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Contents
Definition
Contd..
Contents
Value analysis
Purchasing
Vendor development Buying techniques Purchasing cycles and procedure Advantages of material management
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Definition
It is defined as an organizational concept, which has the authority and responsibility of all activities, concerned with the flow of materials in the organization.
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Classes of materials
Raw materials:- These are materials that are used in the product which is in an unprocessed condition. Purchased Parts:- These are the items used in the assembly of the product.
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Classes of materials
In-progress materials:- They are called work in progress inventories. These goods require further processing. Finished materials:- These are fully manufactured goods, inspected and ready for delivery to the customers. Supplies:- These are consumable goods used in the process of manufacturing.
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Materials-Quality
Four factors affecting the purchase of raw materials are 1) Quality :- The suitably of an item to accomplish the intended work. The raw materials should satisfy the following requirements. i. Efficiency of the material. ii. Cost and the shelf life. iii. For equipments, power consumption and power requirement.
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Quantity From the inventory point of view, quantity standards are decided on the following parameters; Maximum inventory Minimum inventory Standard order Reorder point Price Delivery Date
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Value Analysis
Definition:- It is a systematic study of every element for its cost in a part, material or service to make certain that it performs its function at the lowest possible cost. Benefits of value analysis:i. Decrease in existing cost of the product or service. ii. Unnecessary expenditure is identified and eliminated. iii. Product value improves for new materials and processes. iv. More profits.
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Value ratio Mathematical representation of the value can be done as Function Total cost Value =
Reasons for unnecessary costs:i. Lack of information ii. Lack of ideas iii. Changed circumstances iv. Wrong beliefs, habits and attitudes
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Purchasing
Centralized :- the purchasing procedure of materials for different department is done together from one purchasing department. This is seen in small organizations. Advantages Efficient system Bargaining capabilities increased Good raw material obtained at lower price
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Decentralized:different department purchase their requirement seperately. This is basically seen in large organizations. Advantages Flexible purchasing system Procurement is faster
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Vendor development
The supplier or the person who sells the required materials or services for the production is known as a vendor.
The purchase of raw materials/service from a specific vendor is known as the vendor development.
There are four stages of vendor development:19 July 2012 KLE College of Pharmacy, Nipani. 15
3rd 4th
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1) Survey stage
The following sources are considered for information Trade directories :- e.g. Yellowpages.eindiabusiness.com Trade journals:- e.g. Pharmatimes Telephone directories Suppliers catalogue Salesmen Other ways are like interchanging of information with other companies, tracing of public tenders and advertisements in the press.
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2) Enquiry stage After getting the information of the suppliers, detailed analysis of the supplier is being carried out. A comparison is being made between the different suppliers on basis of the following points:a. b. c. d. Technological competition, service competition, price competition, delivery time.
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2) Enquiry stage The following aspects can be verified by the first hand visit: Internal facilities of the vendor Financial adequacy, stability and reputation of the vendor Location of vendors factory After sales service Industrial relations
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3) Negotiation and selection stage The vendors who clear the enquiry stage are selected and negotiations are being carried out with them.
The various aspects such as credit, quantity discount, quality specifications are being discussed.
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4) Experience and evaluation stage The buyer evaluates and appraises the performance of the vendor. The objective is to improve the performance of the vendors. Few ways of evaluating a vendor are:o Categorial method o Weighted point method o Cost ratio method
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Categorial method
The buyer sets up some category on which the evaluation of the vendor is done. Specimen of suppliers evaluation form is given below.
Grading
Always 9 8 7
Usually 6 5 4
Seldom 3 2 1
Never 0
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Buying techniques
Purchasing of material , machinery and services is done by purchasing department. For buying the material company has to pay up a price, the value that a seller sets on his goods in the market is called as the price of that good.
Tenders are invited from recognized firms. A few types of tenders are: # single tender # Open tender # Closed tender or limited tender
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1) Recognition of need and receipt of requisition: The requisition includes the following information:- Name - Quality and quantity specifications - Date by which material is required - Place at which material is to be delivered
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Need recognition
Select suppliers
Quotations & analysis prices and terms, negotiations, finalisation Purchase order for supply Suppliers acceptance
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Follow-up
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Contd .
Delivery of materials
Payment made
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Location of Stores :
Store should be located adjacent to the manufacturing area.
