Inventory Management

Blog 8 Nov_ Inventory Management

We deal with inventory everyday

How often are your grocery shopping trips per week? Usually the answer is: weekly shopping to stock up some food. 

There are the most common reasons:

1. 1.     I don’t want to shop everyday
2. 2.     Some friends might drop by
3. 3.     I am too busy to spend time on frequent shopping’s trips.

We will usually analyze each types of reasons to generate an inventory list.  Inventories will need to be managed via different methodologies because there are different types of inventories.  

Inventories are found everywhere in Supply Chain, and are induced by many practices such as;

1. 1.     Distribution warehouses
2. 2.     Production with Make To Stock approach
3. 3.     Sourcing from more remote suppliers that will need longer lead time
4. 4.     Return from Customers
5. 5.     Systems accuracy

In order to have a proper inventory control, we will need to have frequent assessments and detailed planning analysis on Order Forecast, Safety Stock Value, Production Capacity and Procurement Lead time.

Contact Grace Lim @ graceyeechuenlim@hotmail.com if needs more information.

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and 

Return of Ethics and Values - The Mid Term Review, Eleventh Malaysia Plan

Return of Ethics and Values

Commitment to the highest ethical and moral standards

Malaysia has its real leaders, who understand that the rule of Ethics and Values is the greatest gift available to any nation and from this alone comes happiness and prosperity for the people

https://www.talentcorp.com.my/clients/TalentCorp_2016_7A6571AE-D9D0-4175-B35D-99EC514F2D24/contentms/img/publication/Mid-Term%20Review%20of%2011th%20Malaysia%20Plan.pdf

One of the Six Pillars from Mid-Term Review, Eleventh Malaysia Plan

Pillar I: Reforming Governance towards Greater Transparency and Enhancing Efficiency of Public Service

One of the main focus areas of the MTR is to improve governance as well as uphold accountability and transparency in the Government administration. Bold and effective measures will be implemented to drive the reform agenda towards strengthening check and balance mechanism at all levels to regain trust and confidence of the rakyat. In this regard, initiatives pertaining to four priority areas, namely improving governance at all levels, elevating integrity and accountability, enforcing prudent public finance management and enhancing public service delivery will be undertaken.

Conflict of Interest _Centralized Procurement

Blog 1_Nov_ 2018 Conflicts of Interest

A Centralized Procurement practice has been known for allowing companies to have better control of purchasing activities.

On the surface, Centralized Procurement seems preferable to the alternative. However, there are also advantages and disadvantages for the Centralized Procurement

The Pros Centralized Procurement:

1.    Better pricing made possible by better control over suppliers.

2.    Elimination of the possibilities of violation and Conflict of Interest.

3.    More successfully address of non-tangible benefits such as driving more successful supplier risk management, supplier diversity and corporate social responsibility initiatives

The Cons of Centralized Procurement:

1.    A possibility of delays in procurement as all the purchases must be routed to the procurement department. 

2.    A centralized procurement organization may not be able to take advantage of local discounts. This can be a drawback if the company is geographically dispersed.

3.    Depending upon the size of the company, a computer system that is dedicated solely to purchasing may be too expensive to maintain.

Some pertinent questions would be:

1.    How should the company adopt Centralized Procurement practices?

2.    Who should be involved?

3.    What tools should be adopted?

4.    What is the approval process?

Companies can adopt a combination approach of  Centralized and Decentralized processes with the following Minimum Process Standard

  

Suggested Minimum Process Standard	Owner	Tool
Appointment of a designated Procurement Manager
Set up Procurement Policies and Procedures that will cover the process of both Centralized and Decentralized Procurement Practices	Procurement Manager	Excel Visio Words
Set up a Procurement Planning tool for a better anticipation of most purchase requirements	Procurement Manger	Excel Visio or ERP systems
Analyze the purchase requirements, categorize the purchases base on cost analysis	Procurement Manager and Requestors	Excel
Set up a Procurement Catalogue.  Categorize goods that have continuous   and frequent purchases. Requestors can submit purchase requests base on the catalogue, instead of via Procurement team.	Procurement, Requestors or Central admin	Excel or ERP systems
Establish and maintain a Supplier Database	Procurement	Excel or ERP systems
Establish and maintain a Contract Management Database	Procurement	Excel or ERP systems
Set up a Procurement Committee for review of the high cost purchases	Procurement Manager
Continuous monitoring spent analysis and reporting	Procurement Manager	Excel

Contact Grace Lim @ graceyeechuenlim@hotmail.com if needs more information.

