If you are a manager of integrated materials management, what would you do to achieve the your firm's strategy, which is make-to-order (Just-In-Time method) or made-to-stock (inventory)?
Yes, you have to fulfill TWO (2) main objectives, which are:
1. Customer satisfaction
2. Minimum total materials cost
When we talk about satisfying customer, the first thing that will cross on our mind is about making people or animals happy (bear in mind animals are also some kind of customer, just like us). And describing customer satisfaction will make us out of our mind because different human being may have different thoughts (except for animals, they have brain but no thought).
From the definition stated in Purchasing and Supply Chain Management book (as we agreed), is the idea of customer's demand that is satisfied without delay or received as promised. Based on our source of reading, we concluded that there are SEVEN (7) elements of satisfaction.
1. Material Availability
This is the main aspect in satisfying customer, by producing or distributing sufficient inventory. This element may vary from various aspects like density of population and demand. Dense population will have high demand of products and immediate shipment that result the availability of materials is very critical.
2. On-Time Shipment
Every delivery or shipment must based on promised date made before (date of receipt is not important at all), but now customer is very concerned about when the materials are received.
3. On-Time Receipt
Yes, to satisfy the customer you have to deliver and send the material based on needed dates. The material that received by customer on time on the most critical time, will satisfy them.
4. Complete Shipment
The material that has been sent must matched with the details in the order made by customer.
5. Quality of Receipt
Yes, the material that arrives must be in good condition and exactly the same with the order made before.
6. Flexibility
An action in which the supplier can receive and accept every single customer's request because every customer may have different needs and wants. The supplier must face any changes happen in the product.
7. Responsiveness to Inquiry
Every feedback given by customer, is it good or bad must be reply and response to the inquiry. Solving the customer's problem will increase the supplier's interest that will reflect to firm's profit.
In conclusion, defining customer satisfaction is too hard to us.To conclude, customer want:
- Short lead time
- Good quality
- High value
- Customized products
- Post-sale service (after sale service)
Friday 28 February 2014
Saturday 22 February 2014
PRICE DETERMINATION
If you go to supermarket, what the most important thing you will consider?
let me guess, price right? Yes!! The price will influence our buying power. Same goes in logistics purchasing issue.
But before we go to far, let me explain about this first. A goods that going to sell has its own price range. We call it price floor and price ceiling. That product price cannot be lower than price floor and cannot excess price ceiling.
Now lets move on the topic that we are gonna to stress more. Price determination, we need to understand the relationship between cost and price.
The price determine suppose to be cover the all cost of production, maintenance, and distribution. However, all the issue that involve in purchasing must be a high quality one. Only the product with best quality will be chosen.
Our main point we will discuss as listed below:
- competition business environment
- political stability
- foreign exchange
For example, company Proton would like to choose one brand of tire out of four suppliers. So what Proton will consider is which supplier can provide them the lowest price in order to produce low cost car to their customer.
Political stability. Political issue is the most risky issue in price determination. Price will be effect most without we knowing and realize about it. For example in Mesir, their politic is not stable when their is an issue with the government. So it hard to make production because there will be a lot of procedures need to be fill up for every single activity that will involves.
Foreign exchange. Some production might purchase some material from foreign country. Sometimes it may be low price and sometimes it may be high cost. Its depend on each country currency. If you purchase from United States, it will incurred high cost due to their currency is higher than Malaysia. But if you purchase in Indonesia, it an advantages for us due to our currency is higher than them.
Ladies and gentlemen, lovely readers and visitors,
In conclusion, all the main point that we discuss earlier is not just about the cost involve, thus it consider all the others factor to get the best product to produce the best product to the customer which is quality, transportation, maintenance, and direct labor.
that all from us for this time, THANK YOU!
Friday 21 February 2014
JUST IN TIME TOYOTA PRODUCTION
Just-In-Time (JIT) is a system that applied to reduce cost. Mostly is about a cost.
Kanban is a card, means detail information in a paper in front of a box or bento.
Kaizen is continuous improvement of company to give their best to customer. That is some briefly explanation about those three system
So below we are going to explain more about those three system.
Just-In-Time (JIT)
Just-In-Time means only what is needed, when it needed and what is amount needed. According this production plan can eliminate waste, reducing inventory and responding the customers. By taking a just in time (JIT) approach to inventory and product handling, the company can cut cost.
