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JRMC Global: Center For Human Excellence & Leadership
JRMC Global: Center For Human Excellence & Leadership
JRMC Global
Center for Human Excellence & Leadership
Jayanta Roy
Jayanta brings more than 27yrs of experience across diverse markets, segments and categories. He has
served leading multinationals like Unilever, IFFCO, Chr-Hansen, Pall, DSM, ICL in various leadership roles in
India & South Asia, Middle East & Africa regions in Food, Nutrition & Health, Performance Chemical sectors.
Jayanta is B.Tech., MBA (Marketing) and PG specialization program (General Management & Strategy) from
IIM Calcutta. He has participated in many Leadership & Management Development Programs in Europe,
Dubai, Singapore, China, Thailand, India including Advanced Strategy Programs from IIM Bangalore, IIM
Ahmedabad, IIM Calcutta, ISB Hyderabad. He has extensively travelled in Asia, Europe, Africa and other
International countries for overseas employments/ strategic projects/ training programs & conferences.
He has been working as Strategist, Leadership Coach, Author, Adjunct Professor(MBA) since June 2014 at his
own firm JRMC Global and has been conducting sessions on various Research based Leadership &
Entrepreneurship Development Programs. Approx. 11000+ people participated in his various Programs from
Academia, Trade Associations, Corporate, NGOs, Govt/PSUs, Politicians, Entrepreneurs, MSMEs etc.
Note: This PPT file contains Course Guideline & highlights a few
salient points of Classroom sessions.
Introduction - Single Warehouse Entry - The Economic Lot Size Model -The
Effect of Demand Uncertainty - Supply Contracts - Multiple Order
Opportunities - Continuous Review Policy - Variable Lead Times - Periodic
Review Policy - Risk Pooling-Centralized Versus Decentralized Systems -
Managing Inventory in the Supply Chain -Practical Issues - Forecasting -
Judgment Methods - Market Research Methods - Time-Series Methods -
Causal Methods - Selecting the Appropriate Forecasting Technique.
Value of Information (1 session)
A Dependent Demand
B(4) C(2)
Supplier IG EP EP Customer
Components WIP Assembly Installation
Manufacturing
OP4
Make to order (MTO) Ship propelling
diesel engines
OP5
Engineer and make to order (ETO) Shipbuilding
IG= Incoming goods
EP= End products
= Inventory
WIP= Work in Progress
OP= Order pentration point =Order driven
=forecast driven (Hoekstra and Romme, 1985)
Objectives of Inventory Management JRMC Global
Item Cost Cost per item plus any other direct costs associated with
getting the item to the plant
Type of Product : High unit and low unit value / short supply or Govt rationed items/MTO
Commitment of Management
Benefits of Inventory Management JRMC Global
Managing Seasonal Stock JRMC Global
LT = 1 week
Market One
Supplier Warehouse
Market Two
Risk Pooling
• Demand variability is reduced if
one aggregates demand across
locations.
• More likely that high demand from
one customer will be offset by low
demand from another.
• Reduction in variability allows a
decrease in safety stock and
therefore reduces average
inventory.
CONFIDENTIAL – Mr. Jayanta Roy/JRMC Global
IMPACT OF INVENTORY CONSOLIDATION
JRMC Global
A - very important
B - mod. important
C - least important
‘C’ ITEMS
Larger in number, but consume lesser amount of resources
Must have:
• Ordinary control measures
• Purchase based on usage estimates
• High safety stocks
ABC analysis does not stress on items those are less costly but may be vital
VED ANALYSIS
Based on critical value & shortage cost of an item . It is a subjective
analysis.
Items are classified into:
• Vital: Shortage cannot be tolerated.
• Essential: Shortage can be tolerated for a short period.
• Desirable: Shortage will not adversely affect, but may be using more
resources. These must be strictly Scrutinized
FSN ANALYSIS
– Based on utilization.
– Fast moving.
– Slow moving.
– Non-moving.
– Non-moving items must be periodically reviewed to prevent expiry
& obsolescence
CONFIDENTIAL – Mr. Jayanta Roy/JRMC Global
Vendor Managed Inventory (VMI)
JRMC Global
VMI is essentially an integrated approach whereby the
inventory at the distributor/retailer (downstream) is
monitored and managed by the manufacturer/vendor
(upstream)
Prerequisites
• Key customers/ large buyers
VMI Success Factors
• Standardized products / frequently purchased • Top management commitment
• Uniform & stable demand pattern • Focus on effort
• Higher transaction costs • Trust and partnership between
supply chain stakeholders
Benefits to Manufacturers
• Highly effective
Lower inventory investments (raw and finished) computer/information systems
Better scheduling and planning (EDI, Bar coding, Scanning)
• Competent manufacturers and
Better market information the ability to forecast
Closer customer ties and preferred status • Willing stakeholders partners and
Benefits to Retailers patience
Fewer stock-out with higher inventory turnover
Better market information
More optimal product mix
Less inventory in channels (transfer costs)
Lower administraCtiOveNrFeIDpEleNnTisIAhmL–enMtrc.oJastysanta Roy/JRMC Global
Just-in-time management (JIT) JRMC Global
JIT is an inventory strategy companies employ to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process,
thereby reducing inventory costs. This method requires producers to forecast
demand accurately.
RULES OF FORECASTING
• The forecast is always wrong.
• The longer the forecast horizon, the worse the
forecast.
• Aggregate forecasts are more accurate.
• Judgment Methods
– Sales-force composite
– Experts panel
– Delphi method
• Market research/survey
• Time Series
– Moving Averages
– Exponential Smoothing
• Trends
– Regression
– Holt’s method
• Seasonal patterns – Seasonal decomposition
• Trend + Seasonality – Winter’s Method
• Causal Methods
Qualitative methods
History analogy
Quantitative methods
Exponential
Moving average Regression method smoothening
Delphi Method: similar to the panel consensus but with concealed identities.
Sales force composite—forecasting based on internal insights concerning short-
term future sales.
Survey of buyer intentions—gathering input to determine the purchasing
intentions of a representative group of present and potential customers.
Delphi method is a forecasting process framework based on the results of multiple rounds
of questionnaires sent to a panel of experts. Several rounds of questionnaires are sent out to
the group of experts, and the anonymous responses are aggregated and shared with the
group after each round.
CONFIDENTIAL – Mr. Jayanta Roy/JRMC Global
Factors affecting selection of a forecasting JRMC Global
method
Data availability
Development and Execution Cost
Variability
Consistency of data
Degree of detail necessary
Time horizon
Technical sophistication
Level of risk and variability
Level of accuracy
Fundamental change indicators