opportunity to achieve experience, which will be helpful in my future professional life. I want to thank you for your support and patience with me and I appreciate the opportunity provided by the University of Dhaka and Prime Bank Ltd to work on this wonderful program. Sincerely yours,
Declaration
I do hereby declare that this internship report has been prepared by me under the guidance of Lecturer Mr. Md. Akram Hossain for the partial fulfillment of BBA program from the Department of Management Information System (MIS), Faculty of Business Studies and University of Dhaka. I also affirm that this report is original in nature and has not been submitted elsewhere for any other purpose.
Signature
__________________ (Md. Ashiqul Haque Tamim) Date: 30 June, 2011 BBA 2nd batch ID: 02-60
Supervisors Certification
This is to certify that Md. Ashiqul Haque Tamim ID:02-60, BBA-2nd batch, Department of Management of Information Systems (MIS), Faculty of Business Studies, University of Dhaka has done this internship report on Supply Chain Management of Logistics & Support Services Division in Prime Bank Limited as a partial requirement of BBA degree. To the best of my knowledge, this report is original in nature and has been prepared by him under my guidance and was nowhere submitted for any purpose.
Signature
_________________________ (Md. Akram Hossain) Lecturer Department of Management Information Systems (MIS) Faculty of Business Studies University of Dhaka Date: June 30, 2011
Acknowledgments
First of all, I wish to express to my gratitude to the almighty Allah for giving me the strength to perform responsibility as an intern and complete the report on Supply Chain Management of Logistics & Support Services Division in Prime Bank Ltd within the stipulated time.
I would like to thank my academic supervisor Mr. Md. Akram Hossain- Lecturer, Dept. of MIS, University of Dhaka for his generous guidance, inspiration and necessary support during the preparation of this report. Without this timely help & assistance, I could not have completed this report.
I would to thank all the officials of Logistics & Support Services Division, Prime Bank Ltd. I would specially like to thank Mr. Reza Hossain (SAVP), Mr. Md. Mahfuzur Rahman (SEO), Mr. Sohel Masud (EO), and Mr. Ashik Biswas (JO), Mr. Md. Forhed Shorawaddy (JO) of this division for giving me time and sharing their thoughts and insights regarding their strategies and their bank as a whole. I would like to thank them for giving the required information to commence this report and for providing the permission to do the required research work.
I also would like to give my gratitude to a very important person who has made it all happen for me at Prime Bank Ltd. - Mr. Md. Shirajul Islam Mollah (Director).
Finally I would like to take the opportunity to express my wholehearted gratitude to my fellow friends, near and dear ones who offered encouragement, information, inspiration and assistance during the period of constructing the internship report.
Executive Summary
Prime Bank Ltd. is one of the major, fully licensed commercial bank of Bangladesh which offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by Bangladesh Bank. This report is mainly review supply chain policies of logistics and support services division of PBL. It focused on supply chain activities and problems. Integrated supply chain business process and its approach are also discussed. Logistics and support service division of PBL and its 6 departments are assessed in this study. This report shows the objectives of supply chain in this division at PBL. Importance of supply chain decisions and its decision phases about logistics and support service division are discussed. It shows the management policies of this division. Procurement policies of PBL are also taken under consideration. Requisition processes of logistics division are reviewed in this report. Relationship of sourcing activities and its components of PBL are assessed. In this report supply environment are analyzed. Role of information technology in supply chain management of PBL are also taken in spotlight. Corporate social responsibilities performed by PBL are presented in this report. It shows major social activities of Prime Bank Foundation.
these activities.
4. Analyze the role of IT in Supply Chain Management and its application in L
1.3 Methodology
This research is an inductive case study research, rooted to literature around purchasing, integration, and SCM. The rationale for a case study is the depth of data that needed to be studied to understand the phenomenon, differentiating in supply chain upstream operations. Purpose of the case study is a) To identify the use of different management mechanisms in the supplier relationships.
b) To identify the factors in relationships that differentiates the use of
integration mechanisms.
c) To identify the process and practices which enable the case company to
maintain consistency and alignment of actions in purchasing through its large organization.
Limitations are the drawbacks of any work. There is hardly any activity which has no limitation. This study also has some limitations.
a) Time variance is the major limitation of this study. As the internship is for 45
days, it is really a short time to analysis a huge organization like PBL. b) The officials of PBL have a busy working schedule. So, data collection process is also hampered for this.
c) The analysis of supply chain management is based on the available information. It may not be 100% accurate. d) Organization secrecy policies are also a limitation of this report. Confidential data of PBL which would be helpful for this report cannot be accessed.
2.1 Background
In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Prime Bank was created and commencement of business started on 17th April 1995. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc. As a fully licensed commercial bank, Prime Bank is being managed by a highly professional and dedicated team with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition. Prime Bank has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMELS rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation. Prime Bank offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and
services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software. Prime Bank, since its beginning has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Our past performance gives an indication of our strength. We are better placed and poised to take our customers through fast changing times and enable them compete more effectively in the market they operate.
2.2 Vision
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.
2.3 Mission
To build Prime Bank Limited into an efficient, market-driven, customer focused institution with good corporate governance structure. Continuous improvement of our business policies, procedure and efficiency through integration of technology at all levels.
By forging ahead and consolidating its position as a stable and progressive financial institution. By generating profits and fair return on their investment.
By assuming our role as a socially responsible corporate citizen in a tangible manner By adhering closely to national policies and objectives thereby contributing
towards the progress of the nation. By upholding ethical values and best practices. Constantly seeking to improve performance by aligning our goals with stakeholders expectations because we value them.