It depends up on nature and value of items to be stored and frequency with which items are received and issued
Objectives : Minimum wastage of space Maximum ease of operation Minimum handling cost Minimum other operational cost
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Facilities of Store
Inspection center Quarantine room Washing room Centralized weighing department Adequate space
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Functions of stores
General function :
Maintenance of Stock (materials and tools)
Maintenance of hygiene, sanitation, and pest control Maintenance of material handling equipment
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Functions of stores
Specific functions :
Receiving & recording of raw materials Quarantine storage Sampling & approval by QC Positioning & Storage Issuing & recording of materials Receiving & Dispatching of finished goods Distribution
Optional functions :
Dispensing, Maintenance of weights & measures
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Twenty Principles of Material Handling 3. Material flow principle. Provide an operation sequence and equipment layout optimizing material flow. 4. Simplification principle. Simplify handling by reducing, eliminating, or combining unnecessary movement and/or equipment. 5. Gravity principle. Utilize gravity to move material wherever practical.
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9. Automation principle. Provide automation to include production, handling, and storage functions. 10. Equipment selection principle. In selecting handling equipment, consider all aspects of the material being handled.
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11. Standardization principle. Standardize handling methods as well as types and sizes of handling equipment. 12. Adaptability principle. Use methods and equipment that can best perform a variety of tasks and applications where special purpose equipment is not justified.
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13. Dead weight principle. Reduce ratio of dead weight of mobile handling equipment to load carried.
14. Utilization principle. Plan for optimum utilization of handling equipment and manpower. 15. Maintenance principle. Plan for preventive maintenance and scheduled repairs of all handling equipment.
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16. Obsolescence principle. Replace obsolete handling methods and equipment when more efficient methods or equipment will improve operations. 17. Control principle. Use material handling activities to improve control of production inventory and order handling.
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18. Capacity principle. Use handling equipment to help achieve desired production capacity.
19. Performance principle. Determine effectiveness of handling performance in terms of expense per unit handled. 20. Safety principle. Provide suitable methods and equipment for safe handling.
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Safely Efficiently At low cost In a timely manner Accurately (the right materials in the right quantities to the right locations) And without damage to the materials
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2.
Observe activities Obtain layouts, flow patterns, schedules, etc. Obtain information on existing material handling equipment Analyze situation by Twenty Principles of Material Handling, and/or forms Can activities be combined, simplified, eliminated???
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3.
Organize meeting with: material handlers machine operators supervisors support engineers
4.
Evaluate alternatives
Meet again to rate alternatives
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Industrial Trucks
Two basic categories: 1. Non-powered
Human workers push or pull loads
2. Powered
Self-propelled, guided or driven by human Common example: forklift truck
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Powered Trucks
Capacities from 450 kg up to 4500 kg Power sources include on-board batteries and internal combustion motors
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Powered Trucks
Designed to pull one or more trailing carts in factories and warehouses, as well as for airport baggage handling Powered by onboard batteries or IC engines
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AGVs Applications
1. Driverless train operations - movement of large quantities of material over long distances 2. Storage and distribution - movement of pallet loads between shipping/receiving docks and storage racks 3. Assembly line operations - movement of car bodies and major subassemblies (motors) through the assembly stations 4. Flexible manufacturing systems - movement of work parts between machine tools 5. Miscellaneous
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Rail-Guided Vehicles
Self-propelled vehicles that ride on a fixed-rail system Vehicles operate independently and are driven by electric motors that pick up power from an electrified rail Fixed rail system Overhead monorail - suspended overhead from the ceiling On-floor - parallel fixed rails, tracks generally protrude up from the floor
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Overhead Monorail
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Conveyor Systems
Large family of material transport equipment designed to move materials over fixed paths, usually in large quantities or volumes
1. Non-powered :
Materials moved by human workers or by gravity
2. Powered :
Power mechanism for transporting materials is contained in the fixed path, using chains, belts, rollers or other mechanical devices
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Conveyor Types
Roller Skate-wheel Belt In-floor towline Overhead trolley conveyor
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Roller
Skate-wheel
Belt
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In-floor towline
Hoists
Used for vertical lifting of materials
Hoist
Load
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Bridge Crane
Gantry Crane
Jib Crane
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Mistakes in procurement Wrong planning decisions Wasteful processes in production Inevitable waste during the adjustment of the equipment Overall absence of efficiency
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Disposal of scrap, surplus, recyclable, obsolete materials is one of the most important area of materials management, but often overlooked or considered minor.
Popular due to increased public awareness of environment, government legislation, better recognition of opportunities it offers in return.
e.g. paper files and forms are recyclable item that can be sold to recycle company.
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The following measure are adopted and monitored for handling scrap: 1. Controlling of surplus and scrap 2. salvaging or converting the waste for advantageous use. 3. Disposal of the surplus and scrap to the best advantage.
