Material Management Process : Demand Forecasting & Planning

Neeraj Lal Vice President

Process:

4 Main components:
Obtaining or acquiring Storage Distribution Exercising control

Essential functions :
Right Right Right Right Right Right Right Right

Material Quality Quantity Time Price Supplier User Cost

Anticipated forecast of demand:

Before budget allocation and before placing order, it is necessary to work out the projected requirement or demand of each item. Very often departmental heads tend to add 10% to 15% to the previous years consumption while giving their requirements.

forecast of demand:

Demand forecasting based on previous year's consumption is improper for the following reasons:

Consumption may be more due to

higher

incidence of a particular disease during the year because old stocks had to be used up because these items substituted specific item due to non availability of required item commercial pressure

Consumption may be less

due to:

lower incidence of the condition requiring this item non availability in the stores alternative item was supplied patients were given prescription for the same or another item.

Methods in demand forecasting & Planning: 1)Last period demand method 2)Arithmetic average method 3)Moving average method

Last period demand method:

This

method simply forecasts for the next period, the level of demand that occurred in the previous period.

Arithmetic average method:

This method simply takes the average of all past demand in arriving at forecast. The arithmetic average works well in a stable situation where the level of demand does not change, it will not adequately respond to trends in demand & it neglects seasonal fluctuations.

Moving average method

This methods generates the next period's forecast by averaging the actual demand for the more time periods. The objective of the moving average will respond with fairly constant forecast. The moving average dampens random effects responds to trends with a delay & dose not compensate for seasonal.

Standardisation:
Means... grouping together items of similar specifications, use or application enable a hospital to choose one of the many acceptable for the purpose. It ensures: Non duplication of inventory Variety reduction Economical purchase cost Efficient use of materials

Planning:

Planning:
After forecasting demand and after verifying budgetary allocation, purchase is initiated. The basic steps are as follows: Preparing detailed specifications Inviting offers by a) quotations b) tenders c) direct enquiry Preparation of tabulated comparative statement of the offers received. cont...

Preparations of list of responsive offers i.e. The offers which fulfil all the specifications and the conditions prescribed. Testing of samples / taking demonstration Placing purchase order.

Thank you