Year
Milestones Memorandum and Articles of Association signed by the sponsors. Incorporation of the company. Certificate of commencement of Business. License issued by Bangladesh Bank. License issued for opening the first branch, Motijheel. Formal launching of the Bank. Commencement of Business from Motijheel Branch. Commencement of Islamic Banking Business from IBB, Dilkusha.
1995
Year 1999
Milestones Initial Public offering - Publication of Prospectus. Initial Public offering - Subscription Opened. Initial Public offering - Subscription closed. Listed with Chittagong Stock Exchange Limited.
Year 2000
Milestones Listed with Dhaka Stock Exchange Limited. Trading of Shares in Dhaka Stock Exchange Limited. Trading of Shares in Chittagong Stock Exchange Limited.
Year 2001
Date 29.03.2001
Year 2005
Date 17.04.2005
Year 2006
Date 08.07.2006
Milestones Introduction of Prime Exchange Co. Pte. Ltd. (Subsidiary of Prime Bank Limited)
Year
Date 15.03.2007
2007
01.04.2007
Year 2008
Date 11.03.2008
Year 2009
Date 01.08.2009
Year
Milestones Introducing of PBL Exchange UK Limited - London Branch. Introducing of PBL Exchange UK Limited -Birmingham Branch. Introducing of PBL Exchange UK Limited Oldham Branch.
2010
Year 2011
Milestones Introduction of Prime Exchange Co. Pte. Ltd. (Jurong East Branch) Introducing Prime Securities Limited.
Prime Bank Foundation are proud to continue CSR activities for the greater interest of countrys socio economic development:
2.7.1.2 Prime Campus: Prime Campus, an English medium school in Uttara, Dhaka, was created by Prime Bank Foundation in 2008 as an alternative to the expensive English primary schools at an affordable charge schedule. Commitment to corporate social responsibility ensures we remain true to our heritage of integrity; maintain a long term point of view to make economically sound, environmentally responsible and socially supportive decisions. More specifically, we maintain an unwavering commitment to honesty, integrity and fairness in all our CSR practices; show compassion by becoming involved with and supporting local and national communities; and consistently act in a manner that fosters our stewardship and sustainability.
Investment in eradicating and preventing different disabilities such as drug addicts, blindness etc; setting up vocational training centers; undertake mass awareness raising campaigns etc.
Arab Emirates. The bank also financed TRCL to launch an Intensive Diabetes Management (IDM) services program in Bangladesh under its brand name "amcare".
2.7.6 Environment
Activities related to the prevention of environment degradation and promotion of environment; support people living in the coastal and char areas; carbon trading etc. Another important undertaking by the bank also merits mentioning, which involves financing of a geo-textiles manufacturing project. Geo-textiles products are being used in ample quantity in construction of bridge and approach road, and building protection for riverbank, coastal, and embankment. Bangladesh being a riverside country is always in need of geo-textiles products, and implementation of such an import-substitute product manufacturing facility would definitely help the country to save drainage of foreign exchanges.
Donations of Passenger cum bed lift to Sylhet Diabetic Association Hospital. Sponsoring 20 KVA Diesel Generator for Department of Development Studies, Dhaka University. Construction of Shahbag Foot Over Bridge.
Awareness Campaign at the three international airports of the country against swine flu. Improvement of Porter and Luggage Handling Services at the Kamalapur Railway Station, Dhaka. Blankets and winter-clothes distribution among the winter distressed people of the society. CSR Contribution in 2010 (other than Prime Bank Foundation)
2.7.10 Education
Childrens Art Competition and Exhibition was arranged by Zoinul Abedin Art School with the sponsorship of Tk. 25,000/- Prime Bank Limited. Donation of Tk. 4,16,500/- for 10 pcs. Computers for the students of Chittagong University. Financial Assistance of Tk. 7,00,000/- to Tania Zarifa Mazid, valedictorian of North South University and graduate student at Columbia University, New York, USA. Sponsorship of Tk. 4, 00,000/- million to Marine Academy Bangladesh for purchasing speed boat for the academy and for Gold Medals and crest for outstanding cadets passing out. Sponsorship of Tk. 4,98,000/- to Notre Dame College for 22nd National Debate Competition 2010 hold on 24 July, 2010. Sponsorship of Tk. 3,50,000/- for English Festival in Dhaka organized by Notre Dame College.
2.7.11 Health
Donation of Tk. 50,00,000/- as financial assistance to purchase equipment for National Heart Foundation Sylhet. Donation of Tk. 3,00,000/- million to Bipul Bhattacharya for his treatment. Donation of Tk. 25,000/- to Journalist Mustafiz for his treatment. Donation of Tk. 1, 00,000/- to the Dr. Lenin Azad to help a Kidney disease patient.
2.7.13 Sports
Sponsorship of Tk. 50,00,000/- for "Sa Games 2010" hold from 29 January-9 February, 2010. Sponsorship of Tk. 10,00,000/- for "Asian Games Qualifying Round Hockey Tournament-2010" hold from 07-16 May, 2010 at Dhaka. Donation of Tk. 1,00,000/- to organize football tournament in Moulvibazar District Sports Association.
