Name: S.M.

SAAD
ERP: 18227
SSN ASSIGMENT #1
Commodity and Spend Analysis Flow
 Store Items - Parts Review

Total : 4,957 Part No.

Suppliers : 64

JSP IMC
Local : 1,080 Part No.

Import : 3,877 Part No.

Local;
Parts Ratio in IMC 1080;
22%

Import;
3877;
78%
Definition
Local Part [LSP]: Part which is ordered from local supplier

Import Part [JSP & MSP]: Part which is ordered from other countries.
Commodity and Spend Analysis Flow For IMC
STEPS IN P2P - IMC
PURCHASE ORDER MATRIX
Suggestion in Existing P2P

• As per detailed discussion with SGM Procurement, it has been observed that
there is sometime lead time issues due to part acceptance and rejection
process.

• As vendor are located in different region of Pakistan.

• Once sample is received in IMC it is inspected and then rejection/acceptance

is done.

• The transport time can vary from 1 – 2 weeks

• My suggestion is that IMC can send its inspection team directly to the vendor
workshop to reduce transport time which will eventually reduce the lead
time of the parts.
PART #2

Select ONE ITEM from any MRO Category and perform following tasks

• G4 Filters For Booth and AHU

Assess the annual requirements of selected item at company level (at all locations)

• 500 No's of G4 filters are required on annual basis.

Does the company raise the requirements (purchase requisitions) for a longer period of
requirement under the (annual rate contract) system?

• Yes

How many PRs (purchase requisitions) and POs (purchase orders) raised at present?

• 20 POs are raised against different department PRs.

PART #2
What is the lead-time for this item?

• 2 – 4 weeks

Where will you place your selected item in below map, please justify your selection of quadrant.

• Materials Management (As it is related to paint quality)

Review the number of vendors supplying total quantities of selected item. Perform Supplier
concentration analysis for selected item purchasing as per below format:
PART #2

Review the cost of item in TSC concept (Please do not forget to include the cost in
procurement process). Please develop Cost Bar Waterfall for selected item as per below
format:

TOTAL SUPPLY COST FOR G4 FILTERS (MPKR)

20

18 1
1
16
1
14 2
12 2
10 1
18
8 15
6
10
4

0
Matrial Cost Packaging Trnasportation Duty & Taxes Delivered Cost Processing Cost Holding Cost Quality Grand Total
PART #2

Is there any possibility to reduce the lead time for this item? You may use following
format:

The company can reduce the lead time if they can accept/reject the lot at suppliers
workshop.
PART #2

estimated Cost Saving. You may use following format:

As you can see from the TCS graphs the transportation cost is quite high, it is maybe due
to supplier has to transport lot again if it is rejected.

This will not only reduce transportation cost but will also reduce holding cost too as it is
also high.

Transport cost 250,000

Holding Cost 500,000

PART #2

Can we reduce the number of PRs (purchase requisitions) and POs (purchase orders) to
reduce transaction cost and paperwork?

Yes, we can reduce the number of PRs and POs by compiling the annual requirement of
all the department and also we can have the advantage of economy of scale
PART #2

Further suggestions for improvement.

During detailed analysis of G4 filters, we came to know that streamlining the process is
very important but strategic sourcing of material can also save huge amount.

One idea has been discussed and highlighted in IMC to reduce cost