Project Report

On

Purchase Planning and Control

Submitted to
International School of Business & Media, Pune

For the partial fulfillment of Post Graduate Program in

Supply Chain & Operations Management

Submitted By

Indrajit H.Bhagade

Guide:
Mr. Avinash Jadhav
Assistant Manager-Supply chain & EDP,
MSS India Pvt Ltd, Nashik

Batch:
2009-2010

1
 Certificate

This is to certify that the project report entitled PURCHASE PLANNING

AND CONTROL is submitted by Mr. Indrajit H.Bhagade as a partial
fulfillment for the requirement of for Post Graduate Program in Supply Chain
& Operations Management for the academic session 2009-10.

This project is the record of work carried out under the supervision and
guidance of Mr. Avinash Jadhav and has undergone requisite direction as per
prescribed by MSS India Pvt Ltd, Nasik.

Mr. Avinash jadhav

Asst Manager-Supply chain & EDP
MSS India Pvt Ltd, Nasik.

2
 ACKNOWLEGEMENT

I express my sincere gratitude to Mr. Avinash Jadhav(Asst manager-supply chain & EDP),
my project guide, for his continuous support in the project. He has been a friend, a mentor and
his inspirations have always kept me in good spirits.

I thank Mr. Avinash Jadhav for his thoughtful and most useful replies to my queries. Without
their constant guidance, the project could not have been completed.

I also thank Mr. Avinash Jadhav & Mr. Rajesh Patil for supporting us at every stage of the
project and providing us with the required data for the project.

I sincerely thank Mr. Avinash Jadhav for motivating and inspiring us at every level of the
project.

I am thankful to International School of Business & Media, Pune for providing me with the
opportunity to successfully carry out my dissertation.

Indrajit bhagade
ISB&M, Pune.

3
 INDEX

CHAPTE
TOPIC PAGE NO.
R
1 INTRODUCTION 5

2 OBJECTIVE 7

3 PROJECT SCOPE 8

4 LIMITATIONS 9

5 COMPANY INFORMATION 10

6 THEORETICAL BACKGROUND OF PROJECT 17

7 DATA COLLECTION AND ANALYSIS  42

8 OBSERVATION AND CONCLUSION 56

9 BIBLIOGRAPHY 57

4
 CHAPTER 1
INTRODUCTION

During the last three decades, supply chain management has been both an important and
a productive aim of corporations. By working to coordinate the production, shipment, and
delivery of the goods required to meet their business needs, companies have been able to more
easily meet the demands of their customers. However as the 21st century unfolds, supply chain
management is evolving into what many experts refer to as synchronized supply chains.

With synchronized supply chains, the overall goal is the same as with traditional supply
chain management. There are three key differences, however. One is that companies work with
their vendors in order to coordinate their processes and to achieve simultaneous production.
Another difference is that the Internet and other types of technology are incorporated into the
process to make those processes run smoother and more efficiently. Finally, the buying
organization will need to hire, train, and restructure their workforce in order to be able to
accommodate this type of supply chain management.

Even though most companies do realize that better supply chain management can benefit
their bottom line, too many of them are leery about pursing modernization and efficiency fully.
However, the value exists for companies who wish to make the changes necessary to achieve it.
Some companies that have pursued supply chain modernization and upgrades have been able to
lower costs and boost profits by tens or hundreds of millions of dollars.

Inventory management is a very simple concept - don't have too much stock and don't
have too little. Since there can be substantial costs involved in straying above and below the
optimal range, careful inventory management can make a huge difference in the profitability of a
business. Although the concept is simple, the process of getting the right balance can be quite a
complex and time consuming task without the right technology.

5
Supply Chain Model

In a today’s highly competitive market manufacturers face the challenge of reducing

manufacturing cycle time, delivery lead-time and inventory reduction. However, every
organization (company) has its own objectives and its own way of decision-making processes.
Due to the conflictions among the objectives of each organization and non-integrated decision-
making processes, there has been a need for a new mechanism, which help to resolve those
conflictions and to integrate processes.
In the early 1990s, the phrase “supply chain management” came into use. Supply chain
management is a process of integrating/utilizing suppliers, manufacturers, warehouses, and
retailers, so that goods are produced and delivered at the right quantities, and at the right time,
while minimizing costs as well as satisfying customer requirements. It consists of a number of
organizations – beginning with suppliers, who provide raw materials to manufacturers, which
manufacture products and keep those manufactured goods in the warehouses. Then they send
them to whole sales or distribution centers that ship the goods to retailers. The customers then
buy products from retailers. Different industries have slightly different structures of the supply
chain networks.

6
 CHAPTER 2
OBJECTIVE

The objective of the project is to develop a secured format of material planning which helps
reduce inventory issues and to have an efficient procurement. For the main objective to be
achieved the following three objectives were achieved :
a. Purchase planning and control.
b. Raw material standardization and material planning.
c. Supplier assessment and Material costing standardization.

The new system when developed will help to reduce the inventory issues. This will help the
procurement personnel to take quick and accurate decisions regarding the exact number of
quantity of raw material to be ordered. The third objective will help the concerned person to
decide which supplier is beneficial for the company. All the above primary objectives completed
are on the basis of facts and the data collected from the centralized server system of the company
using ERP software.

7
 CHAPTER 3
PROJECT SCOPE

MSS India Pvt Ltd is the subsidiary for MSS group which has its head office
at Manchester, UK. It is the only manufacturing unit amongst the group. The scope
of this project is limited to only one plant in Nasik. The project cannot be
implemented in any other firm of MSS group.

8
 CHAPTER 4
LIMITATIONS

This project finally yields a secured format of material planning which helps
reduce inventory issues and to have an efficient procurement. Material planning
sheet does not have the final rates column included in it which is the only
limitation of the project.

9
 CHAPTER 5
COMPANY INFORMATION

MSS India Pvt Ltd, Nasik was established in 1998, it is a wholly owned subsidiary of MSS
Group of companies, UK. State of art production facilities, professional management, skilled
workforce, internationally accepted product Quality, Delivery & Service, Innovations and Cost
competitiveness are major strengths of this organization. The company is 100 % Export Oriented
Unit engaged in manufacturing of Electrical components for the power industry, DC Bus Bar
systems and battery accessories. The Company has been guided by principle which recognized
the availability of the right parts at the right time and at the right cost. They recognize, too, that
their economy.. Their markets.. Their business.. Their customers. And the company is prepared
to reinvent itself in ways that make sure that we continue to serve its customers needs, no matter
how they change. The knowledge in working with the red metal is extensive. The principle of
this company is to supply customer’s product as per their specifications.