2.8.4 SME Banking - Sahaj Rin (Easy Loan) - Sampad Rin (Capital Loan) - Chalti Rin (Working Capital Loan) - Moushami Rin(Seasonal Loan) - Digun Rin (Double Loan) - Anchol (Women Entrepreneurs' Loan) - Agriculture Banking 2.8.5 NRB Banking - Foreign Remittance Services - Account Facilities for NRBs - Bank's Overseas Network - Exchange Houses - Wire Transfer Facilities
2.8.6 Offshore Banking Unit (OBU) Offshore Banking Unit mainly deals with non-residents Bangladeshi citizens, maintaining exclusively foreign currency transactions, can borrow and lend in Foreign Currency with any other local and global Banks, being treated its operation as a country within a country, commissioned by a separate Banking License from Bangladesh Bank. And free from minimum reserve requirement. It may be further defined as the prioritized banking operation where there is no permission for resident Bangladeshi citizen and on contrary dealing with the nonresidents 100% foreign-owned & joint-venture investment enterprises inside the export processing zones which does not fall under the set regulations of Bangladesh Bank and other regulators. It is completely a separate functions and distinct identity, where its customers can enjoy unique package of tax benefit and the operations which are free from local regulations to compete with domestic banks including local branches of foreign banks. Nature of OBU Facilities Extended to the EPZ Company(s) OBU may extend among the EPZ "A" type industry (s) irrespective of funded and non-funded facility (s) which are as follows as working capital financing:
EXP Certifying LC Advising Export Negotiation Export Bill Discounting LC opening LTR Creation Short Term Loan OD for working capital Guarantee NFCD Deposit Current FC A/C Deposit Miscellaneous.
2.8.7 Prime Bank Treasury Money Market Desk Primary Dealer & Fixed Income Desk Asset Liability Management (ALM) Desk Foreign Exchange Desk.
Top Management
Chairman
Board of Directors
Executive Committee
Executive Management
MD
AMD
DMD
SEVP
EVP
SVP
VP
SAVP
AVP
FAVP
SEO
EO
PO
Junior Level
SO
MTO
JO
2.9.3 International Division The objective of this division is to assist management to make international dealing decisions and after decision is made, guide Branches in their implementation. Its functional areas are as follows: i. Maintaining correspondence relationship. ii. Monitoring foreign exchange rate and exchange dealings. iii. Maintaining Nostro A/Cs and reconciliation. iv. Authorizing of signing and test key. v. Monitoring foreign exchange returns & statements. vi. Sending updated exchange rates to concern branches. 2.9.4 IT Division Prime Bank operates and keeps records of its assets and liabilities in computers by using integrated software to maintain client Ledger and general Ledger. The main function of this division is to provide required Hardware and Software. The functions of this division are: i. Designing software to support the accounting operation. ii. Updating Softwares, if there is any lagging. iii. Improvisation of software to get best possible output from them. iv. Hardware and Software troubleshooting. v. Maintain Connectivity in through LAN, Intranet & Internet. vi. Provide updated CDs of Online Accounts to the Branches vii. Routine Checkup of Computers of Different Branches. 2.9.5 Public Relations Division It has to perform certain functions related to all types of communication. The broad routine functions can be enumerated as follows: i. Receiving and Sanctioning of all advertisement application. ii. Keeping good relation with different newspaper offices. iii. Inviting concerned ones for any occasion. iv. Keeping good relation with different officers of electronic media. 2.9.6 Marketing Division Marketing Division is involved in two types of Marketing. Asset marketing: Marketing of assets refers to marketing of various kinds of loans and advances. In-order to perform this jobs, they often visits dome large organizations and attract then to borrow from the Bank to finance profitable ventures.
Liability Marketing: The process of Liability marketing is more of less same as Asset marketing. In this case different organizations having excess funds are solicited to deposit their excess fund to the Bank. If the amount of money to be deposited is large, the Banks sometimes offer a bit higher price than the prevailing market rate. 2.9.7 Human Resources Division HRD performs all kind of administrative and personnel related matters. The broad functions of the division are as follows: i. Selecting & Recruitment of new Personnel. ii. Prepare all formalities regarding appointment and joining of the successful candidates. iii. Placement of Manpower. iv. Deal with the transfer, promotion and leave of the employees. v. Training & Development. vi. Termination and retrenchment of the employees. vii. Keeping records and personal file of every employee of the Bank. viii. Employee welfare fund running. ix. Arranges workshops & trainings for employee & executives. 2.9.8 Inspection & Audit Division Inspection and Audit division works as internal audit division of the Company. The officers of this division randomly go to different Branches, examine the necessary documents regarding each single accounts. If there is any discrepancy, they inform the authority concerned to take care of that/those discrepancies. They help the bank to comply with the rules and regulation imposed by the Bangladesh Bank. They inform the Bangladesh Bank about the Current position of the rules and regulation followed by the Bank. 2.9.9 Credit Card Division Prime Bank obtained the principal membership of Master Card International in the month of May, 1999. A separate Division is assigned to look after this card. The Marketing Team of this division goes to the potential customers to sell the card. Currently Prime Bank Ltd. offers four types of card: (1) Local Silver Card. (2) International Silver Card (3) Local Gold Card (4) International Gold Card
Recently Prime Bank has obtained the membership of VISA credit Card and soon they will start marketing of it. 2.9.10 Merchant Banking and Investment Division This division concentrates its operation in the area of under writing of initial public offer (IPO) and advance against shares. This division deals with the shares of the Company. They also look after the security Portfolio owned by the Bank. The Bank has a large amount of investment in shares and securities of different corporations as well as government treasury bills and prize bond. 2.9.11 Logistic & Support Services Division (L&SSD) This Division was formerly known as General Services Division (GSD). Their main function relates to procurements and supply of all tangible goods and services to the Branches as well as Head office of Prime Bank Limited. This includes i. Every tangible functions of Branch opening such as making lease agreement, interior decoration etc. ii. Print all security papers and Bank Stationeries. iii. Distribution of these stationeries to the branch iv. Purchase and distribute all kinds of banks furniture and fixtures. v. Receives demand of cars, vehicles, telephones etc from branched and different divisions in head office and arrange, purchase and delivery of it to the concerned person / Branch. vi. Install & maintain different facilities in the Branches.
coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy. d. Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. e. Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
f. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.
Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.
3.3 Activities/Functions:
Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Supply chain activities can be grouped into strategic, tactical, and operational levels. 1. Strategic a. Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. b. Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and
operational improvements such as cross docking, direct shipping, and third-party logistics. c. Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. d. Information operations. e. Where-to-make and what-to-make-or-buy decisions. f. Aligning overall organizational strategy with supply strategy. technology infrastructure to support supply chain
2. Tactical a. Sourcing contracts and other purchasing decisions. b. Production decisions, including contracting, scheduling, and planning process definition. c. Inventory decisions, including quantity, location, and quality of inventory. d. Transportation strategy, including frequency, routes, and contracting. e. Benchmarking of all operations against competitors and
implementation of best practices throughout the enterprise. f. Milestone payments. g. Focus on customer demand.
3. Operational a. Daily production and distribution planning, including all nodes in the supply chain.
b. Production scheduling for each manufacturing facility in the supply chain (minute by minute). c. Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. d. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. e. Inbound operations, including transportation from suppliers and receiving inventory. f. Production operations, including the consumption of materials and flow of finished goods. g. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. h. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers.
management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key supply chain processes are: Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management
One could suggest other key critical supply business processes which combine these processes stated above, such as: a) b) c) d) Customer service management Procurement Product development and commercialization Manufacturing flow management/support
Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the source of customer information. It also provides the customer with real-time information on scheduling and product availability through interfaces with the company's production and distribution operations. Successful organizations use the following steps to build customer relationships: determine mutually satisfying goals for organization and customers establish and maintain customer rapport produce positive feelings in the organization and the customers
b) Procurement process Strategic plans are drawn up with suppliers to support the manufacturing flow management process and the development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship where both parties benefit, and a reduction in time required for the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs.
c) Product development and commercialization Here, customers and suppliers must be integrated into the product development process in order to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched with ever shorter
time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must:
Select materials and suppliers in conjunction with procurement, and Develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination.
d) Manufacturing flow management process The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing/service flow process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations.
e) Physical distribution This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a
marketing channel with its customers (e.g., links manufacturers, wholesalers, retailers).
f) Outsourcing/partnerships This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally, with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.
g) Performance measurement Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. Taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can both be correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes narrower. A.T. Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to experts, internal measures are generally collected and analyzed by the firm including Cost Customer Service
External performance measurement is examined through customer perception measures and "best practice" benchmarking, and includes 1) customer perception measurement, and 2) best practice benchmarking.
Logistics - (business definition) Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment.
Logistics - (military definition) The science of planning and carrying out the movement and maintenance of forces.... those aspects of military operations that deal with the design and development, acquisition, storage, movement, distribution, maintenance, evacuation and disposition of material; movement, evacuation, and hospitalization of personnel; acquisition of construction, maintenance, operation and disposition of facilities; and acquisition of furnishing of services. Logistics - The procurement, maintenance, distribution, and replacement of personnel and materiel.
Logistics 1. The branch of military operations that deals with the procurement, distribution, maintenance, and replacement of materiel and personnel. 2. The management of the details of an operation.
Logistics - ...the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements." Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes.
Logistics - The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements.
Logistics - The science of planning, organizing and managing activities that provide goods or services.
Logistics - Logistics is the science of planning and implementing the acquisition and use of the resources necessary to sustain the operation of a system.
Business Logistics - The science of planning, design, and support of business operations of procurement, purchasing, inventory, warehousing, distribution, transportation, customer support, financial and human resources.
Acquisition Logistics - Acquisition Logistics is everything involved in acquiring logistics support equipment and personnel for a new weapons system. The formal definition is "the process of systematically identifying, defining, designing, developing, producing, acquiring, delivering, installing, and upgrading logistics support capability requirements through the acquisition process for Air Force systems, subsystems, and equipment.
Integrated Logistics Support (ILS) (1) - ILS is a management function that provides planning, funding, and functioning controls which help to assure that the system meets performance requirements, is developed at a reasonable price, and can be supported throughout its life cycle.
Integrated Logistics Support (ILS) (2) - Encompasses the unified management of the technical logistics elements that plan and develop the support requirements for a system. This can include hardware, software, and the provisioning of training and maintenance resources.
Logistics Support Analysis (LSA) - Simply put, LSA is the iterative process of identifying support requirements for a new system, especially in the early stages of system design. The main goals of LSA are to ensure that the system will perform as intended and to influence the design for supportability and affordability.
Use of space for Head of Branch, Head of Division, Officers, Teller, Vault, Store ETC. Criteria of usage furniture. Maintenance of decorative items/premises. Maintenance of furniture/fixture. Maintenance of Sanitary fitting/fixture. Maintenance of sign board/signage.
Procurement, Installation & Maintenance of Air Conditioner units. Procurement, Installation & Maintenance of Generators. Procurement, Installation & Maintenance of CCTV Surveillance system. Procurement, Installation & Maintenance of PABX. Procurement, Installation & Maintenance of Photocopier/Fax Machine. Procurement, Installation & Maintenance of electrical systems/Solar panels. Usage of Office equipment. Procure, Repair & Replacement of Cell Phone. Usage of Cell Phone. Save power & Energy. Earthing system. Feasibility survey for suitable premises for perfect installation.
4.2.3 Printing and Stationary Department MICR cheque. Visiting card. Store Management. Delivery cheque book. Supply different stationary items to all division in Head office.