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.

Conflicts of Interest

Blog _15 October 2018 Conflicts of Interest

Leaders of the companies and Procurement practitioners are responsible for ensuring a fair and transparent procurement process that is free from Conflicts of Interest.

There are a few types of Conflicts of Interest that could benefit employees of the company, which are:

• Having direct ownership or shares in a business that the employer does business with
• Offering professional services to the employer’s clients in a private capacity
• Accepting gifts or money in exchange for discounts, preferential treatment or goods, works and services.
• The use of company resources and commodities for personal enrichment
• Abuse of decision-making authority regarding purchases or supplier selection

These are some suggested preventive measures to prevent Conflicts of Interest.

Scenario_1 Decentralized Procurement

There is a Decentralized Procurement, with or without systems, in which each department, division or project manager has the purchasing power to order supplies at their own discretion without seeking approval.  During the purchasing process, either each requestor can issue his or her own Purchase order or have a central administrator to perform the paper work.

Pros of Decentralized Procurement

1.    Speed of order and delivery of Goods.

2.    Requestors can do their own sourcing to meet their needs

Cons of Decentralized Procurement

1.    Control for Conflicts of Interest will be difficult

2.    Loss of opportunities in negotiating for better terms and pricing

3.    Purchase orders generation are usually made by administrative staff who usually lack purchasing or procurement knowledge and skills.

4.    The data is disorganized, thus far more difficult in performing a Spend Analysis.

How does one adopt Decentralized Procurement practices while ensuring over control of Conflicts of Interest?

Who should be involved? What tools should be adopted? What is the approval process?

Below is an illustration of the proposed solution.

Sequence	Process	Owner	Tool
1	Set up a Procurement Catalogue.  Categorized goods that have continuous purchases	Procurement or Central admin	Microsoft Excel or ERP systems
2	Approval of Procurement Catalogue by management	Department Head/Procurement Committee	Manual or e-signature
3	Purchasing activities base on Procurement Catalogue	Requestor	Microsoft Excel or ERP systems generated Purchase Request
4	Generate Purchase Orders	Procurement or central admin	Microsoft Excel or ERP systems generated Purchase Order
5	Continuous monitoring spend analysis, perform further negotiation with suppliers	Procurement	Microsoft Excel – Procurement Planning

Contact Grace Lim @ graceyeechuenlim@hotmail.com if wish to know more on the format and application of Procurement Catalogue, Procurement Planning tools and E-signature in Microsoft Excel format.

 I will share the Centralized Procurement practices in my next Blog

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.

 Click to view profile

Procurement Transformation

Acknowledgement

The summary of the process and high-level policies is the collection of work in multiple fields over the years.  The results and data were collected from various industries such as Semiconductor, Manufacturing, FMCG and NGOs.

This Blog sharing will cover Procurement Planning, Contract Management, Sustainable Procurement, Governance, Transparency, Accountability, Acceptance of Electronic Signature, Separation of Duties and KPI (Key Performance Indicator) Reporting.

Blog _8 October 2018 Procurement Management

Procurement Policies should be accompanied by a description of its purpose and should adhere to the policies of the company.

The policies should include the company’s commitment to ensure the highest ethical and moral standards for the sourcing and procurement activities, which will cover the areas of

1.    Conflicts Of Interest

2.    Confidentiality

3.    Established a Procurement Committee

4.    Established a process for Asset Management

I will share my experiences regarding each of the areas above in my subsequent blogs.

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.

 Click to view profile