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The production department primarily controls the first function by proper design, while purchase department handles the second and third functions. Waste materials in pharmaceutical industry: Empty drums, packing materials, card boards, aluminium caps, bottles etc. these are nonrecoverable rejects. Spoiled materials during production. In a few instances, these may be recoverable. Worn-out parts of equipments (examples are punches and dies), old equipment (due to expiry of life) and obsolete equipment (due to technology change).
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Salvage : It is defined as the processing of materials (items) for advantageous use or disposal of company property, which is no longer economically useful in its present position. Salvage operation : Waste materials are properly collected and stored at one place continuously, so that these can form a separate batch in production. Recoverable materials are stored in a scientific way as other items stored.
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Materials are stored in terms of quality or size or specifications. Waste is invested for suitability to recover or avoid them. Salvaging operation are possible under the following conditions: Evidences from laboratory tests and assays that the drug products meet all applicable standards of identity, strength, quality and purity. Evidence from inspection of premises that the drug products and their associated packing were not subjected to improper storage condition, as a result of the disaster or accident.
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Disposal
Disposal of scrap, waste and surplus materials can be effected by several way :
Surplus material should be returned to the original supplier. Alternatively a customer who needs them should be explored. As a social obligation, some material are defected or broken before selling them as scrap.
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Disposal
Materials may be sold by inviting quotations from potential buyers or through various contracts such as fixed price contract, varying price contract, specific bids and negotiations.
It is worth considering that scrap like any other material represents money and to that extent it has a value.
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Multiple items handled simultaneously Required number of trips is reduced Loading/unloading times are reduced Product damage is decreased (a) Wooden pallet, (b) pallet box, (c) tote box
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Pallets :
Style and Size based on: Shipping and receiving restrictions Size and weight of items on the pallet Space restrictions Equipment used to move the pallet Cost, supply, and maintenance Aisle widths, door sizes, stacking heights
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Types of Pallets :
Materials used :
Softwood Hardwood Paper
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Containerization :
Different types of containers are used according to the type of material. e.g Boxes, cartons, cases, sacks, bales, pallets, drums, barrels, crates, cable drums, machinery, and processed timber Tank containers for bulk liquids and dangerous goods.
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JOB ANALYSIS
Job analysis is defined as a process of collecting and studying information relating to the operations and responsibilities of a specific job.
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JOB ANALYSIS
Process of job analysis :
Defining uses of job analysis
Information collecting Information processing
Job description
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Job specification
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JOB ANALYSIS
Uses of job analysis : Personnel planning Training and development Work scheduling Performance appraisal Job evaluation
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JOB ANALYSIS
Job Description : is defined as a combination of statement containing the work to be performed and the essential working conditions of a particular job. Job specification : may be defined as a statement of human qualities and other desirable characteristics required for discharging the assigned job.
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JOB ANALYSIS
Job Analysis
Job description
Job specifications
Education Experience Training Judgment Initiative Responsibilities Physical effort
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Job title Job place Job summary Machines, tools and equipment Materials and forms used Working condition Hazards
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JOB DESIGN
Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit to achieve objectives. Job design involves three steps.
Specifications of individual tasks. Specification of the methods of performing each tasks. Conversion of tasks into specific jobs to be assigned to individuals.
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JOB DESIGN
Mechanisms of job design :
Understanding the nature of job is important, because it determines the skill requirement in performing a job.
Skill variation, responsibility and growth
Low
Enlargement and enrichment
High
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Job enlargement
It involves performing of a variety of jobs or operations at the same time. It is mainly intended to enlarge the job horizontally. It avoids monotony, as a result of high degree of specialization, but the basic nature of job remains same. Therefore, it has limited role in motivating employees. There is a need for upgradation of authority and responsibility.
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Job enrichment
It acts as an additional motivating factors to other models described earlier in job design. This factor attracted more attention, both in academic circles as well as in practice. Therefore, it requires a detailed study.
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Job enrichment
Job enrichment is concerned with designing of job in terms of the following : Work content provides greater variety. Levels of knowledge and skills are higher. More autonomy and responsibility in terms of planning, directing and controlling is given to workers for their own performance. Work experience becomes meaningful.
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LABOR WELFARE
Labor Welfare means working out things for the well-being of the labors. Knowing there wants and enabling them to fullfill there wants.
Labor welfare is the voluntary efforts of employer to establish within the existing industrial system, working and sometimes living and cultural conditions of the employee beyond what is required by law.
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It reduces idle machine capacity and thus ensures better turnover on investment.
It reduces considerably the idle time of the workers.
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Greater job satisfaction on the part of both the workers and the employer.
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References
CVS Subrahmanyam; Pharmaceutical Product and Management, Published byVallabh Prakashan, Page no :- 260 282 S.C. Saksena; Business Administration Management, Published by- Sahitya Bhawan, Page no :- 262 263, chapter 20.
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