1. Faculty Of
Management Sciences
Pune
PGDM
Materials & Logistics
Management
March 07,14,21,28
April 03,10
2012
18.0

2. Pyramid Of Success
RESULTS
DAILY ACTIVITIES
WEEKLY ACTIVITIES
MONTHLY ACTIVITIES
SHORT RANGE GOALS
LONG RANGE GOALS
VISION – PURPOSE -- MISSION
PRINCIPLES -- VALUES
Success is Progressive Realization of worthwhile Predetermined Personal Goals

3. Values & Goals
• Goals for the future, Values are now.
• Goals are set, values are lived.
• Goals change, values are rocks you can count on.
• Goals get people going, values sustain the effort.
• Values guide all plans, decisions & actions.
• Values become real only when you demonstrate them in
the way you act and in the way you insist others to
behave.
Values & Goals

4. Core Values – Essential Tenets
• Sony
– Elevation of the Japanese culture & national status
– Being a pioneer- not following others, doing the impossible
– Encouraging individual ability & creativity
• Nordstrom
– Service to the customer above all else
– Hard work & individual productivity
– Never being satisfied
– Excellence in reputation, being part of something special

5. Quality System
Total
Quality of
Product
Or
Service
Raw Material
Equipments
Instruments
People
Methods/
Processes
Management
Environment
CAPITAL ESSENTIAL

6. Quality
• Quality is totality of characteristics & features of a
product, service, system or part that bears upon its
ability to satisfy stated &implied needs of a customer.
• Quality is no accident. Must be planned& there are no
shortcuts.
• Quality is conformance to requirement & is achieved
through prevention not appraisal.

7. Quality Management Principles
• Customer focus.
• Leadership.
• Involvement of people
• Process approach
• System approach to management
• Continual improvement.
• Factual approach to decision making.
• Mutually beneficial supplier relationship.

8. Leadership
• Creating A Team Spirit
• Setting An Example ( ROLE MODEL )
• Supporting Excellence
• Providing Direction & Guidance
• Providing Tools & Resources
• Empowering Nurturing & Supporting Growth
• Allowing Freedom In Implementation

9. Dr. Deming’s Philosophy Of Managing - 01
• Dr Deming –
– One of the Team members sent by Americans to rebuild Japan.
– He calls himself a Catalyst for change of Quality
– When you copy certain things you stop thinking.
– He has explained the philosophy of thinking in these 14 points.
There is neither a checklist nor a formula.
– First released in 1986 & revised version in 1990 which was
released in 1994.
– He said that
• Every system must have an aim, without an aim there is no
system.
• The aim of these 14 points is ‘ to make it possible for the
people to work with joy’.

10. Dr. Deming’s Philosophy Of Managing - 02
1. Create a constancy of purpose toward improvement of
product & service, with the aim to become competitive &
to stay in business & to provide jobs.
Create & publish to all concerned a statement of all the
aims & purposes of the company or other organization.
The management must demonstrate constantly their
commitment to this statement.

11. Dr. Deming’s Philosophy Of Managing - 03
Creating value or satisfaction & thereby making profit
should be the purpose.
It must bring out the long term vision of the organization
preferably stating how it intends to stay in business
through creating value for all those impacted in any way
including their suppliers & vendors.
Ford aim of making a best vehicle called customers,
suppliers, users & all people related to their product to
suggest their requirements & participation.
Company should not only write the statement of purpose
but also demonstrate through actions the commitment to
the statement.
Walt Disney purpose – “To make the child smile”.
They set up a college to train artists.

12. Dr. Deming’s Philosophy Of Managing - 04
2 . Adopt the new philosophy .
We are in a new economic age .
Western management must awaken to the challenge,
must learn their responsibilities & take on leadership for
change.
Learn the new philosophy, top management &
everybody.

13. Dr. Deming’s Philosophy Of Managing - 05
We use to defend & always try to find excuses for the
non achievements.
Focus on process instead of output.
If we are not getting output don't increase the input,
attack the cause, that is process. For same output if
the efficiency is low, input will be very high.
Analyze & improve the process.
Adopt the win-win philosophy.
Focus on expanding the market rather than capturing it .

14. Lose/Win Win/Win
Lose/Lose Win/Lose
Maturity
Courage
Consideration
Balance Between Courage & Consideration
Low
High
High

15. Dr. Deming’s Philosophy of Managing - 06
3. Cease dependence on mass inspection to achieve
quality.
Eliminate the need for inspection on a mass basis by
building quality into the product in the first place.
Understand the purpose of inspection:
for improvement of processes & reduction of cost,
i.e as an audit of the process.

16. Dr. Deming’s Philosophy of Managing - 07
Use the system of inspection to understand the gaps in
how you perceive a customer requirement & how
customer actually perceives it.
If the quality is built in the process there is no necessity
of the inspection.
Designing the process such that there is no rejection is
the basis of Just In Time.
The gap between the customer requirement & your
understanding cannot become zero as the level of
customer requirement goes on changing.

