19-Nov-15

Purchasing & Supply Scheduling Decisions

Logistics Concepts & Planning

Unit 5 - Topic : Inventory Decisions

Coordination in the supply channel

Good coordination among production, marketing, purchasing
and all other supply channel activities cannot be emphasized
too strongly.

Purchasing and Supply Scheduling Decisions

Interrelationships between these activities frequently exist to
the extent that optimizing one activity alone can be a
detriment (harm) to one or more of the others.
Failing to recognize this trade-off can negatively affect supply
channel performance.

Purchasing & Supply Scheduling Decisions

Supply Scheduling
The popularity of JIT, quick response and time compression
concepts highlights scheduling as an important activity in
supply channels.

Purchasing & Supply Scheduling Decisions

In the supply channel, it is the production requirements (or
in the case of service firms, the operations requirements)
that represent the demand to be met. A materials manager
typically meets this demand in 2 ways:

Scheduling to requirements is an alternative to meeting

requirements from inventories.

Supplies are timed to be available just when they are needed for
production. A popular technique for handling the mechanics of the
scheduling process is materials-requirements planning

Each represents the end points in a range of alternatives

considered for meeting the demand, or requirements, of a
supply channel.

Requirements are met from supplies carried in inventory. The

inventory
replenishment rules maintain the stock levels.
These rules specify
when and in what quantities the
materials will flow within the supply
channel.

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19-Nov-15

Purchasing & Supply Scheduling Decisions

Just In Time Supply Scheduling
JIT is defined as a philosophy of scheduling where the entire
supply channel is synchronized to respond to the requirements
of operations or customers
JIT is characterized by:
Close relationships with a few suppliers and transport carriers
Information sharing between the suppliers and buyers
Frequent production/purchase and transport of goods in small
quantities with resulting in minimal inventory levels
Elimination uncertainties where ever possible in supply channel
High quality goals

Purchasing & Supply Scheduling Decisions

Kanban

Kanban is an example of JIT is Toyotas production scheduling system.

Kanban is card based production control system.

A KAN card instructs a work centre or supplier to produce a standard

quantity of an item.

The BAN card requests predefined quantity of a component or part or sub

assembly be brought to a work centre. These cards are used as the initiates
for the production and movement of items.

KANBAN/JIT scheduling system uses the re-order point method of inventory

control to determine standard production purchase quantities and involves
very low setup cost and lead time costs.

Purchasing & Supply Scheduling Decisions

Features of Kanban
1.

Models in master production schedule is repeated frequently and

compared with schedule built to take advantage of economies of scale.

2.

Lead times are high predictable because they are short.

3.

Proximity of suppliers to operations is an important criteria.

4.

The low order quantities lead to low inventory, setup cost and
procurement cost

5.

The lead time and setup time are targeted in the cost reduction process

6.

High level coordination between the supplier and buyer helps to uphold
the quality commitments and logistical performance continuously.

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