Affairs on leave, office discipline/punctuality, attendance. Affairs on movement, visit, inspection. Cleaning, washing, plantation of premises. Engagement of safety and security firm. Supervision on safety and security system. Enhancement of Cash in Safe, Cash in Transit, Cash on Counter. Cash carrying service. Insurance like ITs, ATM, Vehicle, Office equipment & furniture, Locker etc. Awareness on fire protection system & usage of fire protection equipment. Dispatch.
4.2.5 Transportation and Communication Department Procurement of vehicles. Auction of vehicles. Use of vehicles. Maintenance of vehicles. Administration for Drivers. Allocation of vehicles.
4.2.6 Real state Department Selection of suitable premises for Branches. Scale of negotiation. Execution of Memorandum of Understanding/Lease Agreement/Deed of Contract.
Figure: PBL Supply Chain 5.1.1Objective of PBL supply chain The objective of every supply chain should be to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in fulfilling the customers request. For most commercial supply chains, value will be strongly correlated with supply chain profitability. Supply chain profitability or supply chain surplus is the difference between the revenue generated from the customer and the overall cost across the supply chain. For any supply chain, there is only one source of revenue: the customer. All other cash flows are simply fund exchanges that occur within the supply chain, given that different stages have different owners. All flows of information, product, or funds generate costs within the supply chain. Thus, the appropriate management of these flows is a key to supply chain success.
5.1.1.1 The flow of products in the PBL supply chain A list of products and services that are procured by L&SSD is presented below according to their category as mentioned in the PBL Procurement Policy: Categories of Items for Procurement Category A Table Stationery, Writing Papers, Printing etc. Category B Printing Forms/Registers Category C Printing of Security Items Category D Computer Accessories/Consumables Category E Category F Category H Category I Category J Category K Electrical Accessories Interior Decoration, Wooden Furniture, Aluminum Works, Repair & Replacement Steel Furniture, Iron Safe, Locker etc. Penaflex Sign Board, Bell Sign, Neon Sign Board etc. Architectural/Interior Designing- Consultancy Service Air-conditioner, Photocopier, Fax, Note Counting Machine, CCTV,
Alarm Bell, Generator, Metal Detector, Fire Extinguisher etc. Category L Land Telephone & Cell Telephone and PABX Category M Courier Service Local and International Category N Vehicles, Repair, Replacement, Maintenance, Fuel, Tyre, Tube, Category O Category P Category Q Category R Category S Spares, Oil, Lubricants etc. Pot plant, Drinking Water, Coffee Vending Machine and Coffee materials. Carpet/Mat and repair, cleaning and washing thereof Security and Facility Staff Services Cash Insurance Arrangements Miscellaneous stores/supplies/services which do not fall under any of the above categories. Table: Items for Procurement
5.1.1.2 Responsibilities of Purchase Departments: The Purchase Departments are responsible for 1. Procuring goods and services of desired quality to the economic advantage of the Bank.
2. Procuring adequate quantity of stores and office supplies at right time so as to ensure timely delivery for meeting demands of indenting Divisions, Departments, Units and Branches. 3. Ensuring execution of contracts in the manner that the Banks interest is well protected. 4. Prioritizing procurement of indigenous products as far as practicable in keeping with the maintenance of quality. 5. Collecting indents from various Divisions and Branches on quarterly basis in time and processing those for procurement by examining quality, determining quantity and comparing prices. 6. Following appropriate method for procurement of the items for which indents are received. 7. Maintenance of Economic Order Quantity of different items so that operations can be carried on unhindered. 8. Standardizing items for procurement for bringing in economy.
5.1.1.3 Procurement Authority: All proposals for procurement are processed by Logistics & Support Services Division in case of procurement to be made centrally. The choice to procure items centrally by the Purchase Department in LSSD or by the Branches locally is the Managing Directors discretion. For central procurement, the authority shall be exercised by the respective executives of different levels as delegated to them by the Board of Directors. But in exercising the authority all procedures and processes of procurement shall be followed. Any procurement, repair, replacement, maintenance, renovation or refurbishment work beyond the delegated power of the Managing Director shall be placed before EC/Board for necessary approval having observed all required formalities of procurement.
5.1.2 Importance of supply chain decisions There is close connection between the design and management of supply chain flows (products, information, fund) and the success of a supply chain. There are many companies who have built their success on superior design, planning, and operation of their supply chain. In contrast, the failure of many business organizations can be attributed to weaknesses in their supply chain design and planning. 5.1.3 Decision phases in the PBL supply chain Supply chain management requires many decisions relating to the flow of information, product, and funds. Each decision should be made to raise the supply chain surplus. These decisions fall into three categories or phases, depending on the frequency of each decision and the tome frame during which a decision phase has an impact. 1. Supply chain strategy or design: During this phase, given the marketing and pricing plans for a product, PBL decides how to structure the supply chain over the next several years. It decides what the chains configuration will be, how resources will be allocated, and what processes each stage will perform. Strategic decisions made by the PBL include whether to outsource or perform a supply chain function in-house, the location and capacities of branches, SME service centers, ATM booths, warehousing facilities, the services to be offered and products to be stored at various locations, the modes of transportation to be made available for different transportation activities, and the type of information system to be utilized.
2. Supply chain planning: For decisions made during this phase, the time frame considered is a quarter to a year. Therefore, the supply chains configurations determined in the strategic phase is fixed. This configuration establishes constraints within which planning must be done. Planning includes making decisions regarding which markets will be supplied from which locations, the inventory policies to be followed, and the timing and size of marketing and promotional efforts.
