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Site details
The characteristics of the particular place (site) will determine the final layout
design. The topography of the site, along with other factors, including drainage and
ground status will decide the designing. You must have a layout that proves to
stand firm on the situated place. For example, if the area is poorly drained, flooded
water can negate the integrity of all the products, which are water sensitive. The
warehouse must be specially designed with a raised floor to protect all the items.
4. List down certain new developments in store management
5. Explain the different OR techniques used in integrated materials
management.
6. Discuss different techniques used for materials management.
The techniques most commonly used are the following:
E-procurement Processes
In addition to creating an electronic catalog, existing procurement processes need to
be electrified end-to-end to support the entire e-procurement process. This includes
requisition and order management, real-time tracking and receiving, online order
fulfillment, automatic billing, invoicing and payment, as well as workflow
management, commerce transactions, and reporting and analysis tools.
Note that an effective e-procurement platform must support both the buyers and the
suppliers business processes. It should also offer functionality that can easily be
customized and configured to meet specific e-procurement requirements. In general,
a successful e-procurement solution will be founded on an open, component-based
model that offers easy configurability and scalability.
User Maintenance
Closely related to the two preceding process management components, user
maintenance includes defining the individuals authorized to use the e-procurement
system, how these users will be enrolled, and how to provide them access to the
trading community. This component serves as the foundation for managing the
complex buyer-supplier relationships that will occur within the marketplace.
Creating the buyer organization: Identifying and defining the individual buyers, how
they will form buying groups, and how they will access the e-procurement process
Creating the supplier organization: Identifying sellers, maintaining company profiles,
and creating shipping options and other high-level parameters for supplier activities
E-procurement organization: Aggregating the entire marketplace, including buyer
and supplier, to include such things as hours of operation, billing rates, etc.
Additionally, user maintenance requires establishing authorization levels and
associated procedures to precisely govern buyer and supplier capabilities.
Three authorization levels that must be addressed are:
Access to the electronic catalog:Defines who may access catalogs and how to do so
Creating and editing requisitions:Defines who can create requisitions, who can edit
requisitions, and who can edit accounting codes
Managing orders: Defines who has access to POs and who has authorization to
override shipping or billing information
Establishing Buyer/Seller Relationships
This component has two phases: managing supplier relationships and managing
pricing.
Buyers and sellers may be linked based on their previous buying relationship or
based on the buyers unique needs. Buyers may make purchases based on
negotiated contracts or choose the specific commodities they need from customized
catalogs. Price lists too may be customized for a buyer or buying group. For
example, prices may be established by adding filters that dynamically calculate a
price as a markup or discount of the list price. Or groups of buyers may be
categorized into classes with filters applied for each group.
Billing Management
E-procurement revenues are generally based on transaction fees. A billing
management system will calculate usage charges and generate and distribute
statements or invoices to buyer-seller members of the e-procurement network.
Suppliers may also use the billing system to calculate ordering charges or to
distribute operating costs for specific orders. These functions must directly interface
with back office invoicing systems to automatically generate bills
Price Establishment
Effective pricing enables buyers to negotiate the best possible deals and sellers to
liquidate excess inventory. Two major pricing options are used: Dynamic Pricing and
Fixed Pricing.
Dynamic pricing: Allows buyers and sellers in an Internet market to trade goods and services at prices
determined by market forces instead of by a predetermined price list or catalog.
An example of dynamic pricing includes business services such as auctions, reverse auctions, and
exchanges.
Fixed pricing: Based on a predetermined price list or catalog prices negotiated between a buyer and
seller
Data Transmission
Transmitting data over the Internet involves two facets: messaging agents
and security. Data and messaging tools enable the Internet-based
exchange of transactional data between different buyers and
suppliers in the e-procurement marketplace. To do this, transactions are sent via the
Internet as messages and then integrated into a suppliers or buyers back-office
system, enabling financial postings that coincide with the receipt, payment, and
invoicing processes. Data messaging tools are also used to cancel transactions and
log failures when messages cant be delivered within a predefined time period or
following a specified number of attempts. The most important aspect of the
messaging tool is that it enables real-time communication between buyers and
sellers.
System Management
Maintaining an e-procurement system involves configuring and monitoring
performance usage, average response time, transaction sources, and traffic
patterns. To maximize the benefits and strategic opportunities e-procurement
systems offer, this information should be used to analyze growth patterns, session
times, and ultimately to fine-tune the systems performance to fit specific market
communities or technical environments.
Once an e-procurement system is up and running, its important to monitor traffic and
system security on a day-to-day basis.
Disadvantages of E-Procurement
Disadvantages of e-procurement are mostly on the side of the supplier. Ageshin suggests that
buyers reap more benefits than suppliers such as shorter ordering cycles, a wider adoption of
just-in-time practices and increased supplier involvement in product development.
