Purchase cycle

PREFORMULATION AND PRODUCTION MANAGMENT :

PREFORMULATION AND PRODUCTION MANAGMENT Facilitated by, Mr. Rajasekhar Valluru Professor Presented by, Venkata krishna Y, Dept. of pharmaceutics, EAST WEST COLLEGE OF PHARMACY

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PURCHASING CYCLE STORES MANAGEMENT MATERIAL HANDLING SYSTEM 2

PURCHASING CYCLE:

PURCHASING CYCLE In a large industrial establishment a separate department namely purchase department is generally maintained. In small concerns the owner/manager makes all the purchases and dispenses with the need for a purchasing department. Purchasing cycle will have certain steps in the process of initiating and completing the transaction . 3

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The steps are to be followed: Recognition of need Description of need Selection of Source for the Purchase Price and availability are determined Placing the Order Acceptance of Purchase order is obtained from supplier or Order Acknowledgement Follow up by the purchasing department Checking the invoice and approving it 4

Recognition of Need :

Recognition of Need It is the need that is officially brought to the attention of purchasing department Two methods are followed Issuance of Requirements by user department to the stores Issuance of Bill Of Materials Purchase requisition describes the needed item and becomes the basics for action by purchasing department. Requisitions are signed by authorised individuals to avoid irresponsible purchase request 5

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A Bill of Materials is a list of all items incorporated into a finished product that the company produces. Under the method of establishing need, the PD is notified of the manufacturing schedule by P roduction Planning and Control (PPC) Department. DESCRIPTION OF NEED Purchase Requisition describes the required items. In order to assure complete and accurate information f or order the requisition must include all necessary information in a form that can be readily checked and verified 6

Selection Of Source:

Selection Of Source After a source had been recognised and described the PD proceeds to select the source of supply. The PD will have a list of Regular Approved Suppliers called Register of Suppliers A right supplier is the one who deliver the materials of correct specifications on the speculate delivery dates There are two sources for the selection of supply of materials Single source Multiple source 7

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Single source The supplier may be exclusive owner for the supply of materials The supplier may be so outstanding in the quality of the product Concentrating purchases may make possible discount rates When all the orders are placed with one supplier deliveries may be more easily scheduled Long term relationships with suppliers encourages loyalty and reduces the risk and interruption in the supply 8

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Multiple Sources Assurance of supply is increased since fire, breakdowns or similar accidents occur to any supplier, deliveries can be still be obtained from the others Some companies diversify their purchases because they do not want to become the support of the company Assigning orders to several suppliers gives company a greater degree of flexibility 9

Determination of Price And Availability:

Determination of Price And Availability This is to secure the price for items to be purchased. This can be accomplished in three ways Standard items Negotiation Inviting tenders Standard items Vendor’s catalogues and price lists are available and for each items buyer need only check current stocking to obtain the price 10

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Negotiation Negotiation implies bargaining between buyer and seller Inviting Tenders / Quotations Inviting tenders is a must in government undertakings Placing the Order The legal order is placed with the supplier on a form known as “PURCHASE ORDER” 11

Order Acknowledgement:

Order Acknowledgement Some companies insist on order acknowledgement from the supplier, acknowledging the receipt of Purchase order and agreeing to supply the items FOLLOW UP Follow up is done to ensure that the items ordered are delivered by the supplier on time. Extension of Delivery Period If the suppliers are not effective within two weeks after the delivery date or if the supplier ask for extension of time, the attention of the authority who signed the order shall be drawn 12

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Cancellation of Orders and Penalty For cancellation of order the approval of higher authority shall be obtained. Before imposing any penalty less than what had been laid down in terms and conditions of supply the approval of GM shall be obtained. Checking the Invoice and Approval The bill sent by the supplier is compared with the Purchase Order and Goods received. Note is made out when the material is received. If the bill is correct it is approved and given to accounting department for payment 13

STORES MANAGMENT:

STORES MANAGMENT A fter inspection the purchased materials are taken to store for preservation. With proper management and coordination storage can contribute to effective operations Nature of stores Stores Layout Stock verification

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Nature of Stores Stores or storage is the function of receiving storing and issuing materials. It involves supervision or the clearance of incoming supplies, to ensure that they are determined in good conditions safely and in readiness for use and issuing them against authorised requisitions Imp: Ready accessibility of major materials A reduced need for materials handling equipments A minimisation of materials determination Ease of physical counting

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Functions: To receive raw materials and account for them To provide adequate and proper storage and preservation to various materials To meet the demands of consuming departments To minimise the obsolescence, surplus and scrap through proper codification preservation and handling Stores layout Stores layout is the fundamental factor in determining the efficient performance of the stores department.

