If you string an arrow and aim it at the wrong target, your efficient aiming makes no sense.
Effectiveness is doing the right things. Efficiency is doing things right. We need to achieve both. However, the former is more important than the latter. Choosing to do a wrong thing, and taking care to do it right, will serve no purpose. Focusing on Materials Management when your core competency is what you should be paying attention to is the bane of the day.
What is Material Management?
A process encompassing acquisition, shipping, receiving, evaluation, warehousing and distribution of goods, supplies and equipment is called Materials Management.
What are the functions of Material Management?
- Material planning and programming
- Purchasing and outsourcing
- Inventory control
- Storekeeping and warehousing
- Categorization and Codification
- Standardization and evaluation of all products
- Transportation and material handling
- Inspection and quality control
- Cost reduction through value analysis
- Disposal of surplus / obsolete material/ Distribution
Requirements for Sourcing Materials:
- Need assessment to estimate material requirement
- Decide Right quality, right quantity, right prices, right source and at right time to the right place
- Centralize the purchase system
- Back up of good systems management which indicates What to order, When to order, How much to order and How much to stock
- Check all possible sources for information to source material: Supplier’s catalogue, Print media,:Trade directories, trade journals , news papers, yellow pages, Salespersons, trade exhibition , fairs , conferences, Colleagues in similar field, Internet
Requirements for Receiving Materials:
- Establish written protocols, assign responsibility
- Checking of goods for quality, expiry etc
- Cross check with purchase order & invoice / delivery chalan
- Proper record in designed registers
- Signature of receiver & delivery person
- Track of movements of goods
- Periodic checks
- Stocks to ensure un-interrupted supplies
- The idle resources which have future economic value
- Cushion between estimated and actual demand of materials
- Design registers according to requirements & volume of turn over
Requirements for Purchase of Equipments
- Client list
- Trial period
- Warranty details
- AMC and After sale service: down time, replacement, preventive maintenance
- Log book
- Obsolescence , buy back
- Training of staff
Why is Material Procurement – a white elephant for SMEs now?
- Many of you, SMEs, spend a huge amount of money in recruiting and retaining manpower for your Purchase Departments. In spite of this, you incur losses; because, as lone entities in a seller’s market you have no the power to hold the reins on the galloping prices.
- Those of you who cannot afford to have sufficient workforce in your purchase department have difficulty in maintaining your inventory and hence are not able to ensure timely delivery for your customers.
- Thus you SMEs are expending time and energy on areas which are not your core competencies, losing focus and profits.
- Your attention is diverted as you have to keep a tab on Shortage, Expiry, Wastage, Pilferage, Malfunctioning of equipments
Challenges you SMEs face in Material Procurement now are:
- High order costs & time
- Too many items and vendors to track and follow up
- Inability to locate relevant suppliers in given time
- Poor tracking and control of non- strategic spend
- Higher product cost due to small quantities
- Multiple payment cycle of various vendors.
- Issue of maverick buying, contract non-compliance, low volumes, disadvantage to price negotiation.
What can Goldchip do for you?
All these cumbersome procedures that rip off your energy and divert you from focusing on your core competency can be now skipped. You can outsource the entire procurement services to Goldchip. This ensures that you benefit from:
- Reduction in Operating & Infrastructure cost
- Availability of more time and personnel to focus on core Business
- Gain from World Class Capabilities, Experience and Expertise of our Consultants
- Shift in Volatile Variable Costs to Predictable Costs
- Shift/ Share Operations in given time
- Shift/ Share operating Risks
- Reduction in order processing cost & time
- Streamlines ordering & accounting processes as single transactions
- Lower administrative costs (like documents, telephones, fax, etc)
- Payment process simplified.
- Ability to negotiate more favorable terms with suppliers (volume buying).
How is it possible for Goldchip?
- Goldchip will organize reverse auction (also called procurement auction, e-auction, sourcing event, e-sourcing or ERA). Here sellers compete to obtain business.
- Sellers find new suppliers, train new and incumbent suppliers, organize the auction, manage the auction event and provide auction data to buyers to facilitate decision making. This drives purchase prices downward.
- Goldchip provides the most comprehensive global supplier database. This helps buyers in identifying, qualifying and negotiating with an increased number of global suppliers.
- Thus a competitive bidding environment is created. Collective bargaining and voluminous purchase will reduce cost. This benefit will be passed on to you, the customer.
Isn’t Goldchip the answer to you Materials Management woes?