On the other hand, Ageshin says that suppliers face problems such as high training costs, the
necessity of dealing with more than one marketplace, higher risk of data compromise and full
organizational restructuring in some cases. Some suppliers used to dealing with clients face-to-
face may find online transactions uncomfortable, since suppliers dont necessarily know whom
they are dealing with online. Just like online dating, knowing and verifying an organization over
the Internet is more difficult, and deception is easier to carry out online.
Another disadvantage of e-procurement services is rapidly growing multiple standards. Both
buyers and suppliers are uncertain of which e-procurement service provider will survive or
become obsolete. Multiple standards also add to the confusion about which one to use and may
increase costs for the seller as it attempts to fulfill multiple standards.
DISADVANTAGES OF E-PROCUREMENT
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Price
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Implementation Problems
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1. E-procurement systems derive information from internal catalogs that often contain static
products and pricing that is updated infrequently.
2. Vendors on e-procurement systems might have one-price-fits-all, which can be list pricing.
Procurement service providers, on the other hand, can obtain wholesale pricing in their role as
re-sellers and can pass on those discounts to you.
3. Procurement outsourcing companies have direct relationships with vendors and therefore they
may be privy to information on vendor-unadvertised limited-time specials.
4. Experienced procurement service providers can negotiate discounts on volume purchases on a
case by case basis when dealing directly with vendors.
5. E-procurement systems find the lowest pricing based on only those vendors that they list in
their system. Procurement service providers who have experience dealing with certain
commodities are able to locate those suppliers/distributors who are not always visible on these
systems.
6. Real time inventory levels are not always accurate on electronic systems. Procurement service
providers can directly verify if the vendor inventory levels are accurate. If there is a delay due to
non-stock items, they are agile enough to switch the order to another vendor, and they can
directly negotiate matching offers with vendors that do have stock.
7. There are certain to be discrepancies in orders due to mismatched part numbers, product
descriptions, etc., that may not always be caught on e-procurement systems and/or these
discrepancies might cause the order to be bounced off the system. The human element can
analyze the discrepancies directly and quickly resolve the problem.
8. Of course there are some types of orders that e-procurement systems may not be set up to
handle, i.e. custom orders, made to spec orders, replacements for discontinued items, etc., where
skilled procurement specialists are better equipped to assist.
1) Establishing an Organisation
To start the export business, first a sole Proprietary concern/ Partnership firm/Company
has to be set up as per procedure with an attractive name and logo.
A current account with a Bank authorized to deal in Foreign Exchange should be opened.
It is necessary for every exporter and importer to obtain a PAN from the Income Tax
Department. (To apply PAN Card Click Here)
An IEC is a 10 digit number which is mandatory for undertaking export/ import. Application
for obtaining IEC Number can be submitted to Regional authority of DGFT in form ANF 2A
along with the documents listed therein.
Applicants can also apply for e-IEC on the DGFT website (http://dgft.gov.in/). Only one
IEC can be obtained against a single PAN.
For availing authorization to import/ export or any other benefit or concession under FTP
2015-20, as also to avail the services/ guidance, exporters are required to obtain RCMC
granted by the concerned Export Promotion Councils/ FIEO/Commodity Boards/
Authorities.
6) Selection of product
All items are freely exportable except few items appearing in prohibited/ restricted list.
After studying the trends of export of different products from India proper selection of the
product(s) to be exported may be made.
7) Selection of Markets
An overseas market should be selected after research covering market size, competition,
quality requirements, payment terms etc. Exporters can also evaluate the markets based
on the export benefits available for few countries under the FTP. Export promotion
agencies, Indian Missions abroad, colleagues, friends, and relatives might be helpful in
gathering information.
8) Finding Buyers
Participation in trade fairs, buyer seller meets, exhibitions, B2B portals, web browsing are
an effective tool to find buyers. EPCs, Indian Missions abroad, overseas chambers of
commerce can also be helpful. Creating multilingual Website with product catalogue, price,
payment terms and other related information would also help.
9) Sampling
Providing customized samples as per the demands of Foreign buyers help in getting export
orders. As per FTP 2015-2020, exports of bonafide trade and technical samples of freely
exportable items shall be allowed without any limit.
10) Pricing/Costing
Product pricing is crucial in getting buyers attention and promoting sales in view of
international competition. The price should be worked out taking into consideration all
expenses from sampling to realization of export proceeds on the basis of terms of sale i.e.
Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost & Freight(C&F), etc. Goal of
establishing export costing should be to sell maximum quantity at competitive price with
maximum profit margin. Preparing an export costing sheet for every export product is
advisable.
After determining the buyers interest in the product, future prospects and continuity in
business, demand for giving reasonable allowance/discount in price may be considered.