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The following are considered while planning the stores layout : Provision for easy receipt storage and distribution of materials, nearness to the to the point of use Minimum handling and transportation of materials , good accessibility for handling equipment and personnel Adequate capacity provision for flexibility for future expansion Clear identification of materials, quick location of items and ease of physical counting Design the building physical appearance to create good will and to invite business

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Arrange storage for fast and easy customer order processing Install good lighting to prevent damage and errors in stocking Plan storage for easy shelf life rotation to permit first in first out control Include safety as part of facility plan Maintain a periodic house keeping and rearrangement plan Two aspects of stores layout are significant Storage systems Types of stores layout

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Storage systems: There are 3 basic ways of locating stock Fixed location: It means that goods of a particular type have a position in the store assigned to them exclusively. There can be considerable waste of space because when stocks of any one item are low the space left vacant cannot be filled The assignment of fixed position is made on any of the following On the basis of supplier On the basis of similarly of items On the joint issue of items On the basis of size and frequency of use

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Random Location: It means that items can be stored in any storage position which is available. Space can be better utilized but when there are many product a record has to be maintained to minimize errors Zoned Location: It means that goods of particular product group are kept in a given area. They can randomly stored in zoned location or stored according to fixed location

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Types of Stores Layout: There are two types of stores layout. They are Comb type layout: The stock may be kept on one side of the side 2. Tree type layout: The stock may be kept on either side of the side The type of layout depends on the availability of space and layout of building

Stock Verification::

Stock Verification: Stock verification can be maintained in one of three ways Low point Inventory: In this method companies take physical inventory when the stock is the lowest, irrespective of period. Disadvantage of this is producing an irregular inventory schedule which tends to peak the work load for stores personnel Continuous Inventory: In this method at beginning of each year some firms divide their inventory into 52 equal groups and assign one of them to be physically counted each week

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Fixed or Periodic Inventory: In this method inventory is taken once a year, generally coinciding with the financial year. This approach is ideal for seasonal business

MATERIAL HANDLING SYSTEM:

M ATERIAL HANDLING SYSTEM Material handling is defined as the art and science of moving, packaging and sorting of substance in any form Selection of Material H andling Systems: Certain principles have evolved to guide facility layout to ensure efficient handling of materials List of material handling principles which provide or frame work for selecting specific material handling devices/equipment are

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Eliminate Handling: If not, make the handling distance as short as possible Keep Moving : If not, reduce the time spent at the termination points of route as short as possible Use Simple Patterns of Material Flow: If not, reduce backtracking, cross and other congestion producing patterns Carry Pay Loads both Ways: If not, minimize the time spent in empty transport by speed changes and route relocations

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Carry Full Loads : If not, consider increasing the size of unit loads, decreasing carrying capacity, lowering speed or acquiring more versatile equipment Use Gravity: If not, try to find another source of power that is reliable and inexpensive In addition to above Material Handling consideration should include the movement of men, machine, tools and information

UNIT LOAD CONCEPT:

UNIT LOAD CONCEPT A unit load is understood as a number of items or bulk material, so arranged that the mass can be picked up and move as single object too large for manual handling Simply stated, the unit load principles means that it is quicker to move a lot of items as a unit than it is to move one of them individually

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The use of principle of unit load has been so effective that many firms today are insisting the materials which they buy the supplied on unit load basis rather than in individual units Disadvantages: Cost of unitizing and the deunitising Equipment and space requirements Bare weight of unitising medium Problem of returning empty pellets or containers Transfer equipments often not available on both ends of the move

PALLETIZATION:

PALLETIZATION A pallet is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies. Goods or shipping containers are often placed on a pallet secured with strapping, stretch wrap or shrink wrap and shipped. While most pallets are wooden, pallets also are made of plastic, metal and paper. Each material has advantages and disadvantages relative to the others.

