modern methods in inventory control
DESCRIPTION
modern method JIT IJIT IIDRPERPVendor managed inventoryTRANSCRIPT
UNIVERSITY OF MUMBAI’SUNIVERSITY OF MUMBAI’S
ALKESH DINESH ALKESH DINESH MODY INSTITUTE MODY INSTITUTE
FOR FOR FINANCIALFINANCIAL & MANAGEMENT & MANAGEMENT
STUDIESSTUDIES
1
NAME OF THE STUDENTNAME OF THE STUDENT ROLL ROLL NOSNOS
SIGNATURESSIGNATURES
AHSAN KHAN 4343
AJAY DHUTAWALE
11
ARUN IYER 28
ANAS KHAN 47
SHAHBAAZ KHAN 522
SYBMS SEM V
Submitted to :- Prof. SANJIV THAKUR SIR
3
Contents
• Jit 1• Jit 2 • Erp • drp • Vendor management
What is DRP ?
Distribution resource planning (DRP) is a method used in business administration for
planning orders within a supply chain. DRP enables the user to set certain inventory
control parameters (like a safety stock) and calculate the time-phased inventory
requirements. This process is also commonly referred to as Distribution Requirements
Planning
Emergence of Distribution Resource Planning
The need for more detailed distribution planning led to the emergence of distribution requirements
planning (DRP) during the 1970s.
DRP is a widely used and potentially powerful technique for helping outbound logistics systems
manage and minimize inbound inventories.
This concept extended the time-phase order point found in material requirements planning (MRP)
logic to the management of channel inventory.
By the 1980s DRP had become a standard approach for planning and controlling distribution
logistics activities and had evolved into distribution resource planning.
The concept now embraces all business functions in the supply channel, not just inventory and
logistics, and is termed DRP .
DRP is usually used with an MRP system, although most DRP models are more
comprehensive than stand-alone MRP models and can schedule transportation. The
underlying rationale for DRP is to more accurately fore-cast demand and then use
that information to develop delivery schedules. This way, distribution firms can
minimize inbound inventory by using MRP in conjunction with other schedules.
Logistical Benefits of DRP
Conclusion
DRP provides inventory and distribution plans to meet product demand forecasts . It
can manage the process of matching the company’s inventory to customers orders m
so that it will never have to worry about having the wrong inventory in the wrong
plave at the wrong time after all its all about the timing
Meaning of JIT (Just In Time)
JIT is a Japanese management philosophy, which has been applied in practice since the
early 1970s in many Japanese manufacturing organizations. It was first developed and
perfected within the Toyota manufacturing plants by Taiichi Ohno as a means of
meeting consumer demands with minimum delays.
Ethical concept of JIT by Japanese:
Motivation of workers
Inspiration of the team work
Opportunity to all the employees
Benefits to the workers
Correction Repair or work
Motion Any wasted motion to pick up parts or stack parts. Also wasted walking
Overproduction Producing more than is needed before it is needed
Conveyance Wasted effort to transfer materials, parts, or, finished goods into or out of storage , or between process
Inventory Making excess inventory of raw materials parts in process or finished goods
Processing Doing more work than is necessary
Waiting Any non-work time waiting for tools & supplies and parts,etc
Types Of Waste
Elements of JIT System
1.Continuous improvement
2.Attacking fundamental problems-anything that does not add value to the product
3. Devising systems to identify problems
4.Good housekeeping-workplace cleanliness and organization
5.Set up time reduction-increases flexibility and allows smaller batches
6.Ideal batch size is 1 item per batch, i.e. single piece flow
Benefits of JIT Systems
Reduced space requirements.
Increased product quality and reduced scrap and rework
Reduced manufacturing lead times.
Greater flexibility in changing the production mix.
Smoother production flow with fewer disruptions.
Worker participation in problem solving.
Summary of JIT I
It can be said in summary that JIT is the management philosophy, which
emphasizes on the waste elimination as well as vendor integration to create
certainty in the material planning process, which ultimately results into no
inventory; and hence inventory control means to follow JIT.
JIT II
The new basis of competition in many industries is time-based. This means that
the focus is on reducing lead time by speeding up the design of new products or
responding more quickly to customer demand for existing products.
The practice of JIT II links engineering, planning, and purchasing departments and
bridges the inter-organization gap between customer and supplier.
JIT II Purchasing
In a JIT II relationship, a supplier's sales representative works full-time in a customer
firm while being paid by the supplier. The customer serves as the host organization,
and the supplier representative-referred to as an in-plant representative, or
“in-plant”functions as an employee of the customer's purchasing department, attending
planning meetings and determining material needs. The in-plant is then authorized to
purchase materials from the supplier for the customer.