Vision and Mission

We, at MSS India Pvt ltd, Nasik, are committed to an integrated Management System which
combines the QMS ISO 9001:2000, EMS ISO 14001:2004 and BS OHSAS 18001:2007.
We shall strive to provide unsurpassed customer satisfaction by offering superior product value
at agreed delivery and international business services. We have a vision to succeed through
working closely with employees, customers and suppliers to meet changing needs of business.
We shall achieve this by implementing effective QMS ISO 9001:2004.
We recognize the impact of our Products, services, and activities upon the environment and we
commit to minimize the harmful impacts. We commit ourselves for prevention of pollution and
meeting the applicable legal and other requirements related to environmental aspects. We shall
achieve this by implementing effective EMS ISO 14001:2004.
We shall also demonstrate care for the ill health, occupational health and safety of all people
associated with the activities and processes by minimizing all possible risks. Strict conformance
in accordance with BS OHSAS 18001:2007 shall ensure that currently applicable OH&S
legislation and other requirements are constantly met.
We shall establish the framework for reviewing objectives and targets. We shall develop our
employees and associates by imparting Training. We shall implement an efficient and effective
IMS to achieve organization’s goal of continual improvement and business growth. The policy
shall be periodically reviewed and revised, if needed to meet the changing needs of the business.

10
11
12
13
  Business process Flow Chart    

14
 Customer

Enquiry

Quotation
Requote
No
Quotation approval

Yes
Sales Order

Sales Order acknowledgement

Material Planning

Purchase Order

Purchase order approval

Gate Entry

Suppli
er 15
Quote
s
 Goods receipt Note

Inspection Result of GRN

Accepte
Rejected d
Register Supplier
Rejection invoice Invoice
Warehouse Stock updated
Approve Supplier invoice

Production order

Production Material Issue

Production order receipt

Inspection Result of Production receipt

Warehouse Stock updated

RG1 Stock Entry

FG Slip

16
 Commercial Invoice

Packing List

Sales Delivery

Excise Invoice

ARE1 copy

Sales Invoice Generation

Posting sales to finance

CHAPTER 6

17
 THEORETICAL BACKGROUND OF PROJECT

A supply chain is the system of organizations, people, technology, activities, information

and resources involved in moving a product or service from supplier to customer. Supply chain
activities transform natural resources, raw materials and components into a finished product that
is delivered to the end customer. In sophisticated supply chain systems, used products may re-
enter the supply chain at any point where residual value is recyclable. Supply chains link value
chains.

A typical supply chain begins with ecological and biological regulation of natural
resources, followed by the human extraction of raw material, and includes several production
links (e.g., component construction, assembly, and merging) before moving on to several layers
of storage facilities of ever-decreasing size and ever more remote geographical locations, and
finally reaching the consumer.

Supply Chain Management

In the 1980s, the term Supply Chain Management (SCM) was developed to express the
need to integrate the key business processes, from end user through original suppliers. Original
suppliers being those that provide products, services and information that add value for
customers and other stakeholders. The basic idea behind the SCM is that companies and
corporations involve themselves in a supply chain by exchanging information regarding market
fluctuations and production capabilities.

If all relevant information is accessible to any relevant company, every company in the
supply chain has the possibility to and can seek to help optimizing the entire supply chain rather
than sub optimize based on a local interest. This will lead to better planned overall production
and distribution which can cut costs and give a more attractive final product leading to better
sales and better overall results for the companies involved.

18
 Incorporating SCM successfully leads to a new kind of competition on the global market
where competition is no longer of the company versus company form but rather takes on a
supply chain versus supply chain form.

The primary objective of supply chain management is to fulfill customer demands

through the most efficient use of resources, including distribution capacity, inventory and labor.
In theory, a supply chain seeks to match demand with supply and do so with the minimal
inventory. Various aspects of optimizing the supply chain include liaising with suppliers to
eliminate bottlenecks; sourcing strategically to strike a balance between lowest material cost and
transportation, implementing JIT (Just In Time) techniques to optimize manufacturing flow;
maintaining the right mix and location of factories and warehouses to serve customer markets,
and using location/allocation, vehicle routing analysis, dynamic programming and, of course,
traditional logistics optimization to maximize the efficiency of the distribution side.

Purchase Planning and Control

 Purchase with a purchase order procedure

Purchase Orders are used for the acquisition of goods or services for the following:

 Physical goods greater than or equal to $5,000 in value, or when the vendor requests a
purchase order number. Goods paid for by credit card or an emergency replacement
item ordered without a purchase order are exceptions to this rule.
 Recurring Services from a vendor, where two or more invoices from the same Vendor
will be posted under a one order – i.e. ongoing supplier of water or milk.
 Or where the value of the service is greater than $5,000 (unless prior approval has
been obtained from their approved financial delegate and the purchase will be
completed without a purchase order.

All travel related acquisitions do not require a Purchase Order and are facilitated by the
Travel Approval Process. Invoices not paid by credit cards are approved and are processed
as Purchase without a Purchase Order.

19
A purchase order should not be requested / raised if RMIT has already received the vendor
invoice. Please refer to Purchases without a Purchase Order for details on how to progress the
payment of an invoice.

 Overview

 Process Flow

 Procedure

 Creating The Purchase Request

 Approving Purchase Requests

 Creating Purchase Orders

 Vendor Creation

 Receipting Goods Or Services Process Flow

 Receipting Goods

 Receipting Services

 Contract Staff Services

 Processing Goods/Service Receipts

 Processing Goods/Service Invoices

 Amending Purchase Orders

 Cancelling Purchase Orders

 Payment Processing

20
Overview

A high level overview of the purchasing process is shown below.

A high level overview of the processing of purchase orders is shown below.

21
Process Flow

22
Procedure

Purchase Requests shall be raised by Requestors and approved by the Approved Financial
Delegates in each department. The Approved Financial Delegation list and associated
authorization limits is available from Financial Delegation of Authority
Local practices may require the Requestor to verify the availability of funds to cover the
request. The Requestor should contact local finance staff to ascertain the procedure.

