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and the Raw materials Work-in-process (WIP) inventory Finished products that flow between the facilities
2
Material Costs
Transportation Costs
Transportation Costs
Plan
Source
Make
Deliver
Buy
Suppliers
Manufacturers
Customers
Material Costs
Transportation Transportation Costs Transportation Costs Manufacturing Costs Inventory Costs Costs 4
System-wide costs are minimized and Service level requirements are satisfied
5
The growth of technologies such as the Internet enable greater collaboration between supply chain trading partners
If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of supply chain maturity of its suppliers
Wholesale Distributors
Retailers
Consumers
Sales
Sales
Time
Sales
Time
Time
Sales Time
Bullwhip Effect
10
Lead time
Batch ordering
customers
Collaborative planning with design partners, distributors, and suppliers
Order tracking & reporting across multiple vendors and carriers Shared visibility for
trading partners
12
Formality
- Receiving Report
Check - Against Purchase Order - Physical check of goods Enclose: - Packing Slip - Bill of Lading - Invoice for Freight
Tests: Characteristics of Incoming materials are compared to the specifications - Blue Prints - Using Gauges - Laboratory Tests - Visual Inspection Inspection report is sent to all relevant departments including the buyer and the seller
Return Policy
If the Material is Rejected
Materials can be returned OR Reworked OR Scrapped off
Quality Problems
If the item fails to meet the buyers specifications, the major problem is usually not ADMINISTRATIVE.
Rejection can disrupt Production Purchasing Manager should work out alternatives
BUYER must investigate to make certain that the supplier has been treated fairly to preserve amicable relations
Go half way & reach a compromise Make honest effort and correct quality discrepancies for future shipments.
Inventory Control
If the material passes inspection
The receiving clerk usually prepares a Move Ticket Material is transferred to the User or to the Storage Area If transferred to stores becomes inventory
Inventories
Safety Margins
Every minor delay in every minor component would cause a serious shortage. Production rates of components and subassemblies always have to be perfectly synchronized. To avoid defects in scheduling & errors in forecasting.
Cost of Inventories
Inventories solve materials management problems but there are strong incentives for maintaining minimum stocks. Materials should be made available when needed Balance the cost of carrying stock against cost of possible shortages
The most important job is done when the Material is delivered on schedule to the Manufacturing Organization.