INVENTORY CONTROL & INBOUND LOGISTICS

8/7/2019 INVENTORY CONTROL & INBOUND LOGISTICS

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Inventory Control & InboundInventory Control & Inbound

LogisticsLogistics

AssignmentAssignment SCM ( Sem 2),SCM ( Sem 2),

EE--PGPBM, Nerul.PGPBM, Nerul.

Inderpal AnandInderpal Anand--4343Trupti Dave-41

Pallavi Gonyal-42

Kush SahuKush Sahu--4848

Anand S MehtaAnand S Mehta--4747

Rajkumari SobhaniRajkumari Sobhani--4444

Jiju VargheseJiju Varghese--4545


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Supply Chain.Supply Chain.


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What is Inventory & InventoryWhat is Inventory & Inventory

ControlControl InventoryInventory Refers to theRefers to thestock of resources, thatstock of resources, thatpossess economic value, heldpossess economic value, heldby an organization at anyby an organization at anypoint of time. These resourcepoint of time. These resourcestocks can be manpower,stocks can be manpower,

machines, capital goods ormachines, capital goods ormaterials at various stages.materials at various stages. INVENTORY CONTROLINVENTORY CONTROL

&MANAGEMENT&MANAGEMENT Is primarilyIs primarilyabout specifying the size andabout specifying the size andplacement of stocked goods.placement of stocked goods.A set of policies and controlA set of policies and controlthat monitor level ofthat monitor level ofinventory and determinesinventory and determineswhat levels should bewhat levels should bemaintained and when stockmaintained and when stockmust be replenished.must be replenished.

The Less Inventory you haveThe Less Inventory you havethe less carrying costs youthe less carrying costs youhave thus greater yourhave thus greater your

margin and thus profitmargin and thus profit..


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Reasons for Keeping InventoryReasons for Keeping Inventory

TimeTime The time lags present in the supply chain, fromThe time lags present in the supply chain, fromsupplier to user at every stage, requires that you maintainsupplier to user at every stage, requires that you maintaincertain amounts of inventory to use in lead time.certain amounts of inventory to use in lead time.

UncertaintyUncertainty -- Inventories are maintained as buffers toInventories are maintained as buffers to

meet uncertainties in demand, supply and movement ofmeet uncertainties in demand, supply and movement ofgoods and Variation in forecast figures and actual figures.goods and Variation in forecast figures and actual figures.

Economies ofScaleEconomies ofScale Ideal condition of One unit at aIdeal condition of One unit at atime at a place where a user needs it, when he needs ittime at a place where a user needs it, when he needs itprinciple tends to incur lots of costs. Bulk buying,principle tends to incur lots of costs. Bulk buying,

movement and storing brings in economies of scale.movement and storing brings in economies of scale.

Hedge against futureHedge against future. Viz. Viz Crude Oil/SteelCrude Oil/Steel

Improve Customer ServiceImprove Customer Service..


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Types Of InventoryTypes Of Inventory

Seasonal InventorySeasonal Inventory: Seasonality in: Seasonality indemand is absorbed using inventorydemand is absorbed using inventory

Decoupling InventoryDecoupling Inventory: Complexity of: Complexity ofproduction control is reduced by splittingproduction control is reduced by splittingmanufacturing into stages and maintainingmanufacturing into stages and maintaininginventory between these stagesinventory between these stages

Cyclic InventoryCyclic Inventory: Periodic replenishment: Periodic replenishmentcauses cyclic inventorycauses cyclic inventory

Pipeline InventoryPipeline Inventory: Exists due to lead time: Exists due to lead time Safety StockSafety Stock: Used to absorb fluctuations: Used to absorb fluctuations

in demand due to uncertaintyin demand due to uncertainty


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Costs in Inventory PlanningCosts in Inventory Planning

Item CostsItem Costs -- Direct cost for getting an item. Purchase cost for outsideDirect cost for getting an item. Purchase cost for outsideorders, manufacturing cost for internal orders.orders, manufacturing cost for internal orders.

Carrying CostsCarrying Costs -- Interest for shortInterest for short--term borrowals for workingterm borrowals for workingcapitalcapital

-- Cost of stores and warehousingCost of stores and warehousing

-- Administrative costs related to maintaining and accounting for inventoryAdministrative costs related to maintaining and accounting for inventory.. Ordering CostsOrdering Costs -- Search and identification of appropriate sourcesSearch and identification of appropriate sources

of supplyof supply-- Price negotiation, contracting and purchase order generationPrice negotiation, contracting and purchase order generation-- FollowFollow--up and receipt of material.up and receipt of material.