Creating the Purchase Request

The following procedure is performed by the Requestor of the goods and services unless
otherwise stated:

 Liaise with the relevant supplier(s) to obtain the best prices for the goods or services
required.
 If assistance regarding supplier selection is required, contact support services from
Strategic Sourcing and Procurement Group.
 Select the vendor in accordance with RMIT’s Quotation and Tendering requirements.
 Please refer to the policy when purchasing goods / services from a preferred supplier
as their requirements are different from the Tenders & Quotation requirements (put in
link to Tender & Quotations).
 All ‘Dangerous Goods’ must be treated with care and caution as detailed in the
Occupational Health and Safety Policy. This covers the purchasing, storage and use of
‘Dangerous Goods’.
o Review the ‘Dangerous Goods Handling Protocols’.
o Complete the Risk Assessment form which can be downloaded from the
Occupational Health and Safety Policy: .
o Document any new dangerous goods handling protocols.
 Once the vendor has been identified, verify if the vendor has previously supplied
goods and services to RMIT. To complete the verification process:
o Use SAP; or
o Use the Active Vendor excel file.
o Contact a Purchasing Officer or local Finance Staff for a current listing or
refer to RMIT Preferred – Approved Suppliers.
 If the vendor is a new vendor, refer to: Create New Vendor.
 Download and complete the appropriate forms;
o Purchase Request Form
o Tender Summary or Waiver Form (DOC55kb 1p)
o New vendor request form. Refer to Create New Vendor below.
 For the provision of consulting services, complete the ‘Engagement of Contractor /
Consultant form.

23
  Complete the form including:
o Vendor details, items and price etc.
 Complete the internal order and cost element to where the item will be expensed.
 If the Requestor wishes to allocate the purchase amount across future accounting
periods, a supplement document listing the amount by period is to be attached to the
Purchase Request. (I.e. The purchase order is the annual supply of bottled water. The
Requestor wishes to allocate this commitment over the estimated monthly use) and
enable better understanding of future commitments.
 Review Approved Financial Delegation of authority listing.
 Seek approval and endorsement from responsible staff member (i.e. Program leader if
to be approved by School head, or Head of School if to be approved by PVC). If more
than one endorsement is required, the 2nd endorser will countersign the first
endorsement. I.e. The field personnel request the good/service; the Project Manager
endorses the request; the Executive Director provides the second endorsement; and
the Vice President Resource approves the request.
 Based upon the value of the transaction submit documentation for approval to the
Procurement Processing Department and school Approved Financial Delegate
(Section 2.4.2).
 Respond to any questions regarding the purchase in a timely manner.

The Purchase Request is for internal processing use only and should not be forwarded to
external vendors.

Approving Purchase Requests

The completed Purchase Request is to be approved by the Approved Financial Delegate in each
department in accordance with their approval limits.

 Verify that the Requestor has signed the Purchase Request.

 The Requestor obtains approval from the Approved Financial Delegate.
o Joint approval from an Endorser is required if the Requestor does not report to
the Approved Financial Delegate.
o If more than one endorsement is required, the 2nd endorser will countersign
the first endorsement. I.e. The field personnel request the good/service; the
Project Manager endorses the request; the Executive Director provides the
second endorsement; and the Vice President Resource approves the request.
o The Approved Financial Delegate at their discretion verifies the Purchase
Request details.
o Verify the amount of the Purchase Request with their local finance support
team.

24
 o Contact the Requestor to verify the requirement for the goods or service if not
appropriately explained upon the request.
 Approved Financial Delegate approves the Purchase Request if the amount is within
their authorization limits.
 If the amount of the Purchase Request is outside the Approved Financial Delegate
authorization limits, higher level approval is to be obtained.
 If higher level approval is required, the Approved Financial Delegate and the
Endorser must endorse and recommend the Purchase Request.
 If more than one endorsement is required, the 2nd endorser will countersign the first
endorsement. I.e. The field personnel request the good/service; the Project Manager
endorses the request; the Executive Director provides the second endorsement; and
the Vice President Resource approves the request.
 The Endorser seeks higher level approval.
 The Approved Financial Delegate sends the approved Purchase Requests to
Procurement Processing Department.
 Should the Requestor or Approver(s) wish to verify the status of the Purchase
Request, they are to use SAP to determine if the Purchase Order has been created or
secondly email the Procurement Processing Department.

Creating Purchase Orders

 The following procedure is performed by the Procurement Processing Department

unless otherwise stated:
 Review the Signatory Listing.
 Use the e-number or name and search the Signatory Listing.
 Verify the approver(s) of the Purchase Request against the Signatory Listing.
 If the Approved Financial Delegate is listed on the Signatory Listing and the
transaction is within their Approved Financial Delegation, approve the Purchase
Request.
 If the Approved Financial Delegate cannot be identified from the Signatory Listing:
o Contact the Requestor and seek assistance in to verify the Approved Financial
Delegate.
 If the Approved Financial Delegate are not listed on the Signatory Listing for
example:
o The staff member is acting on behalf of a Approved Financial Delegate; or
o A new staff member holds an Approved Financial Delegate role and the
signatory listing have not been updated to reflect the change.
o Seek approval from the Financial Services Delegate. The Financial Services
Delegate can approve on-behalf of the Requestor with the provision of
sufficient supporting documentation.
 If the Purchase Request is outside the authorization limits of the Financial Services
Delegate, refer to the Financial Services Listing for the approver, and then the
Purchase Request will be returned to the Requestor to obtain the approval of a
recognized Financial Delegate.

25
  Upon Purchase Request approval, enter the Purchase Request details:
o If the amount is less than $50,000, create the Purchase Order via SAP
ME21N.
o If the amount is greater than $50,000 create a requisition via SAP ME51N.
 Requisitions greater than $50,000 are sent to the Procurement Manager for review.
 Once the Procurement Manager has reviewed and approved the Requisition, it is
released.
 The Purchase Order is created within 48 hours of receipt and approval. If the
supporting documentation is not received with the Requisition, the approval and
processing of the Requisition will be delayed until sufficient supporting
documentation has been forwarded to the Procurement Processing Department.
 Once the Purchase Order is created, an automatic email notification is sent to the
Requestor based upon their staff e-number designated on the Purchase Request form.
If local practice dictates, and if the Requestor is not the finance support staff member,
the Requestor can forward the automated email to their local finance office.
 Forward the Purchase Order via fax to the vendor.
 Write the SAP generated purchase order number on the Purchase Request form and
file by Purchase Order number.

Foreign Currency Purchase Requests greater than $50,000 in value: The Purchasing
Officer will forward a copy of the Purchase Request to the Associate Director Financial
Operations and the Treasury Accountant to assist with any decision to manage RMIT
foreign currency risk.

