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Managing Materials Flow

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Managing Materials Flow

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    1. Managing Materials Flow 6 May 2007 Kong Ming Siem mskong@oum.edu.my / mskong@mysoho.net

    3. 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

    4. 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.

    5. Recap

    6. Recap

    7. 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.

    8. Recap [Objectives of integrated materials management]

    9. Recap [How material management objectives can be achieved…]

    10. 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

    11. 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

    12. Assignment

    13. 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%

    14. 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.

    15. 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.

    16. Forecasting

    17. 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

    18. 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

    19. Types of forecasts Demand-Supply-Price forecasts Short-Midrange-Long term Demand forecast Investigate of the firm’s 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.

    20. 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

    21. 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.

    22. Forecasting time frame

    23. 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

    24. Total Quality Management (TQM)

    25. 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.”

    26. 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.

    27. Traditional Management vs TQM

    28. Traditional Management vs TQM

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

    30. 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)

    31. 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.

    32. Relationship between TQM and Logistics

    33. Relationship between TQM and Logistics

    34. Relationship between TQM and Logistics

    35. Relationship between TQM and Logistics

    36. 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%

    37. TQM Examples AT&T reduced product defect rates by 30% reduced total process time by 46% Hewlett-Packard Company reduced scrap by 75% product failure rate by 60%

    38. 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.

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