The result is that the right parts and materials are manufactured and provided in the exact amount needed - and when and where they are needed. Under just in time the rights always a customer. This is because activities in the system only occur in response to customer order.
Productions pulled by the customer rather than being pushed by the needs or capabilities of the production system.
If tat times are reduced more resources are allocated. Toyota never tries to accommodate changes in demand by making substantial changes in individuals' workloads.
Kanban System
The term 'kanban' combines the Japanese words 'kan,' meaning 'visual' and 'ban,' meaning 'card' or 'board.' A kanban is a visual card or other cue that signals something is needed.
In the Toyota Production System (TPS), a unique production control method called the “Kanban System”. Kanban system such as product’s name, code and storage location.
Toyota use kanban system because when a process refer to a preceding process to retrieve parts, it uses a kanban to communicate with parts have been used.
Kaizen
Kaizen, which in Japanese means good (zen) change (kai) is a philosophy that motivates people to constantly improve their surroundings. Kaizen is the one the Toyota core values. It means continuous improvements. No process can declared perfect but it can be to improve.
Kaizen in practice means that all the teams in the entire organisation are continuously looking the ways how to improve production, and people at every level in the company support this process of improvement.
Toyota process requires that all task, both human and mechanical, be very precisely defined and standardised to ensure maximum quality, eliminate waste and improve efficiency.
That all from us,
Kanban is a card, means detail information in a paper in front of a box or bento.
Kaizen is continuous improvement of company to give their best to customer. That is some briefly explanation about those three system
So below we are going to explain more about those three system.
Just-In-Time (JIT)
Just-In-Time means only what is needed, when it needed and what is amount needed. According this production plan can eliminate waste, reducing inventory and responding the customers. By taking a just in time (JIT) approach to inventory and product handling, the company can cut cost.
The result is that the right parts and materials are manufactured and provided in the exact amount needed - and when and where they are needed. Under just in time the rights always a customer. This is because activities in the system only occur in response to customer order.
Productions pulled by the customer rather than being pushed by the needs or capabilities of the production system.
If tat times are reduced more resources are allocated. Toyota never tries to accommodate changes in demand by making substantial changes in individuals' workloads.
Kanban System
The term 'kanban' combines the Japanese words 'kan,' meaning 'visual' and 'ban,' meaning 'card' or 'board.' A kanban is a visual card or other cue that signals something is needed.
In the Toyota Production System (TPS), a unique production control method called the “Kanban System”. Kanban system such as product’s name, code and storage location.
Toyota use kanban system because when a process refer to a preceding process to retrieve parts, it uses a kanban to communicate with parts have been used.
Kaizen
Kaizen, which in Japanese means good (zen) change (kai) is a philosophy that motivates people to constantly improve their surroundings. Kaizen is the one the Toyota core values. It means continuous improvements. No process can declared perfect but it can be to improve.
Kaizen in practice means that all the teams in the entire organisation are continuously looking the ways how to improve production, and people at every level in the company support this process of improvement.
Toyota process requires that all task, both human and mechanical, be very precisely defined and standardised to ensure maximum quality, eliminate waste and improve efficiency.
That all from us,
Saturday 15 February 2014
THE BENEFITS OF INTERNATIONAL LOGISTICS
Go international is very difficult to understand. Every firm or business always want to expand their business to the global market. Here we listed five (5) benefits of international logistics, that is:
1) Grow your business
2) Less competition
3) Quality
4) Suppliers and Customers
5) Challenge in new market
First, our point is growing your business, when trading internationally the potential clients and suppliers will increase significantly. Just imagine increasing the number of potential clients each time you start selling in a new country. This will probably be much easier than trying to expand your market place in your own country.
Second, will be less competition. The ability to stand out amongst competitors is important factor in business. When there are fewer competitors/competitor, this task is made easier. Your business, which may be viewed as compare to others, when placed in a larger and more different environment, be a unique product or service. By making the product or service available to worldwide buyers, you instantly create another life line for the business by being in less competition and increasing the possibility of standing out. This will turn sales potential and allow you to develop in a successful way a flouring business.
Third are quality goods. Every single things or products would depend on its quality. Quality is cannot be measured. So quality was measured by the customers itself. But quality is defined by the satisfaction of customers. Quality also needed to improve perceptions from customers which will lead the company to improve their performance. The company must produce goods with high quality while the cost must at the lowest level. Goods that have a good quality will reduce the number of reverse logistics.