ADMINISTRATIVE BENEFITS OF JIT II
Efficient administration of the purchasing function is reducing lead times in JIT II
companies.
Having an in-plant on-site provides the customer with continuous supplier support.
Essentially, the supplier is always available and has a real-time awareness of customer
needs.
The levels of customer service and efficiency that are achieved are greater than those in
firms where off-site representatives serve the account.
The time required to contact a supplier is minimized .
What is A Vendor?
“A vendor can be any person, organization or software development company that is providing services or products on behalf of a covered entity.”
• Maintaining good relations.
• Professional and personal relations.
• Mutually beneficial.
• Strategic importance
• Long term.
TYPES OF VENDOR:-
Primary Vendor(s) –
Refers to the direct contractual relationship between a consulting vendor and the end client.
A typical vendor management program will have a number of primary vendors, but there can be one primary vendor who can then use sub-
vendors.
Sub-Vendor(s) – Those staffing firms that work through a primary vendor.
The Successful Vendor Selection Process
Strategies to Strengthen Vendor Relations
• Share Information and Priorities
• Balance Commitment and Competition One of the goals in vendor management
• Allow Key Vendors to Help You Strategize
• Build Partnerships For The Long Term
• Seek to Understand Your Vendor's Business Too Remember, your vendor Negotiate to a Win-Win Agreement
• Come Together on Value Vendor management is more than getting the lowest
What is Enterprise Resource Planning (ERP)?
• ERP is an enterprise-wide information system designed to coordinate all the
-Resources,
-Information,
• Activities Needed To complete business processes such as;
-Order Fulfillment
-Billing.
What is erp ?
ERP (enterprise resource planning) is an industry term for the broad set of activities that helps a business manage the important parts of its business.
The information made available through an ERP system provides visibility for key performance indicators (KPIs) required for meeting corporate objectives.
ERP software applications can be used to manage product planning, parts purchasing, inventories, interacting with suppliers, providing customer service, and tracking orders.
ERP can also include application modules for the finance and human resources aspects of a business. Typically, an ERP system uses or is integrated with a relational database system
Why ERP Came?
• ERP has become a powerful tool in hands of management for effective use of resources and to improve the efficiency of an enterprise.
Why ERP?There are several reasons why a company will consider the Implementation of a New Backbone Business System:
ERP serves and supports multiple business functions
ERP systems allow companies to better understand their business.
ERP enhancing management decision making
ERP helps in improving profitability of the company
ERP helps to cope up with new production requirements
Why ERP?(continued)
Reduce Costs – How will ERP Help?
Enable Reduced Resource Requirements due to:
ERP involves less paper work
ERP Provides a means to supply chain management
ERP provides instant access with latest information
Continued……!
Reduce Costs – How will ERP Help?
Enable Reduced Resource Requirements due to:
ERP provides rapid transfer of information
ERP Reduces Cost
On Demand Reports
How ERP Systems Works?
• Implementation done by consultants
• Integration of all information
• Integration involves all the processes and enhancing the process to current business scenarios.
• Hardware and software both constitute integration
• ERP delivers a SINGLE DATABASE that contains all data for the software module
ERP PACKAGES
I. SAP AG• is a German global software corporation that provides enterprise software applications and
support to businesses of all sizes globally.,
• SAP is the largest enterprise software company in the world (as of 2009). The company's best known products are its SAP Enterprise Resource Planning (SAP ERP) and SAP Business Objects software.
II. ORACLE
• Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems.
• it has enlarged its share of the software market through organic growth and through a number of high-profile acquisitions. By 2007 Oracle had the third-largest software revenue, after Microsoft and IBM.
Companies before ERP
Full of paper work
An example …,
Transfer to Finance
Department
Transfer to Manager
Transfer to Accounting Dept.
Transfer to Accounting dept
Companies after ERP Implementation
Less paper work and more use of technology
ERP SOLUTIONS
PRODUCTIVIT
Y
COST
QUALITY CUSTOMER
SATISFACTI
ONMARKETSHARE
PROFIT
Benefits of ERPI. Operational Benefits
Reduces processing cycle . Access to multidimensional Information. Effective Cost control Increase Productivity
II. Business Benefits
Higher profit & improved Return on Investment (ROI) Better utilization of Resources' due to easy to control Better customer service
III. Management Benefits
Helpful in decision making Secured Information Less Number of Employees
Disadvantages
• Expensive to install and Run
• Initially can be difficult to use
• Customization in many situation is Limited