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Pallets make it easier to move heavy stacks. Loads with pallets under them can be hauled by forklift trucks of different sizes, or even by hand-pumped and hand-drawn pallet jacks. Movement is easy on a wide, strong, flat floor, concrete is excellent. Although pallets come in all manner of sizes and configurations, all pallets fall into two very broad categories: "stringer" pallets and "block" pallets. Stringer pallet: Stringer pallets use a frame of three parallel pieces of timber (called stringers ). The top deck boards are then affixed to the stringers to create the pallet structure. 30

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Stringer pallets are also known as "two-way" pallets, since a pallet-jack may only lift it from two directions instead of four. Forklifts can lift a stringer pallet from all four directions, though lifting by the stringers is more secure. Block pallet : Block pallets (also referred to as Manoj pallets) are typically stronger than stringer pallets. Block pallets utilize both parallel and perpendicular stringers to better facilitate efficient handling. A block pallet is also known as a "four-way" pallet, since a pallet-jack may be used from any side to move it. 31

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32 The classic wooden pallet Plastic pallet with nine legs Galvanized steel pallets

Scrap And Surplus Disposal:

Scrap And Surplus Disposal Scrap may be defined as a residue obtained during manufacturing process which cannot be reused in the manufacturing process but it may be used either in the same manufacturing unit but in different kind of manufacturing processes or in some other factory where such scrap is used as raw material Scrap is generated in almost all kinds of manufacturing and service units. In a drug manufacturing unit the scrap may arise in the form of powder and fine granules during tablet manufacturing ,spoiled capsule shell ,empty containers , spoiled raw materials

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The percentage of scrap arising out of total production is a measure of the working efficiency of employees connected with every aspect of production. If the amount of scrap is more the normal then it may be assumed that something is wrong either with machinery or with manufacturing process Surplus: Surplus material may be defined as that the excess stock which is in excess than the normal requirement of a drug store or a drug manufacturing unit. The surplus stock may arise due to following reasons

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Over estimation regarding anticipated production which did not materialize due to any reason Faulty planning Faulty buying Excessive buying Improper ware housing facilities Fault in machinery which may not be corrected for a long time Disposal of Scrap and Surplus: Before initiating the disposal process the different kinds of scrap and surplus should be segregated according to the quality ,quantity ,metal and size. Various procedures adopted for disposal of scrap and surplus are as follows

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Scrap may be sold directly to the reprocessing industries where such scrap is used as a raw material Scrap is sold to dealers through online Costly machinery and spare parts may be sold to other similar organisation Surplus materials may be offered to original suppliers who may accept the materials and pay good amount for the material Surplus materials may be given to similar user department at a lower price than the normal market price Surplus may be donated to charitable organisation If there is no way out for disposal of scrap and surplus then it may be dumped in the dumping place

Salvaging:

Salvaging It is the saving for advantageous use of disposal of pharma companies property which is no longer economically useful to its user in the present situation. Salvaging provides means of increasing cash income, reducing the cost of company’s product or service and conserving raw material Salvaging Operations: Proper collection of materials preferably at one place Storing them as systemically as other materials Storing in terms of qty, size or specification so as to obtain maximum sale value

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Reclamation of scrap material Restoring material to functional condition and transferring them to stores Selling the material immediately to buyer Taking precaution for manufacturing waste products Containerization Containerization is a system of intermodal freight transport or cargo transport using standard ISO containers (also known as isotainers) that can be loaded and sealed intact onto container ships, railroad cars, planes and trucks.

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Containerization is also the term given to determining the best carton, box or pallet to be used to ship a single item or number of items

References:

References Principles and Practice of Drug Store Administration ------- Dr. Mahesh D Burande Handbook of Drug Store and Business Management ------- Ashok K Gupta Production and Operations Managements K Aswathappa, K Shridhara Internet sources

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