3. Supply chain operations: The time horizon here is weekly or daily and during this phase supply chain decisions are made on the basis of individual customer orders e.g. receipt of requisition from any division. At the operational level, supply chain configuration is considered fixed and planning policies are already defined. The goal of supply chain operations is to handle incoming customer orders in the best possible manner. During this phase, PBL allocate inventory or procure products to match individual orders, set a date that an order is to be filled, generate pick list at a warehouse, allocate an order to a particular shipping mode and shipment, and place replenishment orders. All processes in the supply chain fall into one of the two categories depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order. With push processes, execution is initiated in anticipation of customer orders. Push processes operate in an uncertain environment because customer demand is not yet known. Pull processes operate in an environment in which customer demand is known. They are, however, constrained by inventory and capacity decisions that were made in the push phase.
factors which stand on the way of procurement and having all the determinants kept in the right track. There may be clashes among different determinants. Transparency should be a catalytic factor in procurement process. Again, negotiation in an effective manner may bring in cost savings in procurement. In order that transparency, cost effectiveness, optimum quantity, desired quality and right time are maintained in procurement the Bank should formulate a pragmatic but comprehensive Procurement Policy to be followed by the concerned Divisions and Delivery Outlets. Prime Bank Limited is in operation for about 16 (Sixteen) years. During the period several items like office supplies, stationery (general), printing stationery, security printing stationery, furniture & fixtures, office equipments, electrical and electronic appliances, and fixed assets like land have been procured. Alongside repair, replacement and printing works have also been undertaken. These items may be classified into revenue expenses and capital expenses for treatment in accounting. These procurements constitute an important element in the Banks total operating cost. 5.2.1 Objectives of Prime Bank Procurement Policy: 1. To optimize efficiency in procurement. 2. To promote competition among the bidders or tenderers for procurement of goods, works or services. 3. To provide equitable treatment to the participants, bidders or tenderers. 4. To ensure fairness in procurement process. 5. To bring in transparency in the procurement process. 6. To minimize the wasteful procurement and thereby maintain cost effectiveness. 7. To ensure establishment of accountability of the personnel involved in the procurement process
8. To define the jobs and responsibilities of personnel involved in procurement process. 9. To provide guidelines to the personnel in discharging their responsibilities in procuring goods, works or services for the Bank. 10. To contribute to the improvement in the procurement systems. 11. To bring in dynamism in procurement process.
5.2.2 Scope of application of the PBL Procurement Policy: 1. The Procurement Policy is applicable for Logistics and Support Services Division with regard to procurement of the following items : a. Furniture and Fixtures. b. Electrical and Electronic goods and appliances. c. Office Suppliers and Stationery. d. Communication devices and appliances. e. Technological Security items and Devices. f. Crockeries, Ceramics etc. g. Generator. h. Vehicles for the Bank. i. Other Logistics items as required. 2. This Policy is applicable for IT Division for procurement of hardware and software relating to IT. 3. This Policy may be applicable to Delivery Outlets for procurement of table stationery and supplies as per their requirement and delegated authority. 5.2.3 Modes of Procurement:
1. Direct Cash Purchase. 2. Direct Procurement. 3. Procurement against Spot Quotation. 4. Procurement through limited Tender amongst enlisted firms and suppliers. 5. Procurement against single Tender in case of proprietary item with no limit. 6. Procurement against open Tender in Press. 7. Repeat Order. 8. Negotiation/Arbitration
5.2.4 Processing for Procurement: In processing procurement of any item of capital or revenue nature the following stages are involved : 1. Receipt/Collection of Indent/Requisition 2. Scrutiny of indents 3. Taking decision as to the method of procurement 4. Placing proposal for obtaining approval of the competent authority for procurement 5. Floatation of Tender Notice, Invitation of quotations, Receipt of Spot Quotations, as the case may be 6. Acceptance of Tender, Quotations 7. Pre inspection and Pre-delivery Process 8. Inspection and quality control 9. Delivery
10. Payment on the basis of certification of relevant authority like receiving Department, Quality Control Committee etc.
No company can allow purchasing to lag behind other departments in acknowledging and adjusting to worldwide environmental and economic changes. Such an attitude is not only obsolete but also costly. Kraljics portfolio model was first published in 1983 and is still widely used both in practice and as a reference by researchers. In the article Peter Kraljic (1983) defines four stages of purchasing sophistication according to two dimensions, Importance of purchasing and Complexity of supply market. The dimensions account for risk on one hand and buying power on the other hand. The four categories are supply management, sourcing management, materials management and purchasing management. The focus of this part of the study is to analyze and apply management theories in the procurement of different materials, which fits into Kraljics Portfolio Model. For procurement of strategic items, where both the importance of purchasing and the complexity of the supply market is high, companies should use supply management. The main focus in these situations is that long-term availability should be secured because the supply is scarce. If companies are to purchase bottleneck items, the most important features are reliable short-term sourcing and cost management. Purchasing of these articles are often made on a decentralized level, but coordinated centrally. In this situation the importance of purchasing is low while the complexity of the supply market is high. Materials management is to be used when procuring leverage items. Here the importance of purchasing is high and the complexity of supply markets is low. The supply is abundant and the key performance criteria are cost and materials flow management. Finally, the procurement of non-critical items fit into Kraljics purchasing management segment. The procurement focus is noncritical items and both the importance of purchasing and the complexity of the supply market are low. According to the work of Kraljic, typical sources are established local suppliers that are contracted for a limited time horizon. The supply is superabundant and the main performance criterion is functional efficiency. These purchasing decisions are made on a decentralized level in the buying organization. The Kraljic Matrix from Peter Kraljic was first described in an article Purchasing must become Supply Management in the Harvard Business Review (Sep-Oct 1983). The Kraljic model can be used to analyze the purchasing portfolio of a firm.