Fourth, new supplier and customer, supplier who does not perceive an inquiry as a threat to his own business can be helpful to your overseas product search. He may have suppliers overseas, or he may have overseas contacts in the industry of your interest. Buyers are another source and they normally are not threatened by offering suppliers. They may know the foreign suppliers and their products through their competitors, suppliers, or their personnel.
Fifth, challenging in new market will force the firm or business to try the best as there will be so much competitors that applied different strategies. Every firm or business that enters the market must revise and make research on political/legal, demographic, social, etc. The results may help in adapting the business into the new market compared to the business that enters into the market without make a study.
Friday 14 February 2014
LOGISTICS AND SUPPLY CHAIN IN PORSCHE PANAMERA
Have you ever heard about the Porsche Panamera? This is one of successful car ever build by Porsche in Germany. With all their hardships from the strategic planning, tactical planning and operational planning to build this car, finally this car have announced as the best selling car in US.
We're going to write on how Porsche able to control all the activities by involving logistics and supply chain management.
Time management is very crucial in manufacturing such a prestige car. Time should be reduce to enforce lower cost and fully utilized. Porsche has three (3) different plants around the Germany. This strategy is to make sure the management of Porsche able to handle the operation of transforming the materials to assemble to finished goods, and optimize the works in producing Panamera. Porsche has three different plants, which is:
1. Hannover (to make and paint the body parts)
2. Stuttgart (to produce the engine)
3. Leipzig (to assemble all of the parts and apply on customization)
As you know, the delivery part is delivered 40 times a day to decrease the uses of inventory. Every single part will unload within 2 minutes 30 seconds. Every step to install the part is 2 minutes 20 seconds. They use human hand tools and computer as the computer also has disability to reach the difficult process/processes of installment.Did you know, they only need 2 minutes to install the engine into body, compared to the previous Porsche that could take over 30 minutes!
Porsche has applied customization in their business strategy. Customer can choose different engine according to their custom specification needed. They can choose different seats leather from various 9 different colors. The color of paint on the car also depends on what customer's want. This customization may lead the company to satisfy the customer's requirement.
Porsche use two (2) modes of transportation, which is rail and truck. Rail mode used to transport the body from Hannover to Leipzig and truck mode used to transport engines from Stuttgart to Leipzig as the assembly line was centralized at the Leipzig.
Porsche care about the perfection. After they installed accessories at the assembly line, they will test drive the car whether the car is in high performance or not. Porsche also doesn't care fuel consumption, but performance.
We're going to write on how Porsche able to control all the activities by involving logistics and supply chain management.
Time management is very crucial in manufacturing such a prestige car. Time should be reduce to enforce lower cost and fully utilized. Porsche has three (3) different plants around the Germany. This strategy is to make sure the management of Porsche able to handle the operation of transforming the materials to assemble to finished goods, and optimize the works in producing Panamera. Porsche has three different plants, which is:
2. Stuttgart (to produce the engine)
3. Leipzig (to assemble all of the parts and apply on customization)
As you know, the delivery part is delivered 40 times a day to decrease the uses of inventory. Every single part will unload within 2 minutes 30 seconds. Every step to install the part is 2 minutes 20 seconds. They use human hand tools and computer as the computer also has disability to reach the difficult process/processes of installment.Did you know, they only need 2 minutes to install the engine into body, compared to the previous Porsche that could take over 30 minutes!
Porsche has applied customization in their business strategy. Customer can choose different engine according to their custom specification needed. They can choose different seats leather from various 9 different colors. The color of paint on the car also depends on what customer's want. This customization may lead the company to satisfy the customer's requirement.
Porsche use two (2) modes of transportation, which is rail and truck. Rail mode used to transport the body from Hannover to Leipzig and truck mode used to transport engines from Stuttgart to Leipzig as the assembly line was centralized at the Leipzig.
Porsche care about the perfection. After they installed accessories at the assembly line, they will test drive the car whether the car is in high performance or not. Porsche also doesn't care fuel consumption, but performance.
Saturday 8 February 2014
IMPORTANCE OF PURCHASING MANAGEMENT
Today we would like to talk about the importance of purchasing management in a firm. Let say a well-known company such as NESTLE need to produce their product.
But have we ever though about their materials uses?
Have we ever know whose the person who did such kind of work?
Please do not worry our beloved readers, we will tell you everything here. In NESTLE company there were one department called purchasing department(purchasing management). This department was responsible to purchase every materials need for their product.