Vendor Creation

The following procedure is performed by the Procurement Processing Department; unless

otherwise stated:

 Receive the New Vendor request form and create the vendor based upon the details
provided.
 If no form is received, and a new vendor is required, contact the Requestor by email
or fax to allow the originating area to obtain and return the information to by
completing the requisite New Vendor form.
 The Requestor received the request from the Procurement Processing Department and
completes the New Vendor form based upon the details known and if additional
information is required, the Requestor will contact the Vendor directly.

26
Receipting Goods or Services Process Flow

27
Receipting Goods
The following procedure is performed by the Requestor of the goods and services unless
otherwise stated:

 Receive delivery of the goods with an attached invoice and picking slip.
 Verify the contents of the goods received to ensure that all items have been received
as per the invoice and all items are not faulty or damaged.
 If the goods received are damaged, mark the invoice ‘Goods Faulty – Invoice Not
Accepted and return the goods and the attached receipt advice/invoice to the supplier
with a request for the order to be re-filled.
 A credit claim will only be initiated by the Procurement Processing Department when
the invoice has been paid and the goods received are faulty. The Procurement
Processing Department will contact the vendor and seek resolution.
 If the goods are received in a satisfactory condition, proceed as follows.
 Verify the Purchase Order number is displayed on the invoice/receipt advice.
o If it is not listed, transcribe the purchase number to the PO Label and affix to
the invoice/receipt advice. If the invoice is smaller than the label, attach the
invoice and the label to a separate clean piece of A4 paper.
 Acknowledge receipt of goods upon receipt advice by denoting your e-number and the
date of receipt of goods/services.
 Forward receipt advice and invoice the Procurement Processing Department for
processing.
 The following schools are exempt from forwarding the receipt advice to the
Procurement Processing Department for processing. These Schools’ laboratory and
store manager will conduct their own good receipt processing.
o School of Medical Sciences.
o School of Applied Sciences.
 If the Requestor receives more goods than ordered:
o Return additional goods to the vendor.
o Make appropriate amendments to the Purchase Order.

Receipting Services

The following procedure is performed by the Requestor of the services unless otherwise stated:

 Verify the services performed and receive an invoice for the services.
 If the Requestor does not receive the services directly, the staff member will be
contacted to acknowledge the receipt of services and initial the invoice to
acknowledge “Receipt of services as contracted”.
 Approve/confirm that the services has been satisfactorily performed and the invoice
contains the purchase order number.

28
  If it is not listed, transcribe the purchase number to the Payment Approval form and
affix to the invoice/receipt advice.
 Acknowledge receipt, denote your e-number and date the invoice as evidence of
review.
 Forward receipt to the Procurement Processing Department for review.

Contract Staff Services

The following procedure is performed by the Requestor of the services unless otherwise stated:

 For the engagement of the contractor, it is best practice to insist upon the inclusion of
an authorized timesheet with the invoice, so as to ensure efficient processing.
 Verify the services performed and receive an invoice for the services.
 If the Requestor does not receive the services directly, the staff member will be
contacted to acknowledge the receipt of services and initial the invoice to
acknowledge “Receipt of services as contracted”.
 Validate the invoice against the contracted staff timesheets. For processing purposes,
approved timesheets act like Good Receipts Notes and shall be processed accordingly.
 If there is a discrepancy, contact the Vendor directly.
 If the invoice matches the timesheets, approve/confirm that the services has been
satisfactorily performed and the invoice contains the purchase order number.
 If it is not listed, write the purchase number to the PO Label and affix to the
invoice/receipt advice. If the invoice is smaller than the label, securely attach the
invoice and the label to a separate clean piece of A4 paper.
 Acknowledge receipt, denote your e-number and date the invoice as evidence of
review.
 Forward receipt to the Procurement Processing Department for review and SAP input.

Processing Goods/Service Receipts

The following procedure is performed by Procurement Processing Department Staff or

designated laboratories/store managers unless otherwise stated:

 Receive all goods/service receipt notices in a timely manner.

 Review the receipt advice;
o If the advice does not contain the PO Number, contact the Requestor or
Vendor to obtain the Purchase Order number.
 Process goods/service receipt advice against purchase order using SAP Transaction
MIGO
o Enter the delivery note number in the delivery note field.
o Use the header text field for any additional information.
o For contractors the following naming standard should be used: Invoice #,
Name and Weekending date.

29
 o For services enter the relevant period to which the invoice or supporting
documentation relates to.
 File receipt advice by the purchase order number.

Processing Goods/Service Invoices

The following procedure is performed by the Payable/Purchasing Department Staff unless

otherwise stated:

 Receive all invoices in a timely manner. To avoid duplicate payments only original
Invoices can be processed.
o Contact the vendor and request original invoice. Original re-prints will contain
the same invoice number and are acceptable. SAP generates a warning
notifying the operator if the same invoice number has previously been
processed by the same vendor.
 Date stamp each invoice.
 Verify the purchase order number on the invoice.
 If the purchase order number is not displayed on the invoice:
o Contact the Vendor for information on the Requestor.
o Scan the invoice and email to the Vendor.
o Write the purchase number to the PO Label, the e-number and the date and
affix to the receipt advice. If the invoice is smaller than the label, securely
attach the invoice and the label to a separate clean piece of A4 paper.
 The RMIT Payment Approval label is to be used for authorization of invoices. Refer
to Form 6: Payment Approval.
 Process invoice against the purchase order using SAP Transaction MIRO.
 If there is a discrepancy beyond the in-built SAP tolerance limits:
o Determine the discrepancy.
o If the variation is exists (and is outside the pre-configured tolerance limits)
between the original purchase request and the vendors invoice, contact the
Request or via email. The Requestor is required to amend the PO and seek
approval of the amendments by the Approved Financial Delegate.
o The Requestor is to contact the vendor regarding the difference.
o If the Vendor advises that there is a price rise:
o The Requestor is to amend purchase order for the ‘Recurring Invoice’
underpinning the Purchase Order.
o Refer to Purchases without a Purchase Order
o If the variation results from a processing error, adjustments will be made when
identified by the Procurement Processing staff.
 Process the invoice.
 File the invoice advice by Vendor name and month posted.
 The invoice will be processed in the appropriate ‘Payment Run’ based upon the
invoice date and the vendor’s trading terms.

30
Amending Purchase Orders

The following procedure is performed by the Requestor unless otherwise stated:

 Receive information from the Procurement Processing Department staff regarding the
discrepancy of the Purchase Order.
 If the Purchase Order is amended:
o Make the appropriate amendments using the Purchase Request Amendment
form;
o Denote on form that request is for the adjustment of an existing order.
o If there is a price increase by the vendor, attach supporting documentation to
the Amendment to substantiate the request.
o Receive approval for the amendments, from the Approved Financial Delegate
for the total of the revised request.
 If the Purchase Order is reversed, refer to Purchase without a Purchase Order.