Shortage CostsShortage Costs -- Costs arising out of pushing the order back andCosts arising out of pushing the order back and

rescheduling the production system to accommodate these changesrescheduling the production system to accommodate these changes--Rush purchases, uneven utilization of available resources and lowerRush purchases, uneven utilization of available resources and lower

capacity utilizationcapacity utilization-- Missed delivery schedules leading to customer dissatisfaction and loss ofMissed delivery schedules leading to customer dissatisfaction and loss of

good willgood will


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Designs of Inventory Management SystemsDesigns of Inventory Management Systems

Order Quantity.Order Quantity.

Economic Order QuantityEconomic Order Quantity..

Order Timing.Order Timing.

Reorder PointReorder Point.. Saw Tooth Model.Saw Tooth Model.


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Economic Order QuantityEconomic Order Quantity

EOQEOQ is an inventory relatedis an inventory related equation that determinesequation that determinesthe optimum order quantity that a company should hold inthe optimum order quantity that a company should hold initsits inventory given a set cost of production, demand rateinventory given a set cost of production, demand rateand other variables. This is done to minimize variableand other variables. This is done to minimize variable

Inventory costsInventory costs ..


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Reorder PointReorder Point

Quantity to which inventory isQuantity to which inventory isallowed to drop before order forallowed to drop before order for

replenishment is made.replenishment is made. Need to Order EOQ at Reorder point.Need to Order EOQ at Reorder point.

ROP = D x LTROP = D x LT

DD Demand rate per periodDemand rate per period LTLT Lead Time in periods.Lead Time in periods.


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The SawThe Saw--Tooth Model forTooth Model for

Inventory ControlInventory Control


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INBOUND LOGISTICSINBOUND LOGISTICS


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Inbound Logistics.Inbound Logistics.

Inbound logistics is the management of goodsInbound logistics is the management of goodsand materials which are arriving at your businessand materials which are arriving at your businesspremises. It is the opposite of outbound (orpremises. It is the opposite of outbound (or

'dispatch') logistics.'dispatch') logistics. For example, in a tomato canning plant, inbound logistics isFor example, in a tomato canning plant, inbound logistics is

concerned with the receipt and storage of empty cans and rawconcerned with the receipt and storage of empty cans and raw

tomatoes, which arrive separatelytomatoes, which arrive separately.. Inbound Logistics involve Purchasing,Inbound Logistics involve Purchasing,

Transportation, Warehousing, Material Handling,Transportation, Warehousing, Material Handling,Inventory Management and control.Inventory Management and control.


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Porters Generic Value ChainPorters Generic Value Chain

Inbound Logistics is one of the Primary Activities of the value

chain.


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Steps in Inbound LogisticsSteps in Inbound Logistics

Enter Purchase orderEnter Purchase order

Transportation PlanningTransportation Planning

Select Transportation Service ProviderSelect Transportation Service Provider

Tender Shipment and initiate Event Manager toTender Shipment and initiate Event Manager totrack tendering processtrack tendering process

Respond to TenderRespond to Tender

Deliver shipmentDeliver shipment

Goods ReceiptGoods Receipt

Proof of DeliveryProof of Delivery Self billing to Transportation Service ProviderSelf billing to Transportation Service Provider

Invoice verification & Payment to the SupplierInvoice verification & Payment to the Supplier


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Elements of a Inbound Value-Chain

for a Beverage-Packaging PlantFirst level: Business entities

Timber

Farm

Pulp

Mill

Paperboard

Manufacturer

Paperboard

Converter

Beverage

Company

Grocery

Store

Final

Customer

to second level


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Second level: Processes

Procurement Storage Display

from first level

Sell to

customer

Third level: Activities

Preparing

purchaseorder

Receivingorder

Inspectingdelivery

Moving

to

Storage

Payinginvoice


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INBOUNDINBOUND --A Food System Supply ChainA Food System Supply Chain

Customer

Container Companysupplies to

Food Processers from

Them to Retail stores

Steel Plant Supplies

to

Container Firm

for making of Cans

COAL MINE-

Supplies to Coal Ore to Steel Plant


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THANK YOUTHANK YOU

Documents

INVENTORY CONTROL & INBOUND LOGISTICS