PROCUREMENT OF API &

RAWMATERIAL MANAGEMENT

 PREPARED & PRESENTED BY,

q ISHAN.M. SHUKLA.
CONTENTS:

 INTRODUCTION
 PROCUREMENT &PRODUCTION
MANAGEMENT.
 RAW MATERIAL MANGEMENT
 MATERIAL MANAGEMENT ACTIVITIES.
 PROCUREMENT: DEFINITION, PROCESS.
 PROCUREMENNT OF API.
 IMPORTANCE OF ITEMS & SERVICES
PURCHASED.
 E-PROCUREMENT:ADV& DISADV.
 E-COMMERCE MODELS
 TYPES OF E-PROCUREMENT
 OTHER MATERIALS MANAGEMENT
 IT’S NOT ALWAYS ECONOMICAL FOR THE
COMPANIES TO MAKE ALL THE
MATERIALS USED IN MANUFACTURING.
 SOME ITEMS ARE PURCHASED FROM
OTHERS & SOME ARE PRODUCED IN THE
COMPANY.
Ø CHOOSING B/W MAKING OR BUYING
AN ITEM IS IMPORTANT DECISION TO BE
TAKEN BY MATRERIAL MANAGEMENT.
 REASONS FOR BUYING:

vREASONS FOR MAKING:

MATERIAL MANAGEMENT:

 “IT’SPLANNING, DIRECTING, CONTROLLING

& CO-ORDINATING THOSE ACTIVITIES
WHICH ARE CONCERNED WITH MATERIALS
& INVENTORY REQUIRED FROM POINT OF
THEIR INCEPTIONS TO THEIR
INTRODUCTION INTO THE MANUFACTURING
PROCESS. ”
 IT BEGINS WITH THE DETERMINATION OF
MATERIAL QUALITY & QUANTITY ENDS WITH
ISSUANCE TO PRODUCTION TO MEET
COSUMER’S DEMAND AS PER SCHEDULE &
AT THE LOWEST COST
STRATAGIC DECISION BY MATERIAL
MANAGER

 B.W.I.
CURRENT
F.W.I.
RAW MATERIAL PRODUCTIO BUYERS
N

 STEEL AUTOMOBILE
DEALERS

 SILICON CIRCUITBOARDS
OBJECTIVE OF MATERIAL
MANAGEMENT.
FUNCTIONS OF MATERIAL
MANAGEMENT
Materials Management

 Procurement method is the way of

ordering material.
 Some of the new developments in this
area include:
1) Electronic Ordering
2) Stockless Purchasing
3) Standardization, and
4) Just in Time Purchasing.
“ONE OF THE MAJOR ISSUE THAT MATERIAL
MANAGER MIGHT ENCOUNTER IS THE
METHOD OF PROCUREMENT”
PROCUREMENT
 SIMPLY THE WAY OF ORDERING THE
MATERIAL
 IDENTIFY REEVALUATE NEEDS.
 DEFINE & EVALUATE USER
REQUIREMENTS
 DECIDE WHETHER TO MAKE OR BUY
 IDENTIFY THE TYPE OF PURCHASES
 CONDUCT A MARKET ANALYSIS
 IDENTIFY ALL POSSIBLE SUPPLIERS.
PROCUREMENT

 CONTRIBUTES TO THE COMPETITIVE

ADVANTAGE OF THE FIRM,
 TREMENDOUS IMPACT OF MATERIAL
COSTS ON PROFIT- 60 -70% OF SALES DOLLAR
PAID TO MATERIAL SUPPLIERS
 SIGNIFICANT PORTION OF THE LOGISTICS
COSTS
 POPULARITY OF JIT MANUFACTURING
 INCREASING GLOBAL COMPETITION
 NEED ANALYSIS
USER REQUIRMENTS

MAKE OR BUY MAKE

DECISION
MAKE OR BUY
BUY SOME
COMPONENTS

PURCHSE TYPE
STRAIGHT BUY
MODIFIED BUY
NEW BUY

SELECT VENDOR
MARKET ANALYSIS
EVALUATE REMAINING SOURCES

PRODUCT OR SERVICE DELIVERY

POST PURCHASE PERFORMANCE EVALUATION

 ITEM PROCUREMENT IMPORTANT
MATRIX.

HIGH

RISK

LO
W

VALUE/
PROFIT HIGH
LOW
Importance of Item and Service Purchased

 Products and services purchased by a

company are not all the same.
 Some are more important than others
and require greater procurement
attention.
 The quadrant technique enables the
supply chain manager to assess the
relative importance of each item
based on the degree of perceived
value and risk.
13
Electronic Ordering

 It Provides Data Transfer For Any

Business Application, Including
Purchasing.
 For Example, Data For A Purchase
Order (Such As Order Date, Due Date,
Quantity, Part Number, Order
Number, Address, Etc.) Are Fitted Into
Standard EDI Format.
Stockless Purchasing

 This Means That The Supplier

Maintains The Inventory For The
Purchaser.
 Here, The Cost Of Stocking Inventory
Has Been Temporarily Transferred
From The Purchaser To The Supplier.
 Standardization

 Rather Than Obtaining A Variety Of

Components Similar In Labeling,
Coloring, Packaging, Etc. The Purchasing
Agent Should Try To Have Those
Components Standardized.
 For Every Component That Is
Standardized,
 There Is One Less Invoice, One Less Item
To Be Inventoried, Etc.
Just In Time Purchasing

 This Waste And Delay is Present In All

Production Processes. (Not Only In
Purchasing)
 Therefore, JIT Approach Can Be
Applied To All Areas Of Production.
 ** The Basic JIT Approach: Every
Moment Material Should Add Value.
 Electronic Procurement

 Business-to business (B2B) purchases are

estimated to be $1.3 to $2.0 trillion by 20036.
 Former uses of electronic data interchange
(EDI) were costly and required special
technology to implement have given way to
the publicly available Internet.
 This has opened the door to increased
applications of E-commerce techniques to
procurement.

Purchasing 18
COMMON USERS OF E-PROCUREMENT.

 REASERCH VENDORS & PRODUCT

INFORMATION.
 ELECTRONIC CHECK OF AVAILABLE
STOCK
 PRICE NEGOTIATION
 ORDER PRODUCTS OR SERVICES.
 CHECK ON THE STATUS OF AN
ORDER.
 ISSUE INVOICE AND RECEIVE
PAYMENT. Purchasing 19
FOUR BASIC E-COMMERCE
MODELS
E-PROCUREMENT:
TYPES OF E-PROCUREMENT
OTHER MATERIAL MANAGEMENT
ACTIVITIES.
 WAREHOUSING

 TRANSPORTATION

 PRODUCTION PLANNING & CONTROL

 QUALITY CONTROL.
Transportation
Production Planning and Control

25
References:

 Wickepedia.
 Procurement data of cadila pharma
 raw material management of sun
pharma.