International trade involves payment risks due to buyer/ Country insolvency. These risks
can be covered by an appropriate Policy from Export Credit Guarantee Corporation Ltd
(ECGC). Where the buyer is placing order without making advance payment or opening
letter of Credit, it is advisable to procure credit limit on the foreign buyer from ECGC to
protect against risk of non-payment
Engineered systems cover a variety of units that work cohesively to enable storage
and transportation. They are often automated. A good example of an engineered
system is an Automated Storage and Retrieval System, often abbreviated AS/RS,
which is a large automated organizational structure involving racks, aisles and
shelves accessible by a shuttle system of retrieval. The shuttle system is a
mechanized cherry picker that can be used by a worker or can perform fully
automated functions to quickly locate a storage items location and quickly retrieve it
for other uses.
Conveyor systems
Robotic delivery systems
Automatic guided vehicles (AGV)
Industrial Trucks
Industrial trucks refer to the different kinds of transportation items and vehicles
used to move materials and products in materials handling. These transportation
devices can include small hand-operated trucks, pallet-jacks, and various kinds of
forklifts. These trucks have a variety of characteristics to make them suitable for
different operations. Some trucks have forks, as in a forklift, or a flat surface with
which to lift items, while some trucks require a separate piece of equipment for
loading. Trucks can also be manual or powered lift and operation can be walk or ride,
requiring a user to manually push them or to ride along on the truck. A stack truck
can be used to stack items, while a non-stack truck is typically used for
transportation and not for loading.
Hand trucks
Pallet jacks
Pallet trucks
Walkie stackers
Platform trucks
Order picker
Sideloader
Many types of AGV
Bulk material handling refers to the storing, transportation and control of materials
in loose bulk form. These materials can include food, liquid, or minerals, among
others. Generally, these pieces of equipment deal with the items in loose form, such
as conveyor belts or elevators designed to move large quantities of material, or in
packaged form, through the use of drums and hoppers.
Conveyor belts
Stackers
Reclaimers
Bucket elevators
Grain elevators
Hoppers
Silos
2015
1. List the components of inventory record file
2. Explain different types of sourcing
2014
75 units $59
If Foo Co. sells 210 units during November, the company would expense the cost associated
with the first 100 units at $50 and the remaining 110 units at $55. Under FIFO, the total cost of
sales for November would be $11,050. The ending inventory would be calculated the following
way:
Total $5250
Thus, the balance sheet would now show the inventory valued at $5250.
4. List down all import and export documents required for a manufacturing industry
2014 7
#2 Transparent Spending
Electronically conducting your procurement makes it easier to write and
analyze reports on your procurement systems, meaning you can ensure
that your procurement procedures conform to your policies.
#3 Increased Productivity
Once youve learned the system, e-procurement is less time-consuming
than traditional procurement. Having your records stored electronically
makes it easier to submit reusable tenders. Meanwhile, use of templates
means paperwork can be filled out more quickly.
#4 Eliminating Paperwork
Tired of finding new space to store all that paperwork? With e-procurement,
everything can be saved and stored electronically. This not only saves you
from needing more room, it also makes the process of finding older tenders
more simple.
#6 Standardized Buying
When you have various departments making procurement decisions, there
can be differences in what and how they purchase. Conducting purchasing
electronically makes it easier for every department to conform to company
procurement standards.
#7 Reduced Errors
Electronic paperwork is streamlined and thus easier to check for errors
theres no messy printing to get in the way either. Along with this, past
orders are more easily referenced, meaning theres a greater chance that
your company can compare orders to ensure new ones are correct.
7. Expand EMD
Before any part or raw material is used in a manufacturer of a finished good that will
be delivered to a customer, it is the responsibility of the purchasing department to
ensure that the materials that arrive are of the correct quality specification.
This should include a variety of information about the item to be sourced, such as:
Physical description
Dimensional measurements
Chemical composition
Performance specifications
Industrial standards
Brand name
Physical Description
The purchasing department must know the physical attributes of the part they are
required to source.
For example, if the required material must be made of a certain shade of a blue, then
the purchasing department must be able to communicate that requirement to the
potential suppliers to ensure that the specification can be met.
Chemical Composition
This is very important for sourced materials that are used in the chemical process.
The quality department should give the purchasing team a detailed list of chemical
specifications of the required material. This should include a list of characteristics and
specifications that the materials should conform to, as well as the ranges that the
materials must lie within.
For example, a sourced chemical may be required to have a pH of between 5.6 and
5.9; otherwise, the material would not be suitable for the manufacturing processes.
Dimensional Measurements
For a part to be used in the manufacturer of a machine the part must conform to
certain dimensional specifications.
For example, if the manufacture of a finished item required the use of a Pentalobe TS1
screw with a length of 4mm, then the supplier must be able to produce the item in that
correct size.