Cancelling Purchase Orders

The following procedure is performed by the Payable/Purchasing Department Staff unless

otherwise stated:

 The Procurement Manager receives an email from the Requestor to cancel the
Purchase Order. The email is to contain the Purchase Order # and the Vendor #.
 The Procurement Manager forwards the email to the Payable/Purchasing Department
Staff.
 The Payable/Purchasing Department Staff cancels the Purchase Order as stated in the
email.
 Any additional information attached to the Purchase Order is also cancelled.
 If the vendor requires notification of purchase order cancellation, the Requestor is
responsible for contacting the vendor, if the Purchase Order has been dispatched.
 All Purchase Order cancellations are made within 24 hours of receipt of email
notification requesting cancellation.

31
Payment Processing

RMIT has payment terms of 30 days from the date of the suppliers invoice.
The following procedure is performed by the Payable/Purchasing Department Staff unless
otherwise stated:

 Receive Original Invoice.

 Input original invoice using SAP Transaction MIRO
 RMIT produces weekly payment runs:
o Cheque runs are conducted each Wednesday.
o EFT Payments are made each Thursday.
 Payment Proposals are processed each Monday. The payment proposal contains those
invoices due for payment based on the following:
o All invoices entered by the previous Friday.
o The selected payment date.
o Alpha and numeric selection of all vendors.
 The Payment Proposal provides the total amount of payments due for the week.
 The Payment Proposal is submitted to the Associate Director (Business Advisory,
Financial Services and the Business Analyst consultants preparing the cash flow
forecast).
 Actual Payment runs are scheduled.
 Check Register and EFT register are submitted to Associate Director (Business
Advisory, Financial Services or alternate) for review.
 Request for Payments made outside the specified protocol, must be sent to the
Associate Director (Business Advisory, Financial Services) clearly stating the reasons
for the payment.
 If the Associate Director (Business Advisory, Financial Services) approves the
payment, they contact the Accounts Payable Team Leader to initiate a special
payment run for the Vendor.
 Clarifications on any payments are responded to in a timely manner.

32
Material Planning Process
Material requirements planning (MRP) is a production planning and inventory control system
used to manage manufacturing processes. Most MRP systems are software-based, while it is
possible to conduct MRP by hand as well.

An MRP system is intended to simultaneously meet three objectives:

 Ensure materials and products are available for production and delivery to customers.
 Maintain the lowest possible level of inventory.
 Plan manufacturing activities, delivery schedules and purchasing activities.

History

Prior to MRP and before computers dominated the industry, reorder-point/reorder-

quantity (ROP/ROQ) type methods like EOQ had been used in manufacturing and
inventory management. In the 1960s, Joseph Orlicky studied the TOYOTA
Manufacturing Program and developed Material Requirements Planning (MRP), and
Oliver Wight and George Plossl then developed MRP into manufacturing resource
planning (MRP II).[1]. Orlicky's book is entitled The New Way of Life in Production and
Inventory Management (1975). By 1975, MRP was implemented in 150 companies. This
number had grown to about 8,000 by 1981. In the 1980s, Joe Orlicky's MRP evolved into
Oliver Wight's manufacturing resource planning (MRP II) which brings master
scheduling, rough-cut capacity planning, capacity requirements planning and other
concepts to classical MRP. By 1989, about one third of the software industry was MRP II
software sold to American industry ($1.2 billion worth of software).

The MRP (Material Requirements Planning) concept exists since the 60s of the last
century. It is the basis for most software systems supporting production planning and
control in industrial practice. Most of these so-called MRP systems provide good
assistance for order processing, data handling and inventory book-keeping, but they do
not support planning.

The scope of MRP in manufacturing

The basic function of MRP system includes inventory control, bill of material processing and
elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used to
plan manufacturing, purchasing and delivering activities.

"Manufacturing organizations, whatever their products, face the same daily practical problem -
that customers want products to be available in a shorter time than it takes to make them. This
means that some level of planning is required."

33
Companies need to control the types and quantities of materials they purchase, plan which
products are to be produced and in what quantities and ensure that they are able to meet current
and future customer demand, all at the lowest possible cost. Making a bad decision in any of
these areas will make the company lose money. A few examples are given below:

 If a company purchases insufficient quantities of an item used in manufacturing, or the

wrong item, they may be unable to meet contracts to supply products by the agreed date.

 If a company purchases excessive quantities of an item, money is being wasted - the

excess quantity ties up cash while it remains as stock and may never even be used at all.
However, some purchased items will have a minimum quantity that must be met,
therefore, purchasing excess is necessary.

 Beginning production of an order at the wrong time can cause customer deadlines to be
missed.

MRP is a tool to deal with these problems. It provides answers for several questions:

 What items are required?

 How many are required?
 When are they required?

MRP can be applied both to items that are purchased from outside suppliers and to sub-
assemblies, produced internally, that are components of more complex items.

The data that must be considered include:

 The end item (or items) being created. This is sometimes called Independent Demand or
Level “0 on BOM (Bill of materials).
 How much is required at a time.
 When the quantities are required to meet demand.
 Shelf life of stored materials.
 Inventory status records. Records of net materials available for use already in stock (on
hand) and materials on order from suppliers.
 Bills of materials. Details of the materials, components and sub-assemblies required to
make each product.
 Planning Data. This includes all the restraints and directions to produce the end items.
This includes such items as: Routings, Labor and Machine Standards, Quality and
Testing Standards, Pull/Work Cell and Push commands, Lot sizing techniques (i.e. Fixed
Lot Size, Lot-For-Lot, and Economic Order Quantity), Scrap Percentages, and other
inputs.

34
A typical MRP system follows a successive planning concept, as depicted in the
following figure.

35
Master Production Scheduling.

Based on existing customer orders and a medium-term aggregate production plan Master
Production Scheduling (MPS) prepares a short-term production plan for end or rather main
products. The planning result is the Master Production Schedule, which is commonly referred to
as the MPS.

Material Requirements Planning.

The next step, Material Requirements Planning (MRP), uses the MPS as a starting point and
computes derived demands for all components required for the production of the end products.
The planning data used are the bill-of-materials structure (BOM structure, Gozinto structure), the
current inventory status (including planned receipts) and planned lead times. Within this
planning step lot sizes are computed under the assumption that infinite capacity is available.
Result of these computations is planned production quantities per item and period.