So, we will elaborate this topic based on below issue that is:
-arrange the flow of materials
-smooth the production
-quality of product
-cost and pricing
-choose supplier by quotation
-goodwill/reputation of firm
One of the importance of purchasing management is to arrange the flow of materials. Usually the concept use is JIT (just in time ) which is provided customer need without delay. The production was not conducted all time so the purchaser need to purchase based on their requirement for every production line. For example they would like to produce MAGGI to export to INDONESIA and they need flour and others materials to produce it.
on the other hand, the purchasing management is to smooth the production. To get the successful purchasing they need to know their firm's need to produce the goods by finding the good suppliers and avoid the faulty supplies to smooth their production. This also will create harmony in an organization.
Third, the purchasing management is quality of product. To achieve a good quality product, purchaser had to find a quality raw materials from suppliers to verify their quality such as ISO. The quality is to achieve when the product is function well.
Futhermore, cost and pricing. Negotiation between the suppliers and the purchaser to get the lower cost from supplier. Getting the products/raw materials/components at the lowest price will lead to low pricing. To get the lowest cost, purchaser must find several suppliers and choose the lowest one.
In addition, the purchaser need to decide which supplier who provide the lowest price and high quality by finding a lot of supplier and ask them to send the quotation as this will give the purchaser a chance to choose which supplier is better to provide his firms the raw materials.
Lastly, purchasing is very important as the firm will have a relation with the buyer/buyers, and having a good relationship with the buyer/buyers will reflect the attitude of the firm. Have a good reputation is a bonus to the firm as the market is challenging and it will help the firm to perform well in business.
But have we ever though about their materials uses?
Have we ever know whose the person who did such kind of work?
Please do not worry our beloved readers, we will tell you everything here. In NESTLE company there were one department called purchasing department(purchasing management). This department was responsible to purchase every materials need for their product.
So, we will elaborate this topic based on below issue that is:
-arrange the flow of materials
-smooth the production
-quality of product
-cost and pricing
-choose supplier by quotation
-goodwill/reputation of firm
One of the importance of purchasing management is to arrange the flow of materials. Usually the concept use is JIT (just in time ) which is provided customer need without delay. The production was not conducted all time so the purchaser need to purchase based on their requirement for every production line. For example they would like to produce MAGGI to export to INDONESIA and they need flour and others materials to produce it.
on the other hand, the purchasing management is to smooth the production. To get the successful purchasing they need to know their firm's need to produce the goods by finding the good suppliers and avoid the faulty supplies to smooth their production. This also will create harmony in an organization.
Third, the purchasing management is quality of product. To achieve a good quality product, purchaser had to find a quality raw materials from suppliers to verify their quality such as ISO. The quality is to achieve when the product is function well.
Futhermore, cost and pricing. Negotiation between the suppliers and the purchaser to get the lower cost from supplier. Getting the products/raw materials/components at the lowest price will lead to low pricing. To get the lowest cost, purchaser must find several suppliers and choose the lowest one.
In addition, the purchaser need to decide which supplier who provide the lowest price and high quality by finding a lot of supplier and ask them to send the quotation as this will give the purchaser a chance to choose which supplier is better to provide his firms the raw materials.
Lastly, purchasing is very important as the firm will have a relation with the buyer/buyers, and having a good relationship with the buyer/buyers will reflect the attitude of the firm. Have a good reputation is a bonus to the firm as the market is challenging and it will help the firm to perform well in business.
Friday 7 February 2014
WHY PURCHASING MANAGEMENT TODAY MORE COMPLICATED COMPARED THE PAST?
Assalammualaikum.
So today we are going to post our first post about the purchasing challenges.
Have you ever know the challenges in purchasing? if you don't have any idea. we are going to tell you.
We're going to discuss eight (8) purchasing challenges:
1. Increase in Material Cost
2. Increase in Transportation Cost
3. Increase changing economy and political environment
4. Globalization
5. New inventory concept
6. Safety of environmental issue
7. Technology requirement
8. Business Alliance
The first thing is about the raw materials. Why? As you know the resources in our earth cannot be renew. So, it affects the cost of the raw materials.The limited resources affects the cost nowadays than past. Such as oil and coal.
Transportation cost is increasing by the distance, mode use to transfer the finished goods and size of product. As we know expenses of the price of petroleum,highway toll fees, road tax may vary this factors, thus it is why the transportation cost is increase.