17. Dr. Deming’s Philosophy of Managing - 08
4 .End the practice of awarding business on the basis of price tag
alone. Instead, minimize total cost .
Move toward a single supplier for any one item, in a long – term
relationship of loyalty & trust.
Reduce variation, practice co–operation, educate them, train them
so that they contribute towards the organization.
5. Improve constantly & forever the system of production & service
to improve quality & productivity & thus constantly decrease costs .
Continuous means unbroken & Continual improvement means
unending & it is forever.
At the time of designing process think of what will go wrong & be
prepared for it . Complete knowledge of process is impossible & that
is why it is necessary to go through a cycle of PDSA.

18. PDCA
PLAN
Determine
Goals &
Targets
Determine
Methods Of
Reaching Goals
Engage In
Education &
Training
Implement
Work
Study The
Effects Of
Implementation
Take Appropriate
Action
STUDY DO
ACT
PDSA

19. Dr. Deming’s Philosophy of Managing - 09
6. Institute training on the job .
Training should not be for how but it should be for why. If we know
why are we doing then we can do it in a better way.
Training must also aim at creating learners. This forms the basis for
continual improvement.
7. Adopt & institute leadership.
The aim of leadership should be to help people & help machines do
a better job.
Teach & institute leader.

20. Dr. Deming’s Philosophy Of Managing - 10
Create leaders.
Managers job is to work on the system & continually improve it with
help from the people & the customer by leading people, coaching
them & counseling them in a non – judgmental manner.
Create an environment for learning & for growing.
Every single person in an organization is important & has a part to
play in the system.
8. Drive out fear so that everyone can work effectively for the
company.
Encourage two way communication. Create trust. Create a climate
of innovation.

21. Dr. Deming’s Philosophy Of Managing - 11
Find out problems before they find you. It takes time to correct the
process.
People should not be afraid of making mistakes, but don’t repeat
the mistakes. Don’t be afraid of failure, take calculated risks.
9. Break down the barriers between the departments.
People in research, design, sales, production must work as a
team, to foresee problems of production & ‘in use’, that may be
encountered with the product or service.
Optimize toward the aims & purposes of the company the efforts of
teams, groups, staff areas.

22. Dr. Deming’s Philosophy Of Managing - 12
Encourage systems thinking in the organization where everybody
focuses on creating value for the customer & not just meeting
departmental or sectional objectives.
Optimize the efforts of everyone, do not maximize individual efforts.
10.Eliminate slogans, exhortations & targets for the work force
demanding zero defects & new levels of productivity.
Concentrate on the process & continually improve it.
A genuine leadership culture focuses on improving the work
environment, so that people are intrinsically motivated to do
productive work & if useful, create their own slogans & posters.

23. Dr. Deming’s Philosophy Of Managing - 13
11.Eliminate work standards ( quotas ) on the factory floor. Substitute
leadership.
Eliminate management by objective. Eliminate management by
numbers, numerical goals, Substitute leadership.
Learn & institute new methods of improvement. Learn the
capabilities of processes & how to improve them.
Numerical targets are used for guidance rather than judgment.
We quantify the things rather than qualify them.
Encourage system thinking means
understanding & establishing interdependencies between the
different parts of the system.

24. Dr. Deming’s Philosophy Of Managing - 14
12.Remove barriers that rob people of pride of workmanship.
Develop joy in work .
Develop a sense of ownership in every employee working in the
system so that he or she could take pride & joy in the work they do.
13.Institute a vigorous programme of education & self - improvement.
Encourage education & self improvement for everyone.
There is an end to education but learning is unending.
Pay is not as much a motivator as learning is.
Continual learning leads to continual innovation & improvement .

25. Dr. Deming’s Philosophy Of Managing - 15
14.Take action to accomplish the transformation.
Create a structure & a system in the organization that embodies all
the above principles. Nurture the relationships.
Extend the boundaries of the organization to include all those
impacted including environment .

26. Change In Mindset
• Source Of Salary
• Focus
• Results
• Quality
• Satisfied Customer
• Manage Process
• Lead People
• Through Processes
• Continuously Improve
Process
• Reduce Variability closer To
The Target Value

27. Elements Of Materials Management
• Materials Planning & Programming - Quantity Required
- Specifications
- Time when Required
• Purchasing - Right Source
- Right Time
- Right Price
• Receipt, Inspection & Warehousing
• Store Keeping - Storing - Preservation
- Inventory Control
• Distribution - Timely
- Right Quantity
• Value Analysis & Standardization
• Condemnation Disposal

28. Materials Management
• Materials Management as the function responsible for the coordination of
planning, sourcing, purchasing, moving, storing, and controlling materials in
an optimum manner so as to provide a pre-decided service to the customer
at a minimum cost.
• Integrated Approach- various functions served by materials management
include material planning, purchasing, receiving, stores, inventory control,
scrap and surplus disposal.
• Advantages in Integrated Approach
– Better Accountability.
– Better Coordination.
– Better Performance.
– Adaptability to Design Data Processing System.
– Opportunities for Growth and Development.
• Organization- Why? The internal structure, delegation of authority, interface
relations, coordination of the entire function, identifying training needs and
developing a Policy Manual.