Material Requirements Planning computations

The MRP calculations are as follows:

a) Sort items according to their low level code.

b) Consider each item in sequence and perform the following steps:

1. Get external demand (from the master production schedule), sif any
2. Compute derived demands
3. Get available inventory (from the inventory records)
4. Compute net demand
5. Compute lot sizes (usually with the a heuristic for the single level dynamic lot sizing
problem)
6. Offset lots according to the planned lead time and fix production dates

Capacity Requirements Planning.

Next, for each operation required to make the products the planned starting time and ending
time are computed with the help of standard project planning algorithms, such as the Critical
Path Method (CPM). Again, capacities of the resources are neglected (infinite loading).
Following this planning step, the capacity requirements resulting from infinite loading are
tabulated and graphed. Usually the comparison with the available capacities shows that the
production plan developed so far is infeasible.

This is the point in time when adjustment of the production plan by the human planner comes
into play. Usually based on experience, the planner tries to shift operations on the time axis in
order to generate a feasible production schedule. If this is not possible due to conflicts between

36
the resource requirements of different operations, the capacity is extended by overtime, if
possible. In general, a human does not have the capability to solve this complicated
combinatorial optimization problem, which is a variant of the so-called Resource-Constrained
Project Planning Problem (RCPSP).

Production Control.

In the last planning, for the upcoming short-term planning horizon production oders are released
and assigned to the resources. For each resource orders are scheduled with the help of simple
priority rules.

Critique of the MRP concept

Basically, the MRP concept is nothing else than the automation of order processing
procedures that in earlier days have been done manually. Planning methods that support
decision making in the sense that a feasible production plan is developed are not applied. The
MRP concept has been criticized by many scientists as well as practitioners in a large number of
publications. Its flaws are system-immanent and cannot be deleted by modern data base
methods, user interfaces and faster computers. The major flaws to be criticized are:

1. The medium-term aggregated production planning which aims at the coordination of

sales and operations planning is not supported. Usually the production plan is equated to the
sales plan. With scarce resources, however, these both plans must differ.
2. The production lot sizes are computed for each item in isolation without consideration of the
interdependencies between predecessor and successor items in a multi-level BOM structure.
The competition of items for resources is neglected, which leads to infeasible production
plans. In addition, the cost-related interdependencies between a parent item and its
components are not considered. Whitin the MRP planning phase a successive planning of the
items is performed (first requirements computation, then lot sizing), based on an ordering of
the items according to their low level codes.
3. In the MRP phase and in the Capacity Requirements Planning phase so-called "planned lead
times" are used. These are stored as a resource-independent characteristic of an item in the
production data base and are often not changed for years. The planned lead time includes
estimates of transportation times and of waiting time due to scarcity of production resources.
However, it is obvious that the waiting time for a resource depends on the workload of the
resource. As the workload and, consequently, the bottleneck status of a resource changes
over time, it does not make sense to store the waiting time (as part of the planned lead time)
in a data base. The lead times are a result of the planning and not a given.
4. All planning phase suffer from the severe flaw, that the scarce capacities of the resources
are completely neglected in the planning. Only immediately before the start of the
production operation on the job shop level the infeasibility of a production schedule is
recognized. But at this point in time, it is too late. Delivery delays and superfluous inventory
are the consequence.

37
Implementing Material Requirement Planning(MRP)

Systems through an ERP application or a custom developed application. Before we get into the
implementation planning, let us review the pre-requisites for a reliable Material Requirements
Planning

Accurate BOM:

Bill of materials should be accurate. Defining a BOM is a very important aspect of the
implementation. Most of the instances, BOMs are defined for costing purposes rather than
planning purposes. This poses a lot of problems for the planner. Most often than not, the planner
has to deal with those items which are not even stocked, but MRP throws exceptions because
they are part of BOM. Over a period of time, the real BOM(what actually goes into a product)
would have undergone a change, but not the planning bill. This again leads to a LOT of
confusion.

Accurate Stock Status :

This is a critical requirement. As MRP accuracy depends upon the on hand stock accuracy, it is
essential to ensure the stock figures are accurate.
Generally organizations do a physical counting before going live and update their inventory
records.

Accurate On-Order Status:

As MRP logic takes into consideration, the quantity on order this data is important. Let us look at
a situation.

A company X releases a PO on a vendor V for an Item A. Qty expected is 800 by due date. Now
Vendor V dispatches a quantity of 200 as a first installment. In the mean time the requirements at
X have changed and there is no need of A anymore. Immediately buyer at X makes a call to
Vendor and informs him not to send the remaining material anymore. At some stage later, there
is a requirement of 1000 for Item A. MRP recommends for a quantity of 400 (1000-600) only as
the remaining 600 is expected from the previous PO. However, 600 will NOT come as was
instructed by the buyer. Here the issue is, communication to Vendor has been completed, but to
the system it was not done. So it would result in a short fall of 600 pieces. Sometimes this could
result in ordering excess material too.

Accurate Lead Times

MRP calculations are Time Phased. They work on the principle that, Material should be in stock,
only when it is Just required, not before, not later. So it is very important to get the lead times
more accurately. There are surely practical difficulties for arriving at the lead times. Lead times
are divided into two categories. Fixed lead times and variable lead times. Fixed lead times are

38
those, which are independent of LOT sizes. Variable lot sizes depend upon the Lot size to be
produced or procured.

Procurement lead times

are more difficult to predict than the production lead times. The assumption here is that,
controlling internal production is easier than the Vendor lead times. Though many may disagree
to this statement, if the organization is big and internal delays for decision making is rampant.

Production lead times

are generally accurate and are available in the routing descriptions. However, care should be
taken to identify the lead times based on the BOM defined for that particular part.

Accurate Demand

Another very important factor before MRP is implemented is to get the Demand accuracy. The
demand should be expressed in the production units. Independent demand could include, the
open orders, backlog, anticipation and spare parts requirement. This is one of the most difficult
parts. In many organizations, this could flow down from Master Production Schedule Planning
(MPSP). MPSP is a statement of production, not a Sales and operating plan. While MPSP is
prepared at family level, MRP drills down to SKU level.

He pitfalls while implementing Material Requirement Planning Systems through an ERP

application or a custom developed application.

