Managing Materials Flow

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Managing Materials Flow

• 6 May 2007
• Kong Ming Siem
• mskong_at_oum.edu.my / mskong_at_mysoho.net

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Recap To identify the activities of materials
management
suppliers
consumers
Process/Manufacture
Raw Materials
Goods
output
input


This is Business!!
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Recap

• Managing materials is an integral part of
  logistic management process
• Material management includes-
• Administration of raw materials
• Subassemblies
• Manufactured parts
• Packing materials
• In-process inventory

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Recap

• Material Managers
• responsible to plan, organize, motivate, control
  of all the activities
• Functions perform to purchase, control raw
  material finished goods inventory, receiving,
  warehousing, production scheduling and
  transportation.

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Recap
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Recap
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Recap

• Scope of Material Management
• 4 Basic activities
• Anticipating materials requirements
• Sourcing and obtaining materials
• Introducing materials into the organization
• Monitoring the status of materials as a current
  asset.

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Recap Objectives of integrated materials
management
Company Objectives
Objectives of Materials Management
Low costs
Quality assurance
Low level of tied-up capital
Support of other functions
High level of service
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Recap How material management objectives can be
achieved
suppliers
consumers
Process/Manufacture
Raw Materials
Goods
output
input


This is Business!!
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Recap

• Difference between Material and Logistic
  management
• Logistic
• Finished goods
• Final customers
• Materials
• incoming finished goods, raw materials, component
  parts, subassemblies
• Production, internal customers for further
  processed

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Recap

• Integral aspects of materials management
• Purchasing and procurement (memiliki)
• Production control
• Inbound traffic and transportation
• Warehousing and storage
• Management information system (MIS) control
• Inventory planning and control
• Salvage and scrap disposal

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Assignment
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Assignment

• Duration 1 month (3 weeks left)
• Deadline 27 May 2007 (Exam day)
• Assessment (40)
• Content quality originality 20
• Relate to subject topics 15
• Writing clear and precise 5

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Assignment (Question I)

• Choose one of the local manufacturing company.
  Understand how they manage the materials flow and
  suggest ways to improve it.
• Pilih salah satu syarikat pengeluaran tempatan.
  Memahami bagaimana mereka menguruskan aliran
  bahan-bahan dan cadangkan cara untuk
  mempertingkatkan lagi.

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Assignment (Question II)

• Largest computer maker, Dell is one of the
  successful materials management stories. Do you
  agree? Discuss why?
• Pengeluar komputer peribadi terbesar, Dell
  merupakan salah satu kisah berjaya dalam
  pengurusan bahan-bahan. Setujukah anda?
  Bincangkan keputusan anda.

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Forecasting
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What is forecasting?

• Predicting the future (through quantitative or
  qualitative methods)
• Allow logistics executives to primarily be
  proactive rather than reactive
• Areas
• Conducting/developing forecasts
• Provide info to be used in forecasting
• Receive forecast results and implement necessary
  actions

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Why forecast?

• Most widely reasons-
• Increase customer satisfaction
• Reduce stock outs
• Schedule production more efficiently
• Lower safety stock requirements
• Reduce product obsolescence costs
• Manage shipping better
• Improve pricing and promotion management
• Negotiate superior terms with suppliers
• Make more informed pricing decisions

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Types of forecasts

• Demand-Supply-Price forecasts
• Short-Midrange-Long term
• Demand forecast
• Investigate of the firms demand for item, to
  include current projected demand, inventory
  status, and lead times.
• Consider competing current and projected demands
  by industry and product end use.

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Types of forecasts

• Supply forecast
• Collection of data about current producers and
  suppliers, the aggregate projected supply
  situation, and technological and political trends
  that might affect supply

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Types of forecasts

• Price forecast
• Gather information and analyze demand supply.
• Provides a prediction of short/long term prices
  and underlying reasons for those trends.

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Forecasting time frame
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Forecasting techniques

• General market information (suppliers, sales
  force, customers, etc)
• Highly sophisticated computer algorithms
• Specific technique/approach selected should be
  appropriate for unique characteristic of company
  and market

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Total Quality Management (TQM)
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TQM Introduction

• Concept become popular since 1980s and 1990s
• TQM is the application of quantitative and human
  resources to improve the materials services
  supplied to an organization, all the processes
  within the organization, and the degree to which
  the needs of the customer are met now and in
  the future.

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TQM Introduction

• TQM integrates fundamental techniques, existing
  improvement efforts, and technical tools under a
  disciplined approach focused on continuous
  improvement.
• W. Edwards Deming, Philip B. Crosby, Malcolm
  Baldrige National Quality Award program of the US
  Department of Commerce has helped shape corporate
  thinking on quality issues.

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Traditional Management vs TQM
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Traditional Management vs TQM
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TQM Approach

• Stresses long-term benefits resulting from
  continuous improvements to systems, programs,
  products, and people.

TQM
Products
Systems
Programs
People
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TQM Approach

• Improvements most often result from a combination
  of small innovations.
• A structured, disciplined operating methodology
  is used to maximize customer service levels.
• Significant changes required to bring system
  improvements (reengineering)

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Reengineering TQM

• Deals with starting with a clean state
• Taking systems and processes, rethinking and
  redesigning to create significant improvements in
  quality, cost, speed and service.

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Relationship between TQM and Logistics
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Relationship between TQM and Logistics
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Relationship between TQM and Logistics
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Relationship between TQM and Logistics
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TQM Examples

• McDonnell Douglas Corporation
• reduced scrap by 58
• Boeing Ballistic Systems Division
• reduced lead time on parts and materials by 30
• reduced material shortages from 12 to 0

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TQM Examples

• ATT
• reduced product defect rates by 30
• reduced total process time by 46
• Hewlett-Packard Company
• reduced scrap by 75
• product failure rate by 60

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TQM Summary

• TQM and logistics are interrelated.
• Managing logistics without incorporating the
  costs of quality is just as shortsighted as
  looking at the management of quality without
  considering the role of logistics.
• It is important that the flow of materials be
  administered and controlled utilizing the
  concepts of TQM.