The third point of challenges is the changing in economy and political environment. To import and export raw materials you need to complete the documentation from customs (that may be different from the origin country). Furthermore, the others country regulations always different.For example, neighboring nation such as Indonesia has different type of documentation and procedures compare to Malaysia.
Globalization is a new term that refers to 'go international'. This term is now commonly used by firm that expanding their business outside the origin country. But, to apply this concept, the firm who wants to go internationally must make a research/researches. Making a business outside the origin country is more challenging as they face more obstacles.
The emerging of the new inventory concept like Just-In-Time (J.I.T) is the effect that shows us, to be competitive in market, they must reduce the inventory.On the other hand, as to fulfill the customers' need, some of the firms need to apply inventory as they must satisfy the customers' requirement.
Nowadays, environmental issues are very common in the news headlines. This concern makes the purchasing management works hard to apply this concept to make sure they are creating a good relationship with the people and more Eco-friendly. This concept also helps the firm to reach the standard in reserving environment
Last but not least, the technology in a company is needed to be upgrade to improve the efficiency of production activities. So, the purchaser in logistics need to adapt with the technology changes as it will encourage competition among the organization. If the company still used the old technology and the demand of the product from customer is increase. It will affect the production based on quality quantity and etc. while, if we update the requirement of technology, the company will produce in large quantity.
Making a business alliance is needed as the purchaser must have a good relationship with seller/sellers or buyer/buyers. This is because purchaser should decide the best supplier which provide the raw materials or components with high quality at the lowest price. Business alliance is really important to make sure the firm is still in competition and competitive in every aspects in business. Business alliance also will shown from relation between distributor to get the related information about the demand and satisfaction of the product. So, the purchaser need to create the partnership between them.
If you don't agree with us, please don't be reluctant to comment or if you have anymore addition fact to be add please don't be lazy to comment too. Thanks :)
.
So today we are going to post our first post about the purchasing challenges.
Have you ever know the challenges in purchasing? if you don't have any idea. we are going to tell you.
We're going to discuss eight (8) purchasing challenges:
1. Increase in Material Cost
2. Increase in Transportation Cost
3. Increase changing economy and political environment
4. Globalization
5. New inventory concept
6. Safety of environmental issue
7. Technology requirement
8. Business Alliance
The first thing is about the raw materials. Why? As you know the resources in our earth cannot be renew. So, it affects the cost of the raw materials.The limited resources affects the cost nowadays than past. Such as oil and coal.
Transportation cost is increasing by the distance, mode use to transfer the finished goods and size of product. As we know expenses of the price of petroleum,highway toll fees, road tax may vary this factors, thus it is why the transportation cost is increase.
The third point of challenges is the changing in economy and political environment. To import and export raw materials you need to complete the documentation from customs (that may be different from the origin country). Furthermore, the others country regulations always different.For example, neighboring nation such as Indonesia has different type of documentation and procedures compare to Malaysia.
Globalization is a new term that refers to 'go international'. This term is now commonly used by firm that expanding their business outside the origin country. But, to apply this concept, the firm who wants to go internationally must make a research/researches. Making a business outside the origin country is more challenging as they face more obstacles.
The emerging of the new inventory concept like Just-In-Time (J.I.T) is the effect that shows us, to be competitive in market, they must reduce the inventory.On the other hand, as to fulfill the customers' need, some of the firms need to apply inventory as they must satisfy the customers' requirement.
Nowadays, environmental issues are very common in the news headlines. This concern makes the purchasing management works hard to apply this concept to make sure they are creating a good relationship with the people and more Eco-friendly. This concept also helps the firm to reach the standard in reserving environment
Last but not least, the technology in a company is needed to be upgrade to improve the efficiency of production activities. So, the purchaser in logistics need to adapt with the technology changes as it will encourage competition among the organization. If the company still used the old technology and the demand of the product from customer is increase. It will affect the production based on quality quantity and etc. while, if we update the requirement of technology, the company will produce in large quantity.
Making a business alliance is needed as the purchaser must have a good relationship with seller/sellers or buyer/buyers. This is because purchaser should decide the best supplier which provide the raw materials or components with high quality at the lowest price. Business alliance is really important to make sure the firm is still in competition and competitive in every aspects in business. Business alliance also will shown from relation between distributor to get the related information about the demand and satisfaction of the product. So, the purchaser need to create the partnership between them.
If you don't agree with us, please don't be reluctant to comment or if you have anymore addition fact to be add please don't be lazy to comment too. Thanks :)
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