Lack of Vision:
The organization vision is an important factor for the success. Strategic plan should be
converted to tactical plan and the tactical plan to the operational plan.
There should be a drive to synchronize the major functions of the organization, such as
Sales and marketing, Production, Purchasing (Materials Management) and Finance.
Clearly the business plan at the strategic level sets the blue print for the organization.
Production Plan and the MPS at Tactical plan will convert the business plan into a
workable plan. This should be the input for the MRP which is an operational plan. There
should be owners for each of these stages. A detailed feedback mechanism for the
transactional update to the tactical plan is necessary.

Many organizations make a big mistake of jumping into MRP run without setting these
basic things right. When there is a conflict between the demand and what can be
produced (Production Plan), there is no strict process for addressing the same. With the

39
result in the due course, the MRP run gives undesirable recommendations. The tendency
is to get back to the manual methods.
Automating MRP Recommendations:

As soon as MRP is on the system, the tendency is to automatically release Purchase

orders, Work orders(Manufacturing Orders) and rescheduling the open orders. It is very
important to understand that, rescheduling is not just pressing a key on the keyboard.
There are practical issues. The responsiveness of the system is the KEY criteria.

For ex: There is an open order for an Item X for a qty of 1000, due by 15th Jun. (1 month
later). Now after a few days, the order has been started and work is in progress. The
MRP, based on the revised demand recommends that the order be cancelled. How is this
cancellation communicated back to the Shop floor? What happens to the WIP? Who will
own the WIP?
How soon the machines can be set up once again for the next order which is due? How
frequently these changes are taking place? How are the Shop floor resources measured?

Based on the answers for the above questions, one can fairly estimate the responsiveness
of the system for any changes?

Similarly the vendors. It is very essential to understand that vendors also have to
manufacture and their planning and execution depends on their customers forecast.
Vendors are extended facilities of the organization. The same rules apply for them too.
The responsiveness here varies depending on the type of the vendor, nature of the product
supplied and the availability of the product.

Similarly, expediting has its COST.

It is suggested that before auto releasing orders, rescheduling orders, the responsiveness
be built up. Based on the responsiveness, rules may be set for automation.

Lack of confidence in MRP recommendations:

During the initial phase of MRP run, the MRP recommendations may not match the
traditional planning recommendations. There could be many reasons for the same. Faulty
BOM, in accurate inventory, improper demand, etc..
These errors need to be analyzed. The root cause of the problem needs to be tackled.
Tampering with the DATA has to be avoided at any cost.
If these are not addressed at the root level, lack of confidence seeps into the minds of not
just the planners, but everyone in the system. Hence they tend to go back to the excel
sheets.

40
 Golden rule is: If you want to implement MRP, un-install Excel totally on planners'
desks.

MRP Nervousness:

There are many reasons for MRP nervousness. Frequent Demand variations, low
responsiveness of the shop floor/ vendors, delay in feedback mechanism to the system,
frequent runs of MRP and implementation of recommendations and many such things
could result in MRP nervousness. Planners and the executive team should analyze and
persist with MRP, which is beneficial in the long run.

Outputs
There are two outputs and a variety of messages/reports:

 Output 1 is the "Recommended Production Schedule" which lays out a detailed schedule
of the required minimum start and completion dates, with quantities, for each step of the
Routing and Bill Of Material required to satisfy the demand from the Master Production
Schedule (MPS).
 Output 2 is the "Recommended Purchasing Schedule". This lays out both the dates that
the purchased items should be received into the facility AND the dates that the Purchase
orders, or Blanket Order Release should occur to match the production schedules.

Messages and Reports:

 Purchase orders. An order to a supplier to provide materials.

 Reschedule notices. These recommend cancelling, increasing, delaying or speeding up
existing orders.

Note that the outputs are recommended. Due to a variety of changing conditions in companies,
since the last MRP / ERP system Re-Generation, the recommended outputs need to be reviewed
by trained people to group orders for benefits in set-up or freight savings. These actions are
beyond the linear calculations of the MRP computer software.

Problems with MRP systems

The major problem with MRP systems is the integrity of the data. If there are any errors in the
inventory data, the bill of materials (commonly referred to as 'BOM') data, or the master
production schedule, then the outputted data will also be incorrect (GIGO: Garbage in, garbage
out). Most vendors of this type of system recommend at least 99% data integrity for the system
to give useful results.

Another major problem with MRP systems is the requirement that the user specify how long it
will take a factory to make a product from its component parts (assuming they are all available).

41
Additionally, the system design also assumes that this "lead time" in manufacturing will be the
same each time the item is made, without regard to quantity being made, or other items being
made simultaneously in the factory.

A manufacturer may have factories in different cities or even countries. It is no good for an MRP
system to say that we do not need to order some material because we have plenty thousands of
miles away. The overall ERP system needs to be able to organize inventory and needs by
individual factory, and intercommunicate needs in order to enable each factory to redistribute
components in order to serve the overall enterprise.

This means that other systems in the enterprise need to work properly both before implementing
an MRP system, and into the future. For example systems like variety reduction and engineering
which makes sure that product comes out right first time (without defects) must be in place.

Production may be in progress for some part, whose design gets changed, with customer orders
in the system for both the old design, and the new one, concurrently. The overall ERP system
needs to have a system of coding parts such that the MRP will correctly calculate needs and
tracking for both versions. Parts must be booked into and out of stores more regularly than the
MRP calculations take place. Note, these other systems can well be manual systems, but must
interface to the MRP. For example, a 'walk around' stock intake done just prior to the MRP
calculations can be a practical solution for a small inventory (especially if it is an "open store").

The other major drawback of MRP is that takes no account of capacity in its calculations. This
means it will give results that are impossible to implement due to manpower or machine or
supplier capacity constraints. However this is largely dealt with by MRP II.

Generally, MRP II refers to a system with integrated financials. An MRP II system can include
finite / infinite capacity planning. But, to be considered a true MRP II system must also include
financials.

In the MRP II (or MRP2) concept, fluctuations in forecast data are taken into account by
including simulation of the master production schedule, thus creating a long-term control[3]. A
more general feature of MRP2 is its extension to purchasing, to marketing and to finance
(integration of all the function of the company), ERP has been the next step.

The MRP (Material Requirements Planning) concept exists since the 60s of the last century. It is
the basis for most software systems supporting production planning and control in industrial
practice. Most of these so-called MRP systems provide good assistance for order processing,
data handling and inventory book-keeping, but they do not support planning.

42
 CHAPTER 7
DATA COLLECTION AND ANALYSIS

MSS India Pvt Ltd, Nasik is a subsidiary of MSS group manufacturing DC bus bar
conductors, Battery accessories, & electrical components for power industry. This is a 100%
export oriented unit. All these mentioned products are manufactured and exported to the foreign
customers. The raw material required is imported from the foreign suppliers/vendors. The basic
raw material required for the manufacturing is copper. Besides this Lead is also an important
ingredient required in the process.