Performance Specifications
For example, on a household item such as a washing machine, the rubber belt that is
used must be bale to withstand certain forces and not fail within a certain number of
revolutions. This quality measurement is key for a business if they are to produce
finished goods that are reliable in the eyes of their customers. Therefore, it is
important for the purchasing department to find suppliers who can provide parts that
meet quality specifications.
Industrial Standards
Some parts required in the production of finished goods must conform to certain
industry standards.
These standards are set by a number of trade or industry groups who try to maintain a
certain level of quality.
By having an item that conforms to a particular industry standard, the customer will
have a level of confidence in the product.
There are a number of industry standards that are used, such as Society of Automotive
Engineers (SAE), which is a global association of more than 128,000 engineers and
related technical experts in the aerospace, automotive and commercial-vehicle
industries. The society has hundreds of standards that relate to different technical
aspects of manufacturing.
Brand Name
Sometimes the quality department or development team will inform the purchasing
department to only source a particular brand name.
This may be due to the specific nature of the part made by one company or the level of
quality it has over competitors.
Summary
The quality of the parts and raw materials that are used by a company makes a
difference to the finished products that are sold to their customers.
By ensuring that the purchased parts are of a specific quality, as defined by the
development, manufacturing, or quality departments, the purchasing department is
ensuring that the quality of the finished goods is maintained.
2. Market Purchasing:
Market purchasing refers to buying goods for taking advantages of
favourable market situations. Purchases are not made to meet immediate
needs but are acquired as per the future requirements. This method will be
useful if future needs are estimated accurately and purchases are made
whenever favourable market situations arise. The market situation is
constantly studied for forecasting price trends.
The advantages of this method are: lower purchase prices, more margin on
finished products due to lower material cost and saving in purchase
expenses. This method suffers from some limitations: losses in case of
wrong judgment, fear of obsolescence, higher storing expenses due to
more purchases.
3. Speculative Purchasing:
Speculative purchasing refers to purchases at lower prices with a view to
sell them at higher prices in future. The attention in this method is to earn
profits out of price rises later on. The purchases are not made as per the
production needs of the plant rather these are far in excess of such
requirements. A cloth mill may purchase cotton in the market when prices
are low with the attention of earning profits out of its sales when prices go
up.
5. Contract Purchasing:
In the words of Spriegel it is the purchasing under contract, usually formal,
of needed materials, delivery of which is frequently spread over a period of
time. Under this method a specific quantity of materials is contracted to be
purchased and delivery is taken in future. Even though the goods are
procured in future but the price and other terms and conditions are fixed at
the time of contract. This method may be useful when price rises in future
may be expected and material requirements for future may be accurately e
6. Scheduled Purchasing:
Under this method the suppliers are supplied a probable time schedule for
material requirements so that they are in a position to arrange these in
time. An accurate production schedule is prepared for estimating future
material needs. The suppliers are informed of probable needs and orders
are sent accordingly. The schedule provided by the purchaser to the
vendor is not a contract. This is only a gentlemans agreement for terms
and conditions of purchases. The main objectives of this method are:
minimum inventory, prompt service. low prices, quality goods etc.
8. Co-operative Purchasing:
Small industrial units may join to pool their requirements and then place
bulk orders with dealers. This will help them in availing rebates on large
quantity purchases, cash discounts and savings in transportation costs.
After receiving the materials these are divided among the member units.
Co-operative purchasing helps small units in availing the benefits of bulk
purchasing.
The evolution of material management can be grouped in three separate periods, early part
of twentieth century; the function of materials management was largely reactive and
clerical. Its contribution to profit was not perceived as significant and management did not
attach much importance to it.
In the second period, two important developments took place. After second world was,
demand for consumer goods increased greatly. This created a shortage of raw material,
leading to innovative concepts like substitution of material and value engineering. Then the
oil crisis of the 1970s occurred. Petroleum products and their derivatives become scarce.
There was sharp rise in the cost of raw material and this led to the increase in cost of
inventory.
Purchase managers were forced to adopt innovative and proactive measure such as looking
for new sources of supply, finding substitute products, applying value analysis in purchased
products, specification change that allowed use of less costly and scarce materials, use of
scientific methods of inventory control policies, partnerships, involving carefully chosen
suppliers at an early stage in design and development, and increasing integration of
information system.
All of the above action allowed purchasing to fulfill its role as an expense controller for the
organization and helped to increase regard for the purchase department as a contributor to
profit. Towards the end of twentieth century firms believed in purchasing fewer items.
Generally, they were purchasing raw material and converting these into end products.
Consequently, the concept of outsourcing emerged and firms tried to outsource items
which did not fall under their core competency. Responsibility of outsourcing fell on the
purchase managers; this responsibility makes material manager as key role player in all
organizations.
12. Explain the disadvantage of using e procurement system over traditional purchasing
system
2014 8
13.
14. Explain the objectives of e procurement. explain the various components of e
procurement software solution
2014 7