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Published by ashish.bms9
Logistics Notes
Logistics Notes

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Published by: ashish.bms9 on Aug 25, 2008
Copyright:Attribution Non-commercial


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Purchasing or procurement deals with procuring and arranging
inbound movement of materials parts or finished inventory from
suppliers manufacturing or assembly plants. Scheduling is
putting a time frame on the procurement activities. Scheduling
takes into account when the procurement is required.
Procurement consists of all activities in procurement
performance cycle. And putting a timetable on these activities is

Out source considerations

When a company out sources one of its activities to service
providers outside, several considerations are evaluated.
Traditionally, these considerations revolve round cost of making
the item in house [making internally] and the price charged by
the service providers out side[making it externally]. If the cost of
buying the service or product from outside source is less than
making it in house, the service or the product gets outsourced. In
the current business environment, these decisions receive further
analysis and evaluate economic trade off points & strategic trade
off points
Economic factors


The total cost of performing all activities to create a product is
calculated. To minimize this cost some activities may get
outsourced and some may be sourced internally. The
combination that gives minimum cost to perform entire activity
is ideal.
Strategic factors

\ue000The strategic core competency of our company. What will this
be in future? Where should we be concentrating on?
\ue000 Ability to provide superior service and not only the cost of
making the product or service
\ue000 Costs and cost trend on the long run
\ue000 Special skills developed by a service organization, which are

preferred by the clients. Our company can do outsourcing and
get the benefit of specialized skills. E.g. satelite-tracking
system developed by Schneider National Inc. It is obviously
beneficial to hire this service rather than reinvent the wheel!
Another example can be the daba wallahs in mumbai

What is MRP? [Bardi, page 251]
MRP[Materials Requirement Plan]

Popular concept in 1960&1970. Consists of a computer system, a
manufacturing information system, building on inventory, production
scheduling and administering all inputs to production. And a concept
and philosophy of management.

Definition of MRP system: MRP system consists of a set of

logically related procedures, decision rules, and records designed to
translate a master production schedule into time phased net inventory
requirements and the planned coverage of such requirement for each
component item needed to implement schedule. An MRP system re
plans net requirements and coverage as a result of changes in either
the master schedule, demand, and inventory status or product
composition. MRP systems meet their objective by computing net
requirements for each inventory item, time-phasing them, and
determining their proper coverage

1. Ensure the availability of materials components and products for

planned production and customer delivery.
2. Maintain the lowest possible inventory level
3. Plan manufacturing activities, delivery schedules and purchasing

How? Process: MRP starts with customer\u2019s demand for the quantity

of end product and the time when the products are needed.
Then MRP explodes the time and need for components based upon
the end product need. MRP System focuses on inbound logistical
MRP System uses following key elements:

1. Master Production Schedule

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