The company follows the concept of JUST IN TIME (MADE TO ORDER CONCEPT).
The products are manufactured as per the customer specifications and the demand being
indefinite causes all the departments to always stand on the toes especially the purchase
department. The purchase personnel are responsible for the provision of the quality raw material
to the production dept at the right time. Purchase dept achieves the first objective towards the
production of the final finished product. This project comprises of three stages needed to be
conquered.

The data required to achieve the objectives was collected from the system itself. To
retrieve the data ERP software was used. All the data like Bill of materials of components, item
codes, item description, raw material standard, supplier information, quotations, purchase
orders…etc. was retrieved from the server system of the company.

ERP System

43
Purchase planning and control.
At the very first stage we collected all the data required for preparing material planning sheets.
The customer database was collected. All the drawing numbers of each component were
collected with the help of which we found out customer Item code, Raw material Description,
Raw material code using ERP system. The main objective of this project is to minimize the time
consumed to retrieve the data required for the process. This part of the project is known as Raw
material standardization and material planning.

The final material planning sheet prepared is shown below:

BOM Explosion

44
BOM Sheet

45
Material Planning Sheet (MPS)
The process followed by the purchase personnel is as follows:
 When the sales order is received.
 Export the sales order in excel.
 The excel sheets of each customer prepared by us consist of “ERP item code, item description,
drawing no:, raw material code, raw material description & gross wt”.
 The ERP item code of the required component is retrieved with the help of the Excel database of
each customer.

46
 The material planning sheet are linked with the above BOM excel sheet.
 The yellow colored cells are the cells in which data is entered manually.
 The white colored cells are linked with the above BOM excel sheet so that when the ERP item
code is entered the item description, drawing no:, ERP RM code, Gross weight & RM description
are retrieved.

47
 The pictorial representation shown below shows the retrieval of the required data after entering
the ERP item code.

48
 Enter the order quantity & finished goods/Work in progress stock and stock on hand in the
planning sheet and the rest of the data is retrieved.

49
 In this step Item wise total weight Required, RM size wise Final total and Balance material to be
ordered are retrieved.
 In this sheet the stock in transit is not entered.

 Here, in the material planning sheet there are some of the constraints which play a vital role as
far as inventory management is concerned. For EX: “Stock on hand, stock in transit, balance
material to be ordered”.

50
  When you receive an order, the first step taken by you is the stock check. How much quantity of
the components required are available in the stock. This is called stock on hand. This stock on
hand is to be manually entered in the first MPS.

 Similarly another important role player is Stock in transit. If you don’t have enough stock of a
particular component then you place an order for the remaining. This material takes some lead
time to reach to your unit. So what we need is, we don’t want the system to include the stock in
transit along with the stock on hand until the stock in transit comes into the company’s custody.

 Our objective was to program the MPS in such a way that the stock in transit gets added in the
formula only when the delivery is received. The formula is (RM size wise final total – stock on
hand – stock in transit) = balance material to be ordered. In the first sheet the stock on hand is
entered manually. Until the date of stock in transit which is programmed and linked with the
system date is exceeded the formula doesn’t include the stock in transit in it.

 There are two sheets shown below.

 Sheet A consists of calculated balance material required before transit date is arrived.

 Sheet B consists of calculated balance material required after transit date is arrived.

Sheet A
51
Sheet B

 Now the most important thing is that the balance material of this month is going to be stock on
hand of the next month. So these types of links are made in the MPS.

52
  To maintain the balance stock data these sheets are to be saved after they are fully occupied.
Next sheet is prepared only by copying the earlier sheet on a new one. So this is a very easy
process.

 The advantage of MPS is it would avoid inventory mismanagement issues and to save time
consumed in collecting accurate data from the system.

Costing
53
In this project we were provided with the supplier database and we were supposed to prepare the
competitive supplier database in Maharashtra as well as outside Maharashtra. The norms set for
inside Maharashtra supplier are little bit different from the norms set for OMS. For EX: VAT is
applicable only in Maharashtra. That means as a customer in Maharashtra you have to bear value
added tax against the product you are buying. Similarly CST is applicable to OMS supplier. So
on the basis of certain criterions like Excise duty, C forms, CST, VAT, Transportation cost, etc.
these suppliers are evaluated. This database is maintained for the purchase department to easily
calculate the cost incurred to order a material from different suppliers. We also went through the
process followed by this company in context with the imports of raw materials. The basic raw
material imported is Copper. The cost of the copper depends on LME London Metal Exchange.
It is just like the NSE/BSE market. The rates fluctuate on daily basis. The raw material is ordered
against these rates.
The database excel sheet prepared is shown below:

Costing Sheet

54
Supplier assessment and Material costing
standardization.
The second project consists of maintaining the supplier/vendor database so as make it easy to
choose the reliable and affordable supplier out of the list. In this project we maintained the
approved supplier database and evaluated them on certain criterions set by the company. The
format comprises of supplier code, evaluation and re-evaluation forms which are hyperlinked on
the sheet, ISO certification, pollution licenses, and supplier profile. Considering the criterions
like ISO certification, profile, pollution licenses and other legal documents these suppliers are
then evaluated. After a particular time interval the re-evaluation is done. The decision making
process of choosing the right supplier is done with reference to these supplier evaluation forms.
The final excel sheet prepared is shown below:

Supplier Evolution Sheet

55
 CHAPTER 8
OBSERVATION & CONCLUSIONS
These projects are related to purchase department.
Earlier the purchase personnel used to face problems while synchronizing the quantity required
and the dates when the material is required so as to manage inventory properly.
For Example : if your material is in transit and you are going to receive it by next week then the
material planning sheet should show the added stock as soon as the date is exceeded. Purchase
guys used to face this problem which resulted in ordering of wrong quantity of raw material. It is
observed that this problem is solved by preparing a new programmed material planning sheet
which would automatically add the transit quantity as soon as the delivery is received.
Apart from this another positive aspect observed is less time consumption for the retrieval of the
data. One click is sufficient for the retrieval of the required data.

56
 CHAPTER 9

BIBLIOGRAPHY

http://www.epiqtech.com/supply_chain.htm

http://en.wikipedia.org/wiki/Supply_chain

http://en.wikipedia.org/wiki/purchase_planning_control

http://en.wikipedia.org/wiki/material_planning

57