The Kraljic framework is based on two dimensions for classifying a firms purchased material or components (see figure)
Efficient processing
Volume assurance
Low
Supply Risk
High
Profit Impact implies the strategic importance of purchasing in terms of the value added by product line, the percentage of raw materials in total costs, and their impact on profitability. Supply Risk implies the complexity of the supply market gauged by supply scarcity, pace of technology and/or materials substitution, entry barriers, logistics cost or complexity, and monopoly or oligopoly conditions. The model then distinguishes between the following 4 product categories: 1. Leverage items:
Leverage items are products that represent a high percentage of the profit of the buyer and there are many suppliers available. It is easy to switch supplier. The quality is standardized.
Recommended purchasing strategy :Tender, vendor selection, targeted pricing, umbrella agreement with preferred suppliers. Calloff orders are then placed as an administrative formality.
2. Strategic items: Strategic items are products that are crucial for the process or product of the buyer. They are characterized by a high supply risk caused by scarcity or difficult delivery. Buyerseller power situation is balanced, high level of
interdependency. Recommended purchasing strategy: Strategic alliance, close relationships, early supplier involvement, co-creation, vertical integration, long-term value focus. 3. Non-critical items: Non-critical items are products that are easy to buy and also have a relative low impact on the financial results. Product quality is standardized. Buyer-seller power situation is balanced, low level of
interdependency. Recommended purchasing strategy: Reduce time and money spent on these products by enhancing product standardization and efficient processing.
4. Bottleneck items: Bottleneck items are products that can only be acquired from one supplier or their delivery is otherwise unreliable and has a relative low impact on the financial results. Buyer-seller power situation is supplier dominated, moderate level of interdependency. Recommended purchasing strategy: Volume insurance contract, vendor managed inventory, keep extra stocks, look for potential suppliers.
High
Leverage items
Strategic items
Category F, H, I, J, K
Bottleneck items
Category A, B, D, E, O, P
Category C, Q, R
Low
Supply Risk
High
Suggested strategies for purchasing leverage, strategic, non-critical, and bottleneck items have been described thoroughly by Van Weele (2002). A table showing different strategies for purchasing different items is given under:
Efficient processing: Reducing costs and complexity for administration and logistics is the aim of this strategy. Suggested strategies: Standardization of product Non-critical Items range, inventory holding, reducing the number of suppliers, vendor managed inventory for indirect material, electronic catalogues, internet technology can be applied to manage this items. Decision level: Lower buyer (e.g. Individual buyers) Volume insurance: Securing the continuity supply, if needed at a higher cost, will be the main policy. Suggested strategies: At the same time while continually assure the volume supply, it is very important Bottleneck Items to work at reducing dependency by developing substitute suppliers or products. Hold conservative safety stocks and contingency planning.
Decision level: Higher level (e.g. Department heads) Exploit power: Companies may utilize their power to get a good bargain. Suggested strategies: The purchasing strategy focuses on principles of competitive bidding seeing as the Leverage Items suppliers are more or less interchangeable. Priority is to uphold required quality and continuity of supply at a minimum cost. As a rule in general, long-term contracts are avoided. Decision level: Medium level (e.g. Chief buyer) Partnership: To maintain a good partnership relationship with suppliers. Suggested strategies: The relative power position between the company and the suppliers will decide the purchasing strategy as either partnership or Strategic Items collaboration. Develop separate strategic approaches for each different case. Should consider firms overall business strategies and consider issues related to supply markets all the times. Decision level: Top level (e.g. Vice president of purchasing)
2. Supplier selection Managers must decide on the number of suppliers they will have for a particular activity. They must then identify the criteria along which suppliers will be evaluated and how they will be selected. For the selection process, managers must decide
whether they will use direct negotiations or resort to an auction. If an auction is used, it must be structured to ensure the desired outcome.
3. Sourcing related metrics A manager should track the following sourcing related metrics that influence supply chain performance-
a. Days Payable outstanding: Measures the number of days between when a supplier performed a supply chain task and when it was paid.
b. Average purchase price: measures the average price at which a good or service was purchased during the year.
c. Range of purchase price: measures the fluctuation in purchase price during a specified period. The goal is to identify if the quantity purchased correlated with the price.
d. Average purchase quantity: measures the average amount purchased per order. The goal is to identify whether a sufficient level of aggregation is occurring across locations when placing an order.
e. Fraction on-time deliveries: measures the fraction of deliveries from the supplier that were on time.
g. Supply lead time: measures the average time between placement and arrival of orders.