29. Expectations From Materials Department
• Purchase materials in time & as required by the user departments for
smooth functioning.
• Maintain optimum levels of stock in order to avoid wastage, scrap, &
obsolescence.
• Keep in contact with user department to ensure that the quality supplied to
them is of specified standards.
• Procure the specified material for the best or acceptable price to make it
available in time & to the right user.
• Maintain good vendor relationship.
• Materials Department should take care of
– Procurement
– Main Store
– Other Stores
– Disposal

30. Objectives Of Materials Management
• Primary Objective
– Right Price
– Low Procurement Of Storage Cost
– Continuity Of Supply
– Good Supplier Relations
– Good Information System
– High Turnover
– Consistency In Quality
– Development Of Personnel
• Secondary Objective
– Product Improvement
– Interdepartmental Harmony
– Forecasting
– Favorable Reciprocal Relationship
– New Materials and Products
– Make or Buy, Buy or Lease Decision
– Standardization

31. Organization Focus
• Your most valuable resources drive away at the end of every business day
& it is your job to make it sure that they are eager to return the next
morning.
• People want to be part of the solution , part of something positive. It is up to
the management to tap into that reservoir of goodwill &caring energy.
.
• We want you to have all the information you need to be creative, & to
become more deeply engaged in the business.
• M . I . S .
• Management –Makes decision regarding planning , organizing , directing ,
staffing , coordinating , controlling.
• Information – Information consists of orderly selected data for making
decision.
• System – System for integration of all organization activities through
exchange of information.

32. Principles and Techniques Of Materials Management
• Right ITEM Value Analysis, Standardization, Codification.
• Right QUANTITY Purchasing, Balancing of Inventories, E.O.Q.
• Right PRICE Cost, Price, Value Analysis.
• Right SOURCE Market Research, Purchasing Techniques, Selection.
• Right DELIVERY Procurement Techniques, Follow Up , PERT / OR.
• Right METHODS Work Study , System Analysis, ABC Analysis.
• Right PEOPLE Lack Of Integrity, Organizational Analysis, Behavioral
Science.

33. Techniques To Improve Materials Efficiency
• Variety Reduction – It is the voluntary elimination of the unnecessary variety
in the products, materials, tools, components, spares or supplies.
– Helps in Inventory control, Cost reduction.
• Value Analysis – It is the systematic method of investigation designed to
examine the functions of a product such that quality, reliability,
maintainability, safety & appearance are improved with no increase in cost.
– Helps in cost reduction, cost prevention.
• Learning Curve – it is a scientific technique for predicting the time or cost of
future quantities.
– Helps in price negotiations.
• Vendor Rating – It is the process of evaluating vendors performance against
a prefixed criteria of quality, delivery, price & service.
– Helps in maintaining long term relationship & approved vendor base.
• Break Even Analysis – It is the study of impact of the managerial decisions
on changes in fixed costs, variable costs, selling price, product mix on
profitability of the Organization.
– Helps in Make or Buy Decision.
• Make- or- Buy Decision – It is the systematic analysis of different elements
of cost to determine the economics of “making the item at the home plant”
Vs “buying from outside”.

34. Codification
• Codification is necessary for
– Accurate and logical identification.
– Avoidance of long and unwieldy description.
– Prevention of duplication.
– Variety reduction.
– Efficient purchasing.
– Minimization of clerical work
– Efficient storekeeping.
– Accurate and reliable recording and accounting.
– Easier computerization.
• Three basic stages of codification
– Identification- process of assigning correct nomenclature
– Classification- arrangements of items into groups according to common
features of the item. Description classification/Nature of material/ source
of purchase/ source of origin.
• Long life/ Short life category, Consumable/Non consumable, Special
Equipment
– Codification- allocation of specific codes to the items within the broad
framework.

35. Codification Example
• Basic systems of codification
– Alphabetical / Numerical / Alpha- Numeric / Colour coding / Bar
coding
• First Two Digits – Class
• Next digit -- Sub class
• 4th &5th Digits --Kinds
• 6th & 7th Digits -- Types
• 8th & 9th Digits -- Sizes
• 10th Digit -- Minor Variations.
• Alphanumeric Notation
• A -- General Category
• 01 – Sub Category
• 0010 – Specific Items