Purchasing and Supply Chain Management.
Supply Chain Management is a total concept involving and organizational structure unifying into a single responsibility the systematic flow and control of material and identification of the need through customer delivery.
The Supply Chain management contributes to increased profitability by coordinated achievement of at least materials cost. This is achieved by optimizing capital investment, capacity of personal, consistent with the appropriate customer service level.
Supply Chain Management is an organizational concept in which a single manager has authority and responsibility for all activity for all activities, principally concern with the flow of material into organization. i.e. purchasing production planning and scheduling incoming traffic inventory control receiving and store normally are included
Supply Chain Management – Scope
The scope of materials management is very vast however, we can broadly identify the following functions of material management
This function covers aspects like setting inventory levels, ABC analysis, fixing economical ordering quantities, verifying safety stock levels, lead time even analysis and reporting.
Some other functions of Supply Chain managements are below
- -Receiving and inspection of incoming materials.
- -Inward and outward transportation to various departments.
- -Materials handling.
- -Disposal of scrap, obsolete material, old equipment and machinery, surplus material.
- -Value analysis.
2.Planning and Programming of SCM
This is accomplished with the help of sales forecast and production plans. Supply chain planning and programming involves identifying the individual requirements of parts, preparing materials budget, forecasting the level of inventories, scheduling the order and monitoring the performance in relation to production and sales.
3.Stores | Warehousing
Warehouse is responsible for physical control of materials, preserving materials, minimization of defects and damages through timely disposal and efficient handling. Stores also maintain proper record of materials, ensures proper location and stacking of materials. The physical verification of stocks and the reconciling them with book figures is also responsibility of stores.
These consists of selection of source of supply, deciding terms of purchase, placement of purchase orders, follow up and maintaining good relationship with supplies, approval of payments to supplier besides evaluating and rating suppliers.
Objectives of Supply Chain Management
Prominent objective of Supply Chain management is as under,
- To ensure continuous and uninterrupted production or services operations by maintaining steady flow of SCM.
- To reduce the cost of material by purchasing various material of right quality and right quantity from source at right price at appropriate time.
- To achieve economies in the cost incurred on material, after their purchase through storage, processing and warehousing till the finished goods ultimately reach customers.
- To minimize working capital requirements through proper and scientific inventory control.
- To keep watch on new products available in the market.
- To increase competitiveness of manufactured goods by reducing their price through cost reduction and value analysis.
- To identify import substitute product to reduce overall requirement of foreign exchange and dependence on foreign suppliers.
- To ensure co-operation and co-ordination among all departments within the company to meet material management objective and corporate and functional levels.
- To supply better quality raw materials or components with ultimate aim to improve quality of end products.
- To conserve materials resources within an organization with a view to conserve natural resources.