5.4.2 Sourcing/Enlistment process of Suppliers/Contractors at PBL: Schedule of each category of stores & supplies containing probable names (Code Nos. etc.) of items, terms and conditions of enlistment, supply, payment etc. should be prepared by the Purchase Department along with the Application Forms for enlistment. 1. Suppliers/contractors will purchase Enlistment Forms from the Logistics & Support Services Division at a price to be fixed by the Management from time to time. 2. Application should be invited through advertisement in 2/3 widely circulated National dailies for enlistment with the Bank for each category of items mentioned above. There should be Enlistment/Registration Tk.4,000.00 (non-refundable) for all categories of suppliers. 3. The application for enlistment/registration shall accompany the required fee as mentioned above in the form of DD/PO. The enlistment/registration for each category of suppliers will initially remain valid for 2(two) years term which can be renewed with fee of Tk.2,000.00 (non-refundable) per year. 4. Enlisted/Registered Suppliers/Contractors/Decorators shall also deposit @2% of the total quoted amount as Security/Earnest Money at the time of submitting Tenders/Offers for supply of items. 5. All applications received by the Purchase Department for Fees of
enlistment/registration of suppliers/contractors should be properly and carefully scrutinized by responsible Officers, particularly in respect of the applications etc. properly filled in, all documentary evidence are supplied/enclosed, fulfillment of all requirements laid down in the Schedules
6. After
scrutiny
and
fulfillment should
of be
all
formalities, to
all
the
selected of
Suppliers/Contractors
asked
make
payment
Enlistment/Registration fees to the Cash Section of any Branch of the Bank or at Head Office. The names of the Suppliers/Contractors will be finally enlisted/registered on production of official receipt evidencing payment for each category of supplies and stores. 7. Applications for renewal of registration may be made by the
Suppliers/Contractors on their Letter Head to the In-Charge, LSSD at least 2(two) months in advance of the date of expiry of their registration or the date fixed by the Bank Management through notice. Such applications should be accompanied by the prescribed renewal fee. The registration of the Contractors/Suppliers performance/reputation. 8. There is no bar to a Contractor/Supplier to apply for a change in category, if it is already registered/enlisted. The necessary inquiries should be made and if the result is found satisfactory, the change may be accepted, subject to payment of the additional fees for enlistment/registration for the category desired, but in no case registration fee be refunded. 9. Any Supplier/Contractor not desiring to continue with registration can apply for withdrawal at any time, but such an application shall only be accepted after execution of any purchase order placed in the name of the Contractor/Supplier. 10. Any enlisted Suppler/Architect should also open an account (Current Account) with any of our Branch. should be renewed on the basis of their
5.4.3 Vendor Analysis In practice, business buyers use a variety of methods to assess supplier value. The choice and importance of different attributes varies with the type of buying situation. Delivery reliability, price, and supplier reputation are important for Routine Order products. For procedural-problem product, such as a copying machine, the three
most important attributes are technical service, supplier flexibility, and product reliability. For political-problem products that stir rivalries in the organization, such as the choice of a computer system, the most important attributes are price, supplier reputation, product reliability, service reliability, and supplier flexibility. Furthermore, a business buyer may produce Vendor Analysis in order to compare among suppliers and take corrective measures if necessary. An example of Vendor Analysis is presented below:
Attributes Importan ce Weights Price Supplier Reputation Product Reliability Service Reliability Supplier Flexibility Total Score 0.30 0.20 0.30 0.10 0.10 Poor (1)
X X X X X .30(4)+.20(3)+.30(4)+.10(2)+.10(3) = 3.5
5.4.4 Supply Environment The sourcing strategy formulation process often includes an analysis of the external environment and an assessment of the internal factors of the organization. To help in building the strategy, an organization must make a forecast about the environmental conditions that will be encountered in the future to achieve its goals and procurement should know the suppliers' environments that affect corporate goals. Therefore, procurement cannot operate in isolation from its environment, including the supply market and other elements of business. The optimal supply base may be sensitive to
changes in the market environment because complex systems, such as supply networks, are embedded in the environment and interact with the base. Thus, it is recommended that sourcing strategies should also include analysis of the markets from which key products and services may be sourced. When analyzing supply markets and matching external resources provided by suppliers with the internal needs of the buying company, purchasing portfolio models are nowadays widely used. For example, some of those models can be used to analyze the company's purchases to ascertain the ideal relationship types for different purchases and others can be used to analyze the company's own strength against the supplier market. A real problem can occur when the supplier's priorities do not match the buyer's. Lack of knowledge in a limited supply market may cause difficulty in making purchasing decisions, especially in cases in which only a few suppliers are capable of providing a particular good or service that meets the required standards, has the appropriate volume, or is situated in the required geographical location. Any of these restrictions opens up the possibility for the supplier to exploit the situation.
5.5
Information
Technology
in
Supply
Chain
Management
Traditionally, direct/personal communication (face-to-face and telephone) and mechanical communication (mail and fax) are the most common way the firms communicate to their external partners and internal employees until information technology (IT) has dramatically changed the way business operates and how firms interact with their exchange partners. IT is fundamentally altering the means and patterns of contact between firms and their suppliers or customers. For example, email has become a very popular communication way replacing mechanical communication (mail and fax) methods. Many purchasing executives also indicate that IT has become a vital role in reducing the needs for human resources to perform the routine purchasing tasks such as requisitioning. Furthermore, IT is a useful tool to support closer buyer-supplier relationships and improve supply chain performance. Purchasing managers indicate that the preference for different
communication media depends on what message is being transmitted. Information technology for the purchasing function can be categorized into: 1. Transactional management systems: to facilitate internal or external information exchange about acquisition transaction. For example, EDI and ERP systems are the one draw a lot of attentions previously and recently. 2. Electronic commerce: intranet and extranet are the tools to support more efficient procurement process, resulting in cost savings to the company. 3. Purchasing information management: includes activities related to data warehousing of commodity information and the procedures for gathering the information. 4. Decision support tools: such as negotiation support systems in purchasing process, this applies Game theory in it. A decision support tool for supplier evaluation is another example. The information technology a company uses is closely related to the firms own stages of development. No relationship exists between the commodity type and technology used. 5.5.1 E-procurement in supply chain management: With the IT advance, business-to-business (B2B) e-commerce, which e-procurement is the core area, has become central to running a business effectively. Eprocurement will fundamentally restructure the way in which an organization purchases goods. But Prime Bank Limited does not exercise any of the above mentioned e-procurement system.